Sowing the seed of loyalty

Sowing the seed of loyalty

featuringCEM: Injecting CEM into every stage of the mobile customer lifecycle.

Smartphones: 2012 looks set to be a make-or-break year for several players in the high-end device market.

HOW CUSTOMER EXPERIENCE MANAGEMENT IS BEING USED AS THE NEW COMPETITIVE DIFFERENTIATOR

the future of wireless ISSUE 174 FEBRUARY 2012

OFC_MCI174.indd 1 09/02/2012 09:52

Telecoms.com is the leading provider of news and analysis, combined with in-depth features, exclusive interviews, industry reports and much more. Telecoms.com keeps over 80,000 unique monthly users up to date and in touch with the latest global technological advancements and market trends, addressing the key business and technology issues facing the industry.

For more information please contact Tim Banham on + (0)20 701 75218 or email [email protected]

www.telecoms.com

News, Analysis and Opinion for the global telecoms industry

Telecoms.com offers an extensive range of commercial solutions through different channels such as webinars, TV interviews, newsletters, print products, list rentals, events and custom-made opportunities.

Whether you are looking to reach senior decision makers within operators or vendors, our highly-targeted media solutions and vast industry database will ensure that your marketing message reaches the right people.

telecoms.com_advert.indd 1 07/02/2012 10:55

01Mobile Communications International | First for news, best for business

The leading source of news, analysis and opinion for the global telecoms IndustryVisit www.telecoms.com

Subscribe to MCI today! Email: [email protected] www.telecoms.com/magazine/

Front

Editorial

AnalysisUK regulator ofcom has revised its plans for 4G spectrum allocation. In India, meanwhile, a bungled allocation process for 2G spectrum has led to 122 licences being revoked. new rIM CEo thorsten Heins has his work cut out to improve the firm’s fortunes—while fortunes will be made by the Facebook IPo.

MCI IntErVIEw:

David Ffoulkes-Jones, CEO, WDSthe CEo of customer experience solutions provider wDS speaks to MCI as an introduction to our CEM special focus.

FEAtUrE

Customer Experience ManagementCEM needs to be injected into every element of the mobile operator’s business if it is to be successfully used as a differentiator. In three features, each covering a particular period of the customer lifespan, we look at how carriers are trying to put the customer experience at the forefront of their operations.

HAnDSEtS:

Smartphones 2011 was a tumultuous year for the smartphone sector, and it ended in dramatic fashion. 2012 will be a crucial year for several of them as new products and platforms are put to the test.

Applications and frameworks the software side of the mobile experience is in a state of flux, and 2012 may still be too early to place confident bets.

The future of the interface In 2012 the handset interface is all about the touchscreen. But alternatives are in development—from gesture recognition to flexible and wearable devices.

VEnDor VIEw:

Mike Coward, VP for strategy and innovation at radisys, argues that encryption does not mean the end for Deep Packet Inspection.

ExECUtIVE IntErVIEw:

Paul Bultema, UK and Ireland strategy lead for communications, media and technology at Accenture, talks about consolidation, differentiation and the rise of ott services.

tHE InForMEr

the Informer looks at some of the first financials of 2012 in a bid to divine the winners and losers of the year.

02

04

10

12

23

34

40

32

38

44

Broadband World Forum MENA25 - 27 March 2012-02-07Dubai UAEhttp://mea.broadbandworldforum.com/

IP&TV World Forum 20 - 22 March 2012London UKhttp://iptv-forum.com/

MVNO Industry Summit24th - 26th April 2012Barcelona, Spainhttp://mvnoindustrysummit.com/ Policy Control24th - 25th April 2012 Krasnapolsky Hotel, Amsterdam http://www.policycontrolconference.com/

2012 will see up to 139 LTE networks deployed across 5 continents by operators wanting to bring superfast mobile broadband to the market. If you want to meet ALL of the major LTE operators and players from across the global that matter, this is the place to be! 2011’s event in May attracted 85

of the world’s top 100 operators and with 8 years of proven success in delivering operator-led LTE events, the LTE World Summit is THE place to meet all the major buyers and decision-makers underneath one roof. If you can only make ONE LTE event in 2012....make it this one!.

| Global Events 2012LTE World Summit23 – 24 May 2012CCIB, Barcelona, Spain http://www.lteconference.com/world

ContEntS FEBRuaRy12

A SpECIAL SUppLEMENT ON CLOUD SErvICES

IN THE MOBILE INDUSTry, ProDUCED In

ASSoCIAtIon wItH

SEE CEnTRE SECTIon oF MagazInE

01_MCI171.indd 1 09/02/2012 09:54

02 Mobile Communications International | First for news, best for business

Defi ning Experience

There is a great deal of lip service paid to Customer Experience Management in this industry. Even people who sell

solutions aimed at enabling operators to address and improve their CEM concede that not all the enthusiasm for the topic is genuine. Some go so far as to describe much of the discussion surrounding CEM as ‘guff’.

There are two reasons for this: fi rst, no operator in business can afford to be seen as anything other than devout in its pursuit of quality customer experience. Second, and more crucially, it’s extremely diffi cult to put into practice the theory of successful CEM.

This theory stresses that concern over the customer experience should penetrate every element of the operator’s business. And when you consider that this runs from the bored teenager working Saturdays in a commuter town retail store to the third-party provided engineer tasked with ensuring quick resolu-tion of network issues—and everything in between—it’s easy to see where the funda-mental diffi culty lies.

For all that, CEM is emerging as the new competitive battleground for mobile operators, as other points of comparison have either been worn fl at, or taken from them by over the top players. The lack of interest shown by some of those OTT players in managing the customer experience should put operators in a solid position to build relevance and dependency—if they are able to structure and prioritise their business accordingly.

In this issue of MCI we take three phases of the customer life cycle—retail, contract dura-tion and retention—and look at how operators can and do promote customer experience man-agement within them. An interview with David Ffoulkes-Jones, CEO of CEM specialist WDS, completes our special focus on this new trend.

Nothing else in the industry evolves with such frequency as the device space, of course, and the second of this issue’s twin themes is the handset sector. 2011 was an eventful year for many of the players in this space, and 2012 will be a proving ground for several vendors whose futures could yet swing in very different directions.

In the lead handset feature we have exclusive comment from operator handset specialists who, between them, oversee the purchase of some 150 million mobile devices every year. We also take a look at the applica-tion and framework space, and peer into the future to see how the form factor and user interface of the mobile device as we know it might be revolutionised.

As we go to press the industry is gearing up for MWC, at which all of these issues will doubtless be the subject of intense scrutiny. Doubtless many of our readers will be going to the show. I hope you have a fruitful trip this year and, if you can’t make it, be sure to keep your eyes on Telecoms.com for updates on the most interesting developments.

[email protected]/TelecomsHibberd

mik

e.hi

bber

d@in

form

a.co

m

EDITORIALFEBRUARY12

HEAD OFFICEMortimer House, 37-41 Mortimer Street, London, W1T 3JHTel: +44 (20) 701 75000 Fax: +44 (20) 701 75647

EDITORIALPlease send all press releases to [email protected]

Editorial Director Mike HibberdEmail: [email protected]: +44 (20) 701 75201

Deputy Editor James MiddletonEmail: [email protected]: +44 (20) 701 75257

Assistant EditorDawinderpal SahotaEmail: [email protected]: +44 (0)20 7017 4010

Correspondents:The [email protected]

ADVERTISINGSales Manager Michael ButcherEmail: [email protected]: +44 (20) 701 75601

Chris BealesEmail: [email protected]: +44 (20) 701 6893

DESIGN & PRODUCTIONDesign & Production ManagerJoanne LoweEmail: [email protected]: +44 (20) 701 75604

MARKETING / LIST RENTAL Head of MarketingSophie Burdajewicz Email: [email protected]: +44 (20) 701 75461

PUBLISHERTim BanhamEmail: [email protected]: +44 (20) 701 75218

SUBSCRIPTIONS/ CUSTOMER SERVICESc/o Mobile Communications InternationalMortimer House, 37-41 Mortimer StreetLondon, W1T 3JH, UK

Email: [email protected]

Register online at: www.telecoms.com/magazine/

WEBSITEwww.telecoms.com

Mobile Communications International is published by

© 2012. All rights reserved. (ISSN 1352-9226)

Informa UK Ltd registered offi ce:Mortimer House, 37-41 Mortimer Street, London, W1T 3JH, England.

FREE SUBSCRIPTIONSMobile Communications International is a controlled circulation Bi-monthly magazine available free to selected personnel at the publisher’s discretion. If you wish to apply for regular free copies then please register online at:

www.telecoms.com/magazine/

Subscription enquiries should be sent to:

c/o Mobile Communications InternationalMortimer House, 37-41 Mortimer StreetLondon, W1T 3JH, UK

Email: [email protected]

While every care has been taken to ensure that the data in this publication are accurate, the publisher cannot accept and hereby disclaims any liability to any party to loss or damage caused by errors or omissions resulting from negligence,accident or any other cause. All rights reserved. No part of this publication may be reproduced, stored in any retrieval system or transmitted in any form electronic, mechanical, photocopying or otherwise without the prior permission of the publisher.

mik

e.hi

bber

d@in

form

a.co

m

02_MCI174.indd 2 08/02/2012 15:21

Comviva.indd 1 26/01/2012 09:10


NEWS AnAlysIs [email protected] | @telecomsjames

UK communications regulator Ofcom is under pressure to bring the country up to speed, amid fears that it is lagging behind other European

nations in terms of 4G deployment. The necessary spectrum is not due to be auctioned until later this year, with rollouts not expected to begin until 2014.

In January the regulator announced revised plans to promote competition in the country ahead of the 4G spectrum auction. Ofcom believes that consumers are likely to receive better services at lower prices in the future if there are at least four operators in the market and that—without the right quality and mix of spectrum—an operator might struggle to compete with other national wholesale providers.

The spectrum in the 800MHz band that is becoming available, freed up from the nationwide switchover from analogue to digital TV, is equivalent to three quarters of the mobile spectrum in use today. This re-farmed 800MHz band will be auctioned along with higher frequency airwaves in the 2.6GHz band later this year.

But from its latest consultation it is clear that Ofcom continues to value 3UK’s disruptive nature, and intends to reserve spectrum in the 800MHz digital dividend band for the market’s smallest carrier. A marked change from previous proposals is that the regulator considers Everything Everywhere—which operates the T-Mobile and Orange brands—to have sufficient spectrum overall not to be protected in the same way.

Industry analyst Ovum acknowledges that Ofcom has essentially been stuck between a rock and a hard place. It wants to award these frequencies as quickly as possible in order to benefit consumers, but it also wants to ensure that it does so in a competitive way, as the decisions it takes now are likely to affect the level of competition in the sector for at least a decade.

3UK is likely to be quite happy with the proposals because it is almost guaranteed spectrum in the sub 1GHz band. However, there’s a wildcard in the form of Everything Everywhere’s 1800MHz spectrum, some of which it is being forced to offload as part of the merger of T-Mobile and Orange. If 3UK, or a new entrant acquired some of the

A rock and a hard placeUK communications regulator Ofcom has been forced to make some tough decisions to bring the UK telecoms industry up to 4G speed. There’s good news and bad news in equal measure, with the regulator readily accepting that you can’t please all of the people all of the time.

1800MHz from Everything Everywhere before the spectrum auction, Ofcom would not necessarily guarantee them spectrum in the 800MHz band.

“On balance, Ofcom decided that Everything Everywhere’s holding of 1800MHz is sufficient for the operator to use in order to deploy LTE, rather than worry about it getting access to 800MHz for that,” said Matthew Howett, analyst at Ovum. The regulator believes the benefits of operating LTE at 1800MHz are higher than operating at 800MHz, because 1800MHz allows more capacity.

Of course the operator itself was not happy to hear the news and criticised Ofcom for missing, “a huge opportunity for the UK to address the imbalance in sub 1GHz spectrum holdings, which has damaged consumer interests for the last 20 years.”

The remaining UK operators, Vodafone and O2, are likely to be the happiest at Ofcom’s revised proposals, with Vodafone claiming that the revisions bring the UK closer to a “fair and open auction that will benefit the wider economy, increase competition and ultimately lead to the creation of innovative new services for consumers.”

As a parallel consideration for the forthcoming auction, Ofcom has also outlined new proposals to extend 4G coverage to at least 98 per cent of the population. This builds on the initial requirement that one of the 800MHz licences up for grabs would oblige the holder to roll out a 4G network that provides coverage to 95 per cent of the UK population. Due to a recent government investment plan, which will see £150m go towards the elimination of ‘not spots’ in the UK, Ofcom believes its new condition can be strengthened in one of two ways.

The first option is to increase the coverage obligation attached to that licence to 98 per cent of the UK population. The second and, in Ofcom’s view potentially more effective option, is to require that this 800MHz spectrum license has a condition that forces the buyer to provide 4G coverage that not only matches existing 2G coverage but also extends into mobile ‘not spot’ areas of the UK where the £150m will provide infrastructure capable of supporting 4G coverage. This may have the potential to extend 4G mobile coverage even further than 98 per cent of the population, according to Ofcom.

According to Ovum’s Howett, the country may be lagging behind its European neighbours but the regulator has not done a bad job. “The decisions Ofcom takes now are likely to affect the level of competition in the sector for at least a decade. Striking a balance was never going to be easy. The set of proposals now on the table appear to leave everyone with something to be optimistic about, but at the same time requires compromises to be made. Perhaps Ofcom have got it right.” n

The decisions Ofcom takes now are likely to affect the level of competition in the sector

for at least a decade. Striking a balance was never going to be easy.

04-09_MCI174.indd 4 07/02/2012 15:08

Untitled-4 1 08/02/2012 17:24


NEWS AnAlysIs [email protected] | @telecomssahota

Research In Motion’s share price dropped by around 80 per cent from June 2008 to September 2011 and the firm’s second quarter profits in 2011 slid

to less than half of what it generated in the first quarter, amounting to little over 40 per cent of what it made in the same quarter last year.

The most damning assessment of the company’s chances for the year ahead—and there have been a few contenders—was given by one of RIM’s own shareholders, Canadian merchant bank Jaguar Financial.

“While its rivals have demonstrated an ability to develop and market products with features that inspire consumer enthusiasm and drive higher adoption rates, RIM has clearly fallen short,” the company said in a statement. “Its failure to offer products with innovative features, combined with its limited selection of applications, has resulted in RIM losing market share to its competitors.”

The shareholder called for the company to undertake a value maximisation process that could involve selling the firm.

2011 was a grim year for a company that was once one of the industry’s most widely hailed success stories. RIM announced its intention to lay off 2,000 staff, more than ten per cent of its workforce, as part of its cost-cutting programme, and its CMO Keith Pardy handed in his resignation just a month before the company launched its first tablet, the PlayBook. To compound the misery, a high profile outage in October saw millions of BlackBerry users around the world experience a service disruption, preventing them from using the browser and the BBM messaging platform for three days.

The outage irked customers who took to social networks to vent their fury. As some measure of compensation, the firm offered users access to premium apps for free from its App World store, and gave business users one month of free BlackBerry technical support. However, the damage done to the firm’s reputation was severe, which it can ill-afford in such a hotly competitive market.

Former co-CEOs Mike Lazaridis and Jim Balsillie, who resigned in January, remain on RIM’s board and maintain that the appointment of a new CEO was their own decision. “There comes a time in the growth of every successful company when the founders recognise the need to pass the baton to new leadership. Jim and I went to the Board and told them that we thought that time was now,” said Lazaridis.

Blackberry crumble?To say new CEO Thorsten Heins faces a challenge in turning around RIM’s fortunes would be an understatement.

Heins has put on a brave face, which arguably, is his only option. He claimed a strong balance sheet with approximately $1.5bn in cash at the end of the last quarter and negligible debt. And he noted that the company reported revenue of $5.2bn in its last quarter, up 24 per cent from the prior quarter, and a 35 per cent year-to-year increase in the BlackBerry subscriber base, which is now over 75 million.

“Going forward, we will continue to focus both on short-term and long-term growth, strategic planning, a customer- and market-based product approach, and flawless execution,” he said. “We are in the process of recruiting a new CMO to work closely with our product and sales teams to deliver the most compelling products and services.”

One advantage that the firm has over some of its competitors is the strong ties it enjoys with the world’s mobile operators. It has begun offering services such as carrier billing on its App World store, enabling carriers to let their customers put app purchases on their bills. From its early trials, the firm has seen carriers increase their revenue from applications by 141 per cent.

In the year ahead, the company has high hopes for its BlackBerry 7 mobile operating system for smartphones, which supports more HTML5 standards than any other mobile browser, according to Rory O’Neill, VP for marketing, EMEA, at RIM. And devices are also now beginning to support NFC after RIM became the first smartphone vendor to be MasterCard approved and certified.

