Consumer & Entertainment Services
By Simon Dyson 24 Feb 2020
China music industry update, February 2019.
Perhaps the revival of the Nokia 3310 gave it away. Once, MWC was a celebration of mobile operators and the vendors that built them. Then, post-iPhone, it became an orgy of shiny gadgets feeding the consumer. Now, though, the delight in consumer hardware has begun to feel a little tired.
Ericsson's technology briefing said as much. We were told not to expect the consumer sector to grow like it did before the great financial crisis again, 5G or no 5G. The company's CTO held up an iPhone – born in 2007, of course – to make the point. Consumers, he said, just aren't going to spend more on mobile service, as opposed to devices, apps, or content.
No surprise, then, that there's a renewed focus on the enterprise. Increasing CSPs' share of total ICT spend is now top of the agenda. Announcements such as new SDN APIs at Colt, new releases of Deutsche Telekom and partners' Ngena platform, and new advisory services at Orange underscore the point.
At the same time, the intense focus on private and in-building wireless, edge computing, the IoT, and SD-WAN among the vendors shows that they too are feeling the need to address enterprises better.
This is all well enough. Ninety-nine percent of enterprises are small and medium-sized enterprises. The problem here is that both vendors and telcos are too fascinated with the prospect of one-click virtual network functions and the like to realize that SMEs crave better technology advice and support. This needs people, partners, and tools.
And if you think enterprise technology is hard to exhibit at MWC compared with shiny new phones, try those.
Within the digital payments space, one of the key takeaways from MWC this year has been the subtle shift in the focus and direction of innovation. Whereas prior years have seen significant announcements around consumer-focused product developments, this year there's been a pivot toward B2B solutions and propositions targeted at specific merchant segments.
There are two factors at play here, and tokenization is at the heart of both. Consumer demand for smooth, friction-free transaction experiences on mobile is now well understood; while the imperatives and business models differ on a country basis (driven largely by the degree of payment infrastructure sophistication in each), approaches to delivering secure means for consumers to initiate payments via mobile devices are widespread and maturing. Tokenization has been key in unlocking in-store transactions for mobile, and despite the fact that volumes driven by the "Pay" wallets have been limited, the direction of travel is clear.
At the same time, many merchants are investing in their cross-channel capabilities and need a payment capability to align with this changing landscape. Indeed, the most advanced are looking to redesign the end-to-end commerce experience and to make the payment process as invisible a stage as possible. Tokenization and advances in authentication technology are key here, and will underpin many of these new customer experiences.
The consequent challenge for the payments industry is clear, and it is all about distribution – simply, how to become the embedded token or credential in as many new payment experiences as possible. More holistic commerce solutions designed to meet the needs of specific types of merchant will continue to grow in prominence as the payments industry realizes that meeting the needs of merchants, rather than the banks or other parties providing payment services to consumers, holds the key to future prosperity.
A new Ovum-led survey released at MWC suggests that although telcos are not dominant players in digital advertising, they can play a role. Telcos are looking to leverage and monetize their data insights and analytics capabilities, which they see as valuable assets. Advertising is a target sector, and some early-mover telcos already participate. Conspicuous examples include Telefonica, Singtel, and Verizon, but there are others either actively pursuing or assessing the opportunity.
The survey was conducted on behalf of Synchronoss Technologies, with more than 300 brands in the US, France, and the UK. Most brands in the survey go directly to Google (59%) and Facebook (52%) for their digital advertising needs, which is not surprising given that these two are major, established forces in this domain. But what is more surprising is that one in four brands also partners directly with a telco that specializes in big data and mobile advertising.
Brands in the survey expressed a strong desire for additional data insights and a willingness to pay more for data and analytics that support better targeting (61%). This is a market opportunity up for grabs. Brands in the survey saw telco/mobile operators as second only to social networks as the best original source for mobile customer data insights, and ahead of digital media companies, device vendors, and chat app platforms. This endorsement is a boost for telcos given that most remain uncertain today about whether to build a data-as-a-service business providing data to third parties.
For brands that know about and are using telco data assets, the most compelling aspect is the overall quality of data (64%), followed by its depth and breadth. When it comes to individual data classes, the cuts that generate the most interest are those that are unique to operators: real-time location data, network intelligence, and data from billing.
Telcos at MWC are making a lot of noise about how they are safeguarding the data privacy of their users. We think they should put similar effort into making sure privacy is top of the agenda for third parties that leverage their customer data insights. The majority of brands in the survey did not have data privacy front of mind, due to a number of factors that include inexperience in mobile advertising. But given their desire for enhanced targeting, this could create problems. Mobile operators in particular have knowledge and experience in data privacy matters, and are in a good position to guide brands in this difficult territory.
At this year's Mobile World Congress, the major RAN vendors have given much more attention to channels and internet technology than ever before. No doubt this is due to the importance of massive MIMO when it comes to 5G. Huawei even won a GSMA award for its active antenna solutions. Nokia said it has plans to now build its own antennas, which further reinforces the importance of strong antenna technology for radio vendors. Meanwhile, new market entrant Blue Danube demonstrated its 4T4R beam-steering antenna carrying live traffic from AT&T.
