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OTT/Digital Content: Where’s all the money?

Operators are struggling to monetise the investments they are making in content

Plus Exclusive interview with EE Chief Executive Olaf Swantee

Q3 2015 ISSUE | THE LAST WORD ON NETWORK OPERATOR STRATEGY FROM AROUND EUROPE

Contents

06 Financial data Telco stocks fall ﬂat in Q2

08 Swantee wants to make sure EE gets connected EE Chief Executive Olaf Swantee tells Marc Smith about the operator’s new connected strategy, as it looks beyond 4G and smartphones

10 EU telecoms industry cautious about net neutrality decision

12 A European cloudco – pie in sky? Deutsche Telekom and Orange are two leading proponents of a European company that could take on Amazon and Google in the cloud space

CMO of the Year: The judging process

18 CMO of the Year award 2015 The judging proccess

20 The shortlist This year’s award shortlist features executives from A1, Orange Romania, Proximus and Telekom Romania

Special report: OTT / Digital Content

30 Q3 survey: Operators want new revenues, differentiation but ﬁnd partnerships hard to come by

38 KPN aims to Play in the TV space with new app Ahead of the launch of KPN’s new TV app Play, the operator’s TV & Propositions Manager Diederik Rosenbaum gives Marc Smith the lowdown on the OTT service

08 Swantee wants to make 39 Operators struggle as punters continue to go OTT sure EE gets connected for content A glut of content partnerships, and the anomaly of BT’s mad spree on the TV rights for live sport, EE Chief Executive Olaf Swantee tells cannot mask the fact that operators are a declining force in content provision. James Blackman reports Marc Smith about the operator’s new connected strategy, as it looks beyond 41 Telcos incubate start-ups to send them over the 4G and smartphones top Telcos are putting together an army of start-ups to go over the top and reclaim ground lost to digital players. Are the new recruits good enough to take on Facebook, Google et al? Nick Booth reports

45 The future of instant messaging is content too Now that OTTs have cracked communications, Owen Hughes explores whether any safe havens remain for telcos’ own digital services

Back page

48 Tele2 appoints new CEO as Granryd leaves for GSMA EDITORIAL

Editor Olaf, OTTs and an order of CMOs Marc Smith [email protected] T: +44 (0) 207 933 8979 Olaf Swantee, EE’s enthusiastic leader, is the subject of our CEO interview this Twitter: @eurocomms issue. But rather than discussing 4G LTE – his obsession since the UK operator Staff Writer launched the tech back in 2012 – it is the IoT that is his new preoccupation. Owen Hughes EE unveiled a connected strategy during the summer, and Swantee reveals [email protected] T: +44 (0)207 933 8979 what he wants to achieve in this area. “Operators are still challenged by the changing mobile landscape and changes in traditional revenue sources. The Publisher connected strategy recognises that there is the opportunity to do more for Justyn Gidley [email protected] customers because customers are asking us to do more.” You can read the full T: +44 (0) 207 933 8979 interview on page 8. Sales Manager Christine Felton Our special report this month showcases the industry’s latest thoughts about [email protected] the OTT/digital content space. As operators continue to rack up deals with T: +44 (0) 207 933 8997 OTT partners, our feature interview looks at KPN’s new TV app, which aims to Publishing Director take on the digital players at their own game. Our survey highlights a range Chris Cooke of opinions, notably that the acquisition of exclusive content is crucial to the future success of operators. However, despite new revenue generation being Design Alex Gold cited as a key goal of such content, in reality it is proving hard to come by. As Current Analysis’ Emma Mohr-McClune comments: “The ‘show me the money’ Front cover image taken by Shahar Azran argument doesn’t seem to apply to content; or at least, carriers have yet to hit Subscriptions/Circulation upon the right innovation model to properly monetise the effort.” We also look SJP Business Media at partnerships, the impact of start-ups and the future of messaging apps. PO Box 6009 Thatcham Berkshire RG19 4TT Elsewhere in this issue, we look at whether calls for a European cloudco have United Kingdom any chance of success and get the latest on regulation from our correspondent T: +44 (0) 1635 879361 in Brussels. F: +44 (0) 1635 868594 E: [email protected] Finally, September saw the judging of our second annual CMO of the W: eurocomms.com Year award. The independent panel of judges drew up a shortlist, which is highlighted on page 22. You can also read about the criteria they were judged SJP Business Media against and what the judges hoped to fi nd in the winner. Last year’s winner, (ISSN 1367 9996) All Rights Reserved. No portion of this magazine may be Telenor Denmark’s Lars Thomsen, says: “We are looking to fi nding the fi ve- reproduced without written consent. legged sheep; this is why the CMO role these days is the most important role The opinions expressed are not in our industry.” The 2015 CMO of the Year will be unveiled at a dinner in necessarily those of the publisher, who accepts no liability of any nature arising out October – an interview will feature in our Q4 edition of the magazine. of or in connection with the contents of this magazine. Enjoy the issue. European Communications is published quarterly by: Marc Smith, Editor SJP Business Media, 52-54 Gracechurch Street London, EC3V 0EH

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Vodafone restructures European operations yet again as Humm departs Vodafone has announced the third restructure of its Ericsson formalises new businesses in Europe in as non-telco business unit many years. Ericsson has unveiled a new Industry and Society (I&S) business unit as it continues to focus on non-telco customers.

Baksaas warns Telenor not to end up like Nokia, as he gets ready to leave Telenor’s outgoing CEO has BT taps Cloudera’s big data tech for warned the company that broadband, enterprise projects it needs to be “mentally BT has revealed it is using Cloudera’s and practically prepared for big data technology to improve its sudden events” so as not to broadband service and get a more end up like Nokia. uniﬁ ed view of its enterprise customers.

Three UK CFO says O2 merger would create company that is Vodafone maintains “signifi cantly stronger” position as top M2M The CFO of Three UK said the service provider operator has yet to formally Vodafone has once again submit its proposal for the topped a list of the world’s proposed merger with O2 leading global operators in as the company released its the fi eld of M2M/IoT. fi nancial results for the fi rst half of the year.

Combes to step down as Alcatel-Lucent France’s Free Mobile offers Europe-wide losses fall, Nokia sales rise roaming for €20 a month Michel Combes will leave Alcatel-Lucent as Free Mobile, the Groupe Iliad-owned disruptor in the vendor shakes up its leadership ahead the French mobile market, is offering a new tariff of its merger with Nokia. that includes roaming across Europe for €19.99.

Three Italia and Wind to merge in €21.8 billion deal The parent companies of Three Italia and Wind are to merge the two mobile Nokia sells Here to German car operators and create a consortium for €2.5 billion joint venture as they bid to Nokia has conﬁ rmed the sale of its Here better compete in the Italian mapping business to a consortium of telecoms market. automotive companies for €2.5 billion. Opinion Discover the latest Operators need to strike right balance between OTT developments from Europe’s partnerships and in-house R&D By Adrian Baschnonga, Lead Analyst, Global Telecommunications, EY telecoms space with our free daily newsletter

Register today for European Communications’ daily e-newsletter and keep pace with the key events in the telecoms industry. Alongside all the latest news, you can read exclusive analysis, opinion features, Q&As with industry thought leaders and white papers to download. www.eurocomms.com/newsletter Key trends we cover include: Financial/M&A Q&A Regulation Carlotta Ventura, Telecom Italia’s Brand Strategy Back ofﬁ ce/IT and Media Director Carlotta discusses the M2M operator’s rebranding Big Data Customer Experience Fibre Broadband Enterprise

Analysis

Retailers go shopping for M2M as Vodafone claims it retains big advantage Retail is becoming the fastest growing area within the M2M/IoT space, as businesses look beyond sweating supply chains, new research from Vodafone has claimed.

@eurocomms

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European Communications FINANCIAL DATA

BT fends off rivals over EE Telco stocks fall fl at in Q2 deal competition concerns The share price of telcos in Asia, Europe and the US disappoint BT saw its share price rise 2.1 percent in the three months to June. The quarter began with the UK operator unveiling its results for the full financial year. Asia hints at midsummer misery, CEO Gavin Patterson said the company had “delivered or beaten” the outlook it had set as earnings and as US has mixed performance profits rose. Revenues continued to fall, how- The US market was split in two during more spectrum in the forthcoming ever; they were down two percent to the second quarter, with both T-Mobile 600MHz auction to smaller players. £17.8 billion (€24 billion). and AT&T increasing their share price but Sprint is hoping to support its fi ght- BT welcomed a record number of rivals Verizon and Sprint seeing a decline. back with the aid of space in 1,400 new new fibre customers, 266,000, in the three months to March. Not known for its softly spoken look Radio Shack stores, after the col- This helped to continue the good approach, T-Mobile ruffl ed Verizon’s lapsed retailer exited bankruptcy during performance of the operator’s Con- feathers with a #NeverSettleForVerizon the quarter. It also launched unlimited sumer business unit, which saw sales advertising campaign on Twitter. While 2G data roaming in 15 countries during rise seven percent to £4.3 billion some former T-Mo customers used the quarter. Nevertheless, it closed on (€5.8 billion). the hashtag to say why they left, the $4.42, down 3.6 percent on Q1. Patterson said it had been “a ground-breaking year”. operator closed the quarter on a high of A busy quarter for Sprint’s owner However, the CEO spent much of $38.88, up 18 percent on Q1. SoftBank saw former Google exec the rest of the quarter talking about Verizon made the biggest waves in the Nikesh Arora named as Masayoshi Son’s regulation. quarter, buying dotcom veteran AOL for heir apparent, as the CEO revealed First, he went into bat for the $4.4 billion in June. Its overall Q2 share better than expected operating profi ts company’s upcoming acquisition of performance was down 4.7 percent of ¥982.7 billion in May. The Japanese EE, which rivals have said will distort the market. to $46.61 as it disappointed analysts operator also began selling a humanoid In May, BT called for the deal to with its Q1 contract additions. CFO Fran robot called Pepper. Shares were up be speeded up, telling the UK’s Com- Shammo said: “We have to be rational 20.6 percent in Q2 to ¥1,420. petition and Markets Authority that it and we will not chase every customer.” Being named the world’s most profi ta- would boost competition and benefit AT&T’s share price shrugged off several ble carrier by ABI Research failed to stop both consumers and businesses. At a seminar in June, Patterson Q2 fi nes for data throttling and breaches a decline in China Mobile’s share price described the acquisition as BT’s of customer information to close the of 3.4 percent during Q2. Its shares hit a way of “catching up with the rest of quarter up eight percent to $35.52. It hit high of HK$116.10 in April, when Apple the world,” having been absent from a quarterly high of $36.18 in mid-June revealed China was now its biggest mar- mobile for many years. after the FCC rejected calls to allocate ket for iPhones. But it could be forced to give up its Openreach arm as a quid pro quo. Patterson said: “Its decisions are made independently and that will continue to be the case. Openreach The US will continue to be as regulated in the The US telecoms sector fell future as it is today.” -0.3% He also talked up the MVNO busi- 0.3 percent in Q2 according to ness that EE has built up. Patterson data from the Dow Jones US Index promised to “continue to grow” that part of the company. But rivals, notably Sky and Talk- Talk, remain on the offensive. Asia-Pac In June, Sky called on the UK regulator to launch a full investigation -3.9% The Asia-Pac telecoms sector fell into Openreach on the grounds that 3.9 percent in Q2 according to it has consistently failed to deliver an data from the FTSE Group Index adequate standard of service. FINANCIAL DATA

EU Telco stocks April-June 2015 1200

1100

1000 April May June

European telcos broadly ﬂ at in second quarter

Although the share price of Altice contin- A busy quarter ended with news that The Germany-based operator paid ued its meteoric rise – the 18.5 percent Vivendi had become the majority share- €900 million for the remaining 49 per- increase in Q2 followed a 15 percent holder in TI after taking over Telefónica’s cent stake in Slovak Telekom that it did rise in the fi rst three months of the year 8.2 percent stake in the operator. not already own, just over a month after – overall, European telco stocks fell 0.1 Vodafone saw its share price rise 3.8 the opco announced an IPO. percent between April and June. percent, after it announced underlying Swisscom and Orange both saw their Telecom Italia was the next best per- service revenues in Q1 increased by 0.1 stocks by over seven percent. former as its share price rose 5.4 percent. percent, reversing a downward trend for The Switzerland-based operator In April, it put meat on the bones of the last 10 quarters. revealed in May that Q1 profi ts fell 5.9 an earlier announcement that it was BT (see box out), KPN and Telenor percent as it increased spending. It also offering Italy’s fi rst ever quad-play prop- were the only other telcos in our ranking teamed up with vehicle rental company osition in partnership with Sky. The two to register a rise in their stocks. Sixt to launch a fl eet management busi- fi rms are using each other’s infrastruc- TeliaSonera was the worst performer, ness in Switzerland. ture to push Pay-TV and broadband. as its share price fell over 12 percent. Orange announced it has over 100 A month later, the operator revealed In May, it revealed Q1 net profi ts fell 5.6 million customers in Africa and the Q1 sales fell 2.6 percent, refl ecting a percent and CEO Johan Dennelind de- Middle East, but Q1 earnings and lower sequential decline than in previ- scribed the macroeconomic situation at sales fell. ous quarters. its Eurasian businesses as “demanding”. It also lost the head of its French busi- Also in May, TI announced plans to At Deutsche Telekom, the share price ness, while Group CEO Stéphane Richard list part of its wireless infrastructure on was down over 10 percent despite strong drew criticism for comments he made Italy’s stock exchange. Q1 fi nancials driven by growth in the US. about the operator’s presence in Israel. ec

Europe * Our index is made up of the following EU telcos: Altice, Proximus, BT Group, The European telecoms sector -0.1% Deutsche Telekom, Orange, Swisscom, fell 0.1 percent in Q2 according Tele2, Telecom Italia, Telefonica, Telenor, to data from the FTSE Group* Teliasonera and Vodafone Group. CEO INTERVIEW

Swantee wants to make sure EE gets connected

EE Chief Executive Olaf Swantee tells Marc Smith about the operator’s new connected strategy, as it looks beyond 4G and smartphones

