Martin Gedde's Presentation at Emerging Communication Conference & Awards 2009 Europe


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  • I’d like to present to you today my personal views on how the telephony will evolve. These views are my own personal ones, and do not reflect the corporate position of BT. However, they do mirror the conversations we are having internally about business models for the Cloud. My thesis is simple. The basis of a telco’s business has traditionally been the sale of ‘minutes’ of telephony. What I want to show today is that the era of ‘minutes’ is over. The smart money will be on the enabling of effective and efficient communication among enterprises and their customers. The best operators will be servicing rich communications ‘in the moment’. Those moments will be when interactions between enterprises and their customers are made more efficient and effective. This will be achieved through global communications platforms operated as “Cloud” services.
  • In the 1980s BT was advertising the social value of telephony. It was no longer a luxury confined to business or essential use. As prices dropped, usage surged. Digital networks dropped costs, and profits soared.
  • By the mid 1990s focus had shifted to price competition. Celebrity endorsement and expensive adverts promoted what had essentially become a dull commodity.
  • By the 2000s telephony had largely disappeared from our marketing communications, replaced with promotions for broadband and TV. However, mastering the art of packaging, promoting and distributing media has been a long and difficult journey for both fixed and mobile operators.
  • It isn’t just BT or fixed operators. The party is also over for the mobile operators. There is declining revenue for voice and messaging services in developed markets. Users are migrating to new media, from Blackberry messaging to Facebook. The margins for data usage will never rival those of the telco media they replace. The decline of minute-based telephony is the same: consumer and enterprise, fixed and mobile.
  • However, every wave of technology is adapted by its users to situations that were never conceived by the technology’s inventors. New needs appear. That creates new opportunities to re-invent ourselves and our revenue models. Telephony and SMS continue to enjoy mass market usage. Migration to “over the top” players is likely to take decades. Telecommunications service providers have a window of opportunity to re-invent themselves. So what are those unmet needs?
  • We can easily see those needs by looking at how our products actually work in practise. I am choosing voicemail as an example.
  • The example is real-life personal interaction I had with the UK taxman. The revenue department left me a voicemail message. It is typical of the interactions that happen millions of times, every day, between enterprises and their customers.
  • NB need to fade out audio quite quickly.
  • Container does not relate to message at start or end – “dumb” Audio quality issue Message is a series of business objects, irreversibly encoded by hand into audio
  • For my first example, I picked on voicemail, a traditional telco service. However, new media suffer from the same problems in supporting B2C interactions. BT is a business like any other needing to service its customers. We have been experimenting with new media channels to service and support our business and consumer customers.
  • We have had tremendous support from our online partners in running these experiments. Together we have discovered four limitations of today’s social media tools for business to consumer communications. What if something goes wrong? Consumer terms and conditions unsuitable for us 140 character limits Follower:Following ratio Could a re-tweet leave your account vulnerable to hacking? 15 minute polling interval can result in double-handling of support cases BT is in principle willing to pay to have these things fixed
  • Telecomms providers must return to first principles. They must recognise that their value is in enabling easy communication. Customers (both individuals and enterprises) have become more sophisticated in their telecoms aspirations. They must recognise what creates value in communication, where there is scarcity, and align their business models to those realities. That means going beyond today’s product mindset, selling messages, minutes and megabytes. In doing so they must face two inescapable demands.
  • Users want ‘free’ as a baseline. They will sacrifice their privacy and attention as ‘payment’. They will pay for quality, service and convenience. However, even then it must increasingly ‘feel like free’ as part of a complete package that enables a connected lifestyle. The answer to the decline of telephony and SMS cannot come from consumers alone. Even broadband will increasingly been seen as digital “postage and packaging”, to be sold wholesale to content delivery services or device vendors. This is a pattern we see emerging with Amazon’s Kindle.
