George Held: Zain is now the second biggest bank in
Kenya and the largest in Tanzania

Holly Kramer: Telstra bundles business productivity
applications with broadband service

Margaret Morosi of Deutsche Telekom: carriers and
vendors don’t compete, but co-exist

If you’re a new carrier entrant it means de-emphasising technological expertise in favour of novel marketing offerings. If you’re an incumbent it means harnessing your existing technology to bring hot new services to market. If you’re a technology vendor, it means continuing to make research and development investments in new technology both to serve your customers and to place your organisation nearer the heart of the value chain.

On the face of it, these are different and sometimes conflicting aspects of innovation but, in reality, are all elements of the same drive to innovate that has been stimulated by IP innovation.

Those were the messages of the Global Telecoms Business Innovation Summit. Topics covered at the summit — held on the same day as the presentation of the GTB Innovation Awards — included broadband propositions for SMEs, international mobile services from a new entrant’s perspective, service innovation in mobile services for large corporations and how vendors can continue to provide a platform for service innovation.

The summit was chaired by Kip Meek, chairman of Ingenious Media and head of the Broadband Stakeholder Group.

Holly Kramer, main board member of Telstra and group managing director of product management, opened proceedings by sharing Telstra’s strategy of providing innovative fixed and wireless broadband services for SME sector.

With 800,000 SME customers, Telstra holds more than 50% market share in Australia and has a strategy of providing integrated business solutions, based on the carrier’s fixed national Next IP Network and its mobile NextG Network, which is Australia’s largest and fastest wireless broadband network and covers 99% of the population.

Kramer explained how the carrier is bundling both business productivity applications and collaboration and communication applications as part of its offer to SMEs. This will see applications such as McAfee, MessageLabs and CRM software offered along with Microsoft online services such as Exchange, Office Communications and SharePoint.

A similar approach is being offered for wireless broadband users, with mobile enterprise applications, fleet tracking and management and line of business applications being offered alongside mobile email, messaging and unified communications. It is planned that these portfolios of applications — both fixed and wireless — will be integrated and offered as a holistic package to users.

Strain on the network

Kramer’s presentation was followed by one from Scott Stevens, vice president of technology at Juniper Networks. Stevens emphasised the importance of the network in supporting cloud computing. Although cloud computing is very much the hot topic, the impact of it and other Web 2.0 technologies is putting increasing strain on the network: although new customer growth is beginning to plateau, bandwidth consumed per customer is growing by between 50% and 500% per device per year.

Stevens thinks this increases the value of the network and feels that service providers, by focusing on the application and user experience via application-aware networking, are uniquely positioned to improve the cloud experience.

Therefore, instead of being disintermediated by new services, the role of the network is one of growing value and importance, suggested Stevens.

Stevens’s presentation was followed by a panel discussion chaired by Stephanie Liston, managing director of Peasenhall Ventures and a former member of UK regulator Ofcom.

Liston’s panel, which comprised Vikram Saksena, CTO of Tellabs, Tim Porter, Oracle Communications’ EMEA vice president, and XConnect CEO Eli Katz, sought to explore the role of vendors in developing innovative services and how they can improve their understanding of operator requirements.

“Networks require ever increasing innovation,” commented Liston. “Vendors are focusing heavily on development to assist operators develop new bespoke services leading to new revenue streams. The vendors are particularly keen to develop strategic partnerships with operators to achieve best results.”

In addition to the rush to revenues from new services, the headroom available for innovation in traditional areas, such as interconnect, was also highlighted in the discussion. The participants agreed that interconnection models continually require additional innovation and fresh thinking.

Insight into market

George Held, director of products and services at Zain provided insight into how new market entrants can innovate.

Zain, which operates in 24 countries across Africa and the Middle East, was rebranded a year ago and now has 64 million customers. Branding and the customer proposition as opposed to technical emphasis is core to the company’s philosophy.

“Brand is all,” explained Held. “Our technology boxes sit in a cold room and we don’t care what they do. Our customers buy the brand experience and lifestyle [proposition]. The only important part is the brand.”

That’s an intriguing attitude but it is also clear that Zain’s success has its foundations in offering a tightly targeted portfolio of offerings that its customers want.

For instance, Zain operates as a single network — called One Network — across all of its 24 countries and will continue to do so as it adds more countries to its geographical footprint. In technical terms that’s simpler to manage than handling roaming conditions between 24 separate entities, in service terms it’s innovative and valuable.