Can it succeed? Set against other operators, the majority of whom have a slavish focus on the network-based intri- cacies of the IoT, it is refreshing to see EE dive straight in with a consumer tech launch. That is not to say EE is blind to the technical challenges. Swantee says: “The connected area is only emerging and as such it is extremely fragmented; from a technology standards perspective, this is a real challenge. As an industry, we really need to accelerate standards in this space to drive more reliability and more interoperability.” Nevertheless, EE’s consumer-first approach is to be welcomed. The operator has a four-pronged strategy for a world where many things are becoming increasingly connected. In addition to Connected You, the umbrella under which its Action Cam falls, there is Connected Business, Connected Car and Connected Home. Swantee has created a dedicated team responsible for driving all of them, headed by Christopher Traggio. The CEO E unveiled a new “connected its proposed acquisition by BT. Speak- says: “Creating these categories gives strategy” in June, the centre- ing to European Communications, the business the permission to be cre- piece of which was the world’s Swantee says: “We’ve invested heavily ative and to think differently about the E first 4G action camera (see box in creating a network that can truly products and services we offer going for- out). In common with other telcos, EE deliver high speed, high capacity and ward. The 4GEE Action Cam was first… is attempting to put together a coher- mobile broadband to our customers. it’s exactly the sort of imagination we are ent strategy for the Internet of Things, With voice and text revenues declining, looking for from the business and also arguably the most hyped phrase in the the industry has to find new ways to shows how we will work with partners on telecoms industry today. keep them connected. this strategy.” But the reasons for EE’s involvement “Operators are still challenged by the Swantee describes EE’s plans as “very go beyond jumping on the bandwagon changing mobile landscape and changes in ambitious” and says we can expect to marked potential new revenues. The traditional revenue sources. The connected see “significant launches” in the next 12 UK mobile operator’s initial goals for strategy recognises that there is the oppor- months. But he adds: “This is not about 4G have, to a large extent, been met tunity to do more for customers because rushing to launch new products, we take – it has signed up 11 million custom- customers are asking us to do more.” extra care to ensure the end-to-end ers in three years while coverage has According to the CEO, EE has now experience is spot on when we actually reached 90 percent, making it the reached the point for first time where launch the product.” country’s and Europe’s market leader the network is able to exceed the speeds Swantee expects Connected You to by some distance. devices are capable of asking from it. be the biggest revenue driver of the four Having launched a TV service last “It means we, as a network, can ask for areas it is focusing on. “Given the scale year, an IoT play is the obvious other more because now we deliver more,” of our retail estate and our consumer growth area for it to look at ahead of says Swantee. base, Connected You is clearly an area CEO INTERVIEW

we expect to drive a lot of attention and far, but the CEO says: “We have 30.9 Lights, camera, action! ultimately significant revenue for our million connections on our network business,” he explains. right now. By using all of the great The 4GEE Action Cam is a 4G connected Without being explicit about what products and services at our disposal camera that enables customers to broad- it will come up with next, he adds: we should increase that to 32 million cast HD video content to other connected “We want to bring to consumers new by the end of this year. And looking a devices. It captures HD video, and comes devices and new applications that are bit further ahead, by 2017 we should with an accompanying viewfinder watch enabled by the speed and the reliability be selling more connected devices and Android/iOS app that allow users to achieved by our 4G network. Watches, than smartphones.” control settings. EE admitted the device was inspired by cameras, cars or homes; the opportuni- Ultimately, Swantee wants to position live-broadcasting apps, such as Periscope ties are immense. In all major consum- EE as the gateway through which con- and Meerkat, and cameras such as GoPro. er technologies, UK has been leading in sumers enter the IoT. “Our ambition is to However, it says broadcasting app skeegle, terms of adoption. We expect the same help our consumers navigate this space,” which the camera runs on, differs from for these categories.” he says. “And through our nationwide other similar platforms by the fact that content is only shared with a customer’s He adds: “Beyond that, we see retail footprint we have a unique ability to existing contacts. increasing demand from our B2B part- connect with consumers.” Where there is no 4G coverage, the Ac- ners, preparing to deploy some of these Certainly, the opportunity is forecast tion Cam will fall back on EE’s 3G network. technologies to drive more efficiency in to be huge. According to research It can also be connected via Wi-Fi. their operations. For example, a number house IHS, global services revenues of our key B2B accounts came to us to from the M2M/IoT space will hit $45 were being manufactured “were not discuss applications of our connected billion by 2018. But the Action Cam good enough for us”. cameras for their mobile workforce.” is the thin end of the wedge. Another It chose manufacturer BenQ because, study, this time by Accenture, pre- says the CEO, it “shared our vision and What price success? dicts that smart thermostats, security had the ability to create a unique and Naturally, success will depend on systems and refrigerators will be the top high-quality product”. He adds: “We’ll how much money it can extract from three connected devices adopted by the look to do the same with products going both new and existing customers. EE majority of US consumers. forward. We’ll study the market to see is using a number of different pricing There is no reason why EE cannot get if there are any companies we can work options for the Action Cam, depending involved in such areas – in May, for ex- with that are already producing what on whether the customer is signed up ample, Telefónica added a home security we’re after for our customers, and if to take other services. For example, service to its offering in Spain. those products don’t exist, we’ll partner PAYG customers pay £299.99 for the And while a lack of awareness is the to create them ourselves.” device plus 2GB of data for 30 days. main reason that consumers haven’t Clearly, EE was successful with the Those who opt for a monthly contract purchased a connected device, accord- finding a partner but it would be wishful pay £49.99 for the device then £15 ing to the same Accenture study, EE and thinking to assume it’s an approach that a month for 2GB of data. Existing EE other operators still have a chance. would succeed every time and, again, subscribers can opt for a shared plan However, even with the proposed ac- has the hallmarks of a niche play. that costs £15 a month, inclusive of quisition by BT, it is questionable wheth- Finally, there is a question of seman- the device. er EE would have the required scale to tics. Swantee cites its TV proposition Swantee says: “The whole category go beyond offering niche products such as an example of a Connected Home gives us permission to innovate much as the camera. product because “it brings the mobile more from a pricing/service perspective. Then there are the other partners on experience into the home”. By most of We already offer our connected products whom any connected strategy depends. the industry’s definition, however, a TV on our shared plans, which is proven Swantee says EE spoke to “all the major service is not a connected product in to be by far the preferred tariff for our manufacturers in the market” when the true sense of the IoT. We will need connected camera.” developing the product, but found that to see a few more products yet before EE will not share how many people there was either no desire to produce proclaiming EE’s connected strategy has have signed up for the Action Cam so a 4G-enabled camera, or the ones that been as successful as its 4G one. ec REGULATION EU telecoms industry cautious about net neutrality decision By Carmen Paun, in Brussels

he European telecoms sector is which require different resources, to Under the deal, and assuming it is for- uneasy about the compromise messages, one European Commission mally approved swiftly enough, end users struck in June between the Euro- official explained. will be able to complain to their national T pean Commission, the European However, under the agreement, such regulators from April 2016 if they believe Parliament and the European Union (EU) traffic management must be handled telecom operators are breaking the new Council of Ministers on net neutrality. carefully so that end users do not notice rules, a Brussels official said. In particular, industry leaders are con- regular declines in services, another Brus- One regulatory control that would re- cerned that the agreement needs further sels official said. Only where there was an main is users’ ability to choose between work and tighter wording, ensuring the exceptional traffic bottleneck would ISPs different access speeds and different result is positive and unambiguous. be able to act, he explained: “When the data volumes, as the agreed regula- The European Telecommunications congestion is temporary or exceptional, tion will not have an impact on them, Network Operators’ Association (ETNO) the internet service provider would be stressed an official. has said that EU and national regula- allowed to throttle some services.” tors have to ensure the final wording of Lacking clarity European open internet rules will “not Civil society organisations and industry hamper user experience and network Industry associations still argue the agreement as quality, and does not limit the develop- drafted lacks sufficient clarity. ment of innovative business models”. associations still argue While network management should The GSMA, meanwhile, warned about be limited to times of congestion, some the unclear wording of the net neutral- the agreement as drafted of the rules in the draft regulation allow ity compromise giving rise to different lacks sufficient clarity deviations from its principles beyond ex- interpretations across the EU countries: “ ceptional situations, such as temporary “It is important that guidelines on the or unusual congestion, the European open internet rules ensure consistent Then again, if there was a regular prob- Digital Rights (EDRi) advocacy group said application of the regulation across the lem, ISPs would have to avoid discrimina- in its analysis of the compromise. EU,” it said in a formal statement. tion: “If we are talking about a recurrent” But what the agreed text is most The compromise text struck on June congestion, distinguishing between differ- unclear about, according to the organisa- 30 reads: “Providers of internet access ent streams of traffic is not the solution; tion, is on so-called ‘zero-rating agree- services shall treat all traffic equally, the solution is to expand the capacity of ments’, by which internet users paying for when providing internet access services, the network in that place,” the European a certain download volume get unlimited without discrimination, restriction or in- Commission official said. Indeed, such a access to some websites. The latter does terference, and irrespective of the send- situation would indicate there is signifi- not count towards the users’ download er and receiver, the content accessed or cant demand, so network operators may volume consumption. EDRi argues that distributed, the applications or services have a commercial incentive to increase this kind of deal violates the net neutrality used or provided, or the terminal equip- capacity, he added. principle and should be forbidden. ment used.” Barring exceptions in the public inter- While there is no clear ban on the However, the rule shall not prevent est, which can be subject to “specific zero-rating deals as such, the compro- internet service providers (ISPs) from im- quality levels” under the deal, all traffic mise text could be read both as allowing plementing “reasonable traffic manage- is deemed equal, under the draft regu- such deals and as not allowing them ment measures”, the same text said. To lation agreed between the institutions. anymore, the group argued. “The agreed be deemed reasonable, these measures Not even services such as internet TV or text could be argued to permit price dis- “shall be transparent, non-discriminato- others considered innovative could be crimination, as it allows agreements on ry, proportionate, and shall not be based prioritised in the short term, according to data volumes and commercial practices on commercial considerations but on the compromise text. ISPs would be free that do not completely remove the right objectively different technical quality of to provide IP TV, high-definition video of end-users to use and provide con- service requirements of specific catego- conferencing, telesurgery and other tent, services and applications of their ries of traffic,” it added. similar services, but only if they do not choice,” EDRi said. This could include, for example, impede users’ internet access, according “It could also be read as prohibiting the need to prioritise voice services, to the European Commission. price discrimination, on the basis that REGULATION

this would amount to a discrimination on the basis of the services being used and that it would limit the right to distribute information”. To clarify the situation, EDRi has called on the European Parliament, which is due to vote on the agreement this autumn, to add an amendment making it clear that the new regulation will indeed ban zero-rating deals. This would also help make the situation crystal clear for national laws forbid- ding this kind of deal in the Netherlands and Slovenia. If the new regulation specifically bans zero-ratings, the Dutch and Slovenian laws would be absorbed by the new EU law. But if it does not, neutrality provisions, but the UK does month. Both must agree the text for it to the two countries may see themselves have them in place. be approved. obliged to repeal the ban on zero-rat- “Last-minute changes to the agree- ings, as EU legislation takes priority if it ment will not exempt parental controls More reform next year contradicts national laws. and spam blockers from the law, but af- Besides net neutrality, the draft regu- The Dutch liberal-democrat member ter very close liaison with ministers back lation also foresees an end to phone of the European Parliament (MEP) Ma- in the UK, we have negotiated a position roaming charges from 15 June 2017. rietje Schaake wants the EU to follow that should allow the British government Net neutrality and roaming charg- her country’s example in banning ze- to pass its own law to maintain parental es are the only elements left from a ro-rating deals. “In the Netherlands we controls,” said the British Conservative wide-ranging telecommunications re- have initiated laws to ensure internet member of the MEP Vicky Ford, who was forms proposal presented by the former providers and telecoms operators do involved in the negotiations on behalf EU Digital Agenda Commissioner Neelie not abuse their power with anti-compet- the European Conservatives and Reform- Kroes in September 2013. Negotiations itive practices. In the EU, hundreds of ists (ECR) Group. between the three EU institutions ended millions of people do not have access Meanwhile, the net neutrality rule as up leaving the rest of them behind. to all services online because net drafted, could be seen as an obsta- But Brussels has not given up on neutrality is not safeguarded. This is cle for competition, the Dutch MEP completely overhauling its telecommu- unacceptable,” she said. Schaake warned, and this is exactly nications market, as part of its dream She also stressed that the rules need what concerns the European Competitive to create a digital single market. The clarifying before the text is formally Telecommunications Association (ECTA). current European Commission, which agreed by all EU institutions. “I will seek “What is crucial for end users as well as took office in November 2014, under to ensure the greatest possible clarify on for challenger telcos in the implemen- the leadership of the former Luxembourg issues such as traffic management and tation of these future guidelines is that Prime Minister Jean-Claude Juncker, will specialised services, to make sure there effective competition in the provision of present its own proposals for telecom- is as little as possible vagueness on net internet access is ensured so that end munications reform next year. neutrality,” she promised. users can choose between several offers This will include more effective spec- One of the rules that may need and switch to another operator if they trum coordination, common EU-wide clarification and could be subject are not satisfied,” ECTA director Erzsébet criteria for spectrum assignment at na- to amendment is parental controls Fitori told European Communications. tional level, incentives for investment blocking pornographic or violent content The EU Council of Ministers is expect- in high-speed broadband and ensuring from being accessible to children. The ed to formally approve the current text fair conditions for all market players, current draft regulation does not make on 1 October. The European Parliament traditional and new, the European a clear exemption for these in its net should also put it up to a vote, the same Commission has said. ec CLOUD A European cloudco – pie in sky? Deutsche Telekom and Orange are two leading proponents of a European company that could take on Amazon and Google in the cloud space. David Craik analyses whether this is an idea that could take off

of those and 40 percent are not using them at all.” He also plays down talk of a European cloudco. “A European cloud idea has been suggested several times in recent years but ring-fencing – putting up barriers – around one geographical region doesn’t make much sense in the digital economy,” he states. “The terms ‘national cloud’ and ‘regional cloud’ are oxymorons. Cloud computing relies on economies of scale, which in turn relies on there being no such barriers. That’s why the idea has never gained traction.“ Given this background and uncertainty how likely are Deustche’s aims of a Eu- ropean Cloudco and Orange’s sovereign cloud of becoming a reality? DT’s Abolhassan looks to be pinning ack in June German operator It offers data storage and public cloud his beliefs around data protection, an Deutsche Telekom laid down services to businesses in France and issue that he says is “a real concern” In a challenge to Amazon and Europe and has a data centre in Nor- Europe. He points to the German legal B Google. Ferri Abolhassan, di- mandy guaranteeing that all client data concept of ‘informational self-determi- rector of T-Systems’ IT Division, told del- is hosted in France. nation’ – in other words granting an in- egates at Huawei’s 2015 Innovation Day Cloud is one of the five key areas that dividual the fundamental right to decide in Munich, that Europe should take the Orange Business Services is counting when and to what extent data about his fight to the US tech giants by creating its on to turn its performance around. At or her personal life may be captured, own equivalent of their successful cloud the time the group said: “The technolo- stored, used and shared. operations – a European cloudco. gies and services offered by Cloudwatt “I believe telcos face three principal “There must be, in Europe, a force complement Orange’s own portfolio and tasks. First, they must understand the that gives an answer to many initiatives represent an opportunity to accelerate customer’s business and identify areas coming from the US. If everything is go- the deployment of a sovereign public where the cloud could benefit them,” ing on Amazon, is that good for Europe? cloud both in France and in Europe.” says Abolhassan. “Second, they must There should be a European answer,” But the enterprises they are target- have an in-depth understanding of he said. ing may not be so keen. According to cloud technology and have hands-on DT has high hopes for the cloud. It is a recent KPMG survey, the majority of experience of cloud transformations of aiming for annual growth of 20 percent businesses are currently spending just all shapes and sizes. Third, they must in cloud platforms over the next three 10 percent of their IT budget on cloud have a firm grasp of quality and security years primarily from European enter- services. Concerns around security, management imperatives.” prise customers. regulation and integration abound. He says DT has learned that exper- Abolhassan said the stepping-up of John Higgins, Managing Director of tise, technology and pricing is “not cloud activities would enable the com- Digital Europe, says the continent’s enough” if you lag behind on quality pany to become “the leading provider for traditional SMEs have been a bit slow and security. A ‘made in Europe’ cloud businesses in Europe”. to take it up. “Think of advanced digital is important, he claims, because it Orange is also looking upwards. Back technologies – cloud, social, mobility, big puts the European perspective on data in March it bought out its two partners data analytics – then look at the stock of protection into practice. in French-based cloud computing com- European businesses,” he says. “Fewer “According to a PwC study published in pany Cloudwatt. than two percent are taking advantage March this year, 90 percent of German CLOUD

