October 2013 | www.tmforum.

org

Analysis: What weve learned from real-life lessons Insights: Digital disrupters from diverse industries Viewpoint: KPN Groups Erik Hoving on living in a world of screens

Sponsored by:

Exploring the evolution of digital services

AFTER THE HYPE, WHERES THE MONEY?

inform innovate accelerate optimize

INNOVATE
CATALYSTS COLLABORATION AGILE WORKSHOPS

By bringing the industry together to identify and solve common problems, we enable rapid and successful innovation, striving to challenge conventional thinking by bringing disruptive ideas to the table. www.tmforum.org/innovate
DIGITAL LIFE

DIGITAL LIFE
This report is free for anyone to download from TM Forums website: www.tmforum.org/DL2014

Editorial Director: Annie Turner aturner@tmforum.org Editor: Dawn Bushaus dbushaus@tmforum.org Creative Director: David Andrews dandrews@tmforum.org Managing Director, Insights Research: Rob Rich rrich@tmforum.org Business Development Director, Research & Publications: Mark Bradbury mbradbury@tmforum.org Director, Publishing and Webinars: Katy Gambino kgambino@tmforum.org Production Manager: Sarah Wray swray@tmforum.org Vice President, Marketing: Lacey Caldwell Senko lsenko@tmforum.org Report Design: The Page Design Consultancy Ltd Vice President, Events, Publications and Content: Rebecca Henderson rhenderson@tmforum.org Advisors: Keith Willetts, Chairman and CEO, TM Forum Nik Willetts, Chief Strategy Officer, TM Forum Published by: TM Forum 240 Headquarters Plaza East Tower, 10th Floor Morristown, NJ 07960-6628 USA www.tmforum.org Phone: +1 973-944-5100 Fax: +1 973-944-5110

Page 4 Shifting gears still means great opportunities in digital services Page 6 The communications industrys starring role as screens take center stage Page 8 M2M and profits from beyond the core reality kicks in Market analysis reveals how expectations around the profitability of machine-to-machine communications are shifting. Operators can compete by adding value and are already doing so. Page 16 Sponsored feature Hybris Page 18 Regulatory issues that could impact M2Ms viability Some big changes to the regulatory environment could have big commercial implications for the whole digital ecosystem. Page 20 Seven digital disruptors join in or lose out A wide-ranging look at how digital services are changing and will change sectors from education to pharmaceuticals.

2013. The entire contents of this publication are protected by copyright. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means: electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, TeleManagement Forum. TM Forum would like to thank the sponsors and advertisers who have enabled the publication of this fully independently researched report. The views and opinions expressed by individual authors and contributors in this publication are provided in the writers personal capacities and are their sole responsibility. Their publication does not imply that they represent the views or opinions of TeleManagement Forum and must neither be regarded as constituting advice on any matter whatsoever, nor be interpreted as such. The reproduction of advertisements and sponsored features in this publication does not in any way imply endorsement by TeleManagement Forum of products or services referred to therein.

DIGITAL LIFE 3

WELCOME

SHIFTING GEARS STILL MEANS GREAT OPPORTUNITIES IN DIGITAL SERVICES

Welcome to this second edition of our annual publication Digital Life. The uptake of and thinking around digital services across almost every sector you can think of has progressed in scope and speed since last years edition. The purpose of this publication is to take a cleareyed look at how the digital services market is shaping up after the initial hype and identify opportunities where service providers can develop new, sustainable lines of business. We look at original thinking thats going on in other industries use of digital services and how digital services are changing them, plus possible lessons for all types of digital service providers. We also look at potential regulatory and legal changes that could have resounding repercussions for the digital ecosystem. TM Forum exists to help its members more than 900 enterprises, service providers and suppliers globally to transform continuously to meet the challenges and succeed in the digital world. We do this by bringing together the digital ecosystem, from digital, 4 DIGITAL LIFE cloud and communications service providers, to all of their suppliers and enterprise end-users. Every business in the digital economy today faces three major challenges:
n How

to transform IT and operations to dramatically reduce operating costs through automation, at minimal risk, and in a way that gives the business the agility it needs to get products to market at the speed of disruptive innovators? n How to build an open digital ecosystem where new services can be delivered quickly, easily and securely with a wide range of business models and partners? n How to maximize market share, customer growth and loyalty? The Forum has three core programs designed to address each of them.
n Agile

