Innovation needs to drive revenue generation as the telecoms market faces huge challenges in the rise of flat rate data usage, said speakers at this year’s GTB Innovation Summit. The answers are out there in labs, forums, board rooms and collaborative projects, writes George Malim 
 
 
Ibrahim Gedeon, Telus: The people who thought it would
fail were more than those who thought it would succeed  

 
Ibrahim Gedeon, the CTO of Telus, was the first speaker at this year’s Global Telecoms Business Innovation Summit. He came to talk about Canada’s OneAPI pilot which has seen the country’s three leading operators — Telus, Rogers and Bell Canada — come together, under the stewardship of the GSM Association, to make Canada the first country in the world to make a single API available to developers.
Global Telecoms Business gathered some of the world’s leading innovators to meet in the afternoon before the presentation of this year’s GTB Innovation Awards. Their theme was driving innovation and change with IP transformation.
“There is a need for OneAPI,” said Gedeon at the conference. “The ecosystem is very simple but we couldn’t do it alone. The GSMA did a wonderful job helping us to sell [the concept] to our competitors. The people who thought it would fail were more than those who thought it would succeed.”
It’s not hard to blame them. Bringing together three long-term rivals for the common good is something seldom achieved in telecoms and Gedeon doesn’t pretend the process was easy. “Having three operators involved means there were three opinions,” he said. “Actually there were more like nine different opinions composed of three technology opinions, three product opinions and three marketing opinions. The bulk of the challenges have not been technical.”
With an addressable customer base of approximately 22 million, the operators involved provide a significant market for OneAPI developers to tap into. They’ve been attracted by the clarity that it provides and the billing and network capabilities the operators can supply.
“We got 178 developers on side without advertising,” said Gedeon, who acknowledged that OneAPI isn’t looking to compete with app store ecosystems. “We’re not trying to fight the ecosystems,” he said. “As an operator, I need to generate revenues and demonstrate there’s still goodness in the network. With 25 million subscribers, you’re not going to compete with the ecosystems, with 50 million to 100 million, you have got an ecosystem.”
“We’re not doing it because we’re fantastic people,” he added. “We’re in it for our share of the revenue.”
Gedeon’s presentation was followed by an exploration of how to build a profitable business in mobile broadband services by Ramez Younan, CEO of Orga Systems. “By 2012, it’s estimated that around 30% of mobile operators’ revenue will come from mobile data — in Europe, it’s already 60% — but revenues have been shrinking by 15% each year and margins are shrinking to almost nothing,” he said. “At the same time, network costs are expected to triple so when you put all those figures together, operators will lose money by 2012. I personally think service providers will start losing money earlier than 2012.” 

 

Ramez Younan, Orga Systems: By 2012 around 30% of
mobile operators’ revenue will come from mobile data

The data usage that industry has waited on for so long has arrived and arrived with such volume that it has destabilised the industry. The only ways forward, said Younan, are to charge users based on their usage and continue to strip costs out of operations. “You can’t differentiate the services you provide on payment method, you need to differentiate on usage patterns,” he said. “What I hate most is a student somewhere downloading video from YouTube and taking up the capacity of 500,000 SMSs.”
He advocated policy management to more tightly couple charges with usage. “The student, instead of just being cut off, needs to get an offer of online charging. By doing that you immediately increase the revenue stream from the customer that is causing you the problem in the first place,” said Younan.
“Operators are finding themselves forced by customers, governments and [regulators] to provide unlimited access to anybody at any time. But operators need, at some point, to stand back and say: ‘we need to make money’.”
Nektarios Georgalas, principal ICT researcher at BT, identified the company’s priorities for the coming year as content, television, the cloud and fibre.
“This takes us from operator communications to broadcasting,” he said. “In the labs we have several ideas about business models where we can see a service provider adding value in the cloud arena,” he said. “Another innovation area is pre-emptive operations. The focus has shifted onto the customer experience. It’s about successfully improving the customer experience as we go more proactive and take more predictive approaches.”
For Bruce Pollendine, business director for Northern Europe of XConnect, it was clear that new business models will emerge and, by necessity, operators will have their part to play. “Our business model is entirely dependent on having close working relationships between service providers and operators,” he said.
Georgalas said it was a matter of responding to the key elements demanded by partners and customers. “Make sure you get there first and make money,” he said. “Speed of innovation and speed of delivery of innovation are critical.”
Operators are looking to innovation to differentiate and IP is seen as key enabler of a new breed of innovative service propositions. “Within the operator community there is a wealth of development going on around IP,” said Pollendine. “Operators look to differentiate based on innovation.”
Thierry Bonhomme, executive vice president of research and development, networks, service platforms and infrastructure at France Telecom Orange, said that operators still have to bring value in terms of innovation.
“I won’t claim the network provider should be the sole player,” he said. “But the value the network brings shouldn’t be minimised. There’s a huge transformation in the ecosystem of the traditional layers of vendors of equipment, applications and content. The aim for each is to be closer to the client and generate value from that position.” 


