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

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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

Monetizing voice in a WebRTC world

We've focus heavily on WebRTC in recent months, with posts on how WebRTC could work with RCS or the role of the signaling layer. We're also closely following WebRTC discussions on our Twitter account.  This remains a rapidly developing ecosystem, yet one without clear winners or losers.  

In June, we featured a guest post on how to find the right WebRTC partners 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. 

Now we're happy to welcome back Kelly, as she examines the central question of how to monetize voice services in a WebRTC world. You can follow her on Twitter at @schnellerkeller

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If there’s one thing we’ve learned in the past couple years, it’s that voice is about a lot more than just counting minutes. And new markets are emerging to prove this point, as voice transitions from transient to permanent, from transport to asset. 

More than a decade ago, early VoIP innovators such as Skype, Jajah and Vonage disrupted traditional carrier pricing, which swung the value-creation arrow swiftly from telcos to the consumer. Now WebRTC is taking this to a new level because startups no longer have the same kinds of capital requirements that the VoIP innovators faced. So instead of hundreds of disruptive startups, the dominant players are now going to face millions.

Very mindful of this dynamic, telecoms have been searching hard to replace voice revenue with revenue from alternative products, vertical services and even riding up the value chain to enterprise.  However, for all this effort, voice as a service has proven maddeningly difficult to replace as a profit center.

But what if we are looking at voice the wrong way?  What if voice has value in it beyond the quality and the speed in which it can be transported?  Asynchronous voice – best represented commercially today as voicemail and robo-calling – may be the key to unlocking immense value.  We are just starting to see value creation in voice as content and “big voice data,” and in both cases, voice is persistent – not transient. 

Customers are showing that they are willing to pay for value-added voice services that allow them to be more responsive and productive. New billion dollar markets are likely to follow from these first tentative footsteps.

Traditionally, startups fill the gap between the availability of technology and the unwillingness of established players to leverage it.  But dominant players cause disruption too. Apple turned the mobile industry upside down, shifting power from access providers to the handset providers. Sprint reinvented the long distance call long before Skype was even a possibility.

The future of voice requires players, both old and new, to radically re-think the role of voice and where its true value lies. WebRTC virtually guarantees an explosion of new ideas and possibilities, which means incumbents have an opportunity to identify the ideas with the most profit potential and double down on those projects and/or paradigms.  Instead of investing in the disruption itself, the smart telecoms will invest in the inevitable pockets of value created amongst the cinders of disruption.

By Kelly Fitzsimmons of the Hypervoice Consortium

WebRTC – friend or foe of RCS?

At the Voice of Telecom we’ve taken several different looks at WebRTC and what it means for telcos, including, among other things, the role of IMS in the future of WebRTC and how to spot successful WebRTC partners. 

We’ve also written a lot about Joyn and RCS.  But what about the two together?

It might be easy to see the two technologies as competitors – one open source and the other a developing telecom standard.  But this would be short sighted, for comparing WebRTC and RCS head on is like comparing apples to oranges, not apples to apples.

Instead, the right answer for operators is not to choose between the two technologies – they must be viewed as complements.

To recap, WebRTC is a technology that enables web browsers to use a device’s camera and microphone to allow voice and video calls without the use of plugins. One of its main advantages is that it has lowered the barriers for smaller startups and developers to build real-time voice and video calling solutions, and, according to Disruptive Analysis, the one-billion-WebRTC-devices mark was reached earlier this year.

WebRTC is also currently the only existing soon-to-be standardized technology on the market to create horizontal cross-platform communication services, encompassing smartphones, tablets, PCs, laptops and TVs, which adds value for both consumers and enterprises.

WebRTC gives operators the opportunity to offer telephony services to more devices, such as PCs, tablets and TVs. By combining  existing IMS technologies, operators will be able to provide, for example, one-number services. WebRTC is not going to lead to increased revenues and profits on its own, but taking communications to the web can prevent revenues from plummeting and open up new and intriguing enterprise opportunities, particularly for consumer-facing companies initially but with far reaching implications in the future. There is also a great marketing value in WebRTC, showing that operators can stay relevant and encourage innovation. 

One important characteristic of WebRTC, however, is its lack of a standardized signaling layer, and it’s up to each service provider to decide how this is handled.  We discussed this in a post over the summer, and it remains crucial to locate a person and make a call.