businesses regard data security, compli- such as cloud computing and storage spokesperson says: “We operate it ance, server location and trustworthiness for projects on agile development, open ourselves in tier IV certified datacentres as critical when choosing an IT provider,” data and big data. on Swiss soil with high levels of security. Abolhassan says. It is using the infrastructure of Already over 70 percent of our workload “In Germany, for instance, companies Cloudwatt solutions for Open Source is being migrated to the cloud.” are forbidden from using personal data Cloud for the project with the public The operator identifies Amazon as it where it is not explicitly permitted by law, cloud platform hosted in Orange data- main competitor in IaaS but believes hav- or where they have not gained the con- centres in France. ing Swiss data storage is a clear advan- sent of the person concerned in advance. Renard says the main challenge in tage. It also believes a European cloudco “The situation in the US is the exact developing its sovereign plans is the could become a reality. “It is possible as opposite. Anyone who wants their data financial differential with Google and customers demand more control and data to be protected by German legislation Amazon and the sceptical attitude of privacy. With the NSA scandals the willing- would be well-advised to opt for a Ger- French organisations to the cloud. ness to outsource to a local provider with man service provider with data centres local law becomes even more attractive,” based in Germany.” the spokesperson states. That’s fine – but is it a dream or a The terms So there is support and belief within the reality? Abolhassan says DT actively telcos community that a European cloud participates in various European cloud ‘national cloud’ and rival to Amazon and Google could emerge. bodies, and is “in discussions with the ‘regional cloud’ are David Webster, public cloud analyst at relevant authorities”. IDC, agrees: “A European cloudco would He adds: “But we are also imple- oxymorons be managed by a European organisation menting our vision for secure, cloud- “ and the data centres would be in Europe based solutions in a number of real “The speed of public adoption of the as well. The data should never leave Eu- projects. For example, we are working cloud in France is low. It is difficult to rope and hopefully it would be far away with Huawei to create an infrastruc- make changes here compared to the US from the prying digits of the US security ture-as-a-service offering. The hardware and Asia,” he says.” agencies and make it difficult for US comes from China, the data centres are A ‘European cloud champion’ could courts to get access to data from cloud located in Germany, and users enjoy change opinions and provide more servers on non-US citizens,” he says. the benefits of compliance with German assurance on security, he feels. “Security is the main driver be- data protection legislation.” “It is a personal opinion but we need hind this with some organisations in In France, Cloudwatt president Didier to develop a European cloud champion Europe hesitant about using the cloud. Renard is also concerned with data and there are three ways of doing this,” Deutsche is a very large organisation protection. He says: “We are trying to Renard states. “One way is for Orange or and can bring economies of scale be more sovereign than others in our another operator to quickly develop both almost equal to Amazon and Google. technology in both France and Europe. internally and externally to become that It would be a comfort blanket for some There are big issues in the way data is champion. But to get to that size you people regarding security.” used post-Snowden. We are competing will need a lot of capex. You could have However, he doubts whether Amazon with Google and others and we want a combination of Orange or Deutsche will be quaking in its boots. “People to address issues such as big data and but it would be difficult to achieve given using Amazon are satisfied with the analytics and create a complete set of government intervention and the need to Amazon data centres in Europe and they solutions for our customers. The French be agile. It wouldn’t be the right answer.” are fiercely price competitive regarding state is an example of the adoption of The best way, he believes, is the third reducing prices. A European cloud firm a public cloud and this should be lever- option of interoperability of the cloud or would have to match these prices or be aged for SMEs.” to “transfer workloads from one cloud able to show very good reasons why they At the end of July, Orange Business to another”. He says: “It will be a virtual are charging higher prices. Google and Services announced that it would pro- cloud operator where perhaps we can Amazon have massive scale. It would be vide the French government with their share data.” a challenge for any firm to operate prof- first public cloud platform. The two-year Swisscom, meanwhile, has built itably against them. But, yes, it could deal will provide ministries with services its own open source-based cloud. A become a reality.” ec SPONSORED INTERVIEW: AMDOCS

Operators can’t be prudent with cost at the expense of innovation

or the last decade telecoms ser- digging themselves out of that hole important in today’s environment. Ser- vice providers have largely been ever since. They’ve focused on network vice providers have to reconcile the need financially prudent, focused on sharing and efficiencies as well as sim- to focus on innovation and new services F developing efficiencies through- plifying their operations,” Updyke states. with their need to be financially prudent. out their business. “Operational cost reduction is impor- They have to find the right balance.” “It is a legacy,” says Eric Updyke, tant, and perhaps more than ever now Updyke says the need for innovation group president of system integration as they face slow to stagnant revenue is being driven by two forces – the and operations at Amdocs, “which stems growth, an often unfavorable regulatory battle to deliver new services in an in- back 15 years to the expensive chase environment and the constant need to tensifying competitive environment and for 3G spectrum.” keep investors happy. But focus on cost the battle to deliver The New World of “Service providers paid a king’s reduction can’t come at the expense of Customer Experience™ to increasingly ransom for this spectrum and have been innovation, which has become equally demanding consumers. SPONSORED INTERVIEW: AMDOCS

“There was a time when service pete against other service providers,” have to focus on long-term, but dynamic providers thought that their ownership he says. “We’re seeing more telco/TV strategies – which need to be constantly of the network made them untouchable, and OTT bundles and more quad-play revisited at shorter intervals than in the but that has been challenged by OTTs investment helped by LTE build-outs past,” he says. “You need insightful providing services that leverage the and bandwidth acquisition.” fine-tuning at the right points in time to network for free and increasingly now by But they are struggling to both break the struggle of monetising your tech giants such as Google with network monetise these services and deliver the new services and decide where to apply initiatives like Google Fibre,” he says. “In necessary uplift in customer experience. your focus. It is difficult to juggle all order to bring competitive new services Updyke says 4G uptake in Europe is these new balls at once, especially when to market, providers are reorganising ramping up, although overall mobile sub- you go at it alone. Service providers are themselves and doing more M&A, some scription penetration remains stagnant. recognising that a collaborative approach aimed at expanding their portfolio and In addition, quad-play and multi-play are is required. They need to consider some at consolidating the sector.” rapidly becoming more popular, but mar- flexible sourcing strategies that combine At the same time, and indeed boost- gins are being hurt by heavy discounting. both in-house and outsourced expert ed by the arrival of Google onto the The M2M market is also growing rapidly resources as well as ways to effectively scene, as well as Uber and Zappos in but revenues aren’t keeping pace. incubate new ideas. They need to decide other sectors, customer expectations where they can differentiate around the are changing. best customer experience, and where “They’ve risen to the point where The more services cost and scale are going to win the day.” now you have to deliver a superb The catalyst for these new strategies customer experience. It is no longer you have such as quad- has to come from the top down. enough to differentiate yourself from a Updyke explains that Amdocs recently rival by laying out newer generations of play, the more you need conducted a study, with strategy con- networks,” Updyke explains. “Custom- to ensure that at every sultant Telesperience, into how industry ers never loved waiting days for new “ CEOs should lead and drive their organi- services to be activated or staying at customer touch point sations by 2020. home for hours waiting for an engineer you are consistent The study covered the world’s 100 to install broadband, but they tolerated largest service providers, in terms of rev- it. Not anymore.” enue, with in-depth interviews conduct- The new customer is demanding inno- “Furthermore, the more services you ed with CEOs and senior management vative services that extend beyond tradi- have such as quad-play, the more you executives from 30 of the top 50. tional communications. They want more need to ensure that at every ”customer It revealed that CEOs in Europe be- regular interaction with their providers touch point you are consistent. You lieved they had to change their manage- and they want new experiences. have to provide the right information at ment styles in order to remain success- “Service providers need to build cus- the right time. Stapling a few bills to- ful, as rapid innovation by traditional and tomer loyalty to limit revenue migration gether with a discount wrapped around new players continued to revolutionise to non-communications providers and it isn’t quad-play! Customers see you the way we communicate and consume to introduce new revenue streams and as one provider,” he explains. “Consoli- information and entertainment. business models,” Updyke says. “In our dating back-end systems after M&A and The CEO in 2020 was seen as the chief vision of The New World of Customer establishing convergent IT platforms innovator, driven by a passion for innova- Experience™, service providers need that can share customer information tion. This key skill was judged ahead of to deliver a multidimensional customer are essential to providing consistent in- financial and corporate governance. experience and inspire their customers teractions across channels and lines of The study also found that many ser- with innovative services in this al- business. It’s tricky because you have a vice providers were adding new C-level ways-on, hyper-connected world.” very complicated set of legacy systems roles with responsibility for areas such as He says service providers have recog- which are not consistent. You need to customer experience and digital. nised that they need to make changes prioritise and focus on areas directly “CEOs are not just the chief cost-cut- and have launched new services to help affecting the customer.” ters, they have to be chief innovators them differentiate from the competition. Updyke is encouraged by the aware- too,” says Updyke. “Cost-cutting alone “They are making large investments ness amongst providers that “innovation won’t improve the customer experience to support sophisticated end users and is imperative” but says creating a strate- or monetise your assets. Executives high smartphone adoption, at times, gy to succeed is vital. in Europe believe CEO management as a defensive move to better com- “When it comes to innovation you styles will need to change for them to SPONSORED INTERVIEW: AMDOCS

be able to scale their organisations predictive and preventive analytics. It docs achieved an industry fi rst – creat- into the future. They need to shift from leverages unique tools and IP, as well ing from scratch a shared services and today’s favored styles of ‘visionary’ as operations best practices delivered development center with centralised and ‘pacesetting’, in which the CEO is under clear SLAs and KPIs. This service operations capable of serving complete- expected to know where the company is has successfully provided enhanced ly different markets. Benefi ts included going and lead it there by example, to customer experience by minimising order CAPEX/OPEX cost reductions, predict- ‘coaching’ and ‘affi liative’ styles, which errors and enabling successful fulfi ll- ability of OPEX costs through a fi xed leverage teamwork to attain end goals. ment and activation for service provider long-term agreement, and reduced risk, The ability to create organisational offerings such as connectivity services, overheads and complexity of vendor structures that support innovation and broadband, TV, voice and bundles for management. This unique engagement change was cited as the most impor- residential and business customers. secured Amdocs and Vodafone the tant CEO innovation skill.” “Order-to-activation is one of the most prestigious GTB Innovation Award for Reinforcing the need to overcome critical business processes a service pro- Best Business Services Innovation. the challenge of executing on innovative vider needs to deal with. If you don’t get Telefónica chose to partner with Am- ideas, the study found that providers it right you will have a lot of frustrated docs for transformation projects in Ar- are looking at a blended approach of and dissatisfi ed customers. We have a gentina, Chile and Peru. By modernising insourcing and outsourcing strategies in product play and in-depth knowledge of and standardising Telefónica’s business various areas of the business, including service providers’ operational and sys- support systems on Amdocs software, those traditionally outsourced, those tems environments,” Updyke says. “Our Telefónica subscribers in these countries not traditionally outsourced and in new service is bringing real value through sig- can now move seamlessly between areas altogether. More than half are nifi cant reduction in order fallout of up to customer interaction channels across its expected to outsource at least some entire multi-play offering. “This empow- support for cloud services and digital ered Telefónica to differentiate itself by services, for example. enabling all customer interactions online So how is Amdocs helping to drive this CEOs are not just and ensuring a world-class multi-chan- innovation and empower The New World the chief cost-cutters, nel and digital customer experience. of Customer Experience™? Telefónica is leveraging our market-lead- In addition to continuing to invest in the they have to be chief ing products, services and best practice industry-leading CES BSS/OSS suite, Up- innovators too business processes to ensure high levels dyke describes a new push into services, “ of standardisation and re-use across the based on 3 distinct pillars – the fi rst of group with transformation speed and which is its investment in services R&D in- 60 percent, for example and we already cost advantages,” Updyke says. cluding IP, platforms, processes and tools. have a dozen customers using it.” Updyke stresses the impact a strategic “We realised that we had to invest in The other two pillars are” a wide partner services partner can have in terms of services that drive business innovation,” eco-system, which has seen Amdocs bringing new services quickly and more he explains. “We have built a services teaming up with top technology fi rms to effectively to market, but says providers business that is not confi ned just to our improve its end-to-end service offerings, can also do more to encourage innova- products to address end-to-end business and a business oriented operational mod- tion amongst their own staff. challenges. We are really encouraging el, targeted to achieve KPIs and business “Encourage your employees to give the development of new ideas in start- goals that translate into numbers. their input regardless of role. Get them up mode by putting the right processes “Half of Amdocs’ revenues come from to see things from the perspective of in place and are incubating those ideas, managed services customers, leveraging the end customer and ask ‘What can not in a lab but in real life situations our ability to promote a set of KPIs that we do to innovate?’ – challenging the with customers. We focus on ideas that align well with our customers end goals. status quo,” he says. “Providers need address our customers’ main challenges By providing both products and services, to focus on innovation and on working and look for the services they will need we can offer our customers a unique ac- out which business models can allow tomorrow. Once they’ve proven to bring countability model and take on the biggest them to turn good ideas into value for real value to customers in incubation and most complex projects that others do their customers, all at the high pace mode, we scale them up.” not dare attempt. If we are successful, our required in this fast-moving industry. One example is the development of customers are successful,” he says. Being prudent with cost at the expense an order-to-activation service designed And Amdocs has certainly delivered of innovation is the legacy of yesterday, to minimise order issues and manual for two telco giants looking for help and yesterday is gone.” intervention based on automation and around innovation. Vodafone and Am- www.amdocs.com

