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Monday, January 9, 2012

Telco 2.0™ is a collection of research, brainstorming and consulting services designed to catalyse change in the Telecoms-Media-Technology sector.
The Initiative stimulates new ways of thinking about Business Models, Service Portfolios and Technical Architectures.
Created by boutique analyst and consulting company, STL Partners, the Telco 2.0™ Initiative was launched in May 2006 and is supported by the GSM Association, among other organisations around the world.
Since we launched the concept of the 'Two-Sided Telecoms Business Model', the approach has been finding increasing resonance at senior levels in both mature and fast growth markets.

Why does it exist?

Key challenges for strategists who work in or with the telecoms industry are:
  • Overall Strategy: How is the digital economy evolving, what are the best strategic responses and the most profitable market opportunities?
  • Voice and Messaging: How best to innovate core service offerings to add value and grow revenues?
  • Data and Broadband: How to ensure incentives and rewards are better aligned across the [digital content] value chain?
  • New Communications Services: How can latent telecoms capabilities be better exploited to address new market opportunities?

Conventional Answers are Unsatisfactory

Leading strategists now agree that today's predominant 'one-sided' telecoms business model does not provide sufficient answers to these questions, for telcos or for other players in the digital economy. Something new is needed.

Challenges to the Telecoms Industry

IP has changed the game and many growth markets are maturing rapidly. The lines between industries are blurring and everyone is after the same consumers. This is causing disruption in the telco industry, for operators and their partners. Greater levels of creativity are needed to address the following issues:
  • The vertically integrated Telecoms business model is under attack from all sides: tougher regulation, new technology (most notably VoIP and open spectrum), disintermediatory new entrants, and advancing customer expectations.
  • P/E ratios suggest little investor belief in this improving. They have low confidence in 'converged' or triple/quadruple-play bundles providing high returns.
  • Operators are making investment decisions in Network & IT, Products & Services, and Mergers & Acquisitions without a clear view of the future.
  • 92% of respondents to an STL online survey replied that 're-thinking the strategic role of the operator' is a key priority.
  • 85% of senior execs said the current telco business model will no longer deliver sufficient growth. (Telco 2.0 Survey, November 2008)
  • There is an urgent need for all players in the telecoms value chain to review and renew their business models.

The Opportunity

Fortunately telecom's companies possess a whole host of assets that could be exploited much more to support new, sustainable market growth. The key is for telcos to create open platforms that help other service providers (enterprises, SMEs and government) interact with end-users in more efficient ways than they can today.

Telco 2.0™ 'two-sided' telecoms business model

Telco 2.0™ 'two-sided' telecoms business model
We call this the 'two-sided' telecoms business model, delivering value to and generating revenue from 3rd party service providers as well as end-users. The 'two-sided' business model has consequences for the design of existing services such as conventional voice, messaging and data/broadband products (e.g. see Voice & Messaging 2.0 "What to learn from - and how to compete with - Internet Communications Services") and also creates opportunities to create new revenues and B2B Platform Services.
Our analysis shows that in 10 years time this new business model could deliver up to 30% growth in annual revenues to operators and dramatically enhance the value of the industry to the wider 'digital economy' (Please see: Future Broadband Business Models "Beyond bundling: winning the new $250Bn delivery game" and The 2-Sided Telecoms Market Opportunity"Sizing the new $125Bn platform services opportunity")
To realise this ambition we need to re-think not only our organisational and technology structures, but also how we collaborate across a wider ecosystem.

How to get involved?

  • To start to explore the opportunities in more depth see our reports or attend one of our Executive Brainstorm events
  • To access our searchable knowledge base of information, case studies and learning, please see our Executive Briefing Subscription Service here
  • To engage and act with the industry we invite Telcos to join the Telco 2.0™ Operators Club and Vendors join the Telco 2.0™ Partners Programme
    (email: contact@telco2.net)
  • To explore the strategies appropriate to your organisation arising from these developments use our consulting services
  • We also use our insights, contacts and experience to help clients evaluate and implement innovative strategies and applications, and to create new business opportunities - email contact@telco2.net
  • To keep up to date with the latest news please see our widely read blog or sign up to our newsletter
  • For more detail, please see the full Telco 2.0™ Manifesto

Telco 2.0: The Future Of Telecoms

Telecoms: Will they be the owners of all future content distribution channels?
"Traditionally, telecom companies simply offered various types of phone services and connectivity, and moved lots of data around - maintaining and constantly improving pipes & networks was the primary mission."