Meanwhile the company has signalled its intent for 2012 by making a host of acquisitions to enhance its cloud offerings. It has bought digital content services provider NewBay, cloud-based video editing services provider JayCut, mobile social gaming firm Scoreloop, cloud-based calendar and scheduling services provider Tungle.me and contacts management startup Gist, all in the past year.

“BlackBerry will build out on its cloud infrastructure and on its core strengths which is a proposition around social, sharing and around building and engaging social communities—that’s the piece we can look to differentiate on.” said O’Neill.

However, not everyone shares the enthusiasm voiced by Heins and O’Neill. According to Northstream CEO Bengt Nordstrom, 2012 is going to be very tough for RIM.

“They missed the boat on touchscreens and the software around them—it almost became too late,” he said. “One of their biggest challenges is how to make the BlackBerry app range compelling. In truth, they need to be successful with their efforts to support Android apps.”

And Informa analyst Dave McQueen agreed. “Making Android apps work on RIM’s devices is not a bad idea, but it’s almost worth them starting again and figuring out what they want to achieve—a bit like Motorola did, like Sony are starting to do now and like Nokia did with Microsoft,” he said.

“Whether BBX will be the one platform moving forwards —that’s possible, but they have to back that up with decent devices. n

One advantage that the firm has over some of its competitors is the strong ties it enjoys

with the world’s mobile operators.

04-09_MCI174.indd 6 07/02/2012 15:16

Untitled-1 1 01/02/2012 10:17


NEWS AnAlysIs [email protected] | @telecomsHibberd

The Indian 2G licensing scandal reached a sensational crescendo early in February as the country’s supreme court declared invalid the 122 2G licences

that were controversially issued in 2008 by then telecoms minister A. Raja. The licences in question were awarded on a first come first served basis amid accusations of bribery and corruption, and sold at values set in 2001, rather than through an auction.

The Comptroller and Auditor General of India submitted a report to the Indian government in 2010 which argued that, by severely undervaluing the spectrum, Raja—who is currently in jail—cost the national purse as much as $40bn. This figure has been disputed by the Indian regulator, TRAI, and the Central Bureau of Investigation, however.

The 2008 sell-off was intended partly to bring new players into the market, and several large operators—including NTT DoCoMo, Telenor and Etisalat—now face their spectrum being reclaimed. The Indian Government has indicated its intention to reallocate the disputed spectrum, most likely through an auction process.

Each of the affected operators will be allowed to continue offering their services for four months, while the TRAI devises new guidelines for the auction process and decides how to handle any transition of assets between current licence-holders and new licensees. “It’s looking like [the current licensees] could lose all of their investments, but once the regulator comes out with guidelines, there will be more clarity about what kind of losses these operators will make. It’s still not very clear,” said Anubhuti Belgaonkar, senior analyst with Informa Telecoms & Media.

The nature of the allocation process is not the only controversy surrounding the licences, though. A number of the 2008 licensees were already under investigation for failing to meet deployment targets set in the licence conditions. Among these players were Aircel, Etisalat, Loop Telecom, Sistema Shyam and Unitech—the company with which Telenor has partnered in the Indian market.

And towards the end of last year it became clear that all was not well between the Norwegian incumbent and its Indian partner. Unitech filed a petition to the Company Law Board in India accusing Telenor of mismanagement,

Indian 2G licences in limbo as Supreme Court intervenes after corruption scandalThe long-running saga of India’s 2G licence allocation reached a peak this month when 122 licences were revoked, leaving many foreign investors unsure of their future in the country.

criticising its attempts at fundraising for the venture and offering to buy it out of the Indian operation as a means of settling the issue.

For its part, Telenor seems resolved to stay put; not least because of the significant customer base that it has amassed since acquiring the disputed licence. Tor Odland, vice president, group communications for mobile at Telenor, told MCI that, overall, 66 million customers would be affected by licences being revoked, with 36 million of those customers of Unitech Wireless.

He added that the Supreme Court announcement actually stimulated an acceleration in the growth of the firm’s subscriber base. In the approach to the Supreme Court’s decision, Unitech had been signing up 100,000 new customers each day on average, but this actually increased in the days immediately after the ruling.

“On Thursday, the number increased to 106,000 new sign-ups; on Friday it was 150,000, and on Saturday, we saw it increase to 175,000,” Odland said, the week after the ruling. He attributed the growth to sales staff in India making a concerted effort to continue growing the subscriber base at a difficult time, and said that the operator may have also benefitted from sympathy and support from the general public in the country.

And, with the firm having already invested some two thirds of the $3.43bn set aside for its Indian operations, Odland said Telenor is reluctant to cut its losses and exit the market.

“It’s particularly hard given that we had just begun to get on track with hitting our targets for 2013,” he said. “We will do what we can to operate in India. Currently, everything is an option. We definitely don’t think of it as a lost cause. It will be challenging but we are inspired to continue,” he said.

It may be that for Telenor and its fellow licenses, the only option will be to reapply for the spectrum they feel they already own legitimately, and participate in whatever auction process TRAI decides to put in place. Crucially, TRAI must decide whether or not it restricts the new auction to foreign investors and newcomers once again, or whether it throws the process open to incumbent carriers that are always ready to acquire more spectrum in a rapidly growing market.

How the disputed licensees react when they have had a little more time to absorb the ruling will be interesting to watch. No specific, public accusations have been made, but it is widely inferred from criticisms of the process that at least some of the licensees are believed guilty of bribing A. Raja to get their spectrum allocations at a drastically reduced price. Whether or not they seek compensation from the Indian Government for investments already made, in the event that they do not look to remain in the market after the licences are revoked, will be a telling sign. n

The 2008 sell-off was intended partly to bring new players into the market, and several large operators—now face their

spectrum being reclaimed.

04-09_MCI174.indd 8 07/02/2012 15:09


NEWS [email protected] | @telecomssahota

Facebook revealed in documents supporting its filing that it had 823 million unique users per month, as of December 2011, and that more than half of that

number—around 430million—are using the site from a mobile device. To put that into perspective, 430 million is larger than the global installed Android user base.

The site generated $3.74bn in gross revenue for 2011, with $1.7bn operating profit before tax and $1bn net income, translating into a healthy margin of around 27 per cent.However, there is still vast scope for growth and, with an influx of around $5bn expected with the firm’s stock market flotation, commentators are suggesting that the most promising avenues for investment are mobile and in-app purchases.

The aggressive expansion of its mobile efforts might not be plain sailing for Facebook. Net advertising income from a mobile user is currently less than for a PC-based browser user for Facebook because the site does not display third-party advertising in either native or web mobile applications. It has been suggested that the firm may even need to work out revenue share deals to gain support from operators and ensure they do not feel threatened by its services. Facebook chat on mobile could easily cannibalise income from text messaging, for example.

Despite such concerns, the proliferation of smartphones represents a huge opportunity for the site. In developed markets there is scope for Facebook to increase revenues from mobile-dependent applications such as location-based services and coupons. At the same time, the firm is aiming to sow its appeal beyond advanced smartphone users in developed markets.

In many emerging markets, such as Africa and parts of South East Asia, growth in internet penetration via desktop PCs is modest. However, while they are not investing in PCs, many consumers are investing in feature phones, and Facebook can capitalise on the opportunity that presents.

In October last year, Facebook introduced a version of its platform that can be embedded on the SIM. SIM manufacturer Gemalto developed the offering, which is targeted at the mass market, and the Facebook software application is embedded inside the SIM, allowing users to access core features from the phone’s main screen, through a cascade of menus

“Right now people think the Facebook mobile experience is primarily for smartphone users but Facebook wants to be accessible on every device, not just smartphones but lower-end handsets as well. That means making Facebook a de

The one they’ve all been waiting forFacebook announced an impending IPO early in 2012, and it’s going to be a big one. But what will it mean for the mobile industry?

facto part of handsets that are sold in emerging markets,” said Michael Gartenberg research director at Gartner.

The firm is also in a strong position to offer marketing services beyond display advertising. There is a mass of consumer data accessible via the Facebook platform, and third parties are also integrating Facebook functionality into their websites. But perhaps the most interesting development is the volume of revenue Facebook is seeing from in-app purchases, through services such as games, according to Adrian Drury, practice leader and senior consultant at Ovum.

“One of the most notable things we’ve seen is the volume of revenues coming from PAYG services in the platform, which is brought about by its exposure to [social network game developer] Zynga,” he said. “Users are paying for premium content and features through these games and apps, and everybody is surprised by just how much money that is generating for Facebook.”

But it will be a challenge to maintain this pace of growth. Becoming a public company, the firm will now have the added burden of a responsibility not just to its users, but also to shareholders.

According to Fred Huet, MD of telecoms and media consultancy Greenwich Consulting, Facebook has acknowledged in the past that it needs to generate more revenue per user, and the floatation is only going to increase that pressure. Huet argued that the current model of the Facebook platform playing host to third-party games and apps is overly dependent on other industries and players moving to Facebook and finding ways to make money from the site.

“Now it is going to be quoted, it will probably have to take a little bit more of a driving seat in that space as well. It will surely continue the platform play—providing third parties with a great way to make money, while making a cut for itself. But it will also have to do a bit more on its own—and this means developing more products in-house for its own platform.”

However, Gartner’s Gartenberg does not believe that the IPO will significantly impact the way that Facebook does business. He said that the site will continue operating largely as is, because if the user and the user experience were no longer the priority, Facebook would suffer and so, inevitably, would its shareholders.

“Zuckerberg still has a controlling interest within the company, and they are going to pursue the market as they see fit,” he said.

He also argued that it has been taking into account shareholder considerations for a few years now, with venture capitalist firms such as Elevation Partners, recently investing in the site. However, he conceded that there will be more pressure on the company to drive higher levels of revenue via advertising, particularly in mobile apps, where it currently has no display advertising.

It has to strike the balance between advertising revenue and becoming annoying to consumers; too much advertising with no targeting ends up doing more harm than good. “It needs to focus on preserving the user experience on Facebook, because if that begins to change then they will have bigger issues.” n

Becoming a public company, the firm will now have the added burden of a responsibility not

just to its users, but also to shareholders.

04-09_MCI174.indd 9 07/02/2012 15:09


MCI IntervIew

MCI exeCutIve IntervIew

Have you ever been experienced?David Ffoulkes-Jones, CEO of CEM solutions provider WDS, shares his views on how operators can develop customer experience management into a true competitive differentiator.

There is more than a dash of un-derstatement in David Ffoulkes-Jones’ observation that, “being

the CEO of a network operator right now would be a challenge.” In a verbal sketch of the industry, Ffoulkes-Jones, chief executive of customer experi-ence management specialist WDS, depicts mobile operators battling on a number of fronts—internal as well as external—and struggling to maintain their lines.

“They’ve got their shareholders, which are probably the larger pen-sion funds, in a depressed market, saying they want cash so they can afford to make their pension pay-ments. They’ve got their engineers complaining about capacity issues caused by the marketing department subsidising smartphones onto the network and they’ve got the post-sales support teams reporting that those smartphones cost an arm and a leg to support,” he says. “And on top of all these negatives, they’re already deep into the price game, commoditising the product as it stands.”

In this scenario, he says, it becomes increasingly difficult for the operator to convince its shareholders that a multi-billion dollar investment in new network technology like LTE makes financial sense. Of course, once one operator makes this move in any given market, the rest have little choice but to follow. But this relegates the net-work to the level of a hygiene factor for consumers comparing operators with one another. Meanwhile, the world of content and applications, which operators had expected to enable a new wave of differentiation, has become dominated by over the top providers.

Against this backdrop a new compet-itive arena has emerged, he says, and it is customer experience management.

“As an operator, while I have to spend money on the network because without it I won’t have customers, I have to accept that the operator down

the road is going to do the same thing. So it is not a point of differentiation. I also have to tariff and market the products in the right way, manage them in the right way and get my post-sales services right. I need to create stickiness—and the customer experi-ence, knowing the customer, delivering a great service, managing them in the way that’s right for them—will create that stickiness.”

Today’s mobile operators have a degree of customer interaction that would have been unthinkable just ten years ago. Historically—espe-cially in the days when 12-month contracts were routine—an opera-tor might feasibly have interacted with a customer only at the point of uptake and the point of departure or retention. And if there was contact between these points, it went largely un-analysed.

Today, due in part to the increasing depth and complexity of the mobile

experience, many customers interact with their operators’ support teams far more frequently. Invariably, in the wake of each of these interactions, an automated CRM system pings the user a text message asking them to rate the experience. Websites do the same thing, while technical reports from the network feed in information on device connection rates and dropped calls. The net result is a far greater volume of data on the customer experience—which, on the face of it, should be a good thing for any operator looking to put CEM at the heart of their brand differentiation.

But, says Ffoulkes-Jones, informa-tion only has value if it is properly exploited—and even then that value can vary significantly. Furthermore, the increase in data volume could be just as easily be a burden as a bonus.

“The challenge is getting a clear message out of all of the noise gener-ated by these multiple touch-points,”

David Ffoulkes-Jones

10-11_MCI174_ExecInterview.indd 10 06/02/2012 10:32


MCI ExECutIvE IntErvIEw

he says. “Even if I can get all of this data, and process it in a very clear and concise way, who do I give it to? And is that person set up to receive it? Network operators—and OEMs—traditionally run very siloed environ-ments but I need to be able to deliver this information into an organisation that is capable of making decisions and acting on those decisions in an effective way. So there’s real change required, structurally and culturally, to create an industry that becomes far more customer experience focused than it is today. The customer experi-ence needs to be managed horizontally, as a process.”

The type of feedback generated by automated survey tools in the imme-diate wake of a customer interaction needs to be treated with caution, Ffoulkes-Jones says, describing it as of “questionable value”. While he says that it is an absolute requirement for operators to survey their customers, he points out that text-based feed-back, for example, provides only the snapshot of a moment.

“It’s not a measure of the customer experience, it’s a measure of how they feel right at that minute,” he says. “If they’ve had a tremendous transaction within the operator, they can feel re-ally positive. But the next day they could get a dropped call and then feel terribly negative. So these data are important but they are not the only things that operators should be looking at.

“A truer test would be looking at the churn rate, the level it’s at and wheth-er it’s trending in the right direction. But even that isn’t a completely safe basis for assumption because it could just be that the operator was the first to launch the iPhone. O2 has one of the lowest churn rates in the UK and I wonder if that’s because they’re a great network, or because they were the first to market with the iPhone,” he says.

Data derived from the network

can also be improved upon, he says. Operators may well carry out com-pliance testing for devices that they want to offer to their customers but ticking the box doesn’t go far enough. “How many times do they test the device against the experience their customers have had of the father of that device previously? That would help operators start to understand, from a user’s perspective, whether that device is really appropriate for the network.”

The trouble with customer experi-ence is that, while operators labour to meet KPIs on everything from dropped calls to complaint resolu-tion, customers add an abstract, emotional layer to the mix that is far more difficult to manage. While this can’t be controlled, says the WDS CEO, it can be influenced. If an opera-tor works to build brand equity with its customer, by consistently execut-ing well on its customer interactions and by learning and improving, then they can be honest with their customers about their successes. If, on the other hand, the operator is promising to deliver something that cannot be delivered, a gap is created through which customer loyalty can seep away.

“That’s why we would say that customer experience isn’t about the user interface, or the fact that you’ve done network compliance testing, or your dropped call rates. It’s about all of these things and more. It has to be a continuous and relentless drive towards building better and better services for the customer—that’s how operators can build that loyalty,” he says.

Competition for loyalty is intensify-ing, though. Over the top players have increased the complexity and depth of the mobile experience but are also threatening the operator community’s control of the customer relationship. One by one, core territories that the operators sought to retain as their

own—think services, content and billing—have been colonised by third party providers. But Ffoulkes-Jones argues that this creates an oppor-tunity for mobile operators, as well as a threat, because the over the top players are not making the customer experience a core focus.

“They’re saying they’ll have a good deal of the revenue but they don’t fancy any of the costs, which is a great business model if you can work it,” he says. “But if you look at Google, they have the OS and they’ll sell the apps but they’re not assuming responsibil-ity for the experience of the whole solution. So the operators have the opportunity to step in and tell users that they should be loyal to them be-cause they will manage the experience and make sure that it is reflective of their brand.”

But if operators do pursue this approach, they will not be alone. At the retail end at least, they are likely to soon have competition from inde-pendent players. “Some retailers could take a truly independent view of the customer and say that, of everything that is on offer, a particular product is most suitable,” he explains. “That solution could be a television, a laptop or a tablet, or it could be a network, a device or an application. That’s not how it is yet, but there are lots of other companies that could get into this space if it’s not taken up by the operators.”

