Hace bastante tiempo que sigo y leo EuroTelcoblog, un blog donde postea un analista especializado en telecos de la firma Daiwa Securites. La verdad es que a pesar de que hasta el día de hoy los post publicados no me llamaron excesivamente la atención, estaba seguro que merecía la pena tener al blog en Bloglines y seguirlo ya que algún día me encontraría con un post perla, que compensaría mi espera. Pues bien, este post a llegado. Titulado “Ten Things I Hate About You”, una fantástica lista de las amenazas que se ciernes sobre el sector, y que paso a copiar y pegar a continuación (es tan buena que no me atrevo a traducir ni tocar una coma):
“1)Telcos have lost control of their core product – The old gags are usually the best, so I took the opportunity once again to trot out the supermarket photo from Norway, with voice and frozen peas in a battle-to-the-death for prime loss leader item in this market with one VoIP service provider for every 15,000 households. (I was surprised and flattered later in the morning when the photo also turned up in the presentation of Berit Svenssen from Telenor fixed line – wonder if she knew it came from a Telenor employee?) I then asked for a show of hands of people who had heard of RTC Factory, and only one person raised his hand, but then again he was the one who introduced me to the company in the first place, so this was no surprise. Quite a few people seemed to shake their heads in smiling shock and awe when I repeated the company’s claim that it can give you (or anyone who can pay) a telco in a box with eight weeks’ lead time. If investors like to see markets which enjoy significant barriers to entry, then this ain’t one of them. I suggested that this implies that telcos need to think about trying to monetize the context around phone calls, rather than the billable event itself. Obviously, I said, there are others who are trying to do this already (the pay-per-call brigade and Gizmo Project’s trade off of PSTN breakout in return for your real-world contact data), so get out there and rethink the value in the call. (During the feedback session, there seemed to be intense interest in what Gizmo was up to.)
2) Voice is becoming a feature, not a service – Here I called attention to the Busta widget on my Google homepage, as well as touching on some of the other early stage developments around embedding voice in web communities, virtual worlds, gaming, etc. Given the intensity of use that many of these generate, there is every reason to assume that the communication tools integrated within them will grow richer, and probably fast. One strategy for the telco on the outside, is to get on the inside, by providing the voice platform to these communities. If it’s going to have voice anyway, it might as well be your platform which runs it. So far it has been the newcomers who have tapped into this trend.
3) Telcos can’t grasp that consumers may not want what they’re being sold – Here I observed that 45% of KPN’s first half DSL customer growth came from the Direct ADSL
4) Telcos thrive on scarcity – future value will be built around abundance – Here I gave as one example MySpace, which basically is an experiment in giving tens of millions of people simple site design tools, a lot of free storage and bandwidth, then standing back and seeing what happened. A lot of people laughed at the $600m price tag NewsCorp paid last year, but the Google advertising deal alone is worth $900m, so who exactly is the fool? Another example I gave was the Amazon S3 project, which opens up unlimited affordable storage to people who wouldn’t normally have access to it, and was already enabling the creation of some high-quality sites.
5) Command and control culture is dead, open APIs rule – Here I focused on the classic walled-garden business which used to be AOL, before getting the open API religion. I also pointed out that as part of AIM Pages, users can build modules which import content from services offered by AOL’s “mortal enemies” elsewhere on the web. I got distracted by my ticking watch and actually forgot to mention perhaps the most compelling recent example, which is Amazon.
6) Telco DNA is fundamentally unsuited to the current dynamics of content – Here I pointed to the example of YouTube, which serves in excess of 100m streams per day, but where the most subscribed channel of all time, lonelygirl15, has only 48k subscribers and first appeared on the site five months ago. Think about this, the musings of a teenage girl appear on the site, and in almost no time become the most subscribed channel in the site’s history, but this auditable base of subscribers is tiny. To make things even more difficult to interpret, lonelygirl15 was subsequently revealed to be a stealth project by aspiring filmmakers. The audience particularly seemed to like the quote from one of them that all it took to make the videos was, “Two desk lamps (one broken), an open window and a $130 camera.” I stressed that this sort of formula might well appeal to content companies or advertisers seeking innovative marketing strategies, but that if telcos found getting sports content a challenge, then this sort of dynamic could be a graveyard. Then again, who ever said that user-generated content had to be so US-centric? Can’t telcos try to enable something more relevant to their home markets? So far, a lot of the weight is being carried by independent players, but on the positive side, one thing I noted was that it was not unprecedented for telcos to engage communities in the creation of locally relevent content, and benefit the core business in the process.
