Communications

Community applications in Asia

I'm continually surprised how insular people can be, even those of us who think we're globally connected because we use the Internet. Recently I’ve written on various social networking subjects and a few weeks ago I spoke on the subject at VON, so I’ve been getting feedback and having discussions with people all over the world.

If I'm talking to another American, it's a safe bet they've heard of MySpace and, if they follow social networking applications, Facebook, Friendster or LinkedIn.  But few if any have heard of CyWorld, the largest social network in Korea, where over 30% of all Koreans (90% of teenagers) have a “mini-hompy” or homepage.

When the discussion turns to instant messaging, Americans and Europeans have heard of AOL Instant Messenger, MSN, Yahoo and Skype.  But few have heard of QQ from Tencent.  QQ is the largest instant messenger in China and, with nearly 500 million registered users appears to be the largest instant messaging community on the planet.

The Internet is global, it’s wonderful and it has vastly increased the flow of information, but we’re far from overcoming our islands of language and culture.

 

Walled Gardens - not the best way to make money

I've been discussing the evolution of our Mobile Applications business with operators in the US and the EU.  A key issue in most conversations is how the operator will maintain control of their customers.  This is very different than the approach in Japan or China.

In Japan, NTT DoCoMo is famous for the success of their i-mode service, but for i-mode they chose to enlist partners -- tens of thousands of partners.  DoCoMo gets 100 % of the transport revenue, but only takes 11% of the value-added service revenue (in exchange for billing) while their partners get to keep 89%.

A similar scheme exists in China, where most value-added services are hosted by external service providers and the mobile operators focus on transport and billing.  Recently a well connected analyst, who virtually commutes between China and the US, told me Chinese 3rd party value-added services are now a $800M industry.

China and Japan are extremely different -- different cultures, different demographics, different business climates.  But in both cases their mobile operators have chosen to open up their networks to as many 3rd parties as possible, with significant positive impact!  DoCoMo leads Europe and US operators in data revenues. I don't have reliable numbers for data revenues in China, but mobile data usage is soaring.

In recent years, most breakthrough mobile applications start in Asia.  Why haven't US & EU operators noticed Asian business models?

 

CTIA Las Vegas

Tuesday evening, after F2C, I'm flying to Las Vegas for the CTIA Wireless 2006, the biggest US mobile conference.  I fairly booked on Wednesday, but have some time on Thursday and Friday.  If you'll be there and want to meet, send me an email.

Freedom to Connect

I'll be in Washington DC on Monday & Tuesday next week to attend David Isenberg's Freedom to Connect 2006 conference, this year a joint venture of David's isen.com and PulverMedia of VON conference fame. There are a ton of interesting people on the schedule and, based on last year's conference, there will be plenty of interesting people in the audience as well.
From the conference home page:

The future of telecommunications starts now; there's a new U.S. Telecom Bill in the works, there's new networks in Europe, fast fiber in Asia, wireless across Africa and networks a-building in cities and villages around the world. Join the discussion.  Shape the debate. Assert your F2C:Freedom to Connect.

This is a US-centric conference, driven by frustrations with US policy and the fact that, while US broadband adoption has been fast (even more rapid than cell phone adoption), the US is still falling behind other nations in broadband connections, connection speeds and costs.

Of course it's public policy, so there's lots of politics and lots of muddle.  Fundamentally, there are two topics, which should be independent: 

• transport layer connectivity, commonly referred to as "broadband access"
  
• freedom to communicate electronically, a generalization of "freedom of speech"

Unfortunately, most US residents connect to the Internet using a service from a monopoly or duopoly provider, and recently, these providers have been making scary noises about content-based charging, so the two othewise independent topics become mixed and a muddle ensues.  At a very minimum, the telecom monopolist has an interest is being your only viable voice telephony service provider and the cable company in being your only TV-provider.  When these two compete for both telephony and TV, we move from two monopolists to a duopoly. But that's not much comfort for those of us seeking pure Internet connectivity.  15 Mbps?  100 Mbps?  1Gbps?  More, more, just bring it on!

Net Neutrality - No
Many people see the problem.  Quite a few, otherwise savvy, people think the answer lies in more regulation -- in Net Neutrality laws (here's one proposal) or regulations. Luckily Martin Geddes is on the program. He's a sharp cookie who should adequately kibosh the idea. And in the afternoon, there's a panel Muni Tsunami which will address one way around the problem.  But I worry that no one will actually discuss the root cause of our connectivity dilemma.