This is where IMS and RCS come in. With RCS, operators can offer a wide range of services, including – on top of voice and video – chat, presence, address book, video share, image share and file transfer. It builds on the standards of the telecom industry with the connected quality and reliability.  

So how could an operator use WebRTC and RCS together?  A good example could be to expand the range of devices – such as PCs and tablets – that RCS could support.  An operator could do this by using the WebRTC media framework, IMS for find and connect, with the RCS services on top to give added value.

To give you a sense of the possibilities, earlier this year, analyst Doug Mohney wrote two posts at 

WebRTC world that discussed how RCS and WebRTC could effectively put most current OTT players out of business.  From his first post:

The bigger picture here is that OTT players are going to find themselves displaced by a combination of carrier supported and promoted services in RCS -- because at the end of the day, carriers want to have a large number of customer relationships  -- and WebRTC providing a one-stop shop for developing third-party apps that can tie into third-party services in ways we can't yet imagine.

This is only one possible scenario and RCS is one example of many, in which WebRTC is a potential complement for telcos and not disruptive.  If operators think creatively and are open to new technology and business models, we see many more ways to make the most of telecom and web technologies - working together, not separately.

By Christer Boberg for The Voice on Telecom
 

3 keys to spotting successful WebRTC partners

WebRTC opens up possibilities for millions of developers to create new services that we can’t even imagine today.  New players are rapidly forming new ecosystems and transforming current ones, and we can’t yet say what will drive success.  Will it be new interactions? Or new relationships? Have we learned any lessons so far?  There don’t seem to be any definite answers, so let’s start our discussions here.

With that, we introduce our first guest post from Kelly Fitzsimmons. Kelly is 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.

You can follow Kelly on Twitter at @schnellerkeller

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 Standards don’t create disruption. Innovators do.  The ultimate value of WebRTC will emerge from how well entrepreneurs and technologists put WebRTC into action.  By dramatically lowering the barriers to entry, what used to be hard will become easy.  The result will be throngs of new startups. So then what?

For telco players looking to partner with hot up-and-coming startups, it is important to focus on the few, not the many.  In essence, a telco partner needs to try and spot the "winners" before they know they are winners.  And in this way, a partner's role is not that much different than a venture capitalist. 

So the real question is, do any of the early WebRTC startups have a discernible advantage? 

1.     Capitalization - Has the startup raised capital during the downturn?   The ability to raise funds in the past – particularly during the Great Recession – indicates that their leadership earned the trust of others and, most importantly, their technology has gone through a modicum (if not a lot) of due diligence. This is proof of some staying power.

2.     Team – Does the startup team have experience and expertise in navigating relationships with large strategic partners in the past?  Do they understand how to navigating licensing, IP issues, channel?  The more seasoned the team, the more likely a successful outcome.  If they don’t understand their partner’s world, they are likely to be impatient, which can be exhausting for all parties.

3.     Revenue - Does the startup already have revenue from real clients?  If so, they have moved past market discovery into market validation. This is a critical step that many startups never make.  This step alone will help you significantly de-risk the partnership. If they don’t have revenue now or likely ever, choose another partner.

With so many new entrants, telco has a rich playing field to work from.  These emerging companies offer less nimble enterprises ways to innovate quickly and get new products to market.  Although acquisition may be one tried and true route, early partnering is what many of these young entrants really want.  They want access to your subscriber base and billing systems.  For these startups, revenue is king.

The advantage for telcos in partnering instead of early acquisition is that it de-risks the deals. Do these startup partners really walk the walk? Are your customers interested in their products? By partnering early with a few startups, acquisition becomes easier on the backend.  First concentrate on being the strategic and essential partner.  The more key you are to their success, the better the ultimate terms.

By Kelly Fitzsimmons of the Hypervoice Consortium

The key role of IMS - and operators - in the future of WebRTC

We started last week to look at WebRTC and both the benefits and limitations of its lack of a “find and connect” solution. Today, let’s look at how IMS could play a key role in the future of WebRTC.

Telcos already have invested in an excellent “find and connect” layer in the form of IMS,  and implementing a WebRTC signaling layer with IMS would allow the telecom industry to find  a niche in this new ecosystem. Operators basically just need to offer simple API’s for IMS call control that can be used in conjunction with the API’s for WebRTC.

Having this in the context of a telecom grade network, you get all of the other good stuff like interoperability, security and telco-grade reliability. It would also allow telcos to embrace the web developer community and offer them additional value to WebRTC-based applications and services, that is, adding new technology while telecom core values are kept.

