Digtal life

1,121 views

Published on

0 Comments
3 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,121
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
41
Comments
0
Likes
3
Embeds 0
No embeds

No notes for slide

Digtal life

  1. 1. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing. Free to members $495 where sold NEW SERVICES BEAR FRUITDecember 2012 | www.tmforum.org Ideas in action drive growth in the digital world Hot 10 areas of innovation to act on now Matthew Key, New research: Sponsored by: CEO, Telefónica service providers Digital on how share their insights to succeed and plans
  2. 2. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing.Everything that can be digital will be.We’ve seen the future. And it’s digital. In just There are five core principles of the Initiative:ten years, the way we communicate,consume information and entertainment hasbeen changed forever. And that’s just the start.The Digital Revolution is transforming ourpersonal and professional lives. We demandsimplicity, but the complexity behind ourinterconnected digital lives is only growing.TM Forum’s Digital Services Initiative focuseson overcoming the end-end managementchallenges of complex digital services,enabling an open, vibrant digital economy. For more information on the TM Forum Digital Initiative visit www.tmforum.org/digital DIGITAL LIFE
  3. 3. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing.DIGITAL LIFETM Forum’s reports and publications are free to all employees of our member organizations who register on our website.Publications Managing Editor:Annie Turneraturner@tmforum.orgEditor:Claire Manuelcmanuel@tmforum.orgContributor:Philip Marshall Ph.D.Founder and Chief Research Office, Tolaga Researchphilip.marshall@tolaga.comCreative Director:David Andrewsdandrews@tmforum.orgCommercial Sales:Mark BradburyBusiness Development Manager, Publicationsmbradbury@tmforum.orgNick CarterBusiness Development Director, Research & Publicationsncarter@tmforum.orgSenior Publisher:Katy Gambinokgambino@tmforum.org Page 4Production Assistant: A warm welcome to this first edition of Digital LifeAideen Greenlee By Nik Willetts, Chief Strategy Officer, TM Forumagreenlee@tmforum.org Page 6Client Services:Caroline Taylor Capturing the digital opportunityctaylor@tmforum.org By Matthew Key, CEO, Telefónica DigitalHead of Marketing: Page 8Lacey Caldwell Senko How to prosper in the digital revolution?lsenko@tmforum.org Communications service providers understand they needReport Design: to become digital service providers. In October, TM ForumThe Page Design Consultancy Ltd surveyed over 150 executives from its service provider members to find out how they plan to do it. Philip Marshall,Vice President, Research and Publications: Ph.D., Founder and Chief Research Officer, Tolaga Research,Rebecca Hendersonrhenderson@tmforum.org guides us through the findings.Advisors: Page 22Keith Willetts, Non-executive Chairman, TM Forum Hot 10 areas for innovationMartin Creaner, President and Chief Executive Officer, TM Forum Everyone wants to innovate, yet there is much uncertainty aboutNik Willetts, Chief Strategy Officer, TM Forum how and where to invest the time, talent and funds. Annie TurnerPublished by: explores 10 hot areas that are at boiling point for innovation.TM Forum240 Headquarters Plaza Page 32East Tower, 10th Floor Sponsored featureMorristown, NJ 07960-6628USA Hybriswww.tmforum.orgPhone: +1 973-944-5100 Page 34Fax: +1 973-944-5110 What is TM Forum Frameworx and how can it help you?ISBN: 978-1-939303-03-5© 2012. The entire contents of this publication are protected by copyright. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in anyform or by any means: electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, TeleManagement Forum. TM Forum would like to thankthe sponsors and advertisers who have enabled the publication of this fully independently researched report. The views and opinions expressed by individual authors and contributors in thispublication are provided in the writers’ personal capacities and are their sole responsibility. Their publication does not imply that they represent the views or opinions of TeleManagement Forumand must neither be regarded as constituting advice on any matter whatsoever, nor be interpreted as such. The reproduction of advertisements and sponsored features in this publication does notin any way imply endorsement by TeleManagement Forum of products or services referred to therein. DIGITAL LIFE 3
  4. 4. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing. FOREWORDA warm welcome to thisfirst edition of Digital Life In the last 10 years, digital revolution has already global saturation point, a how we communicate, presented many paradoxes. new breed of competition consume information and To those who said we were has emerged – enabled by entertainment, and conduct about to witness the end that very saturation and the business has changed of reading and literature, a proliferation of connectivity. forever. The digital revolution recent study showed Amazon Competitive ‘over-the-top’ is transforming our personal customers who own a Kindle services are exerting growing and professional lives at eReader device actually read pressure on the established speeds we’ve never seen up to four times more books communications business. In before. Technology is no than those who do not. August 2012, SMS alternative longer the preserve of Becoming digital has simply WhatsApp hit the milestone wealthy nations: in the same made it easier to purchase, of 10 billion sent messages decade, digital services carry and so read books. in one day. That’s a ten- have helped overturn The effect on TV viewing fold increase in 12 months, governments, transform has also been paradoxical. and just one of countless the distribution of aid and A recent study in the U.S. examples of the rapid erosion medicine, and accelerate showed that teenagers today of traditional voice and economic growth in watch more TV than ever, messaging services. True, it’s developing countries. thanks to second screening still a fraction of global SMS The impact on established and social media. Going traffic, but it’s the speed of business has been profound. social makes TV watching a this migration – and the loss The music, movie and more engaging experience, of margins it represents – publishing industries, and and not just for teenagers: that’s raising temperatures in their entire value-chain of the majority of tablet owners the board rooms of operators production, distribution and regularly use their device around the world. retail have been changed while watching TV too. In the words of Intel’s irrevocably. Only now are the In a digital world that former CEO Andy Grove, winners and losers of this moves at the speed of “only the paranoid survive.” first wave of the revolution innovation, the future can Disruptive technologies becoming clear. But it’s not be hard to predict. are the nemesis of any over yet: in the next 10 years complacent business, and every industry – and the Only the paranoid survive for communications service global economy itself – will For the communications providers, now is the time for be transformed. In short, industry, the future is equally reinvention. everything that can be digital, uncertain. Few industries in Of course, connectivity is will be. history have faced so many the oxygen of the information Predicting the ultimate threats and opportunities, age, and data connections effect of disruptive at the same time. As the and usage are only set to rise technology isn’t easy, and the mobile market approaches exponentially. But providing4 DIGITAL LIFE
