Introductory Comments

Overall, it’s a rather telco-centric view in the Telecommunications Arena paper, which today is far broader than telcos. It’s the internet. Most communications today are over the internet, not the PSTN. Telcos provide access to the internet, i.e. to peering points, they are not the exclusive transport / network within the internet / web.

Some of the words used are rather telco-centric marketing terms. Remember, Digital was cool in the ‘70s, today it’s a weak-minded marketing term like cyber:

• Digital Service Provider: I assume any service provided over the internet / web, e.g. Google Search, Netflix, (carrier’s PayTV service if it works over the internet?), RingCentral, AWS, Amazon.com, a resell of RingCentral by the carrier.
• Digital Network Provider? Is it the regional / national internet access networks of telcos? The PSTN? What about the regional, national, international, and global cloud infrastructure / networks? What about all the end to end communications networks like WhatsApp, Telegram, Skype? What about decentralized infrastructures like Ethereum, Riot (now called Element), etc.?
• What about Network Services? – Internet Access, PSTN (fixed / mobile), SMS, enterprise connectivity services, carriers PayTV service over a dedicated IP network?

Can we use specific terms and a generally agreed taxonomy, rather than a telco marketecture?

My focus for the rest of this weblog is on the assumptions behind this paper, with an agreed foundation later discussions can achieve broader consensus.

Why does my opinion matter?

I think it’s necessary to give some background on why I bring relevant and unique experience and insight to this Arena. And most of all I’m independent, telcos are not my meal-ticket, so you get no flattering analysis. If you dislike frank insight, there’s a king with no clothes parable worth reviewing.

My career started at BT Labs in 1990. I worked across opto-electronics, video coding / transmission, and broadband networks. In the same division as Don, one of the authors of that Arena paper. It was a great apprenticeship, and as I moved up the ladder, I saw the gap between the fun experimenting in the labs making new stuff possible, and the old civil service mind-set in the more ‘responsible’ network divisions.

As evidence, look how long ADSL, VoIP, FTTH took to roll out given BT Labs global leadership in those domains. I represented BT across a range of standards groups, some very successful like FSAN (Full Service Access Network), and some less so like the ATM Forum. The work I did at BT is still rolling out and relevant today. BT hired the best and the brightest from British Universities and had an apprentice scheme that enabled those that partied too hard in their teens to catch up with their straight-As peers. BT Labs was an under-utilized asset.

I left BT to work at Lucent, to better understand the supply side, and boy, the depth of understanding of the industry held in BT was leagues ahead of the vendors. The politics was even worse in the vendors. BT would decide by committee, which could take ages, but would generally be a sensible decision. On the vendor side it was follow and protect your boss (a generic middle manager with limited domain expertise), no matter how wrong they were. They often took weak advice from expensive brand-name consultants that believed what’s written on the web. If the report cost $1M, then it must be good! Well, history has shown what a mess the vendors were in. Telcos outsourcing most of their R&D to the vendors was astonishingly dumb given my knowledge of both domains.

I then moved over to the software side, a managing partner for the telecom practice of Cambridge Technology Partners. I’d done loads of coding at BT, as a means to an end to get stuff working (hacking). It was an amazing experience at CTP; the lunatics were running the asylum. We were a fixed time, fixed price unix shop, that used off the shelf software wherever possible, while most telecom vendors were big iron and custom software. We had one project where we needed to add a zero to a quote for it to be taken seriously. Software was the answer, and telecoms had much to learn from IT and the emerging Web / open source world. Telecom’s culture, its self-perceived special requirements, its lack of software architects, and lack of R&D in the internet space was clear 20 years ago.

I then founded a venture funded start-up, that exposed a presence API (knowing if mobile phone is on/off) to enable innovative services like missed call summary, instant group communications, and other services generally superseded today by changing mobile phone habits. The vision was telecom APIs, the term used today is CPaaS, with a simple entry point of presence. I saw firsthand how small companies were talked to death by the people in telcos responsible for innovation. And when they did occasionally try to push a new service, the rest of the organization stood in the way. Enjoy this presentation from 2013 which is still relevant today on the situation, that used material I’d presenting back in 2010.