CMO OF THE YEAR

CMO of the Year

The judging process

European Communications’ CMO of the Year award 2015 has moved onto judging the nominees

ince our last issue, the nom- • Helping to increase operator’s overall “On top of this, simplicity is really inations for the award have sales from new and/or existing key to get a strong message across to been collated and it was up to customers consumers: less is more. We are looking S the independent judging panel Here’s what the judges had to say about to finding the five-legged sheep; this is to assess the strengths of the contend- what they were looking for this year: why the CMO role these days is the most ers. In early September the seven judges important role in our industry.” set about analysing how they matched Lars Thomsen, up against the following criteria: CMO, Telenor Denmark and winner of Andrew Davidson, • Improving the brand in terms of advo- the 2014 CMO of the Year award Head of Marketing, Networks, cacy, awareness, context, etc “To me, the ideal candidate is data-driv- Telecoms & Security, Fujitsu UK • Improving the customer experience en, omni-channel focused and a true “Taking our lead from last year’s winner, • The strategies employed to retain customer champion. The candidate is I want to see a CMO who is embedded customers preferably leveraging the latest technolo- in the success of the business and not • The new products and services that gy in both solution design and customer a peripheral player. Too often marketing have been launched and their success interaction, where communications will sits apart from the business - today’s in terms of take-up, revenue, profit be executed on all media platforms so successful organisations thrive when where possible that messaging is timely and relevant. driven by marketing, understanding CMO OF THE YEAR

how to create a story that the customer ers. The winner will be someone who ness. The CMO is in a unique position wants to engage with.” can demonstrate they have pushed to utilise the brand asset - I’ll be looking aside any engineering led legacy for evidence of the brand being used to Vincent Rousselet, culture and have personally driven drive business strategy and value.” VP Market Insight and Strategy, Amdocs the customer to the heart of their “In assessing the nominations for the business. The success of becoming Marc Smith, CMO of the Year award, we are looking customer-led will be clear for all to see Group Editor, European for evidence of a CMO’s ability to keep and will absolutely have translated into Communications and Mobile Europe on top of the ever-increasing change in proﬁtable growth.” “CMOs are increasingly looking to pro- our industry, while using analytics to an- vide subscribers with a best-in-class, dif- ticipate customers’ needs and desires. Dr Andy Tiller, ferentiated service. To do this, they are “CMOs that extract lessons learned VP Product Marketing, AsiaInfo charged with driving change within their in other sectors will also score highly. “Today’s CMO must take a leader- companies, from internal processes and Building on this, a CMO that fast-tracks ship role in business transformation. key KPIs to brand value and innovative innovative campaigns that drive superior Telecom operators are facing huge services. It is a multi-faceted role that customer loyalty and mindshare at a market pressures, but there are great demands strong leadership and support rapid pace will deﬁnitely get our vote.” opportunities as well. The CMO must from the rest of the C-suite. lead their company to success in the “CMOs are doing all this against a Alex Holt, new digital economy.” backdrop of the growing number of Head of Telecoms, KPMG UK OTT and other external players who are “The role of the CMO has never been Anthony Kendall, encroaching on the traditional turf of more important to the comms sector Strategy Director, Brand Finance operators. All told, the role of the CMO as organisations strive to achieve “Brand is a very powerful tool and a key continues to evolve and become ever growth by better serving their custom- component of the overall value of a busi- more important” CMO OF THE YEAR: SHORTLIST

CMO of the Year 2015: The shortlist This year’s award shortlist features executives from A1, Orange Romania, Proximus and Telekom Romania

A1’s Orange Romania’s (Telekom Austria) Julien Ducarroz Alexander Sperl Under Julien Ducarroz, Sperl, who heads up Orange Romania has A1’s marketing activities managed to obtain under his Chief Commercial and preserve a leading Officer title, is focused on position in the Romanian positioning the company as telco market. In a Brand the premium brand in Austria’s telecoms market. Tracker study conducted at the start of 2015, Orange ranked The judges were particularly impressed with Sperl’s the highest in the categories of “top of mind awareness”, “ contribution to A1 NOW, a new OTT offering that features spontaneous awareness”, “brand consideration” and “first live TV and VoD services. It launched in August and is the choice purchase intention”. first such product on the Austrian market. The operator is The company impressed with a campaign that drew in currently road testing the service with customers. 73,000 engaged users and encouraged 30,000 video Sperl will no doubt be expecting A1 NOW to help keep uploads for what became one of the first commercials in Ro- A1’s Net Promoter Score – a key measure of customer mania based on user-generated content. The resulting TV spot experience – the highest in Austria’s telecoms industry. became the most watched advert on YouTube in Romania in He is also credited with helping to reduce churn and 2014, with over two million views. to increase brand value. The introduction of a Combine & Ducarroz, who carries out marketing duties as CCO, im- Save programme, which promotes the uptake of converged pressed the judges with a number of innovative products and services, has stabilised ARPU and kept churn rates falling. services, notably helping to establish a community of custom- The operator has implemented a number of new, cus- ers who engage in online forums. tomer-friendly initiatives under Sperl’s leadership, such as Meanwhile, Orange Romania’s NPS has improved by 13 the placement of “Gurus” within A1’s stores, who offer free times after the operator managed to cut the response time to technical and troubleshooting devices to customers. customer emails and complaints by half. The company is the only operator in the country to offer carrier billing for Google Play apps and expects the deal to bring in €1 million this year. Overall, the judges felt Ducarroz was a strong leader who took a personal interest in customer advocacy. CMO OF THE YEAR: SHORTLIST

Proximus’ Ariane Telekom Romania’s Marchant Mathias Hanel Ariane Marchant, Director The second nomination of Marketing for Residential from Romania came from Services, was integral to the Telekom’s Chief Com- creation of the new identity mercial Officer Mathias for Belgacom. Proximus, Hanel and provided the formally the sole preserve of judges with an opportuni- the mobile arm, was rolled out as the company’s new brand ty to compare two operators from the same market. in October last year. Telekom Romania, made up of Romtelecom and Marchant is credited with managing this transition in only Cosmote, was branded as a DT subsidiary in September nine months and with a budget of just €20 million. The 2014. Hanel achieved the highest brand performance in judges were impressed with the roadshows she created to Deutsche Telekom Group just four months after launch turn Proximus’ 15,000 employees into brand ambassadors. – 91 percent of customers knew that Romtelecom and But Marchant also had her eye on the small details; for Cosmote were united under a single new brand. example, technical assistance for Proximus TV was extend- The judges were impressed by the fact that high ed until midnight for seven days a week. The MyProximus value customers were prioritised, customer experience app has also been introduced, which allows customers to governance was created and that best practice from the manage their subscriptions more closely. roll out of a self-care mobile app has been used in other The operator’s customer retention strategy has resulted in markets in the DT group. a three percentage point reduction of mobile blended churn. Independent studies showed that TR’s IPTV tech got The introduction of Netflix’s services created a six percent better customer satisfaction ratings than cable rivals, uplift in fixed line customer acquisition, while 92 percent of while the customer care centre and the performance of customers were migrated to the company’s new converged onsite technician’s also scored above average for the fixed/mobile packages during the year. same benchmark. Revenue and market share targets set All told, Proximus revised its financial full-year 2015 guid- by DT were also achieved. ance upwards in Q2, and the company expects its growth objective of to be achieved by the end of the year - one year ahead of schedule. CMO OF THE YEAR

A WORD FROM OUR SPONSORS

Chris Williams, Dr Andy Tiller, Head of Global Marketing at Amdocs VP Product Marketing, AsiaInfo Amdocs is once again delighted to sponsor the European AsiaInfo is proud to sponsor the European Communications CMO of the Year Award. Marketing is all about Communications CMO of the Year awards, which the customer: to the outside world, marketers convey the unique were launched in 2014 in recognition of the promise that their operator stands for; inside the business, they growing importance of marketing to operators are the voice of the customer. across the continent. Customers now compare experiences from different industries As competition between operators, as well and expect everyone to raise their bar. You can order a taxi in as the increasing numbers of external players, seconds via an Uber application, get full information on the increases, the role of the CMO in telecoms has driver location and read the reviews left by past customers. This never been so important. Operators are evolving type of experience sets a benchmark. For a cable company to to become more digital, and the focus is on schedule a technician visit to your house in two weeks, in a four- marketing to really drive strategy and develop new hour window, to fi x a fault you’ve reported today is just not good business models that work in the fast-moving enough anymore. digital communications age. Even those cable providers who put great effort in reducing Technology is advancing at great speeds, giving the appointment window to two hours need to continue operators the ability to develop highly targeted improving. Singtel, for example, is offering a two hour window and innovative products and services. IT/BSS has to its customers. But the company sets itself an internal goal become a key enabler for marketing, which is in of arriving in the fi rst 30 minutes for more than 90 percent of a prime position to drag organisations out from appointments. This delights customers, as well as reduces the the clutches of legacy systems and processes. number of inquiries to Singtel contact centres by customers AsiaInfo is increasingly supporting the CMO’s asking when exactly the technician will arrive. objectives with our IT transformation projects. Contact centres are just but one of an array of channels AsiaInfo believes in the great potential of the used by customers. Service providers, such as Globe in the telecom industry, and we are delighted to support Philippines and a number of the Telefonica affi liates in South European Communication’s initiative to recognise America, that analyse the information they have on subscriber CMOs who set great examples in the industry. channel preference and use it at the right time, seem to be more appreciated by their customers. When a bill is due, send an e-mail; but when a new promotion is about to launch, a Facebook status is preferred. That adaptable channel mix is too the signature of a superior experience. The CMO is a critical agent of change in making customer experience a true source of sustainable differentiation. How so? By innovating the experience, the CMO can make it inimitable by competitors and irresistible to customers looking for exciting services that are intelligently delivered, infl uenced by a dynamic quality of experience and all performed in a manner that accelerates value. We look forward to honouring the marketing leaders who have embraced The New World of Customer Experience™ and, by doing so, have solidifi ed the performance of their business. CMO OF THE YEAR SPONSORED INTERVIEW: IBM

IBM: digital change agent

hange is hard. In telecoms now, it is also urgent. The global picture shows revenue C is flat and margins are shrink- ing – the coffers are stagnant. Rising data traffic is putting infrastructure under extreme pressure. Customer expectations regarding price, service and delivery are through the roof. As competition gets fiercer, their demands grow longer and their patience becomes shorter. For telecoms providers, something has to change, or something has to give. This is the view from Big Blue. Global tech giant IBM has reinvented itself as a solutions provider of formidable scale in recent years, and knows a thing or two about change. It considers itself to be the best partner to help operators navigate these choppy waters, and to make landfall again as digital service providers. “Almost every carrier is dealing with these industry forces right now – how to remove costs, deploy new services and improve the customer experience,” says Scott T. Stainken, General Manager for Global Telecommunications at IBM. For him, and for IBM, the only way to solve this conundrum is through new insights coming from data. “Intelligence is critical,” he says. IBM recently published results from its June 2015 Institute for Business Value study “Keeping Telecom on Target – How CSPs tap the transformative power of data and analytics”. A recent IBV survey of six- ty-five Communications Service Providers concluded that this industry is starting to gain competitive advantage out of this intelligence, with 71 percent of CSPs achieving a positive return on analytics projects within the first year, and 53 percent of these companies focusing on end- to-end analytics transformation integrating data into their business processes. “You have to transform; you have to be able to deliver services in different models,” he says. SPONSORED INTERVIEW: IBM

Stainken has been with IBM for more solutions targeted at specific industries, “We’ve filed more patents than than 30 years; he has seen its own supported by specific industry teams and anyone; a large number are associat- transformation at close hand, against the capabilities,” explains Stainken. ed with telecoms. We are leading this backdrop of the converging information “For telecoms, for instance, we trend in the market for real-time analyt- and communications technology markets. have an industry practice that provides ics and, especially, cognitive comput- “We are changing too; our focus is on consulting and systems integration. ing,” says Stainken. higher value business to innovate and help Previously, that would only have been Importantly, IBM is combining its our partners grow,” says Stainken. available as a one-off custom implemen- inherent capabilities with its inherited To an extent, IBM has survived tation; now it’s available as a pre-inte- expertise in its new range of targeted because it has stayed true to itself. It grated solution, either in the customers’ solutions. “We’ve been working on how remains a business defined as much environment or as a managed service.” to deliver data intelligence for telecoms by attitude, as by product. The word Separately, IBM has been acquisitive for over five years. We’ve taken our “partnership” rings with familiarity by the in the market, having spent $17 billion acquisitions and our own implementa- end of a short interview with Stainken, to acquire 30 companies to build its tions and offered them as solutions for and he returns time and again to this capabilities in big data and analytics. It industry. We’re moving to a next round idea of “focusing on customers’ needs”. won’t discuss how these exchanges align of industry solutions, pre-integrated and This culture is a source of pride for it; it against its new industrial focus, but a pre-packaged,” he says. is explored in detail in Making the World good proportion relate to data analytics In total, IBM has announced 20 in- Work Better, a biography of the firm. and, in one way or another, to the tel- dustry solutions with pre-built analytics In the ageless world of technology, capabilities that make it simpler for IBM’s capacity for invention means it can organisations to act on critical business be forever vital. And but for the revolution insights. This announcement is very in personal computing in the late 1980s, IBM has shifted unique for one specific reason – IBM’s it has remained on the leading edge. from proprietary R&D to industry solutions contain significant It has demonstrated a particular ability and deep pre-built capabilities de- to shift track during the past decade, innovation based in open signed to solve very specific problems having exited from commoditised standards in a multitude of industries. Unlike hardware markets like PCs, hard disk “ prior software solutions, which were drives and DRAMs to put focus on more often a collection of products with profitable sectors such as cloud comput- ecoms industry in particular, its second partial integration, an industry-specific ing and data analytics, and to reverse largest client sector after banking. implementation blueprint, and an army its falling revenues. The sale of its x86 “No one else ”has invested so heavily of consultants, this announcement is server division to Lenovo last year has in this market,” says Stainken. significant because these are indus- transformed it as a solutions provider in From a strong base, IBM has length- try solutions. They contain pre-built the main. ened its stride in the analytics market. capabilities that integrate analytics and IBM hasn’t swapped out its core busi- Its acquisition of Dublin-based network data management capabilities from ness, running the “critical systems of the analytics provider The Now Factory in IBM’s analytics platform. They are also world” for major industrial sectors, but October 2013 was a marker on the designed to solve very granular, and it is no longer counting on markets that track, here. “Previously, we didn’t have very challenging, issues. Two of the aren’t growing. this real-time connection to network it- recently launched industry solutions are self; this ability to see what’s happening dedicated to the telecoms industry. Industry solutions inside it,” explains Stainken. The first of these, Behaviour Based In line with this shift, IBM has been like Customer Insights, provides analytics a ball of energy in recent times. It has Integrated analytics about customer activity across locations, reorganised its old hardware, software IBM’s third step has been, effectively, to devices, applications and interests. It and services units as solutions divisions keep on keeping on – to put continued has a unique application which corre- that address core aspects of the new IT focus on its own R&D and business de- lates net promoter scores and subscriber environment – cloud, analytics, mobility, velopment functions, which are throwing network experience by using mobile, social, and security. up some pioneering partnerships around voice/SMS, CRM, device and cellular More than this, its new solutions have ‘cognitive computing’, notably with Apple data. In the main, it is geared towards been optimised for individual industries, around consumer healthcare analytics marketing and customer care. “It allows such as banking, energy, government, re- and with Twitter around social media them to act upon that insight, whether tail, and, of course, telecoms. “We have analytics for enterprises. it’s to offer a promotion or to take steps SPONSORED INTERVIEW: IBM

