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Free to members
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NEW SERVICES
BEAR FRUIT
December 2012 | www.tmforum.org Ideas in action drive
growth in the digital world
Hot 10 areas of
innovation to act
on now
Matthew Key, New research: Sponsored by:
CEO, Telefónica service providers
Digital on how share their insights
to succeed and plans
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Everything that can be digital will be.
We’ve seen the future. And it’s digital. In just There are five core principles of the Initiative:
ten years, the way we communicate,
consume information and entertainment has
been changed forever. And that’s just the start.
The Digital Revolution is transforming our
personal and professional lives. We demand
simplicity, but the complexity behind our
interconnected digital lives is only growing.
TM Forum’s Digital Services Initiative focuses
on overcoming the end-end management
challenges of complex digital services,
enabling an open, vibrant digital economy.
For more information on the TM Forum Digital Initiative visit www.tmforum.org/digital
DIGITAL LIFE
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FOREWORD
A warm welcome to this
first edition of Digital Life
In the last 10 years, digital revolution has already global saturation point, a
how we communicate, presented many paradoxes. new breed of competition
consume information and To those who said we were has emerged – enabled by
entertainment, and conduct about to witness the end that very saturation and the
business has changed of reading and literature, a proliferation of connectivity.
forever. The digital revolution recent study showed Amazon Competitive ‘over-the-top’
is transforming our personal customers who own a Kindle services are exerting growing
and professional lives at eReader device actually read pressure on the established
speeds we’ve never seen up to four times more books communications business. In
before. Technology is no than those who do not. August 2012, SMS alternative
longer the preserve of Becoming digital has simply WhatsApp hit the milestone
wealthy nations: in the same made it easier to purchase, of 10 billion sent messages
decade, digital services carry and so read books. in one day. That’s a ten-
have helped overturn The effect on TV viewing fold increase in 12 months,
governments, transform has also been paradoxical. and just one of countless
the distribution of aid and A recent study in the U.S. examples of the rapid erosion
medicine, and accelerate showed that teenagers today of traditional voice and
economic growth in watch more TV than ever, messaging services. True, it’s
developing countries. thanks to second screening still a fraction of global SMS
The impact on established and social media. Going traffic, but it’s the speed of
business has been profound. social makes TV watching a this migration – and the loss
The music, movie and more engaging experience, of margins it represents –
publishing industries, and and not just for teenagers: that’s raising temperatures in
their entire value-chain of the majority of tablet owners the board rooms of operators
production, distribution and regularly use their device around the world.
retail have been changed while watching TV too. In the words of Intel’s
irrevocably. Only now are the In a digital world that former CEO Andy Grove,
winners and losers of this moves at the speed of “only the paranoid survive.”
first wave of the revolution innovation, the future can Disruptive technologies
becoming clear. But it’s not be hard to predict. are the nemesis of any
over yet: in the next 10 years complacent business, and
every industry – and the Only the paranoid survive for communications service
global economy itself – will For the communications providers, now is the time for
be transformed. In short, industry, the future is equally reinvention.
everything that can be digital, uncertain. Few industries in Of course, connectivity is
will be. history have faced so many the oxygen of the information
Predicting the ultimate threats and opportunities, age, and data connections
effect of disruptive at the same time. As the and usage are only set to rise
technology isn’t easy, and the mobile market approaches exponentially. But providing
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connectivity alone will not Crossing the chasm to
be enough. It’s bundled, digital services won’t be
enterprise-grade digital easy. There’s the existing
services delivered through business to steer through
partnerships, and platforms harsh conditions; ever-
combined with connectivity, increasing, well-funded
that hold the keys to growth in competition; shareholders
the face of shrinking revenues demanding rapid growth;
from established services. legacy infrastructure and
integration challenges; and
Enter the digital enterprise a business and technology
Communications service culture with its roots in
providers are well placed a very different business
to capitalize on this next environment. Success
wave of digital opportunity. requires focus, vision
The first wave of the digital and radical thinking –
revolution has focused on embracing a new set of core
the consumer, and now competencies for a service
consumers are taking provider’s business. this presents two challenges: research into the insights
that revolution into their how to deliver a scalable and challenges faced by
enterprise workplace. Opening up for digital business platform able to service providers (see page 8)
Enterprise-grade, mission- Whichever way you turn in deliver an agile and constantly included in this report is the
critical services including the digital world, being open evolving set of products, just the first stage in helping
enterprise ‘IT-as-a-Service’ is a universal ingredient of services and support multi- our members embrace the
are poised for growth, while success. The digital economy partner business models at opportunity of digital services.
vertically-focused solutions has thrived because the the lowest possible cost; With over 950 member
such as eHealth and smart Internet provides an open, and how to open up existing, companies covering the
grid are already showing common platform and set of significant capabilities globe, we’re expanding
huge potential. agreed protocols for systems securely and globally. our members’ ecosystem
All of these services require and devices to talk to one As a global industry to encompass new digital
a level of trust; security and another. association, at TM Forum divisions of our current
reliability communications Successful cloud services we’re energized by the members, as well as
companies have in their DNA. and platforms have embraced challenges ahead, and attracting key enterprise
The ‘best efforts’ quality of this open approach, offering committed to helping our players from a number
digital services to date won’t rich application program members succeed in the of verticals who have an
meet the needs of business interfaces which reduce the digital economy. That’s why essential role to play in digital
and life-critical services. cost of integration and drive we recently launched our services for finance, health,
The communications the growth of ecosystems, Digital Services Initiative, energy and more.