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Photo credit: Ann Triling
Today, the basic connectivity offerings have become seriously commoditized: prices are dropping towards zero in a ‘feels like free’ way, and due to the ever-increasing P2Paction the comfortable old position of being a ‘dump pipe’ is no longer a viable option,no matter which way you look at it.
The bottom line is that there is no way that Content and Services will not end up packaged into those expensive pipes, cables and wireless networks.
But take note of those keywords: PACKAGED and BUNDLED and Feels Like Free.

The Future of Telecoms


by Gerd Leonhard
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Increasingly, the Future of Telecoms is more in the com than in the tele; in facilitating communications based on, around and ‘lubricated’ with Content and Services.
Voice traffic will only be a small and probably diminishing slice of the pie here - similar to how CDs and digital music ‘unit sales’ will make up only a fraction of the future revenues of record labels.
In a networked ecosystem that wants to serve and empower those pesky ‘always-on’ digital natives, telcos and operators have no choice but to branch out into adjacent or even completely alien sectors - if they don’t, other players such as device & handset manufacturers, web portals, social networks and search engines will feel compelled to fill the gaps and push the pipe & network guys further and further down to the bottom of a digital ecosystem that has only just now begun to flourish (remember: only about 2% of the world is on broadband, today - there is a long way to go, yet). Imagine a Facebook Mobile Network, a Samsung Mobile Video Platform, and (of course) a Google eBook Reader?



Content Re-Defined


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Clearly, those Web0.0 ‘dumb pipes & walled garden’ concepts are dead and gone - now it is all about what comes through those pipes, not where they come from.
And crucially, content must now be defined in a much broader way: not just as a piece of ‘professionally made’ and bona-fide copyrightable work that is being transmitted but also inclusive of all the surrounding user interactions, attention kernels and clickstreams (oooopps... sorry for the geek speak).
Context becomes very valuable Content, too.
TwitterMusic, Google VidRead, Gone.MTV, Skype.TV, MotoTube…



Media 2.0


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For telcos, it’s about time to get into a new game, and it’s called Media2.0 - a vast and mind-boggling opportunity for (pro)aggressive networks to literally leapfrog over some of those incumbent and still future-shocked media companies, giving birth to or simply fueling new disruptors that could very well be the next Viacom, CBS, BBC or Warner MusicDeutsche Telekom, Orange or Telefonica should have boughtLast.fm, not CBS!
Now, witness Nokia packaging UMG’s and SonyBMG’s music into their handsets, and sell it together.
Witness Google trying to package ‘free music’ into their Top100.cn search engine in China; witness CBS’s Last.fm API’ing ‘free interactive, on-demand music’ into social networks.
Services such as Last.FMPandoraFlickrand Twitter (and there are many others) already make heavy use the telco’s networks to ship and distribute data at an ever increasing pace and volume.

Now, many telecoms and network operators
 around the world are starting to realize where their future is taking them: Content +ConText+Communications+Services+ Ads2.0.
So let’s plot a few futuristic scenarios:
 Twitter may just start to provide pre-loaded content-’links’; users would be able to receive messages with a hot medialink to a file that is pre-loaded somewhere, and instantly stream it via any flash-enabled mobile device. MicroMedia anyone?
A telco (Verizon? SingTel? TMobile?) will buy whatever is left of SonyBMG when Bertelsmann finally drops out of the joint venture; and SK Telecom may well end up buying a majority stake in Warner Music, globally (they do already own 50% of their Korean JV with WMG).
My take is that Music2.0 is likely to coincide with Telco2.0 if the large (but quickly shrinking) music conglomerates and the forever-at-snail-pace music rights organizations keep on playing hard-to get with anyone that has the audacity to want to actually use their music legally.
China Mobile will start ChinaSpace, a social network build around content that is generated entirely by the users (or shall we say Usators).



