Product Marketing as a Strategic Tool for Telco Vendors

Those who know me for a long time know that I am a Product Manager by trade. This is how I started my career and little by little, from products, to product lines, to solutions I have come to manage and direct business lines worth several hundred of millions of dollars. Along this path, I have become also a manager and team lead, then moved onto roles with increasing strategic content, from reselling, OEM, deals to buy and sell side acquisitions and integrations.

Throughout this time, I have noticed the increased significance of Product Marketing in the telecoms vendors environment. In a market that has seen (and is still seeing) much concentration, with long sales cycles and risk-adverse customers, being able to intelligently and simply state a product's differentiating factor becomes paramount.

Too often, large companies rely on brand equity and marketing communication to support sales. In a noisy market, large companies have many priorities, which end up diluting the brand promise and provide vague and disconnected messages across somewhat misaligned product and services.

By contrast, start ups and small companies often have much smaller range of products and services, but having less budget, focus in may case on technology and technical illustrations rather than exalting the benefits and value of their offering.

My experience has underscored the pivotal role of product marketing in shaping a company's valuation, whether for fundraising or acquisition purposes. Yet, despite its proven impact, many still regard it as a peripheral activity. The challenge lies in crafting a narrative that resonates—a narrative that not only embodies the company's strategic vision but also encapsulates market trends, technological evolutions, and competitive dynamics. It's about striking a delicate balance, weaving together product capabilities, customer pain points, and the distinct value proposition in a narrative that is both compelling and credible.

Many companies will have marketing communication departments working on product marketing, which often results in either vague and bland positioning or in disconnects between the claims and the true capabilities of the products. This can be very damaging for a company's image when its market claims do not reflect accurately the capabilities of the product or the evolution of the technology. 

Other companies have the product marketing as part of the product management function, whereas the messaging and positioning might be technically accurate, but lack competitive and market awareness to resonate and find a differentiating position that will maximize the value of the offering.

As the telecoms vendors' sector braces for heightened competition and market contraction, with established players fiercely guarding protecting their market share against aggressive newcomers, the role of product marketing becomes increasingly critical. It's an art form that merits recognition, demanding heightened attention and strategic investment. For those poised to navigate this complex terrain, embracing product marketing is not just an option; it's an imperative for sustained relevance and success in challenging market conditions. 

The RICs - brothers from a different mother?

As you might know, if you have been an erstwhile reader of my previous blogs and posts, I have been a spectator, advocate and sometime actor in telecoms open and disaggregated networks for quite some time.

From my studies on SDN /NFV, to my time with Telefonica, the TIP forum, the ONF or more recently my forays into Open RAN at NEC, I have been trying to understand whether telecom networks could, by adopting cloud technologies and concepts, evolve towards more open and developer friendly entities.

Unfortunately, as you know, we love our acronyms in telecom. It is a way for us to reconcile obtuse technology names into even more impenetrable concepts that only "specialists" understand. So, when you come across acronyms that contain other acronyms, you know that you are dealing with extra special technology.

Today, let's spend some time on the RICs. RIC stands for RAN (Radio Access Network) Intelligent Controller. The RICs are elements of open RAN, as specified by the O-RAN alliance. The O-RAN alliance is a community of telecoms actors looking at opening and disaggregating the RAN architecture, one of the last bastions of monolithic, proprietary naughtiness in telecoms networks. If you want to understand more about why O-RAN was created, please read here.  There are two types of RIC, a non real time and a near real time.

O-RAN logical architecture

The RICs are frameworks with standardized interfaces to each others, and the other elements of the SMO,  the cloud and the RAN. They are supposed to be platforms onto which independent developers would be able to develop RAN specific features, packaged as Apps that would theoretically be deployable on any standard compliant RIC. The Apps are called rAPPs for non RT and xApps for near RT RIC.

Although the RICs share the same last name, they are actually quite different and are more distant cousins than siblings, which makes the rApps and xApps unlikely to be compatible in a multivendor environment.

The non real time RIC and the rApps

The non RT RIC is actually not part of the RAN itself, it is part of the Service Management and Orchestration (SMO) framework. The non-real time aspect means that it is not intended to act on the O-RAN subsystems (Near RT RIC, Centralized Units (CU), Distributed Units (DU), Radio Units (RU)) with a frequency much lower than once per second. Indeed, the non RT RIC can interface with these systems even in the range of minutes or days. 

Its purpose is a combination of an evolution of SON (Self Organizing Networks) and the creation of a vendor-agnostic RAN OSS. SON was a great idea initially. It was intended to provide operators with a means to automate and optimize RAN configuration. Its challenges raised from the difficulty to integrate and harmonize rules across vendors. One of O-RAN's tenets is to promote multi vendor ecosystems, thereby providing a framework for RAN automation. As part of the SMO, the non RT RIC is also an evolution of the proprietary OSS and Element Management Systems, which for the first time provide open interfaces for RAN configuration.

Because of its dual legacy from OSS and SON, and its less stringent integration needs, the non RT RIC has been the first entity to see many new entrant vendors, either from the OSS or the SON or the transport or the cloud infrastructure management communities. 

Because of their non real time nature (and because many non RT RIC and rApps vendors are different from the RAN vendors, the rApps have somewhat limited capabilities in multivendor environments. Most vendors provide visualization / topology / dashboards capabilities and enhancements revolving around neighbouring and handover management.