industry has both the skills reducing the barriers to focused on overcoming the I look forward to working
and assets to deliver the entry for small, innovative challenges of managing with you as we take on these
reliability and security businesses. complex digital services and challenges together, and in the
needed for these services As we move in to the enabling an open, vibrant meantime, enjoy Digital Life!
to succeed. Capitalizing on era of enterprise-grade digital economy.
these opportunities means digital services, I believe The Initiative has five key Nik Willetts
making the leap from being maintaining an open, agile pillars, designed to underpin Chief Strategy Officer,
communications service approach to innovation and our member’s success in the TM Forum
provider to digital service integration will be crucial. digital economy, as shown in nwilletts@tmforum.org
provider. For service providers’ IT, the graphic above. The unique Follow @nikwilletts
DIGITAL LIFE 5
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FOREWORD
Capturing the
digital opportunity
The digital revolution has brought about enormous change and, to remain competitive in a changing world, it is
essential to move fast, embrace new opportunities and innovate. By Matthew Key, CEO, Telefónica Digital.
The digital revolution has the heart of this new digital Open innovation
already fundamentally re- world. We have global reach, We should embrace
written the rules of many a crucial billing relationship innovation wherever it comes
industries, from music with hundreds of millions from. As the barriers to
through to photography. of customers, experience entry have come down, the
This process of change is working with large corporates innovation cycle has changed
accelerating and will disrupt and governments, and huge forever. Great ideas are just
and transform society and distribution networks in as likely to come from a lone
almost every business. terms of retail stores and developer as from within an
My job is to help Telefónica customer service operations. R&D department.
transform its business model Plus we are the ones that What’s more, innovation is
in order to embrace this are putting smartphones – a just as likely to emerge out of
digital revolution. The fact is driving force of digital – into São Paulo, Tel Aviv or Bogotá
that digital will dramatically consumers’ hands. as it is from Silicon Valley
change the way our industry In order to seize on this or London. The challenge
operates. In many ways it opportunity, we need to is to identify the ideas and
already is and the time to behave and act differently. industrialize the solutions.
seize the opportunity is now. We should learn from the That’s why we created
Digital technology does not Internet/software sector, Wayra – a technology
recognize physical boundaries which is more entrepreneurial accelerator programme,
or respect companies that and has risk-taking at its incubating 170 start-ups
have been successful in the core. It’s agile and iterative; across 11 countries. Wayra
past. The low barriers to it’s not afraid to scrap allows us to identify and
entry, the minimal cost of things that aren’t working nurture groundbreaking
innovation, and the speed and it sacrifices process ideas in areas relevant to our
with which customers adopt for speed. Most of all, it’s business.
new products, and abandon about innovation and putting We gain access to a wider
products they have grown up a premium on doing things pool of ideas, and the start-up
with, have given the digital differently. companies we are supporting
revolution an unstoppable I believe that there have the opportunity to take
momentum. are three key aspects to their innovations to our 300
The opportunity for succeeding in the digital million customers.
companies like us is to sit at space. In-house research and
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development undoubtedly means involving as many in real time with their doctor, Digital is paving the way
remains important, but network operators, hardware improving the quality and for brand new products and
you also need to identify manufacturers, chipset cost of healthcare. services that will introduce
disruptive innovation from makers, content owners and Financial services is new revenue streams. It has
outside your company and developers as possible. another. In Latin America, the potential to drive huge
outside your industry. only 30 percent of the efficiencies in the way we
Social innovation population has a bank operate, and it will allow us
Building ecosystems The most exciting aspect of account, and yet mobile to empower our business and
Trying to control digital the digital revolution is the phone penetration is over public sector customers to do
services from end-to-end role technology can play in 100 percent. Activities that things differently.
is no longer an option. changing society positively. we take for granted, such Thanks to our position as
Partnerships are vital to work Combine social needs with a as paying a bill, can involve a trusted service provider,
with specialists in areas that new business model and you people taking days off work we can be at the forefront
are not a core competency. have a recipe for success that and standing in line for many of enabling our customers’
By creating a vibrant will create new opportunities. hours. Delivering banking digital lives.
ecosystem around products Healthcare is one such services via mobile can not This period of change
and services, where different area. Public administrations only transform people’s may feel uncomfortable, but
companies play to their key around the world are lives, but also transform my message is move fast,
strengths, the sum can be grappling with the rising costs the delivery of government embrace the opportunities,
greater than its parts. of healthcare, particularly services, such as pensions create new ecosystems, and
Take Firefox OS where the costs associated with for instance. build stronger businesses and
Mozilla is seeking to establish chronic conditions such as We have all looked at a better society.
a new, open mobile operating heart or respiratory problems. industries such as music,
system based on HTML5. In the UK, 5 percent of travel, and publishing and Matthew Key
We support its goals because NHS patients have chronic thought why did they not CEO, Telefónica Digital
we believe driving open conditions and they account embrace the digital change?
web standards in mobile will for 50 percent of the NHS’s Change is difficult, particularly
be the only way to ensure annual budget. when you are talking about
innovation continues. But We are already trialling changing a model that has
we know that a new OS can services in several countries proven successful for so
only be successful if based to enable people to monitor many years.
on the broadest possible these conditions in their own The good news is that the
cross-industry support. This homes and share the results opportunity is significant.
