Telenor's - Ericsson

The great scare – how telecom
and media can embrace the
internet threat
By Nathan Hegedus, page 10
▶ Media expert Lucy Küng
focuses much of her work on
the upheaval caused when a
new generation of technology
platforms – such as the internet
and the iPad – threatens to
replace tried and tested models
– such as broadcast tv and the
printed magazine.
New technology has in these
instances been the most significant
trigger of change, although
deregulation and globalization
have also played a role.
The irony is that technological
advances could be a force for
renewal and growth if incumbents
– in both the media and
in telecom – get their organizational
acts together. And the
big challenge is organizational.
It’s not strategic, and it’s not
really about resources.
Content is absolutely core to
the future. Very few people buy
technology per se; they buy it
because of what that technology
can do for them. And they
buy technology they don’t particularly
like if it allows them to
access certain content.
The balance of power is shifting
toward players further down
the value chain. These players,
which represent a wide range,
have very deep pockets, certainly
in comparison with many
media players, and often control
the new platforms.
Telecom operators have a toehold
in the “net generation.”
This critical consumer group of
16 to 24-year-olds is increasingly
indifferent to traditional
media products, but extremely
interested in the connected,
collaborative environment of
the internet.
All that most media companies
have just now is their control of
the ethereal realm of creating
content.
Even if newspapers migrate
every print reader to paying
online, they will still make large
losses. Switching off the presses,
after a hypothetical future
print-to-digital tipping point,
might save newspapers 25 percent
of their total costs, but this
is not enough to make up the
gap from the smaller online
income. Even adding iPad income
to web paywall revenue
would only total half the income
newspapers are currently
making from print.
Clever collaboration is in the
best interests of both media
and telecom firms. They should
try to work fast, follow through
on good ideas fast, launch them
in beta fast, and then see what
the response is.
Larger organizations are often
very skilled at exploiting their
existing products but that process
seems to squeeze out exploration,
which is what the
current environment calls for.
To get past this, top managers
must be explicit that creativity
is central to the organization's
future.
Rise of the machines
By Mariette Lehto, page 20
▶ Today, we can see a clear
trend of operators increasingly
moving into vertical m2m markets
– but most network operators
are not geared to handle
this radically different line of
business.
Vertical solutions are often diverse
and consist of a wide variety
of technologies and applications.
To secure quick time to
market and reduce the need for
managing complex integration
projects, operators deploying
m2m have most commonly used
a wholesale business model.
Running a wholesale business
is a volume game and has tough
cost-effectiveness requirements.
Typical m2m arpu is
usd 5–15 per month and can
be just a few usd per year or
lower. On average, m2m accounts
for 10 percent of mobile
arpu, while mobile operators
have developed their networks
for serving customers with
monthly arpus of usd 50–60.
When providing m2m services
for the consumer market, costs
such as customer care per connection
have to be scaled down.
The technical capabilities are
there, but a number of business
issues need to be solved. The
connected device ecosystem is
often complex and fragmented.
Service providers and enterprise
customers are expected to
interact with multiple parties to
get the “things” connected.
For many enterprises, this interaction
requires special competence,
resources and telecom
understanding, something they
may not have. End-to-end integration
time and complexity
is easy to underestimate. But
complexity can be countered
by bringing in people with the
right expertise.
Simplicity equals cost efficiency,
but making it simple is not
that simple. When entering
new business areas, operators
need both process and system
flexibility.
There are several ways to achieve
this balance:
Improvements in existing infrastructure:
adding new features,
products and services to
the existing infrastructure enables
quick time to market and
reduces the investment risk.
However, incremental improvements
in infrastructure
may not be enough; there are
also organizational challenges
in terms of the prioritization of
different businesses.
Software as a service has already
proven a viable model in
putting m2m into operation
and maintaining good service.
The challenge is to have a software
package that includes all
the functionality necessary to
provide the services that customers
ask for. Quality-ofservice
enforcement, for example,
requires traffic functionality.
It’s not only a matter of
device provisioning.
Redevelopment of the infrastructure:
this involves ambitious
development projects,
which require detailed vertical
understanding, and technical
and financial resources.
Outsourcing the infrastructure:
operators can benefit from
business partnerships with telecom
vendors, in which the
vendor builds and operates the
infrastructure based on the
executive summary
vertical-specific business requirements.
The experience of an early
starter
By Benny Ritzén, page 28
▶ Norwegian incumbent Telenor
is a pioneer in taking
M2M services to the market on
a global scale. Telenor offers a
wide range of managed m2m
services, from tracking vehicles
and shipments in transit to
reading electricity meters.
Per Simonsen, ceo Telenor
Connexion, and Hans Christian
Haugli, ceo Telenor Objects,
explain why building business
from machine connectivity is
so different from what operators
are used to doing:
It’s about moving from selling
products to selling services.
This has a huge impact on business
processes and business
models, and requires quite a
substantial shift on the customer
side.
m2m is fundamentally different
from the traditional telecom
offering and as a consequence,
operators must fundamentally
change to adapt to it.
The overall mindset needs to
change too, because you are
switching from being local to
global. Operators tend to be
local by nature, while m2m customers
are mostly global.
Most m2m is about large volumes
of connections, but relatively
small data volumes per
connection. However, there is
also an opportunity to generate
new types of revenue tied to
services supporting pure connectivity
– some examples include
monitoring and surveillance,
lab and field-testing and
service-level agreements.
m2m customers require something
fundamentally different
from what traditional telecom
customers require. You need to
take those needs seriously in
the marketplace and that is why
Telenor has made the decision
to separate the m2m business.
There are at least three positions
an operator can take in
the m2m market. One is the
connectivity position. The sec- »»»
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