Selling the Invisible Always is Tough

Selling the invisible always is difficult. Some products are intangible,  there being no way the buyer actually can determine “quality” in any direct way, until the services are provided. Legal, medical, financial or other services provide good examples.

Marketing advice, crisis management and other services also are very hard for buyers to evaluate, in advance of purchase. There is no physical object to inspect, so a potential buyer has to try and determine value some other way.

source: Marketing study guide

So think about it: all  communications and connectivity services are intangible products, for which a buyer has no way to determine quality in advance of purchase, and no way to compare quality to other potential buyers except to “try them.”

There are some obvious consequences. If a buyer cannot independently determine value or quality, buyers might be prone to distrusting quality claims. Perhaps that is why service providers tend to score low on consumer satisfaction surveys. People might know they have no way of making judgments as they can with physical products. And when “value” cannot be determined, it is hard to determine whether “price” is right, either.

In fact, every connectivity service--video, voice or internet access--scores at the bottom of multi-industry indexes in surveys of customer satisfaction conducted by the American Customer Satisfaction Index.

source: ACSI

One might object that all internet apps also are “intangible,” and that is true. Consumer surveys tend to show higher satisfaction with apps than connectivity services.

Make it personal is one typical bit of advice for sellers of intangible services. In other words, explain “how it makes your life better.” “Show the benefits” (outcomes) is another way to sell an intangible product. When even that is tough, sell “peace of mind.”

That's why credentials, furniture, street address, references and "experience" become proxies for value and competence where an intangible product is concerned. Even tangible products such as fashion items or vacation resorts have a huge and similar problem, namely creating a brand or mystique that helps potential buyers evaluate the product, which either is a means to another end, or an "experience."

Trust also is important for selling intangibles.  As there is nothing tangible to show customers, customers have to trust their suppliers. And though it would be hard to show a direct correlation, one element that promotes trust might be that lots of other customers have chosen a particular supplier. So market share becomes a proxy for value and a reason for greater trust.

In his book Selling the Invisible: A Field Guide to Modern Marketing, Harry Beckwith makes the point that an intangible product cannot be sold in the same way as a physical product.

“In fact, a service does not even exist when you buy one,” notes financial analyst Ben Carlson. “If you go so a salon, you cannot see, touch, or try out a haircut before you buy it. You order it. Then you get it.”

Product failure also is harder to determine. Did you get good advice? How a good a job did your painter, dentist or doctor do?

That is unknowable. That is why products can have warranties. There is some way of knowing and quantifying the risk of product failure.

Most services cannot be similarly quantified, with the possible exception of outage or availability performance.

The big point is that customers buy connectivity services that mostly come without guarantees or certainty. So anything suppliers can do to provide proxies for quality should help.

And that is why “brand” reputation matters. Irt is a proxy for quality and a reason for trust. That is why personal relationships matter: they are proxies for quality and reasons for trust.

That is why good storytelling matters.

Companies and people sell themselves, their vision, philosophy and values. Being likable is a prerequisite when the customer has endless choices.

“Prospects do not buy how good you are at what you do. They buy how good you are at who you are,” says Beckwith.

That is why sellers of broadly similar products benefit from “accentuating the trivial.” That might be one of the few ways to differentiate, when products perform in broadly similar ways.

Service businesses are built on promises, it is fair to say. A good brand is synonymous with a firm or person who will fulfill those promises on a consistent basis so you know exactly what you’re getting when you sign up.

Verizon’s brand promise has long been “best network.” So anytime that is challenged, the whole value of the brand is challenged. It really is quite a bit harder to explain what the key brand promise is for the other tier-one service providers.

Comcast’s latest tagline is “the future of awesome.” Comcast customers who have used other major service providers might agree that tagline actually does tend to resonate with user experience.

T-Mobile US says it is the “uncarrier,” with a clear “we are not like the other guys” positioning. Many of T-Mobile US customers might agree.

AT&T changes its tagline every so often, so it is hard to say what the core brand promise happens to be. Sprint also makes changes every now and then. The point is that it is not clear what the brand promise is.  

That arguably is a problem for everyone except Verizon, which has been consistent. And that might illustrate the problem of selling intangible connectivity services. “Best network” is at least a proxy for quality that people understand. I am hard pressed, in most cases, to explain what the value proxies are, where it comes to service providers.

SDN and NFV are Different, But Telcos Will Use Both

Even if the terms are used interchangeably, network functions virtualization (NFV) and software defined networking (SDN) arguably are different. But both seem to be part of the broader push towards core networks that are virtualized and easily programmable. So SD-WANs reflects an SDN approach, while use of white box network elements represents NFV. Telcos will do both.

At a high level, one might argue that the business outcome for network functions virtualization (NFV) is lower cost networks. One might also argue that the business outcome for SDN, while contributing to lower cost, is greater network control.