DIGITAL LIFE 7
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DIGITAL SERVICES SURVEY
How to prosper in
the digital revolution?
The digital revolution is enabling unprecedented innovation, which has and is disrupting business models and
entire industries. Nowhere is this more true than for communications, which underpins the entire digital ecosystem.
Communications service providers understand they need to become digital service providers. In October, TM Forum
surveyed over 150 executives from within service provider members to find out how they plan to do it. Philip Marshall,
Ph.D., Founder and Chief Research Officer, Tolaga Research, guides us through the findings of this unique research.
Unlike the publishing, music, This was complemented It is well-known that
advertising, PC and other by in-depth interviews with service lifecycles are
industries, communications’ some of the communications diminishing, but perhaps
day of reckoning has been industry’s most experienced, one of the most important
postponed by the boom in senior executives. The findings of the in-depth
data services. That day is research revealed that digital interviews was how much
coming, though. services represent fewer than they are shortening and the
Networks underpin all 10 percent of overall service rate of change is accelerating.
digital services, which are revenues for 40 percent of For example, one interviewee
driving unprecedented the respondents, while only states that some of their
capacity demands and 15 percent of participants say company’s mass market
necessitating huge they account for more than 20 services have had their
investment. Yet those percent of income – sobering product lifecycles shorten
who run the networks are figures (see Figure 2). from 36 to 24 months, then
receiving modest revenues Service providers certainly closer to 12 months.
from these services. At recognize the importance Yet the survey found
the same time, their core of digital services and that crucially, many of
services, phone calls and particularly the tremendous these services and the
messaging, are being eroded rate of market take-up. need for speed are not
at an accelerating pace, Part of the problem of supported by vendors (see
as they move from being responding is that executing Figure 6 on page 14), with
charged-for, discrete (even if transformation strategies about 50 percent of new
bundled) services to apps. is a huge undertaking, and developments relying on “Service providers certainly
The big question is what to the field is littered with in-house efforts. In the
do about it. expensive failures. It is face of these challenges,
recognize the importance
In October 2012, TM even more challenging now, we anticipate that of digital services and
Forum carried out a Digital given the pace of innovation, communications service particularly the tremendous
Services Survey of over the diversity of ecosystem providers will rapidly migrate
150 executives from within players and the proliferation to and mimic the platform- rate of market take-up.”
service provider members. of business models. based approaches that are
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being pursued by Tier 1 network transformation. progress and their plans for Figure 1 shows the
players like Telefónica if they This is crucial for service the future. smartphone penetration
prove successful. providers to reduce costs estimates among the
Key considerations include: and become agile enough A perfect storm respondents of the TM
to handle the variety of Industry commentators Forum’s Digital Services
n How to respond to players services which customers who have been anticipating Survey. It shows over half
like Apple, Google, are demanding – and their the digital economy for the respondents estimate
Facebook and Skype, who ever-shrinking service many years couldn’t have smartphone penetration
are offering over-the-top lifecycles. With the market predicted the manner and levels of more than 20
(OTT) services. In particular, itself evolving so fast, rate at which it is unfolding. percent, and 19.6 percent of
under what circumstances service providers cannot Within the last five years, the respondents estimate levels
is it better to partner with just transform once, but digital economy has been greater than 50 percent.
OTT players and when are finding they need to simultaneously bolstered The penetration rate of
does it make more sense change continuously. How by the proliferation of smartphones is growing at
to compete? Are there and what they prioritize are smart devices, application an astonishing rate and they
opportunities to utilize the key to success. stores, cloud computing and will become the predominant
OTT solutions as service n Market focus and the extensive application type of device on mobile
enablers and mimic OTT partnership strategies developer communities. networks within the next
innovations so that they can includes market segments, This has created the three years. The smartphone
be used in parallel markets? whether consumer, ideal conditions for digital market is dominated by
n Which key assets small, medium and services to thrive and caught devices that run on the
and capabilities can large enterprise, and many industries, including Android (Google) and iOS
communications service vertical industries such communications, by surprise. (Apple) operating system
providers use to attain as energy, transportation Global smartphone penetration environments to facilitate
sustainable market value and healthcare. already exceeds 20 percent, extensive application
and how this is expected to Communications service having growing from almost development activity. Both
change as digital services providers can no longer nothing in 2007, when the first Android and Apple are well
continue to evolve? This dominate market iPhone was launched. on the way to having 1 million
can vary greatly between categories with vertically-
mature and emerging integrated solutions, but
markets, and depending must develop partnerships Figure 1: Smartphone penetration among respondents
on the starting positioning and play a lesser role
What percentage of your subscribers are smartphone users?
of the service provider; across a wider variety of
such as whether they have markets. This is particularly 0 to 10%
control of premium content the case in vertical market 10 to 20%
and an established data solutions, such as those 20 to 30%
center infrastructure. The associated with machine- 30 to 40%
positioning of the service to-machine (M2M) 40 to 50%
provider is also affected by communications, where Over 50%
the pace of innovation and they must partner with Don’t know
span of experimentation, other industry specialists,
which is one of the such as in healthcare,
hallmarks of the digital energy and transportation.