  • For enterprises, minutes of telephony are not about social gossip. They waste time, and this money. So business efficiency calls for fewer minutes spent, and thus duration is a flawed revenue platform. Our historical business model puts our interests in opposition to those of our customers. The prospective replacement, Unified Communications, is not the answer to telcos. Whilst this will make conversation with each enterprise more efficient, the revenue streams are more closely allied to the providers of those software applications than telcos.
  • Enterprises have always communicated with their customers. The channels between enterprises and their customers take many forms: analogue, telco and new media. These have evolved over time. Once, your customer had to attend your commercial premises in person. Communication over a distance, using horse and hand, was so expensive that it was effectively restricted to the state and big business. The postal system, borne on the railroad, democratised that communication. The telegraph moved the bottleneck from the speed of a train to the speed of a morse code operator. Then the telephone democratised communication at the speed of light. Each of these spawned further new universal and common platforms for communication, such as overnight couriers or SMS. Still, there was a limited choice. The need for compatibility and interconnect ensured that innovation was slow. Telcos continued to introduce new channels, such as IPTV. However the Internet is a kind of “meta medium” that delivers new media for reaching people at an ever increasing pace. This creates complexity for enterprises. They know a lot about their customers in terms of their own industry, but increasingly little about their customer’s overall communications media and preferences.
  • The challenge is to provide and support a rich interface. Commercial conversations will move to the media that offer the right combination of reach, efficiency and effectiveness. Users will be attracted to channels that are discounted or free services in exchange for their privacy and attention. Enterprises will be attracted to channels that offer the greatest breadth of users and depth of interaction options.
  • How can this be done? There are 3 answers to this question. Telcos have a range of channels to reach their customers: SMS, MMS, voicemail, voice, push-to-talk, IPTV, and new ones such as RCS Firstly, we must use existing channels for effectively. A precondition of success is that the public continues to use telco telephony and SMS in preference to rival media. Fixed-price bundles = Reduce or eliminate termination fees
  • Telcos need to learn how to package and promote their existing platforms better to support the nascent Communications Enabled Business Process market. For example, a tool like Phweet sends an SMS to the end user, who can click on the embedded link to launch a phone call. However, this required combining a bulk SMS with two (bridged) outbound calls. These could be packaged into a bundle and promoted at a different price point by telcos.
  • The second action required is to enhance existing channels to support B2C communication
  • Insert API Phone does not ring Complete process via another channel – expire message – avoid duplicate handling HD Audio Allow the sender of a message to record is locally at high quality, and transfer it to the voicemail system. The user of a visual voicemail system receives is as a message like an email, and hears it with drop-outs or limitations of a cellular circuit. However, the business model is very different from how HD audio is positioned today. It is the enterprise that wants to interact with the end user who pays, not the consumer. Personalise Roaming/Home Prepaid/Postpaid Available/Busy Smarter containers Make voice messages interactive (e.g. embedded IVR with VoiceXML) Multi-modal communications Offer services the bridge media.
  • The third action required is to create new channels to support B2C communication
  • BT is working to create new ways of interacting with customers. As the default and preferred voice engine for Google Wave, we are at the vanguard of this change.
  • There are six universal business processes that all enterprises engage in. These processes add no value per se to the underlying good or service the user desires. They are essentially forms of waste. Increasingly, the bottleneck in these processes is the interface between the enterprise and customer. Wherever these processes carry inefficiencies there is an opportunity to harvest revenues through intelligent service-provision. Telcos need to review their support of each element of the business process. Today they have a narrow focus on a subset of these: advertising, and billing and content delivery for digital media. They need to look much wider at how their communications products can remove friction from a much wider range of business processes
  • The examples earlier show just how much opportunity does exist. Call centre operators slowly transcribe names and addresses and credit card details which telcos already know. Trucks deliver parcels to homes that telcos know are empty. Utilities send bill payment reminders by post because they lack up to date knowledge of your mobile number or email address, which your telco may also know.
  • Three communication modes that support these essential business processes are: Connect Interact Transact All three must be supported.
