That’s not a health warning, but a fact, based on a 38-country study* of 51 communication service providers’ business SaaS portfolios that I’ve just completed.

Microsoft powers an astonishing 51% of these CSPs’ productivity and collaboration offers. Want a SaaS equivalent to The Economist magazine’s Big Mac Index? Et voilà!

A tall order

CSPs hope Office 365 – viewed as well featured and from a trusted brand – will acclimatize enterprises to SaaS, trigger volume migration and, ultimately, enable top-line revenue growth.

Maybe it could all come true – if only CSPs had more to sell and less competition.

The term ‘SaaS marketplace’ sounds big and sexy, but it’s aspirational for now. The typical CSP works with no more than six business-SaaS partners.

Utilitarianism rules: Portfolios are designed to benefit the widest horizontal base of employees.

Worryingly, most CSPs (based on their current portfolios) believe this to be a white-collar employee working on a PC in a traditional office. Really?

Empty calories

It will take more than a one-size-fits-all commodity SaaS strategy for CSPs to profit.

Selling, say, the P1 plan (see graph) is a beginning, not a conclusion.

According to Informa’s 2013 Industry Outlook survey – which polled more than 200 CSPs worldwide – LTE and cloud services lead top-line growth expectations.

Yet barely a third of CSPs bundle broadband (their core revenue stream) with SaaS as a standard offer in their official SaaS marketplaces.

Islands of SaaS also exist in siloed fiefdoms – like mobile appstores and M2M marketplaces – often marooned by incompatible service delivery platforms.

Meanwhile, CSPs’ competitors are multiplying.

There’s Microsoft’s own Office 365 Marketplace, Amazon Web Services’ Marketplace, Rackspace’s Cloud Tools Marketplace, and the marketplaces of IT distributors Ingram Micro and Tech Data, to name a few.

A balanced diet

The latest gastronomic trend is foraging. It’s about finding goodness in the wild, on local land.

I think this can work for CSPs too.

Start at Kilometer Zero. Replace the chanterelles with local SaaS. Get attuned to what small businesses – the primary target for business SaaS – really need. Develop menus that cater to large affinity groups.

The Big Mac may be a ‘communion wafer for consumption,’ but a healthy diet is all about balance.

(*Note: The Informa CSP@SaaS Pricing Benchmark and accompanying report are now available on the Informa Telecoms & Media Intelligence Center.)

Telecom trials LTE in New Zealand

New Zealand operator Telecom has begun trialling its LTE network in parts of Wellington and Auckland. The firm said it is aiming to launch the new network late in 2013 or early in 2014.

Alcatel-Lucent will run the trial in the Lower Hutt area of Wellington using the 2600MHz spectrum. The Auckland trial will take place in parts of the North Shore, also on the 2600MHz spectrum, and will be conducted by Huawei.

Both trial areas include residential and light industrial property, a section of motorway and small–to–medium enterprises. Telecom said that this allows it to test the technology and customer experience in a variety of contexts.

The firm is also planning two smaller trials of 4G LTE outside of the main centres. Alcatel-Lucent will conduct a trial on behalf of Telecom in a rural part of southern Hawke’s Bay on the 700MHz spectrum, which will become available after the switch over to digital television, and Huawei will trial LTE at 1800MHz and 2600MHz frequencies in a small area of Rotorua.

“Telecom’s 100 per cent 3G smartphone network, which is built specifically for smartphones, already provides a very good quality experience for our customers. We have made this even better with the rollout of dual carrier HSPA+ technology to almost 30 per cent of the network, and we plan to extend this to nearly 50 per cent of the network early in the New Year,” said Telecom general manager for mobile products, Ed Hyde.

“With such a solid network available to Telecom customers already, moving to a 4G LTE network is all about building for the future. The communications and technology services a 4G LTE network will deliver can, and will, change lives. Whether it is by giving health professionals enhanced access to real-time, high quality video communication with patients in their homes, or dramatically increasing the productivity of businesses with a mobile workforce, Telecom believes this network will be crucial for New Zealand’s future.”

The first phase of the trial will run until mid-February.

All aboard! France’s SNCF wants your cheeks on a seat – but not necessarily on a train.

With Olympics trade in mind, the French rail giant just launched a Paris-to-London coach service. Branded idBus, the service claims a four-star experience at a two-star price.

An odd move for a global leader in rail transport?

