Archive for the 'Business Model' Category

BT DSL outage

I’m sure many of you were affected in one way or another by the recent DSL outage, caused by the North Paddington exchange. The latest is that from BT is that water got into the exchange, starting an electrical fire, which was put out by more water, causing a flood in the basement.

The above picture is an example of the severity of the situation. However I really must praise the sterling work of BT in not only working around the clock to rectify the issue, but also in notifying their customers using Social Media. Their twitter stream (@BTcare) was a hive of activity all day, and was backed up by their status blog depicting progress. In fact the above picture comes from their own Flickr stream. Info was then compounded upon by key clients, such as Gradwell (@gradwelltweets), who posted a list of exchanges that were affected (some 437!)

Although many of us in the industry view BT as a bit of a dinosaur when it comes to embracing change, they really are showing us all how best to adopt and embrace new media. And although they have been tripped up by their BTcare account more than once, these mishaps will inevitably help them create a more fulfilling user experience. The whole episode also helps to shoecase how Twitter, blogs and other social media devices, when used in the right way, can really enhance the way a business can communicate with it’s community. We can all learn a thing of two from BT.

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This is NOT a party political broadcast

So we have heard the budget, and to be honest, there are few surprises for us telco’s. We all knew that this would be an ideal opportunity for Labour to posture somewhat prior to the election to gain votes. And that is exactly what they’ve done.

The one thing for me personally that has been interesting is both parties use of the advancement of broadband in their respective manifestos. The Tories have confidently stated that they will get 100Mbps lines to 90% of the population by 2017. Last year Labour confidently announced that their USC for #digitalbritain would be a paltry 2Mbps per household. This has been subsquently revised to providing ‘superfast’ broadband by 2020. However despite elaborate methods of financing this from each, there doesn’t seem to have been much thought as to how this would be delivered, and more importantly, who will deliver this.

Fibre is and has been the obvious method. Much noise has been made for both BT and Virgin Media to provide access to their ducts for other carriers use. However when the purported cost to deliver fibre to each and every premises is between £5bn and £30bn you can see the massive investment needed. Hence the government’s involvment. Many different technologies have been considered to deliver ‘next generation services’ today. Satellite, LTE, WiMAX and even BPL (that’s an acronym for Broadband over Powerlines) have been mooted as being able to service those much talked about not-spots, that are rightfully threatening the validity of the #digitalbritain manifesto.  The disappointing factor is that there seems to be little communication with telco’s to understand how best to deploy services that will help Britain move into a digital future.

In my view, there are 2 key issues that stop any government really moving forward with providing high speed universal access.

  1. Lack of communication with those in the trenches – I’m sure the likes of BT and Virgin Media have been consulted about their opinions on providing high speed access to all (or badgered to open up their ducts). However what the government hasn’t done is try to assist smaller providers who have worked in other more rural areas to try and deploy networks designed for tomorrow. An example of this can be found by the inequality in the tax rates paid out on fibre by the likes of BT and smaller providers, such as Vtesse. If there is at least parity, then this will spur people like Vtesse to create efficient models to provide high speed access in areas the not-spots.
  2. The government inherently doesn’t GET the internet – This is a massive statement to make. However on one hand the government is trying to deploy a set of foundations to provide universal access, whilst on the other, introducing the Digital Economy Bill to massively restrict our use of the internet. Ever so slightly hypocritical. The government seems hell bent on protecting the revenues of industries who also don’t get the internet, instead of helping them to adopt new business models to fully embrace the internet.

Once the government realise that providing universal access is less of a political game  whilst engaging with those who could spur innovation, then will we truly see a landscape conducive to providing nationwide high speed access to underpin a digitally thriving economy.