Under fire from all sides as they are in Ffoulkes-Jones’ sketch of the industry, this is the last thing that operators will want to hear. And he suggests that they can only ensure their continued relevance by weighting the customer’s experience such that it occupies a complete 360-degree world view. “It’s not the only information you’ll need to make the right decisions, but it’s a significant chunk of it if you want to ensure that you are delivering an experience that’s reflective of your brand,” he says. n

10-11_MCI174_ExecInterview.indd 11 07/02/2012 09:43

Soft CellThe retail store is back in vogue as operators look to inject the customer experience into the first and most influential touch-point in the customer relationship lifecycle.

By Mike Hibberd

Not too long ago, “customer acquisi-tion” was something of a dirty term in the cellular industry. Operators were

queasy with the hangover from their land grabbing activities and the focus turned to customer retention as they sought to identify the highest value customers and keep them in the fold.

The industry operates on cycles, though, and acquisition has now come back to the fore—driven, as much within the industry is today, by the arrival of the smartphone era. That era, of course, was ushered in by the iPhone and—yet again—Apple’s influence can be detected in some of the key shifts that we are witnessing.

While retail is once again a key priority for operators, the focus is less on shifting boxes and signing up cud-munching consumers than on using this first point of contact as a launch pad for the somewhat ephemeral Customer Experience. The ideal is that eve-rything the operator’s brand stands for can somehow be distilled into a retail experience that leaves each customer feeling so happy with the product they’ve bought that they never want to churn. Nowhere else in the mobile operator’s business is the ideal more divorced from the reality.

Network technology, broadly speaking, works. And when something goes wrong with it, the problem can be identified and fixed. This

is because technology obeys laws of physics. People are an altogether more unpredictable element of the operator’s world—employ-ees as well as customers—and this is what makes customer experience management in general, and retail in particular, such tricky games to play.

Nonetheless, the retail phase of the cus-tomer lifecycle is benefiting from a great deal of analysis and investment as operators try to refine their acquisition activities. Greater sophistication in the retail process is neces-sary because of greater sophistication in the devices and services being retailed—and the blend of channels being used by operators to initiate contracts is a delicate balancing act.

In addressing the retail experience they offer as smartphones become more pervasive, operators need to look at potential retail out-comes. According to Tim Deluca-Smith , VP for marketing at customer experience specialist WDS, there are four potential destinations in retail, and only one of them is good.

The first sees the customer taking owner-ship of the device and finding, after some initial experimentation, that they are defeated by the complexity of the handset and/or the associated services. The user then reverts to basic service use, such as voice and text. In the second scenario the initial experience is the same but the user is more motivated to overcome their difficulties. In being so,

however, they become a support burden to the operator. A third customer might simply return the phone—resulting in wasted time or even churn—while in the fourth, ideal scenario, the customer is well matched to the product and services they have bought, and is well set up to become a profitable user.

“Getting things right in that first retail period will really shape the profitability of the customer,” Deluca-Smith says. “When we do root cause analyses as part of a support contract, it’s amazing how many of the issues can be traced back to a deficiency in the retail phase. Products are too often incorrectly matched or mis-sold.”

The importance of properly aligning custom-ers with products is driving some operators to promote their physical stores in the retail channel mix. Online and call centre sales may well be more convenient and cost effective, but person-to-person interaction is now seen as ex-tremely important by operators looking to inject the customer experience into the retail process.

The influence of Apple’s retail stores cannot be overestimated here. Vodafone’s director of content services, Lee Epting, says that, “in terms of retail customer experience, Apple set the bar with its Genius Bar.” This facet of Apple’s retail environment, where a number of in-store agents are trained to an expert degree in the firm’s products and solutions, enabling them to answer any customer query »

feature CEM – RETail

12 Mobile Communications international | First for news, best for business

12-14_MCI174.indd 12 06/02/2012 10:50


feature CRM – REtaIl

or demonstrate any process, is a defining element of the firm’s customer experience. There is a very short evolutionary line be-tween Apple’s Genius Bar and O2UK’s Guru programme, introduced in 2010.

In the run-up to Christmas 2011, there was a two-week waiting list for an appointment with an O2 Guru at the firm’s flagship store on London’s Oxford Street retail centre, which shows demand exceeding supply, if nothing else. O2 has also set up a YouTube channel for its Guru project, in a bid to catch the overspill of customers looking for that extra level of tuition.

The average in-store device sale across the industry is getting longer, according to research from WDS, and now sits at around 40 minutes. As more and more subscribers upgrade to more sophisticated devices, it seems unlikely that the renewed importance of the physical store will diminish anytime soon.

This may be a difficult reality for some within operators to accept. For an executive tasked with increasing efficiencies in the retail process, the duration of the sale is a KPI that needs to be reduced, not extended. The longer a sales agent spends talking to a customer who has already decided to buy a device, the less time they will have to convince the next person that comes into the store. But if the extra time spent with that first customer deflects one or two future customer support interactions, it is time well spent.

Programmes like O2’s Gurus are motivated in part by public relations, and rely on glossy visibility to create a sense of the brand values the operator wants to project. But putting the customer experience into the retail phase of the customer lifecycle has to be done throughout the operator’s processes. As WDS’ Deluca-Smith has it: “There’s more to a good retail experience than a shiny store full of good looking people. “

This is especially true given that not all retail activity happens in-store. While Vodafone’s Lee Epting argues that remote retail channels “will never be that significant overall,” because, “users want to be able to touch the devices and discuss them with knowledgeable staff,” the fact is that, for some customers, online retail, online chat and call centre sales are actually preferable.

“These kind of channels were originally introduced as a cost reduction,” says Igor Sarenac, VP for communications at Convergys. “But things have changed. The younger and upcoming generations simply prefer the web channel. And that’s the generation that will be around for a very long time.”

These users might not research their pur-chases in store, preferring to rely on online comparisons, social media and unofficial user feedback to help them make their decisions. They will then look to make the purchase online. Clearly in this environment it is more difficult for operators to inject customer ex-perience into the retail process than when they are presenting users with an in-store ambassador for the brand.

Most operators have automated, database-oriented systems that allow users to create what they’re told is a “bespoke” package by selecting services they like to use and the volume of minutes, text messages or data they might consume (largely useless in the last case since almost nobody understands the correlation between content consumption and data consumption). But these are inherently restrictive and, if an operator wants to project the customer experience through online chat or call centre retail processes, flexibility and dynamism are paramount.

Perhaps ironically, given Lee Epting’s comments, one of the carriers most adept at this—according to Igor Sarenac—is Vodafone. “They try to be able to respond to anything a customer wants in real time, to be as dynamic as possible,” he says. “What they try to do is to say “yes” to customers.” Clearly injecting customer experience into the retail process is about moving away from price as a differen-tiator, rather than simply meeting customer’s tariff demands, but Sarenac suggests it is a more subtle approach.

“The idea is to create a positive relationship with the client, to say “yes” even when you don’t really mean it. You might be saying that certain things are possible, but explaining to the cus-tomer that there are certain requirements that have to be met in order to get those things,” he says. “Clients are much more receptive to this approach than to being told that they’re not eligible for something, or not entitled to

it. Operators need to satisfy customer needs in a way that suits their business. Don’t turn down the client, given them a choice. Because if you push back, the client will go somewhere else and never come back,” he says.

Operators are now using online chat sales agents to snare potential customers that are browsing their retail sites comparing tariffs and handset pricing. The offer of a chat session is triggered automatically and the potential customer is questioned by a real person and responded to in real time. The appeal of this channel for operators is that, in a world where consumers have rejected off-shore call centres because of language and accent barriers—and because of a feel-ing of remoteness—it offers the best of both worlds. Written communication skills can be higher in off-shore environments than spoken communication skills, drawing a veil over the fact that the transaction is being conducted across a gap of thousands of miles.

Native speakers of the language might see through the veil, though, as operators in some cases are carefully scripting the responses that their agents are permitted to give, in line with their desire to create a positive “yes” environment. Indeed, according to Sarenac, ‘soft skills’ is an area drawing increasing investment from operators looking to set themselves apart on customer experience.

But retail is not an environment in which many people look to forge a career. Even in a flagship store in a European capital, the staff are likely to view their roles as transitory—12 months to two years to earn some money, and then off they go to do something else. Retail is a high turnover environment and yet operators must invest in training to ensure that their sales agents are winning the customers per-sonal investment as well as their financial one.

And this is the biggest problem with customer experience in retail: An operator can have the best systems in place, the most dynamic approach to tariff building and a chief of retail sitting in head office who genuinely believes in the sales environment they are trying to create. But it simply can-not be guaranteed that the person standing face to face with the customer, on the other end of the phone, or typing responses into the chat window, will be motivated to act as an ambassador for the customer experience.

Customer experience is people dependent—and people are nowhere near as dependable as the technology mobile operators employ them to sell. n

as more and more subscribers upgrade to

more sophisticated devices, it seems unlikely that the

renewed importance of the physical store will diminish

anytime soon.

12-14_MCI174.indd 14 06/02/2012 10:50

DONT GET CAUGHT READING SOMEONE ELSE’S COPY.

For your very own free subscription to Mobile Communications International,

register at www.telecoms.com/magazine/

MCI_subscription_advert.indd 1 08/02/2012 14:46

In the not too distant past, operators were slow to react to customer sentiment as the touchstones between the provider and the

customer were few and far between—the most common interaction coming at the end of the customer’s lifecycle when it was already too late to act. Yet as technology has evolved, those touchpoints have grown more frequent, push-ing customer experience centre stage. This is reflected, etymologically speaking, in the transi-tion from ‘customer relationship management’ to ‘customer experience management’.

The argument is that, to deliver an unri-valled customer experience during the lifespan of the customer relationship (not just when selling to them, or trying to stop them churn-ing), an operator must prioritise the needs of that customer throughout the organisation—in the culture, structure, technologies and busi-ness processes the operator employs.

“There was a lot of system development activ-ity ten or so years ago; operators were putting in these CRM platforms, and having one dynamic interface for selling and serving gave you a ho-listic view of the customer. But really, this was fundamentally just a customer database, it’s not customer experience management,” says Iain Regan, global head of business development, at business process outsourcing firm Firstsource.

Likewise, technology has allowed the system of customer reward to evolve beyond the unso-phisticated loyalty points model pioneered by supermarkets and petrol stations. As Michal Harris, director of marketing insight and strat-egy at Amdocs, points out: “Every telco had a section related to retention and loyalty but the main focus of this was all about whether the end user had enough loyalty points. Really, you have to build a relationship with the user with a more holistic approach to win customer loyalty.”

This is the critical difference between cus-tomer relationship management and customer experience management—technology is no

The lives of othersThe 18 or 24 months in between the key touch points of acquisition and retention is where operators have to deliver on the customer experience promises that were made at the point of sale.

By Dawinderpal Sahota

longer the biggest show in town. A company-wide strategy is needed to address satisfac-tion and an outstanding customer experience should be embedded in all aspects of operator strategy, from marketing and advertising to the network and smartphone portfolios. This is not to say that automated technological solutions are not vital, though.

“Operators should be giving me alerts about things that are happening that may affect me; such as planned outages or service disruptions,” says Scott Kolman, senior vice president of marketing for customer experi-ence solutions provider Speech Cycle. “They need to let me know that issues do exist and that there is a resolution—action will be taken and the issue will be resolved. Proactive care such as this will show me they acknowledge me as a customer and make me feel that my concerns and welfare are valued,” he says.

For example, if a subscriber gets off a plane in a foreign country and turns on their handset, only for the phone to fail to register, they will have a negative experience. But if the operator has a platform to automatically suggest a response to this, the customer will have a positive experience.

If the operator can see in real-time that

the customer’s phone has failed to register because they were not provisioned properly for international roaming but can also see that this is a high-value customer with a good credit rating, who has historically used international roaming, a business rule can be set up to automatically turn on international roaming. The operator would also need to send the customer a notification via SMS that it has enabled roaming services, and if the customer does not want it to be enabled, they can choose to disable it.

“If that all happens in real-time; if I come off the plane, turn the phone on and it works, then clearly, there are big gains,” explains Jeff Gordon, CEO at Syniverse, a technology and services provider for telcos. “From an economic point of view, that device is being used, it’s generating revenue, instead of be-ing out of commission for a few hours or a few days, and my cost to serve, because I’ve automated that infrastructure, is peanuts. It’s less than if the customer got in touch to initiate the roaming, which will have required tier one or tier two support.”

Operators that are serious about customer service also need to prioritise it in the structure of their business, and according to Gordon »

feature cusTomer relaTions

16 mobile communications international | First for news, best for business

16-18_MCI174.indd 16 06/02/2012 10:56

KapschCarrierCom.indd 1 07/02/2012 16:37

Rawling, senior marketing director at Oracle, carriers really do understand the challenge. It’s the way you bring it all together. “Systems and technologies need to talk to each other,” he says. “The customer experience is where differentiation is going to be. It’s not a network initiative, or about billing or a call centre, it’s about organisational change. It’s about all these things,” says Rawling. “It’s a business problem.”

Often, this necessitates the appointment of a head of customer service or, in the case of Everything Everywhere, a chief customer officer (CCO).

The CCO’s role is to ensure that the cus-tomer service team continuously reviews its processes and its engagement with custom-ers to identify opportunities for improve-ment, while the team’s goal is to improve customer loyalty and recommendation rates. One method Everything Everywhere uses is to set up specific teams to deal with issues in anticipation of significant events, such as when there is a new product entering the market that is likely to be immensely popular.

“We have an experienced team in place to support all enquiries and we have dedicated teams for certain enquiries. For example, when we launched the iPhone we had a dedicated team to support on this and this alone,” a spokesman tells MCI.

Such an executive will need to be able to marshal data feeds from all other parts of the operator’s business, says Convergys’ VP for communications, Igor Sarenac. “Every functional group in an operator has their own set of data reports,” he says. “You have a set or marketing data, a set of data that comes from customer surveys, a set that comes from listen-ing into the call centre. If you don’t connect all of these up to each other, that’s a big mistake.”

Accountability is a development also picked up on by Iain Regan from Firstsource, who says that chief- and senior executives are now being given remits extending across all parts of the telco operation, including ownership of, and accountability for, ensuring that the customer ex-perience is consistent across the entire operation.

Lee Epting, content services director at Vodafone, is a case in point. While each Voda-fone operation has a dedicated team, which in the company’s parlance caters to CVM (customer value management ), Epting takes aspects of the customer experience under her own umbrella. “When I was focused on the discovery of content, the customer experi-ence wasn’t really in my remit,” she says. “But now there’s this focus on the transparency

of information and, in order to create great discovery features on the device, we realised we can integrate customer care too. It was an ‘aha’ moment.”

Epting believes that customer experience is an area of differentiation for providers and returns to this idea about transparency of information—a two-way flow of data between the operator and the consumer—as a means of preventing churn. “Are we listening to our customers and understanding their needs, wants and desires as they relate to support and access to information?” she asks. “How do I, as a provider, put data about your phone usage into something you can understand, and help you change your behaviour?”

As head of content, Epting is involved in many of these touchpoint opportunities between Vodafone and the end user and she believes that, in a digital world, the ability to serve customers from a digital perspective is absolutely key. “So we’ve focused on giving our customers access to information that is valu-able to them and related to their relationship with Vodafone. Telcos have sometimes been accused of being a bit grey with regards to the transparency in their offerings and usage, and making that information available really is key.”

According to Oliver Finn, VP marketing at active subscriber intelligence provider The Now Factory, this is one area that allows the operator to position itself as gatekeeper of the smartphone ecosystem.

Finn says that operators should promote the apps that are most suitable for the network and cause the fewest issues to the operator, as these will also be the ones that cause fewest issues to the consumer. In addition they should also empower the consumer and promote self-care. A positive experience can be created, without requiring costly support intervention. “This means giving customers more information about the devices and apps that they’re using, and directing them to self-care portals so that they can easily configure their devices,” he says.

The consumption of content and interac-

tion with self-care services are increasingly driven by social media, and it is crucial to recognise how this one factor is dramatically changing the customer service landscape. There is an inherent danger in social media as, when customers take to social network-ing sites to communicate with brands, it is often to vent their frustrations at an instance of poor customer service, and share their negative experiences with their friends and acquaintances.

“It is critical that operators step up their notion of customer service and realise that—for those that don’t – their customers can not only defect to someone else, they can also infect a far wider community. Their sphere of influence goes well beyond their friends down the block; now that sphere of influ-ence literally encompasses the globe,”says Syniverse’s Jeff Gordon.

