Monday, December 23, 2013

Service exposure as a way of realizing a two-sided business model

By exposing different network assets – for instance SMS, billing capabilities and call setup – operators could enhance their position in the value chain and create new innovative offerings. In this post, the main focus is on how the exposure of various voice capabilities could contribute to realizing a two-sided business model.

We explored the possibilities of a two-sided business model for telcos in a recent blog post. Among other things we discussed growing opportunities in verticals, such as learning and healthcare.

Apart from existing examples in the telecom industry, such as toll-free calls and emergency service calls, another way of realizing a two-sided business model is for operators to move into the area of service exposure – sometimes also referred to as network exposure or API exposure.

Operators venturing into service exposure must consider a number of basic questions before getting started: What capabilities should they expose and to whom should they expose their assets?

The first question is perhaps the easiest to answer: Operators must carefully consider what to expose so that they don’t endanger their own core business. This would be the case if an OTT player, with the help of exposed assets, could build a high-quality telephony service at a lower price.

When it comes to the “to whom” question, the main target group for exposed voice capabilities is the enterprise segment (and developers working at the assignment of companies). Assets are exposed to be integrated into enterprise business processes to help companies become more efficient.

When these questions have been answered satisfactorily, what would a possible two-sided business model based on service exposure look like? An interesting case is where a voice application, CRM system and customer support could interact.

For instance, an app developer working for a big insurance company has developed an intelligent form, which retrieves information from the company’s database. Customers can fill in the form on the company’s website and send it back electronically. 

Questions might arise when customers fill it in and by clicking a button inside the form the customer can come into direct contact with an expert at the company who can answer any queries. The expert has access to the company’s CRM system and can directly see the background information on the customer.

The operator makes sure that the voice application works seamlessly together with the intelligent form and the CRM system. In this case, the operator makes money on the assets exposed to the developer (for example, through a license fee) and the voice solution it sells to the insurance company. The insurance company, in turn, can decide that the “in-form” calls will be free of charge for its customers.

An obvious advantage for the operator with this set-up is that it can make its (voice) services more relevant and integrate them into additional communication flows. In this way, a two-sided business model can help operators reach beyond the limits of their existing business and participate in larger profit pools than those available in a pure connectivity market.

By Bodil Josefsson for the Voice on Telecom     

Monday, December 2, 2013

Four ways carriers can monetize WebRTC

In this blog we have featured several guest posts from Kelly Fitzsimmons, a serial tech entrepreneur and co-founder of the Hypervoice Consortium. The consortium has the mission of articulating and advancing standards, capabilities and potential applications for Hypervoice, or the transformation of voice communications into searchable and shareable native web objects.

Her latest post explored how to monetize voice in a WebRTC world. Now we're happy to welcome her back again, as she examines four ways carriers can monetize WebRTC. You can follow her on Twitter at @schnellerkeller


When it comes to WebRTC, carrier attitudes range the gamut. What remains consistent is that few carriers have a clear idea on how to make money in a WebRTC world.

At the root of it, WebRTC poses a particularly thorny problem. Historically, web applications – particularly fast adopting ones – have been free or, at best, freemium. But how can revenue from telecom services, such as voice, be stabilized or even grow when people expect it to be free? 

Once users expect free, the most obvious choice is to move up the value chain. Since the core service itself is now table stakes, the carriers have been asking themselves who would be willing to pay for a better version of it (verticals? enterprise? OTT?). And from that point, the next logical focus becomes obvious: quality of service.

That may be the obvious choice, but it is unlikely to unlock radical new stores of value for the carriers. It may stem the bleed for a bit, but there are other players already entrenched in these upscale value-added markets. The carriers risk both showing up late in the game and not being seen as an obvious brand choice.

So, rather than focusing on quality of service, perhaps a better question for carriers is: How are we uniquely positioned to generate radical value while working from our key areas of strength?