code. In 2008, as per its initial concept, it went up against human contestant on US quiz show Jeopardy, taking first place and $1 million in prize money. Watson was released to developers as an open platform, and spun off in its own unit, the Watson Group, early last year. Its capacity for cognitive computing has been made an essential part of IBM’s new analytics solutions for the telecoms industry, as well as its other vertical markets. “We’re moving from a world of systems and records, and large statistical data stores to cognitive computing, which can solve problems and make offers in real-time. We’re using Watson to bring cognitive computing to telecoms, working on use cases for call centres, and also to other areas of the business, like network,” explains Stainken. IBM has multiple public references, here. Malaysian operator Celcom Axiata has used analytics solutions by IBM to run real-time contextual marketing campaigns, enabling it to make almost instantaneous offers to consumers based on new insights into their behaviour. Its leadership of the Malaysian market is in no small part down to its ability to easily garner insights from its big data stores in real time, it says. Meanwhile, US service provider XO Communications has used IBM tools, rooted in Watson’s predictive modelling capability, to identify customer dissat- to stop churn.” IBM’s next move will be industry,” says Stainken. isfaction and take steps to stop churn. to incorporate a churn prediction appli- “How do you use analytics in a more Watson is assisting another operator to cation into this solution. predictive manner to enhance the cus- resolve customer issues more effectively, Facilitated by The Now Factory, the tomer experience? It’s about discovering says Stainken. “It effectively makes call second solution, Customer Experience problems in the network before custom- centre agents and self-serve applications Analytics, delivers insights about cus- ers do. That way the operator can change more intelligent, because they have tomers’ activity on the network in rela- the overall experience for the consumer.” better information at their disposal.” tion to their locations, devices and apps. By way of a customer experience scoring Cognitive computing Predictive analytics mechanism, it optimises customer ex- But more than simply joining up its own Ken Kralick, one of Stainken’s indus- perience across voice and data services, portfolio, IBM has shifted from propri- try-specific Global Solution Executives, and improves the quality of service from etary R&D to innovation based in open explains that, through native innovation a customer perspective. The Customer standards. Its ‘Watson’ system is a good and new business, IBM can start to Experience Analytics solution addresses example of this. predict what customers want, where a defining issue for the sector, about Watson was developed initially as a they need better service or where the loyalty, advocacy and churn. According show of IBM’s technological wizardry; a network needs to beef up capacity. to IBM, only one in six customers are computing system that could understand This is based on customer profiles and advocates. “This is a huge leap for the natural language and not just binary actual network behaviours. SPONSORED INTERVIEW: IBM

“The kind of predictive analytics with wholly differentiated consumer prop- coming out now sit somewhere between ositions. “It’s very powerful,” says Kralick. SCOTT T. traditional data intelligence and the STAINKEN cognitive computing we are doing with Industrial strength General Manager, Watson. We’re fi lling the gap with some For IBM, all of these characteristics and Global Telecoms very impressive predictive analytics that capabilities stand as a potent combina- Industry really make customers feel like their tion, and inspire some fi ghting talk on telecoms provider knows who they are the part of its GM. Scott is the General Manager of the and what they want,” he says. “When you combine all of this – the Global Telecommunications Industry. “Without being too intrusive, or survey- focus, the investment, the innovation – it He is responsible for the strategy, ing them to death, we can really predict is unique in the market. We’re not just a solution offerings and development of what customers are looking for. And that’s consulting practice, we’re not just a soft- the overall industry ecosystem. One of part of the customer experience element ware product; we can deliver an end-to- Scott’s key priorities is helping IBM’s we were talking about, and a really great end solution globally. No one else can do telecommunications clients transform example of how we have integrated all that. We’re one of the few organisations within a converging marketplace of these [analytics] assets we’ve bought over that know how to deliver globally integrat- communications, media, information the last couple of years into preconfi gured, ed enterprise solutions – for the world’s technology, and consumer electronics. prebuilt, out-of-the-box, ready-to-use, re- largest organisations,” says Stainken. IBM is committed to enable transformation port-ready solutions that work for industry.” The point about scale is important via open standards based and innovation in IBM’s story, if hardly revelatory for a in key areas such as advanced analytics, business that has outlived virtually every cloud, security and mobility. Predictive other in the technology space, and still outranks most for revenues (and leads Scott has over 30 years experience analytics that really every other IT fi rm on the Fortune 500). in the Information Technology and “We have the industrial strength to Telecommunications industries holding make customers feel like handle the requirements of the largest a variety of global leadership positions their telecoms provider telecoms providers in the world. For including: General Manager Wireless, “ some customers, we are bringing in over responsible for IBM’s worldwide mobility knows who they are 20 billion transactions per day into our initiatives, and Vice President Sales systems. Our ability to fi lter those, and Global Telecommunications. He has As illustration, Kralick says IBM is grab the events we need, cannot be broad international experience including working with an Argentinian operator to matched by anyone,” says Kralick. assignments in Korea, Japan and Spain. provide users with targeted offers and “We have assets that we’ve built over promotions when they are in the” vicinity time, with the likes of the US government, Scott is a member of the TM Forum Board of the advertisers’ retail location. “You that we’ve brought into our portfolio and of Directors. don’t have to print a coupon, and plan a integrated into our solutions. This is not trip,” he says. “When you happen to be just sandbox proof-of-concept stuff. This is in range – when you’re at break, say – a industrial strength, in a big way. We have retailer you like might entice you with a the ability to process all these billions of deal on coffee or lunch.” events in real-time, or to store them offl ine He adds: “For any Chief Marketing in a cost-effective way and probe them Offi cer, this is a really interesting proposi- as the client chooses. No one else can CSPs consider themselves to be analytics tion – a predictive, real-time, personalised stream, store and monitor data like that.” front-runners, implying that more than solution. It brings a lot of interesting new Even so, fewer than one in four tele- three quarters of the CSPs surveyed revenue that the telecoms operator hasn’t coms providers are effectively exploiting acknowledge that they have work to do had before, and the customer feels like, their data stores, or making use of analyt- in exploiting data and insight for greater wow, they know me. It’s a good win-win.” ics services available to them according to competitive advantage. IBM’s telecoms business is also work- IBM. “The industry accepts there is a need He warns: “Use of real-time data ing with other sectors, such as the travel for analytics, but most recognise they’re analytics is rapidly becoming a competi- industry, to combine data insights. Tele- not yet leveraging capabilities available tive advantage; if you’re not, then you’re coms operators and airline carriers, for to them in the market,” says Stainken. at risk.” instance, are pooling data, and putting it The June 2015 IBM Institute for Busi- www.ibm.biz/telco-analytics through IBM’s analytics fi lters to come up ness Value paper reports, 23 percent of @IBMAnalytics SPONSORED FEATURE: ACCANTO SYSTEMS

Embedding Customer Experience across the Business

Jarkko Multanen, CEO, Accanto Systems incremental benefits along the way. a customer calls, the agent can see CSPs have huge advantages when immediately if the problem is related to compared to other organisations looking the network or the handset, for example, to improve customer experience – not and respond quickly and appropriately. least vast amounts of customer data. Secondly, CSPs can begin to embrace Networks already provide various metrics a more proactive model. For example, and KPIs on their performance, but tracking the quality of service being often these are vendor specific. With a delivered to corporate customers in real typical CSP having multiple vendors, it is time, using dashboards in service oper- virtually impossible to follow the quality ating centres to monitor performance, of experience of a single subscriber and proactively contacting customers to while he is using voice and 2G/3G/4G flag that an issue is being addressed. data services. Nonetheless, in order to This approach not only improves the truly optimise the customer experience, customer experience but also reduces he way in which consumers eval- especially for high value customers, the burden on customer services by uate Communications Service CSPs need to find a way to leverage this driving down call volumes and improving Providers (CSPs) has changed scattered and independent information. resolution time. radically over recent years. The What is required is a means of con- After years of investment in improving Temphasis is no longer on coverage and solidating the multiple network tools that network quality and competing on price, price but the quality of the experience. monitor 2G, 3G and 4G networks as well CSPs are beginning to refocus. As a Despite recognising the change, few CSPs as billing information and customer ser- result, the difference between good and are yet to align business processes with vice calls. Once CSPs have aggregated bad customer experience is becoming the customer experience. these diverse information sources, cor- stark – and with customers increasingly Right now, Customer Experience Man- relations between customer experience making CSP decisions based on the agement (CEM) may be at the top of the and long term value will become clear. quality of experience, those companies agenda but too many CSPs lack the focus What is the impact of network outage on that get it right are gaining significant required to deliver a truly effective, joined customer churn? Are specific handsets commercial advantage. up experience. With different objectives causing problems? What prompted a CSPs have a huge opportunity, with across marketing, network operations and drop in expenditure by high level cus- detailed customer and already existing, customer service, not to mention multiple tomers during a specific timeframe? although scattered, network information budget holders, companies are being It is this information that can support - including real time activity - and long pulled from pillar to post and failing to the refinement of the CEM strategy. term relationships that organisations deliver any coherent strategy. Armed with this insight it is far easier for in other markets can never hope to CSPs need a mind-set change. Yes a CSP to prioritise activity and, critically, achieve. Rather than attempt to achieve CEM is clearly essential but no company embark upon improving one aspect of the impossible with a single CEM, CSPs is going to realise the vision of excellence the customer experience, rather than need to leverage this information to by adopting a catch all approach – or trying to change it all at once. gain insight into priority areas and begin embarking on a single RFP for a CEM Getting one aspect of the service to make incremental change. It is by system. There are any number of issues aligned with the customer experience will using this real time insight and following that can affect the customer experience deliver immediate and quantifiable ROI a clear CEM framework that CSPs can and rather than attempting to address and, critically, then provide a platform successfully evolve towards business every aspect of this experience at once, for expanding the CEM model into other processes effectively aligned with the or hoping that one CEM system can solve areas. For example, providing customer customer experience - and drive up that all the experience issues that affect the services agents with up to date infor- Net Promoter Score and customer per- business, CSPs need to take a far more mation on a customer’s experience ception to far more acceptable levels. measured approach – and look to deliver is incredibly powerful. Firstly, when www.accantosystems.com Special report OTT / DIGITAL CONTENT Contents

30 Q3 survey: Operators want new revenues, differentiation but ﬁ nd partnerships hard to come by

39 Operators struggle as punters 39 continue to go OTT for content A glut of content partnerships, and the anomaly of BT’s mad spree on the TV rights for live sport, cannot mask the fact that operators are a declining force in content provision. James Blackman reports

41 Telcos incubate start-ups to send them over the top Telcos are putting together an army of start-ups to go over the top and reclaim ground lost to digital players. Are the new recruits good enough to take on Facebook, Google et al? Nick Booth reports

45 The future of instant messaging is content too Now that OTTs have 41 cracked communications, Owen Hughes explores whether any safe havens remain for telcos’ own digital services

45 SPECIAL REPORT: OTT / DIGITAL CONTENT

Q3 survey: Operators want new revenues, differentiation but ﬁnd partnerships hard to come by The OTT/digital content space remains one of hope for operators, but they are struggling to turn offerings into signiﬁcant revenue streams

he telecoms industry is united in its view that the acquisition Fig.1 On a scale of 0-10, how important is it to the of exclusive content is crucial future success of operators to acquire content T to the future success of oper- that is exclusive? ators, according to European Commu- nications’ latest survey. When asked to place a value on its importance, the 0 4.48% weighted average of respondents was 1 1.49% 8.2 out of 10 (see Fig.1). Said one respondent: “Exclusive con- 2 2.99% tent is something clients look forward to… [it’s] an important part of brand- 3 2.99% ing.” Another added: “It is important that operators invest in content to max- 4 0% imise the utilisation of data capacity 5 8.96% available, not to mention the competition in the market being saturated by 6 7.46% content providers.” But not everyone is convinced. One 7 11.94% respondent said: “[Exclusive content] is too expensive and self limiting.” 8 22.39% When it comes to the type of 9 23.88% content they should be offering their subscribers, exclusive or not, operator 10 13.43% respondents chose sport as the most *All respondents

Fig.2 Which type of content do you regard as valuable. Three-quarters chose this, the most valuable to offer subscribers? ahead of ﬁlm, which got 57 percent of the vote (see Fig.2). Music and gaming also got a healthy share of the vote, ahead of TV and video other, non-specified types of TV and TV and video content. (film) BT is perhaps the most visible of TV and video video 57.14% Europe’s operators to pursue a strategy (sport) 17.86% of acquiring exclusive sports content. It 75% has spent billions on football rights for the English Premier League and Europe- Other an Champions League ﬁxtures. Music 7.14% Analysys Mason’s Stephen Sale Gaming 42.86% notes: “High-value video content 39.29% (notably sports) is the likeliest revenue generator [while] music and gaming are more often used to attract and *Operator only respondents retain subscribers.” SPECIAL REPORT: OTT / DIGITAL CONTENT

However, in reality it is proving hard Fig.3 What do you regard as the biggest challenge to to get such content. Operators regard the success of your digital content strategy? a lack of partnerships as the biggest challenge to the success of their digital Lack of partnerships 46.43% content strategy. Over 46 percent chose this ahead of rights acquisition, which was chosen by 43 percent of respondents (see Fig.3). Rights acquisition 42.86% Many operators lack Access/distribution tech 25% the commercial clout with OTT partners

Fragmented nature of European market 25% “Says Sale: “Many operators lack the commercial clout with OTT partners. There are a few dominant” content players and the practice of exclusivity in Inability to take risks in the content space 25% national markets can often restrict the opportunity for an individual operator.” But the situation is improving. According to operator respondents, Piracy 14.29% their relationship with non-telco, digital content providers has improved since the last time European Communica- tions canvassed their views on this Other 3.57% topic in 2013. Over half, 54 percent, said the relationship was better than it was two years ago versus just seven percent *Operator only respondents

Fig.4 How would you define your overall relationship with non-telco, digital content providers currently?

