Archive for March, 2008

eComm2008, day 3: calling with plants, and other innovative business models

Saturday, March 15th, 2008

The third and last day of the Emerging Communications Conference in Mountain View, CA focused in on innovation.

IBM Think logos at Computer History Museum in Mountain View, CA

Keynote speaker and Chief Analyst Martin Geddes from STL Partners had no trouble convincing the audience that the telco companies need to reinvent themselves as providers of data logistics services. By providing a frictionless platform in-between upstream organizational customers and downstream individual customers, the telcos can source new revenue streams, just like the logistics companies from the freight business have successfully done for decades.

eComm2008 in Mountain View, CA: telcos are sitting on massive amounts of latent data assets

In the Telco 2.0 world, two-sided business models will allow the carriers to exploit the massive amounts of valuable but latent data assets they already own. For example, the airline that brought me to Silicon Valley and back could have offered me a highly personalized 5-day data plan, if only the local telco company had made it dead easy for them to do so. All the information needed to organize the transaction already exists – it’s just waiting to be recombined and exploited.

Data portability is another precondition for a flourishing Telco 2.0 world. Mobile operators could take over from the Web 2.0 social networking sites in this area, as they know their customers better than anyone else thanks to the billing relationship. But it won’t work if management of contact lists, pictures, music files, ringtones and the like are mandatorily coupled with data access.

Nathan Eagle (MIT) turning constraints into innovation in Africa

Abundance of information may actually cloud our view on how to select and recombine the useful bits. A possible antidote and innovation strategy is to go back to basics. This is what Nathan Eagle from MIT is experiencing in his work as facilitator of developmental entrepreneurship in Nairobi, Kenia. The 5-year old phones that the local population are using basically allow them to call and to send text messages. These constraints are a bonus in that they force Nathan Eagle and his team of local students and entrepreneurs to be more innovative. As a result, new forms of communication spring up, like flashing, where consensual meaning is attached to the number of times a phone rings. The advantage: zero cost. Another application uses SMS to vastly improve the supply chain of a blood bank. What better motivation to innovate is there than the opportunity to save lives with 250 lines of code?

Hi, this is your plant calling - David Troy at eComm2008 in Mountain View, CA

Of course, not every innovation grows out of a pressing in-your-face user need. Some Silicon Valley innovators, e.g. Ebay’s Pierre Omidyar, have become entrepreneurs and even billionnaires by accident. At the outset, there needs to be a desire for experimentation and playfulness. This is mostly a matter of personal or organizational mindset and culture. Not just knowledge, but also – if not mostly- imagination.

Dave Troy is certainly a case in point. He’s the creator of the mashups twittervisionflickrvision, and spinvision. He also makes thirsty plants call up their negligent bosses, facilitates political campaigns and steers robot vacuum cleaners by phone. Not every innovation like this is monetizable, of course, but that’s OK. What enables this kind of emergent innovation is the availability of open networks, open content, open devices and open source code. And an open mind, I should add.

Brian Capouch preserving historic houses with technology - eComm2008 in Mountain View, CA

Personal drive and attitude indeed make a big difference. Brian Capouch, a computer science professor who lives in rural Indiana, applies Asterisk and other open source technology to preserve historical farmland houses from vandalism and destruction. He also runs a wireless farm network for his local community. It’s a tough job, but someone’s gotta do it!

Bridging the communication gap between Web and telco worlds

Shirish Andhare from Sylantro presented a human resources methodology to help bridge the culture gap between the Web 2.0 and the incumbent telco world. As said in yesterday’s post, the two worlds are doomed to collaborate in order to grow the pie. New multiplay service models need to see the daylight, with voice being only a component in a broader high-value solution. Elaborating on this last topic, Trevor Baca from Jaduka presented 10 usage contexts in which voice plays an important role. I mostly retain the following tags: urgency, emotion, place (to a minor extent: time), people, and, last but not least: enterprise. On a related note, Benoit Schillings from Trolltech stated that the best strategy to have users accept new features or concepts is to piggyback on what they already know and can relate to. In other words: innovative application features need to be positioned in the user’s mind.

It is an impossible task to summarize the learnings from 3 overstuffed days into a few lines. But let’s try anyhow:

  • Telco/Mobile 2.0 is not equal to squeezing Web 2.0 principles into the existing telco environment
  • It rather requires a radical rethink of existing technologies, organizational structures, work culture, service & product offerings, and, above all, business models
  • Innovation is an outside-in process; organizations need to open their windows and let the fresh air flow in. The answer is blowing in the wind
  • Technology is used by humans. Humans have social and professional relationships. Technology that facilitates these relationships wins
  • End users always have the last word: they will vote with their clicks

eComm2008, day 2: Tangoing with the telcos

Friday, March 14th, 2008

On day two of the Emerging Communications Conference 2008, multiple speakers focused on the topic of (lack of) openness, in its various forms.