One way Everything Everywhere has tackled this challenge is by putting into place a buzz monitoring system that tracks and evaluates social comment and sentiment. The company says that the solution gives it access to real time information which it uses in four main ways: to engage in online conversation where appropri-ate; to manage its own social media campaigns; to evaluate online sentiment and its campaign performance; and to educate the business with real-time info on products and services.

The operator also uses dedicated corre-spondents to track customer sentiment and communicate with customers experiencing poor service. The spokesperson explains: “One example of how we use social media as a tool to provide customer service is the @OrangeHelpers Twitter stream which helps customers with questions about everything from handsets to contracts, apps to bills and tariffs to texts.”

A grasp of social media is just one strength that operators will need to develop if they are to truly place the customer experience at the heart of their business for the duration of each customer’s life cycle. They will need to back this up by exploiting the full range of data at their disposal from the different functional units within their business. Appointing a chief customer officer, or equivalent, is a positive move and one that many operators will likely make. But in reality this is just another way of slicing the cake of business responsibilities. If that senior executive does not have the power to effect change within the organisation, then the operator will not be able to effect change in the customer experience. n

Chief and senior executives are now being given remits

including ownership of, and accountability for,

ensuring that the customer experience is consistent


feature CustoMer relatIons

16-18_MCI174.indd 18 06/02/2012 10:56

Untitled-3 1 03/10/2011 11:28


Keeping hold of your customers in a hyper-competitive marketplace is notoriously difficult and requires a strategy that goes way beyond unsophisticated loyalty programs.

By James Middleton

The long goodbye

feature CEM – RETEnTIon

Dan Hesse, the CEO of major US opera-tor Sprint, recently commented that “improvement in churn is the quickest,

fastest, most significant way of improving your bottom line.” Although operators are rightly focusing on growing ARPU and aver-age customer spend, winning the loyalty of existing customers and extending their stay on the network arguably plays a stronger role in maximising customer profitability.

Churn is a serious issue for the vast ma-jority of operators. It has steadily increased on a global scale in recent years, from three per cent in 2009, to 3.5 per cent at the end of 2010 and almost 3.9 per cent towards the end of 2011. Take Sprint as an example of a tier-one operator in the US: With a churn rate of 1.91 per cent for the third quarter of 2011, the company lost a net of 44,000 postpaid subscribers, each bringing in an ARPU of $58 for the quarter. That’s a potential loss of $2.5m for the quarter outright, and a far greater sum over a contract lifespan.

Obviously, no carrier wants to see their valuable subscribers move to competitor networks, yet it’s only recently that opera-tors have changed tack to focus on building a relationship with the end user in order to actively prevent churn, rather than retain customers in a reactive, last-ditch attempt. By and large, it’s still something that’s only really addressed at the last minute.

In a late 2010 survey of operators by Infor-ma Telecoms & Media on customer loyalty, 66 per cent of respondents commented that they thought customers had become less loyal in the two years since the last survey. Only nine per cent thought they had become more loyal, yet 79 per cent of the same respondents said they expected competition in their market to increase dramatically over the next 18 months.

So why is it that in the same survey, these operators that so clearly expressed concerns

about the fickle nature of their customers, admitted that their main focus when it came to customer relations was on churners (65 per cent) and potential churners (91 per cent), suggesting that retention and loyalty efforts rely on last-minute actions?

“There’s an issue with priority in terms of customer segments,” says Michal Harris, director of marketing insight & strategy at Amdocs. “We should be talking about a dif-ferent customer lifecycle now, which needs a different approach to how you treat your customers. Many carriers are still focused on last minute efforts,” she says.

This attitude is somewhat bewildering given that, by the reckoning of Firstsouce CEO, Iain Regan, the cost of acquiring a new customer is six times that of retaining an existing one. And, of course, there is a cost attached to that last ditch attempt to appease a customer. However, he says that, with a well thought out reactive process in place, it is not uncommon that an exit interview can provide an opportunity to fix a problem and hold onto a customer.

That’s all well and good, but common sense—and numerous balance sheets—argue that there are great savings to be made by tack-ling customer restlessness before it gets too late, with a proactive focus through analytics.

Accenture recently boasted that a leading US wireless provider—one of its clients—was able to cut churn by 15 per cent in six months, retain more than one million subscribers and generate hundreds of millions of dol-lars in incremental net OIBDA, all thanks to analytics-driven customer segmentation, and the company’s creation of a ‘Churn Command Centre’ dedicated to driving customer lifetime profitability.

By leveraging a diversity of data—demo-graphic and behavioural—retention analytics can predict just when and why customers are likely to churn. They determine the customers’

value to the company in terms of both current and future revenue and profitability, as well as their influence on other customers.

Paul Bultema, executive director, UK and Ireland strategy lead, for the communications, media and technology operating group of Accenture, says: “Analytics is playing an im-portant role in tailoring and defining services for customers. It gives operators the ability to dynamically link customers to their products and services and then to the financials and back to the network quality, so they can pro-actively respond to and address the customer experience. This is a great differentiator.”

The consultancy also believes operators can infer the drivers of churn by using multi-dimensional analysis in novel ways, such as correlating churn with the interactions a customer has had with the company in order to trigger retention treatments, as well as identifying areas where the customer experi-ence needs to be improved. This is a strategy which may sound straightforward, but is one that requires the ability to build a service in-teraction history across all channels to identify these churn ‘hot spots’.

But Firstsource’s Regan suggests that, as operators measure and incentivise or penalise against the performance of their divisions with regards to the customer experience, the real question is whether all the incoming data is providing operators with tangible insight?

His company’s approach is perhaps more material. Firstsource uses analysis tools to gain insight into customer interactions to identify broken processes or pinpoint where competitors are ahead of the game. A big part of this is reactive analytics around pre-churn customers; the ones that are in the process of drifting out of the zone of contentment.

“With voice analysis tools on care calls we listen for emotional strain in the customer’s voice. Or keywords like ‘sorry’. This allows the

20-21_MCI174.indd 20 06/02/2012 10:58


CEM – rEtEntIon feature

Common sense—and numerous balance

sheets—argue that there are great savings to be

made by tackling customer restlessness before it gets

too late, with a proactive focus through analytics.

devices on which they’ve come to rely,” he says. Moreover, in light of the smartphone and

application store revolution, the same argu-ment applies to content as much as to devices. Given that operators are now in many cases editorialising content for consumers, they are in a position where they can use this hand holding to their advantage in terms of customer satisfaction. Indeed, Thomas Schöpf, COO of integrator Kapsch CarrierCom, believes operators should be looking to develop their own content or form a partnership giving ac-cess to good content for their users.

The point is well supported by Alcatel-Lucent’s, Ben Geller, senior director of solu-tions marketing, who believes operators have all recognised that at some point they are going to have to foster some pretty compelling partnerships because they can’t be all things to all people. “There is a desire to truly own that customer experience and OTT players are not equipped with the infrastructure required to provide a world class experience. Opera-tors can keep themselves at the heart of the relationship and add value too.”

Informa’s 2012 Outlook survey, which high-lighted the intention of carriers to address the area of customer experience over the coming year, also discovered that the single most im-portant asset for a service provider building a content ecosystem is the billing relationship, with 40 per cent of responses—more than twice the number for the next most significant element—ownership of customer data.

“The real USP of the operator today is that it owns the customers through billing and customer care. It’s no longer the basic network because at the end of the day anyone can run

a network and take advantage of your rollout and your coverage,” says Schöpf of Kapsch Car-rierCom, referring to the over the top players. “Through billing expertise operators can offer much more charging for third party content for example. Users aren’t interested in having several accounts with several different provid-ers. They want one bill, one point of contact and one system for customer care.”

It’s the market that is changing, according to Michal Harris of Amdocs, and providers need to change their model to focus on the network experience. “If providers say ‘my core value is the network, this is what I do best,’ then they should do their best to sell the network to the end user or a third party.” The network should be the enabler and in reference to the OTT guys, there are plenty of companies willing to provide the experience to the end user.

By acting as a gatekeeper, the operator is rewarded with total ownership of the customer and all the trappings and information that go with it. On the one hand, the sea change in busi-ness strategy is still held back by technological hangovers such as the persistence of post and pre pay billing, which codifies who you are as a customer and defines the entire user experience when it really is just a payment mechanism that has been shaped by technology. In essence, operators have tied up the customer experience with things that aren’t that important users are just after a service after all.

But the knowledge consistency of the opera-tor-gatekeeper means that telcos have access to so much knowledge and with such an integrated profile of the customer, that Amdocs’s Harris believes they can compete against the databases nurtured by Facebook and Google.

As the CEO of a tier one operator in France recently commented during a survey on customer experience carried out by Informa: “Good Customer retention practice is about business culture, not technology.” n

operator to get on the front foot and intervene to get a specialist on the phone and fix the problem with the customer,” he says.

“No one takes this lightly. This is all about insight and about what we can change. Most customers expect problems but it’s how those problems are rectified that matters.”

But the operator’s role as a problem solver raises another interesting paradigm. The ar-rival of the smartphone changed the entire landscape of customer experience manage-ment, and with a plethora of increasingly com-plex connected devices entering the market, user expectations have risen dramatically. No longer content with a desire to make calls and send text messages, telco customers now expect to tech support and troubleshooting advice from anything to in-car communica-tions systems to ‘connected home’ gadgets like set top boxes or smart meters. The issue being that if they don’t get everything they expect from their connected gadgets, they point the finger squarely at the provider of that connection the operator.

According to Tim Deluca-Smith, VP for marketing at WDS, if mobile operators want to provide unparalleled customer service and capitalise on the opportunity the connected home concept offers, they will need to start getting more creative, and generous, with their data sharing policies, as this will make the customer’s life much easier.

“Consumers don’t want to consciously think about the device or network to which they’re at-tached. They want to buy a data allowance and use it, at their discretion, across the multiple

20-21_MCI174.indd 21 06/02/2012 11:00

The most trusted media partner and editorial source for

the global telecoms industry

For more information, please contact

Tim BanhamPublisher

Tel: +44 (20) 701 75218Email: [email protected]

Mike ButcherSales Manager


Chris BealesSales Executive


Telecoms.com_house_advert.indd 1 09/02/2012 09:09

The final quarter of 2011 was an eventful one in the handset sector. Nokia marked its return to the smartphone market

and its first Windows Phone product with a great deal of fanfare, while Apple announced in quick succession the availability of the iPhone 4S and the death of its inspirational leader Steve Jobs. Samsung released the first handset to run version 4.0 of the Android OS and Sony Ericsson announced that its tenth birthday would be its last, as Ericsson finally exited the joint venture and Sony absorbed what remained.

Meanwhile Chinese vendor Huawei set out its stall, pledging an assault on the smart-phone market to match the one it has mounted with such success on the infrastructure sector. Alcatel, a handset brand far less prominent

in 2011 than it was in its heyday, surfaced in partnership with Orange and Facebook, as the social networking firm revealed more of the cards it plans to play in the device space. For Blackberry vendor RIM, the situation simply went from bad to worse; leading to the resignation of co-CEOs Jim Balsillie and Mike Lazaridis in January.

And these were just the headlines. Behind the biggest stories, the device sector contin-ued to pulsate with activity in 2011, as its constituent parts battled for their place in the value chain, the hearts of the consumer and for supremacy over one another.

For all the change, one constant remains: the mobile operator is still the primary route to market for handset vendors. And competi-tion for a place in operators’ portfolios looks

set to intensify. In November Matthew Key, head of the Digital unit at the newly restruc-tured Telefónica, revealed that the firm is planning to slash the number of handsets in its global range by more than half.

With a portfolio of around 240 handsets, there is clearly a lot of fat to cut at Telefónica. But while the firm’s device range is at the larger end of the scale, relative to subscriber base, Key’s announcement reflected a trend visible in the wider industry.

Simon Lee-Smith, general manager UK and group devices at Telefónica, says that the surplus in the portfolio can be explained by a handset strategy that has historically been local in focus, with individual terri-tories responsible for procuring handsets deemed especially suitable for their markets. »

The Clone WarsThe handset market is more competitive than ever, and success is increasingly being defined by performance at the top end. 2012 will be the year of the Windows Phone push but can Nokia and Microsoft really compete with established leaders like Apple, Android and Samsung?

By Mike Hibberd


SMArTPhoNeS feature

23-30_MCI174.indd 23 06/02/2012 11:08


feature sMartphones

This is now changing to a more “aligned” ap-proach, hence the cut in numbers, which will happen mostly at the low end.

At Vodafone, where the device portfolio is currently at the kind of size that Telefónica is targeting, the drive is to reduce the range still further, says Peter Becker-Pennrich, global di-rector of terminals marketing. Becker-Pennrich says that Vodafone plans to “go down in size quite a bit” in 2012. And a similar strategy seems likely at Orange and Deutsche Telekom, which have announced plans to align procure-ment of handsets. Orange currently ranges around 100 handset models per quarter, according to Patrick Remy, the firm’s senior vice president for devices.

Remy says portfolio management needs to take into account the fact that too much choice can confuse consumers, but Dan Adams, a partner at Accenture who focuses on device strategy, points out that there is also a key financial driver.

“The research that we’ve carried out into the prices that manufacturers charge operators shows that, until you hit between 500,000 – 750,000 units, you don’t reach a manufacturer’s best price,” he says. “So operators have to set their portfolio so that a good chunk of it gets over that number per device. If they don’t, they’ll be paying more than the competition and, while they might have a better range of handsets that’s more adjusted to the local market, consumers are not going to pay more for a handset they can get cheaper elsewhere.”

Vodafone spends $8bn on handsets annual-ly, according to Becker-Pennrich, including af-filiates and partner markets, which translates into 60 - 70 million units a year. Telefónica’s Simon Lee-Smith says annual device spend is around $6bn, which buys some 50 million devices. Patrick Remy doesn’t want to say how much he spends at Orange, but indicates that he buys in the region of 30 million units an-nually. With those kind of shipment numbers, it’s easy to see why—according to Accenture’s calculations—the range of devices on offer needs to be carefully restricted.

The worry for vendors is that a cut in the number of devices on offer might translate into a cut in the number of suppliers. At Vodafone just eight suppliers deliver 98 per cent of the volume, and Becker-Pennrich says that he “would expect the number of suppli-ers to become less.” Telefónica has around a dozen “key vendors” of which half are deemed “strategic suppliers” that are able to deliver breadth and depth. A reduction in the number

of suppliers is not a goal, says Lee-Smith, but the firm expects “natural consolidation”.

None of this paints a rosy picture for hand-set vendors and, mindful of the importance of the carriers in getting to market, they don’t want to ruffle any feathers. Apple aside, which in terms of operator relationships is in a shot-calling class of its own, the vendors seem universally keen to portray themselves as the operators’ friends and supporters. Sony Ericsson’s global head of sales, Kristian Tear, is a deferential case in point:

“We have no ambition to replace opera-tors,” he says. “They have acquired expensive licences, built out infrastructure and—to a large extent—they facilitate the development of mobile phones and mobile broadband. So we try to work together with them.”

As if to reinforce the message, Simon Lee-Smith offers a thinly veiled warning to handset manufacturers when he says that the vendors which don’t recognise the “end to end value chain of devices”—for which read the interests of the operators in that value chain— “rarely do well.” There are some vendors, he says, without naming names, whose interest wanes once the operator has bought their product. How to sell this product onto the consumer is the operators’ problem, as far as these players are concerned—a position which doesn’t win much favour with Lee-Smith.

“That’s a very myopic view,” he says, “and we won’t support those vendors.”

In truth, though, the handset vendors don’t need threats to motivate them. For most of them a new reality is dawning in which, despite their protestations to the contrary, differentiation is becoming increasingly difficult. The launch in October of Huawei’s first own-branded Android smartphone, the Vision, offers the perfect illus-tration: It simply wasn’t clear what a consumer would see in the Vision that set it apart from the alternatives from Samsung, Sony Ericsson, HTC and the rest of the Android collective.

Peter Becker-Pennrich argues that, while there are actually differences between the handsets from the various players, the customer percep-tion is that differentiation between them is minimal. Consumers typically gravitate towards the large brands, he says, making it very hard for the chasing pack to pitch any kind of USP.

“What happens at the beginning of the innovation cycle, typically, is that whoever owns that innovation is able to capitalise on it and build a brand value,” he says. “Later on, as the innovation cycle flattens out and more people can do it—and price goes through

the launch in october of huawei’s first own-branded android smartphone, the Vision, offers the perfect illustration: It simply wasn’t clear what a consumer would see in the Vision that set it apart from the alternatives from samsung, sony ericsson, htC and the rest of the android collective.

