Facebook is Becoming a Bigger Replacement for "Communications"

We are by now well into the process of non-traditional communication modes disrupting telco products. Now Facebook is taking moves that move it more centrally into person-to-person messaging.

“I believe the future of communication will increasingly shift to private, encrypted services where people can be confident what they say to each other stays secure and their messages and content won't stick around forever,” said Mark Zuckerberg, Facebook CEO. “We plan to start by making it possible for you to send messages to your contacts using any of our services, and then to extend that interoperability to SMS too.”

“With the ability to message across our services, however, you'd be able to send an encrypted message to someone's phone number in WhatsApp from Messenger,” says Zuckerberg. “You can already send and receive SMS texts through Messenger on Android today, and we'd like to extend this further in the future, perhaps including the new telecom RCS standard.”

“In a few years, I expect future versions of Messenger and WhatsApp to become the main ways people communicate on the Facebook network,” he said.

“We plan to build this the way we've developed WhatsApp: focus on the most fundamental and private use case -- messaging -- make it as secure as possible, and then build more ways for people to interact on top of that, including calls, video chats, groups, stories, businesses, payments, commerce, and ultimately a platform for many other kinds of private services,” said Zuckerberg.

That moves Facebook more centrally into communications, and away from a “social network.” “But one great property of messaging services is that even as your contacts list grows, your individual threads and groups remain private,” he said. “This is different from broader social networks, where people can accumulate friends or followers until the services feel more public.”

It is not as though Facebook services replace the “telco” completely, but it is a major expansion of Facebook presence as a platform for communications that otherwise might be thought the purview of a telecom company.

Would Massive FTTH Help Telcos Gain More Broadband Share?

In the fourth quarter of 2018, US cable operators got 841,000 net new internet access accounts, while telcos lost 145,000 accounts. The entire industry gained 724,000 net accounts. So cable operators once again accounted for virtually all of the net gains.

Satellite broadband service providers added 28,000 net accounts.

Some observers think telcos would do better if they spent lots more capital on upgrading their networks to fiber-to-home platforms. Maybe not.

MoffettNathanson's Craig Moffett notes that AT&T's expanding fiber-to-the-premises footprint hasn't swung market share. AT&T lost subs in 2018 even as the FTTH footprint expanded by four million during the year.

Of course, that could change as AT&T has more time to market services, as take rates often climb for the first several years after marketing begins. And AT&T also has to deal with the older digital subscriber line base, which is uncompetitive with cable offers, for the most part.

You Cannot Tell the Ecosystem What to Do

Vertical integration worked fine as a business strategy for telcos in the monopoly era. “You don’t need it (flexibility, agility) when you have a very predictable environment because you can organize and orchestrate things neatly,” says Jacobides. Cost reduction works, as a strategy, when markets are stable.

Ecosystems are useful when there is market variety or there isn’t a predictability of demand. And that is why connectivity providers, who now are part of the internet ecosystem, have to become more agile. Telcos and connectivity providers are not at the center of their own stable industries.

So why the premium on agility? When a firm is in an ecosystem, even when you are the the ecosystem orchestration agent, you cannot tell the ecosystem what to do. In fact, you have to rely on the ecosystem because there is no way any single firm can figure out how to produce all the value produced by the ecosystem.

source: MIT Sloan Management Review

 ”If I’m Android or if I’m Apple, I don’t know, which part of this variety is going to work for you,” said Michael Jacobides, London Business School professor. “Neither am I good in producing all this variety.”

And it is not clear if, and when, connectivity providers actually can be the orchestrating agents of some part of the ecosystem. It seems unlikely a connectivity provider ever can create a full ecosystem around itself.

On the other hand, “services have extremely fast cycles where you have much smaller bets, where you have much more rapid developments, where you need to be making decisions and changing your decisions a few weeks at a time,” said Jacobides. And connectivity is nothing if not a services business.

So ambiguity is the essential price of operating in any ecosystem: no single firm can produce most of the value, or anticipate what end user demands are going to be.

The thing that is new is the extent to which ecosystems are more important than traditional firms are today,” argues Michael Jacobides, London Business School professor.

The reason virtualized networks are viewed as strategic is agility; the ability to create and try new services and features very rapidly.

FTTH Adoption Exceeds 50% in New Zealand

Consumer adoption of ultrafast broadband in New Zealand has exceeded 50 percent, according to a report by the Ministry of Business Innovation and Employment. UFB is defined as “fiber to home” offering 100 Mbps downstream.

source: New Zealand Commerce Commission

How Will Robots in the Enterprise Change Executive Roles?

A recent PwC study estimates that, on average, the proportion of jobs at high risk of automation will be roughly 20 percent by the late 2020s, and 30 percent by the mid-2030s. Most expect the bulk of changes will happen across lower and middle levels of an organization. But roles of firm leadership will have to change as well.

source: PwC

"Growth is Hard"

I leaned a long time ago in management classes that the most-important decision an executive ever will make is the choice of which market to enter (assuming one has a choice). In other words, longer-term success hinges on whether your chosen market has high growth rates, or slow growth rates; is a bigger market, or a smaller one; tends to feature high profit rates or low rates.

And “growth is hard,” say consultants at Bain and Company. About nine percent of firms studies by Bain actually have sustainable and profitable growth.

source: Bain and Company

source: Bain and Company

What is Your Firm's Core Competency?

What are your firm’s core competency or “unique selling proposition? A core competency is the one thing, or small number of related things, that a particular firm does better than any other firm in its industry, not simply “things we do well.”

Granted, in most industries there might be an actual “unique” competence. There are, to be sure, many who would argue core competence does include “things we do really well,” but always with the implication that those things allow one firm to do better than its competitors.

A truly-unique and core competence is likely to be quite rare.

The same sort of thinking underlies the notion of the “unique selling proposition,” the value one firm’s offer represents that cannot be duplicated by any other firm in the same market. A core competency is a deep proficiency that enables a company to deliver unique value to customers.

It’s tough.

source: Bain and Company