  5. 5. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing.connectivity alone will not Crossing the chasm tobe enough. It’s bundled, digital services won’t beenterprise-grade digital easy. There’s the existingservices delivered through business to steer throughpartnerships, and platforms harsh conditions; ever-combined with connectivity, increasing, well-fundedthat hold the keys to growth in competition; shareholdersthe face of shrinking revenues demanding rapid growth;from established services. legacy infrastructure and integration challenges; andEnter the digital enterprise a business and technologyCommunications service culture with its roots inproviders are well placed a very different businessto capitalize on this next environment. Successwave of digital opportunity. requires focus, visionThe first wave of the digital and radical thinking –revolution has focused on embracing a new set of corethe consumer, and now competencies for a serviceconsumers are taking provider’s business. this presents two challenges: research into the insightsthat revolution into their how to deliver a scalable and challenges faced byenterprise workplace. Opening up for digital business platform able to service providers (see page 8)Enterprise-grade, mission- Whichever way you turn in deliver an agile and constantly included in this report is thecritical services including the digital world, being open evolving set of products, just the first stage in helpingenterprise ‘IT-as-a-Service’ is a universal ingredient of services and support multi- our members embrace theare poised for growth, while success. The digital economy partner business models at opportunity of digital services.vertically-focused solutions has thrived because the the lowest possible cost; With over 950 membersuch as eHealth and smart Internet provides an open, and how to open up existing, companies covering thegrid are already showing common platform and set of significant capabilities globe, we’re expandinghuge potential. agreed protocols for systems securely and globally. our members’ ecosystem All of these services require and devices to talk to one As a global industry to encompass new digitala level of trust; security and another. association, at TM Forum divisions of our currentreliability communications Successful cloud services we’re energized by the members, as well ascompanies have in their DNA. and platforms have embraced challenges ahead, and attracting key enterpriseThe ‘best efforts’ quality of this open approach, offering committed to helping our players from a numberdigital services to date won’t rich application program members succeed in the of verticals who have anmeet the needs of business interfaces which reduce the digital economy. That’s why essential role to play in digitaland life-critical services. cost of integration and drive we recently launched our services for finance, health,The communications the growth of ecosystems, Digital Services Initiative, energy and more.industry has both the skills reducing the barriers to focused on overcoming the I look forward to workingand assets to deliver the entry for small, innovative challenges of managing with you as we take on thesereliability and security businesses. complex digital services and challenges together, and in theneeded for these services As we move in to the enabling an open, vibrant meantime, enjoy Digital Life!to succeed. Capitalizing on era of enterprise-grade digital economy.these opportunities means digital services, I believe The Initiative has five key Nik Willettsmaking the leap from being maintaining an open, agile pillars, designed to underpin Chief Strategy Officer,communications service approach to innovation and our member’s success in the TM Forumprovider to digital service integration will be crucial. digital economy, as shown in nwilletts@tmforum.orgprovider. For service providers’ IT, the graphic above. The unique Follow @nikwilletts DIGITAL LIFE 5
  6. 6. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing. FOREWORDCapturing thedigital opportunityThe digital revolution has brought about enormous change and, to remain competitive in a changing world, it isessential to move fast, embrace new opportunities and innovate. By Matthew Key, CEO, Telefónica Digital. The digital revolution has the heart of this new digital Open innovation already fundamentally re- world. We have global reach, We should embrace written the rules of many a crucial billing relationship innovation wherever it comes industries, from music with hundreds of millions from. As the barriers to through to photography. of customers, experience entry have come down, the This process of change is working with large corporates innovation cycle has changed accelerating and will disrupt and governments, and huge forever. Great ideas are just and transform society and distribution networks in as likely to come from a lone almost every business. terms of retail stores and developer as from within an My job is to help Telefónica customer service operations. R&D department. transform its business model Plus we are the ones that What’s more, innovation is in order to embrace this are putting smartphones – a just as likely to emerge out of digital revolution. The fact is driving force of digital – into São Paulo, Tel Aviv or Bogotá that digital will dramatically consumers’ hands. as it is from Silicon Valley change the way our industry In order to seize on this or London. The challenge operates. In many ways it opportunity, we need to is to identify the ideas and already is and the time to behave and act differently. industrialize the solutions. seize the opportunity is now. We should learn from the That’s why we created Digital technology does not Internet/software sector, Wayra – a technology recognize physical boundaries which is more entrepreneurial accelerator programme, or respect companies that and has risk-taking at its incubating 170 start-ups have been successful in the core. It’s agile and iterative; across 11 countries. Wayra past. The low barriers to it’s not afraid to scrap allows us to identify and entry, the minimal cost of things that aren’t working nurture groundbreaking innovation, and the speed and it sacrifices process ideas in areas relevant to our with which customers adopt for speed. Most of all, it’s business. new products, and abandon about innovation and putting We gain access to a wider products they have grown up a premium on doing things pool of ideas, and the start-up with, have given the digital differently. companies we are supporting revolution an unstoppable I believe that there have the opportunity to take momentum. are three key aspects to their innovations to our 300 The opportunity for succeeding in the digital million customers. companies like us is to sit at space. In-house research and6 DIGITAL LIFE