Layer Zero
Today the relevant monopoly and the only "natural monopoly" is at Layer Zero -- the physical right-of-way in front of our homes and businesses.  Everything else, copper pairs, coax, fiber, is a government granted monopoly that made sense in it's day, but no more. Yes, I've heard the argument that fiber is a natural monopoly, but that argument is based on the assumption that only services are allowed.  If fiber ownership (e.g. condominium fiber) is an option, or dark fiber in any form, the fiber-is-a-natural-monopoly argument falls to pieces.  Many people would still chose a service provider, but the ownership option would drive enormous competition. While he doesn't talk about Layer Zero competition, Bill St. Arnaud of the Canarie Project in Canada is the most articulate spokesman for condo fiber and customer-owned fiber.  Unfortunately, I don't see Bill on the agenda.  Perhaps I'll have a chance to make the point by careful questions during a Q&A.

India vs. Pakistan - A Telecoms Comparison

Recently I had occasion to look for up-to-date mobile subscriber figures for several countries including India and Pakistan. I've separately looked at and written about their telecom markets before, e.g. here & here, leveraging information from public sources and advice and comments from Indian and Pakistani friends. But I had never put to two side-by-side.

India should pay attention.  Pakistan has figured out a winning formula.

Population data from the CIA World Factbook.

 

	Population (in Millions)	Growth Rate	Median Age
India	1,080	1.1%	24.7
Pakistan	162	4.3%	19.6

Pakistan’s mobile market lagged India’s through 2004, but here are recent (14–18 months) numbers and calculated growth rates based on data from RCR Wireless (2004) and the respective regulators (Telecom Regulatory Authority of India [for Feb06] and Pakistan Telecommunications Authority [for Jan06]).

 

	Millions of Mobile Subs	Mobile Teledensity	Growth Rate
India	84.9	7.9	48%
Pakistan	23.1	14.3	332%

So what’s up?

As I commented about Pakistan’s mobile market back in December,

…real changes happened in 2004.  First, in April the government granted two more licenses < thus six competitors>.  Telenor won one of those licenses, built a network and launched services in February 2005.  Warid won the other, launching services in April 2005.  Second, in June 2004 the government abolished the remaining restrictions on foreign direct investment permitting foreign investors to retain 100% equity in their investments.  And third, they dropped the activation tax to Rs. 500 (~ $ 8) <from Rs. 5000 in 2001>.

I’m an outsider, an American with neither Indian nor Pakistani ancestors, but I want to see everyone on the planet with a mobile phone — as soon as possible.  This can only happen if developing countries stop inhibiting telecommunication growth.  The formula is pretty clear:

1. Foster real competition – more than four competitors everywhere in the country.
2. Foster foreign investment — eliminate all restrictions on foreign direct investment in telecom.
3. Reduce taxes — eliminate all telecom-specific taxes.

Pakistan made big advances on all three points in 2004, and look at the results.  India please take note.

 

APIs for BT's 21st Century Network (not)

For a few moments, I thought British Telecom had recognized the value of open APIs and 3rd party developers...

Yesterday I had the pleasure of attending a breakfast event at the British Consulate Boston (actually located in Cambridge Massachusetts, with beautiful views of Boston) where Paul Excell, Chief of Operations for BT's Technology Office spoke on BT's much touted 21st Century Network (21CN). He was followed by Malcolm Burwell of TTPCom, a panel discussion and questions from the floor, but most of the attention was to 21CN.

I already knew the cost justifications for 21CN and had seen slides for earlier talks. In my mind, it was all about complexity. As this view shows, BTU would go from 6+ networks and 1500 buildings to one converged (dare I say, IMS?) network and only 100 buildings.

But yesterday Paul Excell skimmed over the cost savings and instead focused on the wealth of new services that would become available on 21CN.  More than that, he suggested we would see the richness of Internet applications becoming available on 21CN.

Eventually I got to ask:  what APIs will be available?  and will BT open them up to 3rd parties the way Internet companies (Google, eBay, Amazon, Skype, ...) do?

Reasonable questions, particularly as I'd just read this recent comment by Marc Canter:  "Did you know that 45% of all of eBay’s listings come in through their APIs?"

Paul Excell's answers (paraphrased, but representative):

1. there will be rich APIs, like Parley.  (If you are not familiar with Parley, it's the ultimate API for telephony services on the Intelligent Network, i.e. it's far removed from Internet or Web 2.0 applications).
2. BT has a brand image of quality and reliability, so they need to ensure that applications work together.   (My translation:  very large 3rd parties may approach BT and negotiate for access to their APIs).

Wow!  Nice hype, but they're still clueless...

Watch this Telecom Italia commercial

Mobile Pundit VeerChand Bothra points to a truly moving 60-second spot on the power of modern communications.

It won an Epica (a premier European creative award) in 2004, but techie that I am, I missed it at the time.

Thank you, VeerChand. Thank you, Telecom Italia.

Telecom Impact on Per-Capita GDP

My presentation at VON was focused on availability (aka presence) and contextually-aware communications, but I did begin with a brief mention of subjects I'm passionate about and I ended with my typical closing comments about telecommunications:
1) telecom is good for mankind (more productive than other kinds of infrastructure investment),
2) the underlying technology is improving exponentially (& thus is fascinating for geeks!),
3) 6.5B people but only 2B mobiles ,
This is an enormous opportunity. Have fun, while helping mankind and making money.

