10 'Innovation Principles' for success in a disrupted telco marketplace

Taking care of a firm's biggest-spending, most-profitable customers is a rational strategy for virtually any company in any industry, and the telecom business is no exception.

But there's a downside to success. When a business model works well, there is resistance to change, and sometimes change is needed.

Analysts at Telco 2.0 point out that one way to jumpstart innovation is to focus on "unattractive" customers. By that they mean a focus on why some customers or segments have proven difficult to serve at reasonable margins, or which have not so far generated enough gross revenue.

That will not be an instinctive reaction, as competitors typically will have incentives to launch attacks at a firm's best customers, leading an incumbent to focus even more attention on the "best" customers.

On the other hand, attackers also have incentives to attack those customer segments that are not well served by incumbents. Short-haul or discount airlines have proven troublesome for incumbent airlines, for example.

The point, say analysts at Telco 2.0, is to seriously examine why a particular customer segment cannot be served at a reasonable profit, and retool the delivery system so a reasonable profit can be made.

10 'Innovation Principles' for success in a disrupted (Telco) marketplace

Waxman Net Neutrality Bill Goes Nowhere

Rep. Henry Waxman (D-Calif.) now says his net neutrality bill is effectively dead after Rep. Joe Barton (R-Tex.) declined to support the legislation, the Washington Post reports.

The draft also would have prohibited the FCC from imposing regulations on broadband Internet access service or any component of the service under Title II of the Communications Act, except when a broadband Internet access provider prefers to do so.



The rules would have applied to all consumer broadband connections, wired and wireless.

The short draft basically codified the existing "Internet freedoms" rules the FCC has bee using, without apparently adding language that prohibits application of quality-of-service features to consumer broadband access.

The rules would prohibit service providers from blocking lawful content, applications, or services, or prohibit the use of non-harmful devices, subject to reasonable network management. Service providers do not object to those rules.

The draft language also would have allowed reasonable network management practices, specifically saying that such practices  "shall not be construed to be unjustly or unreasonably discriminatory."

The draft language did not elaborate on whether enhanced services or other quality of service features are permissible. The language focused on "minimum" standards of behavior, but did  not specifically address whether consumers have the right to buy services that offer expedited or quality-assured delivery.

Video Cord Cutting Threat is Overblown, Analyst Says

Some have noted a recent upsurge in investor interest in online video services, while others note a potential valuations bubble developing. You probably have to count BTIG analyst Richard Greenfield in the skeptical camp.

"The concept of being a so-called 'cord-cutter' sounds cool (leveraging technology) and,or,rebellious (fighting the entrenched multichannel video system)," BTIG analyst Richard Greenfield says. "But cool and rebellious do not necessarily translate into action."

While we are concerned about the long-term potential of "over-the-top" video, it is not a major threat to the cable and satellite industries over the next three to five years, he argues.

"Rather than blame the obvious headwinds, including a U.S. economy with housing going nowhere fast, high unemployment and consumer discretionary income falling, investors seem to have convinced themselves that concerned video cord cutting is becoming a real threat to the multichannel video entertainment industry.

At a high level, just about everybody would say the pressure is growing. Where observers disagree is about the immediate prospects. Greenfield says a survey of 1,300 consumers suggests the threat is overblown, at the moment.

Of the 1,200-plus subjects that subscribed to multichannel TV service, 37 percent say they have considered dropping their cable, satellite or telecom video service.

But when the 434 potential "cord-cutters" were asked if they would actually drop their subscriptions if it meant losing live sports events, missing out on live reality TV results shows and missing some of their favorite programming entirely (such as "True Blood" or "Weeds"), only 96 people (less than eight percent) would still consider dropping their service.

That would be in keeping with recent data on video churn, which suggests behavior at the one percent or two percent a year level.

But adjusting for the young-skewing, Web savvy survey panel, he concluded that "actual cord cutting risk is well below five percent.

Such surveys do not account for the reluctance of content owners to mess up their own revenue streams by making valuable content available in ways that damage current revenue streams. People might like the idea of buying and watching only what they want. But content owners are not going to allow that.

The desire to "cut the cord" might be there, but people will not be able to act on the impulse and still see what they want.

But some attitudes and values uiiWhat does a cord cutter look like? They are younger, watch less TV and are less likely to get HBO or Showtime, according to Greenfield.

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Telepresence for the Home?

 Cisco executive Bob Plamondon, telepresence is now trickling down the market down to small enterprises. And the next stage of that adoption curve is the home market.

In The Future, All Media Will Be Personalized, Facebook Exec Argues

There will always be a place for mass marketing, but in the next three- to five years, a website that isn’t tailored to a specific user’s interest will be an anachronism, Facebook COO Sheryl Sandberg says.

