I presented at a recent sales conference for a large security / IT solution provider on the evolution of the telco industry and the role security and protection plays in that evolution. In summary: customer data, trust, security and protection are critical for operators to get right in this emerging environment. Operators need an integrated security and protection layer, not point solutions for each service as is the case today. Protection from malware across all network services e.g. IP, SMS, MMS, WAP push, widgets, apps, etc. Protection in the network, in devices and in services. SDP vendors need integrated security solution across network, services and end-points, which means a partnership with security / IT providers is key. Its a rapidly growing problem as its a highly profitable and more importantly safe criminal business compared to drugs smuggling or prostitution; hence a specialist security/protection partner is essential.

1. Evolution of Telco Industry
Alan Quayle
Business and Service Development
www.alanquayle.com/blog

2. The Telco Business Model,
its the customer that’s going to decide!
Utility Service
Connectivity Provider
P/E=1 P/E=7

3. Strategic Context: Re-engineering the Web
Era Date Characteristic Access Operator Implications
Development of the <100kbps Focus on infrastructure,
Web 1.0 ’90-’05 capacity expansion and mass
basic platform.
market connectivity.
Focus on user Partner with media
experience, open <10Mbps companies, social networking,
Web 2.0 ’00-’10 programmable systems, advertising based models, IP
connecting people. control and QoS.
Web becomes intelligent, Fundamental shift in business
understand / anticipates <100Mbps model, dumb or smart pipe?
Web 3.0 ’10-’20 users needs – rise of the Question mark of operators’
‘trusted agent.’ role as ‘trusted agent.’
Can Operators become the Trusted Agent?
Security / Protection is critical

4. Google knows nothing about a person compared to
Operators (especially true in APAC!)
• Everything Google knows and much, much more………
• Where you are at all times of the day, how fast you’re driving, where you
like to go on weekends, where you have dinner, where you had lunch, how
long you were at lunch…
• When you entered a country, how often you enter that country, how much
you spend on communication services, what web services you use when in
that country
• When and where you use value added / web services
– If you use lots of data services at home, offer FMC
• The phone numbers of your friends, who you ignore, when you ignore calls
• The phone numbers of your business associates, who you talk to most
• Your favorite TV programs, when you like to watch TV, what interactive TV
services you use
• All your SMS – why are they not searchable and stored in the network?
• All your voice messages – why are they not searchable?
• China Mobile, Telstra, Maxis, SingTel are all have customer data projects
underway
The list goes on, much further on, and yet T-Mobile my mobile operator has never
contacted me throughout the 6 years I’ve been with them, and they’ve taken >$10k
from me in that time – is that really a customer centric business?

5. The Three Pillars of an Operators Customer Experience
From Tier 1 APAC CTO Interview
Product and High-Quality Channel
Service Portfolio Network Consistent
Device portfolio Reliable branded
Bundled/unbundled Optimum cost experience
plans Performance across
Applications on/off web, retail,
deck content center,
devices and
kiosk
Customer Experience System
Customer data, revenue, service and business process
management
Telco are moving towards a real-time enterprise model

6. Strategic Context: Power of Devices Drives Peer to Peer
Assumptions Shattered
Always Online Intelligently Connected
Faster CPUs, 3D graphics
Multiple PDP context Push as well as pull
Massive storage
Multiple access Pervasive P2P
High definition displays
Application driven Smart UIs
Media centric
Web-centric Context aware
Smartphone penetration >50%
Intelligence is now at the edge: It’s the PC model!

7. Fragmentation has Stifled the Mobile Industry

11. Fragmentation has Stifled
and is now Killing the Industry
20,000 Phones
*
750 Operators
25 OS *
375,000,000
Mobile apps just didn’t have the scale – now the web is taking over

13. Smartphones are the Key Driver:
Fragmentation Mitigation
Gartner analysis shows
market consolidating on
5 OS given Smart Phone
penetration has reached
the tipping point in many
tier 1 markets
Developing markets such as Malaysia and Indonesia have a surprisingly high
smart phone penetration: it acts as their laptop and status symbol

14. Strategic Context: Customer’s Perceptions are Changing
Applications are no
User doesn’t care if longer ‘web’ or
message delivered Other
‘telecom’ services –
by SMS, MMS, IM. Voice
they’re just apps.
Utility
Messaging
Subscribers are no Productivity
longer ‘voice Mobile
subscribers,’ they’re broadband
PIM
Internet subscribers substitutes fixed
– voice is just an broadband
app.
Games
Browsing Multimedia Access to
multimedia is no
Source: Nokia Smartphone 360 Survey longer constrained
Time allocated to different applications
Customers expectations are changing rapidly – “There’s an app for that!”
Web and Telco services have converged for customers

15. Strategic Context: Web-based Service Providers
are Innovating Faster
And customers expect this rate of innovation from their service providers

16. An Operator’s Product Development Process
Find Budget
Opportunity Market
Identified Research
18-30 month 12-18 month
s s
New product
Re-Launch Launch development process

17. What’s Changed?
Expectations

18. What Customers Expect
18-30 month 6-12 months
s
4 months Weekly

19. Which Means That…..
Fixed and mobile Services independent of Rapid usage growth and
Broadband is an enabler the network innovation
•Broadband is the •Broadband is an •Growth of Web 2.0
growth engine for enabler for all services community services
telecom. •Market boundaries •“Freemium” models
•Increasing access diminish as customers •‘Boiling Frog’
capacity increases expectations change. expansion into voice
web-service •Move from vertically to
capabilities horizontally integrated
•Web 2.0 significantly cannibalizes telco’s services
•Voice, messaging, IPTV
•Multi-play becomes multi-access
Operators must act now or become a dumb pipe

20. Telecom Cake
BOSS $45B
Services $2000B
Telecom Middleware
$6B
(IN / IMS / SDP)
Core (Routing/Switching) $30B
Transport (DSL /
$300B
wireless / optical)
Devices (fixed / mobile) $300B
Services revenue drives the industry – need to focus on impacting there

21. What This Means
• It’s a fight to remain relevant as a service provider
– Fight to maintain a P/E ratio of 7 not 1
• Trusted agent is key: Google knows nothing compared to
an operator
– Security / protection is critical
• Mobile is finally moving to the PC model
• Users do not differentiate between telco and web services
– Contextually relevant (customer data) is critical
• Accelerate service innovation
– Apps store, open innovation, opening the network
– Trust / security / protection is critical
• Telecom Services is a $2T business
– Its all about the services
Customer data, trust, security and protection are critical