Google’s Group Manager of Mobile Platforms Rich Miner explained Android’s goal of taking away constraints that hamper innovation across the mobile application stack. To bridge the gap between low-level hardware capabilities and ease of use, we need to overcome more than human-factor limitations like small screens and keyboards – these problems can be solved by design, as the iPhone proves. Compelling applications are useless if they’re not easy to discover, distribute, and install. And they won’t be built in the first place unless frictionless business models are in place to stimulate and reward the developer community. So value-killing gatekeepers in the telco or software organizations must get out of the way.

Rich Miner, Google Android Project Manager at eComm 2008 in Mountain View, CA

Android sceptic Dean Bubley pointed out that the large majority of smart phone users don’t care about software stacks and extension capabilities. All they want is a pink phone with a camera and a good battery that will play music and videos. They’re not waiting for mobile Internet applications that come with installation procedures, user logins and extra costs. The $100 billion SMS market will be difficult to substitute overnight.

Apart from the telcos’ cash cow concerns, there’s also an issue of brand protection. It should come as no surprise that Apple is maintaining a firm grip on what applications can make it to the iPhone Apps Store, even though the SDK is free and the Standard code signing process only costs a symbolic  $99. Christopher Allen, who recently organized the first iPhoneWebDev camp, gave a long list of constraints that Apple still imposes on the iPhone developer community. What it comes down to is that in the end, Apple can prohibit anything. So the barriers may be lowered – that’s great – but they’re far from gone.

Crick Waters from Ribbit at eComm2008 in Mountain View, CA

Whereas the Apple iPhone enables innovation on the mobile device, Silicon Valley startup Ribbit goes way beyond this old model we all know so well. Co-founder Crick Waters likes to describe his company as Silicon Valley’s First Phone Company. Whereas the iPhone and its siblings function as a very smart presentation layer on top of a generic mobile Internet, Ribbit takes a radically different approach: it offers a complete platform that places itself in the middle of the cloud, in between the telco networks and the Internet. This unique position allows for much deeper integration and enables a complete redefinition of deeply rooted concepts, like – to name one thing – a phone call.

Ribbit has the appearances of a Web-based CTI platform, but at the scale of the Internet, and is completely open. Despite its disruptive and potentially threatening position, Ribbit partners with incumbent telcos in a revenue-sharing business model. About 3500 Flex developers have already signed up for Ribbit’s developer program, and the first Consumer and Enterprise showcases are available. For the moment, the service is only connected to US carriers, but in these times of blurring geographical phone boundaries, that should not be a problem. To be watched closely!

If companies like Ribbit push incumbent telco companies out of their central position towards the edge of the ecosystem, maybe it’s time these carriers start reevaluating their assets to see what’s left for them in this new world – apart from selling cheap minutes and sending text messages. As Kousjik Chatterjee from Embarq and Johannes Ernst from NetMesh pointed out, one asset that the carriers should cherish is their billing relationship with millions of customers. Billing implies authentication and identity, so here’s an opportunity not to be missed. Link telco customer identity with OpenID and voice biometrics, and we have a new phone-based service for accessing the Internet.

The openID adoption curve presented at eComm2008

What do we need country-specific phone prefixes for, other than as an excuse for carriers to overcharge for international connections? If we want phone numbers to be long-life identifiers for the people that use them, number portability must be able to travel across country borders. CEO Rod Ullens from Brussels-based VoxBone announced that the ITU has granted his company the right to create and distribute a new range of country-neutral numbers with prefix 833. VoxBone will offer the worldwide numbers to the carriers at no charge, hoping that they will pas them on to their customers at the same price. The incumbents would share revenue with VoxBone for all calls originating from the PSTN, and a second revenue stream will come from global premium services. The business model challenge will be to make sure that the end user will not suffer from exorbitant transfer costs. Otherwise the iNum initiative will die a rapid death.

VoxBone CEO Rodrigue Ullens announcing the iNum initiative at eComm2008

Another remarkable initiative was presented by Terranet’s Founder & CEO Anders Carlius. His company has identified an unserved audience in the Third and Fourth Worlds that do not deserve to be overlooked, if only for the yearly revenue potential that they represent: $240 billion! Terranet’s approach is to distribute cheap peer-to-peer mesh phones in local communities, which would cater for daily needs like security & emergency, or simply calling home. As a bonus, the technology enables a great leap forward in crossing the digital divide. It should come as no surprise then that Terranet is bombarded with interest by governmental and private organizations, especially after this BBC interview.

