Wrote an article for Gigaom on Apple and SIMs

Gigaom just published an article by me called: "How to bypass carriers Apple style", on what Apple could do with the SIM-idea I developed for M2M. Apple is only in there because of the marketing value, Samsung, Sony, Philips, LG, Asus, all of them could be doing this. It works best for laptops and other data devices. These devices often don't have data roaming enabled, even if you use a dongle.

Have fun reading it!

GIGAOM Readers: please have a look at some of the other articles I wrote on the topic:

• A very simple presentation to introduce the idea given at the Telco2 conference (click or scroll down)
• A more in depth management summary of the idea, focussed on embedded M2M
• There is also a 55 page document for the government of the Netherlands (in Dutch)

Other things I wrote:

• The common errors of Telecom CEOs
• a primer on peering and transit
• Telecom Cool Wall
•  Why all telecom marketing and product management is wrong

The GSMA changes opinion on programmable SIM-cards

In a surprise move, the GSMA today announced that it will standardize a new form of embedded SIM. This will allow remote activation and updates.  The spec will be ready in January 2011. No word yet on whether or not the IMSI will be changeable after initial activation. This is however a complete reversal from the GSMA's position from the past:

Appendix A of 3GPP TR 33.812 V9.2.0 lists the opinion of the GSMA as
[…]Furthermore, one of the major concerns of MNOs is the potential weakening of the well-established and trusted SIM-based GSM/3G security architecture. Extended OTA (any kind and via any bearer of over the air data download to the USIM) capability to facilitate download of new subscriber keys and possibly authentication algorithms represents such a potential weakening of security.[...] not allowing MNOs to fulfil their obligations towards regulatory and other governmental authorities to guarantee secure authentication and billing.


[…]The only proposal in the TR that was acceptable to GSMA SG representatives was the Alternative 2 where operator change was performed by physical replacement of the UICC in the device.[…]


This would allow the likes of Apple to release mobile phones without removable SIM-cards. The biggest question is of course, why the GSMA changed its position and how much control they are willing to relinquish to the end-user, be they Apple or a smart metering company.

Though this will alleviate the problems I identified in my work on Machine to Machine communication, it's only 1 out of the 4 problems that I identified that now could be fixed (seeing is believing). Customers may be able to switch operators in the future, but roaming, national roaming and innovation, will probably still be limited.

Your customer wants to be mvno v2

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My presentation on M2M at Telco2.0 and my impression of the conference

Tuesday and Wednesday I was at the Telco 2.0 conference in London organised by STL. I was an invited speaker on the M2M track on Wednesday morning. Like many of you, I know the Telco 2.0 blog and knew of the conferences. Good friends in this community, like James Enck were on stage there before me. Other friends in this community stood at the basis of the Telco 2.0 ideas. So I was quite happy to be invited to the event.

Telco 2.0 on M2M
My presentation was part of the dedicated M2M track. Not all the attendants were there, but only those interested in M2M. The crowd was treated with a series of presentation from carriers and various forms of system integrators and suppliers.


What I found interesting in the telco presentations was, what they were and weren't about. What they weren't about is what their customers were doing and the problems that these customers were facing. What they were about is, potential use cases, the organisation of the telco's M2M unit and how it was embedded in the organisation and the design of the M2M platform. The whole reasoning was supply driven. Build it and they will have to come. As someone had warned a while ago, most telco diagrams of a problem start with their network in the upper left part of the page and the customer in the lower right part of the page. This is true. It also shows where their focus is; themselves, not their customer.

The difference between the telco's wasn't too great. Orange seems to go for a more fully integrated solution, where they will deliver the network, the platform and all sorts of other devices. Telenor has a dedicated group for M2M networking solutions, called Connexion and another group Objects that focus on service enablement, regardless of the network. So Connexion can sell to the whole market without involving Objects and vice versa.

Most of the presentations were at least of a decent quality and sometimes quite better. It deserves metntioning, because often this is different. However, the feeling these presentations give me in retrospect, is that of enormous budgets and very little idea of what the customer is looking for. This idea came from a remark by a quite brilliant and quiet Eastern European financial controller of a mobile telco, who remarked privately that his company just didn't have the size and the budgets necessary for such a platform, certainly given the 5 euro max revenue/month per SIM. This remark is so incredibly true. The large behemoths of European Telecoms are still swimming in the free cash flow. Free cash flow that is supposed to do something and might as well be spend on M2M. Running after every hype in the business, including M2M is not so much a necessity as it is a luxury.

The interactive format of Telco2.0 also means there was quite some feedback from the room, through instant polls. What it showed was that the audience was effectively split over the idea whether mobile telcos have a larger role to play  in the M2M ecosystem.

My presentation on how M2M customers becoming MVNO's
 I gave a presentation called "Your M2M customer wants to be MVNO". In generally the audience quite liked it. They thought it was thought provoking. I do think it was the most referenced presentation during the day. Both the facilitator and the speakers quite often referred to Rudolf or Logica. This was of course nice for my ego. I really focussed on the 4 central business problems and why becoming an MVNO was a solution.


What was also quite clear is that the industry really doesn't want to hear what I had to tell. The idea that a large scale M2M user is going to become a wholesale customer of the telco is just not done. There were some interesting comments why not:

Your customer wants to be mvno v2

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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

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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.

If TomTom were a country, its mobile penetration would rank between Gambia and Gabon (137th)

In the report I wrote for the Dutch government on M2M (or embedded wireless, or internet of things), quantifying the size of the market for M2M was one of the important issues. Today TomTom published some of its ambitions with real time traffic information and its HD traffic product in a Manifesto. As part of this they give a number of the amount of devices that are GPRS/UMTS enabled: 1.38 million!

If TomTom were a country, it would rank between Gambon and Gabon in terms of active mobile devices or 137th. Its goal is even more ambitious and that is to bring 20 to 25 million devices on the road, which puts it in the range of  The Netherlands, Australia and Taiwan, somewhere around 35th to 40th in the world rankings. Yes people, that would mean that TomTom would have more devices in the field than many European mobile companies.

M2M is going to be really big and it will change the relationships between telco's and M2M end users.

Logica report on switching costs for M2M (by me)

This last year I've worked on one of the most interesting subjects I've ever come across: Switching costs for Machine to Machine users (or embedded wireless as the GSMA calls it). The result is a report for the Dutch Ministry of Economic Affairs. It's about how a simple rule change in who can apply for numbers (E.212 and telephone) could open up a market for M2M communications. It would more or less remove the difference between public and private networks and result in a more flexible market, like we now already see for internet connectivity.

 Though I independently came to a solution, I can't claim I've thought of this solution first. That honor goes to at least 2 of my Logica colleagues in the Nordics and the UK or maybe to someone at Stratix consulting, but more likely someone somewhere, elsewhere. I do think I can now claim to have written the first full research in a public document on the subject. It's called "Onderzoek flexibel gebruik MNC's"(downloadable pdf, in Dutch). (and yes please put the links that prove this wrong in the comments, someone must have done this before, but I couldn't find it) :-)

Management Summary of Onderzoek Flexibel Gebruik van MNC's

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