  7. 7. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing.development undoubtedly means involving as many in real time with their doctor, Digital is paving the wayremains important, but network operators, hardware improving the quality and for brand new products andyou also need to identify manufacturers, chipset cost of healthcare. services that will introducedisruptive innovation from makers, content owners and Financial services is new revenue streams. It hasoutside your company and developers as possible. another. In Latin America, the potential to drive hugeoutside your industry. only 30 percent of the efficiencies in the way we Social innovation population has a bank operate, and it will allow usBuilding ecosystems The most exciting aspect of account, and yet mobile to empower our business andTrying to control digital the digital revolution is the phone penetration is over public sector customers to doservices from end-to-end role technology can play in 100 percent. Activities that things differently.is no longer an option. changing society positively. we take for granted, such Thanks to our position asPartnerships are vital to work Combine social needs with a as paying a bill, can involve a trusted service provider,with specialists in areas that new business model and you people taking days off work we can be at the forefrontare not a core competency. have a recipe for success that and standing in line for many of enabling our customers’By creating a vibrant will create new opportunities. hours. Delivering banking digital lives.ecosystem around products Healthcare is one such services via mobile can not This period of changeand services, where different area. Public administrations only transform people’s may feel uncomfortable, butcompanies play to their key around the world are lives, but also transform my message is move fast,strengths, the sum can be grappling with the rising costs the delivery of government embrace the opportunities,greater than its parts. of healthcare, particularly services, such as pensions create new ecosystems, and Take Firefox OS where the costs associated with for instance. build stronger businesses andMozilla is seeking to establish chronic conditions such as We have all looked at a better society.a new, open mobile operating heart or respiratory problems. industries such as music,system based on HTML5. In the UK, 5 percent of travel, and publishing and Matthew KeyWe support its goals because NHS patients have chronic thought why did they not CEO, Telefónica Digitalwe believe driving open conditions and they account embrace the digital change?web standards in mobile will for 50 percent of the NHS’s Change is difficult, particularlybe the only way to ensure annual budget. when you are talking aboutinnovation continues. But We are already trialling changing a model that haswe know that a new OS can services in several countries proven successful for soonly be successful if based to enable people to monitor many years.on the broadest possible these conditions in their own The good news is that thecross-industry support. This homes and share the results opportunity is significant. DIGITAL LIFE 7
  8. 8. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing. DIGITAL SERVICES SURVEYHow to prosper inthe digital revolution?The digital revolution is enabling unprecedented innovation, which has and is disrupting business models andentire industries. Nowhere is this more true than for communications, which underpins the entire digital ecosystem.Communications service providers understand they need to become digital service providers. In October, TM Forumsurveyed over 150 executives from within service provider members to find out how they plan to do it. Philip Marshall,Ph.D., Founder and Chief Research Officer, Tolaga Research, guides us through the findings of this unique research.Unlike the publishing, music, This was complemented It is well-known thatadvertising, PC and other by in-depth interviews with service lifecycles areindustries, communications’ some of the communications diminishing, but perhapsday of reckoning has been industry’s most experienced, one of the most importantpostponed by the boom in senior executives. The findings of the in-depthdata services. That day is research revealed that digital interviews was how muchcoming, though. services represent fewer than they are shortening and the Networks underpin all 10 percent of overall service rate of change is accelerating.digital services, which are revenues for 40 percent of For example, one intervieweedriving unprecedented the respondents, while only states that some of theircapacity demands and 15 percent of participants say company’s mass marketnecessitating huge they account for more than 20 services have had theirinvestment. Yet those percent of income – sobering product lifecycles shortenwho run the networks are figures (see Figure 2). from 36 to 24 months, thenreceiving modest revenues Service providers certainly closer to 12 months.from these services. At recognize the importance Yet the survey foundthe same time, their core of digital services and that crucially, many ofservices, phone calls and particularly the tremendous these services and themessaging, are being eroded rate of market take-up. need for speed are notat an accelerating pace, Part of the problem of supported by vendors (seeas they move from being responding is that executing Figure 6 on page 14), withcharged-for, discrete (even if transformation strategies about 50 percent of newbundled) services to apps. is a huge undertaking, and developments relying on “Service providers certainly The big question is what to the field is littered with in-house efforts. In thedo about it. expensive failures. It is face of these challenges, recognize the importance In October 2012, TM even more challenging now, we anticipate that of digital services andForum carried out a Digital given the pace of innovation, communications service particularly the tremendousServices Survey of over the diversity of ecosystem providers will rapidly migrate150 executives from within players and the proliferation to and mimic the platform- rate of market take-up.”service provider members. of business models. based approaches that are8 DIGITAL LIFE
