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DigiWorld Summit: Game changers (part 2)

Posted By The Network Integrator, 17 December 2012 | 0 Comments | (0)
Tags: Broadband Digiworld idate mobile network Alcatel-Lucent

By André Mechaly (@a_mecly), VP Marketing & Communications EMEA, Alcatel-Lucent

This is the 2nd part of this blog post.

 

While there is a stress on operators revenues, some operators are better able to monetize data by differentiating on data caps, throughput and offering multi-device packages. Cartsen Schloter, the CEO of Swisscom mentioned that after launching an offer with pricing based on throughput, 12% of the Swiss population moved to this scheme in less than three months! He mentioned that this was possible thanks to a sustained investment in the network and that regulators should now focus more on capital expenditure invested per inhabitant than to mobile-terminated costs or roaming fees. At the same time, Terry Denson, Vice President, Global Strategy at Verizon Communications stressed that when one speaks about next generation networks, they are already being deployed in the US with LTE and Fiber (and powered by Alcatel-Lucent!). While ‘wireline’ used to drive innovation (we created mobile phones to do voice, video and mobile TV like in fixed networks), innovation is now driven by mobile and fixed networks to try to imitate mobile networks: content aggregation on TV (linear + ‘over the top’ + video-on-demand), multi-screen and multi-device ownership, content that follows you because in the Cloud, etc…. A converged fixed mobile strategy thus makes great sense!

 

If one is not convinced that a very powerful network is benefiting from the whole value chain, let me share this interesting point stressed by Julien Coulon, co-founder and CEO of Cedexis: 100 milliseconds lost on the Amazon site translate into 1% of revenue loss. On fixed networks, 74% of the latency is due to the network and on mobile networks, this is 90%! Video buffering is also killing the user experience. People stop looking at videos after two or three pauses for buffering, and this translates directly into a measurable loss of advertising revenues.

 

Frictions exist as well in the other parts of the value chain. On the content side, some content providers can’t finance content production because some of the newcomers do not have the same financing obligations. But innovation happens as well there. Laurent Frisch from France Television explained that his strategy was to make his content available on as many platforms as possible and get a share of the advertising revenue. He demonstrated the spectacular ‘catch-up’ Salto application of HBBTV-connected TVs: start your TV program from the beginning as soon as you switch on TV!

 

Videofutur explained what they have done to become France’s answer to Netflix, doubling the amount of video-on-demand traffic last year and putting all their content in the cloud to avoid having to investing in their own servers, something that would undermine their business plan. The BBC explained that for the Olympics, they delivered 24 live high definition TV channels and more than 2500 hours of live coverage streamed from the Cloud.

 

On content, media timeline (for example, the time between availability of a movie in the theaters and as a DVD, then on TV, then as Video On Demand – also called “chronologie des medias” in French) is supposed to allow content owners to maximize revenues, but according to Kelly Merryman, VP of Content at Netflix, this leads to piracy. Netflix stressed that in the markets where they operate (51 countries worldwide), piracy has decreased. Thanks to this, they are planning to launch in February original content in all their markets on the same day!

 

On the device side, device makers also face fierce competition, and developers have too much dependency on vendors of operating systems, which is why they welcome initiatives like Mozilla OS being completely based on HTML5, for both mobiles as well as connected TVs, a point made by Vassilis Seferidis, VP European Business Development, at Samsung Electronics.

 

Behind all these innovations, there is the usual question of vertical versus horizontal approaches, proprietary versus standards. History has proven that standards lead to very successful stories like GSM but they sometime limit the speed of innovation, hence some proprietary extensions. Tristan Nitot from Mozilla OS foundation reminded of the early period for geeks like me that a Compuserve user was unable to send e-mail to an AOL or BBS user. E-mail happened and these services are now in a museum!

 

As we can see, innovation leads to disruption, and some members of the value chain suffer while others succeed. But, we are in a growing industry. And when attractive content meets attractive screens with a very good quality of experience thanks to a high-leveraged network, the customer is happy and consumes!

 

Beyond the content you and I consume, telecommunications is becoming the ingredient of all other industries, like transportation, energy, education or health, to name a few, so opportunities for growth and new businesses are there!

 

To summarize, and while we are, as an industry, in a somewhat difficult transition period, we have to think about the future. And, according to Alan Kay, the best way to predict the future is to invent it –  so let’s invent!

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