Worse than it was two years ago 7.14% Same as it was two years ago Better than it was 39.29% two years ago 53.57%

*Operator only respondents SPECIAL REPORT: OTT / DIGITAL CONTENT

“Too right they are,” says Mohr-Mc- Fig.5 True or false: partnerships with digital content Clune. “Content providers are looking players are becoming increasingly complex. to go global fast, but local or regional market content licensing regulation hasn’t kept up with all that, and the partnership hurdles appear higher than ever. What’s more, the OTT content provider space has matured somewhat over the last year. “Loyalty patterns are shifting, and True content partners are becoming more demanding as a result. Network pro- 88.89% viders have never been under so much pressure to open up their APIs, but the stakes are high. OEMs and other third parties are looking for new hooks into the ecosystem, and the entire sponsored False data model has still to be resolved.” 11.11% Sale adds: “The focus for operators *Operator only respondents has been on partnerships with a small

who said the relationship was worse (see Fig.4). Fig.6 What is the main driver for you providing content? The remainder, 39 percent, said the relationship was the same as it was Generating new revenues in 2013. Current Analysis’ Emma Mohr-Mc- 64.29% Clune agrees things are moving in the Attracting Loyalty patterns new subscribers are shifting, and content 35.71% partners are becoming more demanding as “ Reducing a result Creating differentiation churn right direction. She says: “Two years ago, from your competitors 28.57% I attended a vendor conference featuring 64.29% a panel of non-telco digital content providers, and it” was quite clear to everyone in the room that the two groups were speaking an entirely different language. Other We’ve come far in attempting to under- 3.57% stand each other. We’ve worked at it. Avoidance is not an option.” The nature of those relationships is getting harder, however. Almost nine in 10 operator respondents agreed they were becoming more complex (see Fig.5). *Operator only respondents SPECIAL REPORT: OTT / DIGITAL CONTENT

number of well-known, established OTT providers with strong brands and proven Fig.7 What is your assessment of the RoI you are getting business models. from the content you provide currently? “Each provider will have very speciﬁc requirements and is approached on a case-by-case basis. As the sector ma- tures and operators seek to differentiate then the number of partnerships Significant RoI will increase, interactions will become that can be more complex and the long-tail of viewed as a OTT providers is likely to require more integration support.” revenue stream in its own right Driving at new revenues 7.41% Whoever they partner with and whatever they offer, generating new revenues and creating differentiation are the two main drivers for operators to provide content. Small RoI that is secondary to Almost two-thirds of operator respond- winning/retaining subscribers ents chose these two answers ahead of attracting new subscribers and reducing 74.07% churn (see Fig.6). Sale comments: “Western European telecoms revenue is forecast to decline from €252 billion in 2014 to €231 There is no RoI billion in 2020. Operators are looking at OTT content to help drive data usage, 18.52% particularly in mobile, as well as a po- *Operator only respondents

Fig.8 Is consolidation in the European telecoms market tential source of direct revenue. Some going to help or hinder the type of partnerships services may be bundled in to tariffs or the associated data may be zero-rated you can sign with digital players? as a means to reduce churn or attract new customers.” Reducing churn was chosen as a driver for content provision by 28.5 percent of respondents – a figure Mohr-McClune thinks is surprisingly low. She explains: “I think what we’re seeing here is a loss of confidence in content provision as a retention tool. Carriers today recognise what a complex and multifaceted exercise churn Help control is, subject to the whims and Don’t know idiosyncratic behaviour of individu- 57.14% 25% als with highly differentiated content tastes, device access preferences, loyalty triggers and price sensitivities, Hinder but also subject to changes in digital content fashion. 14.29% “Simply ‘adding a Netflix subscription’ Make no difference 3.57% to the bundled service mix is insufficient *Operator only respondents as a longer term strategy, although it SPECIAL REPORT: OTT / DIGITAL CONTENT

might work in the short-term to achieve Fig.9 In June, the European Union promised to enshrine net differentiation. These results articulate the questions many carriers today have neutrality in law from April 2016. Overall, is this going to about content as a longer-term churn be beneficial to your digital content business? control mechanism.” Yes, it’s going to Simply ‘adding a be beneficial Netﬂix subscription’ to 39.29% the bundled service mix “is insufﬁcient as a longer term strategy

The problem for operators is that the RoI that they get from the content they No change offer remains insubstantial. Just seven 17.86% percent said the RoI was” signiﬁcant enough to be viewed as a revenue Don’t know stream in its own right, while 18.5 per- 28.57% cent said there was no RoI at all (see Fig.7). The vast majority, 74 percent, No, it will have a said the RoI is small and secondary to negative effect winning/retaining subscribers. 14.29% Mohr-McClune says: “There’s reality for you, and I’m pleased to see this survey expose this little discussed fact. The *Operator only respondents

‘show me the money’ argument doesn’t Fig.10 Should you be able to, would you anticipate charging seem to apply to content; or at least, for specialised services, such as internet TV? carriers have yet to hit upon the right innovation model to properly monetise the effort.” Adds Sale: “Potential gains from monetising data traffic are commonly No traded off as zero-rated traffic for customer acquisition/retention. There may 14.29% be indirect benefits from acculturating customers to content consumption but these are hard to measure.” Don’t know 7.14% Regulation is a double-edged sword With M&A activity continuing across the European telecoms sector, the majority of operator respondents, 57 percent, Yes thinks consolidation is going to help the type of partnerships they can sign with 78.57% digital players (see Fig.8). Fourteen percent said consolidation would hinder it, while 3.5 percent said *Operator only respondents it would not make any difference. The SPECIAL REPORT: OTT / DIGITAL CONTENT

figures were almost identical when we Operators rate Google as biggest content competitor asked whether consolidation would help or hinder the precise type of content Google is regarded as the biggest competitor Mohr-McClune says: “There’s nothing too sur- they could acquire. that operators face in the digital content prising in the results of this particular question; It should be noted that the survey space. The YouTube owner was chosen by 78 Google and Netflix are well acknowledged as was carried out before the European percent of respondents, ahead of Netflix (see comprehensive and increasingly global content Commission put the brakes on the Fig.11). Apple was the third most popular threats. What’s more, the channel sophisti- merger of the Danish arms of Telenor choice, with exactly half of respondents cation and muscle of Facebook, Amazon and and TeliaSonera in September. choosing the Cupertino-based firm. Apple are all well understood.” Operators are split on the potential implications of net neutrality, however. Amid continued discussions as part Fig.11 Which of the following players do you consider as of the EU’s Digital Agenda reform, a the biggest competition in the digital content space? majority thinks that enshrining net neutrality in law would be beneficial Google to their digital content strategies (see Fig.9). Fourteen percent think it will 78.57% have a negative effect while 29 percent say they simply do not know what the impact will be. Netflix Sale sides with the don’t knows. He says: 67.86% “Despite strong messages in support of net neutrality there is plenty still to be resolved in the EC’s Digital Single Market initiative around content. For example, proposals for cross-border content portability will likely incur costs for service providers and content owners and the potential options have not yet been made clear. Weighing up the full implications of the EC’s proposals is difficult at this stage.” Apple Unsurprisingly, the vast majority antic- ipates charging for specialised services. 50% Over 78 percent said they would charge for offerings such as internet TV if they were allowed to, versus fourteen percent ec Amazon who said they would not (see Fig.10). 39.29% About the survey Facebook 39.29% One hundred and eleven respondents took part in our online survey in August and Sep- Spotify tember 2015. The respondents were equally split three ways between operators, vendors 28.57% and other interested third parties, such as analysts, consultants and regulators. National From a geographical perspective, 69 broadcasters 25% percent came from Europe and 12 percent from Asia-Pacific. The remainder was split between respondents from the Middle East, Other 10.71% Africa and the Americas. *Operator only respondents SPONSORED INTERVIEW: PEERAPP

PeerApp helps European telcos quickly and efﬁ ciently deliver high-quality OTT and streaming video content to their subscribers

onsumer demand in Europe for the best possible QoE for their customers, bandwidth consumption. high-quality OTT and other dig- while better enabling them to control and “Consumers in Spain, for example, ital content delivered over the cut operating and capital expenses. could currently be accessing a content C Internet continues to grow rap- With more than 500 broadband ser- server in the UK or Germany. With Peer- idly. A new report from research fi rm IHS: vice provider customers in 100 coun- App, the operator can bring the content Brits Watch Less TV than Ever Before; tries, PeerApp says it can help communi- closer, so subscribers can watch it with- Italians Watch the Most, substantiates cation companies ‘quickly and effi ciently out buffering,” Arolovitch explains. “The consumer interest and migration toward ability to provide content deep in operator Internet-based video and other services. networks and neighbourhoods throughout OTT and additional streaming video The importance Europe is critical to improving QoE.” services place signifi cant demands on Arolovitch believes that European broadband access networks, both in of content delivery groups are only now waking up to the terms of magnitude of traffi c and cost of and the complexity importance of improving content delivery. supporting it on one hand, and meeting “Before Netfl ix was launched last year in quality of experience expectations for involved are not fully Europe, internet traffi c was contained. the end users, on the other. As a result, “ The European operators we’re talking to realized by many many European broadband operators are say this has led to cost and service qual- re-evaluating the design of their network network operators ity problems. Consumption and cost per infrastructures, and are looking to embed subscriber is rising and margins are being content delivery capabilities deep in their deliver high-quality OTT and streaming eroded by this onslaught of traffi c. It has networks in close proximity to end-users. video content to their subscribers’. put operators out of their comfort zone.” US-based PeerApp, a global leader PeerApp Chief Technology Offi cer Alan How do European operators reduce cost in helping network operators accelerate Arolovitch explains that open ”content but provide the best possible quality? and optimise content delivery, enables caching really came into its own with the Arolovitch explains that to accommo- European broadband service providers emergence and subsequent popularity of date the demand for quality, most opera- to minimise customer churn by speeding video services such as YouTube and grew tors have invested in broadband network delivery of live and on-demand video ser- with the emergence of smartphones upgrades offering last mile speeds in vices, online gaming, software updates, such as Apple’s iPhone. excess of 100 Mbps. Unfortunately, he cloud services, and other popular OTT “We’ve seen both the rapid scaling states, these investments have not fully content to their subscribers. PeerApp of video delivery and demand for new solved the challenge of delivering the solutions also allow operators to provide software updates from smartphone users performance subscribers expect. as well as new apps moving over to the “A common answer is to get the cloud and the Internet,” he says. fastest broadband speeds as possible PeerApp’s solution to the challenges to residences,” he explains. “But it’s not European broadband operators face is the speed but the quality of the pipe to augment their networks by embed- and performance of the applications that ding content delivery capabilities deep matter most to customers.” in the network, in close proximity to PeerApp asserts that OTT and their customers. streaming video applications can be These local content delivery solutions delivered 12 times faster – or more – by help network operators make more bringing it closer to end-users. And that effi cient use of bandwidth by storing associated network savings can be 35 popular OTT, streaming video and other percent or higher. Alan Arolovitch, Chief Technology Offi cer, digital content closer to end-users. This “Our technology targets large users of Peerapp shortens latency of access and reduces media, especially video and fi le sharing SPONSORED INTERVIEW: PEERAPP

over the internet,” Arolovitch says. “The importance of content delivery and the complexity involved are not fully realized by many network operators. Downloads and dynamic URL schemes are not designed with caching in mind and traditional approaches based on URL analysis do not apply. Instead, high-quality content delivery should be based on response. We analyse the payload in a particular area and understand trends among services, content types and subscribers. We then look at what’s popular and cache that content as close as possible to end-users. So when it’s needed it comes quicker and with more quality.” PeerApp Local Content Delivery optimizes networks for cost and quality But it seems not always easy. “We are able to fi gure out – and often able to absorb the bandwidth hit re- back-offi ce services. It makes business anticipate – the content the local pop- sulting from customers updating their sense to cooperate and local content ulation is wanting right here and now. iOS devices. There was a traffi c spike delivery can be an important part of that. But there is obviously variety in demand. of about 5 Gbps from the downloads, We will help both parties meet consumer From a northern to a southern region but since they were fully cached by demand expectations.” in a country you can have 50 percent PeerApp the operator did not need to Indeed he claims Europe is a much disjointed popularity,” he adds. “We can serve the updates from the Internet, more competitive market than the US help identify the necessary content for but could serve them locally from with- and much more quality driven. Thus any given area.” in the PeerApp system in its network.” putting more pressure on operators. Globally, PeerApp solutions manage This European Tier 1 is also supporting “There are competitors and disruptors an aggregate capacity of 5 TBps; this mobile customers through the PeerApp in the European market which means includes multiple Tier 1 deployments solution. While PeerApp has supported customers leave on price. There is also on a 100-500 Gbps scale. mobile operators with core-based solutions more regulation and benchmarking with Let’s look at a specifi c European for quite some time (about one-third of authorities leaning more on operators to example: its business globally), it is also bringing a avoid false advertising,” he states. “Claims Arolovitch explains that a European mobile edge computing (MEC) solution to such as ‘lightning fast broadband’ are Tier 1 operator was facing two challenges market that will bring local content delivery benchmarked by third parties – they really when it picked PeerApp for help: regula- to the RAN, in a virtualised manner. look at how operators shape up on quality. tors demanding transparency to end-us- “We consider our open content cach- They have to deliver on their promises.” ers around bandwidth and latency; and a ing a ‘seed function’ to help operators Arolovitch elaborates, “We are fi nding need for competitive differentiation. on the path to realising their SDN/NFV that there is a growing market need “The operator ran a competitive strategy,” Arolovitch says. for our services in Europe in fi xed and process to select a solution to help Coming back to OTT, Arolovitch contin- mobile. We’re engaging with European them best address these challeng- ues, “Operator OTT response and strategy operators to see how we can help them es and PeerApp was selected,” he has become complicated with the moves with this.” With pending European explains. “We deployed a 400 Gbps by content publishers such as HBO to go Tier 1 deals and MEC trials, PeerApp traffi c handling capacity system for the direct in their service offerings.” is ready to help Europe come of age operator. Since deployment, subscrib- “It’s a new reality for operators. Do in the new ultra-competitive world of ers are experiencing signifi cantly faster they compete or partner with the likes of media content demand. downloads than before – both for HBO?” Arolovitch asks. “We are at the “New consumer behaviour and content and web pages. The operator beginning of that marketplace. Netfl ix increasing adoption of OTT and other started using ‘customer experience’ went direct and in the US every content streaming video services continue to in their advertising and also began publisher has some kind of direct service drive network traffi c growth,” adds Arolo- creating new packages and offers in the works. But we believe that they vitch. “We work alongside the operators around increased bandwidth, resulting need to work with operators to get to to help them fi nd the best way through.” in excellent customer uptake. With an market and to distribute. Operators can www.peerapp.com iOS8 update specifi cally, PeerApp was help content publishers with delivery and @peerapp SPECIAL REPORT: OTT / DIGITAL CONTENT