Until the arrival of WebRTC, it was very hard for smaller startups or developers to build real-time voice and video calling solutions – it simply required too much investment. WebRTC lowers the barriers to entry, but even with WebRTC, it’s not that simple for a small innovative startup to design ubiquitous service access with interoperability with existing services, and telco levels of quality and reliability. Most have the technical expertise but lack the experience, scale and network assets of established operators.

However if start-ups and developers worldwide could stand on the shoulders of the telecommunication industry – still the biggest giant in communications – they would not have to reinvent the wheel again and again. By cooperating with telcos, they could suddenly enjoy the same opportunity and resources, create more competitive offerings with standardized technology that allows for full interworking, as the likes of iMessage, Google + Hangouts and Skype, etc.

In reality, the telecom industry is in a great position to drive WebRTC-related innovation by offering PSTN termination, quality of service assurances, interoperability between services, and use of server-side infrastructure to mention a few examples.

So, to answer the question we asked the other day, WebRTC does have the potential to level the playing field. Just not all by itself.

By Christer Boberg and Thea Sommerdyk for The Voice on Telecom

The missing signaling layer in WebRTC is both an advantage and a limitation

Could WebRTC be the best thing since sliced bread? It’s being hailed as a revolutionary technology, and the future of communications. And here at the Voice on Telecom, we’ve certainly been talking about it and its many possibilities since last year and as recently as this March

But while WebRTC opens up VoIP and video capabilities to millions of developers, it has created wild expectations that it will be a game changer.  This may turn out to be true in the future, but for now, WebRTC is only one part of a successful communication service.

So what’s missing then?

We all know that WebRTC enables web browsers to use the camera and microphone to allow peer-to-peer voice and video calls without the use of plugins – this is the media layer.  But to actually make this work, you need to locate someone and make the call, or “find and connect” and this involves a signalling layer.

WebRTC standards cover the media layer but, as Google drove the development of WebRTC, it intentionally disregarded the signaling layer.

This absence of standards allows developers to use WebRTC in any real time communication settings, regardless of the “find and connect” solution and protocol. This can be an advantage but also a limitation, since without “find and connect” there can be no communication between parties, and the choice of signalling protocols can directly impact the success or failure of your service.

So this missing signaling layer is key.

By Christer Boberg and Thea Sommerdyk for The Voice on Telecom

Mozilla takes WebRTC further at Mobile World Congress but just wait until it goes mobile

WebRTC was one of the big stories at Mobile World Congress in Barcelona a few weeks back.  We’ve been on top of this trend for a while, pushing the service and revenue possibilities for operators.

Mozilla – along with AT&T and Ericsson – made the biggest WebRTC splash with their proof-of-concept demonstration linking a Firefox browser with a user’s mobile contacts list and the underlying IMS network, with its find and connect functionality, allowing for direct calls to mobile phones from the browser.

Integrating the phone number is an especially nice touch, as it could solidify the number as the universal identifier of choice amidst a scattered OTT landscape of confusing and multiple sign-ins.

Analyst Dean Bubley writes that WebRTC is “one of the most exciting and pivotal technologies” he’s seen in a decade.  He also says WebRTC has the potential to benefit most players in communications business, including operators:

“The breadth of companies involved – including Google, Ericsson, Cisco, Telefonica and AT&T – spans both traditional telecoms, enterprise communications and the web. We will see web access added by telcos, for example for IMS access from the browser. And we will also see realtime voice and video communications added by to the web inside social networks, or allowing informal “call centre” functions on normal websites.”

As hot as WebRTC and HTML5 – which WebRTC builds on – are now, we see the real revolution coming when it truly goes mobile. As a tool to encourage developers and highlight the possibilities of WebRTC, Ericsson released the first WebRTC-enabled mobile browser last year. And it looks like mobile WebRTC-enabled applications will disrupt OTT players (and native app builders) far more than they will disrupt established operators.

After all, who needs a standalone messaging or VoIP app when you can just make a call to anybody through the browser?  Of course, this means challenges for operators too, and they can use this opportunity for collaboration and competition to leverage in communication services.

Dancing VoLTE style with Psy to build an indispensable telco platform

In 2013, nothing says you’ve hit the commercial mainstream more than going Gagnam Style with Korean rapper Psy.  So it was fun to stumble across a commercial the superstar made for the South Korean operator LG U+.