Jim Balsille (left) and Mike Lazaridis (right)

23-30_MCI174.indd 24 06/02/2012 11:09


sMartphones feature

the floor—it’s very difficult for the players that were not part of the first wave of innovation to explain to customers why they should pay a premium for their brands.”

Given that Apple alone can claim to have truly owned the current innovation cycle from the outset, all of the other vendors fall into the second wave and are battling one another for stability in the market. Those that are success-ful—Samsung chief among them—are forced to navigate the obstacles placed in their path by Apple’s aggressive legal strategy.

The problem is compounded by what some handset sector executives have identified as the beginnings of a shift in loyalty away from handset brand in the high end towards the OS. “The growth of Android has demonstrated that customers value the operating system,” says Telefónica’s Simon Lee-Smith. “Increasingly people are coming in and asking for an Android device, rather than a Samsung or Sony Ericsson.”

As handset brands have historically held greater sway than operator brands, vendors and operators are bound together by the shared threat from the platform players like Apple, Google and—if it is successful with its revamped Windows Phone offering—Microsoft.

For Microsoft, being perpetually late to the party could finally be construed as a positive, at least in terms of the reception it’s now get-ting from operators. None of the carriers feel safe with a smartphone platform duopoly that Accenture’s Dan Adams categorises as “Apple at the top and Android at the bottom.”

Peter Becker-Pennrich says that this du-opoly “feels uncomfortable”. Like all opera-tors, he bends a knee to Apple, saying: “It’s no wonder they are the most valuable tech company in the world right now, because they have the best content, delivered through the best processes.” And his take on Android is also positive. While iOS “makes it difficult for us to push our services and differentiation agenda,” he says, Android scores highly for operators on issues like commercial flexibility and the ability to pre-embed and deeply root carrier software into the OS.

“The only problem,” he says, “is that if Google had a bad day and changed all of its policies, there would be relatively little that the industry could do about it. That’s where a lot of the discomfort is coming from, and we need more competition in that space.”

Once upon a time carriers would have looked towards Blackberry vendor Research in Motion for the third platform, but those days are long, and perhaps irretrievably, gone. When Orange’s

Patrick Remy says, “having only two ecosystems would be something that we’d be concerned about—having a third is important to us and our customers,” he offers a damning assessment of RIM by not even considering it as a prospect.

Microsoft’s bid to exploit this need for a third ecosystem, and to drive quality technical and strategic execution, will surely be one of the great device sector narratives of the next twelve months. And it is not only Microsoft’s fortunes that this narrative will chart; Nokia, too, is fully exposed to whatever difficulty or reward lies in store for Windows Phone.

The launch of Nokia’s Lumia 800 was ar-guably the biggest product story to emerge from the handset sector in 2011, and with good reason. Once arch-rivals in the handset space, Nokia and Microsoft now depend on one another for success in what is, for both of them, the latest (and possibly last) of several costly and involved rolls of the smartphone dice. Both of them talk of the importance of growing the WP ecosystem, with the participa-tion of other vendors key to its success. But for the time being Nokia and Windows Phone are essentially one and the same.

Microsoft’s other vendor partners, which have shifted en masse to Android during Windows’ time in the wilderness, will not rush back to Redmond until they’ve seen how Nokia performs—not least because the exact nature of the relationship between Microsoft and Nokia, and in particular the level of favouritism the Finnish vendor will be shown as part of it, is not being communicated. So when Nokia’s UK and Ireland MD Conor Pearce says “we’re trying to build a third ecosystem, to bring balance to the market” and “we’re proud to be doing the first real Windows Phone,” he is positioning Nokia, as well as Windows, as the answer to carriers’ concerns over the platform duopoly.

And few people seem willing to write the partnership off. “The market is open for Mi-crosoft and Nokia to have a really good play here,” says Accenture’s Dan Adams. “Microsoft have never really cracked the handset market but never bet against them in a consumer play. Just ask Sony Playstation if the Microsoft brand is cool enough to sell to consumers. And one thing that can be guaranteed is that Microsoft will be able to create a good development community.”

The marketing push that Nokia is putting behind the Lumia 800 is immense and, if the phone falls short of expectation, it won’t be for lack of consumer awareness. Taking its lead from Apple, the Finnish vendor is »

Samsung Galaxy Nexus

rIM 9900

Nokia Lumia 800

23-30_MCI174.indd 25 06/02/2012 11:22


feature sMartphones

looking to position its new flagship firmly at the premium end of the market and this aspiration may be one stumbling block to suc-cess, at least if the views of Telefónica’s Simon Lee-Smith are any measure of the situation.

“Nokia are coming back at high end levels, but generally Nokia devices are expensive—and if they want to sell in volume they need to bring out devices that are cost competitive,” he says. “Manufacturers seem to think that a €400-plus price is the norm. Well, it isn’t; customers and operators won’t pay that level of cost for a device which doesn’t differentiate sufficiently.”

Nonetheless, Lee-Smith—like his opposite numbers at Vodafone and Orange—stresses enthusiasm for the Lumia 800 as well as the wider Windows platform play. And, while we’ve seen how important it is for vendors to support carriers in the handset space, the relaunch of Windows Phone illustrates how that support

can travel in the opposite direction. At Nokia World 2011, where CEO Stephen Elop unveiled the Lumia 800, he said that the operators car-rying the new handset would be spending three times as much on marketing it than had been spent on any other Nokia handset.

In the UK, Telefónica’s O2 has a phalanx of in-store sales specialists called Gurus, schooled to a specialist degree in the work-ings and strengths of various handsets within the carrier’s range. The closer the vendors work with the Gurus, says Simon Lee-Smith, the better the Gurus will be at selling their handsets. “The Guru programme has been very successful,” he says, “and it has increased sales for all of the vendors that have been involved in the programme.”

So Nokia, like the rest of the vendors in the high end market apart from Apple, will now adopt a pro-carrier stance. This position is

neatly summed up by Sony Ericsson’s Kristian Tear in a comment aimed squarely at Apple (and one that might perhaps be aimed at Google, too, were it not for Sony Ericsson’s commitment to Android): “We want to support the operators, rather than try to steal their customers and consumers away from them, and we’ll continue to do that.”

A dynamic that sees the market leader challenging for customer ownership and the chasing pack pledging allegiance to the operator community is nothing new, of course. While New Nokia would never do such a thing today, it was not that long ago that it launched Club Nokia, which can be viewed in hindsight as an overly premature or poorly executed (or both) attempt at the strategy that Apple made its own. And when Nokia was making its bid for supremacy, its peers made similar noises about the importance of the carrier. »

As the director of marketing for Vodafone’s global device unit, Peter Becker-

Pennrich is closely involved in the procurement of up to 70 million mobile

devices each year. Like all operators in mature markets, Vodafone has an interest

in seeing a third smartphone ecosystem thrive in a market dominated by Apple

and Google. Here Becker-Pennrich gives his frank assessment of the prospects

for Nokia and Microsoft as they spearhead the Windows Phone challenge, and

his thoughts on Research in Motion, which at one point would have been viewed

as the natural provider of a third way.

On Windows Phone…WP is not there yet. They are making genuine efforts for WP8 but in WP7 there

is still a lot to be wished for, especially when it comes to offering all those things

that we need on the enterprise side, and the overall flexibility of the OS.

On Nokia…Success isn’t guaranteed, but it’s not all doom and gloom, as you sometimes see

in the analyst opinion pieces. They still have one of the strongest and largest

supply chains in the world and their economies of scale are significant. And they

still have a significant presence in all the markets that they operate in. They

know how to work the channels and they have the sales structure in place.

They still have brand value, and a lot of brand recognition, which is a dormant

asset. If they manage to underpin that with more attractive products then I

can see how a lot of these things can be leveraged again. Will they succeed for

sure? I don’t know, but they have a fighting chance and therefore I’m tentatively

optimistic.

On Microsoft…I continue to be confused by Microsoft’s stance in the smartphone market. On

the one hand they want to provide a fairly rigid, streamlined experience because

they say they don’t want to confuse the consumer and they want to offer a

recognisable experience. But this is of no value to anyone in the ecosystem

other than Microsoft.

They want to be restrictive with their

experience and at the same time they want

to appeal to as many OEMs as possible—and

you just can’t square that. Why would an

OEM be interested in taking the platform if

they can’t differentiate on top of it?

On the Microsoft-Nokia partnership…My long term expectation is that, at some

point, Nokia and Microsoft will become

one, but not necessarily from a financial or

corporate entity perspective.

On research in Motion…RIM reminds me right now of Nokia

around the time when they were selling

the N97 and a bit later. If you have strong leaders who take credit for leading

the company to its present position, they really struggle to see that they

shouldn’t be the ones who take it forward. I’m not sure whether RIM entirely

understands the magnitude of the problem they have; I don’t think it has

completely sunk in.

What are their options? Licensing another OS doesn’t really make any sense

because, what makes your Blackberry really valuable is not the UE, or the

integration, it’s the unbeaten ability to have push email with very decent battery

life that is stable and robust. They took a lot of flack for the outage recently,

but they ran so many accounts for so many years with no problems. That’s their

strength. And the special sauce of this thing is just about where the silicon hits

the software. So it’s not going to be easy for them to put some standard soft-

ware on top of their hardware and then somehow make best use of everything

they’ve developed.

It will be a massive effort, but I think they will go for an open OS which they

don’t control, which is why they made the QNIX purchase.

A buyer’s perspective

Peter Becker-Pennrich

23-30_MCI174.indd 26 06/02/2012 11:10

Untitled-1 1 08/02/2012 12:38


feature sMartphones

Phone numbers

OS 3Q11 units 3Q11 Share 3Q10 units 3Q10 Share

Android 60,490.4 52.5% 20,544.0 25.3%

Symbian 19,500.1 16.9% 29,480.1 36.3%

iOS 17,295.3 15.0% 13,484.4 16.6%

RIM 12,701.1 11.0% 12,508.3 15.4%

Bada 2,478.5 2.2% 920.6 1.1%

Microsoft 1,701.9 1.5% 2,203.9 2.7%

Others 1,018.1 0.9% 1,991.3 2.5%

Total 115,185.4 100 81,132.6 100

Worldwide smartphone sales to end users by operating system, 3Q11 (thousands)

the latest figures from market analyst Gartner, for the third quarter of 2011, show an increase in handset sales of 5.6 per cent year on year, to reach 440.5 million units. Growth in the smartphone segment was far more dramatic, with sales increasing 42 per cent year on year, although smart-phone sales as a share of overall sales grew by just one per cent to 26 per cent in the third quarter.

While nokia remains the overall leader in the market, with 23.9 per cent of overall sales, the third quarter saw samsung take the top spot in the smartphone market for the first time. the Korean vendor, which sits in second place in the overall market saw sales of its smartphones to end users triple year on year to hit 24 million units, Gartner says.

apple’s iphone shipments grew 21 per cent to 17 million, although this figure was a decrease sequen-tially. Gartner expects apple’s Q4 numbers will be far stronger based on pre-orders for its latest device, the 4s. the firm is seeing increasing demand in markets outside of its traditional core, including Brazil, Mexico, russia and China.

Gartner also believes nokia and Microsoft will see a “true turnaround” in the second half of 2012, as their concerted efforts to push the new Windows phone products yield fruit.

Vendor 3Q11 units 3Q11 Share 3Q10 units 3Q10 Share

Nokia 105,353.5 23.9% 117,461.0 28.2%

Samsung 78,612.2 17.8% 71,671.8 17.2%

LG Electronics 21,014.6 4.8% 27,478.7 6.6%

Apple 17,295.3 3.9% 13,484.4 3.2%

ZTE 14,107.8 3.2% 7,817.2 1.9%

RIM 12,701.1 2.9% 12,508.3 3.0%

HTC 12,099.9 2.7% 6,494.3 1.6%

Motorola 11,182.7 2.5% 8,961.4 2.1%

Huawei 10,668.2 2.4% 5,478.1 1.3%

Sony Ericsson 8,475.9 1.9% 10,346.5 2.5%

Others 148,990.9 33.8% 135,384.1 32.5%

total 440,502.2 100% 417,085.7 100%

Worldwide mobile device sales to end users by vendor, 3Q11 (thousands)

23-30_MCI174.indd 28 06/02/2012 11:10

From an idea to the screens of the world, MIPTV has the power to transform your business.

MIPTV is where 11,500 participants & 4,000 buyers from 100 countries converge, united by their passion for TV - in all its forms. Shape and make deals, create bridges across our expanding industry and unlock new business opportunities.

Sunday April 1st to Wednesday April 4th 2012 | Cannes, France Accelerator Events | MIPDoc, MIPFormats, MIPCube | 30-31 March 2012

Where do youwant to go next?

To book a stand, register & advertise: www.miptv.com

MIPTV-MCI_204x277.indd 1 06/02/12 19:26


feature sMartphones

Club Nokia did not sit at all well with the operators, and its failure gave credibility to the unsupportive stance they adopted. There was no such attempt to stand firm in the face of Apple, however, and just as the chasing pack of handset vendors make all the right noises about the importance of the operators, so the operators themselves cannot be seen to bellyache about the level of control Apple exerts over them.

And yet it’s an open secret that the carrier community harbours a level of resentment towards Apple. Of course very few people want to put their head above the parapet and say so; for an operator spokesperson to voice any sentiment along these lines would probably be a firing offence. But even third parties and partners get extremely jittery on the topic.

One man who doesn’t mind calling the situation as he sees it is industry consultant Bengt Nordström, a former CTO at Hong Kong carrier SmarTone and alumnus of Ericsson and Comviq, among others. “We hear from the operators about how Apple treats them and they’ve never seen anything like it before in the industry,” Nordström says.

“When [Apple] began to dictate the situa-tion, questioning whether operators were good enough to sell their product, it conflicted with the views that operators have of themselves.”

The problem is compounded by performance issues with iPhone products that operators, in many cases, must shoulder, he says. “Many of these problems are caused by Apple’s technical solutions, such as their poor radio antennae,” he says. “But when they try to bring these things to Apple’s attention, they get ignored.”

For Apple, undisputed over the past four

years as the leading innovator in the smart-phone space, 2011 will go down as one year in which the key milestone was not product related. The death of Steve Jobs overshadowed the launch of the iPhone 4S and forced the industry to confront what it had long been debating hypothetically: Can Apple continue to dominate without its leader—a complex character who will be remembered as much for his ruthlessness and dictatorial management style as for the clarity and genius of his vision.

For Tim Cook, who replaced Jobs as CEO when Jobs’ illness made it impossible for him to continue to lead, the pressure is well and truly on. While his debut performance unveiling a new product was made under the pall of Jobs’ imminent demise, the iPhone 4OS itself met with nothing like the positivity that greeted its forebears. The world was waiting for iPhone 5, and what it got was Siri; a voice control function that sits alongside Facetime as another attempt from Apple to breathe life into a concept that the mobile industry has long used to define the future. »

While Vodafone’s Peter Becker-Pennrich pays tribute to Apple’s successes, there is a caveat attached: “The question is whether or not the will have the best product going forward,” he says. “The iPhone 4s was a disappointment to many people and—if you forget about brand value for a moment and compare it to a Galaxy Nexus of SII, or the HTC sensation—you’ll find many reasons why the iPhone wouldn’t be rated as high as the others.”

Whether or not Apple can sustain its status as the definitive innovator in the space is prob-ably the biggest question in the smartphone market for the near term. Certainly the tech-nological gap between it and its competitors seems to be shrinking. Simon Lee-Smith says that Apple still out-executes its competitors and retains a design edge. But he adds that, “the others have brought themselves much closer to iPhone and Apple in general. The gap is closing—and closing rapidly.”

Of course the question of whether Apple re-tains its leadership leads to another, more open debate: If Apple is to be ousted, who or what will succeed it? Even the people most intimately involved in the handset sector concede that they’d be far wealthier by now if they had the answer to this question. But there are a few ideas.

There is a consensus that, any player that is able to make a true success of a domestic, multi-device connectivity play—somehow harnessing the benefits and experiences available through the television, the PC, the

smartphone, tablet and other devices (games units, for example) could find themselves in a very strong position. “Whoever gets that right first will be able to command a premium on their products in the phone space,” says Becker-Pennrich.

Such a trend would play well for the likes of Samsung; strong in TVs and handsets, and working hard to become so in the tablet space. The new Sony device business, when the Ericsson half of the brand has been phased out, will be all about adding “Sonyness” to the products, says Kristian Tear. “We believe in the convergence of screens and this is putting us in an excellent position for the next five to ten years,” he says.