  • These elements attract a sliding scale of value to the parties: with pricing and thus revenue to match Compared to today’s 1 cent of termination revenue, these are major growth opportunities.
  • No one telco or communications application provider can tackle this problem alone. It is too complex. The number of combinations of users, channels and enterprises is too large. New intermediaries are required. They will operate platforms that aggregate together the network capabilities of telcos, smart interaction capabilities of online applications, and knowledge of individual user profiles and preferences. Just as platforms like VISA and Mastercard join banks together and dominate business processes like payments today, customer contact will spawn new giant platforms.
  • I believe that these platforms are likely to be global, not regional or national. The future of communications is a global Cloud Computing fabric. The Internet provides the ubiquitous access mechanism. The Web provides a universal user interface. However, the Web is today a world of applications that rarely interconnect with each other, or adapt themselves to the end user’s context. The next stage is to build the platforms that join together these applications, and personalise the experience to the user, and make business more efficient.
  • What will the new ecosystem look like? Telcos have several key advantages: Own communications channels: SMS, MMS, voicemail, voice, push-to-talk, IPTV, RCS Knowledge of people: Individuals, households and communities (however partial) Real-time customer intelligence: Presence, location, activity Accounting and settlement platforms: Billing and settlement for billions of network events However, will telcos and their industry associations be able to adapt fast enough to the new business models? Will actors like aggregate CRM data and disintermediate telcos? What role will systems integrators play? How will ERP and SaaS players evolve? Or will something new and unexpected emerge, just as Skype, Google, YouTube burst onto the scene in the past?
  • Regardless of the answer, the business model based on duration of calls will be gone. It will be replaced with one instead based on moments. Money will flow to reward making a connection between an enterprise and their customer. It will be made when the communications provider enriches their interaction. And, most of all, it will be made when the communications channel facilitates a transaction, and a business process advances.
  • Martin Gedde's Presentation at Emerging Communication Conference & Awards 2009 Europe

    1. 2. Goodbye minutes, Hello moments: The Voice Business Model for the Cloud Martin Geddes Strategy Director, BT Innovate & Design
    2. 3. Going… 1988
    3. 4. Going, going… 1995
    4. 5. Going, going, gone… 2008
    5. 6. The party’s over Revenue for top four UK mobile operators, £million Source: Ofcom, Telecommunications market data tables, Q1 2006-2009.
    6. 7. Cycle of products and needs
    7. 8. Case study: Voicemail
    8. 9. Example: A real call Mobile network operator
    9. 10. Verbatim text <ul><li>First saved message. </li></ul><ul><li>Sent September 29 th at 9.39am. </li></ul><ul><li>Good morning, this is a message from HM Revenue and Customs for Mr M R Geddes. If you could you return my call on telephone number 0845 38021427 quoting the reference [DELETED]. Our office hours are 8am to 8pm Monday to Friday and we would appreciate a call back no later than 8pm on Wednesday the 30 th of September. Thank you. </li></ul><ul><li>End of message. </li></ul>
    10. 11. What did we hear? <ul><li>The ‘container’ – announcing the message </li></ul><ul><li>Message medium </li></ul><ul><ul><li>Poor quality audio </li></ul></ul><ul><li>Message content </li></ul><ul><ul><li>Sender details, Recipient details, Requested action, Call-back number, Reference number, Times to call, Expiry of call-back period </li></ul></ul><ul><li>The ‘container’ – press # to return call </li></ul>
    11. 12. And if we call HMRC back… This is a test message. The service on this number is currently inactive.