  9. 9. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing.being pursued by Tier 1 network transformation. progress and their plans for Figure 1 shows theplayers like Telefónica if they This is crucial for service the future. smartphone penetrationprove successful. providers to reduce costs estimates among the Key considerations include: and become agile enough A perfect storm respondents of the TM to handle the variety of Industry commentators Forum’s Digital Servicesn How to respond to players services which customers who have been anticipating Survey. It shows over half like Apple, Google, are demanding – and their the digital economy for the respondents estimate Facebook and Skype, who ever-shrinking service many years couldn’t have smartphone penetration are offering over-the-top lifecycles. With the market predicted the manner and levels of more than 20 (OTT) services. In particular, itself evolving so fast, rate at which it is unfolding. percent, and 19.6 percent of under what circumstances service providers cannot Within the last five years, the respondents estimate levels is it better to partner with just transform once, but digital economy has been greater than 50 percent. OTT players and when are finding they need to simultaneously bolstered The penetration rate of does it make more sense change continuously. How by the proliferation of smartphones is growing at to compete? Are there and what they prioritize are smart devices, application an astonishing rate and they opportunities to utilize the key to success. stores, cloud computing and will become the predominant OTT solutions as service n Market focus and the extensive application type of device on mobile enablers and mimic OTT partnership strategies developer communities. networks within the next innovations so that they can includes market segments, This has created the three years. The smartphone be used in parallel markets? whether consumer, ideal conditions for digital market is dominated byn Which key assets small, medium and services to thrive and caught devices that run on the and capabilities can large enterprise, and many industries, including Android (Google) and iOS communications service vertical industries such communications, by surprise. (Apple) operating system providers use to attain as energy, transportation Global smartphone penetration environments to facilitate sustainable market value and healthcare. already exceeds 20 percent, extensive application and how this is expected to Communications service having growing from almost development activity. Both change as digital services providers can no longer nothing in 2007, when the first Android and Apple are well continue to evolve? This dominate market iPhone was launched. on the way to having 1 million can vary greatly between categories with vertically- mature and emerging integrated solutions, but markets, and depending must develop partnerships Figure 1: Smartphone penetration among respondents on the starting positioning and play a lesser role What percentage of your subscribers are smartphone users? of the service provider; across a wider variety of such as whether they have markets. This is particularly 0 to 10% control of premium content the case in vertical market 10 to 20% and an established data solutions, such as those 20 to 30% center infrastructure. The associated with machine- 30 to 40% positioning of the service to-machine (M2M) 40 to 50% provider is also affected by communications, where Over 50% the pace of innovation and they must partner with Don’t know span of experimentation, other industry specialists, which is one of the such as in healthcare, hallmarks of the digital energy and transportation. services marketplace.n Operational transformation This report investigates strategies, in terms of the variety of digital changes to organizational service strategies that structures and employees’ communications service incentives, and IT and providers are pursuing, their Source: TM Forum Communications Service Provider Digital Services Survey, 2012 DIGITAL LIFE 9
  10. 10. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing. DIGITAL SERVICES SURVEYapps in their respective subscribers’ adoption is culture plays a small orstores. placing tremendous pressure negligible role in constraining Even though digital on them to do so. The key the digital service market (seeservices create massive barriers to responding were Figure 3). Yet 34 percent ofnetwork traffic demands, identified by respondents respondents (6.8 plus 27.2communications service as being company culture, percent) feel culture remainsproviders struggle to technical transformation, an inhibitor, so clearly for manymonetize digital services. strategies for identifying there remains much to do.Figure 2 shows that profitable business models The survey found thefewer than 16 percent of and partnership strategies. cultural inhibitors arerespondents can attribute predominantly:more than 20 percent of their Changing company culturesrevenues to digital services. Company culture plays an n complexities in gainingWe believe that in most important role in attacking consensus among internalcases, providers with greater the digital services market, as departments, whichthan 20 percent of revenues does the need to continuously respondents attribute tohave well-established, evolve organizational the number of departmentspremium content offers. structures and corporate involved, protracted All the senior industry priorities. In our survey, approval processes and aexecutives who were we found communications lack of accountability;interviewed one-to-one service providers have n fear of cannibalizingagreed that communications made tremendous efforts established product andservice providers have to transform their company service revenues; andbeen slow to innovate cultures: over 26.3 percent n risk-adverse cultures.in digital services, even (11.7 plus 14.6 percent) ofthough the speed of respondents believe company The survey results generally indicate strong support from C-LevelFigure 2: Estimated digital service revenues as a executives and widespreadpercentage of total revenues for survey respondents recognition that the dynamics of the digitalApproximately what % of your total services revenue comes from digital services? services market will demand(revenues from digitally delivered services other than voice, data and messaging) continued changes in Services are pre-revenue corporate cultures. There Less than 10% is also an almost universal 10 to 20% agreement that efforts to More than 20% shift towards Internet-centric I do not know philosophies are much at odds with traditional telecom philosophies. “There is also an almost universal agreement Driving partnership that efforts to shift strategies Most digital services have towards Internet-centric fragmented value chains philosophies are much which demand cooperation among multiple ecosystem at odds with traditional players for solutions that telecom philosophies.” Source: TM Forum Communications Service Provider Digital Services Survey, 2012 are brought to market.10 DIGITAL LIFE
  11. 11. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing.Figure 3: Company culture or process prohibits innovationCompany culture – corporate culture or process prohibits innovation If you selected Closely Applies or Exactly Applies, please select any of the following(percent of respondents) which apply to the challenge experienced: Services are pre-revenue Lack of C-level support/leadership Less than 10% 10 to 20% Risk taking is not encouraged More than 20% No clear program for channeling/developing I do not know innovative ideas No single department/senior executive responsible for progress Internal processes and decision making takes too long to get to market fast enough Fear of cannibalization of existing products/ service revenues prevents product development Too many internal departments involved to establish agreement and priorities 0% 20% 40% 60% 80% Source: TM Forum Communications Service Provider Digital Services Survey, 2012This contrasts sharply models that bring playerswith traditional, vertically- together to facilitate and “Many service providers are developing platforms tointegrated telecom services. monetize digital