Telenor’s Voice 2.0 Strategy: ‘Mobilt Bedriftsnett’ Case Study
Summary: Telenor’s new ‘Mobile Business Network’ integrates SME’s mobile and fixed phone systems via managed APIs, providing added functionality and delivering greater business efficiency. It uses a ‘two-sided’ business model strategy and targets the market via developers.
The enterprise is the key field for new forms of voice and messaging; it's where the social and economic value of bits exceeds their quantity by the greatest margin, and where the problems of bad voice & messaging are most severe.
People spend hours answering phone calls and typing information into computers – calls they take from people sitting behind computers that are internetworked with the ones they sit behind. Quite often, the answer is to send the caller on to someone else. Meanwhile, other people struggle to avoid calls from enterprises.
It's got to change, and here's a start: Mobilt Bedriftsnett or the 'Mobile Business Network' from Telenor.
Telenor are a large, Norwegian integrated telecoms operator, and a pioneer and early adopter of some Telco 2.0 ideas. As long ago as 2001, their head of strategy Lars Godell, was working on an early implementation of some of the ideas we've been promoting. They also have an active ‘Telenor 2.0' strategic transformation programme.
Content Provider Access - CPA - established a standard interface for the ingestion, delivery, billing, and settlement of mobile content of any description that would be delivered to Telenor subscribers, and was the first service of this kind to share revenue from content sales with third parties and to interwork with other mobile and fixed line operators, years before the iPhone or even NTT's pioneering i-Mode. Later, they added a developer sandbox (Playground) as well.
So, what would they do when they encountered the need for better voice & messaging? The importance of this line of business, and its focus on enterprises, has been part and parcel of Telco 2.0 since its inception (here's a note on "digital workers" from the spring of 2007, and another on better telephony from the same period), and we've only become more convinced of its importance as a wave of disruptive innovators have entered the field.
We spoke to Telenor's product manager for charging APIs, Elisabeth Falck, and strategy director Frank Elter; they think MB is "our latest move towards Telco 2.0".
In the Voice & Messaging 2.0 strategy report, we identified a fundamental shift in the value proposition of telephony; in the past, telephony was scarce relative to labour. That stopped being true between 1986 and 2001 in the US, when the price per minute of telephony fell below that of people's time (the exact crossover points are 1986 for unskilled workers and landline calls, 1998 for graduates and mobile calls, and finally 2001 for unskilled workers and mobile calls).
Now, telephony is relatively plentiful; this is why there are now call-centre help desks and repair centres rather than service engineers and local repair shops. It's no longer worth employing workers to avoid telephone calls; rather, it's worth delivering services to the customer by phone rather than having a field sales or service force. The chart below visualises this relationship.
We also identified two other major trends in voice – commoditisation and fragmentation.
Voice is increasingly commoditised – that is to say, it's a bulk product, cheap, and largely homeogenous. These are also the classic conditions of a product in perfect competition; despite the name and the ideological baggage, this isn't a good thing, as in this situation economic theory predicts that profit margins will be competed away down to the absolute minimum required to keep the participants from giving up.
The provision of Voice is also increasingly fragmented and diverse – there are more and more producers, and more and more different applications, networks, and hardware devices incorporate some form of telephony. For example, games consoles like the Xbox have a voice chat capability, and CRM systems like Salesforce.com can be integrated with click-to-call services.
As a result, there's less and less value in the telephone call itself – the period between the ringing tone and the click, when the circuit is established and bearer traffic is flowing. This bit is now cheap or free, and although Skype hasn't eaten the world as it seemed it might in 2005, this is largely because the industry has reacted by bundling – i.e. slashing prices. Of course, neither the disruptors nor the traditional telcos can base a business on a permanent price war – eventually, prices go to zero. We've seen the results of this; several VoIP carriers whose business was based on offering the same features as the PSTN, but cheaper, have already gone under.
The outlook of Telco 2.0 Executive Brainstorm delegates as far back as 2007 demonstrates the widespread acceptance of these trends in the industry, and the increasing proliferation of diverse means of delivery of voice as show in the following chart.
So why bother with voice? The short answer is that there are three communications products the public gladly pays for – voice, SMS, and IP access.