Apparently this struck a chord with several people who came up to me afterwards asking about how they could help the spread of telecom to developing countries and did I have references for my statements about telecom is good for mankind?  The answer to the latter is yes!  Even better I wrote up those references just last week in a comment to an article on Teledesity and GDP in Atanu Dey's blog.  Here's what I wrote:

In the case of teledensity and GDP growth, there’s actually been quite a bit of work by economists trying to tease out what is causation and what is merely correlation. Yes, it’s a difficult problem. On the other hand, there are decades of data across more than 100 countries—countries which introduced different political, legal and economic regimes at different points in time. So it turns out there is a basis on which to attempt to determine the impact of telecom and other kinds of infrastructure investments and, over the past decade or so, multiple economists have published on this subject.

A 1999 World Bank policy research working paper entitled Infrastructure’s Contribution to Aggregate Output by David Canning examines the contributions of different factors of production to aggregate output looking at 57 countries over the period 1960-1990. As I commented here last August, Canning found a large productivity benefit to investment in telecom—larger than investments in roads, electricity or even education!

Canning’s work was on pre-mobile phone data. More recently, Leonard Waverman, Meloria Meschi, Melvyn Fuss in their paper, The impact of telecoms on economic growth in developing countries, examine 38 developing countries for which full data was available for the period 1996-2003. The short summary, “There are increasing returns to the endowment of telecoms capital (as measured by the telecoms penetration rate).”

A second post in my blog last October has the full references as well as pointers to popularizations of this academic work published in The Economist (UK, subscription required), related material on the Vodafone website, and regulatory policy work by Wallenstien.

To restate the concluding words of my October post, none of this is to downplay the developing world’s need for clean water, public health initiatives and access to medical care, but if there is one area where capital investment provides out-sized returns for individuals and nations, it’s mobile telecom. And this is one area where developing nations can easily attract outside capital investment with regulatory policies that favor open access, competition and foreign investment.

My presentation at VON

Here is the slide deck for my "Industry Perspective" presentation at VON yesterday, Mutual Disruption:  IM/ Presence Meets the Mobile Phone.

Download mutual_disruption_im-presence_meets_the_mobile_phone_v3.ppt

When Carl Ford interviewed me for a podcast the week before VON, he was surprised to see I wasn't talking about Layer Zero Competition, my topic at the last two VON conferences. So, before diving into my discussion of communities, contextually-aware communications and mobile phones, I briefly mentioned three of my passions:

1. Layer zero competition
2. The next 4-5 billion subscribers
3. VoIP disruption of telephony

and I didn't even mention video...

VoIP disruption is not a surprising topic. It's been a recurring theme for me.  The first time I spoke at a VON conference was in 1996 and my topic was wideband audio.  I had organized an IP-PBX panel and used my position as moderator to advocate wideband audio rather than "toll quality speech," i.e. don't struggle to duplicate the PSTN, use IP communications to do better!

Some of the points in this presentation are:

• With a few exceptions, most VoIP service providers are still thinking like telecom engineers, not focusing what the user is trying to do, i.e. connect with another person in a fashion appropriate to what the user is trying to accomplish and what the other party is available for.
• Presence is the wrong word.  What we mean is availability, with contextual qualifications.  My mobile phone is always with me, always on, but I may not take your call !
• Mobile phones are more important than desk sets.  Indeed, mobile has done a better job of addressing user interests than VoIP has so far. (And, mobile has been far more widely adopted than VoIP).  Even more significant, in developing countries mobiles far exceed PCs with Internet connections. Finally, Asia leads in mobile innovation, so US & EU folks need to pay attention to Asia.
• Person-to-person communications is the biggest opportunity (bigger than content sales and most other "data applications"), but it's centered around communities. Individuals participate in multiple communities, so there is no way a walled garden operator can serve all their customers' communities.
• Communities in Asia are equally available on Web & WAP.  I have some views of my WEB and WAP home pages on 12wap.net (in Singapore).
• Recently the GSM Association announced ubiquitous interoperability for presence on mobile phones. If they succeed with this initiative, it could represent a significant threat to AIM, Yahoo and MSN Messenger.

I closed by suggesting there was an enormous opportunity, in the next 18 months, to create the best combination of communities, availability, Web 2.0 and mobile phones.

Reverse engineering Skype

In the Peer-to-Peer SIP session at the VON conference on Wednesday afternoon, Henning Schulzrinne mentioned the existence of this really interesting presentation that was given by Philippe BIONDI & Fabrice DESCLAUX at the recent Blackhat Europe conference in Amsterdam March 2nd & 3rd.

It's 115 slides with tons of techie detail.  Read the summary first.