serviceNow communications service innovations. orchestrate cooperation and building partnershipsproviders need to partner Our survey showed that with ecosystem players. In some cases, communicationsacross the value chain and communications serviceacquire competencies in providers recognize the service providers are acquiring key assets in marketsareas of strategic importance. challenges of value chain they regard as strategic.” The fragmentation of the fragmentation. Many arevalue chain is particularly developing platforms toacute in the M2M market, orchestrate cooperation andwhere solutions are applied building partnerships withto a vast range of services, ecosystem players. In somefrom automotive and cases communications servicetransportation, to energy and providers are acquiring keysmart grid, healthcare and assets in markets they regardhome security. as strategic, such as Verizon’s As partnerships become recent acquisition of Hughesmore commonplace for Telematics Inc.1 (HTI ).communications service The partnership andproviders, they will shift ‘co-opetition’ strategiestheir businesses from being adopted by communicationsproduct-centric to retail- service providers are morecentric. Along with the complicated when theyappropriately architected involve OTT players. In somesolutions, this shift will cases communications See TM Forum Case Study Handbook 2013, which can be accessed free by all employees of our member companies 1enable two-sided business service providers compete by registering on our website then going to www.tmforum.org/casestudyhandbook2013 DIGITAL LIFE 11
  12. 12. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing. DIGITAL SERVICES SURVEYagainst OTT players, while as a serious problem funding shortfalls. The top computing and M2Mon other occasions they also indicates that other three challenges cited by solutions in vertical markets.partner with them. Based in companies are not these respondents were: Some Tier 1 operators, suchthe survey interviews, there necessarily anxious to as AT&T, Orange, Telecomis no clear consensus among partner with them: after all n lacking business cases Italia, Telefónica, Verizon andrespondents about the best traditional ‘telco’ rules, terms for digital services when Vodafone, have implementedco-opetition strategies, with and conditions have made it compared with the revenue innovation labs and platform-communications service difficult to do business with streams for existing based solutions as waysproviders partnering with OTT them, especially for smaller, services (cited by 51.4 of carrying out affordableplayers at varying levels. faster-moving companies, percent of respondents); experimentation that they The online survey results who so often have had n internal competition for hope will lead to scalableillustrated in Figure 4 indicate onerous and unsustainable funds (cited by 40.5 percent offerings they can control.that 28.1 percent (25.2 and terms inflicted on them. of respondents); and There are notable variations2.9 percent) of respondents n limited funds mean they in their approaches tobelieve that partnerships Business cases, risk can only focus on a small platforms, particularly whereare difficult to establish, challenge investment number of opportunities OTT providers are involved.particularly in terms of: The rate of innovation (cited by 35.1 percent of For example: and diversity of digital respondents).n identifying the right services make it difficult n The focus of initiatives partners for new services; for communications service Discussions with the like Telefónica Digitaln a lack of relationships with providers to balance their senior industry executives are clear – innovate to developer communities; and investments in digital revealed that they had dominate services withinn a lack of control over the services relative to those for made considerable strides its core business, partner value chain. legacy services. The survey in addressing issues around with strong industry players results in Figure 5 show that business cases through to develop opportunities The fact that altogether 31.1 percent (20.4 plus 10.7 platform-based solutions, in new markets andsome 57.1 percent saw percent) of respondents think and by choosing market create open developerfinding the right partners digital services are stifled by solutions such as cloud environments to enableFigure 4: Partnerships are a key requirement for communications service providers to succeed in the digital services marketPartnerships – necessary partnerships are difficult to establish If you selected Closely Applies or Exactly Applies, please select any of the following(percent of respondents) which apply to the challenge experienced: Exactly applies Poor history with partnerships/lack of Closely applies skills needed to build and operate services through partnership Somewhat applies Almost applies Lack of relationship with Does not apply developer community Put off by lack of control in value chains Difficult to find the right partners to offer new services 0% 20% 40% 60% Source: TM Forum Communications Service Provider Digital Services Survey, 201212 DIGITAL LIFE
  13. 13. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing. experimentation and the manage the delivery and While there is much talk vertically integrated service creation of new services security of services. This of this being fairer – that silos that are optimized for (see pages 22 and 23). parallels AT&T’s proposal those who generate traffic particular products. Thesen Tier 1 operators like AT&T to introduce toll-free data should pay for its carriage vertical architectures have and Verizon in the U.S. services and charge OTT – the less often expressed proved costly and inflexible. In market are unique in that players for their customers’ view is that it is a way of recent years, communications they have nationwide mobile usage, in effect capitalizing extending the life telco- service providers have been coverage and regulated, on being part of a ‘1-800 type charging models. eliminating silos where they partial, fixed-line coverage type’ data service (that n Most communications can to evolve their service across the country. is free to the user at the service providers are being environments, and reduce Co-opetition strategies with point of consumption). driven by customers to costs and risks. OTT players vary depending Some communications cooperate or collaborate This is largely thanks to on where communications service providers, including with popular OTT providers standardized, commercial off service providers have fixed SK Telecom and Korea such as Google, Facebook the shelf approaches enabled and mobile or mobile-only Telecom, are lobbying their and Twitter. Many service by TM Forum’s Frameworx coverage. For example, regulator to enable them providers anticipate there suite of standards-based Verizon competes or to charge OTT players for are opportunities to tools and best practices (see partners with Netflix for access to their networks. leverage widely adopted page 34). video services depending on They are not alone: among OTT capabilities as service Digital services are whether or not it has fixed others, Luigi Gambardella, enablers for broader pushing this further