I'm exhausted. I met so many interesting people today I can't count them, and I also hooked up with a lot of old friends. Plus the sun was shining, so today was a good day. Except that the mood inside the Tower Bridge Hilton was considerably darker. I'm too tired to do a full post on what happened at day one of Telco 2.0 - I'll do that in due course. For right now, here are the highlights of my day.
Let's start with the end of the day. The final item on the agenda was an audience poll, conducted on organizer Telvents' spiffy little notebooks distributed around the audience. The question was, "How confident are you today in the ability of telcos to create long-term sustainable growth in an IP-based world?" The results - 30% said "very unconfident," 23% said "not very confident," and 14% were not sure. Pretty damning stuff, but hardly surprising to me based on my previous involvement in events of this kind.
Maybe it was my fault. I was the opening stimulus speaker and "analyst in residence" for the entire day (think sports broadcast color commentator). My presentation was entitled "Ten Things I Hate About You," and was a distillation of ten common themes around which investors have concerns/criticisms. More about this in my lengthier followup post. I think it went pretty well.
The next two presenters, Abdul Guefor from Intel Capital, and Gordon Smillie from BT, spoke about a lot of themes which were also in my presentation - the need to be more open, to embrace the chaotic and find a way to adapt to it. Abdul's Platinum comment of the day, in my mind, was that telcos should learn to embrace controlled chaos, and talk to the rest of the world more regularly. "If you don't address these issues, Private Equity will," a recognition of the vast PE war chests looking for underperforming assets which nevertheless throw off a lot of cash. Gordon Smillie, who comes from a background outside telecom, has a really interesting presentation, which included the observation, "In the past we have been used to having time to evaluate where the next threat might come from. Just accept it is coming. Why wait to react? Define what market you're in, and compete in it." He also said something which intrigued me. "Telco outsiders looking in think that telcos' strategic assets are different than what the telcos themselves think they are." He also questioned if current telco structures are capable of delivering innovation, or whether some internal incubation structure needs to take root.
Norman Lewis from Orange was the barnburner presentation of the day, hands down. His opening line was that we shouldn't look at technology as an indicator of where the industry is going, we should look at childhood. Children, because of concerns over safety, are no longer allowed to do the things in the physical world which they might have once done freely. Confined in a restricted physical space, they pursue ways to define their own personal space by virtual
means. This is not technology to them, it is life, it is reality. Any future applications which do not have a social networking aspect to them will be irrelevant. If we don't understand that, we won't have a business in future. We should be viewing customers as points in the value chain, not end points. We should open up devices, with easy scripting languages which can allow them to be not just customers, but co-authors of the applications which will spread virally. He also had some intriguing comments about the next battle ground - open information systems and data retention - i.e, with all the user generated content and associated metadata proliferating currently, who claims ownership and how is it used? My summary doesn't do the presentation justice. It was simply wonderful, and it's inspiring to hear someone speaking with such conviction.
Kennet Radne from TeliaSonera had a slightly more conventional presentation which touched on many of the same themes. But it had one killer data point - when The Pirate Bay was taken down in Sweden, TeliaSonera's IP traffic declined by 60%.
Alessandro Petazzi from Fastweb came in with a presentation built around lessons learned from its leadership in IPTV deployment. This sobered people up, though he wasn't heavy-handed in his delivery. There was a lot of interesting information here, but the bullet points that the audience seemed to react to were: there was no discernable improvement in subscriber lifetime among triple play customers; offering premium sports content as a free incentive for subscriber acquisition had increased churn; people who were willing to buy premium content on the network were relatively price inelastic; these people are relatively small in number, but their average expenditure is significantly higher than average. He also made a great comment during Q&A to the effect that the amount of additional money you can squeeze from customers is governed by your place in the value chain - you have to accept that. Personally, I found this all fascinating given the near-hysteria surrounding IPTV. Here we have a player with five years of experimentation and marketing experience behind it, saying something pretty different from what many relative newcomers to the space seem to think.
There were some other presentations from Google, Intel, Yahoo!, Telenor, GSMA, et al, all worthy of some comment in a later post. I want to close out with some observations about the presentation given by Ken Ducatel, who works for Commissioner Reding. He ran though the key points of the Commission's review of regulation (spectrum management, elements of veto power at EU level, etc.), and then spent a long time on the issue of structural separation, an idea floated by Commissioner Reding in June, but not formally raised in the official communication which followed. It seemed to me as though he was trying to sound out the audience on the issue, and urged them several times to respond to the consultation which runs until 27 October. At the risk of misrepresenting his statements, what I took away generally as a message was that changes in the nature of service provision in an IP age, as well as provisioning problems encountered by the incumbents (presumably equal infrastructure access to third parties) makes structural separation a potentially attractive solution. My gut feeling, without seeking to over-exaggerate, is that this is a key area of interest to the Commission, and that it is something to watch very closely.
I've got to go to bed now. So far I feel, and many others have said, that this is indeed a different sort of event, and the sense of self-examination and self-criticism from the executives here, many of them very senior, is palpable. However, the other sense I am getting from attendees is that the realizations arising from this process are one thing, but implementing change and modifying organizational DNA are quite separate challenges.
UPDATE: For an excellent summary of day one and the voice and messaging workstream on day two, see here.