It’s actually an important object lesson in fighting OTT that telecom operators can learn from.

~~~

• LESSON 1 – If you can’t beat them, join them

This is OTT realpolitik: SNCF is fighting disruptive competition on many fronts. Low-cost airlines like Easyjet and Ryanair, Megabus and Eurolines coaches offer cut-price travel to students and other budget-conscious travellers. Sweeping changes in EU transport rules mean that various passenger and freight routes are now up for competition.

• LESSON 2 –  Make it simple

No confusion marketing here: SNCF’s idBus prices are fixed with no hidden extras. Paris to London costs between Euro 49 to 65. Until the end of 2012, a third of seats on all idBus European routes will cost 5 Euros. SNCF thinks this will attract up to a quarter of a million passengers and 75% occupancy in 2012.

• LESSON 3 – Focus on customer experience

It’s not cattle herding: The idBus fleet offers luxury coaches with generous legroom, wheelchair access and customers can choose their seats. Technology is a critical differentiator: Each bus offers totally free Wi-Fi with in-seat power sockets for connected devices (Eurostar won’t limp into the Wi-Fi era until 2013*). Customers get real-time information on their route since each coach is tracked via GPS.

• LESSON 4 – Think outside of your box

Driving this initiative is a new recruit: Barbara Dalibard (pictured below, far right). Now boss of SNCF Voyages, she helmed Orange’s Euro 7.1  billion enterprise division Orange Business Services until 2010. She’s injected fresh ideas into the incumbent of a mature industry.

CONNECTED VERTICALS

Sound familiar? This kind of lateral thinking is exactly what the telecom industry needs to embrace.  As SNCF’s example underscores, telecom innovation can bring dynamism into adjacent industries – but telecom can also learn by interacting beyond its traditional borders. Understanding this is the real fast-track to success in OTT and Connected Verticals.

*Working with Bouygues Telecom, Orange and SFR, Alcatel-Lucent has just implemented technology for Eurotunnel to support mobile connectivity – but only in the Channel Tunnel.

For further discussion of these issues, the white paper: Connected Verticals: Opportunities in Transport and Energy is freely downloadable from Slideshare, along with other content from Informa’s Enterprise Verticals research and consultancy practice.

If you watched Wimbledon’s epic showdown live on television,  then you have Telstar to thank.

Launched 50 years ago, the Telstar-1 satellite,  brainchild of Bell Labs, made international live broadcasts possible. On July 10, 1962, the age of global communications truly began.

Telstar was a very big deal for AT&T and the U.S. government. Countering Soviet space superiority was not the only reason. Space was AT&T’s newest money-making pursuit.

But mere weeks after Telstar’s launch, John F. Kennedy’s Communications Satellite Act prevented AT&T’s Bell System monopoly from extending into space.

It was a sure sign of things to come. In 1982, the U.S. Department of Justice finally secured victory: agreement to break up the Bell System – that vast arsenal of vertically-integrated assets which once controlled 90% of the U.S. telecom industry.*

The forgotten anniversary

Unlike Telstar, there will be no anniversary celebrations for what’s known as the Modification of Final Judgment. Yet it was a landmark in anti-trust history that – 30 years later – is still relevant today.

In 2012, anti-trust scrutiny is focusing on Apple, Facebook, Google and Microsoft.

Regulators are asking if these companies’ digital services distort markets. For some, the focus is also on their collection and use of personal data - a critical issue when our opinions and preferences are their profit engine.

Regulators’ unenviable task is to determine when market dominance becomes abuse and to whose detriment. But can regulators keep up in a digital economy where new hegemonies can appear overnight?

The skull beneath the skin

If you care to peel back the skin, several non-telcos driving the digital economy now share a surprisingly similar bone structure with the Bell System. Facebook is venturing into submarine cable ownership; Google already has. Physical telecom assets are increasingly cool and necessary.

Not least, Google’s involvement in the O3b satellite system – due to launch in 2013 – has the potential to be as defining as Telstar. O3b aims to serve the 3 billion people in emerging markets currently without broadband connectivity.

That’s a powerful capability for a company that could now subsidize a first world smartphone for the rising third world.

Who’s the incumbent now?

What’s curious is that inheritors of several Bell System assets – Alcatel-Lucent (owner of Bell Labs) and Ericsson (owner of Bellcore/Telcordia) – now seem prouder of their telecom heritage than the telcos themselves.

Perhaps it was luck, but when I last met Alcatel-Lucent’s Ben Verwaayen, his assistant Christine ushered me into his office wearing an iconic red telephone box dress.

Verwaayen is deeply concerned that basic telecom infrastructure should continue to be built – particularly in Europe – but with costs and access fairly apportioned across its beneficiaries.

Meanwhile, although Ericsson’s Hans Vestberg took convincing that his 137-year-old company shares a familial lineage with Google and the Bell System, he told me he’d certainly like Google’s valuation.