NFV  is the process of moving services such as load balancing, firewalls and intrusion prevention systems away from dedicated hardware into a virtualized environment, many would agree. Others might note that NFV makes use of “virtual machines” to supply network functions.

And, as with many innovations, the initial drive to reduce cost eventually leads to new thinking about use cases, revenue streams and service creation. On the other hand, SD-WANs are a prime example of the opposite trend: a new service offering requiring separation of control plane and data plane.

source: TM Forum

And many would say one core attribute of NFV is the ability to separate control plane functions from data plane operations, so software can run on commodity hardware. But that is a core principle of SDN as well.  

Both are based on network abstraction. But SDN and NFV differ in how they separate functions and abstract resources.

SDN abstracts physical networking resources--switches, routers and other network elements--and moves decision making to a virtual network control plane. In this approach, the control plane decides where to send traffic, while the hardware continues to direct and handle the traffic.

NFV aims to virtualize all physical network resources beneath a hypervisor, which allows the network to grow without the addition of more devices.

In other words, SDN separates network control functions from network forwarding functions.  NFV abstracts network forwarding from the hardware on which it runs. You might also argue that NFV provides basic networking functions, while SDN controls and orchestrates them for specific uses.

So what makes that different from a software defined network (SDN)? That often is hardly to explain. SDN aims to automate processes, while NFV often aims only to virtualize them.  Software defined networking (SDN) is an approach to using open protocols, such as OpenFlow, to apply globally aware software control at the edges of the network to access network switches and routers that typically would use closed and proprietary firmware, some would say.

In principle, then, an entity can deploy SDN without NFV, or NFV without SDN.  

As a practical matter, NFV often ie easiest to understand as a way of separating software and controller functions from dedicated network elements. By implementing network functions in software that can run on a range of industry standard servers hardware, NFV aims to reduce cost and make networks more flexible.

SDN, on the other hand, seeks to create a network that is centrally managed and programmable. In other words, SDN separates lower-level packet forwarding from higher-level network control.

Service Providers Embrace Open Source

The global telecom industry has come a long ways from the days of proprietary platforms, solutions and network elements. Consider the heavy service provider membership in the Telecom Infra Project, an effort to develop open source platforms for communications and mobile networks.

TIP Summit 2017 - Jay Parikh Keynote from Telecom Infra Project on Vimeo.

A survey of 150 mostly-technical professionals from 100 companies finds 73 percent are “extremely” or “mostly” confident that open networking solutions can achieve the same level of performance as traditional networking solutions.

Some 59 percent of respondents say they currently are using open networking solutions and some 84 percent of those that are not, plan to do so within the next three years.

Still, technology immaturity is the biggest concern for 46 percent of respondents. The next closest concern, at 23 percent, was performance itself.

As you would expect, cost savings are the driver. Some 75 percent of respondents say cost savings are the expected outcome of deploying open networking solutions.

The survey of 150 networking professionals from 100 communications service providers globally, included 48 percent who  work for converged service providers owning both fixed and mobile networks.

Mobile service providers were 25 percent of the sample, while wireline, cable and satellite operators made up 22 percent. Some 57 percent are in North America; 17 percent from Europe and 14 percent from Asia.

Respondents from Central/South America comprised eight percent of the sample, and those from Middle East/ Africa represented four percent.

Survey respondents worked in technical roles. Nearly 25 percent work in engineering and 20 percent say they work in network design and planning. Some 19 percent work in network operations and 11 percent in research and development.

Where Could Blockchain Add Value in Communications or Media?

Will disintermediation be one of the ways blockchain ultimately has value in the “technology, media and telecom” (TMT) industry? Possibly. Disintermediation is the process of removing distributors from any supply chain. Think “over the top” and you get the concept. So anything that promises disintermediation could have big consequences in the TMT space.

In the case of blockchain, that disintermediation could be a positive, not a negative, for content owners or distributors, though. Think about the problem of authenticating users and subscribers; participants in any social media transaction or in any highly-distributed access services environment.

Consider the case of a mobile services provider that amalgamates access to multiple networks, including assets secured from two or more other underlying service providers. Think of Google Fi, which uses Wi-Fi, Sprint and T-Mobile US networks. In some future scenario, perhaps blockchain is used to authenticate users for access to each of the participating networks.

To be sure, there are other ways of doing so. The issue is whether blockchain might be easier or cheaper, eventually, perhaps for cross-border (international roaming) transactions, for example. International settlements always are seen as a value of blockchain, in terms of taking cost out of such transactions.

The idea is that blockchain could have value whenever databases must be kept or transactions completed. Communications and content arguably have lots of places where those two things happen.

Blockchain is a technology of more than average potential usefulness in the “technology, media and telecom” industry (or industries; it is hard to say which is the more-apt description), according to consultants at McKinsey. In fact, in most industries, blockchain might have both low feasibility and relatively-modest impact, the consultants say.