services marketplace.
n Operational transformation This report investigates
strategies, in terms of the variety of digital
changes to organizational service strategies that
structures and employees’ communications service
incentives, and IT and providers are pursuing, their Source: TM Forum Communications Service Provider Digital Services Survey, 2012
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DIGITAL SERVICES SURVEY
apps in their respective subscribers’ adoption is culture plays a small or
stores. placing tremendous pressure negligible role in constraining
Even though digital on them to do so. The key the digital service market (see
services create massive barriers to responding were Figure 3). Yet 34 percent of
network traffic demands, identified by respondents respondents (6.8 plus 27.2
communications service as being company culture, percent) feel culture remains
providers struggle to technical transformation, an inhibitor, so clearly for many
monetize digital services. strategies for identifying there remains much to do.
Figure 2 shows that profitable business models The survey found the
fewer than 16 percent of and partnership strategies. cultural inhibitors are
respondents can attribute predominantly:
more than 20 percent of their Changing company cultures
revenues to digital services. Company culture plays an n complexities in gaining
We believe that in most important role in attacking consensus among internal
cases, providers with greater the digital services market, as departments, which
than 20 percent of revenues does the need to continuously respondents attribute to
have well-established, evolve organizational the number of departments
premium content offers. structures and corporate involved, protracted
All the senior industry priorities. In our survey, approval processes and a
executives who were we found communications lack of accountability;
interviewed one-to-one service providers have n fear of cannibalizing
agreed that communications made tremendous efforts established product and
service providers have to transform their company service revenues; and
been slow to innovate cultures: over 26.3 percent n risk-adverse cultures.
in digital services, even (11.7 plus 14.6 percent) of
though the speed of respondents believe company The survey results
generally indicate strong
support from C-Level
Figure 2: Estimated digital service revenues as a executives and widespread
percentage of total revenues for survey respondents recognition that the
dynamics of the digital
Approximately what % of your total services revenue comes from digital services?
services market will demand
(revenues from digitally delivered services other than voice, data and messaging)
continued changes in
Services are pre-revenue
corporate cultures. There
Less than 10%
is also an almost universal
10 to 20%
agreement that efforts to
More than 20%
shift towards Internet-centric
I do not know
philosophies are much at
odds with traditional telecom
philosophies.
“There is also an almost
universal agreement
Driving partnership
that efforts to shift
strategies
Most digital services have towards Internet-centric
fragmented value chains philosophies are much
which demand cooperation
among multiple ecosystem at odds with traditional
players for solutions that telecom philosophies.”
Source: TM Forum Communications Service Provider Digital Services Survey, 2012 are brought to market.
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Figure 3: Company culture or process prohibits innovation
Company culture – corporate culture or process prohibits innovation If you selected Closely Applies or Exactly Applies, please select any of the following
(percent of respondents) which apply to the challenge experienced:
Services are pre-revenue Lack of C-level support/leadership
Less than 10%
10 to 20% Risk taking is not encouraged
More than 20% No clear program for channeling/developing
I do not know innovative ideas
No single department/senior executive
responsible for progress
Internal processes and decision making takes
too long to get to market fast enough
Fear of cannibalization of existing products/
service revenues prevents product development
Too many internal departments involved to
establish agreement and priorities
0% 20% 40% 60% 80%
Source: TM Forum Communications Service Provider Digital Services Survey, 2012
This contrasts sharply models that bring players
with traditional, vertically- together to facilitate and
“Many service providers are developing platforms to
integrated telecom services. monetize digital service
Now communications service innovations. orchestrate cooperation and building partnerships
providers need to partner Our survey showed that with ecosystem players. In some cases, communications
across the value chain and communications service
acquire competencies in providers recognize the service providers are acquiring key assets in markets
areas of strategic importance. challenges of value chain they regard as strategic.”
The fragmentation of the fragmentation. Many are
value chain is particularly developing platforms to
acute in the M2M market, orchestrate cooperation and
where solutions are applied building partnerships with
to a vast range of services, ecosystem players. In some
from automotive and cases communications service
transportation, to energy and providers are acquiring key
smart grid, healthcare and assets in markets they regard
home security. as strategic, such as Verizon’s
As partnerships become recent acquisition of Hughes
more commonplace for Telematics Inc.1 (HTI ).
communications service The partnership and
providers, they will shift ‘co-opetition’ strategies
their businesses from being adopted by communications
product-centric to retail- service providers are more
centric. Along with the complicated when they
appropriately architected involve OTT players. In some
solutions, this shift will cases communications
See TM Forum Case Study Handbook 2013, which can be accessed free by all employees of our member companies
1
enable two-sided business service providers compete by registering on our website then going to www.tmforum.org/casestudyhandbook2013
DIGITAL LIFE 11
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DIGITAL SERVICES SURVEY
against OTT players, while as a serious problem funding shortfalls. The top computing and M2M
on other occasions they also indicates that other three challenges cited by solutions in vertical markets.