Simon Lee-Smith is thinking along similar lines, addressing the question of whether whichever company usurps Apple will have to exert a similar level of control from one end of the device play to the other. “I think Apple will be challenged by a company that has end-to-end control, but not necessarily of hardware and software,” he says. “Someone will bring out an integrated solution which offers software, services and connectivity as a whole, and it won’t be about the looks of the device. There will be another competitive landscape, and this is where other companies will leapfrog Apple.”

In the immediate term, as the smartphone innovation cycle winds down, tablets will lead the next one and, here, Apple looks to have already established another leadership position. Given the similarities in the DNA of smartphones and tablets, however, the chasing pack are already showing themselves to be far quicker off the mark, and the tortuous legal battle between Apple and Samsung, is likely only the tip of the iceberg.

As the carriers, vendors and platform pro-viders tussle for position, they are in chorus on the view that the consumer holds the final decision-making powers. In the end it will be down to the consumer to judge whether or not the Lumia 800 is worth a certain amount, or whether Android has evolved to the point where it is no longer perceived to be a poor cousin to iOS. It will be the consumer whose loyalties will reflect the strengths and weak-nesses of all the players in the value chain and the consumer who decides what innovation is the winning innovation. And it should not be forgotten that there is a distinct possibility that the next great innovation leader in the device space is not a name even known to that consumer as 2012 unfolds. n

the late Steve Jobs

23-30_MCI174.indd 30 06/02/2012 11:10

25-27 March 2012, Westin Mina Seyahi Beach Resort and Marina, Dubai, UAE

JOIN USwww.broadbandworldforum.com/community

FOLLOW USwww.twitter.com/bbworldforum

The Middle East and Africa's Premier Broadband Event

Official Government Partner StrategicOperator Partner

Brand New for 2012 - More Innovative Networking Opportunities

RURALBROADBAND

Official Supporter The Etisalat Smart Home in a Box Connected

Home Masterclass

FREEEXHIBITION

ENTRY

Learn from and network with 70+ leading industryexperts including 40+ operator speakers

Hear from the Content Players Transforming the Broadband Industry

Mohamad Mourad, Regional Manager forthe Gulf Region, Google

Samir Ibrahim,Head of Distribution NewMedia and Merchandising,Al Jazeera Television, Qatar

Hassan Chahine,Technology Advisor, Dubai Media Incorporated

Patrick Boulos, MENA MD, Universal Music, UAE

Driving Sustainable Growth of Broadband in the MEA region

The Foremost Operators in Broadband Delivery in the Region

Hatem Bamatraf,Senior Vice President - Network Development& Operations, du

Nasser Bin Obood,CEO, Etisalat, UAE

Dr. Saad Zafer Al Kahtani,CEO Strategic Operations,STC

Regional Regulatory Decision Makers

H.E. Amir Zai Sangin,Minister for the Ministry of ICT, Afghanistan

Dr. Imad Hoballah,Acting Chairman and CEO andHead of TelecommunicationsTechnologies Unit, TRA Lebanon

Nayla Khawam, CEO,Orange Jordan

50%

DISCOUNT FOR

REGIONAL OPERATORS

www.broadbandworldforum.com/mea

�70+ speakers

�40+ operator case studies

�1000+ attendees

�76% operator attendance

�30+ countries represented

�44% CxO/VP/Director level Nima PourNejatian, CTO,MobinNet Telecom Co., Iran

Jayhun Mollazade, CEO,Azqtel, Azerbaijan

Gold Sponsor Rural BroadbandSummit Sponsor

Networking Break Sponsors

9658 BBWF MEA Ad For MCI_Layout 1 08/02/2012 12:21 Page 1

vendor viewSPONSOReD AND wRiTTeN BY

Encryption: will it be the death of DPI?As more websites move to encrypt their content and user data, more questions are raised over the future of Deep Packet Inspection. But advances in heuristic classification mean that DPI systems will still be able to function in an encrypted world.

Every time that I participate in a speaking panel on Deep Packet Inspection (DPI), someone asks,

“How do you cope with encryption?” This is a good question since we’re seeing broader deployment of secure web browsing on the Internet; in fact, Facebook publicly moved parts of their site to “https://” in 2011, and Google now defaults to “https://” for their users.

What does this mean for DPI and all the investment that operators have made in DPI technologies? Are all of the DPI-based traffic shaping systems in the market suddenly going to become use-less? Will we need to come up with new techniques to manage traffic?

Fundamentally, encryption will not be the death knell for DPI, but it will force greater innovation as operators seek to manage increasing traffic volumes, and to deliver the customer experience their subscribers demand.

The Drivers for DPIDPI is a technology that can be used for multiple purposes, but the most popular to date has been traffic shaping systems used to manage congestion, first on fixed networks, and more recently on mobile networks.

It’s a cliché to talk about the rate at which mobile data is growing, but this growth remains the dominant driver of mobile infrastructure development and deployment decisions. With the amount of mobile data almost doubling every year, even long-anticipated solutions like Long Term Evolution (LTE) only help—they are not the cure. LTE provides “only” a 3X improvement in spectral efficiency—enough to satisfy 18 months of the projected growth—but is years in

the making and will take years more to fully deploy. Other pieces of the solu-tion include small cells, Wi-Fi offload, and opening up new spectrum, but each of these is likely to provide only part of the solution.

Given this reality, it is inevitable that there will be congestion in the network—because operators can’t roll out new technologies and spectrum fast enough to meet the demand. Once this congestion hits, an operator has a limited set of options:• Donothing,andallowtheuserstofight

it out for bandwidth. In this scenario, a single user downloading a large file can cause poor performance for everyone else in the same cell site.

• Performsimplistictrafficmanagementand allocate each user a fixed share of the spectrum. This is better than noth-ing, but is not very efficient.

• DeployaDPI-basedtrafficshapingplatform and intelligently adjust the bandwidth to each user and to each subscriber individually. This allows in-dividual applications to be prioritised against each other, and can improve the quality-of-experience (QoE) for every subscriber in the cell, including the heavy users.These traffic shaping platforms have

seen strong market adoption and are expected to be a $1.6bn market by 2015.

DPI-based Platforms: Different ImplementationsCurrent DPI or Traffic Shaping platforms can be separated into two categories: those built around a general purpose

packet processing platform, and those built with dedicated ASICs or FPGAs.

The ASIC/FPGA-based systems have an intuitive appeal: for a given fixed problem, they can be optimised to per-form well on that problem and can offer appealing performance and price points. While they come with a long develop-ment cycle and a high development cost, these drawbacks are often overlooked in the zeal to have the densest or highest performing system. This approach is also more common when the DPI func-tionality is integrated into some other piece of equipment such as a router or a mobile network node like a GGSN or LTE gateway. These systems weren’t designed for DPI, so the functionality is shoe-horned into some limited power and space budget.

A different approach uses a general purpose packet processing platform, which uses a blade-based server that has been adapted for use as a packet processing platform by adding load balancing, special packet routing soft-ware, and multi-core processors. Here the developer uses the processor cores to execute the DPI and packet shaping

Standalone service provider DPI productsForecast to grow to $1.6 billion in 2015

©Infonetics Research, Service Provider Deep Packet Inspection ProductsBiannual Market Size, Share, and Forcasts, October 2011

1.8

02011 2015

Glo

bal R

even

ue

in $

US

Bill

ions

32-33_Vendor view.indd 32 06/02/2012 14:58

vendor view

Mike Coward VP Strategy & Innovation, Radisys

Although strict encryption prevents the DPI platform from looking into the packet, there are still plenty of clues for the DPI platform to look at.

algorithms—making this a software exercise, not a silicon development one. This approach has been popular in the standalone traffic shaping market, which is aiming to offer the highest per-formance possible and can leverage the pace of silicon change with new chips coming out every year.

Everything, EncryptedEncryption has been discussed in the DPI community for years, but it was always seen as a theoretical problem with a couple of famous exceptions (e.g., Skype going to great lengths to conceal itself). 2011 was a turning point: the year started with Facebook announcing that many of their services would be offered over encrypted web sessions by default. Facebook’s decision was triggered by the release of a proof-of-concept hacking tool called Firesheep that allowed users to snoop Facebook traffic on open Wi-Fi networks and impersonate other users. This was followed throughout 2011 by other high profile services like Twitter and Google moving to encrypt their ses-sions as well.

It is fairly clear that this is a one-way evolution. Significant barriers to encryption have been the hardware cost and the time it takes to encrypt and decrypt traffic. But these are shrinking every year with Moore’s Law, as even desktop and mobile CPUs get dedi-cated instructions added to accelerate encryption. Furthermore, once a web service has added encryption, it’s hard to imagine a reason that they would later remove it, so we can expect to see a steady increase in the percentage of encrypted traffic as service after service adds encryption.

Adapting DPI Platforms to an Encrypted WorldTo come back to the original premise of the article: No, in the general case, DPI platforms cannot break the encryption and look inside the packets.

In order to think about how a DPI platform can function in an environment where most of the traffic is encrypted, it is helpful to think back to the main purposes of commercial DPI platforms today: to understand which users are consuming the available bandwidth and then making intelligent decisions about which traffic to prioritise. Although strict encryption pre-vents the DPI platform from looking into the packet, there are still plenty of clues for the DPI platform to look at: the source and destination of the traffic, the packet size, and the pattern of packets. For ex-ample, a stream of small packets every 20 milliseconds in both directions is almost always a VoIP call. Traffic to and from the Facebook servers is, by definition, Facebook traffic. It’s also possible to cor-relate separate flows: even if everything is encrypted, if the platform sees a request to a server at CNN, followed by a request to Akamai, it can reasonably assume that Akamai is serving CNN content and thus apply the appropriate rules. This is called “heuristic” or “inferred application” clas-sification, and can reach similar levels of accuracy as the traditional DPI approach.

With this information, the DPI platform can make the same decisions that it would have if the packets were unencrypted: control the amount of bandwidth that each user is allocated, and within that band-width help the user prioritize interactive services like VoIP and video streaming while de-prioritising less sensitive services like big downloads or backup sessions.

This approach is more compute-inten-sive than traditional DPI—it takes more CPU cycles to track flows, look at packet sizes and packet arrival times, and then correlate different flows than to just look inside the packet—but it’s still possible. Developers with FPGA and ASIC-based platforms are in a tough spot, though: the ASICs can’t be changed once they are in the field, and the task is more complex than FPGAs can be expected to handle because they are good at fixed function but poor at heuristic correlation.

Developers on Commercial Off-the-Shelf (COTS)-based packet processing platforms have an easier time: the same multicore CPU that was looking inside the packet can instead run heuristic code to infer the application, so systems that are already deployed can be repurposed to handle encrypted traffic with just a new software load.

The death of DPI?The death of DPI has been predicted multiple times. I’ve no doubt that very prediction will be proffered at this year’s Mobile World Congress.

There are those who believed the functionality would be absorbed into adjacent network nodes. Those who argued that users wouldn’t put up with it. Most recently, there have been those who believe that encryption will render DPI useless. The shift to heuristic-based application classification, however, coupled with the use of general purpose packet processing platforms, provides a solid path forward that preserves exist-ing investment and delivers the same benefits in a timeframe that meets the needs of operators already struggling with traffic congestion. n

32-33_Vendor view.indd 33 06/02/2012 14:59

feature applications

34 Mobile communications international | First for news, best for business

Since mid-2008, when Apple cut the rib-bon of its genre-defining App Store, the concept has swept the mobile industry

and become the primary means for consum-ers to discover content. Today there are more than 500,000 available apps in the Apple App Store and over 370,000 in Google’s Android Market, while Windows Phone Marketplace, Nokia Ovi Store and BlackBerry App World follow behind at some considerable distance.

There is also a substantial customer base. According to Gartner, smartphone sales ac-counted for 26 per cent of overall handset sales in the third quarter of 2011. Then of course there’s the nascent but not insignificant tablet space. Overall there’s a strong ecosys-tem in existence, with plenty of opportunity for developers, who create the applications that are the lifeblood of these ecosystems, to flock to the biggest store fronts.

And this is the problem. Application stores, now swollen with content, have become somewhat daunting, especially for the many first-time users migrating to the smartphone space from the feature phone market. For developers, the big risk is getting lost in the crowd, buried beneath dozens of other apps that might be cheaper or similar in nature,

offer more novelty value, or whose develop-ers simply got luckier. Moreover, the bigger a store gets, the harder it is to police, and the more likely that a sub-standard or even downright malicious app will make it through the vetting process, damaging the experience on that platform for everyone.

According to Lee Epting, director of content services for Vodafone group, consumers are prioritising quality over quantity: “They’re saying, ‘give me choice but don’t give me too much choice’. It’s a daunting prospect to have to scroll through thousands of apps to find one quality item and then buy it in the hope that it’s ok,” she says.

Vodafone isn’t the first carrier to try and po-sition itself as a filter between the thousands of available applications and the bamboozled consumer. But it recently went a stage further, with the launch of a branded experience in the Android Market that introduced carrier billing and also opened a separate, curated app store, designed to showcase a selection of apps from multiple platforms and stores, all of which have been tested against Voda-fone’s network.

“What we’ve found when we check these apps, is that there’s lots of stuff getting into

the Apple App Store that we don’t think Apple would be happy with. We don’t know why, maybe they dropped the bar,” Epting says. “But when we quality check these apps they fail our standards, mainly for using APIs not required for the app. So we’re more stringent than other app stores.”

In its branded App Select store, a stan-dalone experience pushed out via widget and web to new and existing users, Vodafone will focus on showcasing the top 100 apps from any shop. There will be no archive, with con-tent being refreshed every three months—and, if an app is not moving, it will be cut. Fur-thermore, all content is localised by market.

If Vodafone is correct in its assessment there is a new generation of smartphone agoraphobics who, unsettled by the wide, open plains of the internet and its application stores, are clamouring to be let back into the walled garden. It could be argued that the growing adoption of HTML5 as a rich web technology will exacerbate this problem as many see an HTML5 site as a cheaper alterna-tive to a full blown mobile application.

“The app store model is certainly a bubble, but this time it’s clear that the shift isn’t temporary,” says Mark Doherty, strategic solutions manager »

Spoilt for choiceWhile there are some who believe the devices space has become a two horse race in terms of platforms, with apple and Google’s android as the only runners, the software side of the mobile experience is in a state of flux, and 2012 may still be too early to place confident bets.

By James Middleton

34-36_MCI173.indd 34 06/02/2012 11:25

Untitled-1 1 09/02/2012 09:01


feature applICatIons

at Adobe Systems. “For agencies and publishers we’ve now come out of the era of using marketing budgets to simply join the crowd on iOS. Brands are now starting to measure their successes and optimise their spend. We also know that mobile budgets are not growing, so brands are looking for ways to reach more devices with the same cost and that’s where HTML and cross-platform technologies come in.”

In November, Adobe called time on Flash Player for mobile devices, ending development on the browser plugin following the release of Flash Player 11.1 for Android and Black-Berry PlayBook. Doherty says that HTML5 is certainly one path forward, although it will take years to produce widely consistent web standards necessary to support everything required by the creative and publishing industries in HTML. Meanwhile standalone applications can still be built using Flash tooling and targeting with Adobe AIR across iOS, Android, Blackberry, Amazon’s Kindle Fire and other devices. “It turned out that content owners just weren’t that interested in optimising Flash content for mobile browsers, but they are keen to build applications and so Adobe is supporting that model,” Doherty says.

While Flash is being refocused towards pre-mium video and gaming experiences and other use cases that would be impractical or impossible with HTML, Doherty points out that, with larger screens such as those appearing on tablets, users hunt for—and find—different content.

On the flip side, more of those large screens are coming on line, partly due to the success of the iPad but more because Android inherently lowers the barrier of entry for newcomers to the tablet and mobile devices scene. And with the most successful application stores run by a mixture of web entities and device OEMs, the operator looks somewhat shut out of the ecosys-tem, according to Paul Buchheit, an ex-Google developer credited with the creation of Gmail as well as the company’s “Don’t be evil” motto.

“The carriers are such a roadblock to in-novation a lot of times and Google, Microsoft, Amazon, Apple and Facebook are all in this re-

ally aggressive war with each other and they’ve all got a lot of money. If something like buying a carrier gave one of them a leg up in terms of offering services it may well make a lot of sense. But right now things are held back a lot of times by carriers trying to squeeze as much money as possible out of the industry. Look at how long the iPhone was stuck on AT&T’s network while Android got a huge opening by being available on Verizon,” he says.

In Buchheit’s crystal ball, the mobile plat-form space will be a two horse race between Apple and Android. “Android has so much momentum and its free—it has a negative cost so how do you compete with that? And Apple is just a better experience. So what room does that leave for any other players?”