because broadband/content offers in Head of the European consumer offers. they need a variety of new the respective markets. Telecom Network capabilities, including then Telstra in Australia believes Operators’ association, Technical transformation following which respondents that it can partner and ETNO, wants the ITU underpins profit to the survey identified as the collaborate with OTT to change its regulatory Communications service most common: players and introduce approach to the Internet, providers’ technical deep packet inspection enforcing some kind of infrastructure has evolved n Open development (DPI) technology to sender pays principle. over many decades to create environments to provideFigure 5: Business case challenges and internal funding priorities stifle digital service innovationInvestment – funding to develop ideas into products is difficult to secure If you selected Closely Applies or Exactly Applies, please select any of the following which apply to the challenge experienced: Exactly applies Waiting to see what others do in the Closely applies market – unclear on the business model Somewhat applies Early attempts have failed so Almost applies little enthusiasm Does not apply Internal competition for funds e.g. building out 4G infrastructure/supporting IPv6/customer retention program Funding difficult to secure due to a lack of compelling business case when compared to existing revenue streams Limited funding to develop ideas means concentrating on a small number of opportunities 0% 20% 40% 60% Source: TM Forum CSP Digital Services Survey, 2012 DIGITAL LIFE 13
  14. 14. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing. DIGITAL SERVICES SURVEYFigure 6: Integration challenges for digital servicesIntegration – legacy systems are too complex or expensive to integrate with when If you selected Closely Applies or Exactly Applies, please select any of the followingdeveloping new products which apply to the challenge experienced: Exactly applies Lack of best practices, standards Closely applies and reference architecture Somewhat applies Cannot find vendors to complete the Almost applies integration at a viable price point Does not apply Too many disparate vendors involved, leading to fragmented solutions Complex integration with network, platform and cloud infrastructure Requires complex integration with B/OSS (e.g. product catalogs, CRM, billing and charging, service management with OSS) which is too risky/expensive 0% 20% 40% 60% 80% 100% Source: TM Forum Communications Service Provider Digital Services Survey, 2012 service enablement and and changing demands in end-to-end management difficulties in provisioning, exposure. the digital services market, challenges are being activation, subscribern Automation to reduce continuous transformation addressed by the Forum’s management and service costs and improve efforts would be necessary. Digital Services Initiative, assurance. reliability, which becomes Figure 6 shows that 55.3 and the integration of the   particularly complicated percent of respondents management layer across Strategies to ride the in the case of autonomous (38.8 plus 16.5 percent) multi-cloud environments to digital wave M2M devices where believe that their legacy drive service assurance is a The strategies that management and systems are too complex key part of the new, practical communications service monitoring must or expensive to integrate Multi-Cloud Management providers are adopting from encompass network and into the development of Packs for Digital Services, digital services are almost as device nodes. new products. Of these which will be available to broad as the variety servicesn Flexibility to support the respondents, 82.8 percent members from TM Forum’s in the offing. Figure 8 greater variety and reduced believed that Business and website as part of the illustrates this diversity where lifecycles associated with Operational Support System Frameworx 12.5 release in 57.9 percent of respondents digital services. Several (B/OSS) integration was the December 2012. indicate that they have respondents estimated major concern, while 51.7 The survey results in Figure collaborative approaches that the lifecycles for digital percent also cited complex 7 show that 43.0 percent and 42.9 percent indicate services are half those of network, platform and cloud (25.2 plus 17.8 percent) of that they have competitive their established services integration issues. respondents believe they business strategies for digital and say they expect The on-going integration will struggle to implement, services. In addition, 35.7 lifecycles to shrink further. challenges are serious operate and scale new digital percent indicate connectivity- issues for service providers services profitably. The centric strategies. It was generally agreed that and were investigated greatest concern expressed In reality, communicationsgiven the pace of innovation as part of the study. The by these respondents is the service providers could be14 DIGITAL LIFE
  15. 15. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing.Figure 7: Integration challenges for digital servicesOperations – difficulty in implementing/operating/scaling operations for new services If you selected Closely Applies or Exactly Applies, please select any of the followingat a profitable cost base (percent of respondents) which apply to the challenge experienced: Exactly applies Closely applies Hard to manage operations across a Somewhat applies number of countries/operating companies Almost applies Does not apply Challenges with charging, revenue, settlements etc. Difficulties in provisioning, activation subscription management and service assurance 0% 20% 40% 60% 80% Source: TM Forum Communications Service Provider Digital Services Survey, 2012expected to embrace all While there are differences inthese strategies, depending their go-to-market strategies, Figure 8: The diverse digital services strategies foron the services they the most are focusing on four communications service providersoffer. It is this diversity of categories of digital services,requirements that proves namely: Which of the following statements best describe your company’s business strategythe most challenging aspect towards established digital services (e.g. social media, apps, VoIP, cloud etc.) (please check all that apply)of providing digital services n vertical industry solutionsand is their primary agent for and M2M, typically withchange. vertical sector emphasis No clear strategy While 12.7 percent of towards transportation,survey respondents lack energy and healthcare; Connectivity: Focus on providing effectivea clear strategy for digital n cloud-based services connectivity at competitive prices, charging users for what they consumeservices, it is heartening to including establishedsee that almost 60 percent infrastructure and platform Competitive: Directly compete with existing digital service providers by offering a better/recognize that partnerships as a service offerings bundled alternative serviceand collaboration are in addition to a variety Offensive: ban or separately bill for “over the top”necessary to succeed in the of cloud orchestration, services which cannibalize traditional revenuedigital services market. management and security streams or consume excessive bandwidth Given its huge momentum, solutions; Collaborative: embrace partnerships withcommunications service n socially-orientated, digital service (“over the top”) providers andproviders across the globe unified communications and seek to add value to those servicesare addressing the many infotainment, which build 0% 20% 40% 60% challenges of digital services on their legacy in telephonywith vigor, placing bets and and messaging; andinvesting heavily in the market. n premium content with the Source: TM Forum Communications Service Provider Digital Services Survey, 2012 DIGITAL LIFE 15