Business Program focuses on solving the challenges of established businesses seeking to transform the efficiency of their IT and operations

with a low-risk, scalable approach. The program generates and leverages a broad range of expertise, research, best practices and standards proven to improve efficiency and agility through automation, reduction in operating costs, improve the efficient use of capital investment and reduce time-to-market. n Open Digital Program addresses how to enable an open digital ecosystem, seeking to make it simpler to build effective partnerships, quickly and securely, by exploring the business and technology challenges that make great partnerships difficult to achieve. n Customer Engagement Program tackles the challenges of attracting customers but, more importantly, retaining and engaging with them. This involves moving beyond traditional customer experience metrics and exploring how to enable one-to-one customer engagement. Measure and implement what truly matters to your customers to grow your business.

garage developers to multinationals were invited to try out these new APIs and provide feedback about what works and what improvements they want. The aim is to support faster development of richer APIs to meet industry needs and communicate the Forums work and aims more effectively to the right people. This input will be incorporated into more iterations.

Figure 1: TM Forum members benefits across our strategic programs

Across our programs and key topic areas we offer a wide variety of member benefits. The core of the Forum is our unique Collaboration Community, where companies come to together to solve common industry issues, including big data, business process optimization, revenue management, cloud and virtualization, IT and operations transformation, security, and much more as you can see in Figure 1. Accelerating collaboration efforts Just as the communications industry is having to learn new ways of working to accommodate the innovations that appear daily in the digital world, TM Forum is looking at how its members can enable the open digital economy for the benefit of consumers and all types of service and infrastructure providers. One key area is having an innovative, iterative, speedy approach to designing and developing lightweight management APIs. At the moment, applications and services are offered by the likes of Apple through its iTunes ecosystem, which is tightly integrated with its devices, and Google with its Android offerings. If consumers of the services want to take offerings from different providers, it is difficult for them to do so. As consumers increasingly want to manage their cars, health and homes through secure, reliable, easy-to-use apps and services, this will become an ever bigger issue. How do they simply combine services from their car dealer, doctors office or hospital and energy supplier? TM Forum has set up a series of Agile Workshops in which a varied group of stakeholders come together, brainstorm which issues they want to address in a particular area, then agree to develop solutions in the next 90 days. One such event was held in Paris in July to look at four areas: catalog management, ordering, trouble ticketing and service level agreements. The specifications for the necessary APIs were thrashed out, using RESTful programming, with which developers typically work as it enables them to leverage the advantages of HTTP and high levels of scalability. The interfaces were exposed to a diverse group of people at TM Forums Hack and Learn, which took place Saturday, October 19 and 20, in San Francisco. This was a new venture for TM Forum and a chance to test and refine the new, more agile approach to collaboration. At the Hack and Learn, developers from a range of companies from small

Help at hand TM Forum continues to offer illuminating case studies and research, well-respected industry events, business benchmarking including metrics and key performance indicators developed and honed by members, and our constantly evolving Frameworx suite of best practices and standards. Frameworx (see page 27) is used today, in whole or in part, by some 90 percent of the worlds communications service providers, as well as cable companies, utilities and defense organizations. We hope you find this edition of Digital Life informative, entertaining and inspiring. Nik Willetts Chief Strategy Officer, TM Forum nwilletts@tmforum.org Follow @nikwilletts

DIGITAL LIFE 5

FOREWORD

THE COMMUNICATIONS INDUSTRYS STARRING ROLE AS SCREENS TAKE CENTER STAGE

Despite huge global variations in terms of scale, quality and capacity, operators face five common challenges to meet customers needs in the era of digital services. We can learn a lot from other industries about how to address them. By Erik Hoving, Chief Strategy, Innovation & Technology Officer, KPN Group