What’s more, with access to 900 million telco subscribers through Ericsson’smanaged services deals, I reckon he’s got the wherewithal to give the likes of Google a bloody nose in some areas.

The next 50 years

So where does this leave the telcos? Saying mea culpa for past misdeeds won’t pay next month’s rent.

As their competitors and partners architect vertically-integrated business models, telcos like AT&T, Deutsche Telekom, Orange, Singtel and Telefónica are pursuing a profoundly outward urge to capture digital innovation.

Exactly what they’ll celebrate in the future remains unknown, but they won’t simply rely on past glories.

For further analysis of these issues, my presentation: The New Incumbents: Anti-Trust in the Digital Economy is freely downloadable from Slideshare.

*The actual breakup came in 1984.

But that’s exactly the point.  The European Commission’s Digital Agenda for Europe doesn’t want old school methods to talk to citizens or to broadcast its views.

Instead, it wants to involve every European in critical decisions that will help stimulate Europe’s digital economy – knowing that these decisions are tightly linked to the European Union’s entire future.

Lead by example

No slouch on Twitter herself, Digital Agenda commissioner and EC vice president Neelie Kroes(46,376 tweeps) is not alone among her peers to embrace social media.

This was fully in evidence last week during the Digital Agenda Assembly, a two-day EC-run conference where the #da12 hashtag reached out to an estimated 20 million people – that’s 4% of the European Union’s population.

Physically run in Brussels, the eight workgroup discussions – with topics ranging from broadband, cloud computing, e-commerce and entrepreneurship – were streamed live, tweeted, Facebooked and blogged.

We want you

But don’t call this e-government. This is We-Government, an emerging term for the use of digital social tools between citizens and governments to interact, co-create and solve problems.

Can such methods succeed? #da12 was not a discussion among mandarins. Stakeholders included a farmer leading a community fiber network build in rural England (see the excellent B4RN project), technology leaders like Alcatel-Lucent’s Ben Verwaayen and many others.

Nor was this political debate controlled via airbrush, satellite outage or truncheon.

Critics might say that no decisions were reached, that #da12 was just a talking shop. But that will only be true if the fundamental purpose of We-Government is ignored.

Now, it really is up to us.

African Undersea Cables: Steve Song, Many Possibilities

Africa is my destination this week. I’m on a mission that’s both personal and professional.

Officially, I’m here to work with clients, catch up with our growing regional team and speak at Informa’s inaugural Cloud Africa Summit.

Unofficially, I hope to prove myself wrong about the déjà vu that I feel about aspects of Africa’s ICT market.

The IMF just said that sub-Saharan Africa is beginning to stand on its own feet, pointing to its sustained and major progress since the millennium.

Not least, financier George Soros recently described Africa as ‘one of the few bright spots on the gloomy global economic horizon.’ (And having met and worked for Mr. Soros, I warrant that he pulls no punches.)

Great leaps forward?
Meanwhile, progress in ICT – which is intimately linked to economic health – rarely traces a smooth curve. Take the international Internet bandwidth spike from new African submarine cables.

Lighting the long-awaited EASSy cable gave countries like Kenya 10 times more capacity overnight. And only two weeks ago, the 5.1Tbps WACS cable landed in South Africa to great fanfare. More cables are to come.

Africa’s outrageous international bandwidth prices are well under attack. But let’s hope that’s not the whole story.

Plus ça change
As a veteran of Europe’s bandwidth bloodbath, this all seems eerily familiar. My concern: A race to the bottom in international (wholesale) bandwidth pricing, and poor attention on fundamentals. What do I mean by fundamentals? I mean the critical need to close the loop by providing local and personal on-ramps to digital superhighways and clouds.

A rough calculation suggests that Kenya’s international internet bandwidth exhibited a 140% CAGR between 2005 and 2010. Yet personal access still equates to only 2,378bps per capita, according ITU figures for 2010. And Kenya is better off than most on some metrics: Smartphone penetration of mobile handsets is 14% versus South Africa’s 22% and Uganda’s 2%, per Informa estimates.

A delicate ecosystem
In 2003, I co-authored a major market study of the South African telecom market for the South African Department of Communications. My specific remit was to evaluate enterprise and wholesale services, size the market and detail its prospects and impediments.

In some ways, nothing has changed: Being a successful digital society still means keeping a delicate ecosystem in balance. That ecosystem includes many elements – and it’s not just submarine cables. Terrestrial fiber, spectrum, Internet exchange points and datacenters are among the telecom assets also required. But that is certainly not all. Affordable devices, ICT literacy and investment, rule of law and many other factors are highly relevant.

Enter the Cloud
With some irony, I reread these nine-year-old words:

Many [telecom operators] are exploring expansion into the IT services space as a way to increase wallet share with business customers.

