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What exactly is Web 2.0? Why should service providers concern themselves with it? After all, voice is still the core revenue-generating application (even if voice ARPU is flat or declining), and beyond that we have video-on-demand and IPTV coming online. So how relevant is Web 2.0 to the carrier business model going forward?
The short answer is plenty. Carriers who remain focused on traditional voice services and video are missing the larger transformational drift of the communications industry. It’s no longer just about service providers inventing services and then selling them to customers; it’s about allowing customers to help develop and define their own innovative applications – about platforms on which customers share communications and entertainment experiences with one another, building ever-larger communities of friends, colleagues, and customers. In this scenario, end users become application development partners with service providers in creating their own services – not just the one-way street of build-it-and-they-will-come. The goal of service providers today should be on providing these platforms for new services and communications experiences, and then letting customers get creative. This is the larger trend behind Web 2.0 – and why carriers worldwide need to take note.
Not Your Father’s Web
Coined in 2004, Web 2.0 refers to a set of next-generation, Web-based services, including social networking sites, wikis, communication tools, mash-ups, etc., which emphasize online collaboration and sharing among users. The irony is that many of the core technologies of Web 2.0 have been around since the early days of the Web. However, only recently have the key impacts of Web 2.0 become clear, and these fall into two categories: 1) how emerging apps are impacting the network infrastructure, and 2) how services themselves will be developed and delivered to the customer going forward. These are the kinds of issues that will be discussed in depth at a key industry forum developed by the International Engineering Consortium in April - SOFNET 08.
The hybrid nature of Web 2.0 applications is driving network transformation at several levels. First, the convergence of data applications onto a common IP infrastructure is seen as the key enabler for many multimedia, interactive applications that are becoming increasingly popular.
According to Michael Howard, principal analyst at Infonetics, carriers are continuing to invest in network transformation and convergence to meet the demand for advanced data services – both in the residential and business sectors. "Carriers are experiencing decreases in legacy service revenue (ATM, frame relay, leased lines) and know the downward trend will continue,” he states, “but they expect big increases from IP VPN, VoIP, and metro Ethernet revenue, and providers planning broadband and IPTV expect sizeable revenue increases from those services as well." In addition to this, the network must also accommodate user-generated multimedia content characteristic of Web 2.0 services such as facebook, YouTube, and others.
Putting traditional services such as voice with emerging, IP-based broadband applications—in both a mobile and fixed environment—requires carriers to make significant infrastructure investments. Just how and where to make such investments will be the focus of many discussions at SOFNET 08. For example, IP Multimedia Subsystem (IMS) is seen by many as a key enabling technology for next-gen, Web 2.0 applications. However, there has been concern among carriers over how to implement it cost effectively, how to migrate the legacy network toward an “all-IP”, IMS-based network, and what the payoff will be. At SOFNET 08, carriers such as Korea Telecom Freetel and BT – alongside thought leaders such as Accenture and Oracle, will focus on carrier experiences in adopting IMS to date, and how it is enabling network transformation.
Nevertheless, the impact of Web 2.0 on network infrastructure is only one key concern. Another major issue is how these next-gen services will be developed and delivered…how to monetize them.
A New Paradigm for Services Development
If any metaphor characterizes the Web 2.0 world – and, by extension, the Telco 2.0 world – it is openness. In order to interact richly with colleagues, friends, customers, and business partners, end users are pushing a model in which 1) they have a hand in developing and defining the services they themselves want, and 2) interacting with the network itself is easy and efficient. This is the end game of the network-as-software model: one in which software and applications in demand live on the network, are accessed by the network, and indeed are created via the open-access network. This is a new paradigm for services development, one which is still being hashed out by industry players.
For example, at SOFNET 08, Microsoft will discuss its Connected Services Sandbox as an example of the kind of innovation, collaboration, and delivery characterizing the new paradigm. Through Sandbox, operators can open their networks to next-generation Web 2.0 applications that can be mashed together with traditional services to create new connected services. The goal of the Sandbox is to facilitate the rapid development and market deployment of new service offerings, creating new opportunities for participants and delivering new options for consumers and businesses.
“The Web world and the telecommunications industry have the potential to complement each other in powerful ways,” says Michael O’Hara, general manager for the Communications Sector at Microsoft. “By embracing the principles of Web 2.0 and leveraging the significant customer relationships and assets they already have in place, operators have the opportunity to redefine the models for doing business. In the new soft service provider environment, operators will be able to offer hundreds, if not thousands, of new services that enable them to target specific customer segments, reduce ‘churn’ and drive new revenues.”
Charting a Course Forward
BT, a global innovator in IP-based network transformation and services development, will host the SOFNET 08 conference, with Telecom Italia also endorsing the show as a service provider sponsor. Matt Bross, Group CTO for the BT, sees it as an excellent opportunity to help traditional telcos embrace the new paradigm and see their organizations as enablers of a new world of interaction.
“The innovation genie is out of the bottle,” said Bross in an interview recently with Light Reading. “We need to do more mash-ups, and we need to connect together for innovation. There are major innovation possibilities by opening up collaboration opportunities. We're moving towards a real-time global innovation model... [and] moving from a closed to an open model. It's a big challenge."
Getting a handle on these mash-ups (that is, creating a new service by putting together two existing ones) as well as opening the network to third-party innovators, is the course forward according to Bross. One which will be discussed thoroughly at SOFNET 08.
“We need to change our mindsets and focus on how we can enhance the quality of people’s lives and how they do business,” he said. “We need to innovate at the speed of life.”
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