Thierry Bonhomme, France Telecom Orange: Innovation
success combines the knowledge and skills from other players

The nature of innovation has changed, he said; “The arrival of Google and YouTube and others has created a market for innovation and sped up the way innovation is delivered in the market,” he said. “Innovation success in the future is innovation that combines the knowledge and skills from other players and will balance a new business model based on revenue share among those players.”
Rick Halton, vice president of marketing at Hewlett-Packard, also identified the shifting business models that surround telecoms and their effect on innovation in his presentation. “Finally customers are getting what they want and, from their perspective, that’s great,” he said. “However, operators are coming from a [traditionally] metered industry and that has now radically changed. There’s so much capital expenditure to pump into LTE deployment and the move to all-IP has resulted in services needing to be delivered over fragmented assets.” 

 
 
Rick Halton, HP: business models are about channels to
market, building a lifetime digital relationship
High quality experiences need to be delivered across those fragmented assets. “Customer experience management is end to end but a lot of the processes are broken up across different organisational units in a business,” added Halton.
“Business models are about channels to market, they’re about building a lifetime digital relationship. For operators, it has become a marketing issue and it’s about making their ecosystems more attractive through payments and value add so people come to them.”
Do industry bodies stimulate or slow down innovation? Keith Willetts, founder and chairman of the TM Forum, took part in a panel discussion on the theme, stating that associations really only exist to reflect the needs of their members. 
 

Keith Willetts, TM Forum: the hardest part about successful
collaboration is that it depends on the spot on the
landscape you pick
 
“Industry associations go where the industry they serve needs them to go,” he said. “You can’t solve the problems of a company in an industry body. To me, the hardest part about successful collaboration is that it depends entirely on the spot on the landscape that you pick. If everyone agrees it moves very fast but if they don’t, you need to find another spot.”
Graham Trickey, senior director the GSM Association, pinpointed three key functions of his association. “We have the freedom to innovate, we have people able to think out of the box about the major issues in the industry,” he said. “Associations are also about connectivity — it’s about finding the right people in the right silos. Finally there’s a benefit to the way we’re organised. Our board is composed of CXOs from the top 22 or 23 telecoms operators and we’re clearly owned and controlled by those people.”
Robin Mersh, COO of the Broadband Forum, said that industry bodies also have a serious role to play in establishing standards in addition to facilitating contacts and identifying target areas to work on. “Innovation needs to be underpinned by the work you do in standards bodies,” he said. “There’s no point in trying to invent technology just for yourself.”
Providing an operator view of industry bodies, Margaret Morosi, head of global services at Deutsche Telekom, said; “We work with quite a number of different bodies,” she said. “Industry bodies aren’t inventing technologies and services, they’re developing processes. We have some we can work well with and some we have to push and introduce ideas to.” 

 
 
Margaret Morosi, Deutsche Telekom: Industry bodies
aren’t inventing technologies and services, they’re
developing processes

For Quintin Lew, vice president of Verizon, participation is important. “We participate in all the technology forums,” he said. “Our technical representatives are clearly part of those and prominent members. We also have our own interoperability programme run by our labs.”
The summit concluded with a presentation from Nan Chen, president of the Metro Ethernet Forum, who explained the concept behind newly created CENX, the first carrier ethernet neutral exchange provider.
CENX provides secure, flexible and virtual interconnect to a member-tailored marketplace for buying and selling service providers. “Carrier ethernet’s success is not because it’s the best technology,” said Chen, who is president of CENX.
“It’s because it’s the best cheapest technology. CENX provides an interconnect point between service providers that facilitates the exchange of carrier ethernet services. Carrier ethernet exchanges enable a clear road ahead to revenue growth, low costs and global interconnection.”
The Innovation Summit was sponsored by HP and Orga Systems. GTB