The near real time RIC and the xApps

The near real time RIC is part of the RAN and comprises a set of functionalities that are, in a traditional RAN implementation part of the feature set of the gNodeB base station. O-RAN has separated these capabilities into a framework, exposing open interfaces to the RAN components, theoretically allowing vendor agnostic RAN automation and optimization. The near real-time would infer sub-second frequency of interaction between the elements. And..here's the rub.

Millisecond adjustments are necessary in the RAN to account for modulation, atmospheric or interference conditions. This frequency requires a high level of integration between the CU, DU and RU to not lose performance. As often in telecoms,  the issue is not with the technology, but rather the business model. O-RAN's objective is to commoditize and disrupt the RAN, which is an interesting proposition for its consumers (the operators) and for new entrants, less so for legacy vendors. The disaggregation of the RAN with the creation of near RT RIC and xApps goes one step further, commoditizing the RU, CU and DU and extracting the algorithmic value and differentiation in the xApps. The problem with disruption is that it only works in mature, entrenched market segments. While traditional RAN might be mature enough for disruption, it is uncertain that open RAN itself has the degree of maturity whereas new entrants in RU, CU and DU would be commoditized by xApps.

For this reason, it is likely that if near RT RIC and xApps are to be successful, only the dominant RU, CU, DU vendors will be able to develop it and deploy it, which will lead to some serious dependencies against vendor independence.

 I am currently working on my next report on Open RAN and RIC and will provide more updates as I progress there.

Edge computing risks and opportunities for operators and hyperscalers

 Part of a presentation to the World Bank's investment teams regarding institutional investment in ICT for emerging countries.

Edge Computing risks and Opportunities for Telco and hyperscalers from Patrick Lopez

Hyperscalers enter telco battlefront

We have, over the last few weeks, seen a flurry a announcements from hyperscalers investing in telco infrastructure and networks. Between Facebook's $5.7B investment in India's Jio Reliance, to Microsoft's acquisition of Affirmed Networks for $1.35B or even AWS' launch of Outpost and Google's Anthos ramp up.

Why are hyperscalers investing in telecom gear and why now?

Facebook had signalled its intent as far as 2016 when Mark Zuckerberg presented at mobile world congress his vision for the future of the company.

Beyond the obvious transition from picture and video sharing to virtual / augmented reality, tucked-in in the top right, are two innocuous words “telco infra”.

What Facebook realized is that basically anyone who has regular access to broadband will likely use a Facebook service. One way to increase the company’s growth is to invent / buy / promote more services, which is costly and uncertain. Another way is simply to connect more people.

With over 2,5 billion Facebook products users, the company still has some space to grow in this area, but the key limiting factor seems to be connectivity itself. The last billions of broadband unconnected are harder to attain because traditional telecom networks do not reach there. The last unconnected are mostly in rural area. Geographically disperse, with a lower income than their urban counterparts.

Looking at this problem from their perspective, Facebook reached a similar conclusion to the network operators operating in these markets. Traditional telco networks are too expensive to deploy and maintain to reach this population sustainably. The same tactics employed by operators to disaggregate and stimulate the infrastructure market can be refocused and better stimulated by Facebook.

This was the start of Facebook Connectivity, a specific line of business in the social media’s giant empire to change the cost structure of telco networks. Facebook connectivity has evolved to encompass a variety of efforts, ranging from the creation of TIP (an open forum to disaggregate and open telco networks), the co investment with Telefonica in a Joint Venture dedicated to connect the unconnected in latin america and this week, the announcement of its acquisition of 9.9% of Jio Reliance in India.

How about Microsoft, Google and others?

Google had, before the recent open source cloud platform Anthos dug their toes in telco water with project Fi and its fiber businesses.

Microsoft has been trying for he last 5 years to exploit the transition in telco networks from proprietary to IT. Even IBM's Redhat acquisition had a telco interest, as the giants also try to become a more prevalent vendor in the telco ecosystem.

So... why now?

Another powerful pivot point in Telecom is the emergence of 5G. As the latest telephony technology generation rolls out, telco networks are undeniably being re-architected and redesigned to look more like cloud networks. This creates an interesting set of risks and opportunities for incumbents and new entrants alike.
For operators, the main interest is to drastically reduce the cost of rolling out and maintaining complex telco networks by using powerful virtualization, SDN and automation techniques that have allowed hyperscalers to dominate cloud computing. These technologies, if applied correctly can transform the cost structure of network operators, particularly important at the outset of multi billion dollars investment in 5G infrastructure. The radical cost structure disruption comes from disaggregation of the network between hardware and software, the introduction of new vendors in the value chain who drive price pressure on incumbents and the widespread automation and cloud economics.

These opportunities bring also new risks. While they open up the supply chain with the introduction of new vendors, they also allow new actors to enter the value chain, either to substitute and dominate legacy vendors or create new control points (see the orchestrator wars I have been mentioning in previous posts). The additional risk is that the cost of entry into telco becomes lower for cloud hyperscalers as the technology to run telco networks transitions from proprietary closed ecosystem to open source, cloud environment.

The last pivot point is another telco technology that is very specifically aimed at creating a cloud environment in telco networks: Edge computing. It creates a cloud layer that can allow the provision, reservation and consumption of telco connectivity, together with cloud computing. As a greenfield environment, it is a natural entry point for cloud operators and new vendors alike to enter the telco ecosystem.