I was in China three days ago when a new fixed program, worth 80 billion ($107.2 billion), was announced, to bring broadband access to rural areas over the next three to five years. China Mobile will add 600,000 base stations to its network over the coming years. KPNs network in Germany, a large country by European standards, has 18,000 base stations in total an entirely different scale. We still compare networks in Europe and the U.S., although they, too, are totally different. You can drive from Amsterdam to Marseille (about 760 miles) and only drop wireless coverage twice, at the border crossings into Belgium then France. In contrast, if you travel 50 miles outside San Francisco, theres no coverage at all and thats true generally once you get 6 DIGITAL LIFE

outside cities in the U.S. Then if you look at whats happening in Hong Kong and Tokyo, for example, the difference in quality and depth of network coverage is massively beyond anything weve got in the West. Everywhere things are happening fast, and much faster than we ever thought. Bill Gates comment that, Most people overestimate what they can do in one year and underestimate what they can do in 10 years, applies to our industry. Users of screens, rather than access users, are center stage. Thats how we should think of our customers, typically with three screens in front of them the TV, tablet and smartphone. They want to be able to do what they want with each instantly, at any time. Were moving to an Internet of screens. Our

business is to ensure they can do this. Yet only five years ago our business was dominated by voice and most people working in our industry come from that world so we tend to think about coverage, not capacity, about phone calls, not users experience. The Internet of screens is about living in an instant world, where customers want more and they want it now. I have four children and if I want to know whats going on, I find out from them: Theyre far better gauges than any market research. For example, SoundCloud, which lets people follow what others are listening to, is going to be a huge success. Its sort of like Twitter, but instead of following what people are thinking and writing, you

follow what theyre listening to. Its a world away from how many minutes people are on the phone. Whether your business is banking, retail, education or financial services, it will revolve more and more around screens (as we explore in the article on page 18). And its our job to enable that, to provide the access we dont provide the screens or the apps, but we make it possible. Regardless of their diversity, I see five big trends for operators everywhere, which we need to address. The first is globalization. Weve only seen maybe 5 percent of what that means so far and weve no real idea about the full implications. But borders will cease to exist, and businesses and our customers will become more and more global. Suppliers, apps and technology providers will have global businesses, while by definition, operators are local. We need to think about how we can deal with that. Second, which is key to TM Forum, we are moving to the full integration of the

Network and IT. Before, IT supported the Network. The two need to meld into a single factory because IT is the Network. This is highly relevant to us. Our business customers in particular need to be able to integrate with our assets its an IP world. It will bring massive changes and benefits for our business customers, who conduct business with their customers through screens. Third, we are living in an instant society where people want the same for less or more for the same amount. They want things faster, instantly. Its like the car industry: Prices have barely changed in the last two years, but the performance you get has taken big steps forward. We need to innovate to keep up. If we are going to ask people to spend more, we have to give a good reason, a step up like the iPhone was. Fourth, the Internet will go mobile. The Internet as a mass medium started in the 1990s as a fixed-line phenomenon, and even now in the U.S., sometimes 70

percent of Internet traffic in the evening is Netflix via fixed broadband. John Chambers [the long-serving CEO of Cisco Systems] rightly calls video the voice of the future it will be the most common type of traffic on the Internet, however it is accessed. At the moment we provide the Internet for mobile users via apps, but we will see a true mobile Internet emerge, where there is no difference between the fixed and mobile and it will be location-based. Fifth, we will all use more and more data. This is good news, although the communications industry is in a dilemma: Its not that people dont what we provide; its that they want so much more of it, now. Yet so far we havent been able to implement the usual model where people pay more for things that are scarce and capacity is scarce in the face of insatiable demand. That demand has exploded in the last five years and is accelerating. Yet we mostly charge flat rates although elements like speed and

security are very valuable to our customers. We need to use much more innovative pricing we could learn a lot from the airlines and hotel reservation systems. For instance, when youre on the beach during summer, along with thousands of other people, youll have trouble getting Internet access. If you want to book a flight from the Netherlands to Hong Kong, or a hotel, youll probably have a good choice if you book your ticket or room two months in advance, but there might not be a seat or room available if you try to book two days before you want to leave. Why couldnt we do the same with selling guaranteed capacity? In short, the communications industry is in an era of huge growth, and we are seeing huge developments in technology. But from the point of view of maturity, operators still have a long way to go. Eric Hoving Chief Strategy, Innovation & Technology Officer, KPN Group DIGITAL LIFE 7

