How regulator's and Telco's are holding up the Internet of Things

Well, I got quite a few reactions on my work on Machine to Machine communications. Some of it was critical and deserves a reaction. Many people however are also very positive. Bill St. Arnaud has referred to me multiple times now on his blog. Telco2 has invited me to speak in London on November 9-10. The Apple and Gemalto rumor stimulated me quite a bit more to finish the piece below. BTW I think Steve should talk to me.


I'll go through the criticism point by point. It starts of with that M2M is overrated and who really wants this. The next section is, that I misunderstood technology or misidentified solutions. Then a short intermezzo to explain that even if technology was a solution, it wouldn't solve all and then I lay all the blame on regulators. To get some background, flip through the presentation

Management Summary of Onderzoek Flexibel Gebruik van MNC's

View more presentations from Raindeer.

BTW the spicy title is because it seems I get better response to spicy titles than to none spicy titles. Fear sells and I happen to know some regulators read this blog, so this may give them reason to forward the blog.

Where do we use M2M?

There are many ways of doing machine to machine communication. Much of it is already done in Scada systems and generally uses wired networks. One of these may be analysis systems for hundreds of thousands of sensors in chemical plants. All of this is wired communication. However unlike chemical plants most systems don't sit nicely in one place, they either move or are too distributed.

Virgin Media Speedtest: 50mbit only 2 percent more revenue.

As you know I've been arguing for simplifying the broadband offers to the French model of 1 price that gives the highest speed to all customers. My argument being this simplifies the marketing and the back office.

Chris Marsden spotted the Virgin Media broadband subscription numbers and notices that only 3% take the 50mbps subscription. Only 90,000 subscribers are willing to pay 10 pounds a month extra for the top of the line. Only 9 percent of customers take the 20Mbps version. So a grand total of 88% take the cheapest offer. The question then is, how much this brings in extra

Top of the line: 900k extra compared to the Medium and 1,350k per month compared to the simple version
Middle of the line: 3 million a month extra compared to the medium

So roughly 52 million pounds extra a year as the result of all that differentiation. All that compared to a quarterly revenue of 660 million for the cable business. A dismal 2 percent extra these customers bring in.

The biggest problem is to assess the costs side. Is it costing them more or less than 50 million to support the complexity. But I am willing to wager it is costing them in the double digit millions to support this. Just because everything they do has to keep in mind the three offers. It's not just the back office but also the print campaign. On top of it every temporary offer to tease the customer has to take this into account. It's a proper hassle.

So if this was a speedtest, would you really be racing for the 50Mbit offer to differentiate your product?

Update: Dutch regulator OPTA threatens hotels offering internet to guests

Update: 28-10: Hotels aren't telecomproviders the OPTA has confirmed. It had approached 15 organisations. Only 3 organisations who delivered ISP services to multiple hotels were asked for extra information. Hotels, conference centers and installation companies who install hardware were not deemed telecommunications providers.

Update 14-10: Only 10 hotel. chains were asked. If some of them route their own internet traffic, ie have an AS number and routable traffic, then it may be that they do have to register. But it's a big if. See Webwereld, where I perform as a pundit

Just when I was writing a longer blogpost on the outdated distinction between public and private telecoms networks (related to M2M), here comes the Dutch regulator OPTA with a reason why we should have some form distinction. OPTA is of the opinion, after a public network complained, that hotels are offering a public network if they are offering internet to their guests. This means these hotels have to register with OPTA and pay 250 euro a year. What I find shocking is that OPTA isn't able to conclude by itself that the complaining public network was completely and utterly wrong. I also wonder why McDonalds wasn't mentioned as a major infringer.

I'll be speaking at Telco 2.0 on M2M, London, Nov. 9-10

I've been invited to speak at the Telco 2.0 EMEA event in London, Nov 9-10. My topic will be M2M and so I'll be part of the M2M session on the second day. Unfortunately this does mean I won't be speaking at the FTTH Forum in Budapest, which is on the same day, but that one comes recommended too. My attendance of the one and not the other is related to my employers interests.

I'll be speaking along the lines of the research I did for the Dutch government into M2M and the impact on telco business models. 

For those of you in London, I'm free to meet up on the 8th and possibly on the 11th. Drop me an e-mail or a phone call if you would like to. 

Killed! Milking someone else's customer: Fake voicemail.

Update October 12th: KPN has now killed the bad idea, because there were too many negative reactions.

KPN has come up with a brilliant way to make more money: Fake Voicemail, telecompaper reports. They need to, the financial targets are tough. (addendum: Friend of mine suggests it's a violation of common carrier status, or net neutrality. Interesting way to look at it. Imagine a fixed line and an answering machine, where this kicks in before the answering machine)

Normally if you call a mobile number and it isn't answered and the user hasn't activated the voicemail, after 90 seconds it will stop ringing. Now KPN has introduced a message after 30 seconds telling people that the phone isn't answered and that there is no voicemail. I call this fake voicemail. The fantastic thing of fake voicemail for KPN is that it can charge the 'termination rate' to someone else's customer (or its own customers for that matter), who hasn't asked for the message and was perfectly capable to understand that the other person didn't pick up the phone.

To keep you on the line longer and pay more, there is also a whole menu of options for those wanting to leave a message, that can be accessed through KPN's online portal etc. KPN is serious about this squeezing of someone else's customer and has announced it will come up with more types of services that incur a charge.

To me this just shows how easily exploited the termination rate system is and why it should be abolished altogether. The benefit of the service lies with the called network and the called person. Furthermore they have chosen to activate it on their network. If customers like this kind of service, let them become KPN customers.

I would suggest KPN to do a similar thing for all of it's fixed lines. The termination rate is less, but how hard can it be. :-) Other possible solutions would be to randomize the time the caller is sent to voicemail. Some people are way to good at guessing when to cancel the call and not be sent to voicemail. On it's own network it could send people reminder SMS's that inform them the person they called might now be available to take their call.

Another thing that bugs me is that even though termination rates are coming down, I don't see rates for calls to mobile coming down. Termination rates have dropped, but retail prices are remaining the same. It's still around 17 cents per minute to call mobiles.