New Telco Growth: is Time Running Out?

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Summary: at a time when telcos are being re-rated as quasi utilities by investors, the importance of creating sophisticated and effective strategies for new growth is becoming ever more pressing. But the recent Telco 2.0 ‘Executive Brainstorm’ demonstrated that the clock is ticking fast and the opportunity could slip away from Telcos as nimbler competitors from adjacent industries take the value.

This article looks at: Key ‘Telco 2.0’ Issues for the Industry; Mobile Advertising; M2M; Collaboration; Consumer Data; Where to start? Next Steps for Telco 2.0. At the end we publish some of the key votes from the Brainstorm.

Background: Key ‘Telco 2.0’ Issues for the Industry

This article summarises some of the main issues raised at the 9th Telco 2.0 Executive Brainstorm held in London on 28-30 April 2010. The aim of the event was to start defining a ‘roadmap’ for moving towards ‘Telco 2.0’ business models, which are all about delivering strong, sustainable, long term, organic growth. Two hundred execs from across the Telecoms, Media and Technology sector participated in the event.

The event covered these topics:

  • Day One: Strategic Issues for 2010-2011: Investment 2.0 - Building Confidence in Telecoms; Customer Data and Privacy - Monetising the Opportunity; Internet Innovators; Mobile Broadband Network Economics; Living with Google; Rapid Implementation of ‘Telco 2.0’ Business Models.
  • Day Two: Digital Entertainment 2.0 - Multi-platform distribution: Trends in Digital Entertainment; TV 2.0; Mobile App Stores and Developer Communities; Devices.
  • Day Two: Enterprise Services 2.0 - New Opportunities in M2M and Advertising: Defining Enterprise Market Opportunities; M2M - the Opportunities Beyond Connectivity; Advertising and Marketing Services.

[NB There are also two useful videos from the event here showing Telco 2.0's CEO, Simon Torrance, interviewed by Telecom TV on the overall messages, and our Director of Consulting, Phil Laidler, outlining the opportunity in enterprise services.]

Summary – can telcos act quickly enough?

While it was good for us at the Telco 2.0 Initiative to see the ideas we have been developing, researching and promoting over the last 3 years permeate the thinking of the corporate strategy teams at operators and vendors around the world, and while it’s been nice to see them reflected in an increasing number of CEO investor presentations recently, there is clearly a long way to go for the industry to turn the rhetoric of business model innovation into operational reality. It is proving a slow process.

Our worry is that it may become too late for telcos to take advantage of a set of golden opportunities to create a new role in the fast evolving ‘digital economy’ unless they act more decisively now.

Mobile Advertising: Operators increasingly marginalised

As an example, mobile advertising is growing fast (see also here) but operators are capturing a tiny part of the market. Operators claim that the overall opportunity is small but that is because by pursuing a ‘vertical focus’ or ‘opportunistic trader’ strategy (see Chris Barraclough’s slide below) rather than an open, horizontal platform approach they limit themselves to a small part of the total addressable market. While the majority of our delegates agreed with us (see the vote below), the majority of the industry still does not. The blinkers need to be removed.

CB Chart of scenarios for time post june 10 2010.png

Source: Telco 2.0

M2M: it’s not just connectivity

Similarly, in M2M, operators have traditionally adopted connectivity-centric approaches to large organisations in vertical markets, where margins are razor thin. However, this is now changing. For example, we heard at the brainstorm from Telenor Objects, a new business unit established to create an open, potentially interoperable, platform that is device and network agnostic that could stimulate real innovation in this market by enabling developers to support businesses of all sizes in all markets. Above all it could help to give telco operators a stronger strategic position in the M2M market. This attracted a great deal of interest at the event, but requires a whole new perspective to understand and act on its full potential.

Collaboration: a rising tide floats all boats

Which leads to a major theme that underlines both these examples: collaboration. Telco 2.0 has for a long time spoken of the need to offer a ‘telecoms’ interface, rather than an individual telco interface, to 3rd party/’upstream’ organisations who wish to reduce the friction in their everyday business processes, and could use latent telecoms capabilities to do so. This is the foundation of the ‘Telco 2.0’ growth opportunity. But it requires common commercial approaches, not just operational or technical ones. All of the upstream organisations we talk to – from advertisers, to developers, to content owners, to government, to banks, to retailers – are asking for this, and are willing to pay money in return to help increase efficiency and reduce costs.

The time is ripe to create these common commercial models, in a way that has been done before with voice roaming, freephone, SMS and, in some advanced markets, content delivery. This is by no means simple, but the requirement must be recognised and acted on fast, based on a deeper understanding of upstream markets. The Telco 2.0 Initiative has started a research programme to help define common commercial models and the role that operators could most profitably play within different ecosystems.