After my start-up was sold, I moved onto consulting. Helping companies given my experiences. I helped loads of companies break into telcos, so they had some deals and revenues. However, telcos struggled to be successful, the anti-bodies within those organizations would come out and slowly remove those innovative viruses. In the end I could no longer take people’s money when I had lost confidence anything good would come of the introductions and investment.

By now (2010) it was clear, telcos were not going to innovate in telecom services given the emergence of programmable telecoms / communications (software-ization of telecoms). Hence the rise of lots of CPaaS, UCaaS, CCaaS innovators and their IPOs. The past decade and the COVID-19 crisis has shown to enterprises, they do not need telcos for their telecom services.

This is not a black and white situation, some telcos are successful in software and services, like MTN (great software architecture skills) and Dialog (most successful telco CPaaS by revenue). But many have not. GSMA / TMF are legacy talking shops in this domain, and best ignored. Look to W3C instead. Well, actually look to meeting your customers needs as effectively as possible, not forcing telecom standards on them. As an example, forcing ATM (Asynchronous Transfer Mode) on banks, when IP was clearly in their best interests.

For the past 7 years I’ve run TADHack, the largest global hackathon focused on telecoms / communications. And TADSummit since 2013 the longest running thought leadership event focused on programmable telecoms / communications. And over those years telcos and their suppliers moved on, while lots of innovative people and companies have joined our events. Innovation is outside the telco, where the PSTN is required there are wholesale agreements, and the internet is good enough for most telecom / communications services.

So that brings me to today, I’m still working in telecoms / communications, and helping the innovators succeed. Still trying to help telcos, as I began my career there and it shaped me into the person I am today, but circumspect on their chances given 30 years of experience. I’m going to focus my feedback on some of the stated and implied assumptions in the Arena paper. It’s OK to disagree with me, most people do, but I’m confident in the opinions stated here.

CO-DEPENDENCY?

I want to first address an assumption not explicitly stated, but implied in the thinking behind co-dependency. That the OTTs (internet / web companies) are taking advantage of poor regulated telcos. This is often used in later argumentation that they need more cash from services running over their networks. I find this argument distasteful as it is self-focused and anti-customer.

In the beginning Telcos were gifted by their nations a network of ducts, poles, copper, buildings, spectrum, and access rights that enabled the creation of today’s broadband networks which provide access to the internet. These networks are NOT the internet. End customers pay telcos for internet access, PSTN services, emergency services, and lots of other VAS.

Let’s pick on the US, an easy target I know. But the battlefront of the claimed co-dependency.

US Telcos earn over 1/3 of a trillion dollars a year in one country, and some how internet companies are taking advantage of telcos? Telcos invest to keep people paying vast sums for internet access, my household pays $210 per month, more than any other utility. The internet / web companies have their own national / global networks and peering points with telcos. The equation is balanced. The only people being taken advantage of in the US are the end customers because of poor regulation. Just compare telecom prices to other countries with fairer regulation. Even in those countries incumbents continue to attempt to stifle competition, I’m looking at you BT, read the Simwood blog to understand more.

Often profitability is brought up. Telcos are simply not spending wisely – look at the tens of billions spent on IMS for no obvious operational or customer experience improvement. Well I guess it helped fill the gap in revenues between 4G and 5G network roll-outs for the vendors. Look at the 5G phallocentric standard of bigger is better, when 5G could have focused on capping the massive investments of mobile networks to lower overall (no per Hz or per bit games please) total capital investments and total operational costs.

The industry needs to change the treadmill it’s on as the services gravy train is running out of steam. Voice, then mobile voice, then dial-up internet access, then SMS, then fixed broadband access, then mobile broadband access. There are many other opportunities, but they are much smaller; need appropriate investment not ‘loads-a-money’ investment because you believe it will be HUGE; and appropriate partnerships. It’s a portfolio approach, few big bets, solving customers’ problems than build-it and they will come.

Just look at the massive portfolio of Amazon Web Services, with loads of features and continuous improvements underneath each one. And on top of all those AWS technologies are the industry vertical focused AWS solutions. It’s all about the customer and using innovative technologies that are continuously evolving to solve their problems. Communications is just one piece of their massive AWS armory of technologies.