Facebook, Google, AWS, Microsoft and others seem to think that 5G and edge computing in particular will be more cloud than telco. Network operators try to resist this claim by building a 5G network that will be a fully integrated connectivity and computing experience, complementary to public clouds, but different enough to command a premium, a different value chain and operator control.

In which direction will the market move? This and more in my report and workshop Edge computing and Hybrid Clouds 2020.

Time to get out of consumer market for MNOs?

I was delivering a workshop on SDN / NFV in wireless, last week, at a major pan-european tier one operator group and the questions of encryption and net neutrality were put again on the table.

How much clever, elastic, agile software-defined traffic management can we really expect when "best effort" dictates the extent of traffic management and encryption renders many efforts to just understand traffic composition and velocity difficult?

There is no easy answer. I have spoken at length on both subjects (here and here, for instance) and the challenges have not changed much. Encryption is still a large part of traffic and although it is not growing as fast as initially planned after Google, Netflix, Snapchat or Facebook's announcements it is still a dominant part of data traffic. Many start to think that HTTPS / SSL is a first world solution, as many small and medium scale content or service providers that live on a freemium or ad-sponsored models can't afford the additional cost and latency unless they are forced to. Some think that encryption levels will hover around 50-60% of the total until mass adoption of HTTP/2 which could take 5+ years. We have seen, with T-Mobile's binge on  a first service launch that actively manages traffic, even encrypted to an agreed upon quality level. The net neutrality activists cried fool at the launch of the service, but quickly retreated when they saw the popularity and the first tangible signs of collaboration between content providers, aggregators and operators for customers' benefit.

As mentioned in the past, the problem is not technical, moral or academic. Encryption and net neutrality are just symptoms of an evolving value chain where the players are attempting to position themselves for dominance. The solution with be commercial and will involve collaboration in the form of content metadata exchange, to monitor, control and manage traffic. Mobile Edge Computing can be a good enabler in this. Mobile advertising, which is still missing over 20b$ in investment in the US alone when compared to other media and time spent / eyeball engagement will likely be part of the equation as well.

...but what happens in the meantime, until the value chain realigns? We have seen consumer postpaid ARPU declining in most mature markets for the last few years, while we seen engagement and usage of so-called OTT services explode. Many operators continue to keep their head in the sand and thinking of "business as usual" while timidly investigating new potential "revenue streams".

I think that the time has come for many to wake up and take hard decisions. In many cases, operators are not equipped organizationally or culturally for the transition that is necessary to flourish in a fluid environment where consumer flock to services that are free, freemium, or ad sponsored. What operators know best, subscription services see their price under intense pressure because OTTs are looking at usage and penetration at global levels, rather than per country. For these operators who understand the situation and are changing their ways, the road is still long and with many obstacles, particularly on the regulatory front, where they are not playing by the same rules as their OTT competition.

I suggest here that for many operators, it is time to get out. You had a good run, made lots of money on consumer services through 2G, 3G and early 4G, the next dollars or euros are going to be tremendously more expensive to get than the earlier.
At this point, I think there are emerging and underdeveloped verticals (such as enterprise and IoT) that are easier to penetrate (less regulatory barriers, more need for managed network capabilities and at least in the case of enterprise, more investment possibilities).
I think that at this stage, any operator who derives most of its revenue from consumer services should assume that these will likely dwindle to nothing unless drastic operational, organizational and cultural changes occur.
Some operator see the writing on the wall and have started the effort. There is no guarantee that it will work, but certainly having a software defined, virtualized elastic network will help if they are betting the farm on service agility. Others are looking at new technologies, open source and standards as they have done in the past. Aligning little boxes from industry vendors in neat powerpoint roadmap presentations, hiring a head of network transformation or virtualization... for them, the reality, I am afraid will come hard and fast. You don't invest in technologies to build services. You build services first and then look at whether you need more or new technologies to enable them.

NFV costs expectation gap

I am fresh off from an interesting week in sunny San Jose, at the NFV World Congress, where I chaired the operations stream on the first day.

As usual, it is a week where operators and vendors jostle to show off their progress since last year and highlight the challenges ahead. before I speak about the new and cool developments in terms of stateless VNFs, open source orchestration, containers, kubernetes and unikernels, I felt the need to share some observations regarding diverging expectations from traditional telecoms vendors, VNF vendors, systems integrators and operators.

While a large part of the presentations showed a renewed focus on operations in NFV, a picture started to emerge in my mind in terms of expectations between vendors, systems integrators and operators at the show.

Hardware
Essentially, everyone expects that the hardware bill for a virtualized network will reduce, due to the transition to x86 hardware. While this transition might mean less efficiency in the short term, all players seem to think that it will resolve itself over the next few years. In the meantime, DPDK and SR-IOV are used to address the performance gap between virtualization and traditional appliance, even at the cost of agility. By my estimate, the hardware cost reduction demonstrated by VNF vendors and systems integrators still falls short of operators expectations. Current figure places them around a 30% cost reduction vs. traditional model, whereas operators' expectations hover between 50 to 66%.

Software
This is an area where we see sharp expectations variations between all actors in the value chain.
VNF vendors expect to be able to somehow capture some of the hardware savings and translate them into additional license fees. This thinking is boosted by the need for internal business case to transition from appliance to software, to virtualized and eventually to orchestrated VNF. We are still very early in the market and software licensing models for VNFs are all over the place, in many case simply translated from the appliance model in other cases built from scratch but with little understanding of he value of specific functions in the overall service chain. Increased competition and market entering from non-traditional telco vendors will level the licensing structure over time.