Vodafone’s Lee Epting believes that users exploring the device default to an app-centric world and, while widgets as a concept are becoming increasingly dynamic, you get more richness from native apps. “I have yet to see one new paradigm put another paradigm to death. Just look at Java,” she says. “It’s still a primary breadwinner for a lot of app developers today and is a mainstream in the emerging markets. Java will still be around for some time because people with feature phones will want content too.

“Developers are living in a mixed soup, so we are saying a curated app shop is what will matter to the next wave of smartphone users,” she says. “We’re going after an existing channel—Android Market—and saying let’s have a curated store within that, but also let’s hit the browser and have a widget framework with real time updates.”

But another player that has seen reasonable success as an app development platform, as well as managing to cosy up to the operators and the device vendors is Facebook, a social network that has been smart in its packaging of APIs, and very successful in integrating social gaming and driving brand awareness through applications.

Take Nokia Siemens Networks (NSN), which in October, launched a self-care app for Facebook, allowing operators’ customers to personally

manage their fixed and mobile telecom services from their phones. The app enables end users to check their balance, buy special offers and subscribe to services from their respective service providers. It also hits a sweet spot with operators by setting up a self-care platform, freeing up the carrier’s in house resources.

Henri Moissinac, head of mobile business at Facebook, says he doesn’t see Facebook as a “rival” development platform because a lot of the things done for mobile developers recently are on top of Android or iOS. “So we’re making these platforms more and more relevant for develop-ers. We’re making them social, focusing on social apps. So rival isn’t right but we’re starting on Android and iPhone and trying to spread out into other platforms,” he says.

In one sense the firm walks a fine line because it relies on the carriers and handset manufac-turers to push the social network to the users. But Moissinac does reveal that the company is trying to push the envelope with regards to specific experiences that pitch Facebook more as a handset UI. “You can sync your address book with Facebook and for some devices and users maybe that will be the only address book that they use,” he says, conceding that the proposition might not be attractive for “the entire world”.

For Facebook, in a mobile environment at least, its greatest traction comes through the apps, on various platforms, as every time a user migrates from the mobile site to the app Moissinac says the company sees “engagement going through the roof” due to a better and faster experience. Yet he also sees potential for a more intelligent browser.

In fact, the consensus is that native apps, widgets and rich web sites will co-exist for some time to come. The big question is whether these existing channels, left to a ‘let 100 flowers bloom’ model, will be able to maintain, or in some cases regain, quality. The users hold all the trump cards and will take the simplest option. But this doesn’t mean the most permissive player will take the lead, rather the most shrewd cultivator of those pieces of content. n

the big question is whether these existing channels, left to a ‘let

100 flowers bloom’ model, will be able to maintain, or in some

cases regain, quality.

34-36_MCI173.indd 36 06/02/2012 11:26

Step up to the next level www.telecomsminimba.com

Developing dynamic and effective telecoms professionalsto deliver organisational success

Our Distance Learning courses rapidly build your competency, knowledge and confidence – and are designed to fit in with your work schedule

“I will strongly recommend to our HR thatthey sponsor more students on this course”KM, NET*ONE (PVT) LTD, ZIMBABWEDistance Learning

Our Distance Learning courses for the telecoms industryprovide you with the opportunity to enjoy the full benefits of studying,whilst still in employment using the freedom and flexibility of distancelearning to your advantage. Courses run over three, six months ornine months, depending on whether you opt for the UniversityCertificate or standard programmes. Mandatory modules andspecialist modules of your choice provide comprehensive coverage of the subject. The flexible options include both technology andbusiness modules, enabling you to select a programme that is rightfor you.

Diploma in Modern TelecommunicationsStarts 29 February 2012

For those who need a more thorough understanding ofcommunications and its evolution.

Diploma in LTE and Advanced CommunicationsStarts 28 March 2012

For those who would benefit from a thorough grounding in LTE andthe many supporting technologies – with a technical focus.

Diploma in Telecoms BusinessStarts 25 April 2012

For those who would benefit from a thorough understanding of thecommunications business environment.

Foundation in TelecomsStarts 26 April 2012

For those new to the industry or those needing a good grounding inmodern communications – covering technology and business.

Our fully accredited Telecoms Management and Distance Learning programmes offer you the opportunity to gain Universitycredit points with the option of a recognised University Certificate on successful completion. Contact us for more information:

Tel +44 (0)20 7017 4144 Email [email protected] Web www.telecomsacademy.com

THESE PROGRAMMES ARE FULLY ENDORSED BY THE GSADiscounts are available for GSA members. Please call us on +44(0)20 7017 4144 for details.

Quote ref to: MCI0212

Research & analysis provided by

Telecoms Mini MBA

A five day practical, interactive programme for mid to seniorprofessionals delivering a fantastic blend of knowledge andskills. The programme is designed to give a critical understanding ofthe key competency areas required for success within the

Enhance your career prospects www.telecomsacademy.com/dl

Attend the Telecoms Mini MBA in Istanbul alongside EurAsiaCom andgain free entry to the exhibition!

telecommunications industry – enabling you to make more informedand commercially viable strategic decisions.The programme is made up of modules from five main competencyareas, as well as the comprehensive business simulation throughwhich we maximise the competency development and ensure ideas onstrategic implementation are tested and appraised.

The five main competency areas are:

After the programme, the optional Competency DevelopmentJournal can be used to ensure you consolidate your learning and applyit directly to your own organisation and role.

For alternative 2012 dates and locations please visit:www.telecomsminimba.com

4 Leadership/people management5 Marketing/customer focusPLUS Unique Business Simulation

1 Strategy/business environment2 Emerging technologies3 Finance

Comprehensive • Engaging • Motivating

27 February – 2 March 2012 Singapore19-23 March 2012 Istanbul Alongside

19-23 March 2012 London22-26 April 2012 Dubai18-22 June 2012 Johannesburg

University Accredited Training Programmes

PART OF THE

Advanced Telecoms Management Series

Early Bird and Group Discountsavailable

Mini MBA+DL MCI AD_Mini MBA+DL MCI Ad[204x277] 31/01/2012 14:00 Page 1

Mobile Communications International | First for news, best for business

MCI IntervIew

MCI exeCutIve IntervIew

38

Differentiating in a dynamic worldPaul Bultema, executive director, UK and Ireland strategy lead for the communications, media and technology operating group of Accenture, talks about consolidation, differentiation and the rise of over the top services.

The opportunities for differentia-tion in this industry are cyclical. At one time carriers competed

on network coverage or price. Today, at the dawn of the 4G era, cover-age and price remain important to customers—although in many cases there is nowhere for prices to go—but the deployment of new technology is adding into the mix the expectation of improved performance.

As a result, there is a significant op-portunity for operators to differentiate on the customer experience, with a focus on the products and services on offer and the brands they represent. Paul Bultema, executive director, UK and Ireland and strategy lead for the communications, media and technol-ogy operating group of Accenture, believes that wireless operators are having a tougher time than the fixed line players, which is forcing a certain shift in the network operator busi-ness model.

“On the wireline side there is more of a sustainable and consistent enter-prise space where you have not seen the same amount of churn,” Bultema says. “But on the mobile side you have the decline of voice and data revenues combined with the impact of growth in data over the last few years as well as the capex investment needed for those network upgrades. It puts carriers in a precarious position and they’ve historically been very vertical in eve-rything like retail and distribution so they’ve taken a hit on many levels.”

Sticking to comparisons with the wireline industry, Bultema notes that operators have “horrific” data qual-ity linking the physical layers of the network to the services used by cus-tomers. And while wireless operators also have this issue, they have the additional challenge of much more dynamic requirements. “It’s one thing trying to manage a POTS customer but another managing them in a 3G

or 4G environment where you have to be so dynamic, while at the same time deploying your 4G network, and catering to tablets and devices that are very bursty and have never been seen before in the network,” he says.

This kind of pressure is driving operators to question themselves as to what’s really core and non-core to their business. Bultema acknowledges that operators are increasingly coming to accept that networks are not core to their business—a phenomenon which is driving the growth in outsourcing and network sharing.

“We’re going to see some major changes in the next two to three years in the mobile space, with increased M&A and consolidation impact in terms of retail and distribution and substantial consolidation on transmis-sion,” he says. “Where regulators have historically encouraged competition

they now have to change tack a bit and tolerate network consolidation. It’s more of a move towards a utility rather than each operator owning their own network.”

Bultema cites Australia as a prime example, where the National Broad-band Network is being pitched as a core national utility—designed to make the country more competitive and aimed at trying to lower the cost of provision per subscriber. He also cites national investment schemes taking place in Brazil and many other countries, where it is unsustainable for every operator to have their own network.

By the same token, LTE is having a dramatic impact on operator business models—with the threat of the dumb pipe—the operator’s greatest fear—looming ever large. But according to Bultema, the dumb pipe strategy is a

Accenture's Paul Bultema

38-39_MCI174.indd 38 06/02/2012 14:50


MCI ExECutIvE IntErvIEw

good thing for the industry. “Consider LightSquared in the US, which is trying to be the dumbest pipe possible. It has no product development or R&D but what it has is open APIs into their OSS and BSS and network so customers can come and plug in to their network and develop products and services on behalf of their own customers where they have greater customer intimacy. I think this model speeds innovation and moves innovation closer to the customers in niche segments,” he says.

In the wake of LightSquared’s crea-tion, the industry has seen a prolif-eration of the LTE wholesale model adopted by Yota in Russia, as well as operators in Poland and Mexico. Ac-centure believes this will drive intense competition at the retail level and that mobile operators will be put under further pressure as a result.

“Technology is one of the drivers of this business model–Ethernet and backhaul is a pre requisite–and the upgrades around 4G are more difficult than operators expect. They may know network deployment but this is not just another network deployment,” Bultema says. “It has end-to-end ramifications across the company, starting in sales and marketing, management, infra-structure and engineering, construc-tion, service delivery, and IT, before you even have your node ready,” he says. “Doing that in 3G with a well defined process is one thing but trying to opti-mise 3G much more dynamically while trying to roll out 4G—and doing that in an efficient way—is another thing entirely, and I’ve not seen one operator that has an end-to-end management workflow system to align those plans on the network. That is a significant issue and means most operators are very much behind schedule in terms of 4G upgrades.”

According to Bultema, telecoms as an industry suffers from tremendous inefficiencies. He picks out airlines

as an evolutionary target. There are few players headquartered in any given country and many don’t even own their planes, preferring instead to lease them. Airlines don’t do their own maintenance or their catering, they outsource both. But what they do manage directly—and what they’re really good at, Bultema says—is pric-ing models, operation heuristics and supply chain management as well as supply and demand forecasting.

“This is what’s driving network consolidation and the rise of LTE wholesalers. Take Yota for example—it’s a much more capital efficient and faster way of deploying LTE,” he says.

“Telecoms has not made that type of change–most operators still own everything on an end to end basis and, outside of the US, the way operators communicate with each other in terms of third party network access is still through phone, fax and email, there’s no e-bonding infrastructure.

“So telecoms has been ripe for an upgrade for decades but nothing had emerged as a critical issue that will drive this—until now. My belief is that LTE, not as a technology, but because of the fundamental dynamics needed to support network upgrades and the innovation required to survive at the IP layer, is going to drive that kind of structural change in the industry.”

Although some operators are con-sidering the dumb pipe model, they also need to consider content and service partnerships, and this is where the over the top (OTT) players have been much more innovative than op-erators. They are closer to and more in-timate with their customers, allowing them to extract a significant amount of profitability from the changes of platforms and ecosystems as they develop rapidly within the industry.

Coming back to the key question of whether or not each service provider in any given market needs to have their

own network, Bultema argues that this is something that is becoming increas-ingly unsustainable. Going forward the requirements for LTE, fibre and network upgrades will drive very deep network sharing. Operators will have to morph themselves into much leaner organisations in order to compete against OTT players and provide that responsiveness and innovation.

And analytics will play a key role in tailoring these services. The ability to dynamically link customers to their products and services and then back to the financials and network quality, so operators can proactively respond to QoS issues and improve the user experience, will be a core competitive advantage and differentiator going forward.

Customer touch points should be extended throughout the customer lifecycle—not just at the end of a customer’s lifespan and not just on the sell side but also on the customer experience side, he says. “Such as text messages when you land in a foreign country giving you information about roaming prices and a notification if you’re about to hit your data allow-ance–these things can be helpful or beneficial and can improve your perception of the operators,” Bultema says. Again telcos can learn from air-lines with their own loyalty programs and improve their loyalty schemes in a way that attracts customers, he argues.

“The OTT players, Facebook, Google and Apple have a fairly loyal fan base and there are lessons to be learned from them by operators in terms of keeping products very simple, and the interface very clean and straight-forward, creating a suite of services around what their core strengths are,” he says. “There is rapid innovation but also rapid abandonment if something does not work and all these product management elements are still slow in the operator community.” n

38-39_MCI174.indd 39 06/02/2012 14:51


Interface SchoolsMobile devices have come a long way from their walkie-talkie wartime roots, and the user interfaces have come further in a far shorter time. Touchscreens are all the rage today but, in the future, where will the user interface reside?

By Dawinderpal Sahota

The Second World War saw the first use of transmission of speech by radio, when Motorola developed a battery-

powered, backpack-mounted, two-way radio, called the ‘Handie-Talkie’ for the US military in the 1940s. It was credited as being the world’s first mobile phone. It wasn’t until 1979, however, that mobile handsets became commercially available to consumers, when Japanese mobile operator NTT created the world’s first automated cellular network covering the population of Tokyo.

Mobile phones have come a long way since then. We’ve seen manufacturers add colour screens, cameras, personalised ringtones, Bluetooth and messaging. Today’s smart-phones have internet connectivity, touch-screens, dedicated application stores and developer ecosystems—but what can we expect to see in the next stage of evolution in the mobile phone industry?

Perhaps the most crucial aspect in the ad-vancement of mobile handsets is the growing dependency of consumers on these devices as a multipurpose communications tool. People are using phones not only to communicate by voice, but also by SMS, email and social networks. In many developed markets, smartphones are a lynchpin of the consumer lifestyle, whether to keep users informed of global news, updates from social networks, entertainment through

games, music and video, or by providing an endless array of apps, from those that are use-ful to our everyday lives, to those suited purely to idle procrastination. Mobile handsets are arguably the most important object in people’s lives, and the chances are they will become even more important in the future.

Gus Desbarats has won an array of creative design awards for his work in developing new handset concepts. He is also a futurologist and chairman of industrial design agency TheAlloy. Speaking to MCI he says that one of the most important aspects of the next wave of handsets to enter the market will be how they integrate users’ “important but simple information”.

“Mobile wallets will take off to facilitate in-store and online payments, we’ll see handsets being used for identification purposes, and even for access keys – such as house keys. And they’ll also be important for ticketing, being used as rail or bus tickets,” he says.

This evolution marks the changing nature of the mobile phone. No longer is the design of the hardware the most influential or crucial factor in consumers’ minds when they buy a new hand-set, as, beyond the inclusion of a touchscreen, the user experience is almost exclusively defined by what is offered on the software side. The difference between smartphones and feature phones is more than just the form factor, but the access to sophisticated operating systems

and their ecosystems, with app stores, internet browsers, and content and contact synching.

And with the rise of cloud services, handset design could begin to take even more of a back seat, as devices begin to serve merely as an access portal to the cloud. As this evolution takes place, one argument is that, rather than have one smartphone that encompasses all of the functionalities that a user needs, consum-ers will be more interested in possessing a variety of devices with different screen sizes.

“What will become important is screen size, and that will depend on what information you’re accessing,” Desbarats says. “Yes, there will be more people watching TV on small form factors, but I think you’re going to see just a greater diversity of form factors. We’re seeing that already with the iPhone and iPad. People are simply consuming content on the form factor that makes sense.”

However, handset manufacturers are not about to sit back and let software providers define the mobile phones of the new era. De-vice manufacturers have also invested heavily in research and development to ensure that consumers opt for their particular brand.

Manufacturers are fast approaching the time when they will have to entice users with new de-signs, and they may need to move away from the now common 3.5-4in, touchscreen device, popu-larised by the first iPhone. In the short-term, »

feature InTerFaCeS

40-42_MCI173.indd 40 06/02/2012 11:32


InterFaCes feature

what this means is that manufacturers will be focused on creating devices that “are more user-friendly,” says Desbarats, as today’s smartphones aren’t as user-friendly as some might think. “Smartphones have been hijacked by the iPhone movement,” he says. “They’ve created this nice, beautiful device. But at the end of the day, if you really think about it, they’re not actually very easy devices to use on the go,” he says.