  16. 16. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing. DIGITAL SERVICES SURVEY greatest innovation the size of the consumer among market segments, unified services. occurring among players market and its growing role which is illustrated in Figures This contrasts the service that have premium in defining solutions for the 9 and 10. Figure 9 shows priorities for pre-paid content. enterprise market. Many priorities for the post-paid subscribers, which are less of the respondents plan to and pre-paid consumer certain and place more Although communications target the small and medium markets and reveals that the emphasis on partneringservice providers are enterprise (SME) markets highest priority for post-paid with third-party contentexpanding their large, by ‘hardening’ consumer services are associated with and platform providers tosmall and medium solutions by adding security multimedia digital content deliver unique, content-richenterprise offers, they still and quality of service for multi-screens and services, such as hybridrecognize the importance capabilities. personal consumption, and social-media applications.of maintaining robust Communications service richer social media-oriented Figure 9 shows theconsumer offers, given providers’ priorities vary communication services/ digital service priorities forFigure 9: Communications service providers’ positioning strategies to capitalize on the digital services with consumersDigital Service Priorities (Postpaid Consumers) Digital Service Priorities (Prepaid Consumers)Multimedia digital content for multi-screens and Multimedia digital content for multi-screens and personalized consumption models personalized consumption models Industry-specific services such as eHealth, Industry-specific services such as eHealth, smart grid, financial services, M2M smart grid, financial services, M2M Create APIs for third-party access to existing Create APIs for third-party access to existing capabilities such as billing, and grow a capabilities such as billing, and grow a developer community around our APIs developer community around our APIs Cloud-based X-as-a-Service e.g. Infrastructure- Cloud-based X-as-a-Service e.g. Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (Paas), as-a-Service (IaaS), Platform-as-a-Service (Paas), Software-as-a-Service (SaaS) solutions and Software-as-a-Service (SaaS) solutions and virtual/mobile desktop virtual/mobile desktop Partner with third-party content and platform Partner with third-party content and platformproviders to deliver unique, content-rich services providers to deliver unique, content-rich services e.g. hybrid social-media applications e.g. hybrid social-media applications Richer, social media-oriented communication Richer, social media-oriented communication services/unified communications services/unified communications 0% 20% 40% 60% 0% 20% 40% 60% Not applicable Low Medium High Source: TM Forum Communications Service Provider Digital Services Survey, 2012“Within the prosumer/SME market, communicationsservice providers recognize the blending of functionalitythat is commonplace in the consumer market.”16 DIGITAL LIFE
  17. 17. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing.the large enterprise and (SaaS) solutions and virtual/ Unified communications The viral adoption of socialprosumer/SME market mobile desktop. go social networks like Facebooksegments. In these markets, In addition, within the By stressing richer, illustrates how radically andcommunications service prosumer (see page 27)/SME social media-oriented quickly communications isproviders are placing higher market, communications communications, changing and the robustnesspriority on industry specific service providers recognize communications service and scalability of socialservices such as eHealth, the blending of functionality providers are augmenting communities. As unifiedsmart grid, financial services, that is commonplace in the their old-style telephony communications gain broaderM2M and cloud-based consumer market, giving and messaging offers, with market adoption, users’X-as-a-Service such as some emphasis to richer, social and Internet messaging identities become blurredInfrastructure-as-a-Service social media-oriented capabilities. This can be with the proliferation of IP-(IaaS), Platform-as-a-Service communication services/ broadly classified as social based social networking and(Paas), Software-as-a-Service unified communications. and unified communications. messaging solutions.Figure 10: Communications service providers’ positioning strategies to capitalize on the digital services with enterprises,prosumers and SMEsDigital Service Priorities (Large Enterprises) Digital Service Priorities (Prosumers/SMEs)Multimedia digital content for multi-screens and Multimedia digital content for multi-screens and personalized consumption models personalized consumption models Industry-specific services such as eHealth, Industry-specific services such as eHealth, smart grid, financial services, M2M smart grid, financial services, M2M Create APIs for third-party access to existing Create APIs for third-party access to existing capabilities such as billing, and grow a capabilities such as billing, and grow a developer community around our APIs developer community around our APIs Cloud-based X-as-a-Service e.g. Infrastructure- Cloud-based X-as-a-Service e.g. Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (Paas), as-a-Service (IaaS), Platform-as-a-Service (Paas), Software-as-a-Service (SaaS) solutions and Software-as-a-Service (SaaS) solutions and virtual/mobile desktop virtual/mobile desktop Partner with third-party content and platform Partner with third-party content and platformproviders to deliver unique, content-rich services providers to deliver unique, content-rich services e.g. hybrid social-media applications e.g. hybrid social-media applications Richer, social media-oriented communication Richer, social media-oriented communication services/unified communications services/unified communications 0% 20% 40% 60% 80% 0% 20% 40% 60% 80% Not applicable Low Medium High Source: TM Forum Communications Service Provider Digital Services Survey, 2012“The viral adoption of social networks like Facebook illustrateshow radically and quickly communications is changing andthe robustness and scalability of social communities.” DIGITAL LIFE 17