Systems integrators are increasingly looking at VNFs as disposable. Operators tell them that they want to be able to have little dependency on vendors and to replace VNFs and vendors as needed, even running different vendors for the same function in different settings or slices. Systems integrator are buying into the rationale and are privileging their own VNFs, putting emphasis (and price premium) on their NFVI (infrastructure) and VNFM (management). Of course this leads also to the conclusion that while VNFs (and VNF vendors) should be interchangeable, the NFV MANO (management and orchestration) function will be very sticky and will likely stay a single vendor proposition in a given network. As a result, some are predicted the era of orchestrators war, which certainly feels timely, after the SDN management war (winner OpenStack), southbound interface war (winner OpenFlow), hypervisor war winner (KVM)...
I have spoken at length about the danger operators expose themselves if they vacate the orchestration field and leave systems integrators to rule it. It seems to have gained some traction with open source orchestration projects being pushed in standards. In any case, VNF vendors expect a growth in software licensing vs. appliance model, whereas integrators and operators expect a reduction.

Professional services
This is the area where everyone sees to agrees that an increase is inevitable. SDN and NFV provide layers upon layers of abstraction and while standards and open source are not fully defined, there is much integration and "enhancements" necessary to make a service on NFV work.
VNF vendors and operators who do not want to perform integration themselves usually expect a 50% increase vs. appliance projects, whereas integrators budget a robust 100% increase in average. This, of course, increases even further if the integrator is managing the infrastructure / service itself.

Maintenance and support
Vendors and integrators expect the ratio of these to be essentially comparable  to appliance models, whereas operators expect a sharp reduction, in light of all professional services being extended for integration and automation.

Total
VNF vendors behind closed doors will usually admit that, in the short term, the cost of rolling out a new VNF function /service might be a little higher than appliance, due to the performance gap and increase in professional services. There are sharp variations between traditional vendors that are porting their solutions to NFV and new vendors that cloud-native and have designed their solution for a software defined virtualized environment.
Systems integrator can show an overall cost reduction but usually because of proprietary "enhancements and optimization".
All are confident, though that automation and orchestration makes operation of existing services much cheaper and ramping up of new ones much faster. Expectations are that VNF architecture will be much more cost effective than appliance on a 3 to 5 years TCO model. Operators, on their end expect a NFV architecture to yield savings from day one, compared to appliance and to further increase this gap over a 3 years period.

Mobile Edge Computing 2016 is released!

5G networks will bring extreme data speed and ultra low latency to enable Internet of Things, autonomous vehicles, augmented, mixed and virtual reality and countless new services.

Mobile Edge Computing is an important technology that will enable and accelerate key use cases while creating a collaborative framework for content providers, content delivery networks and network operators. 

Learn how mobile operators, CDNs, OTTs and vendors are redefining cellular access and services.

Mobile Edge Computing is a new ETSI standard that uses latest virtualization, small cell, SDN and NFV principles to push network functions, services and content all the way to the edge of the mobile network. 

This 70 pages report reviews in detail what Mobile Edge Computing is, who the main actors are and how this potential multi billion dollar technology can change how OTTs, operators, enterprises and machines can enable innovative and enhanced services.

Providing an in-depth analysis of the technology, the architecture, the vendors's strategies and 17 use cases, this first industry report outlines the technology potential and addressable market from a vendor, service provider and operator's perspective.

Table of contents, executive summary can be downloaded here.

MEC 2016 Executive Summary

2016 sees a sea change in the fabric of the mobile value chain. Google is reporting that mobile search revenue now exceed desktop, whereas 47% of Facebook members are now exclusively on mobile, which generates 78% of the company’s revenue. It has taken time, but most OTT services that were initially geared towards the internet are rapidly transitioning towards mobile.

The impact is still to be felt across the value chain.

OTT providers have a fundamentally different view of services and value different things than mobile network operators. While mobile networks have been built on the premises of coverage, reliability and ubiquitous access to metered network-based services, OTT rely on free, freemium, ad-sponsored or subscription based services where fast access and speed are paramount. Increase in latency impacts page load, search time and can cost OTTs billions in revenue.

The reconciliation of these views and the emergence of a new coherent business model will be painful but necessary and will lead to new network architectures.

Traditional mobile networks were originally designed to deliver content and services that were hosted on the network itself. The first mobile data applications (WAP, multimedia messaging…) were deployed in the core network, as a means to be both as close as possible to the user but also centralized to avoid replication and synchronization issues.

3G and 4G Networks still bear the design associated with this antiquated distribution model. As technology and user behaviours have evolved, a large majority of content and services accessed on cellular networks today originate outside the mobile network. Although content is now stored and accessed from clouds, caches CDNs and the internet, a mobile user still has to go through the internet, the core network, the backhaul and the radio network to get to it. Each of these steps sees a substantial decrease in throughput capacity, from 100's of Gbps down to Mbps or less. Additionally, each hop adds latency to the process. This is why networks continue to invest in increasing throughput and capacity. Streaming a large video or downloading a large file from a cloud or the internet is a little bit like trying to suck ice cream with a 3-foot bending straw.