Customer Data: this seam of gold needs mining

Underpinning all Telco 2.0 growth business models is the most important latent telco asset, which has immense value to society and the wider digital economy: the consumer data that runs through telco networks. There is a lot of interest in this topic – how to mine, refine and use consumer data to enhance the services of telcos and third parties - but not enough is being done to put in place practical strategies to secure telcos’ long term role as the ‘custodians’ of consumers’ data. The danger is that other organisations act more quickly than telcos and extract the real value from this opportunity. The World Economic Forum has started a major project called ‘Re-Thinking Personal Information’, which Telco 2.0 is supporting. This will be a catalyst to getting this topic to the top of the executive agenda in the second half of 2010 and 2011. (Come online for the free virtual event - Telco 2.0 Best Practice Live! on 28-30 June - to understand more about this).

In Practice: make it work internally first

A final theme from the event is that the ‘two-sided’ telecoms business model (which is the best way for telcos to create strong, sustainable, long term organic growth) is only possible if telcos apply Telco 2.0 principles internally first. Only if you can make your own business more effective or efficient using specific telco assets can you then take these to 3rd parties. Amazon, a good example of a one-sided retailer who has developed into a two-sided platform provider, only developed its ‘marketplace’ after it became the leading online retailer with ground-breaking customer interactions. At the same time, there are plenty of opportunities to improve the wholesale models between telcos, surely one of the easiest and most valuable markets to address?

Next Steps for Telco 2.0

Sometimes it takes time for new ways of thinking to permeate a big industry like telecoms. The Telco 2.0 Initiative will continue to help catalyse the required commercial transformation, via the following activities over the next six months:

  • Research – focus on defining in more detail the ‘roadmap to Telco 2.0’, collecting more case studies and developing new ‘use cases’ related to our agenda. (to be published here on
  • Syndicated Research (new!) – M2M 2.0 and Media Distribution (please email ).
  • Physical Events – 10th Telco 2.0 Executive Brainstorm AMERICA, 27-28 October, Los Angeles (including the 2nd Hollywood-Telco International Summit and the 2nd Privacy 2.0 Summit); 11th Telco 2.0 Executive Brainstorm EMEA, 9-11 November, London. (See:
  • Virtual Online Events (new!) – 1st Telco 2.0 ‘Best Practice Live!’, case studies, use cases and strategies, 28-30 June; and then quarterly (28-30 September; 9-10 December). These are FREE to delegates:
  • Consulting – bespoke research and strategy planning to companies, individually and collectively (please email ).
  • Newsletter, Blog & LinkedIn Group – Sign up here or view here or Linked In Group here

Key Votes from the Brainstorm

In the meantime, below are are some of the votes from the event, covering: the best strategies for operators, Living with Google, Consumer Data, M2M, Collaboration.

Telco 2.0 Strategies

Using the specific example of Mobile Advertising & Marketing as a new application area, delegates were overwhelmingly supportive of the enabler platform strategy. The strategic options for delegates to choose between were:

  • ‘Opportunistic Trader’, providing only on portal inventory directly to advertisers for a small revenue share, which is where most telcos operate today;
  • ‘Vertical Niche’ operations such as Orange’s 3 screen strategy, whereby the operator targets a specific vertical, in the case of Orange it’s the entertainment and the operator offers a cross platform film and TV service to downstream to consumers and a similar cross platform offering upstream to advertisers, sponsors and retailers;
  • ‘Integrate to Dominate’, which requires a telco to acquire all the skills of an ad platform to compete directly with the likes of Google;
  • ‘Horizontal Platform Enabler’, through which telcos provide access to their inventory, functionality and assets to third parties.
vote on operator strategies april 2010.pngSource: Delegate Vote, 9th Telco 2.0 Executive Brainstorm, EMEA, April 2010

Consumer Data: Telcos should start with using data to improve their own services

Delegates were asked to identify where they think money for telcos can be derived from the customer data they hold and rank each option depending on the importance of immediate action on the following scale:

4 = This is an immediate priority to implement

3 = We should pilot more of this in the next 12 months

2 = We need to explore further and set out strategy now, for actions next year

1 = We should keep clear of this

vote on customer data april 2010.png

Source: Delegate Vote, 9th Telco 2.0 Executive Brainstorm, EMEA, April 2010

Vote - Living With Google – Where to Co-operate; Where to Compete

Delegates ranked constructive strategies as a higher priority than conflict orientated strategies for dealing with Google.


1= No way, bad idea

2= Low priority, it will not have much impact

3 = Medium priority, worth a try

4 = High priority, this will help to rebalance things

vote on google strategies april 2010.png Source: Delegate Vote, 9th Telco 2.0 Executive Brainstorm, EMEA, April 2010

Vote - Collaboration

Participants didn’t have great expectations for the newer Wholesale Application Community (WAC) cross operator initiative with no one thinking it would make a huge impact on the market.

vote on collaboration april 2010.png

Source: Delegate Vote, 9th Telco 2.0 Executive Brainstorm, EMEA, April 2010

Vote - M2M: Lacks Internal Support

vote on m2m april 2010.pngSource: Delegate Vote, 9th Telco 2.0 Executive Brainstorm, EMEA, April 2010