So what is the reason for all of this attention on the antenna? Generally, the antenna, while always important to the base station, has been something of an afterthought. The reason for its renewed importance now is no doubt related to 5G.
5G is really about three big enablers: spectrum, network transformation and digitalization, and advanced antenna technologies. The major equipment vendors, while they can't provide the spectrum (radios that can work on the spectrum, yes), will be required to provide both network transformation strategies and solutions along with advanced antenna technologies. As we head toward 5G, this creates opportunities for both new players and the major incumbents.
Another day at MWC, another big development for low-power, wide-area (LPWA) IoT. This time, it's India that will see a major LPWA network rollout, and it's the LoRa ecosystem that will benefit the most from it. India-based global telecoms service provider Tata Communications and Hewlett Packard Enterprise (HPE) will build the LoRa network, with the first phase of the rollout to target Tier 1, 2, 3, and 4 cities in India, reaching over 400 million people. Alongside successful field trials in Mumbai, Delhi, and Bangalore, there are also 35 proof-of-concept applications in trial on the network.
As Ovum predicted before MWC, 2017 will be the year of LPWA IoT, and the event continues to substantiate this. Earlier in the week Orange announced that LTE-M will be deployed for LPWA IoT across its 4G networks in Europe, a move that came as other major operators, including AT&T, KDDI, KPN, NTT DoCoMo, Telefonica, Telstra, Telus, and Verizon announced their backing for LTE-M.
While LTE-M has benefits over LoRa in terms of being standardized and operating in licensed spectrum, LoRa currently has clear benefits in terms of its more mature ecosystem and strong existing commercial viability. Rather than see LTE-M and LoRa as competing technologies, they will both gain market share by playing to their specific strengths. And as we noted earlier in the week, the presence of both Orange and other LoRa-players KPN and KDDI in the grouping of operators to back LTE-M shows that operating the technologies for different specific use cases in specific contexts makes sound commercial and strategic sense.
And beyond the competition for specific technology ecosystems, operator announcements at MWC17 have given considerable momentum not just to the LTE-M and LoRa ecosystems but also, more importantly, to the overall LPWA IoT market, with the foundation rapidly being laid for an acceleration in market uptake.
A key theme here at MWC has been the impact of new technology on the communication service provider business model. On the one hand, the development of SD-WAN, NFV, and edge computing is giving over-the-top competitors capabilities they didn't previously have.
An example here would be Velocloud's partnership with Tata NetFoundry to deploy its SD-WAN and transport optimization product. Deploying the software at customers' edge locations and on NetFoundry peering sites creates a kind of virtual operator overlay, potentially squeezing value out that operators might otherwise claim.
Another example might be the pure software-defined radio base station Canonical showed with partner LimeSDR. It's not hard to imagine enterprise customers deploying these devices and configuring whatever waveform, topology, and apps they want, or cablecos using them with unlicensed LTE to break in on mobile revenues.
On the other hand, vendors and wholesale providers are beginning to challenge for the customer relationship. Tata's Move global MVNE platform and Nokia's worldwide IoT grid are cases in point.
And the two issues intersect; new wholesale models help over-the-top competitors fill the gap between their own assets and a full service. Operators struggle to serve SMEs, usually because they struggle to scale down their enterprise account teams effectively. A purely SME-focused player might do better, concentrating on advisory, developing its own tools, and partnering out the rest.
This sounds grim, but it's not as if the CSPs are out of ideas. Ngena, the group of operators led by DTAG, aims to create something like a roaming alliance for layer-2 networking services, connecting small multinational companies' sites with the cloud. US cable operators have done supremely well in this space, benefiting from their continental scale. Ngena aims to create a global Ethernet platform of even greater scale. It's an exciting vision and one that makes a lot of sense.
That said, providing service over other people's networks is always challenging. Savvis attempted to create a tier-1 scale ISP by aggregating transit relationships. That didn't work. Protocol stacking and tunneling tend to create systems that are hard to debug when things break. But at least Ngena is doing something new and fresh. Also, it is the first operator initiative we know of that commits to a software release cycle publicly.
There are 110 million global monthly active users of Rich Communications Services (RCS), it was announced Tuesday at MWC 2017, with 25 million weekly active users in India on the network of start-up LTE operator Reliance Jio.
As predicted, the GSM Association and Google have used MWC17 to highlight the progress of RCS, building on Google's announcements in the weeks leading up to the show. These announcements included the addition of new operators, the release of the Early Access Program for RCS for Business partners, and the rebranding of Messenger to Android Messages (which is based on the new Universal Profile for Advanced Messaging). Following on from the earlier news that Telenor Group would launch Android Messages in 13 markets across Europe and Asia, it was also revealed at MWC17 that Vodafone has launched Android Messages in 10 markets.
But the focus at MWC17 has been very much on what the GSMA is calling "Messaging-as-a-Platform," and in particular RCS for Business, including the development of chatbots within RCS to enable interactions between enterprises and their customers. Brands such as Virgin Trains and Walgreens demonstrated at MWC how such interactions could work. For example, Virgin Trains' head of digital technologies, Steve Gooder, showed how the company has upgraded its existing SMS platform notification service to RCS, enabling a more graphical, interactive, and – crucially for Virgin – branded experience. Ovum understands, however, that it will likely be toward the end of the year before such services go live.