7) Telcos expand their footprints physically, not virtually – Readers of this blog will note the frequency with which I have talked about mutually assured destruction, which I think we are seeing play out among the big four PTTs in Europe. However, the question at the back of my mind is, why didn’t a telco, maybe one with a relatively small footprint (Belgacom, Swisscom, BT) buy Skype? Why did it take eBay (and the other three or four internet players reportedly involved in the auction) to see the value of what Skype had to offer? Of all people, surely telcos should have seen what was happening and bought the company out at an earlier stage. Maybe some tried, but if so it went completely unreported, which probably is a good indication that no one tried. Ditto for MySpace – why was it Murdoch and not a telco? I could see the audience squirming, but I quickly pointed out that this was not as stupid as it sounds. SK Telecom had the good sense to buy Cyworld, which has become both an exportable, licensable platform, a generator of incremental revenue ($125m per annum in virtual goods), and serves to stimulate usage of the core asset base.
8) Telcos can’t innovate – I guess this one was the proverbial duck in the barrel, given how few companies even bother to disclose R&D expenditure. I repeated Sir Terry Matthews’ exhortation from VON Stockholm that telcos should get away from an obsession with bullet-proof reliability and be more adventurous in product development. Ironically, many of the people in the audience are in fact engaged in innovation efforts, and they are damned smart. However, I guess the issue of innovation is about much more than R&D if the overall organization is not driven by innovation, and some parts may even be openly hostile to it. This seemed to be a common theme of the feedback coming in towards the end of the conference – the people attending such an event would naturally be more amenable to the need to change the model, to do things differently. The real challenge was in convincing the other 99,000 people in the organization of the same. Anyway, I inevitably mentioned what many have called Google’s spaghetti strategy (throw it against the wall and see if it sticks), which I think the audience appreciated as something to strive for, but probably impractical. (I noticed with interest the feedback which followed Jim Holden’s presentation about Google’s partnership strategy in the wireless space – a lot of it betrayed a level of suspicion and mistrust of the “step into my parlour said the spider to the fly” variety. This was similar to the response to Google at the TEN event back in June. Is there any company which instills greater fear in telcos than Google? I’ve been pondering this for a few days now, and am coming to the conclusion that Google may represent for telcos some very threatening ideas – a company which encourages innovation even when the direct connection to the core business may be unclear or non-existent, a company which believes in the option value of innovation investment. This is alien territory for the modern telco, and it’s made even more galling by virtue of the fact that this innovation effort just happens to be bankrolled by $6bn in annual advertising revenues. Moreover, I think that Google encapsulates a telco awareness that the garage around the corner may give rise to something which could wipe you out.)
9) Telcos shouldn’t try to innovate – Here I was trying to convey that some investors believe the battle is already lost, and that telcos should concentrate on things they know how to do relatively well – building and managing network infrastructure – and reposition themselves to enable the explosion of content and application innovation at the edge. The problem is obviously the need to sack tens of thousands of employees as a result, which may be untenable in a number of cases. However, I made the observation that, for companies like BT and KPN who report in such a way that investors can get some insight into divisional profitability, it is clear that the unsexy utility network business contains a lot of value. Based on BT’s restated numbers from last year, Openreach and Wholesale accounted for 70% of positive operating free cash flow (EBITDA minus capex), and wholesale was 77% of the equivalent figure for KPN’s fixed business in 2005. There are investors who would prefer exposure to this sort of business alone, rather than the IPTV-aggregating, me-too-softphoning service provider business.
10) Maybe the entire foundation is wrong – I had to close out with my current nagging question over the tension between broadband as a “product” (you know, the standard marketing pitches about blazing fast downloads…) and broadband as a lever of social policy and local economic self-determination (torrent version here). The access model as it is now clearly encourages and enforces artificial scarcity, when in fact what might be needed is something entirely different. If so, that means we have adopted the wrong model and invested heavily in it. A fairly downbeat topic to close on, but luckily, as we were out of time I didn’t get to the part where I suggest that the entire privatization process might have been a miscalculation. Maybe next year… tariff, which is basically raw connectivity with no ISP service, and now accounts for nearly 20% of the total customer base. I suggested that this seemed to be a validation of the increasing role that web services are having in the lives of ordinary consumers, and also seems to underline that where they are given a choice, many may choose to avoid telco-mediated services entirely. If I have 85 Gmail accounts, VoIP from a number of sources, a free blog, and theoretically unlimited online storage at my fingertips, what do I need an ISP for? The obvious message for telcos is that if people want dumb pipes you should sell them dumb pipes as efficiently as possible, and (as John Waclawsky from Motorola stated the next day) construct a strategy for capturing value at the edge.”
Bueno parece claro que los disparos tienen mala intención y apuntan al corazón del sector, pero ¿lo alcanzarán de muerte?