Hosted IP telephony can help businesses increase their productivity by virtually eliminating the boundaries of the workplace [and] will become the foundation on which all other services will be built.

Indeed! And as Informa’s Telecom Cloud Monitor indicates, African operators like MTN, Safaricom and Vodacom are among those taking action. The cloud’s operational model offers extraordinary new opportunities.

But let’s be very clear: Every new kilometer of sub-sea cable and square meter of server space is only part of what Africa’s ecosystem needs to become truly digital.

Research carried out by industry analyst Ovum indicates that while operators in other regions showed little signs of feeling the credit crunch during the third quarter, their European counterparts saw revenue generating prospects shrink.

Last month we reported that the North American mobile market has so far withstood the economic turbulence, helped largely by the rise in two year mobile contracts. While operators in the emerging markets continued to enjoy generous revenue growth rates, with Africa and Latin America carriers reporting double digit revenue growth rates.

“Unlike other regions where the mobile market has proved resilient so far, the third quarter financial results of Europe’s top mobile operators show a marked, credit-crunch-induced deterioration in their performance”, said Emeka Obiodu, senior analyst at Ovum.

However, the good news is that Ovum does not anticipate a major slowdown for the mobile telecoms industry. Although some operators may become vulnerable, the market remains overwhelmingly buoyant and is expected to ride out the financial crises.

“Reassuringly, the basics of the mobile market are still intact,” said Obiodu. “Mobile services have become the de-facto consumer communication tool of choice, and with an increasing shift to postpaid contracts, plus the opportunities enabled by high-speed mobile data services, there is still money out there to be made in the mobile market.”

The research reaffirms similar projections made by telecoms.com parent and industry analyst Informa Telecoms & Media last week.

Analysts advised operators to get their house in order and focus on the customer service experience. The name of the game next year will be retention over acquisition, so carriers should place the highest value customers at the top of their Christmas card list.

So while the reigning in of capex, generally viewed as a last resort measure, will principally be driven by a microscopic focus on stripping out excess operating expenditure and not a blind cost cutting exercise, in terms of opex, Informa expects saving initiatives to focus on advertising and publicity, acquisition and retention costs, discretionary expenses such as travel, training, conferences and consultants, and headcount – where cuts are being already being made.

Italy’s Telecom Italia has announced plans to cut costs by around Eur2bn in 2009, as well as offload non core assets to the tune of a further Eur3bn. Part of the restructuring plan includes the slashing of a further 4,000 jobs in Italy.

Under the Italian operator’s 2009-2011 plan, 40 per cent of the targeted cost efficiencies will be achieved in 2009, through network operations, building and energy simplifications; sales and distribution and customer operations programmes; and general organisation streamlining.

Non core assets, which fall outside the scope of the business plan, will be offloaded to contribute a further Eur3bn in cash flow.

At an event in London on Wednesday, Telecom Italia CEO Franco Bernabe, said: “The conditions that have since emerged on the market and in the real economy mean that it is necessary to be even more incisive in our priority of debt reduction. In the light of our results, which in the meantime have shown a slow down in margin erosion, we are now in a position to move forward with this three-year plan confirming the path we went through in recent months.

We will strive even harder to keep operating costs and investments in check, maintain a business with a scope that matches our current needs, and pursue our target of bringing down debt to around 2.3 times our EBITDA.”

Bernabe said future growth is expected to come from Italy and Brazil, and to a lesser degree, from Argentina.

In its domestic market, the carrier plans to drive growth in revenues from broadband, which it expects to account for 28 per cent of overall domestic revenues by 2011. The approach will be customer centric, with a focus on Quality of Service, Value Added Services, the development of IPTV, online advertising and digital home services, as well as the development of mobile broadband.

The group’s brand will also be revised to promote this customer centric approach as well as the company’s more convergent offerings.

In Brazil, the company intends to exploit the opportunities arising from fixed to mobile substitution, as well as using mobile as a broadband growth enabler. Telecom Italia forecasts more than 2.5 million mobile broadband customers by 2011, and an estimated market share in this sector of around 25 per cent.

In Argentina, TIM intends to expand its presence by exercising a call option to increase its shareholding in Sofora. This will be undertaken with the support of a local partner and will not require Telecom Italia to make any financial investment, the company said.