partner with them. Based in companies are not these respondents were: Some Tier 1 operators, such
the survey interviews, there necessarily anxious to as AT&T, Orange, Telecom
is no clear consensus among partner with them: after all n lacking business cases Italia, Telefónica, Verizon and
respondents about the best traditional ‘telco’ rules, terms for digital services when Vodafone, have implemented
co-opetition strategies, with and conditions have made it compared with the revenue innovation labs and platform-
communications service difficult to do business with streams for existing based solutions as ways
providers partnering with OTT them, especially for smaller, services (cited by 51.4 of carrying out affordable
players at varying levels. faster-moving companies, percent of respondents); experimentation that they
The online survey results who so often have had n internal competition for hope will lead to scalable
illustrated in Figure 4 indicate onerous and unsustainable funds (cited by 40.5 percent offerings they can control.
that 28.1 percent (25.2 and terms inflicted on them. of respondents); and There are notable variations
2.9 percent) of respondents n limited funds mean they in their approaches to
believe that partnerships Business cases, risk can only focus on a small platforms, particularly where
are difficult to establish, challenge investment number of opportunities OTT providers are involved.
particularly in terms of: The rate of innovation (cited by 35.1 percent of For example:
and diversity of digital respondents).
n identifying the right services make it difficult n The focus of initiatives
partners for new services; for communications service Discussions with the like Telefónica Digital
n a lack of relationships with providers to balance their senior industry executives are clear – innovate to
developer communities; and investments in digital revealed that they had dominate services within
n a lack of control over the services relative to those for made considerable strides its core business, partner
value chain. legacy services. The survey in addressing issues around with strong industry players
results in Figure 5 show that business cases through to develop opportunities
The fact that altogether 31.1 percent (20.4 plus 10.7 platform-based solutions, in new markets and
some 57.1 percent saw percent) of respondents think and by choosing market create open developer
finding the right partners digital services are stifled by solutions such as cloud environments to enable
Figure 4: Partnerships are a key requirement for communications service providers to succeed in the digital services market
Partnerships – necessary partnerships are difficult to establish If you selected Closely Applies or Exactly Applies, please select any of the following
(percent of respondents) which apply to the challenge experienced:
Exactly applies Poor history with partnerships/lack of
Closely applies skills needed to build and operate
services through partnership
Somewhat applies
Almost applies
Lack of relationship with
Does not apply developer community
Put off by lack of control in value chains
Difficult to find the right partners
to offer new services
0% 20% 40% 60%
Source: TM Forum Communications Service Provider Digital Services Survey, 2012
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experimentation and the manage the delivery and While there is much talk vertically integrated service
creation of new services security of services. This of this being fairer – that silos that are optimized for
(see pages 22 and 23). parallels AT&T’s proposal those who generate traffic particular products. These
n Tier 1 operators like AT&T to introduce toll-free data should pay for its carriage vertical architectures have
and Verizon in the U.S. services and charge OTT – the less often expressed proved costly and inflexible. In
market are unique in that players for their customers’ view is that it is a way of recent years, communications
they have nationwide mobile usage, in effect capitalizing extending the life telco- service providers have been
coverage and regulated, on being part of a ‘1-800 type charging models. eliminating silos where they
partial, fixed-line coverage type’ data service (that n Most communications can to evolve their service
across the country. is free to the user at the service providers are being environments, and reduce
Co-opetition strategies with point of consumption). driven by customers to costs and risks.
OTT players vary depending Some communications cooperate or collaborate This is largely thanks to
on where communications service providers, including with popular OTT providers standardized, commercial off
service providers have fixed SK Telecom and Korea such as Google, Facebook the shelf approaches enabled
and mobile or mobile-only Telecom, are lobbying their and Twitter. Many service by TM Forum’s Frameworx
coverage. For example, regulator to enable them providers anticipate there suite of standards-based
Verizon competes or to charge OTT players for are opportunities to tools and best practices (see
partners with Netflix for access to their networks. leverage widely adopted page 34).
video services depending on They are not alone: among OTT capabilities as service Digital services are
whether or not it has fixed others, Luigi Gambardella, enablers for broader pushing this further because
broadband/content offers in Head of the European consumer offers. they need a variety of new
the respective markets. Telecom Network capabilities, including the
n Telstra in Australia believes Operators’ association, Technical transformation following which respondents
that it can partner and ETNO, wants the ITU underpins profit to the survey identified as the
collaborate with OTT to change its regulatory Communications service most common:
players and introduce approach to the Internet, providers’ technical
deep packet inspection enforcing some kind of infrastructure has evolved n Open development
(DPI) technology to sender pays principle. over many decades to create environments to provide
Figure 5: Business case challenges and internal funding priorities stifle digital service innovation
Investment – funding to develop ideas into products is difficult to secure If you selected Closely Applies or Exactly Applies, please select any of the following
which apply to the challenge experienced:
Exactly applies Waiting to see what others do in the
Closely applies market – unclear on the business model
Somewhat applies
Early attempts have failed so
Almost applies
little enthusiasm
Does not apply
Internal competition for funds e.g.