What’s especially fascinating here is the fact that LG U+ is promoting VoLTE so explicitly.  There have been doubts in some quarters about whether VoLTE was anything but a replacement service.  We disagree with that, of course. We see VoLTE, in conjunction with RCS, as an indispensable platform to deliver HD voice, video and multimedia services across multiple devices and access technologies.

At the Mobile World Congress in Barcelona, Telefónica demonstrated a seamless voice call handover from a 4G to a 3G mobile network, and they summed its strengths up nicely in a release:

“A key advantage of VoLTE is that it can be combined with several enhanced IP-based services such as High Definition Voice, presence, location, and Rich Communication Suite (RCS) additions like instant messaging, video share and enhanced phone books. Moreover, VoLTE enables prioritization over other data streams to deliver consistently high quality service levels.”

In short, VoLTE is a way for telcos to build on their historic strengths as they enter the all-IP age, so it’s nice to see LG U+ taking it up Gagnam Style. The company has competition in the Korean VoLTE market too.  SK Telecom launched VoLTE at the same time as LG U+ last year, and it is aggressively pushing both HD voice and the RCS-based service joyn, in conjunction with VoLTE. 

And now that we’ve brought up HD voice, we also see it gaining some traction with the public.  It might not be Psy-level, but GSMA made HD voice T-shirts that were distributed at the Mobile World Congress.

And that makes us want to dance “VoLTE style” with Psy once again.

Looking ahead to VoLTE, WebRTC, HD voice and Joyn - and so much more - in 2013

We are off on our winter holiday here at the Voice on Telecom, which means we are looking back at the past year and forward to 2013.  It’s amazing how far the telecom world has come since we started writing just a little more than a year ago.

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Back then, we wrote our first post about trillions of text messages and, soon after, wondered if Telefónica was “going too far” into digital.  And even earlier this year, when we wrote about things like WebRTC, it seemed like we were looking far into the future.

Well, the future has arrived.  We’re now talking about WebRTC as a transformational commercial reality, about the cutting edge services introduced fast and furious by Japanese operators, and about smart operators – like Telefónica, among others – that have committed themselves fully to digital services.

One thing that hasn’t changed is our belief that operators remain in an excellent strategic position, whether in billing or M2M or health care or, especially, messaging and voice services. We’ve highlighted these points in our posts looking at Joyn and RCS – which we believe will gain real traction in the market – and VoLTE, which is crucial not just for operators to move to all-IP but can serve as a platform for crucial services like HD voice and video calling.

So we hope to see you in the New Year, when we’ll all have to move faster just to keep up with the changes and innovations that get to the heart of how we all communicate. 

Joyn and RCS 5.0 show off their potential in the US with MetroPCS

We wrote recently about how the timing might be right for Rich Communication Services (RCS) after all. And as if to reinforce the point, one of the leading operators in the US chose the same day as our post to announce the commercial launch of an RCS offering on its network.

Just like the big five operators in Europe, MetroPCS will deliver RCS under the GSMA-licensed joyn brand. It offers more than the basic joyn, though: besides the usual mix of free, integrated instant messaging and chat and simplified content sharing, MetroPCS adds WiFi VoIP and Video calling. The timetable is also familiar from previous RCS unveilings, with the joyn app initially available for one high-end smartphone (in this case, Samsung’s Galaxy Attain) before roll-out of additional RCS-enabled devices next year and native support for joyn services to follow.

But there are more differences  this time – the MetroPCS deployment represents the world's first commercial launch of RCS on an LTE network. The operator will also be using as a baseline the GSMA RCS 5.0 standard, which offers a larger feature set than most existing joyn roll-outs. This makes us wonder whether MetroPCS will be looking to deliver differentiated services along with the base service interoperability that lies at the heart of joyn.

And something else is downright unusual. The industry response so far has been almost universally positive, with the normally sober Fierce Wireless even calling the technology “cutting edge”. Compared with the resigned sighs of “too little, too late” that echo around Europe following an RCS launch anywhere in the continent, the willingness of North America to judge RCS on its own merits – of which there are plenty – is really rather refreshing.

Of course, an RCS announcement just wouldn’t be the same without at least one dissenting voice, and in the case of MetroPCS it comes from an unexpected quarter. T-Mobile USA – who expect to close a merger with MetroPCS sometime in the first half of 2013 – remain distinctly lukewarm on the potential of RCS, to judge by recent comments from company CTO Neville Ray.