    12. 13. Inadequacies of voicemail for B2C <ul><li>Ineffective </li></ul><ul><ul><li>Relies on customer writing, remembering, acting </li></ul></ul><ul><ul><li>Poor user experience – bad UI, not personalised </li></ul></ul><ul><li>Inefficient </li></ul><ul><ul><li>Hand-crafted, one-off message </li></ul></ul><ul><ul><ul><li>Must identify and re-authenticate customer returning call </li></ul></ul></ul><ul><li>Insecure </li></ul><ul><ul><li>No reason given for call to user </li></ul></ul><ul><ul><li>Is it really HMRC? </li></ul></ul>
    13. 14. The telco’s revenue? <ul><li>€ 0.07 </li></ul><ul><li>Termination fee </li></ul>
    14. 15. Case Study: Social Media
    15. 16. Big trial <ul><li>17,102 </li></ul><ul><li>BT Retail consumer customer support interactions handled via Twitter April-October 2009 </li></ul>
    16. 17. Big benefit <ul><li>50% </li></ul><ul><li>of BT Tradespace customers subsequently make a spontaneous positive public comment about BT in a public social media space </li></ul>
    17. 18. Social media maturity issues for B2C interactions <ul><li>Support and accountability </li></ul><ul><li>System limitations </li></ul><ul><li>Security of private data </li></ul><ul><li>Timeliness of data </li></ul>
    18. 19. What’s the real need?
    19. 20. Inescapable demands <ul><li>The public expects ‘free’ services and wants ‘free’ delivery. </li></ul>Customers
    20. 21. <ul><li>Enterprises </li></ul>Inescapable demands ‘ Minutes’ waste time and thus money
    21. 22. Increasing complexity in customer contact
    22. 23. Communicating with customers <ul><li>Enterprises </li></ul>Customers INTERFACE
    23. 24. 1. Use existing channels
    24. 25. How? Use existing channels better An SMS, with subject line, and click-to-call URL
    25. 26. 2. Enhance existing channels
    26. 27. How? Five ways to improve voicemail for B2C interaction <ul><li>Insert, update, and delete APIs </li></ul><ul><li>High definition audio </li></ul><ul><li>Personalise interactions </li></ul><ul><li>Smarter containers </li></ul><ul><li>Multi-modal communications </li></ul>
    27. 28. How? “Twitter for Business” <ul><li>Enterprise customer experience </li></ul><ul><ul><li>Service level agreements </li></ul></ul><ul><ul><li>Enterprise support </li></ul></ul><ul><li>Enterprise features </li></ul><ul><ul><li>Multimedia messaging for B2C interactions </li></ul></ul><ul><ul><li>Federated identity </li></ul></ul><ul><ul><li>Security and authorisation features </li></ul></ul><ul><ul><li>Real-time customer intelligence </li></ul></ul>
    28. 29. 3. Create new channels
    29. 30. How? “Please call…” Today: “Missed calls” Tomorrow: “People who want to talk to you & why”
    30. 31. Google is doing it already Source: Lifehacker Interact with Netflix inside Google Mail.
    31. 32. BT’s Ribbit adds voice to Google Wave More end points Richer interactions Upsell to transactions
    32. 33. Re-imagine the offering
    33. 34. Six universal business processes Identify Market Sell Deliver Bill & Pay Support
    34. 35. Those processes leak money… Labour costs Energy costs Working capital costs
    35. 36. Three functions of communications systems Connect + Interact + Transact
    36. 37. Three revenue opportunities Connect Delivering an HD audio message alert to my visual voicemail system € 0.1 Interact Smart interactive voicemail message that avoids a call to contact centre € 1 Transact Collect payment on enterprise’s behalf (“Paypal for voice”) € 10
    37. 38. The global platform race
    38. 39. Huge ecosystem complexity
    39. 40. Global communications platforms
    40. 41. Who will profit? Telcos? Salesforce+ Google+ Facebook? Someone new?
    41. 42. Five stage evolution of communications <ul><li>Messages… for Everyone </li></ul><ul><li>Minutes… are Everywhere </li></ul><ul><li>Megabytes… for Everything </li></ul><ul><li>Media… for Entertainment </li></ul><ul><li>Moments … for Efficiency </li></ul>
    42. 43. Martin Geddes [email_address]