Throughput and capacity seem to be certainly tremendously growing with the promises of 5G networks, but latency remains an issue. Reducing latency requires reducing distance between the consumer and where content and services are served. CDNs and commercial specialized caches (Google, Netflix…) have been helping reduce latency in fixed networks, by caching content as close as possible to where it is consumed with the propagation and synchronization of content across Points of Presence (PoPs). Mobile networks’ equivalent of PoPs are the eNodeB, RNC or cell aggregation points. These network elements, part of the Radio Access Network (RAN) are highly proprietary purpose-built platforms to route and manage mobile radio traffic. Topologically, they are the closest elements mobile users interact with when they are accessing mobile content. Positioning content and services there, right at the edge of the network would certainly substantially reduce latency.

For the first time, there is an opportunity for network operators to offer OTTs what they will value most: ultra-low latency, which will translate into a premium user experience and increased revenue. This will come at a cost, as physical and virtual real estate at the edge of the network will be scarce. Net neutrality will not work at the scale of an eNodeB, as commercial law will dictate the few applications and services providers that will be able to pre-position their content.

Mobile Edge Computing provides the ability to deploy commercial-off-the-shelf (COTS) IT systems right at the edge of the cellular network, enabling ultra-low latency, geo-targeted delivery of innovative content and services. More importantly, MEC is designed to create a unique competitive advantage for network operators derived from their best assets, the network and the customers’ behaviour. This report reviews the opportunity and timeframe associated with the emergence of this nascent technology and its potential impact on mobile networks and the mobile value chain.

2015 review and 2016 predictions

As is now customary, I try to grade what I was predicting for 2015 and see what panned out and what didn't. I'll share as well what I see for 2016.

Content providers, creators, aggregators:

"They will need to simultaneously maximize monetization options by segmenting their user base into new price plans and find a way to unlock value in the mobile market.While many OTT, particularly social networks and radio/ audio streaming have collaborated and signed deals with mobile network operators, we are seeing also a tendency to increasingly encrypt and obfuscate online services to avoid network operators meddling in content delivery." 

On that front, I think that both predictions held true. I was envisioning encryption to jump from 10 to 30% of overall data traffic and I got that wrong, at least in many mature markets, where Netflix is big in mobile, we see upwards of 50% of traffic being encrypted. I still claim some prediction here, with one of my first post indicating the encryption trend 2 years before it started in earnest.

The prediction about segmentation from pricing as OTT services mature has been also largely fulfilled, with YouTube's 4th attempt, by my count, to launch a paid service. Additionally, the trend about content aggregators investing in original content rights acquisition is accelerating with Amazon gearing up for movie theaters and Netflix outspending traditional providers such as BBC with a combined investment by both company estimated in the 9$Bn range. Soon, we are talking real money.

In 2016, we will see an acceleration of traditional digital services that were originally launched for fixed line internet transitioning to predominantly mobile or mobile only plays. Right now, 47% of Facebook users are exclusively through  mobile and account for 78% of the company's revenue. More than 50% of YouTube views are on mobile devices and the corresponding revenue growth is over 100% year on year. 49% of Netflix' 18 to 34 years old demographics watches the service on mobile devices. We have seen signs with Twitter's vine,  and Periscope as well as Spotify , MTV and Facebook that the battlefield will be on video services.

Network operators: Wholesaler or value providers?
The operators in 2016 are still as confused, as a community as in 2015. They perceive threats from each other, which causes many acquisitions, from OTTs, which causes in equal measure many partnership and ill-advised service launches and from regulatory bodies, which causes lawyers to fatten up at the net neutrality / privacy buffet.

"we will see both more cooperation and more competition, with integrated offering (OTT could go full MVNO soon) and encrypted, obfuscated traffic on the rise". 

We spoke about encryption, the OTT going full MVNO was somewhat fulfilled by Google's disappointing project Fi launch. On the cooperation front, we have seen a flurry of announcements, mostly centered around sponsored data or zero rated subscription services from Verizon, AT&T.

"We will probably also see the first lawsuits from OTT to carriers with respect to traffic mediation, optimization and management. " 

I got that half right. No lawsuit from content providers but heavy fines from regulators on operators who throttle, cap or prioritize content (Sprint, AT&T, ...).

As for digital service providers, network operators are gearing themselves to compete on video services with services such as mobile TV /LTE broadcast (AT&T, EE, Telekom Slovenje, Vodafone), events streaming (China Telecom, ), sponsored data / zero rated subscription services (Verizon, T-mobile Binge On, Sprint, AT&T, Telefonica, ...).

"Some operators will seek to actively manage and mediate the traffic transiting through their networks and will implement HTTPS / SPDY proxy to decrypt and optimize encrypted traffic, wherever legislation is more supple."

I got that dead wrong. Despite interest and trials, operators are not ready to go into open battle with OTT just yet. Decrypting encrypted traffic is certainly illegal in many countries
or at the very least hostile and seems to be only expected from government agencies...

Mobile Networks Technology

"CAPEX will be on the rise overall with heterogeneous networks and LTE roll-out taking the lion share of investments. LTE networks will show signs of weakness in term of peak traffic handling mainly due to video and audio streaming and some networks will accelerate LTE-A investments or aggressively curb traffic through data caps, throttles and onerous pricing strategies."

Check and check.

"SDN will continue its progress as a back-office and lab technology in mobile networks but its incapacity to provide reliable, secure, scalable and manageable network capability will prevent it to make a strong commercial debut in wireless networks. 2018 is the likeliest time frame."