Telenor's CPA, one of the most successful and longest-running mobile content plays, is proud of $100m in revenues. In comparison, the business voice market in Norway is NOK6.9bn - $1.22bn. Even in 10 years' time, voice will comprise the bulk of Telco revenue streams. However grim the prospects, defending Voice is only optional in the sense that survival is optional.
Moreover the emergence of the first wave of internet voice players – Skype, Vonage, etc., and the subsequent fight back by Operators, demonstrates that there is still much scope for innovation in voice and messaging, and that the option of better voice and messaging is still open.
Specifically, the possible zone of value is now adjacent to the call – features like presence-and-availability, dynamic call routing, speech-to-text, collaboration, history, and integration with the field of CEBP (Communications-Enabled Business Processes). There may also be some scope for improving the bearer quality – HD voice is currently gaining buzz – although the challenge there is that the Internet Players can use better voice codecs as well (Skype already does).
The crucial market for better voice & messaging is the enterprise, because that's where the money is. Nowhere else does the economic value of bits exceed their quantity and cost so much.
For large enterprises, the answer will almost certainly come from custom developments. They are already extensive users of VoIP internally, and increasingly externally as well. They tend to have large customised IT and unified communications installations, and the money and infrastructure to either do their own development or hire software/systems integration firms to do it for them. The appropriate telco play is something like BT Global Services – the systems integration/managed services wing of BT.
But using the toolkit of Voice 2.0 is technically challenging. It's been said that free software is usually only free if you value your time at zero; small and medium-sized businesses can never afford to do that.
Mobilt Bedriftsnett (MB) is Telenor's response to this situation, aimed at Small and Medium Enterprises (SMEs). Its primary benefit is to improve business efficiency by extending the functions of an internal PBX and/or unified communications system to include all the companies’ mobile phones.
Telenor's internal business modelling estimates the cost of CRM failures – missed appointments, rework of mistakes, complaints, lost sales – to a potential SME customer at between $500 and $2,000 a year. This is the economic ‘friction’ that the product is designed to address.
To read the rest of the Analyst's Note, covering...
Introduction
The enterprise is the key field for new forms of voice and messaging; it's where the social and economic value of bits exceeds their quantity by the greatest margin, and where the problems of bad voice & messaging are most severe.
People spend hours answering phone calls and typing information into computers – calls they take from people sitting behind computers that are internetworked with the ones they sit behind. Quite often, the answer is to send the caller on to someone else. Meanwhile, other people struggle to avoid calls from enterprises.
It's got to change, and here's a start: Mobilt Bedriftsnett or the 'Mobile Business Network' from Telenor.
‘Telenor 2.0’
Telenor are a large, Norwegian integrated telecoms operator, and a pioneer and early adopter of some Telco 2.0 ideas. As long ago as 2001, their head of strategy Lars Godell, was working on an early implementation of some of the ideas we've been promoting. They also have an active ‘Telenor 2.0' strategic transformation programme.
Content Provider Access - CPA - established a standard interface for the ingestion, delivery, billing, and settlement of mobile content of any description that would be delivered to Telenor subscribers, and was the first service of this kind to share revenue from content sales with third parties and to interwork with other mobile and fixed line operators, years before the iPhone or even NTT's pioneering i-Mode. Later, they added a developer sandbox (Playground) as well.
So, what would they do when they encountered the need for better voice & messaging? The importance of this line of business, and its focus on enterprises, has been part and parcel of Telco 2.0 since its inception (here's a note on "digital workers" from the spring of 2007, and another on better telephony from the same period), and we've only become more convinced of its importance as a wave of disruptive innovators have entered the field.
We spoke to Telenor's product manager for charging APIs, Elisabeth Falck, and strategy director Frank Elter; they think MB is "our latest move towards Telco 2.0".
Voice 2.0: despite the changing value proposition...
In the Voice & Messaging 2.0 strategy report, we identified a fundamental shift in the value proposition of telephony; in the past, telephony was scarce relative to labour. That stopped being true between 1986 and 2001 in the US, when the price per minute of telephony fell below that of people's time (the exact crossover points are 1986 for unskilled workers and landline calls, 1998 for graduates and mobile calls, and finally 2001 for unskilled workers and mobile calls).