Anders Carlius from Terranet at eComm2008 in Mountain View, CA

On the application side, I first want to mention Fonolo, a “deep calling” service based on reverse-engineered IVR applications. I’m a bit sceptical about the operational scalability of the system, and, frankly, also about the solution that this service offers. It’s already bad enough that IVR menus are not always as user-friendly as they should be; starting a desktop and opening another web application is not the answer. Moreover, just like the GetHuman initiative, it might actually serve as an excuse for IVR and speech application builders not to invest in usability. Which would be kind of counter-productive.

The second service that caught my attention is DialDirections.com, for its simplicity, quality and rapid adoption.

DialDirections service presented at eComm2008

Conclusion: day two of eComm2008 was stuffed with presentations and ideas that can and occasionally will change the world. On the one hand, the innovators at the edge take their distance from the carriers or, like Ribbit, push them out of their luxurious central position; on the other hand, the incumbents’ weight is so large that one way or another they cannot be fully ignored or circumvented. This tango has only just begun, and every now and then the dance partners will inevitably step on each other’s toes. But as everyone knows: it takes two to tango.

eComm2008, day 1: Hear the voice of disruption

Thursday, March 13th, 2008

I’m in Mountain View, California for the Emerging Communications Conference, where 300 – almost exclusively male – people have gathered to discuss the next innovation waves in telco land. Like many innovations, this conference itself is born out of frustration. Frustration with US telcos concentrating on selling cheap minutes. Frustration with European mobile operators asking ridiculous prices for simple call termination. Frustration with a VoIP revolution that has taken place but in a sense has just as well gone unnoticed by the public at large – who couldn’t care less about technology. Vested interests – in 3G investments, for one thing – and organizational inertia have indeed created a classic innovator’s dilemma for the large carriers, that stifles innovation. Creating the conditions to get out of this situation is the main topic of eComm2008.

Emerging Communications Conference 2008 in Mountain View, CA

The first condition for a blossoming communications market lies in a distribution of power. Today, the big players and their lobbying arms in Washington DC or Brussels still hold the power, but an inevitable grassroots countermovement is developing. Speakers like Jonathan Christensen from Skype and network neutrality activist David Isenberg pleaded for a natural segmentation of competences in the market. In this setup, carriers should do what they do best: carry voice and data through their pipes, and even provide some billing services – for those who need it. At the edge of the network, business and application developers – who are supposed to know what end users like and dislike – then make user-centric innovation go forward. That’s the idealistic scenario. The one trillion dollar question is how to make this happen. The answers put forward on day one of the conference evolved around the value of simplicity, a redefinition of voice, and the importance of trust & identity.

David Isenberg using Martin Geddes as presentation device at eComm2008 in Mountain View, CA

The value of simplicity was epitomized by Twitter. Lead architect Blaine Cook – a sociologist by education! – ascribed Twitter’s phenomenal success by the fact that all complexity in the system is hidden from the end user – all they can send and receive are 140 character messages. But building addictive systems that are simple to use is not for the faint-hearted. Without going into much detail, Blaine Cook acknowledged that Twitter has had issues in scaling up that are more than mere growing pains. Using XMPP as an alternative for SMS may alleviate problems in a structural way, but Peter Saint-André pointed out that the main challenge for mass adoption of presence in a mobile setting is … battery power.

Twitter's Blaine Cook at eComm2008: simple systems are complicated to build

On the voice front, technologists Ken Rehor from the VoiceXML Forum and Voxeo CTO RJ Auburn presented architectural updates from the VoiceXML world. Useful to know if you’re not a specialist, but not ground-breaking by themselves. Their presentations go to show that the availability of standardized (VoiceXML or other) platforms may be a necessary, but certainly not a sufficient condition for innovation. Thomas Howe from the eponymous company asked the more important question of how commoditized voice can get a value boost. The answer lies in the application context: for a package transportation company, a failed call may mean a failed delivery – and that’s a real cost. In other contexts like voice cards – my example – the value is more of an emotional nature. Thomas Howe’s main message is this: don’t build voice applications, but augment existing applications and business processes with voice, where useful.

Thomas Howe looking for value in voice at eComm2008

Another fundamental issue in the Internet & telco industry is trust & identity. Piotr Cofta, Chief Researcher at BT, sees trust & identity as necessary communication shortcuts without which society would not work. To drive societal innovations he envisions a layered stack of responsibilities in which trust and identity play the same role as the transport and network layers in the Internet’s well-known OSI model. Contrary to its counterparts in the US, British Telecom had made an important first step in opening up its network through its 21st Century Network, 21CN in short. There is no need for more, but for better communication.

eComm2008: trust and identity

My conclusion for day one: if you don’t innovate, your competitors will. Or worse: a new industry will. We have to be careful not to inflate the meaning of disruptive innovation – buzzword bingo always lurks around the corner. But telco execs beware! A change is gonna come … whether you like it or not.