  18. 18. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing. DIGITAL SERVICES SURVEY Encouragingly, many of new developments relying for a purpose-built platformthe survey’s respondents on in-house developments. for tracking the location andrecognize they cannot rely In the face of these maintaining the security ofon using their control of the challenges, we anticipate a group of Haj pilgrims fromsubscribers’ phone number that communications service Pakistan.as a means of controlling their providers will rapidly migratecustomers’ identities, hence and mimic the platform Cloud services havewill be increasingly pressured approaches being pursued by a silver liningto embrace and integrate Tier 1 players like Telefónica The promise of capital andother communities such as if they prove successful. operational efficiencies,Facebook and Twitter. Communications service and faster service delivery Players like Telefónica providers are looking to is driving the proliferationare developing platform platforms that underpin their of data centers and cloudcapabilities to compete social media and unified services. Indeed, cloud wasdirectly against OTT players communications strategies, communications servicein their core markets and that will provide highly providers’ number one prioritycollaborate in areas where reliable core communications regarding their strategiesOTT providers can extend on the one hand while to capitalize on the digitaloffers into new markets. enabling innovation on the services with enterprises,Others like AT&T, Telstra, other. This includes efficiently prosumers and SMEs asTurkcell and Zain Group are integrating personal illustrated in Figure 9. Theytaking more partnership- subscriber information with are clearly anticipating robustoriented approaches. other relevant service and revenue opportunities fromIn addition, we generally business intelligence. cloud services.observed a tendency for Although many platform Almost all the Tier 1smaller players in their initiatives target next communications servicerespective markets to partner. generation network providers have been acquiring Service lifecycles technologies, they are equally or building massive dataare diminishing due to relevant to 2G network and center resources and offeringaccelerated innovation. One SMS messaging environments. a variety of IaaS and/or PaaSinterviewee states that some Communications service offers for many years. Nowof their mass market services providers globally are using the they are expecting thathave seen product lifecycles2 services platforms to bundle demand for cloud servicesdecrease from 36 to 24 innovative SMS messaging will evolve in parallel to themonths, then closer to 12 and telephony services. As an digital services market andmonths. In addition, many of example, Zain Group recently with the proliferation ofthe new services lack vendor used its value-added services mobile broadband, driving thesupport, with about half of (VAS) platform as the basis need for:“Communications service providers are looking toplatforms that underpin their social media and unifiedcommunications strategies, that will provide highlyreliable core communications on the one hand whileenabling innovation on the other.” 2 See TM Forum’s Product Lifecycle Management – an introductory guide,which will be available free to members from the Forum’s website from December 2012.18 DIGITAL LIFE
  19. 19. Report prepared for Saumya Choudhury of Ericsson Inc.. No unauthorised sharing.n continued cloud service Netflix and Redbox to enable can be consumed how, when of industries, including capacity provided through delivery of content to mobile and where the customers healthcare, energy, infrastructure, platform and devices outside its fixed choose. transportation, smart cities, SaaS offerings; broadband footprint. In Figures 9 and 10, the retail and exploration. They aren increased security Players like Telstra and role of third-party content for partnering with (and in some demands, such as in Verizon don’t believe that it rich service does not receive cases acquiring) companies identity management and is necessary to control the as high a priority as many of which have specialist vertical data protection; and ownership and aggregation the other capabilities listed. capabilities and expertisen The orchestration of of content, rather they are However, in interviews needed to deploy and run services across public and focused on controlling the with senior executives from M2M services. private cloud boundaries. distribution of content and communications service Communications associated transactions. Their providers, it is clear they service providers are alsoPremium content hits agenda is to ensure users believe premium content, implementing their ownthe multiscreen consume more content in whether acquired directly or platforms or partneringMany service providers, like more places. through partnerships, will with companies like JasperAT&T, Comcast, Telstra and As we’ve mentioned play an important role in the Wireless to deliver commonVerizon, have the rights to already, communications consumer market in future. device management andpremium video content such service providers could basic service orchestrationas sports and news channels. benefit greatly by integrating Vertical markets and M2M functionality for M2MThey are capitalizing on this premium content with other Pervasive communications, services. Others are workingcontent with multiscreen social media and unified web services and to offer the expected risestrategies for delivering communication capabilities to developer communities, in demand for sophisticatedcontent among TVs, tablets improve users’ experiences and the availability of low- network and device end-pointand smartphones. and benefit from third party cost sensor networks is management systems to For example, Telstra in service innovations. driving opportunities in ensure they perform reliablyAustralia leverages its rights Even communications vertical markets and M2M and securely.to Foxtel video and exclusive service providers who lack services. Most notably, Most of the Tier 1rights to sporting events, direct control of premium communications service respondents to our surveydelivering the content across content recognize its providers are pursuing these have established M2Mcompany-branded tablet and importance in their overall opportunities where they have initiatives, resulting in asmartphone devices. Telstra digital media strategies. Their achieved a high penetration slew of partnerships withalso bundles its service with strategies involve acquiring rate for their services and are companies like Mercedesother infotainment, such premium content assets (such seeking ways of extending and BMW in the automotiveas messaging and music as via Netflix), identifying the market and their income. industry, GE Healthcareservices. ways to wrap the content to Hence M2M solutions are and Johnson & Johnson in Verizon also offers a add value and differentiation being widely implemented healthcare, and Tesco in retail.multiscreen solution and to the content, and integration by communications service Throughout the interviews,partners with players like across devices to ensure it providers across a variety M2M services were the“Pervasive communications, web services and developercommunities, and the availability of low-cost sensornetworks is driving opportunities in vertical marketsand machine-to-machine services.” DIGITAL LIFE 19

×