In spite of all the bashing today, carriers have many unique – albeit not all that obvious – strengths. For example, with some exceptions, carriers are masterful at billing. The telecom billing systems touch almost every human in the connected world, which leads to their next gift: distribution. From retail counters to the deployment of hundreds of thousands (possibly millions) of mobile sales representatives, telecom knows how to find you. 

And finally, telecom knows a great deal about you. If you have ever been lost, you have likely thanked the high heavens that you walk around with a GPS in your pocket. By linking location data to historical behaviors, carriers are uniquely positioned to help you find the things you want, when you want it, exactly where you are. And with mobile payments, carriers can help you seamlessly complete that transaction – without ever reaching for cash or a credit card.

In sum, telecom can touch, find and provide unique information about and to almost every human on the planet. Not even Google can make this claim, as the vast majority of the world has never been invoiced by Google – let alone seen a sales rep. (And not to put too fine a point on this, but even Google requires the carriers.) 

So regardless of how WebRTC shakes out, many of telecom’s assets are nearly agnostic to the outcome. That said, there are a few ways that the carriers can capitalize on WebRTC now that could pay off big dividends later:

OTT Reselling
By partnering with OTT to test out various applications, the carriers can use their sales and distribution assets to market test apps and watch which ones break through the noise barrier. WebRTC promises to make the app world a far noisier place, which puts the carriers in a unique position. Their distribution strength can help an app find an audience and allow, in turn, the carriers to identify winners early.

This strategy may involve OEM, white-labeling and just plain channel distribution. From a revenue standpoint, OTT reselling provides a quick new revenue stream. For example, today AT&T is reselling RingCentral’s Office@Hand, a simple cloud-based phone and fax solution for small business.

Note how neatly the pricing structure fits within AT&T’s monthly billing. Although net revenue is likely to be modest with apps like RingCentral at first, these reselling relationships could pay big dividends down the line if they:
1. help keep customers on the carrier billing systems
2. provide real-time due diligence to the carriers’ corporate development teams so that they can identify acquisition targets early (read: cheaply).

Core Services
Wouldn’t it be lovely if these new apps didn’t run on the web, but rather utilized the carrier’s core network assets? That is exactly what AT&T has done by partnering with Tropo, provider of the Ameche platform. Today, AT&T is busy building a developer ecosystem on its network. In this emerging model, developers win by being able to stand up apps with carrier grade service levels on the backend. Carriers win by collecting fees from Tropo and other Platform as a Service (PaaS) providers. (For more on this relationship, go here)

When combined with reselling, AT&T would generate a double bottom-line with third-party apps – once through reselling (that is, RingCentral) and then by collecting network utilization fees from the platform providers (that is, Tropo).

Sales Optimization
Thanks to all the network utilization data that the carriers can access, they are in a unique position to see sales opportunities no one else can spot. For example, a surge of calls happens at a customer company tripling their monthly call volume. Who other than a carrier can spot this today? If the carriers were selling apps to solve for call volume spikes, their sales resources could be deployed at the exact moment of customer pain with a helpful cure. In the land of sales, that’s called winning. With this strategy, the carriers would increase net revenue by reducing cost of sales, improving their win:loss ratio, and accelerating time to close.

Small Data
For a moment, let’s think beyond Big Data. Today, carriers possess meaningful Small Data – precise, scientific insights – that can be derived from how businesses are leveraging their services. Instead of being predictive, these consist of historical insights and/or content that is built up over time. If the resulting insights or archived data are meaningful enough, these types of services could become quite sticky. In short, customers are less likely to jump to a competing service provider, if they are going to lose 5+ years of historical business data and the resulting analytics. The Small Data strategy generates annuity revenue through archiving and access fees while reducing customer attrition rates.

To the innovative carrier, all these monetization strategies can be linked together – creating four new, complimentary revenue streams. Imagine a carrier reselling an app that sits on their own network that solves a problem they can uniquely spot and sell to that cultivates long-term, loyal relationships with their customers. And for carriers, like AT&T, that future is already underway.

By Kelly Fitzsimmons of the Hypervoice Consortium