Essentially, blockchain offers the hope of “perfect audit history,” without fraud. That obviously has implications for the financial industry, or any situation where “trust” is essential. And since “money” is always based on trust, that matters.

But trust has become a bigger issue for social media and advertising as well, which is likely why blockchain could have relevance in the TMT space. Though blockchain is not foolproof, it arguably is more hardy than most other ways of using databases, as fraud generally requires a wide level of willingness to commit fraud (something over half of all connected computers are in on the attempt, McKinsey essentially argues).

source: McKinsey

Nor can blockchain check on the integrity of data that is input into the database. “All that the blockchain itself does is ensure the integrity of the individuals making the transaction, ensuring that you have the right combination of a public and private key,” McKinsey analysts note.

source: McKinsey

Blockchain: One View of What it Is, and Is Not

Blockchain is one of those concepts one hears about all the time (artificial intelligence and machine learning also), is likely destined to be important in the communications industry, but in ways that are not always intuitive, or necessarily visible to most practitioners.

It is rather akin to "electricity,"  "computing" or "cloud computing" or "open source" in that sense. 

AT&T Builds 5G on 4G

It often is said that 5G builds on 4G, and that is correct. Consider AT&T, which is boosting 4G speeds as it launches 5G markets. AT&T plans to bring mobile 5G to 12 cities in 2018, reaching at least 19 cities in early 2019.

AT&T also has announced 99 new 5G Evolution markets, bringing the total number of such markets with these technologies to 239. 5G Evolution markets are locations where peak theoretical wireless speeds for capable devices are at least 400 megabits per second.

AT&T says 5G Evolution will be available  in over 400 markets by the end of 2018. In the first half of 2019 AT&T plans to offer nationwide coverage, making 5G Evolution available to over 200 million people.

The other technology AT&T is deploying is LTE-LAA, which boosts peak theoretical wireless speed for capable devices to a gigabit per second. LTE-LAA is now live in parts of 20 cities with plans to reach at least 24 cities in 2018.

In terms of devices, AT&T offers 13 devices capable of accessing both 5G Evolution and LTE-LAA network technologies. The devices include: LG V30 and LG V35 ThinQ, Motorola Z2 Force Edition, Netgear Nighthawk Mobile Router, Samsung Galaxy S8 and Galaxy S9 series devices and others.

source: AT&T

Could Edge Computing Change Smartphone Design and Cost?

Edge computing is almost always touted as a necessity in the 5G era to support ultra-low-latency services, the typical examples being support for autonomous vehicles, remote surgery or even prosaic requirements such as supporting channel changes on video screens supporting ultra-high-definition TV (4k, 8K, virtual reality).

But are there are other possibilities? Consider the advent of the Chromebook, a “PC” that essentially conducts all computing activities at a remote cloud data center. The advantage is lower-cost customer premises equipment (CPE).

Sure, one needs a screen, power supply, keyboard and some amount of on-board memory and processing. But not so much. It often is said, with a good measure of truth, that a Chromebook is a device supporting a browser, and not much more.

So can edge computing support a similar approach to the design of smartphones, essentially creating a device that resembles earlier efforts to create network-centric computing devices? Maybe, some think.

Could edge computing create new opportunities for access providers supplying phone services? AT&T believes that could happen.

AT&T plans to build thousands of small edge computing data centers in central offices and other locations across the United States. So could a big edge computing network affect mobile phone design as much as cloud computing has affected the design and use of computing devices? AT&T’s Mazin Gilbert, VP, thinks that is a possibility.

Edge computing could create the conditions for really cheap smartphones. “Can my $1,000 mobile phone be $10 or $20 dollars, where all the intelligence is really sitting at the edge?,” Gilbert asks. “It’s absolutely possible.”

That obviously would dramatically reduce barriers to smartphone use by everyone, while providing some means of differentiation for access services provided by AT&T. Both trends would provide more reasons for consumers or businesses to use the AT&T network, instead of rival networks.

It has been decades since tier-one telcos actually had a significant role in customer premises equipment business. Back in the monopoly era, telcos actually made and sold the phone devices people used. In fact, it was illegal to use any phone not manufactured by the service provider.

In the competitive era, service providers have been irrelevant as suppliers of CPE, as that role was ceded to device suppliers active in the consumer electronics space.

Edge computing could change those assumptions. Perhaps a firm such as AT&T licenses the building of cheap smartphones that rely extensively on edge computing and are designed to work on AT&T’s network.

As always, that approach will start out as a “useful for many people” but not a “full and complete substitute” for standard smartphones able to work globally. But not every customer requires global roaming. For most customers, coverage most places in the United States will work.

As any Chromebook user will attest, the “connect to Wi-Fi or you cannot do too much” approach is not perfect. You cannot “compute” anywhere (except to conduct offline transactions or activities). But it works, especially if one has the ability to tether to a smartphone.

Something like that could be possible once edge computing is fully built out.