How businesses evolve

It’s useful to understand how over the recent years, big businesses have reinvented themselves. I was reading an article recently on the departing Ericsson CEO Carl-Henric Svanberg, which gave an insightful account of the issues facing Ericsson after the dot-com bubble had burst. His model solely focused around consolidation, whilst others in their market either spread themselves extremely thin in looking for new markets to expand into (see Marconi) or acquired rivals to try and quickly expand (see Alcatel-Lucent). What Carl-Henric Svanberg did with Ericsson was to really consolidate, concentrate on their core business of building networks and inevitably cut costs. This worked, and he now leaves Ericsson today in the healthy position of having 40% of all mobile calls made on their network. I think a lot of companies get excited by the profits and market share available to them when they look outside of their domain. 2 large enterprises who are having mixed results are Google and Cisco. Although Google is still king of search, it’s increasingly more lucrative and more prestigious projects such as Google Books are starting to sap resources from it’s search empire. This has had the effect on competitors like Bing taking more market share.

It was also interesting to see how emerging technologies helped to spur growth in the ailing company. Although a large proportion of their spending is still attributed to legacy networks, opportunities increasingly present themselves to expand into so-called next generation networks. 3G networks are fast becoming their bread and butter, with customers such as Three (3) and T-Mobile in the UK having Ericsson infrastructure to power their data networks. Moving forward, with the advance of M2M, Carl-Henric Svanberg thinks that there is the potential for roughly   sim cards to be embedded into devices as seemingly mundane as fridges, microwaves and washing machines. This is where he envisages Ericsson’s next market shift. There’s no doubting the strength of the mobile data market. Whether it hits a natural saturation period or whether advance such as LTE will help it break through it’s glass ceiling are anyone’s guess. However one thing is certain. Due to the requirement for people to be connected on the move, this is definitely a market that will be key for a long time.

The big Twitter debate

Over the last two years, Twitter has taken the Internet by storm. Early adopters (myself included) saw it as just another method by which to communicate to your network, and dismissed it on this basis. However, as celebrities such as Britney Spears and Ashton Kutcher started to jump on board, Twitter slowly started to become more of a mainstream media tool. This was further enhanced by events such as the River Hudson plane crash and the terrorist events in Mumbai. Now Twitter is seen as a fundamental broadcasting medium by many to obtain relevant news.

However, the problem with Twitter is that there doesn’t seem to be any obvious way to monetise their service. They have a massive subscriber base, all of which obtain a free service. Now they even have a large enterprise and corporate client base who use their service not only to promote their brand and products, but also to connect with their client base. Due to the size of Twitter’s user base, the temptation is always there to sell out to a larger player, and there has been a lot of speculation relating to an acquisition by Google. Real time search is the one area within their portfolio that they’ve had problems coming to terms with. However, with Twitter’s real time feed suddenly Google would have specific relevant information about up to date trending topics, of which to target their adverts too. The immediate benefits of this are there for all to see. Google can instantly monetise a service that currently does not have any obvious income stream. Whilst for Twitter, they have direct access to Google’s massive resource pool to be able to compete against the likes of Facebook, who with the acquisition of FriendFeed are slowly encroaching into the space of real time search. Also, Google’s track record of amalgamating newly acquired assets into it’s estate is strong, as is shown by the success of both YouTube and Blogger being able to keep their brand identity and prove successful in their respective markets.

However, Twitter does have an ace up it’s sleeve. With the use of hashtags, Twitter has a direct way of keeping a handle on the latest trends being discussed. They have large investors behind them providing them with the capital to increase their infrastructure. Also, despite the fact I mentioned earlier that their lack of an obvious business model was a problem, it definitely constitutes a nice problem . Currently their valuation is built solely on their subscriber base and their infrastructure. The minute they disclose their intentions, their value would rocket to potential investors, and may well even see them go down the IPO route. Remember that the guys behind Twitter are also the same guys that started Blogger, and sold it successfully to Google.

For my two pence, I think that Twitter would be silly to ignore the threat of Facebook, and sell in a hurry to the likes of Google and Apple. They have an extremely strong brand and an even stronger user base which they can use to their advantage. And just as Google did with the implementation of Adwords, if they can find a way to monetise the mammoth amount of hashtags flying around, I think they would stand a good chance of seeing off the combined Facebook/FriendFeed threat.


My tweet stream

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