building out 4G infrastructure/supporting
IPv6/customer retention program
Funding difficult to secure due to a
lack of compelling business case when
compared to existing revenue streams
Limited funding to develop ideas means
concentrating on a small number of
opportunities
0% 20% 40% 60%
Source: TM Forum CSP Digital Services Survey, 2012
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DIGITAL SERVICES SURVEY
Figure 6: Integration challenges for digital services
Integration – legacy systems are too complex or expensive to integrate with when If you selected Closely Applies or Exactly Applies, please select any of the following
developing new products which apply to the challenge experienced:
Exactly applies Lack of best practices, standards
Closely applies and reference architecture
Somewhat applies
Cannot find vendors to complete the
Almost applies
integration at a viable price point
Does not apply
Too many disparate vendors involved,
leading to fragmented solutions
Complex integration with network,
platform and cloud infrastructure
Requires complex integration with B/OSS (e.g. product
catalogs, CRM, billing and charging, service management
with OSS) which is too risky/expensive
0% 20% 40% 60% 80% 100%
Source: TM Forum Communications Service Provider Digital Services Survey, 2012
service enablement and and changing demands in end-to-end management difficulties in provisioning,
exposure. the digital services market, challenges are being activation, subscriber
n Automation to reduce continuous transformation addressed by the Forum’s management and service
costs and improve efforts would be necessary. Digital Services Initiative, assurance.
reliability, which becomes Figure 6 shows that 55.3 and the integration of the
particularly complicated percent of respondents management layer across Strategies to ride the
in the case of autonomous (38.8 plus 16.5 percent) multi-cloud environments to digital wave
M2M devices where believe that their legacy drive service assurance is a The strategies that
management and systems are too complex key part of the new, practical communications service
monitoring must or expensive to integrate Multi-Cloud Management providers are adopting from
encompass network and into the development of Packs for Digital Services, digital services are almost as
device nodes. new products. Of these which will be available to broad as the variety services
n Flexibility to support the respondents, 82.8 percent members from TM Forum’s in the offing. Figure 8
greater variety and reduced believed that Business and website as part of the illustrates this diversity where
lifecycles associated with Operational Support System Frameworx 12.5 release in 57.9 percent of respondents
digital services. Several (B/OSS) integration was the December 2012. indicate that they have
respondents estimated major concern, while 51.7 The survey results in Figure collaborative approaches
that the lifecycles for digital percent also cited complex 7 show that 43.0 percent and 42.9 percent indicate
services are half those of network, platform and cloud (25.2 plus 17.8 percent) of that they have competitive
their established services integration issues. respondents believe they business strategies for digital
and say they expect The on-going integration will struggle to implement, services. In addition, 35.7
lifecycles to shrink further. challenges are serious operate and scale new digital percent indicate connectivity-
issues for service providers services profitably. The centric strategies.
It was generally agreed that and were investigated greatest concern expressed In reality, communications
given the pace of innovation as part of the study. The by these respondents is the service providers could be
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Figure 7: Integration challenges for digital services
Operations – difficulty in implementing/operating/scaling operations for new services If you selected Closely Applies or Exactly Applies, please select any of the following
at a profitable cost base (percent of respondents) which apply to the challenge experienced:
Exactly applies
Closely applies Hard to manage operations across a
Somewhat applies number of countries/operating companies
Almost applies
Does not apply
Challenges with charging,
revenue, settlements etc.
Difficulties in provisioning, activation
subscription management and service
assurance
0% 20% 40% 60% 80%
Source: TM Forum Communications Service Provider Digital Services Survey, 2012
expected to embrace all While there are differences in
these strategies, depending their go-to-market strategies, Figure 8: The diverse digital services strategies for
on the services they the most are focusing on four communications service providers
offer. It is this diversity of categories of digital services,
requirements that proves namely: Which of the following statements best describe your company’s business strategy
the most challenging aspect towards established digital services (e.g. social media, apps, VoIP, cloud etc.)
(please check all that apply)
of providing digital services n vertical industry solutions
and is their primary agent for and M2M, typically with
change. vertical sector emphasis No clear strategy
While 12.7 percent of towards transportation,
survey respondents lack energy and healthcare; Connectivity: Focus on providing effective
a clear strategy for digital n cloud-based services connectivity at competitive prices, charging
users for what they consume
services, it is heartening to including established
see that almost 60 percent infrastructure and platform Competitive: Directly compete with existing
digital service providers by offering a better/
recognize that partnerships as a service offerings
bundled alternative service
and collaboration are in addition to a variety
Offensive: ban or separately bill for “over the top”
necessary to succeed in the of cloud orchestration,
services which cannibalize traditional revenue
digital services market. management and security streams or consume excessive bandwidth
Given its huge momentum, solutions;
Collaborative: embrace partnerships with
communications service n socially-orientated,
digital service (“over the top”) providers and
providers across the globe unified communications and seek to add value to those services
are addressing the many infotainment, which build
0% 20% 40% 60%
challenges of digital services on their legacy in telephony
with vigor, placing bets and and messaging; and
investing heavily in the market. n premium content with the Source: TM Forum Communications Service Provider Digital Services Survey, 2012
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DIGITAL SERVICES SURVEY
greatest innovation the size of the consumer among market segments, unified services.