While Ray said “there are elements of the RCS offering that make sense,” he instead said he sees the rich application environment in the US already driving many of the services that RCS is aiming to populate.

That may be true.  But there is also little to suggest a lack of space in the market for a fully interoperable communications service that works on any device, on any network, with anyone in a subscriber’s mobile address book. Hopefully a post-merger MetroPCS will get a chance to show just why the industry in North America is right to be excited.

Is VoLTE poised to be a platform for innovation?

Now we’ll see what Voice over LTE can do.

The service known as VoLTE recently went live in South Korea on both the SK Telecom and LG U+ networks, as well as in one market for MetroPCS in the US.

And LTE also continues to spread fast, with the GSA predicting there will be 195 LTE networks in 72 countries by end of 2013 (up from 159 networks in 68 countries at the end of 2012).

And if operators truly want voice to work in this new LTE environment – if they want to give their users a good experience – they will need VoLTE, which gives them the opportunity to provide telecom-grade services to compete against the likes of Skype.

It’s not a surprise that South Korea is the leading VoLTE market.  We examined the country in May and found it on the cutting edge of most telecom trends, from smartphone adoption to the OTT challenge to operators.

We talked to Gabriel Brown, of Heavy Reading, to get some insight into the Korean VoLTE launch. He also said Korea – with its early LTE adoption – was a logical starting point for VoLTE.  VoLTE requires good LTE coverage and ideally would be supported by multiple operators. Korea has that.

But there is also national pride at stake.

“It is also an opportunity for Korea and the Korean telecom industry to demonstrate their prowess globally,” he said. “By being first, they can show their expertise internationally.”

But what about the service itself? In an interview with Telecom Asia, Ian Koh of Ericsson, makes a compelling case for the benefits of fast call connections with VoLTE.

Of course, the most crucial role for VoLTE is as the platform for new services like HD voice and video calling. And FierceWireless says the proposed MetroPCS merger with T-Mobile could spur VoLTE innovation in the US, even though MetroPCS is not yet marketing the service and says it will take four to six months before they have VoLTE up and running in all their markets.

Brown, of Heavy Reading, says that while there hasn’t been huge demand for VoLTE yet, there is “a need for reliable, secure, rich communication services.”

That is exactly what telecom does well, he says:

Even if consumers are not aware, in the industry there has been enough development for us to come to the conclusion that more operators will launch services in 2013, and it will become more mainstream from 2015 and onward.

So what do you think?  Should operators make VoLTE a priority as they roll out LTE?

The future of voice does not have to be dark - We'll be back in the fall to keep the discussion going

We’re taking a summer break here at the Voice on Telecom. We’ll be offline for July and August but will return in September. Things are moving so fast in the area we focus on – the future of voice, SMS and person-to-person communications – that we’re already excited to take in what happens this summer and look ahead to the fall and winter.

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We’ve been writing this blog and been on Twitter since October.  In that time we’ve tried to reach across the whole spectrum, from four posts on gaming to analysis of Telefonica as a leader in innovation to our takes on new business models, the viability of OTT players financially, innovation in Africa, the Chinese New Year and South Korea, among many other subjects.

What’s had the most buzz?  VoLTE, Joyn/RCS and Telefonica’s Tu ME app. It’s fun that all three of those subjects are about looking forward, rather than dwelling on a gloomy financial outlook.

It’s remarkable how much has changed too in our short time online. We’ve seen the launch of Joyn, Rogers One Number and Tu Me as operators go “Telco-OTT”.  And there is a real sense of innovation and urgency among operators, including openness to finding new ways to make money off of voice and texting channels.  On this level, we’ve examined HTML5, WebRTC and in-web and in-game voice solutions.

It’s a broad, kind of vague, but fascinating topic we’re examining together.  So we hope you’ll come back in the fall and continue the discussion with us.

Tough times for operators in South Korea

With the highest smartphone penetration of any country in the world, it seems natural to look to South Korea for a glimpse into what the future might hold for operators in other mature markets. And it’s certainly an interesting picture. The question is just how worried it should make the operators.

First and foremost, all those smartphone users – over 20 million in a country of just under 49 million people, according to one recent count – mean truly staggering volumes of data traffic. South Koreans already generate more data traffic per person than anybody else, with volumes increasing almost 20 times last year alone, and are set to reach over 100 gigabytes each – every month – by 2015. To put that in perspective, it’s roughly what today’s US user gets through in a year.