Facebook’s Sandberg: In The Future, All Media Will Be Personalized

Optimism About Tech Recovery Might be Misplaced

Gartner analyst Andrea Di Maio says he "has visited five European countries in the last two weeks, meeting over 50 clients, and almost every single conversation has been either about how to reduce costs or about how to deal with specific technical or organizational challenges in a cost-constrained environment."

That doesn't sound like a foundation for a renewed wave of information technology spending, though there has been optimism on that score in the U.S. market recently.

What might really be worrisome isthe magnitude of the cuts and the timeframe for expected savings. He says he has "heard numbers between 20 and 40 per cent and timeframes of a year or less."

It is fair to say that most CIOs and IT leaders are simply unprepared to deal with this.

Tech recovery? This doesn't sound like it.

When There is Nothing Else Left Than Cutting Costs

For Millennials, Byte-Sized Is Best

One of the common observations (complaints) about Millennials is that they lack the ability to sustain attention, and as a corollary, that they don't read much. Contrary to common perceptions, Millennials do read.

But according to the New York Times, 15 to 24 year olds spend on average 50 minutes a day reading and ‘pursuing other interests’. This is much higher than 25-64 year olds who spend just 32 minutes doing so.

Also, according to a U.K. McKinsey study, the average person consumed 72 minutes of news a day, up from just 60 minutes in 2006. What’s more, the increase was driven almost entirely by people under the age of 35.

All that noted, Millennials have a tendency to want content short, condensed and artfully presented with colorful graphics, bold type and simple headings. And they want condensed content.

For Millennials, Byte-Sized Is Best

New Google SEO Guide is Out

If you are the kind of person who likes to know something about search engine optimization, Google has just published a new version of its guide.

Google SEO Guide

Apple's segmentation strategy

Apple is different. Most people sort of intuitively understand that. Some might suggest that the iPad "has" to cannibalize low-end MacBook sales.

The alternative view is that Apple is cannibalizing low-end Windows machines, instead.

The iPad targets a set of applications and use casesthat are not dependent upon keyboards and mice. But there are plenty of jobs for which a tablet is an unsatisfying replacement for a traditional computer, and so the segmentation is pretty clear.

Apple also makes sure it doesn't make low-end MacBooks for which an iPad would represent a practical alternative. Beyond that, every product in the Apple line has a fairly easy to understand role in a user's life, with different form factors and input methods that make each product suitable for different use cases.

Apple's segmentation strategy

Android to Double Phone Market Share This Year

Android phones will take 24 percent of the entire smartphone market in the fourth quarter, more than doubling its 10 percent share at the end of 2009, Morgan Stanley analyst Ehud Gelblum predicts.

Microsoft's Windows Phone 7 devices will grab seven percent of the market in the fourth quarter, as Windows Phone 7 devices will be available from all the major U.S. mobile providers.

Meanwhile, Apple's share of the growing market will slip slightly this year to 15.3% from the 16% it had at the end of 2009, according to the report.

Android to Double Phone Market Share

Teen Mobile Usage Has Exploded, As You Know

One of the reasons mobile usage by teenagers has grown so much is a confluence of necessity and opportunity.

Having exhausted most other demographics, mobile operators found they had clear incentives to get teenagers using mobile services.

The "family plan" created the cost incentive for parents to do so. They did. 

Long-Form Online Video Viewing Keeps Growing

Viewing of long-form (movie length) online content is growing, to nobody's surprise.

The big question is how soon critical mass is reached, and there are repercussions for alternative viewing modes.

Part of the answer hinges on willingness to pay for such viewing, either as part of some other subscription service, such as cable TV or Netflix, or new appetite for on-demand viewing, for which there is a discrete fee.

U.S. Mobile Content Revenue Forecast

Mobile content might not be a huge business at the moment, but it is about three times as large as mobile advertising is, in 2010.

Going forward, it looks as though gaming and video are where the larger opportunities might lie.

Millennials are Social, Period

Fully 78 percent of Millennial internet users engage with social media, including blogs, microblogs, social networks, and photo- and video-sharing sites, according to a Harris Poll.

But social media usage has grown in virtually every age demographic.

Millennials Online: Marketing to a Moving Target

The Blogosphere: Colliding with Social and Mainstream Media

Social networks and microblogs have in recent years nudged blogging off the social media pedestal.

For some consumers, Facebook and Twitter have supplanted blogging as life-streaming outlets.

But blogs remain an important part of the landscape. This year, 51 percent of U.S. Internet users, or 113 million people, will read blogs on a monthly basis.

By 2014, the blog audience is expected to rise to 60 percent of internet users, or 150 million people.

The number of bloggers will also grow, though somewhat more modestly. In 2010, 11.9 percent of US internet users keep blogs. By 2014, there will be 33.4 million bloggers in the United States, representing 13.3 percent of internet users.