I maintain the view that SDN is still too immature for mass deployment in mobile networks, although we have seen encouraging trials moving from lab to commercial, we are still a long way from a business case and technology maturity standpoint before we see a mobile network core or RAN running exclusively or mostly on SDN.

"NFV will show strong progress and first commercial deployments in wireless networks, but in vertical, proprietary fashion, with legacy functions (DPI, EPC, IMS...) translated in a virtualized environment in a mono vendor approach. "

We have seen many examples of that this year with various levels of industry and standard support from Connectem, Affirmed Networks, Ericsson, Cisco and Huawei.

"Orchestration and integration with SDN will be the key investments in the standardization community. The timeframe for mass market interoperable multi vendor commercial deployment is likely 2020."

Orchestration, MANO has certainly driven many initiatives (Telefonica OpenMANO) and acquisitions (Ciena acquired Cyan, for example) and remains the key challenge in 2016 and beyond. SDN NFV will not take off unless there is a programmatic framework to link customer facing services to internal services, to functions, to virtual resources to hardware resources in a multi-vendor fashion. I still maintain 2020 as the probable target for this.

In 2016, the new bit of technology I will investigate is Mobile Edge Computing, the capacity to deploy COTS in the radio network, unlocking virtualized services to be positioned at the network's edge, enabling IoT, automotive, Augmented Reality or Virtual Reality services that require minimal latency to access content even faster.

In conclusion, 2016 shows more than ever signs that the house of cards is about to collapse. Data traffic is increasing fast, video is now dominating every networks and it is just starting. With 4K and then 8k around the corner, without talking about virtual or augmented reality, many of the players in the value chain understand that video is going the next few years' battlefield in mobile, OTT and cloud services. This is why we are seeing so much concentration and pivot strategies in the field. 
What is new is the fact that if mobile was an ongoing concern or barely on the radar for many so-called OTT, it has now emerged as the predominant if not exclusive market segment in revenue. 
This means that more pressure will rain on network operators to offer bandwidth and speed. My reports and workshops show that mobile advertising is not growing fast enough in comparison to the subscribers eyeball moving to mobile screens. This is mostly due to the fact that video services in mobile networks are a pretty low quality service, which will get worse as more subscribers transition to LTE. The key to unlock the value chain will be collaboration between operators and OTT and that will only happen if/when a profitable business model and apportioning of costs is worked out.

At last, my prediction about selfie kills seem to unfortunately have been fulfilled with selfies now killing more people than shark attacks. Inevitably, we have to conclude that in 2016, commercial drones and hoverboards will kill more people than selfies...

That's all folks, see you at MWC next month.

Google's MVNO - Project Fi is disappointing

A first look at Google's MVNO to launch in the US on the Sprint and T-Mobile networks reveals itself a little disappointing (or a relief if you are a network operator). I had chronicled the announcement of the launch from Mobile World Congress and expected much more disruption in services and pricing than what is announced here.

The MVNO, dubbed project Fi, is supposed to launch shortly and you have to request an invitation to get access to it (so mysterious and exciting...).

At first glance, there is little innovation in the service. The Google virtual network will span two LTE networks from different providers (but so is Virgin's in France for instance) and will also connect "seamlessly" to the "best" wifi hotspot. It will be interesting to read the first feedback on how the device selects effectively the best signal from these three options and how dynamically that selection occurs. Handover mid call or mid data sessions are going to be an interesting use case, Google assures you that the transition will be "seamless".

On the plus side, Google has really taken a page from Iliad's free disruptive service launched in France and one-time rumored to acquire T-Mobile US. See here the impact their pricing strategy  has had on the French telecommunications market.

1. Fi Basic service comes with unlimited US talk and text, unlimited international text and wifi tethering for $20 per month.
2. The subscriber is supposed to set a monthly data budget, whereas he selects a monthly amount and prepays 10$ per GB. At the end of the month, the amount of unused data is credited back for 1c / MB towards the following month. The user can change their budget on a monthly basis. Only cellular data is counted towards usage, not wifi. That's simple, easy to understand and after a little experimentation, will feel very natural.
3. No contract, no commitment (except that you have to buy a 600+$ Nexus phone).
4. You can send and receive all cellular texts and calls using Google hangouts on any device.
5. Data roaming is same price as domestic but... see drawbacks

Here are, in my mind, the biggest drawbacks with the service as it is described.

1. The first big disappointment is that the service will run initially only on Google's Nexus 6. I have spoken at length on the dangers and opportunities of a fully vertical delivery chain in wireless networks and Google at first seems to pile up the drawbacks (lack of device choice) with little supposed benefits (where is the streamlined user experience?).
2. "Project Fi connects you automatically to free, open wifi networks that do not require any action to get connected". I don't know you, but I don't think I have ever come across one of these mysterious hotspots in the US. Even Starbucks or MC Donald free hot spots require to accept terms and conditions and the speed is usually lower than LTE. 
3. Roaming data speed limited to 256 kbps! really? come on, we are in 2015. Even if you are not on LTE, you can get multi Mbps on 3G / HSPA. Capping at that speed means that you will not be streaming video, tethering or using data hungry apps (Facebook, Netflix, Periscope, Vine, Instagram...). What's the point, at this stage, better say roaming only on wifi  (!?).

