Tuesday, May 06, 2008
Strength In Numbers: Operators Make Third-Party Involvement Number One Priority
Taken as single and separate events, recent announcements by the major mobile operators across the U.S. and Europe don’t say much about the role of Web 2.0 as a future revenue generator. However, connect the dots and draw the logical conclusions and a singular important mega-trend emerges: Command-and-control models are giving way to coordinate-and-cultivate.
It took some time, but operators are beginning to understand that insisting on strict control over what happens on their networks comes at a heavy cost and may lead, in some instances, to outcomes quite contrary to their interests.
Take Vodafone, for example. Its decision last week to offer unlimited Internet access as a standard feature of its new monthly mobile price plans is more than just a new flat rate policy. It’s a clear recognition that users require - and will continue to demand - access to their pick of services, apps and social networking sites. In fact, we have it direct from Vodafone that the top three Internet sites on Vodafone Mobile Internet are Facebook, Google, and the BBC. The top three searches by customers are Facebook, Bebo and eBay.
A new flat rate policy fuels the use of Internet on mobile phones, an additional revenue stream that Vodafone needs to grow in a saturated market. Gone are the fears that Vodafone may be relegated to a mere pipe. In its coordinate-and-cultivate role, Vodafone understands it can’t lock customers into a version of the Web it controls; its role - and the source of its competitive advantage - revolves around providing its customers no-brainer access to the Internet and the off-portal destinations they want most. In short, being open.
(To be fair, the “unlimited” offer has a catch: a 500 megabyte cap on usage. Still, it’s a shift in operator thinking that will give the mobile Web the shot in the arm it sorely needs. As Paolo Pescatore, Director of Operator Strategy at CCS Insight, a telecoms consultancy, said in this article: “It will be interesting to see how this is marketed as this means it is not a truly unlimited service. But it is a step in the right direction in terms of the integration of data into existing tariffs and a greater level of simplicity.")
But it’s not only about providing access to the open Web; network operators must also overcome their reluctance to open up their networks to third-party application developers and service providers. KPN is one operator that understands this all too well. It recently opened its mobile network to create an ecosystem of user-generated applications. The software enabling this transformation is Artilium’s ARTA Mobile Services Platform, designed to facilitate rapid creation of new mobile applications, packaged as services.
Fortunately for us all, other mobile operators around the globe are adopting a similar mindset.
An encouraging - and little-reported - example comes from delegates representing a range of tier 1 European network operators at the recent IMS 2.0 World Forum event organized by Informa. This summary post makes it clear: Mobile operators are “no longer wondering whether they should expose network resources to third parties, but rather what the best way of doing it is.”
An operator that stood out is Spain’s Telefonica. The address delivered by Luis Angel Galindo, senior manager for mobile services strategy and innovation, spoke volumes about the operator’s commitment to providing APIs that expose some fundamental network resources to third parties.
“What has become clear is that in Web 2.0, the user is central to the development of content and services,” he said. “This is the age of personalization. People want to design their own services, and there are a large number of players out there who are developing the tools to enable them to do it. We must invite clients to participate in the service design process.” To this end, Telefonica has set up a portal called OpenMovil Forum, from which developers can download a range of APIs.
Speaking at the same conference, Mario Bonnet, Telecom Italia’s innovation project manager, told delegates that the operator had also been working on a series of APIs, effectively enabling third-party service development based on network resources. Bonnet was quoted as saying that, within another six months, the operator expected “to have at least seven or eight APIs available to third-party developers.”
Why the growing interest among mobile operators in tearing down the walls and throwing open the networks and network resources to other companies and stakeholders in their business ecosystem? Because change here - like everywhere - is inevitable. Operators can either take charge of change - or be crushed by it. Bonnet put it best: “The challenge with Web 2.0 is to turn threat into opportunity.”