Internet Access is a Utility, COVID-19 has proven that.

COVID-19 has shown internet access is essential to people’s health, safety, and the ability of society to function. It is a utility like electricity, water, natural gas, and sewerage. Whether the utility label should be applied to mobile internet access as well as fixed internet access is an interesting discussion, but at the least, fixed internet access should be considered a utility.

With utility accepted, it’s easy to see telcos charging internet / web companies for using their networks, is like the electricity company charging Samsung a fridge fee for all Samsung fridges using electricity on their piece of the grid. It’s just unworkable and silly.

Apps work over many of networks, not just the telcos’, they are built to adapt.

Quoting from the Arena paper: “applications and services innovation is so heavily dependent on the infrastructure layers” Bullshit! Applications and services adapt to the highly variable network conditions they find in the real world, as customer experience, not network operations, comes first.

VoIP worked on ADSL 20 years ago. I had AT&T’s VoIP trial, then Vonage VoIP, they all worked and I ran my business on them. Telcos maintained they would not work reliably, just like Netflix, YouTube, Amazon TV, etc. Today I receive 4K UHD TV from Netflix, better quality than the telcos’ PayTV service. Telcos claims on service limitations over the internet have been proven false time and time again, with innovators showing what is possible.

Between the home network / tethered link to the mobile, fixed / mobile access networks, backhaul / metro / core transport, internet exchange / peering point, transport, intra / inter data centers, to the virtual machine running your streaming instance that is just about to be moved to an instance in another data center, telcos have no knowledge or control over most of the congestion points. So the services ‘adapt and survive’ as the real world is quite complex. The co-dependency with telcos is slight at best. The customer pays the telco for internet access, and the customer pays the internet / web service provider. The co-dependency is the customer not the network.

Bottom-line It’s a Culture Issue

Quoting from the paper: “In the face of these onerous expectations, telecommunications infrastructure providers tend to have a conservative mindset and exhibit behaviours which, of necessity, tend to be very different from those in the highly competitive digital services domain. These behaviours create barriers to innovation that are very difficult to overcome. “

Netflix operates a global network, their network operations are amazing, yet their network is constantly innovating. They have 180M customers around the world, using access networks they have no control over and have to adapt to. That’s more customers than Verizon Wireless, AT&T Mobile, and TMO US.

Telcos are conservative because the culture is conservative, they come from the civil service. The recipe to success in the civil service: be seen to make no public mistakes, always be attached to a perceived successful / important project, and never go down with a sinking ship. Do that and you climb the telco corporate ladder, you may never deliver anything of substance in your career, but you’ll be perceived as ‘of the right stuff’ because of all the successful projects you claim a hand in.

To quote Peter Drucker, “Culture eats strategy for breakfast.” It is the telco’s culture that blocks innovation. I can share tens of stories of telcos failures to adopt innovations from start-ups that went on be successful on the internet, here’s an example from Khairil’s (Group Chief Marketing & Operations Officer at Axiata Group) TADSummit 2014 keynote. I can share tens of stories of companies ‘meetinged’ to death by telcos and their ‘strategic’ vendors. I advise companies not to rely on telcos as their sole customer segment, it’s dangerous.

Wrapping Up

Just summarizing the assumptions we need to agree:

• There is little codependency – applications adapt as telco’s internet access is just one of several congestion points they must work over.
• Telcos cannot expect money from web/internet-based service providers. You’ve got to earn revenues from providing competitive services to customers.
• At least fixed internet access is a utility. COVID-19 has proven that.
• The services gravy train is running out of steam, 5G is the wrong track, but you’re stuck with it for the next decade. Operations innovation is likely the best option for margin growth.
• Enterprises have learned telcos are not required for telecom services, especially through COVID-19.
• Culture eats strategy for breakfast. This is the big one, this is the elephant in the room, no band-aid can solve a telco’s innovation gap without addressing this head-on.

So should telcos roll-over and accept becoming a utility? Generally, no, though for some that could be a viable strategy. BUT to affect change you must first know thyself. From self-enlightenment in accepting many of the assumptions in the Arena paper are false or inaccurate can telcos break the ‘strategic holding pattern’ of the past 20 years.