So it’s hardly surprising that LTE is a hot topic in South Korea. Each of the three major local operators has launched an LTE offering, with SK Telecom predicting 10 million users on its LTE network by 2015. But there are already signs that LTE alone won’t be enough – and may even make things worse. KT’s LTE subscribers are using 170 percent more voice services and 112 percent more data than their 3G customers, while SK, having spent USD 2 billion in 2011 on network upgrades, is already talking about rolling out LTE-Advanced by 2013 to keep up with demand. When the best way for KT to show the media their LTE capabilities without signal interference is to hold the briefing on board a ship, as it did last week, you get a sense of just what they and the other operators are up against.

Sounds tough, right? And that’s without the OTT player that boasts 42 million users exchanging 1.3 billion messages every day (in a country of 49 million people, remember). So far the operator response to the runaway success of KakaoTalk has been an ineffectual mixture of denial and overpaying for rushed acquisitions in the same space, as exemplified by SK’s purchase this month of free mobile messenger service Tic Toc (revenues so far – zero) for a reported 20 billion won. KakaoTalk has issues of its own, not least a net loss of 14.2 billion won in 2011, but it’s hard to see how even the ongoing deployment of Rich Communication Services (RCS) based on the GSMA's Joyn initiative can help the country’s operators regain the upper hand.

There is also a political dimension. In the run-up to December’s presidential election the telecom market has been one of the battlegrounds. The in-power Saenuri Party promises to cut mobile voice call rates by 20 percent and force operators to offer unlimited LTE data plans. Estimates suggest this policy could cost operators a combined 1 trillion won in revenues. The opposition, the Democratic United Party, claims it will abolish basic charges while mandating free text messaging and public Wi-Fi, which may leave operators down by 7 trillion won. Little wonder that one telecom insider recently complained that politicians in South Korea “lack any insight about the industry at all.”

What do you think? Is the Korean experience a sign of things to come for operators everywhere as smartphone usage continues to rise, or can the right network strategies, a smarter response to the OTT challenge and different political priorities make a difference?

Is this the year of HD voice in the US? Or do we wait until next year?

Sprint announced a HD voice handset – the HTC Evo – last week, the first time the technology has gotten any real attention in the US, especially from mainstream media outlets like Time and Consumer Reports. 

Plus, ABI Research predicts that both Verizon and MetroPCS will soon bring HD voice (and VoLTE) handsets to market as well, as most US operators will apparently tie HD voice rollout tightly to the introduction of VoLTE.

So is HD voice finally taking off in the US, where it has lagged? Jim Eller at ABI thinks so:

“The demand for HD Voice in VoLTE phones will provide the critical mass necessary to encourage the device manufacturers to produce large quantities of phone models with HD Voice, which should lead to widespread adoption.”

We asked this same question on Twitter and got this (cleaned up) response from HD Voice guru Doug Mohney of HD Voice News:

“2012 year of HD voice? For North America, maybe 2013. Europe's year of HD voice is now.”

And lest we forget why HD voice has the potential to add such value to operator offerings, here is a 2011 clip from Orange, a pioneer that rolled out HD voice in the UK way back in 2010 and currently runs about one-third of all HD voice networks:

Don't mix up LightSquared's wholesale business model with its spectrum troubles

The news for LightSquared these days is bad, all bad. Its proposal to create a combined satellite and terrestrial LTE network was rejected by regulators in the US, after months of technical and political battles about whether the company’s frequencies interfere with GPS devices.

Now comes the fallout:  the CEO resigned, investors are suing and the company has laid off almost half its workforce.  And while LightSquared vows to fight on, and has retained prominent attorneys, Sprint just cancelled its USD 9 billion network sharing deal.  Oh, and LightSquared has already spent USD 4 billion of its own money.

So it is easy to dismiss LightSquared’s business model. And many have, with major industry players calling the telecom wholesale business model “more hype than substance” and saying that the wholesale model “won’t play in mobile data for the next two years.”

Really? We looked at LightSquared last October, and the company seemed to have lined up an intriguing mix of customers, ranging from massive (Sprint) to retail (Best Buy) to wholesale (YourTel America) to innovative disruptors (FreedomPop and SmarterCar). It also appeared to have the potential to shake up the over the top (OTT) voice game, by potentially opening up direct network access to even mobile VoIP players.