In conclusion, it is an interesting "project", that will be sure to make some noise and have an impact on the already active price war between operators in the US, but on the face of it, there is too little innovation and too much hassle to become a mass market proposition. Operators still have time to figure out new monetization strategies for their services, but more than ever, they must choose between becoming wholesaler or value added providers.

Mobile video 2015 executive summary

As is now traditional, I return from Mobile World Congress with a head full of ideas and views on market evolution, fueled by dozens of meetings and impromptu discussions. The 2015 mobile video monetization report, now in its fourth year, reflects the trends and my analysis of the mobile video market, its growth, opportunities and challenges.

Here is the executive summary from the report to be released this month.

2014 has been a contrasted year for deployments of video monetization platforms in mobile networks. The market in deployments and value has grown, but there has been an unease that has gripped some of its protagonists, forcing exits and pivot strategies, while players with new value proposition have emerged. This transition year is due to several factors.

On the growth front, we have seen the emergence of MVNOs and interconnect / clearing houses as a buying target, together with the natural turnover and replacement of now aging and fully amortized platforms deployed 5/6 years ago.

Additionally, the market leaders upgrade strategies have naturally also created some space for challengers and new entrants. Mature markets have seen mostly replacements and MVNO green field deployments, while emerging markets have added new units in markets that are either too early for 3G or already saturated in 4G. Volume growth has been particularly sustained in Eastern / Central Europe, North Africa, Middle East and South East Asia.

On the other hand, the emergence and growth of traffic encryption, coupled with persisting legal and regulatory threat surrounding the net neutrality debate has cooled down, delayed and in some cases shut down optimization projects as operators are trying to rethink their options. Western Europe and North America have seen a marked slowdown, while South America is just about starting to show interest.

The value of the deals has been in line with last year, after sharp erosions due to the competitive environment. The leading vendors have consolidated their approach, taken on new strategies and overall capitalizing on installed base, while many new deals have gone to new entrants and market challengers.

2014 has also been the first year of a commercial public cloud deployment, which should be followed soon by others. Network function virtualization has captivated many network operators’ imagination and science experiment budget, which has prompted the emergence of the notion of traffic classification and management as a service.

Video streaming, specifically, has shown great growth in 2014, consolidating its place as the fastest growing service in mobile networks and digital content altogether. 2014 and early 2015 have seen many acquisitions of video streaming, packaging, encoding technology company. What is new however, is that a good portion of these acquisitions were not performed by other technology companies but by OTT such as FaceBook and Twitter.

Mobile video advertising is starting to become a “thing” again, as investments, inventory and views show triple digit growth. The trend shows mobile video advertising becoming possibly the single largest revenue opportunity for mobile operators within a 5 years timeframe, but its implementation demands a change in attitude, organization, approach that is alien to most operators DNA. The transformation, akin to a heart transplant will probably leave many dead on the operating table before the graft takes on and the technique is refined, but they might not have much choice, looking at Google’ and Facebook’s announcements at Mobile World Congress 2015.

Will new technologies such as LTE Multicast, for instance, which are due to make their start in earnest this year, promising quality assured HD content, via streaming or download, be able to unlock the value chain? 

The mobile industry is embattled and find itself looking at some great threats to its business model, as the saying goes, those who will survive are not necessarily the strongest, but rather those who will adapt the fastest.

Mobile network 2030

It is summer, nice and warm. England and Italy are out of the world cup, France will beat Germany on Friday, then Brazil and Argentina in the coming weeks to obtain their second FIFA trophy. It sounds like a perfect time for a little daydreaming and telecom fiction...

The date is February 15, 2030

The mobile world congress is a couple of weeks away and has returned to Cannes, as the attendance and indeed the investments in what used to be mobile networks have reduced drastically over the last few years. Finished are the years of opulence and extravagant launches in Barcelona, the show now looks closer to a medium sized textile convention than the great mass of flashy technology and gadgets it used to be in its heyday. 

When did it start to devolve? What was the signal that killed what used to be a trillion dollar industry in the 90's and early 2000's. As usual, there is not one cause but a sort of convergence of events that took a momentum that few saw coming and fewer tried to stop. 

Net neutrality was certainly one of these events. If you remember, back in 2011, people started to realize the level of penetration fixed and wireless networks were exposed to from legal and illegal interception. Following the various NSA scandals, public pressure mounted to protect digital privacy. 
In North America, the battle was fierce between pro and con neutrality, eventually leading to a status quo of sorts, with many content providers and network operators in an uneasy collaborative dynamic. Originally, content providers unwilling to pay for traffic delivery in wireless networks attempted to secure superior user experience by implementing increasingly bandwidth hungry apps. When these started to come in contention for network resources, carriers started to step in and aggressively throttle, cap or otherwise "optimize" traffic. In reaction, premium content providers moved to an encrypted traffic model as a means to obfuscate traffic and prevent interception, mitigation and optimization by carriers. Soon enough, though, the encryption-added costs and latency proved impractical. Furthermore, some carriers started to throttle and cap all traffic equally, claiming to adhere to the letter of net neutrality, which ended up having a terrible effect on  user experience. In the end cooler heads prevailed and content providers and carriers created integrated video networks, where transport, encryption and ad insertion were performed at the edge, while targeting, recommendation, fulfillment ended up in the content provider's infrastructure. 