KPN aims to Play in the TV space with new app

Ahead of the launch of KPN’s new TV app Play, the operator’s TV & Propositions Manager Diederik Rosenbaum gives Marc Smith the lowdown on the OTT service

top me if you’ve heard this baum doesn’t seem un- before, but operators are duly worried by not having starting to roll out services that a blockbuster exclusive. S ape those of digital companies Instead, what sets several years after the originals. Play apart is that KPN is After failing miserably to counteract targeting people who “are messaging apps like WhatsApp with joyn, not in the market for an now operators are going it alone with TV internet connection” in and video apps as they bid to entice cus- Rosenbaum’s words. tomers with a range of digital content. In short, this is the KPN is one of the frontrunners in disloyal, permanently Europe. In April, it announced plans to connected and potentially launch Play – described as a “true” OTT lucrative youth market. app featuring linear, on-demand and According to Rosen- catch up TV – later this year. baum, Play is KPN’s response to in the telco world as something different. Diederik Rosenbaum, TV & Prop- how that demographic is watching TV It comes as an app for iOS and ositions Manager at KPN, claims differently. This can be summed up as Android devices as well as on Google past lessons are being learned. The more streamed, on-demand content on Chromecast for use on smart TVs. Netherlands-based operator has hired mobile devices. Rosenbaum says a web portal is being external coaches to help its core Play “They don’t see a difference between worked on but has not been included at team of 30-50 people, oddly based in in home and out of home,” he says. launch as it is “a bit harder to do”. Italy, adopt what Rosenbaum calls “an “Perhaps the biggest insight we gained KPN has worked with Accenture and OTT mindset”. was that they think: ‘Don’t restrain me.’” Think Analytics on the app, the latter He says: “We’re seeing [these efforts] An interesting footnote to this is that helping to provide recommendation tech- pay off in time-to-market.” KPN ditched its youth-focused mobile nology that learns what customers like. KPN began market research 18 brand, Hi, in May. The Play team has developed the app months ago, spent “a good year” The operator said at the time that with a “deliver customer satisfaction developing the product and has now the desire to be connected anywhere, first” attitude, according to Rosenbaum. launched the app in beta mode with the use of music and video streaming, He claims the beta test has revealed roughly 2,000 customers trialing it. It as well as a need for converged access only “minor things” that need to be has penciled in a full commercial launch were shared by all of its subscribers, not changed “in all phases” of the customer some time in the autumn. just the youngest. journey through the app. So, what exactly is Play? The app It is a key point worth dwelling on Exact pricing details have not yet features 22 channels, including content that, with Play, KPN has decided to offer been revealed but, leaving that key from The Wire broadcaster HBO, but something that does not beholden the detail aside for the moment, it is worth none of it is exclusive. customer to sign up to its telephony and contemplating whether Play has enough While exclusivity is often cited a must- broadband services as well. to make it stand out in the field. have in the “new” world of TV, spread While triple- and quad-play offers are Although he concedes KPN is playing in out as it is across multiple broadcasters de rigueur amid the wave of consolida- the same pool as Netflix, which launched and platforms, the rights to acquire such tion in the industry, the very market that in the Netherlands in 2013, Rosenbaum content are prohibitive to many. KPN is targeting with Play is the least does not see it as direct competition. As such, KPN is taking something of a likely to sign up for such a service. He explains: “I think we’re addressing low-cost approach to Play and Rosen- Play is a true OTT service and stands out the same target group but it’s a different SPECIAL REPORT: OTT / DIGITAL CONTENT

product. It would be very pretentious of model,” Rosenbaum says. what effect will the KPN brand have on us to say we’re competing with Netflix.” Other longer term factors include the decision-making? According to Brand Another potential competitor, Amazon European Commission’s promise to look Finance’s 2015 ranking, the brand value Prime, is yet to arrive in the Netherlands. into the online players that provide a of KPN rose 37 percent versus the previ- Then there are the national broadcasters. similar or equivalent services to telcos. ous year. While the report doesn’t single NPO, the Dutch equivalent of the BBC, Brussels wants to create a level playing out what young people think, overall the has an app on Google Play that has been field between all parties as part of its brand appears in rude health. It is in downloaded up to five million times. Digital Single Market reform that could 31st place in the global ranking, ahead Again, it is not directly comparable as benefit offerings such as Play. Agree- of Ziggo in 79th place. it offers NPO channels alone, but it does ment, if it ever comes, is likely to be a Naturally, it is too early to draw any give an idea of the size of the estab- long way off. such conclusions about Play. Instead, lished players that is out there. Before that, however, KPN needs Rosenbaum reflects on some of the But KPN has another competitor in its to focus on getting Play out into the lessons he has learned during the app’s sights. Rosenbaum continues: “The core market and generating a buzz with its development: “You have to constantly of KPN’s business model is broadband intended target. Marketing and adver- move and stretch yourself to stay ahead where our main competitor is Ziggo… but tising will be key here, and much will of the game. Competition is coming from they don’t have a comparable OTT app.” depend on whether people see value in all areas. It’s fun but unpredictable. Liberty Global-backed Ziggo is the larg- a product that offers breadth of content “Building an OTT app really does est cableco in the Netherlands and run by if nothing exclusive. require a different way of working. I know former KPN Director Baptiest Coopmans. Certainly, the true OTT nature of the it’s a cliché, but it really is a case of It offers apps, such as Horizon Go, to app is something that should appeal but innovate or die.” ec customers but again you have to have an existing subscription with the company. A Ziggo spokesperson told European Com- munications she couldn’t comment on whether they were working on something Operators struggle similar to Play. It sounded unlikely. Whatever the competition, Rosenbaum says success will not be judged on the as punters continue number of customers who sign up, but instead on how “addicted” they become. It is a comment that suggests the “OTT to go OTT for content mindset” is alive and well at KPN. The executive backs it up with another when asked a typically telco question about the A glut of content partnerships, and the anomaly of BT’s mad impact of Play on KPN’s network. spree on the TV rights for live sport, cannot mask the fact “People don’t ask that of Netflix so that operators are a declining force in content provision. why do you want to ask that of me?!” James Blackman reports Rosenbaum retorts. Touché, sir. Should Play be a success with cus- n early 2013, when European the rest of the field, and draw some tomers, Rosenbaum says it would be Communications last considered this deflected lustre. “a logical next step” to offer it to KPN’s industry’s approach to content in any “They’ve essentially given up on existing subscriber base. Idepth, there appeared to be some licensing and reselling content now,” He claims not to be worried about renewed vigour among network opera- says Ovum Analyst Guillermo Escofet. cannibalising the operator’s own existing tors. Having tried and failed to reinvent “That era’s long gone; they’ve been TV customers. KPN added 64,000 IPTV themselves as media brands, eventually pushed aside and their content teams customers in the second quarter, taking swept aside by the flood of content over- have been whittled down. The focus is the total subscriber base to just shy of the-top (OTT), they had re-emerged at now on bundling content – on identifying 2.2 million. Its share of the Dutch TV last with a new strategy: partnership. third-party media brands to partner with market is growing and currently stands By joining with established OTT brands and package up into mobile tariffs.” at 28 percent. to offer customers easy, often discount- Plenty of new partnerships are being “We’re not fearful of that, but we ed, access to content, operators had signed, and pushed. In the UK, for will have to think about in our pricing hit upon a new way to strike out from example, O2 has agreed sponsorship SPECIAL REPORT: OTT / DIGITAL CONTENT

aggregators is coming to an end as consumers take more control.” Escofet makes a clear distinction between the opportunity in content for mobile operators and for fixed line providers. Even though BT is offering sports content on its SIM-only tariffs, and is about to get back into mobile in a big way with the pending takeover of EE, it is a fixed line business at heart, with a direct line to the television set. This makes all the difference, according to Escofet, and the sheer level of BT’s investment in content makes it something of a freak even in the fixed-line television market. “TV is the of Channel 4’s digital channel, All4, original home of Breaking Bad and Mad exception when it comes to content, not giving its Priority customers access to Men, for a range of television and movie the rule, and BT has invested enormous shows before they air, EE has replaced premieres on a new AMC channel. The sums,” he says. its long-running two-for-one cinema same month, it outbid Sky for live cov- Charlie Marshall, Director of Strategy offer with a video streaming promotion erage of the 2018-18 Ashes series, as at digital sports specialist Supponor, with Wuaki.tv, and Vodafone is offering part of a deal worth £80 million. agrees: “The main reason mobile finds Sky Sports and Spotify to 4G customers [content] difficult is it’s all about the ahead of the launch of a TV service on main screen, the television screen. Mo- its nascent fixed-line offering. bile operators have struggled in general But this pattern of partnership won’t Competitive because they lack that gravitational pull last, reckons Dr Florian Gröne, partner at gains achieved via new of the main screen experience.” Strategy&, a consultancy division within It’s a view that hardly raises eyebrows PwC. Content will remain king, he says, content partnerships are among multi-play vendors themselves, it but consumers will associate it less and increasingly marginal seems. BT was unavailable for com- less with the underlying platform, as “ ment, but its French equivalent was demonstrated by the continued trend of clear enough. “There are commonalties cord cutting and content unbundling. Such spectacles are but sideshows to [between fixed and mobile] because of “Once consumers start voting with the main event, of course; BT has just convergence but the objectives are very their feet, it is very difficult to stem the forked out around £897 million to” steal different,” says Laurent Maillot, a Direc- tide and lock them in merely on the UEFA Champions League coverage away tor within Orange’s content team. basis of trying to bundle content with from ITV and Sky, and £960 million to In France, Orange is a major force in connectivity,” he says. renew its stake in Premier League foot- the distribution of content; its Orange TV ball (now 42 games, compared with Sky service, available with its broadband and King of content Sports’ 126). multi-play tariffs, provides tiered access Some appear to reject this idea, and But Gröne regards the BT example as to 160 channels, with a good number have gone further than just partnering an anomaly among telecoms providers. on-demand and in high definition. “We with OTT providers. BT’s 2012 deals In general, the telecoms sector is short are masters of the set-top box; we control for the broadcast rights to a tranche of ideas and increasingly marginalised access to the television,” remarks Maillot. of English Premier League football when it comes to content, he says. Like BT, its content strategy hinges on matches (38 per season) and all of “Carriers are ill suited to the content live sports, movie premieres and original English Premiership rugby, worth £890 creation game, and the differentiated drama series, though Maillot makes million combined over three and four content available through licensing or clear it has a more measured approach years respectively, hinted at a change in partnerships is very limited – the best to football rights than BT. For Orange, perspective for telecoms in general. Its answer anybody has come up with is mobile is a subordinate platform. “It is appetite hasn’t let up. ‘live sports’, which results in increas- just another screen,” says Maillot. This August, it announced a deal with ingly steep commercial commitments. “For mobile, the focus is on partner- US television network AMC Global, the So the era of carriers as content ship and distribution, and selection of SPECIAL REPORT: OTT / DIGITAL CONTENT

the best possible services. We will offer But differentiation – in the content itself, operators’ roles in the sale and distribu- content through partnerships, but we or in its pricing – is hard to come by. tion of content must expand? have no desire to be a content provider. “It does let you differentiate, but it’s “Carriers will continue to have to For fixed, the strategy is quite different.” a very tactical thing,” he says. “If you’re shoulder the capacity burden and invest So what’s the appeal, and what’s the first to market, then you have a point billions into spectrum, fibre and new net- the future, if operators are just delivery of difference. And there are lots of ways work technology to provide the bandwidth pipes, or, worse, promotional channels? of bundling these services – whether it’s that feeds consumers’ ever-growing appe- “For mobile, the focus is on partnership hard bundling or soft bundling. But it tite for broadband data,” says Gröne. and distribution, and selection of the doesn’t last forever.” But mobile networks are fizzing with best possible services. We will offer con- Indeed, outside of BT’s big bucks data insights, real-time and loca- tent through partnerships, but we have strategy, is any telecoms provider, fixed tion-aware. If they can unlock them, no desire to be a content provider. For or mobile, really distinguishing itself? surely they can enhance their roles in fixed, the strategy is quite different.” Do any of these content partnerships the value chain, delivering more interac- look really fresh? “No, I’m not aware of tive and targeted content? Not neces- Hard to differentiate anything that’s particularly interesting,” sarily. OTT players are setting a blistering This is harsh, of course. Mobile opera- responds Williams, simply. pace so far as data analytics go, and tors hold decent appeal for OTT providers Supponor’s Marshall agrees: “There’s operators are hobbled by entrenched looking to expand their reach. Softbank nothing that compelling, there’s nothing cultural challenges, argues Gröne. has just announced a tie-up with Netflix that exciting. It’s just a race to the bot- “Carriers have had access to rich that will see it bill its mobile and broad- tom,” he says. customer and network data for many band customers directly for Netflix ser- Yet, as network technology improves years, but they’ve had limited success vices. The deal represents a neat entry and content becomes more mobile many activating it with a consumer mind-set. to the Japanese market for Netflix. content providers are designing for mobile Changing to something more nimble, Spotify, one of the pioneers for con- first. Increasingly, mobile is dictating the customer-centric and responsive will tent partnerships, has grown significantly agenda for content distribution. Surely remain a significant challenge.” ec by piggybacking onto mobile operators’ distribution power and marketing muscle. Even so, its global subscriber base stands at 75 million, of which just 20 million are paid-up members. “It isn’t Telcos incubate a mass market proposition yet; mobile operators represent about the biggest billing channel there is, so they can help start-ups to send make it so,” says Escofet. The flipside, of course, is operators get to mitigate against churn. Gareth Williams, them over the top Manager of Custom Research at Analysys Mason, says: “Customers taking three or Telcos are putting together an army of start-ups to go over four services from a supplier are far less the top and reclaim ground lost to digital players. Are the likely to churn than those taking just one new recruits good enough to take on Facebook, Google et al? or two. As a means to entangle custom- Nick Booth reports ers, and a way to stimulate revenues, content partnerships are certainly working.” perators continue to train loss for operators of $386 billion (€345 He adds: “The problem is, mobile oper- young start-ups to go over the billion) between 2012 and 2018 as a ators can’t just carry on forever like this.” top (OTT) of their networks, result of providers like Facebook and Competitive gains achieved via new O and do battle with the digital WhatsApp making use of the infrastruc- content partnerships are increasingly enemy that has staked out new revenue ture they so kindly provide. marginal, and fleeting. Escofet points to streams. Many won’t make it back alive. As a result many operators have Orange’s tie-up with anti-virus software According to one analyst firm, op- launched incubator programmes in a Lookout in France and DoCoMo’s bun- erators have lost out on considerable bid to fight back. dling of note-taking application Evernote growth potential by not having applica- Telecom Italia, for example, has in- in Japan as examples of operators going tions that sit on top of their networks. vested €4.5 million to fund start ups fea- beyond standard entertainment bundles. Ovum predicts a combined revenue turing robots, donkeys and bookworms. SPECIAL REPORT: OTT / DIGITAL CONTENT