occurring among players market and its growing role which is illustrated in Figures This contrasts the service
that have premium in defining solutions for the 9 and 10. Figure 9 shows priorities for pre-paid
content. enterprise market. Many priorities for the post-paid subscribers, which are less
of the respondents plan to and pre-paid consumer certain and place more
Although communications target the small and medium markets and reveals that the emphasis on partnering
service providers are enterprise (SME) markets highest priority for post-paid with third-party content
expanding their large, by ‘hardening’ consumer services are associated with and platform providers to
small and medium solutions by adding security multimedia digital content deliver unique, content-rich
enterprise offers, they still and quality of service for multi-screens and services, such as hybrid
recognize the importance capabilities. personal consumption, and social-media applications.
of maintaining robust Communications service richer social media-oriented Figure 9 shows the
consumer offers, given providers’ priorities vary communication services/ digital service priorities for
Figure 9: Communications service providers’ positioning strategies to capitalize on the digital services with consumers
Digital Service Priorities (Postpaid Consumers) Digital Service Priorities (Prepaid Consumers)
Multimedia digital content for multi-screens and Multimedia digital content for multi-screens and
personalized consumption models personalized consumption models
Industry-specific services such as eHealth, Industry-specific services such as eHealth,
smart grid, financial services, M2M smart grid, financial services, M2M
Create APIs for third-party access to existing Create APIs for third-party access to existing
capabilities such as billing, and grow a capabilities such as billing, and grow a
developer community around our APIs developer community around our APIs
Cloud-based X-as-a-Service e.g. Infrastructure- Cloud-based X-as-a-Service e.g. Infrastructure-
as-a-Service (IaaS), Platform-as-a-Service (Paas), as-a-Service (IaaS), Platform-as-a-Service (Paas),
Software-as-a-Service (SaaS) solutions and Software-as-a-Service (SaaS) solutions and
virtual/mobile desktop virtual/mobile desktop
Partner with third-party content and platform Partner with third-party content and platform
providers to deliver unique, content-rich services providers to deliver unique, content-rich services
e.g. hybrid social-media applications e.g. hybrid social-media applications
Richer, social media-oriented communication Richer, social media-oriented communication
services/unified communications services/unified communications
0% 20% 40% 60% 0% 20% 40% 60%
Not applicable Low Medium High
Source: TM Forum Communications Service Provider Digital Services Survey, 2012
“Within the prosumer/SME market, communications
service providers recognize the blending of functionality
that is commonplace in the consumer market.”
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the large enterprise and (SaaS) solutions and virtual/ Unified communications The viral adoption of social
prosumer/SME market mobile desktop. go social networks like Facebook
segments. In these markets, In addition, within the By stressing richer, illustrates how radically and
communications service prosumer (see page 27)/SME social media-oriented quickly communications is
providers are placing higher market, communications communications, changing and the robustness
priority on industry specific service providers recognize communications service and scalability of social
services such as eHealth, the blending of functionality providers are augmenting communities. As unified
smart grid, financial services, that is commonplace in the their old-style telephony communications gain broader
M2M and cloud-based consumer market, giving and messaging offers, with market adoption, users’
X-as-a-Service such as some emphasis to richer, social and Internet messaging identities become blurred
Infrastructure-as-a-Service social media-oriented capabilities. This can be with the proliferation of IP-
(IaaS), Platform-as-a-Service communication services/ broadly classified as social based social networking and
(Paas), Software-as-a-Service unified communications. and unified communications. messaging solutions.
Figure 10: Communications service providers’ positioning strategies to capitalize on the digital services with enterprises,
prosumers and SMEs
Digital Service Priorities (Large Enterprises) Digital Service Priorities (Prosumers/SMEs)
Multimedia digital content for multi-screens and Multimedia digital content for multi-screens and
personalized consumption models personalized consumption models
Industry-specific services such as eHealth, Industry-specific services such as eHealth,
smart grid, financial services, M2M smart grid, financial services, M2M
Create APIs for third-party access to existing Create APIs for third-party access to existing
capabilities such as billing, and grow a capabilities such as billing, and grow a
developer community around our APIs developer community around our APIs
Cloud-based X-as-a-Service e.g. Infrastructure- Cloud-based X-as-a-Service e.g. Infrastructure-
as-a-Service (IaaS), Platform-as-a-Service (Paas), as-a-Service (IaaS), Platform-as-a-Service (Paas),
Software-as-a-Service (SaaS) solutions and Software-as-a-Service (SaaS) solutions and
virtual/mobile desktop virtual/mobile desktop
Partner with third-party content and platform Partner with third-party content and platform
providers to deliver unique, content-rich services providers to deliver unique, content-rich services
e.g. hybrid social-media applications e.g. hybrid social-media applications
Richer, social media-oriented communication Richer, social media-oriented communication
services/unified communications services/unified communications
0% 20% 40% 60% 80% 0% 20% 40% 60% 80%
Not applicable Low Medium High
Source: TM Forum Communications Service Provider Digital Services Survey, 2012
“The viral adoption of social networks like Facebook illustrates
how radically and quickly communications is changing and
the robustness and scalability of social communities.”