Wholesale works. Think of the catering firms for airlines.  If you unwrap a soggy sandwich on British Airways or on United Airlines, it’s likely that it comes from the same supplier.  Same goes for plants in a nursery or the headphones sold by your favorite retailer.

Instead of dumping on the telecom version of this model, which would include not just data but also voice and SMS, before it’s even been tried, let’s applaud the innovation.  LightSquared has now created a scope for this wholesale model. It likely will not work for them, but perhaps it will succeed elsewhere, even outside the US.

And it will be interesting to see what both LightSquared executives and the competition do with the lessons – technical, political and business – from the whole process.  Dish Networks is the most logical successor in the satellite-based LTE game, while Clearwire is working hard to make wholesale work for them.

But before we get bogged down in spectrum talk, let’s take a look at LightSquared’s visionary aspirations for expanding LTE access.  It’s a good one, and hopefully we’ll see many more such innovative ideas in the near future.

Can telco standards make high definition video conferencing the next big thing?

The operators, vendors and handset makers behind “joyn” – the new GSMA branding of RCS services like instant messaging and voice calling – weren’t the only ones getting together at Mobile World Congress in Barcelona last month.  At the same time, a wide array of mobile operators and telecom equipment vendors announced a broad initiative behind a new set of standards for high definition video conferencing.

These new standards were on display in a HD video conferencing demonstration between Telefónica's booth in Barcelona, an Orange site in France, a Telecom Italia site in Italy and a Deutsche Telekom site in Germany.

According to the press release, the new video standard is based on 3GPP IMS and uses GSMA IPX to interconnect. And behind this nice use of standardized technology is an ambitious but crucial goal: making video conferencing as easy as making a phone call.

The video below is a year old, but it gives you an idea of the possibilities:

This ease of use is crucial, as video conferencing is often seen as the next big thing, with the market just waiting for prices to come down and standards to be set. This is a field in which operators still hold some important strategic cards, like interoperability, the ability to set standards, and control over their networks.

There is a clear trend here, one of telco cooperation, after a decade of brutal competition (and the failure of MMS because of a lack of interoperability).

Let’s not forget that even Apple and Skype only reach a small percentage of the overall market.

These new standards could have their first big impact in enterprise, where the available proprietary solutions cost too much, and operators have the potential to offer companies high quality video services with good interoperability. 

And if operators can succeed in enterprise, evolving HD video conferencing into a mass market service would be a natural, and very lucrative, path.

AT&T making strategic - and smart - bets on HTML5 and the cloud

You want to know who gets the convergence of mobile, social, the internet and voice?

It’s AT&T.

In recent days, the American giant, the heir to the Ma Bell monopoly, came out with two distinct yet strategically related moves into both HTML5 and the cloud.

With HTML5, AT&T has created a new API platform that will allow developers of web-based apps to include SMS and MMS in the app, take in-app payments charged directly to an AT&T bill, as well as integrate with AT&T’s U-Verse TV. The company is also opening an AppCenter app store on Android phones, so users will have a way to discover HTML5 web apps, says GigaOm.

HTML5 is important for operators, both in their consumer and enterprise offerings, and AT&T has long been frustrated by platform fragmentation. A standards-based web technology would solve that problem and put operators in a better competitive position against companies like Apple, Google, RIM and Facebook that look to own the customers on their respective platform.

HTML5 has been the best alternative to native apps for a good while, but its performance still frustrates developers, and it still lacks that breakout hit to trigger “boom time.” Oh yeah, and everyone thinks HTML5 is hard to monetize.

AT&T can help change both that perception and reality.

At the same time, AT&T made two “ambitious” moves into the cloud by launching CloudArchitect, a cloud infrastructure as a service model aimed at developers and small business, and by being the first US telco to sign on to the OpenStack initiative, an open-source cloud project started by NASA, among others, in 2010.

Providers have been courting developers for years. And here we see an operator trying to grow into the internet, and not locked into one strategy. Where the company thinks it can make money more or less itself – in the cloud – it aims to own it. But in web development, it is opening up to others.

Of course AT&T has its own ambitions on the web.  But instead of limiting itself by only pushing its own things, the company is embracing the creative forces of the Internet to maybe help it discover the next big thing.

It is not either or.  It is about doing both. And this multi-pronged strategy ensures AT&T multiple revenue streams from developers, enterprise clients and end users.  It is good business, and it is necessary business, because the market is moving too fast for anyone to stand still.