However, Petja Heimbach, VP of next-generation communications at Deutsche Telekom and chair of the GSMA's IP Comms leadership team, acknowledged during the GSMA's Network 2020 seminar that interoperability between RCS-based services remains a significant issue, adding that it is a problem that RCS operators need to solve within the next six months. At the moment, RCS operators are offering services based on different versions of the RCS specifications, with Universal Profile adding to that fragmentation – at least in the short term.
Samsung also announced at MWC that it will expand the availability of its RCS platform, based on its acquisition of vendor NewNet Communications Technologies. Like Google's Jibe, the NewNet platform includes clients, RCS application services, RCS hub, and a monetization platform. Samsung will be able to add its own Android-based handsets into the equation as well, with all future Samsung smartphones including Android Messages as the default messaging client. Samsung says that it is working with operators including Deutsche Telekom, KT, SKT, and Vodafone, and that its platform will enable interconnectivity among not only the operators, but also third-party RCS clouds – presumably, this means Google.
MWC 2017 has seen a renewed focus on loyalty in the digital commerce context, with new launches from Mahindra Comviva and Urban Airship, among others. This is a welcome development, as surveys by Ovum released just before MWC show that loyalty programs and rewards can have a positive impact on user engagement with mobile payments and also mobile financial services (MFS). This is important, as although the uptake of mobile payments is improving, driving usage is an ongoing challenge, in both mature and emerging markets.
Mahindra Comviva launched the MobiLytix Customer Engagement for Digital Payments platform, which uses data analytics to provide consumers with contextually relevant offers and promotions. Mahindra Comviva hopes its new solution will help address what it describes as the chasm between the registration for mobile money services and actual usage. In the GSMA's latest State of the Industry Report on Mobile Financial Services (2016), also released at MWC, it reported that of the 556 million registered mobile money accounts globally, only 174 million are active on a 90-day basis.
Urban Airship released a brand-centric loyalty solution for Apple Pay. In collaboration with USA Technologies, the company has integrated Urban Airship Reach with Apple Pay to enable users to automatically update loyalty points at checkout. The integration also allows consumers that don't have a particular brand's loyalty card to enroll at point of sale with a pre-filled form, populated with information from the user's device. Once enrolled, a loyalty card is added to the Apple Wallet. Brands can send targeted alerts and promotions to users at specific locations, while also benefiting from data capture.
The Ovum parallel surveys (1,800 consumers, 49 MFS providers) were carried out on behalf of Amdocs, which in the run-up to MWC launched the Loyalty Management System, which allows MFS providers to integrate multiple loyalty programs and cards into a single mobile wallet. The overwhelming majority of respondents (69%) said they would definitely use a mobile wallet service more if they were rewarded for doing so. The survey also shows that rewards can encourage consumers to use mobile payments more than traditional instruments such as cash and credit/debit cards. Tiered loyalty programs were revealed to be particularly powerful. Seventy-nine percent of service providers with such programs said the prospect of earning higher-tier points incentivized customers to use mobile payments and mobile financial services more.
AT&T announced the selection of Hewlett Packard Enterprise's (HPE's) cloud-based subscriber data management (SDM) solution. The vendor's offering includes the HPE Integrated Home Subscriber System (HPE I-HSS), which serves as an integrated home location register (HLR), home subscriber services (HSS), and authentication, authorization and access (AAA) databases.
A cloud-based SDM function is critical to realizing faster service provisioning promised by software-defined networking (SDN) and network function virtualization (NFV). It enables the authentication of a subscriber's identity and validates their subscription to services. CSPs currently experience long lead times when carrying out these processes because subscriber data is held in multiple siloed data repositories. These siloed repositories were created as the different network access technologies (2G, 3G, 4G) were rolled out. So provisioning the customer data for specific services would require locating and pulling subscriber data from these different sources.
As a CSP's rollout of network virtualization progresses, there's a need to create a single source for subscriber data irrespective of the network access technology used to connect to the network. The functions of a virtualized SDM function will deliver this centralized capability to the CSP's network, allowing CSPs to gain a consolidated view of all their subscribers. It also empowers them to launch new services seamlessly and quickly to subscribers as they can utilize the integrated view of the subscriber to deliver targeted offerings to customers based on insights obtained from customers' purchasing and consumption behavior.
The announcement also sees the tier-1 US-based CSP extend the progress of its network virtualization program, which commenced in 2013. As at December 2016, the CSP had virtualized over 30% of its network infrastructure.
Enterprise Technology IT, Enterprise Decision Maker
By Jeremy Cox 24 Feb 2020
Microsoft's wave one 2020 announcements for Dynamics 365 offer promise for delivering a better customer experience, but it more must be done to dynamically orchestrate the customer experience.
Europe, Middle East & Africa team: +44 7771 980316
Asia-Pacific team: +61 (0)3 960 16700
US team: +1 212-652-5335
Already an Ovum client? Login to the Knowledge Center now