Now, telephony is relatively plentiful; this is why there are now call-centre help desks and repair centres rather than service engineers and local repair shops. It's no longer worth employing workers to avoid telephone calls; rather, it's worth delivering services to the customer by phone rather than having a field sales or service force. The chart below visualises this relationship.
...and changing position in the value chain...
We also identified two other major trends in voice – commoditisation and fragmentation.
Voice is increasingly commoditised – that is to say, it's a bulk product, cheap, and largely homeogenous. These are also the classic conditions of a product in perfect competition; despite the name and the ideological baggage, this isn't a good thing, as in this situation economic theory predicts that profit margins will be competed away down to the absolute minimum required to keep the participants from giving up.
The provision of Voice is also increasingly fragmented and diverse – there are more and more producers, and more and more different applications, networks, and hardware devices incorporate some form of telephony. For example, games consoles like the Xbox have a voice chat capability, and CRM systems like Salesforce.com can be integrated with click-to-call services.
As a result, there's less and less value in the telephone call itself – the period between the ringing tone and the click, when the circuit is established and bearer traffic is flowing. This bit is now cheap or free, and although Skype hasn't eaten the world as it seemed it might in 2005, this is largely because the industry has reacted by bundling – i.e. slashing prices. Of course, neither the disruptors nor the traditional telcos can base a business on a permanent price war – eventually, prices go to zero. We've seen the results of this; several VoIP carriers whose business was based on offering the same features as the PSTN, but cheaper, have already gone under.
The outlook of Telco 2.0 Executive Brainstorm delegates as far back as 2007 demonstrates the widespread acceptance of these trends in the industry, and the increasing proliferation of diverse means of delivery of voice as show in the following chart.
... Voice is still the biggest game in Telcotown...
So why bother with voice? The short answer is that there are three communications products the public gladly pays for – voice, SMS, and IP access.
Telenor's CPA, one of the most successful and longest-running mobile content plays, is proud of $100m in revenues. In comparison, the business voice market in Norway is NOK6.9bn - $1.22bn. Even in 10 years' time, voice will comprise the bulk of Telco revenue streams. However grim the prospects, defending Voice is only optional in the sense that survival is optional.
Moreover the emergence of the first wave of internet voice players – Skype, Vonage, etc., and the subsequent fight back by Operators, demonstrates that there is still much scope for innovation in voice and messaging, and that the option of better voice and messaging is still open.
...although the rules are changing...
Specifically, the possible zone of value is now adjacent to the call – features like presence-and-availability, dynamic call routing, speech-to-text, collaboration, history, and integration with the field of CEBP (Communications-Enabled Business Processes). There may also be some scope for improving the bearer quality – HD voice is currently gaining buzz – although the challenge there is that the Internet Players can use better voice codecs as well (Skype already does).
...and the Enterprise market is where the smart money is
The crucial market for better voice & messaging is the enterprise, because that's where the money is. Nowhere else does the economic value of bits exceed their quantity and cost so much.
For large enterprises, the answer will almost certainly come from custom developments. They are already extensive users of VoIP internally, and increasingly externally as well. They tend to have large customised IT and unified communications installations, and the money and infrastructure to either do their own development or hire software/systems integration firms to do it for them. The appropriate telco play is something like BT Global Services – the systems integration/managed services wing of BT.
But using the toolkit of Voice 2.0 is technically challenging. It's been said that free software is usually only free if you value your time at zero; small and medium-sized businesses can never afford to do that.
Telenor's ‘Mobile Enterprise Network’: Mobilt Bedriftsnett
Mobilt Bedriftsnett (MB) is Telenor's response to this situation, aimed at Small and Medium Enterprises (SMEs). Its primary benefit is to improve business efficiency by extending the functions of an internal PBX and/or unified communications system to include all the companies’ mobile phones.
Telenor's internal business modelling estimates the cost of CRM failures – missed appointments, rework of mistakes, complaints, lost sales – to a potential SME customer at between $500 and $2,000 a year. This is the economic ‘friction’ that the product is designed to address.
To read the rest of the Analyst's Note, covering...
- Core product - based on Telenor APIs
- Integration with PBX/UC Vendor Client Solutions
- The 'Two-Sided' Enterprise App Store
- Route to Market
- Technical ArchitectureEarly days, high hopes...
- Performance Expectations
- Fit with broader strategy
- Lessons for other players