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