In Europe, content and service providers saw at the same time "net neutrality" as the perfect excuse to pressure political and regulatory organizations to force network providers to deliver digital content unfiltered, un-prioritized at best possible effort. The result ended up being quite disastrous, as we know, with content being produced mostly outside Europe and encrypted, operators became true utility service providers. They discovered overnight that their pipes could become even dumber than they were.

Of course, the free voice and texting services launched by some of the 5G licensees new entrants in the 2020's accelerated the trend and nationalization of many of the pan European network operator groups.

The transition was relatively easy, since many had transcended to full virtual networks and contracted ALUSSON the last "european" Telecom Equipment Manufacturer to manage their networks. After they had spent collectively over 100 billion euros to virtualize it in the first place, ALUSSON emerged as the only clear winner of the cost benefits brought by virtualization. 
Indeed, virtualization was attractive and very cost effective on paper but proved very complex and organizationally intensive to implement in the end. Operators had miscalculated their capacity to shift their workforce from telecom engineering to IT when they found out that the skill-set to manage their networks always had been in the vendors' hands. Few groups were able to massively retool their workforce, if you remember the great telco strikes of 2021-2022.
In the end, most ended up contracting and transitioning their assets to their network vendor. Obviously, liberated from the task of managing their network, most were eager to launch new services, which was one of the initial rationale for virtualization. Unfortunately, they found out that service creation was much better implemented by small, agile, young entrepreneurial structures than large, unionized, middle aged ones... With a couple of notable exceptions, broadband networks were written off as broadband access was written in the European countries' constitutions and networks aggregated at the pan European level to become pure utilities when they were not downright nationalized.

Outside Europe and North America, Goopple and HuaTE dominate, after voraciously acquiring licenses in emerging countries, ill-equipped to negotiate the long term values of these licenses versus the free network infrastructures these companies provided. The launch of their proprietary SATERR (Satellite Aerial Terrestrial Relay) technology proved instrumental to creating the first fully vertical service /network/ content / device conglomerates.  

Few were the operators who have been able to discern the importance of evolving their core asset "enabling communication" into a dominant position in their market. Those who have succeeded share a few common attributes:

They realized first that their business was not about counting calls, bites or texts but enabling communication. They first started to think in term of services and not technology and understood that the key was in service enablement. Understating that services come and go and die in a matter of months in the new economy, they strove not to provide the services but to create the platform to enable them.

In some cases, they transitioned to full advertising, personal digital management agency, harnessing big data and analytics to enrich digital services with presence, location, preference, privacy, corporate awareness. This required much changes organizationally, but as it turned out, marketing analyst were much easier and cost effective to recruit than network and telecom engineers. Network management became the toolset, not the vocation. 

In other cases, operators became abstraction layers, enabling content and service providers to better target, advertise, aggregate, obfuscate, disambiguate, contextualize, physical and virtual communication between people and machines.

In all cases they understood that the "value chain" as they used to know it and the consumer need for communication services was better served by an ever changing ecosystem, where there was no "position of strength" and where coopetition was the rule, rather than the exception. 

Video monetization & optimization 2014 executive summary

As announced earlier this month, my latest report "Mobile video monetization and optimization 2014" is out.

In 2014, mobile video is a fact of life. It has taken nearly 5 years for the service to transition from novelty to a growing habit that is quickly becoming an everyday occurrence in mature markets. Nearly a quarter of YouTube and Netflix views nowadays are on a tablet or a smartphone. Of course, users predominantly still stream over wifi, but as LTE slowly progresses across markets, users start to take for granted the network capacity to deliver video.

Already, LTE networks start to show signs of weariness as video threatens the infrastructure and the business model of mobile content delivery.

On the regulatory front, with the US appeal court served in January ruling that the FCC had no authority to impose "Open Internet Order" (net neutrality) rules to broadband carriers, there is a wind of hope and fear that blows across the traffic management market.

Almost concurrently, we are seeing initiatives from network operators and OTT alike to find new footings for business models and cooperation / competition.

•       AT&T is experimenting with sponsored data plans,
•       Verizon has bought a CDN,
•       Deutsche Telekom partners with Evernote and Spotify,
•       Orange persists investigating Telco OTT with Libon,
•       Uninor India wants to charge for Facebook,
•       Netflix is trialing tiered pricing,
•       Facebook and Google are hinting at operating wireless networks…

In the meantime, mobile advertising still hasn't delivered on the promises of taking advantage of a hyper targeted, location-aware, contextually relevant service. Privacy concerns are at their highest, with the fires started by Wikileaks and Edward Snowden’ NSA scandals, fanned by “free internet” activists and a misinformed public.

Quality of Experience is a growing trend, from measurement to management and experience assurance is starting to make its appearance, buoyed by a series of vague announcements and launches in the analytics, big data, and network virtualization field.

Legacy (already?!) video optimization vendors see the emergence of smarter, more cost-effective and policy-driven platforms. The technology has not delivered fully on cost reduction, but is being implemented for media inspection, analytics, media policy enforcement and control and lately video centric pricing models and bundles.

With the acquisition of the market leader last year and the merger of the number 2 and 3 in market share at the beginning of this year, we have seen video optimization trials and RFx being delayed in their decision making.

Video optimization in 2014 is a mature market segment. The technology has been deployed in over 200 networks globally.

{Core Analysis} believe that video optimization will continue to be deployed in most networks as a media policy enforcement point and for media analytics.