Held cites the example of making a call from Kinshasa, the capital of the Democratic Republic of Congo, to Brazzaville, the capital of the Republic of Congo. Pre-Zain, the call would have routed from Kinshasa to Brussels, from Brussels to Paris, and from Paris to Brazzaville — all to cover a distance of 500 metres across the Congo River, which separates these two capital cities.

Administrative burden

The roaming costs of such a call are obviously ridiculous as is the administrative burden placed on carrier systems.

By simplifying its operations so any Zain subscriber can call another Zain subscriber at a local rate, in Zain countries, the consumer gets a clearly attractive offering and Zain cuts down on its requirement to build roaming relations and manage its back office.

While major carrier groups of the developed world would covet the ability to offer such a proposition, their businesses have not been built with this sort of capability in mind and many have been stitched together from an array of assets over a period of decades.

For them today, this type of offer is a non-starter but the Zain experience demonstrates how a lithe organisation can bring previously unconsidered propositions to market and change the game beyond recognition.

Zain has also applied its single network approach to its other services. Zap, its money transfer and payment service, is offered across its entire network and radically changes the carrier business. “Having Zap over One Network means it’s goodbye to Western Union,” said Held. “Zain is now the second biggest bank in Kenya and the largest in Tanzania. Central banks now look at us as a bank, not a mobile operator.”

In spite of the success of these innovative services, Held advocates a cautious approach to rolling out new offerings. After all, there’s a vast market to educate each time you roll out a service that previously didn’t exist. “You only have limited space so we focus on launching one major product a year and doing that right,” he said.

Held’s presentation was followed by Nick Jeffery, director of Vodafone Global Enterprise, who, although also from a mobile carrier, works in a totally different market from a totally different point of view. Jeffery’s mission is to bring new mobile services to multinational corporations, thereby attracting them to Vodafone as a global provider.

“Mobility technology advances outpace those of other industries and we see the emergence of strong demand for them from multinationals,” he said. “Machine-to-machine applications, for example, provide real-time information to clients and mobilisation of applications opens new service opportunities.”

Jeffery, however, also acknowledges that technology for the sake of technology is far less of an emphasis. “There’s that history of charging for services on a per user, per minute basis,” he said. “That’s now changing and the imperative is to innovate in the board room rather than the lab.”

Jeffery’s presentation was followed by a panel discussion exploring what operators want from vendors and how vendor carrier relationships can work.

Dan Warren, director of technology at the GSM Association, chaired the discussion which explored how, as vendors seek to involve themselves in the value chain, they can continue to have effective relationships with carriers.

“Vendor research and development supports the telco business but vendors also want to provide services in competition with carriers,” said Ihab Tarazi, vice president of global network planning at Verizon Business. He thinks carriers have little option other than to accept this and continue to work closely with vendors.

Competitive advantage

By doing so, he reckons carriers will be able to bring products to market rapidly, thereby preserving competitive advantage. “Gaining a six month advantage is where it’s at,” he said.

Others don’t see the potential for vendors to compete with carriers as something that can be avoided and see the continuation of vendor-carrier partnerships. “We don’t compete, we co-exist,” said Margaret Morosi, head of global services at Deutsche Telekom ICSS.

It’s a confusing value proposition. Carriers spend vast sums with vendors which in turn have invested heavily in developing technology but also want to use that investment to generate revenue streams of their own, potentially in competition with their customers.

That requires a multi-faceted approach to vendor relationships which involves both partnering with vendors to access their technology and recognising that the commercial relationship can also be two-way with vendors needing the carrier networks to deliver their services.

Matthew Finnie, CTO at Interoute, acknowledges the finely-balanced nature of such relationships. “Both parties have to be schizophrenic commercially as well as technologically,” he said.

Regardless of whether service providers are targeting SMEs with applications, supporting the onward march of cloud computing, bringing new models to the mobile space or seeking to attract large corporates, providing a high quality customer experience is at the heart of these strategies.

Erwan Ménard, vice president and general manager for HP’s communications and media solutions, focused on this point. Quoting Yankee Group’s vice president for next generation software systems, Ari Banerjee, he said: “In an increasingly competitive market, customer experience is emerging as a top priority for service providers.”

Ménard highlighted that current complex process maps simply don’t focus enough on the points at which the customer touches the network. However, much functionality exists already within carriers that can be used to innovate and transform the customer experience.

Even areas as prosaic as back office functions can be maximised to deliver improved customer experience, he pointed out. For Ménard, all innovation must be supported by innovative processes that can be both used to ensure efficiency of new services and also ensure a decent quality of experience for users. GTB