The New Music Business


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Within 18-24 months, a major telecom (Vodafone? Telefonica? NTT?) will announce that they are entering the music business. They will start from scratch, unencumbered with back-catalog, contracts and Music1.0 (;) people and concerns, working with new artists and with those well-known brand name acts that have finally left their labels for good, riffing off the various Music2.0 blue-prints that have been making their way around the Net (including my own humble Music2.0 book I hope;).
This will be fueled by the fact many incumbent record labels (no, not just the major labels and the RIAA) have famously succeeded in being ubiquitously hated by the music fans i.e. the users, their artists, the general public, and - you guessed it - the telecom execs, themselves. Ten years of back-patting and spending 100s of Millions of $ to convince these guys to somehow give the consumers what they really want - no wonder there is serious thirst for revenge here.
Telcos are fed up and will cut their slavish ties to the old major label system in the next 9-18 months.
Flat-rate music offerings will become a standard - and fuel the telcos of tomorrow.
Smarter toll-booths for more traffic.



Other Likely Scenarios


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Skype will be sold by eBay to either a major social network (F….k?) or a major telecom, and will come back full circle to how it got started: a powerful network for sharing data the cheapest possible way, be it phone calls or other bits and bytes i.e. content (read: music, film, TV, books...). Skype is where legal P2P will happen, first.
Within 12-18 months, together with Google, one of the leading advertising and communication agencies will strike a deal with a major telco and jointly launch ad-supported and user-generated content services based on an  Advertising2.0approach, completely side-stepping traditional content production and licensing procedures and offering new artists (and out-of-contract acts) yet another way to go direct.



Recommendations for Telcos


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So, dear Telcos, Operators and ISPs, here are my 2 cents:
  1. Stop worrying about pleasing the incumbent music & media industry players and ‘the studios’- either they will follow your lead and give five billion users what they want, how they want it, or you need to leave them behind as quickly as possible.
  2. Play your hand now for it is strong: you have the network, you have the users, you have the billing relationships - you can get the content the way you need it, too!
  3. Like the Radio and Broadcasting Industries before you, start by demanding a new, standardized blanket license for full-length, interactive music streaming followed by unlimited downloading of music on digital networks; and while this is being negotiated start making deals with Ad Agencies and Advertisers to prep the Advertising2.0 pipeline.
  4. It’s music first and then Film, Video, TV…. $700 Billion of Advertising per year are ready to be traded in this battle for content in return for attention. Seize the day.




More Info


Some sources of inspiration for this Future Story:
IBM Future of Advertising Report
Telco2.0 Two-sided business model
Telco2.0 Blog
Edelmann Trust Report



Originally written by Gerd Leonhard for MediaFuturist and first published on 20th May 2008 as " The Future of Telcos" (PDF)


Gerd Leonhard is a media futurist as well as an author and writer, a media and Internet entrepreneur, a strategic advisor, and a keynote speaker & presenter.
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If you want to get a good feel for what he does, you can check out Gerd's blog MediaFuturist, or watch some videos from the new Media Conversations Future Talksseries (to select an episode just click on the book icon / guide button, and go from there). You can also visit  his Youtube channel, or subscribe to his video feed.



Photocredits
The Future of Telcos - Content & Service Pipes: Yin Chern Ng
The Future of Telecoms: Tomasz Trojanowski
Content Re-Defined: Kin Hang Norman Chan
Media 2.0: Goran Stojanovic
The New Music Business: Arnlod Turner
Other Likely Scenarios: Hypermania
Recommendations: Yuri Arcurs
Gerd Leonhard -
Reference: MediaFuturist [  Read more ]


Link:http://www.masternewmedia.org/news/2008/06/19/telco_20_the_future_of.htm#ixzz1j1CJdLPI

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