'Look outside' for innovation

16 Oct 2008
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To complete at 'internet speed' service providers need to stop focusing on developing new apps and services and look outside for innovation.

Operators' mentality of having to build services in-house when no business case yet exists and always having carrier-grade reliability has to change, said Oracle chief architect and CTO Stephane Maes.

Speaking at ITU Telecom Asia in Bangkok last month, Maes said that since operators are not the innovators, they need to delegate the risks and development of untested new services to third parties.

Kees Rovers, founder and director of non-profit Close the Gap in the Netherlands, said during another presentation in Bangkok that the design of products in this new networked environment is not done by the industry but by customers. He claims telcos are not structurally able to innovate quickly.

The success factor is at the end of the value chain, he said. 'It's giving power to the people. We have tried to stop this. We've seen it in the music industry when kids are looking for downloads. We see it with doctors and the medical profession. They don't want e-health, or video access or even to be reached by email. They are reluctant to innovate, just like incumbent telcos.'

To discover what your customers or your citizens want, Rovers suggests starting with focus groups and citizen groups, especially with the elderly, and listen to them. They will tell you if the product 'fits'. 'Too often operators are only listening to their shareholders.'

He said that if you unite your customers, they will change your company. But if you don't, you'll go out of business.

He insisted that for operators it's all about access and not services, which so many services providers are focused on. 'Don't worry about services, which can be done by partners or third parties. It's not about content or a killer app.'

IBM's GM of its Global Telecommunications unit Michael Hill agreed. 'I get tried of hearing people say they are only a commodity pipe. There can be plenty of money in a pipe, and a lot of industries would like to be in that situation.'

The key, Hill said, is to create a platform that is open to partners, which can also provide others with pure access. 'There are a lot of ways to compete and operators don't have to find and develop services.'

Jenesis Consulting MD Jeanette Whyte argues that the major telcos have moved to using third parties for some time and the upstarts (MVNOs) have never taken that route. 'I'm surprised to hear they still want to build apps and services themselves. As they invest in 3G licenses and networks, it's all about reducing their cost base, and it's not cost-effective to develop in-house.'
She pointed out that operators now don't have the headcount and get more feature-rich apps when they outsource.

TM Forum's Tony Poulos told Telecom Asia that there are two schools of thought. One school is outsourcing the development of specific services and offering the developers partial payment and a slice of the action. 'Apple has turned the whole model on its head with the AppStore, and Google is saying it will do the same with Android.'

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