The Blogosphere: Colliding with Social and Mainstream Media

Will LightSquared’s LTE Network Find a Business Model?

LightSquared’s wholesale LTE network might not succeed as a major platform for 4G mobile providers. For starters, there might not be enough customers.

So some speculate LightSquared might instead be able to build a model based on middle-mile backhaul, basically hauling traffic from telco and other ISP points of presence back to major Internet backbone locations.

backhaul revenue potential from the 800 to 1,200 rural telcos and some number of independent or rural ISPs to make such a strategy feasible. I haven't made any attempt to run the numbers, but it seems intuitively unlikely.

Rural Internet access customers tend to pay less, and connect less, than their urban and suburban counterparts. Many ISPs or telcos in rural areas serve a few hundred total customers for voice, and less than that for Internet services. A market for Ethernet connections in the middle mile does exist. What isn't clear is whether the backhaul revenues are substantial enough to build a full business case for LightSquared.

Of course, LightSquared would not say that is the case, but rather than middle mile backhaul is a portion of the total potential revenue streams. That's probably true.

Will LightSquared’s LTE Network Reduce Middle Mile Costs?

Not So Many Twitter Replies and Retweets

There is a notion that social networking communication patterns "should be" symmetrical, or something sort of symmetrical, or at least highly interactive.

Systomos finds this is not the case. After analyzing 1.2 billion tweets, Systomos found that that 29 percent of all tweets produced a reaction of any sort, either a reply or a retweet.

Of this group of tweets, 19.3 percent were retweets and the rest replies. This means that of the 1.2 billion tweets we examined, six percent, or 72 million were retweets.

Sysomos also discovered that 92.4 percent of all retweets happen within the first hour of the original tweet being published, while an additional 1.63 percent of retweets happen in the second hour, and 0.94 percent take place in the third hour.

That's a classic "Pareto" distribution, often known as the "80/20" rule or a "long tail" distribution. Since so many processes and distributions in the natural world follow a Pareto curve, this should come as no surprise.

Pareto would suggest that a small number of tweets produce most of the replies or retweets. And that is precisely what Sysomos found.

Replies and Retweets on Twitter, a Report by Sysomos

Here's Why Google Needs To Buy Twitter Immediately

Google "Needs" to buy Twitter, for any number of strategic reasons, Henry Blodget argues.

Facebook is emerging as a serious threat to Google's core business, and Twitter is the only social company Google can buy that might have a chance of combating this.

Apple is getting into social networking, and Apple is among Google's most-dangerous competitors, though not the only one.

Google hasn't gotten traction with its internal "social" efforts, and it might be too late to catch up.

Google has the money.

Twitter should ultimately come upon a viable revenue model, and it could be a big one.

Here's Why Google Needs To Buy Twitter Immediately

Gmail Messages Now Can be "Unthreaded"

The way Gmail organizes mail into threaded conversations has been a "love-hate" sort of issue; some people find it very useful, and some us keep finding we are losing the "latest" messages because the messages are appended to an existing conversation thread that is on page two or three of an inbox.

Google now has decided to allow each user to decide to "thread or not thread." It's a big deal for some of us.

To change your settings, go to the main "Settings" page, look for the “Conversation View” section, select the option to turn it off, and save changes. If you change your mind, you can always go back.

Thank you, Google!

Official Gmail Blog

82% of Enterprise Outages Caused by Power, Hardware or Telecom Service Failure

Loss of electrical power, hardware failure or loss of telecom service accounted for about 82 percent of the outages experienced by some 200 medium and large businesses over roughly the last year, CDW has found.

While 82 percent of the 200 businesses completing the survey felt confident that their IT resources could sustain disruptions and support operations effectively, 97 percent admitted network disruptions had detrimental effects on their businesses in the last year.

Also, about 1800 smaller businesses reported network disruption of four hours or more within the last year. CDW estimates that such network outages cost U.S. businesses $1.7 billion in lost profits last year.

"The survey confirms that while many businesses believe they are prepared for an unplanned network disruption, many are not – and yet the three most common causes of IT outages are addressable," said Norm Lillis, CDW vice president, system solutions. Power loss ranked as the top cause of business disruptions over the past year, with one third of businesses reporting it prompted their most recent disruption. Hardware failures caused 29 percent of network outages, followed by a loss of telecom services to facilities (21 percent). "

The survey also revealed that businesses need to take advanced preparation more seriously and support employees more effectively with network accessibility.

While 53 percent of respondents said employees are instructed or given the option to work from home when a foreseeable network disruption approaches (a weather event, for example), only a third of businesses activate standby communications and network systems to support increased remote access when warned of such an event.

In fact, while respondents reported that, on average, 44 percent of the workforce normally has telework options, they said that only 39 percent of employees could telework during their most recent network outage.

link to full study