For someone wanting to browse through their list of contacts, there are arguably more user-friendly methods than scrolling through an alphabetical list using your finger. TheAlloy works with a host of handset manufacturers and creates concept phones for them, ideas from which will be used in handsets that will commercially available later down the line. While the agency cannot divulge details of the ideas it works on with manufacturers, it also creates its own concept phones to demonstrate fresh and innovative design ideas. One of the concept phones that it has created has an interface that allows users to simply squeeze and tilt the handset in order to scroll through content, which the company claims is easier than using touchscreens while on the go.

“All of these kinds of things just mean that you can navigate in a shorter time and with less dexterity focused on the screen,” he says. “You need to be able to do stuff while you’re moving—that’s what’s missing in mobile phone interfaces generally. Everyone’s going app crazy but there’s a lot of stuff that can just be done on the go, such as setting access permissions. These things can be done much more naturally while you’re doing other things and we’ll see more of that.”

But in order to incorporate this “squeeze and tilt” functionality into phones, Desbarats says that manufacturers must move away from the rigid, solid structure of today’s devices. Indeed, flexible handsets enabled by nanotechnology are now being touted as the future of the mobile device by some vendors.

It may sound implausible, but Samsung has confirmed that it will be launching a smart-phone with a flexible screen in 2012. The firm has been showcasing its flexible Super-AMOLED displays since 2010 and company spokesman Robert Yi confirmed in an earnings call in Octo-ber that products featuring the technology will be on sale in the first quarter of 2012.

Market leader Nokia is also working on flexible handsets and Tapani Jokinen, head of design technology insights at the Finnish vendor, says it will be introducing similar twist and squeeze functionalities in its future phones.

“The new properties that nanotechnology bring to us are really beginning to impact our designs, so we are trying to figure out how we could use this to bring meaningful experi-ences that really matter to users,” he explains.

Taking the concept a stage further, Nokia hopes to challenge the traditional design of the mobile phone, with a project called Iho. Iho is the Finnish word for ‘skin’ and the project aims to create a skin-like wearable phone. “This is an electronic skin that we could use to create a flexible, transformable phone that you can attach to your skin meaning that it will always be there with you 24×7,” Jokinen explains. The phone would be wrapped around the user’s arm.

Nokia’s experimentation has found that, using nanotechnology, the components in a phone do not have to be in specified places and can instead be moved around. The technology can also be used to create materials that are not just flexible, but also stretchable.

But it’s not just the introduction of more flexible handsets that will challenge what has now become the “traditional” design of the smartphone. Korean firm Pantech has said that it will introduce a portfolio of Android handsets equipped with ‘touchless’ hand gesture recognition technology.

The first device to feature the innovation, the Vega, was launched in South Korea in November 2011. According to Pantech it enables users to answer incoming calls, activate the MP3 player, play games, and perform other tasks using simple hand gestures, recognised by the phone without the user having to touch the screen.

Microsoft, meanwhile, is looking to extend the capabilities of touchscreen technology, with the OmniTouch project one of its most notable programmes. OmniTouch is the name being given to a technology that turns any surface in the user’s environment into a touch

interface. It is a wearable system that enables graphical, interactive, multi-touch input onto a range of everyday surfaces.

“We wanted to capitalise on the tremen-dous surface area the real world provides,” explains Hrvoje Benko, of Microsoft’s natural interaction research group. “The surface area of one hand alone exceeds that of typical smart phones. Tables are an order of mag-nitude larger than a tablet computer. If we could appropriate these ad hoc surfaces in an on-demand way, we could deliver all of the benefits of mobility while expanding the user’s interactive capability.”

The prototype OmniTouch device is built to be wearable, and combines a laser-based pico-projector with a depth-sensing camera. “This custom camera works on a similar principle to Kinect [the Microsoft xBox motion-based gaming interface], but it is modified to work at short range,” explains Benko.

Another technology that could revolutionise services brought to mobiles, but is today just in its infancy, is augmented reality. AR is set to become much more pervasive as researchers are experimenting with new use cases for the technology. But Gus Desbarats suggests that there might be a barrier to uptake in the form of user inertia. Consumers might simply find the idea of a virtual overlay on the real world too “weird”.

Because of that, he says, AR is: “more likely to be used for professional services applica-tions, in the short term; for emergency services for example. It could allow you to be able to look a building and see who’s there, or look at a person and detect their body temperature,” he says. “So many devices and monitors are going to be connected, we’re just going to be swamped with information.” n

Gus Desbarats

Manufacturers are fast approaching the time when they will have to entice users with new designs, and they may need to move away from the now common 3.5-4in, touchscreen device, popularised by the first iPhone.

40-41_MCI174.indd 41 06/02/2012 14:52

OperatOrs search fOr a legitimate rOle in ip-based cOmmunicatiOns

At Informa Telecoms & Media’s Rich Communications event in Munich at the end of October, representatives of each of the operators in the Group of Five (G5) – Orange, Telefonica, Vodafone, Deutsche Telekom and Telecom Italia – acknowledged the multiple pressures on their businesses from OTT messaging services. The most significant concern for operators is not, surprisingly, the immediate downward pressure they are experiencing on their voice and messaging traffic and revenues, as subscribers churn to OTT-provided voice-over-IP and IP-messaging services, but the potential erosion of their customer base by OTT providers (see fig. 1).

G5 members say that, if they do not take steps to slow or halt OTT-driven churn as soon as possible, they are faced with the prospect of losing – and perhaps never regaining – not only the high-value customers who are the early

adopters and avid users of OTT services but, eventually, a significant proportion of their subscribers. That erosion of their subscriber base will inevitably drive down their revenues even further in the long term.

Some mobile operators are extremely candid about the threat that OTT providers of IP- communications represent to mobile operators’

businesses. They believe that if they do not act, they risk being marginalized; members of the G5 believe that they currently do not have a legitimate role to play with regards to providing IP-based messaging.

At present, there is a good chance that mobile users still recognize that the operator provides their voice and messaging services, but if operators

OTT IP-based messaging: Outlook for mobile operators and OTT providers pamela clark-dickson

Senior Analyst

Informa Telecoms & Media

• Mobile operators are finding that their revenues from traditional voice and SMS are under pressure from over-the-top (OTT) providers of voice and messaging services.

• Operators are also concerned about the potential erosion of their subscriber bases by OTT providers, not only among smartphone users but also their wider customer base.

• Data from KPN Mobile and SK Telecom reveals the extent of the challenge that operators face from OTT providers, in terms of declining SMS traffic and revenues.

• Some operators are restructuring their tariffs in order to ward off the threat of OTT IP-based messaging providers, introducing integrated price plans that include voice minutes, SMS and data, and that encourage their subscribers to stay “in-bundle”.

• The five operators in the G5 group (Orange, Telefonica, Vodafone, Deutsche Telekom and Telecom Italia) believe that instant-messaging services based on the GSMA’s RCSe specification will help them to retain customers on their networks. However, a number of questions remain over whether RCSe-based services will actually launch, and how relevant they will be to subscribers.

• OTT IP-based messaging providers also face several challenges; in addition to the mobile operators’ defense strategies, these providers may also have to contend with subscriber “silo fatigue” and trying to figure out how to generate revenues from their “free” service.

KeY pOints

• Innovative communication services• Community-based• Best-effort service principle • Indirect/no/evolving monetization

Internet (OTT) communication world

ARPU

Core communication services •Highly interoperable •

Reliable customer relationships •Direct service monetization •

New competitive environment

Operator communication world

fig. 1: IP communications: the respective positions of over-the-top providers vs. mobile/fixed operators

source: GSMA

991 INFORMA-MCI ADVERT-V2.indd 1 6/2/12 12:54:44 PM

do not act to secure their role as a provider of voice and messaging services – regardless of the bearer – that recognition may very well transfer to an OTT provider of IP-based voice or messaging, such as Skype or Apple. If that happens, mobile operators are at risk of relinquishing the right to charge for the services that they do provide.

Kpn and VOdafOne restructure serVice plans tO mitigate cannibalizatiOn

The operators have good reason to be afraid. Even as the G5 operators were outlining their RCSe plans at Rich Communications, KPN Netherlands announced its 3Q11 results, which included the information that the number of outgoing SMS messages per customer had declined 5% year-on-year. Even more significantly, the figure among its Hi brand customers declined 24% year-on-year, a significant change from the 8% year-on-year decline reported by KPN in 1Q11.

Overall, KPN experienced a decline in its voice and SMS traffic and revenues in 3Q11, which it attributes to changing customer behavior – that is, increased take-up and use of OTT services. That OTT activity has, however, increased the data traffic flowing over KPN’s network, which has in turn helped keep ARPU hovering at €24-25 (US$32.80-34.20) since 2Q10 (see fig. 2). The operator says that smartphone penetration among its postpaid customers is 67%, with 74% of postpaid customers also subscribing to KPN’s data plans.

In South Korea, SK Telecom has also experienced a significant decline in its

SMS and mobile-instant-messaging (MIM) traffic as a result of the proliferation of OTTs in the country. Between June 2010 and May 2011, SKT’s SMS traffic slid down from 10.6 billion messages a month to 3 billion, while traffic on its MIM service declined from 260 million messages a month in June 2010 to almost zero in May 2011.

SKT attributes the precipitous decline to the penetration and use of OTT services, including two of the most popular services in South Korea, Kakao Talk and MyPeople. KakaoTalk, which provides an IP-based messaging service for mobile phones, had 25 million users globally (about 20 million in South Korea) by October 2011, who were generating 600 million messages a day. Meanwhile, MyPeople has 13 million users. Between them, KakaoTalk and MyPeople have achieved 40% penetration on smartphones in South Korea, according to SKT.

KPN is restructuring its service plans to encourage those postpaid users who were going out-of-bundle by accessing services such as WhatsApp to stay within their bundle of services. KPN

said it has been able to convert 35% of the customers it targeted with the new offers. In September 2011, the operator also introduced new service plans that include a combination of voice, SMS and data. It has also attempted to differentiate these plans based on quantity, speed and quality of service.

Vodafone Group is pursuing a similar strategy: In its 1H12 results announcement, Vodafone said it is using pricing strategies to avert potential revenue loss associated with the substitution of voice and SMS with data. Specifically, the mobile operator is focused on migrating postpaid customers to tariffs that bundle voice, SMS and data; by end-1H12, about 24% of its contract customers in its five largest European markets had been moved to these integrated tariffs.

about informa telecoms & media

Informa Telecoms & Media delivers strategic insight founded on global market data and primary research. We work in partnership with our clients, informing their decision-making with practical services supported by analysts. Our aim is to be accessible, responsive and connected, both to the markets we serve and to our clients’ business goals. For more information, visit: www.informatandm.com

This research is taken from a new report published by Informa Telecoms and Media entitled “VoIP and IP messaging: Operator strategies to combat the threat from OTT players”. For more information please visit:

www.informatandm.com/messagingip

AR

PU

(¤)

0

5

10

15

20

25

3Q112Q111Q114Q103Q102Q101Q100

10

20

30

40

50

Nonvoice as %

of AR

PU

fig. 2: KPN Netherlands, consumer wireless ARPU, 1Q10-3Q11

note: US$1 = ¤0.72 source: KPN

991 INFORMA-MCI ADVERT-V2.indd 2 6/2/12 12:54:46 PM


the informer

early indicatorsWant to place some bets on the performance of big names in 2012?

At the back end of January, as usual, the great and the good of the industry played show and tell with their bank

statements. There weren’t many in the market revelling in unreservedly good news on the financial front but, true to form, Apple had another bonanza to report.

Such is the regularity with which the iPhone vendor hoovers up mind-boggling sums of the folding stuff that the Informer has commissioned a new key for his office computer that says Applepostsrecordprofits, which will save him from having to type it out word by word every three months.

In the last 92 days of calendar 2011, Apple grossed $46.33bn, which is more or less equivalent to the GDP of Slovenia for 2010. Net profit for the quarter was $13.06bn, which exceeded by some distance the total revenue Google managed to gather for the same period, which was a dash over $10bn.

How long can this tremendous growth continue? Revenue was up 75 per cent year on year, while profit more than doubled. With 37 million iPhones sold, shipments were up 128 per cent year on year. And there was a 111 per cent upturn in iPad orders, with 15 million units shipped. The popularity of this increasingly mass market duo is filtering back to Apple’s desktop business as well. The firm’s PCs retail at a substantial premium to most Windows-based machines, but sales were nonetheless up 26 per cent at 5.2 million units.

With the iPhone 5 certain to roll out later this year, and a TV play also widely anticipated, you can expect the big numbers to keep on coming.

How others must envy such a performance. Nokia, still the handset market leader, leaked €954m for the final quarter of 2011, compared to an operating profit of €884m for the same period in 2010, and a €71m loss for Q3 last year. CEO Stephen Elop made a valiant effort to accentuate some positives, trumpeting sales of more than one million Lumia smartphones; Nokia’s new flagship handsets based on Microsoft’s Windows Phone platform.

But the firm’s struggles in the lower end of the market—which has sustained its leadership during wilderness years in the

high end—show no signs of letting up. The long, drawn out demise of Symbian continues, with Elop confirming that the platform is losing out to low-priced smartphones. Nokia is revising its forecasts for Symbian-based unit sales downwards. Exactly how far, Elop didn’t say.

Nokia really has its work cut out. The Informer has had a good play with the Lumia800 and it’s a great device (the pre-commercial model that he has is a bit temperamental) but will it really spearhead a turn-around? The Finnish vendor also announced that it had flogged its 1.5 billionth S40 device, one of its new Asha feature phones. These will prove just as important as the high end product for Nokia in 2012.

Elsewhere in the device vendor community, Samsung netted $3.5bn for the final quarter, contributing to annual profit of $12.2bn. This was down 15 per cent year on year, and the Korean player’s endless legal spats with Apple are probably taking their toll. Motorola Mobility, meanwhile, lost $80m for the quarter, which was the amount it made in profit for the same period in 2010. Again legal fees played their part, with Moto also citing tougher competition.

Japanese vendor NEC was also feeling the pain, announcing late this week that it is to cut 10,000 jobs at home and abroad, on an expected annual loss of $1.3bn. Sales are down across both networks and devices, and flooding in Thailand last year hit a number of the firm’s factories, NEC said.

In operator land AT&T topped the losses table, spurting a monumental $6.7bn into the ether during the final quarter of last year. Revenues were up at $32.5bn and with 9.4 million smartphones sold, the firm had its best every quarter in retail terms. But its planned takeover of competitor T-Mobile, which was blown out of the water by US antitrust authorities, is now coming back to haunt AT&T, which for some reason that the Informer will probably never understand, agreed to pay T-Mobile $4bn if the deal didn’t go through.

There’s money to be made in these abortive marriages! n

Join the debateA round-up of recent reader comments from the industry leading website Telecoms.com. Get involved in the discussion at www.telecoms.com/join-the-debate/

Leaving customers satisfied requires more than simply increasing bandwidth. The traditional approach of over-sizing the network infrastructure is counter-productive, as it will defeat the purpose of Ethernet as a cost-effective technology. Nevertheless, while right-sizing is critical to staying aligned with the objective of cost containment, quality of experience (QoE) requires also must be balanced in parallel. Customers who signed up for expensive data service packages, especially those with international usage, expect high QoE. When they don’t get it, they are much more likely to churn.

Marc Lippe on backhaul challenges for LTE

Introducing another operating system could be a recipe for disaster. Regardless, it will be interesting to see if Samsung move away from Google’s Android platform during 2012. Time will tell!

Beacon on Samsung’s plans to merge Bada with Tizen

Right now, mobile users number 350 million. What happens when 800 million users engage in Facebook mobile? It puts the data spectrum crunch in perspective, and sheds some light on Google+ user-focused search responses…

Bill Gwinn at Accenture on Facebook on thae mobile

Cellcos are in a tight spot, it must be admitted: users want to do what handsets enable them to do, and that means great strain on mobile data networks. That calls for more investment, and margins are getting tighter. Not to mention the PR nightmare every time an operator wants to cap something or make a few quick quid on the side, to put it that way. Where and how this will end, hard to say.

Eustace Breeze on GiffGaff’s decision to kick out heavy users

44_MCI174.indd 44 07/02/2012 15:13

Untitled-5 1 08/02/2012 17:38

The greater the challenge, the greater the need to

Balancing your need for revenue with your customers’ demand for new services isn’t easy. Fortunately, Telcordia has been solving the world’s toughest communications challenges for nearly three decades. We’ll help you get it right as you deliver innovative new services, operate more efficiently, and drive revenue. So you’re in the perfect position to take advantage of any opportunities that come along.

©2012 Telcordia Technologies, Inc. A

ll rights reserved.

www.telcordia.com

Telcordia is now part of ericsson

Tel_SurferMCI_204x277_CMYK_V.pdf 1 2/1/12 10:12 AM

Documents

Sowing the seed of loyalty