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DIGITAL SERVICES SURVEY
Encouragingly, many of new developments relying for a purpose-built platform
the survey’s respondents on in-house developments. for tracking the location and
recognize they cannot rely In the face of these maintaining the security of
on using their control of the challenges, we anticipate a group of Haj pilgrims from
subscribers’ phone number that communications service Pakistan.
as a means of controlling their providers will rapidly migrate
customers’ identities, hence and mimic the platform Cloud services have
will be increasingly pressured approaches being pursued by a silver lining
to embrace and integrate Tier 1 players like Telefónica The promise of capital and
other communities such as if they prove successful. operational efficiencies,
Facebook and Twitter. Communications service and faster service delivery
Players like Telefónica providers are looking to is driving the proliferation
are developing platform platforms that underpin their of data centers and cloud
capabilities to compete social media and unified services. Indeed, cloud was
directly against OTT players communications strategies, communications service
in their core markets and that will provide highly providers’ number one priority
collaborate in areas where reliable core communications regarding their strategies
OTT providers can extend on the one hand while to capitalize on the digital
offers into new markets. enabling innovation on the services with enterprises,
Others like AT&T, Telstra, other. This includes efficiently prosumers and SMEs as
Turkcell and Zain Group are integrating personal illustrated in Figure 9. They
taking more partnership- subscriber information with are clearly anticipating robust
oriented approaches. other relevant service and revenue opportunities from
In addition, we generally business intelligence. cloud services.
observed a tendency for Although many platform Almost all the Tier 1
smaller players in their initiatives target next communications service
respective markets to partner. generation network providers have been acquiring
Service lifecycles technologies, they are equally or building massive data
are diminishing due to relevant to 2G network and center resources and offering
accelerated innovation. One SMS messaging environments. a variety of IaaS and/or PaaS
interviewee states that some Communications service offers for many years. Now
of their mass market services providers globally are using the they are expecting that
have seen product lifecycles2 services platforms to bundle demand for cloud services
decrease from 36 to 24 innovative SMS messaging will evolve in parallel to the
months, then closer to 12 and telephony services. As an digital services market and
months. In addition, many of example, Zain Group recently with the proliferation of
the new services lack vendor used its value-added services mobile broadband, driving the
support, with about half of (VAS) platform as the basis need for:
“Communications service providers are looking to
platforms that underpin their social media and unified
communications strategies, that will provide highly
reliable core communications on the one hand while
enabling innovation on the other.” 2
See TM Forum’s Product Lifecycle Management – an introductory guide,which
will be available free to members from the Forum’s website from December 2012.
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n continued cloud service Netflix and Redbox to enable can be consumed how, when of industries, including
capacity provided through delivery of content to mobile and where the customers healthcare, energy,
infrastructure, platform and devices outside its fixed choose. transportation, smart cities,
SaaS offerings; broadband footprint. In Figures 9 and 10, the retail and exploration. They are
n increased security Players like Telstra and role of third-party content for partnering with (and in some
demands, such as in Verizon don’t believe that it rich service does not receive cases acquiring) companies
identity management and is necessary to control the as high a priority as many of which have specialist vertical
data protection; and ownership and aggregation the other capabilities listed. capabilities and expertise
n The orchestration of of content, rather they are However, in interviews needed to deploy and run
services across public and focused on controlling the with senior executives from M2M services.
private cloud boundaries. distribution of content and communications service Communications
associated transactions. Their providers, it is clear they service providers are also
Premium content hits agenda is to ensure users believe premium content, implementing their own
the multiscreen consume more content in whether acquired directly or platforms or partnering
Many service providers, like more places. through partnerships, will with companies like Jasper
AT&T, Comcast, Telstra and As we’ve mentioned play an important role in the Wireless to deliver common
Verizon, have the rights to already, communications consumer market in future. device management and
premium video content such service providers could basic service orchestration
as sports and news channels. benefit greatly by integrating Vertical markets and M2M functionality for M2M
They are capitalizing on this premium content with other Pervasive communications, services. Others are working
content with multiscreen social media and unified web services and to offer the expected rise
strategies for delivering communication capabilities to developer communities, in demand for sophisticated
content among TVs, tablets improve users’ experiences and the availability of low- network and device end-point
and smartphones. and benefit from third party cost sensor networks is management systems to
For example, Telstra in service innovations. driving opportunities in ensure they perform reliably
Australia leverages its rights Even communications vertical markets and M2M and securely.
to Foxtel video and exclusive service providers who lack services. Most notably, Most of the Tier 1
rights to sporting events, direct control of premium communications service respondents to our survey
delivering the content across content recognize its providers are pursuing these have established M2M
company-branded tablet and importance in their overall opportunities where they have initiatives, resulting in a
smartphone devices. Telstra digital media strategies. Their achieved a high penetration slew of partnerships with
also bundles its service with strategies involve acquiring rate for their services and are companies like Mercedes
other infotainment, such premium content assets (such seeking ways of extending and BMW in the automotive
as messaging and music as via Netflix), identifying the market and their income. industry, GE Healthcare
services. ways to wrap the content to Hence M2M solutions are and Johnson & Johnson in
Verizon also offers a add value and differentiation being widely implemented healthcare, and Tesco in retail.
multiscreen solution and to the content, and integration by communications service Throughout the interviews,
partners with players like across devices to ensure it providers across a variety M2M services were the
“Pervasive communications, web services and developer
communities, and the availability of low-cost sensor
networks is driving opportunities in vertical markets
and machine-to-machine services.”
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