“Geographically, our growth will come from Italy and Brazil, without neglecting the Argentinean telecommunications market. Our business plan focuses on new services and enabling functions over fixed-line and mobile broadband. On the domestic market, our focus is on a new customer-centric approach, which is why we will be launching a new macro-organization starting from January 2009. We will continue to boost innovative businesses, as we work to promote wide-ranging development of the digital economy. We will also be updating and significantly rationalizing our brand architecture in 2009 to offer increased support for our range of convergent services,” said Bernabe.

The mobile division of Austrian carrier Telecom Austria said Friday it has started the first femtocell pilot in Central Europe.

Mobilkom has rolled out the technology with 35 selected residential and business customers throughout Austria, using kit from Chinese vendor Huawei.

As the carrier explains, a femtocell effectively creates an individual indoor 3G network connected to the core network via Telekom Austria’s DSL fixed line infrastructure. “This guarantees seamless indoor mobile coverage for both voice telephony and data transfer within buildings that have not had satisfactory network coverage to date, such as private homes, computing centres with thick concrete walls, and seminar rooms in hotels,” the company said.

Interest in femtocells is fast gathering momentum, with analyst house and telecoms.com parent Informa Telecoms & Media, recently predicting that more than half of all mobile data traffic is to be generated at home within the next five years, with voice not far behind, driving a clear case for the femto business model.

The explosive adoption of 3G dongles and ‘mobile broadband’ services is also firing interest in femtos, as operators begin to reach capacity in their various spectrum allocations.

This week Disruptive Wireless analyst Dean Bubley noted that, “Alarm bells have started to ring with the rate at which network capacity is being apparently used up.” The analyst says some operators have been forced to fire up second, third and even fourth carriers, “ie had filled up the initial 5MHz chunk of their 3G spectrum, and had started using another” – to meet demand.

“So given that most operators only have 10MHz or 15MHz paired allocations for 3G, it’s no surprise to see the panicked interest in femtocells, 900MHz refarming, 2.6GHz auctions and various approaches to adding or splitting cells,” Bubley said.

As a result, Malik Saadi, principal analyst at Informa, believes that if implemented properly, mobile access at home (MAH) solutions including femtocells, UMA/dual-mode, VCC/dual-mode, and alternative technologies are a potential solution.

By allowing operators to offload a substantial part of mobile traffic to the subscriber fixed line, MAH installations could potentially lead to significant savings by relaxing network capacity upgrade requirements and improving the coverage and capacity of mobile broadband access in the home environment.

Japanese operator SoftBank is to score a world first in January, when it becomes the first service provider to launch 3G femtocells in a commercial capacity. 2G versions of the technology have already been deployed by the likes of Sprint in the US, but the fast adoption of data services driving the need for a 3G version.

Mobilkom Austria’s pilot project will run until the second quarter of 2009, with the final product offering to be launched in the first half of next year.

French carrier France Telecom reassured investors on Thursday with financial results that bode well for the European telecoms sector, according to analysts.

The French incumbent posted a gross operating margin (equivalent to EBITDA) for the third quarter of Eur5.09bn, flat against the same period last year. Consolidated revenue climbed 2.3 per cent on a comparable basis to Eur13.5bn.

European telecoms analyst and sector strategist at the Daiwa Institute of Research, Michael Kovacocy, said the company’s results were generally bang in line with expectations and offered a reassuring outlook for operational and financial stability.

Revenues at the Personal Communication Services unit were up 5.1 per cent on a comparable basis to Eur7.6bn, as the number of mobile broadband customers almost doubled year on year to 23.2 million. Quarterly revenue at the Home Communication Services unit was down 1.2 per cent to Eur5.7bn due to price battles, and the decline in traditional telephone services. While Enterprise Communication Services recorded quarterly growth of 1.2 per cent, offsetting fears of business investment contraction.

Kovacocy notes that there was some language in the results which pointed to softness of demand in emerging markets due to the economic turbulence, but said he believes the impact on operations and financials to have been relatively minor so far.

However, the French carrier has still not shaken off bad reputation gained from its aborted attempt to take over Nordic carrier TeliaSonera. “France Telecom has still not adequately convinced the market nor us that its days of dangerous M&A are finished,” Kovacocy said. The analyst applauded recent moves into non-Francophone Africa, such as the company’s acquisitions in Uganda, Niger and Kenya, and a renewed interest in Ghana, but said that industry watchers would, “Continue to be wary of pan-European, non in-country consolidation, scale moves from the French powerhouse.” ]]> http://www.telecoms.com/4980/france-telecom-posts-reassuring-figures/feed/ 0