Each year, the Italian operator’s accel- business-to-business apps. of £150,000 (€250,000). erator selects 40 startups that have ap- “The first wave of app development In the UK, where the system has been plied to the programme to address areas was mainly oriented to fulfill personal trialed, Telefónica said it has seen a such as mobile, smart city, smart home, needs like communication, enter- 15 percent reduction in the number of automotive, gaming, health & wellness, tainment and information. Now we customers walking out of its O2 stores data analytics, green solutions, social are seeing the rise of business apps before they get served. impact, digital payments, IT security, oriented to productivity, customer It is a rarity, however. No other start- social networking and wearables. management, payment and process ups have had the same level of success, Those selected receive a €25,000 monitoring,” says Lombardi. admits Gary Stewart, Wayra’s UK grant to develop their projects and take This is a trend reflected at Telefónica’s Director. However, Telefónica claims that part in the acceleration program in Mi- Wayra incubator too. The most notable its subsidiary has had some success, lan, Rome, Bologna or Catania. application it has developed so far is generating €6 million in contracts. “We Among the new companies champi- Qudini, a cloud based digital queue and have an intense scouting process with oning Telecom Italia’s cause are Looqui, appointment management system for the eleven recruitment centres around the a system for Tactile signing for the deaf company’s own stores. It is being rolled world,” says Stewart. There are pitching and blind, Fred, a proximity based social out across Telefónica’s global operations. competitions being organised by Wayra networking site focused on book sharing The founders, twenty-somethings practically every day, he says, and Wayra and Hotblack Robotics, a system that Imogen Wethered and Fraser Hardy, first is scouring the universities in search “guides a team of robots connected to a crossed paths at an O2 sponsored Hack- of creativity. “We’re always looking for cloud robotics platform”. athon in March 2012. From there, they talent,” says Stewart. But will they reclaim any of the reve- came up with the idea of solving queuing Only 1.4 percent of the young hopefuls nue streams that operators are losing? using mobile technology. that pitch their business ideas get taken As with any form of creative competi- After winning the Hackathon and on, says Stewart. If they do impress the tion, nobody can predict where the next sponsorship from Telefónica subsidiary Wayra judges, they then have to make a box office success will come from. BlueVia, they were encouraged to apply much tougher case to a jury of venture Lucy Lombardi, Head of Innovation for the first London Wayra cohort. Trained capitalists. Those that emerge from this at Telecom Italia, believes the main and mentored, Qudini left nine months process with their dream still intact will be opportunities for OTT start-ups are not later with a business plan and SEIS (Seed given £34,000 (€46,500) on funding and in pleasing consumers but in developing Enterprise Investment Scheme) funding the same amount in support services. SPECIAL REPORT: OTT / DIGITAL CONTENT

So far, so underwhelming according to the Wall Street Journal. and others will need to follow or risk A review of other start-ups from the Could operators cut a deal with their getting left behind.” Wayra stable reveals several that still subscribers, offering them a percentage concentrate on social media, which of any ad revenue for videos they post Management still stuck in the past some analysts say has peaked, while over their network? Whatever service they decide to provide, others are targeting shopping and “I believe there is a growing wealth the experience of Coleago Consulting gaming. Social and Beyond, for example, of compelling original digital video that suggest operators cannot rely on their helps brands engage with the customers many viewers simply are not seeing,” senior management for ideas. at the point of sale. says Gallagher. The potential is there to The consultancy firm has developed UpClose.Me aims to cash in on the be the author of a blockbuster but, as The Innovation Game, which is based on selfie generations obsession with image, with any creative process, only one in a the world of start-ups, angel investors by connecting them live through interac- million gets lucky. and venture capital. Targeted at new staff tive videos. Tappx is a cross-promotion A less risky OTT strategy might be pur- and graduate trainees at telcos, it aims to platform where members exchange sued in the new opportunities offered in instill in them an entrepreneurial spirit. advertisement and promote their apps emerging technology that nobody has had Participants begin by making a for free – social media meets eBay. the chance to colonise yet, according to one-minute elevator pitch for a new Just as Hollywood studios market- Mark Slinger, Head of Product at network business idea. Then, working in small ed the film Alien as “Jaws - in space” management software vendor SysMech. “start-up” teams they seek seed capital there are all kinds of hybrids of already and then final funding as they develop successful formats. Frock Advisor, for their idea and its business case. Next an example, is an omni channel fashion they have to plan, shoot and edit a TV platform. Bragbet sounds suspiciously I believe there commercial for their new idea. like social networking meets betting is a growing wealth It follows an earlier idea Coleago while Chatterbox offers yet more had, whereby staff, including top-level consumer insights, this time through of compelling original executives, were put into a War Game instant messaging. digital video that many scenario intended to inspire a new Like Comcast’s rumoured plans to “ way of thinking and a novel approach launch an online video service called viewers simply are to business. Watchable, these could be accused of be- Instead, all it revealed was that senior ing yet more “me too” efforts by old play- not seeing management often find it very difficult to ers, according to analyst Rob Gallagher. escape the telco mindset of networks, As Director of Research at Ovum’s “As voice and video over LTE help devices, tariffs and capacity, according media and entertainment division, operators to reduce the ‘cost per bit’ for to Coleago MD Graham Friend. Gallagher has seen many a telco try to delivering services,” they could help them Nevertheless, Lombardi remains con- go OTT in order to become a true com- offer services more akin to the OTT ones fident that Telecom Italia can create the munications service player, rather than currently on the market,” says Slinger. talent, especially as new opportunities a provider of a dumb pipe. “So far, so OpenCloud’s Head of Marketing Mark arise in areas like the Internet of Things. underwhelming,” he commented in one Windle says WhatsApp’s recent move What are the special talents that of his reports. into voice services could be illuminating. Telecom Italia’s ‘talent scouts’ and “Consumers are hardly crying out for Operators can compete by introducing talent farmers need to get the best out another YouTube or Facebook Video, as virtualised VoLTE services – not only a of their crop? demonstrated by the continued poor fine technological innovation, but also an “First it is important to understand performance of also-rans such as Daily- opportunity for operators to differentiate the new role of telcos in the digital value motion and the likely failure of newcom- their voice services. chain,” says Lombardi. “We have a role ers such as Vessel,” says Gallagher. Mobile operators need to launch to play where there is a need for proximi- There is potential for growth in the enhanced communication services and ty to the customer, a need for security or video sector, as content creators seek open, virtualised VoLTE provides the for end-to-end quality of experience. A to reduce their financial reliance on the means, according to Windle. telco can put together infrastructure as- Google-owned YouTube service, which “Operators could launch new VoLTE sets and digital skillsets alongside it. We keeps 45 percent of revenue generated services much more competitively, and are paying special attention to everything by ads on its platform. they support sustainable differentia- that has a potential to integrate the In comparison Comcast will offer tion,” says Windle. “This model has al- telco industry, such as Smart Spaces, participants to Watchable 70 percent, ready been adopted by some operators the IoT and robotics.” ec

SPECIAL REPORT: OTT / DIGITAL CONTENT

The future of instant messaging is content too Now that OTTs have cracked communications, Owen Hughes explores whether any save havens remain for telcos’ own digital services

messaging] providers added stickers, which helps make messaging more fun and engaging. Since then, the range of content and services available via OTT apps has just exploded.” One noteworthy move from the instant messaging space has come from Snapchat. The photo and video-sharing app dipped its toe into the m-payments market last year when it launched Snapcash, a feature that allows users to send and receive money via the app. While the service is currently only available in the US, it serves to demonstrate that are fewer than ever safe havens for operators to play in as OTT messaging providers explore new ventures. “M-commerce is one of the main areas we see quite a lot of OTT players diversifying into and this is another area that’s becoming a challenge for telcos,” says Rishi Tejpal, Principal Research he OTT players remain the to anyone in their contact list - generally Analyst at Gartner. biggest threat to the future of at a better quality than cellular networks. “Instead of just having an extension to mobile operators’ messaging Meanwhile, owner Facebook has mobile commerce services, some of the T services, and one that isn’t taken the ﬁ ght to Skype by introducing OTT players are actually moving toward going away any time soon. video calling to its Messenger app. mobile payment solutions.” While some operators continue to Add the fact that the company is now While established instant messaging deliberate launching RCS-based apps working on a digital assistant to rival Siri services evolve, new ones are appearing – which promise enhanced commu- and Google Now and it’s clear that OTT from the woodwork. nications and interoperability across providers aren’t content with just offering Market newcomer Yahoo Livetext networks but only if telcos can cooperate users a slightly more pretty-looking text merges live video chat with text, cutting together – OTTs are turning their atten- messaging service. audio out of the equation altogether. tion to voice and other forms of services. Pamela Clark-Dickson, Principal Analyst Livetext Product Manager Arjun Sethi WhatsApp serves as a prime exam- of Consumer Services at Ovum, points claims the service allows user to connect ple of OTT players’ rapid march from out that instant messaging has come a with “the immediacy, simplicity and ease basic instant messaging to all-singing, long way from its humble beginnings. of texting with the expressiveness of all-dancing communications services. “Services such as WhatsApp, Facebook video, without the audio.” The addition of VoIP to the hugely Messenger, Viber and so on have been By way of example, Sethi explains that popular mobile application earlier this successful mostly because they initially the app can be used to share a video year enabled WhatsApp’s 800 mil- enabled free in-app messaging, and more message with a friend without disturbing lion-plus users to make free voice calls recently, voice,” she says. “Then, [instant those around you with sound.

SPECIAL REPORT: OTT / DIGITAL CONTENT

Nevertheless, it’s a late arrival in an attracted the likes of CNN, National want to engage with. already crowded space, leaving its lon- Geographic, ESPN and Comedy Central, “Customers want to be able to gevity in question. all of which are now using the platform connect with family and friends in an CCS Insight analyst Kester Mann sug- to advertise their own material. intuitive way, but they’re also looking for gests ‘me too’ products are an inevitabil- It’s not just Snapchat cashing in on features that make spending time in the ity in the instant messaging market. this tactic, either. Says Gartner’s Tejpal: app more fun, expressive and personal,” “There are a few new things coming “CSPs are also in the advertising space he says. out, [but] there’s only so much innova- [so] if OTT players are moving into it as “One day, messaging will be the way tion you can bring to this area because well, one of the challenges for telecom to communicate with everyone and any- a load of these OTT guys have been operators is to secure their market share thing, everywhere, and we will make sure around for quite a long time and mes- in this domain. that Viber stays fast, simple and secure saging is quite established. There’s only “The moment you move more toward when our users are communicating.“ so much you can add to that,” he says. digital services, you’re providing custom- Of course, operators have launched Sethi is unable to provide any details ers with added value and user experi- their own messaging services in an on where Livetext aims to go from here, ence. That’s one of the things keeping attempt to counter the attraction of OTT, but says: “We’re always looking to inno- users with OTT platforms, rather than with varying success. Yet nothing from vate and improve, and look forward to moving towards operator services.” the telco corner thus far has posed any being able to learn with and from our us- real threat to OTT’s march on the space. ers in order to develop more features.” Being the case, what insights can Yahoo’s service is yet more proof that Everyone in the Shmilov offer telcos about where the instant messaging providers are quick industry is headed next? to capitalise on the momentum of new instant messaging “Right now, everyone in the instant communication trends. space is looking at new messaging space is looking at new func- Ovum’s Clark-Dickson says: “Almost tionality and new ways to engage with all OTT communications apps are now functionality and new their users. offering voice and video chat alongside “ “We can’t speak for others, but at ways to engage with messaging as standard features.” Viber, we’re dedicated to creating a And they aren’t stopping there, either. their users rich, sophisticated experience for our Clark-Dickson continues: “Telcos are users that makes it easy and fun for probably already aware of the fact that a Viber, the multi-platform messaging them to connect with their family and number of the OTT communications pro- app owned by Japanese commerce friends for free. viders have expanded their capabilities company Rakuten, has signed up more “We have a robust set of features that to include content and commerce. than 600 partners” since its launch in our users have embraced, and we’re “This is a fairly standard approach for 2010 as part of its efforts to beef up the focused on continuing to develop and most app developers: build a substan- service with new content and functions, improve the experience for them.” tial base of users on the premise of signing up the likes of the BBC, Buzzfeed Still, operators that devote too much enabling ‘free’ in-app messaging and and web-based music channel SB.TV of their efforts to creating OTT-champi- voice, and then add services for which COO Michael Shmilov says that help- oning apps are risk of being forever one they can charge either consumers, ing Viber’s users connect with brands is step behind, say analysts. brands and advertisers.” a particularly important in for its ambi- Says Tejpal: “Advertising, digital tion of incorporating payments into the content, m-commerce, mobile payments New functionality service in the future. – these are the main areas where we This is another area Snapchat has “Messaging is also no longer about see the OTTs could go into. They can’t proved active. Snapchat Discover, 1:1 communication,” says Shmilov. only rely on instant messaging or voice introduced in January this year, brings “Messaging apps are quickly becoming services, because that model will not be content from other providers directly into the preferred way to consume content, sustainable for much longer. At the end the app itself, thereby offering a platform and we want Viber to be a place where of the day, they need to stay where the through which companies can bring their people can communicate directly with money is coming from.” own services to the attention of Snap- merchants and one day exchange pay- Should telcos give up on instant mes- chat’s users. ment through the platform.” saging completely? Maybe. Either that, Given Snapchat has an estimated Yet the Viber executive stresses that or operators themselves need to carve 100-200 million of these daily, it’s the core principle of instant messaging is the direction the market takes in future. little wonder why Discover has already the ability to offer something that users And that’s no easy task. ec BACK PAGE

Tele2 appoints new CEO as Granryd leaves for GSMA

Tele2 announced in August that its CFO Allison Kirkby would take over as CEO in January 2016. She replaces Mats Granryd who leaves the operator to assume the Director General post at the GSMA. She said: “Together with my leadership team we will continue to challenge the industry.” To register for your free subscription visit www.eurocomms.com/register

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