ANALYSIS: OPPORTUNITIES FOR SUSTAINABLE DIGITAL SERVICES

M2M AND PROFITS FROM BEYOND THE CORE REALITY KICKS IN

As we move beyond the hype cycle, expectations around machine-to-machine communications (M2M) are shifting. The Internet of Things is different from M2M, which has big implications for service providers projected revenue. Services that intuitively looked like win-win situations, dont easily translate into sustainable reality. Sheridan Nye, Senior Analyst, Enterprise Verticals, Informa Telecoms & Media, explains that enterprises arent interested in M2M so much as business benefits and a partner to help them move through the four identified stages to becoming M2M-enabled. She outlines how and where operators can compete by adding value.
over the past two or three years. While the number of connected things may well reach its much-quoted 50 billion by 2020, only a proportion will be connected via mobile networks (see panel on opposite page). This has important consequences for associated revenue projections. As the financial value of voice and data continues to fall, mobile network operators are looking to services beyond the core to shore up their revenues. Machineto-machine communications (M2M) is the enabler of many of these aspirations from telehealth to smart grid and the connected car, and even longstanding telematics services. Expectations of the global M2M market have followed the familiar hype curve 8 DIGITAL LIFE Cellular connections Informa Telecoms & Medias (ITM) Enterprise Verticals practice researches M2M and demand for ICT services in transportation, healthcare, utilities, automotive, public safety, and public sector/ smart cities. ITM forecasts that by 2015, 315 million public cellular M2M connections will be deployed, generating $12.81 billion in mobile network revenue by 2015 (see Figure 1-1). Compound annual growth in

Figure 1-1: The 25% CAGR in machine-to-machine connections on public cellular networks up to 2015
Millions 350 300 250 200 150 100 50 0 Historical Projected

2009

2010

2011

2012

2013

2014

2015

Source: Informa Telecoms & Media, July 2013

connections of 25 percent from 2009 to 2015 is impressive; nonetheless there are no hockey sticks here. The path is steady rather than any dramatic upswing. Its important to distinguish between public cellular and other forms of M2M when assessing revenue potential.

Mobile network operators seek to embed SIMs into devices to generate high volumes of typically low revenue endpoint connections and backhaul from aggregation points. Specialists in vertical industries, in contrast, often see connectivity as a value-

add for their hardware. In the latter scenario, dedicated narrowband networks may be a better option, or private deployments, to ensure the end-customer avoids monthly connectivity fees (see panel on page 10).

It is important to distinguish between public cellular and other forms of M2M when assessing revenue potential.

Business models distinguish the Internet of Things from M2M

It is important to be clear what we mean by M2M and the Internet of Things sometimes assumed to be simply a matter of enterprise versus consumer applications. We think is also rests on sources of demand and innovation (see Figure 1-2 below). M2M is characterized primarily as a market response to a business need, to enhance an existing process or product, or to mobilize previously static or overly-centralized services. M2M business models are therefore most often a businessto-business-to-business (B2B2B) configuration with some level of managed service or quality guarantee. For large enterprise customers, the contract may be bundled in with high-value services such as mobility or corporate wide area networks. In contrast, the Internet of Things market starts with platforms that encourage low-cost experimentation and Internet-style creativity. These services tend to emerge with mass markets of users in mind consumers, small enterprises, citizens. Each relatively low-value service is delivered over the most convenient connection available to these audiences typically cellular, Bluetooth and Wi-Fi. The Internet of Things tends to be an over-the-top (OTT) proposition today. However, control and quality guarantees will become essential as services increase in value and end users come to rely on them for daily or critical activities. Of course, the distinction is somewhat semantic as a mix of business models, customer types, network technologies and users will be found in real deployments. The key point is that a vast number of devices will be connected to create societal and commercial value, but not all the value will be accessible to the public mobile communications sector.

Figure 1-2: M2M versus the Internet of Things

Common M2M characteristics Led by business need Connectivity provides added value for the end user, typically in the form of increased efficiency and productivity of internal processes, or as enablement of a new service for their customers Business-to-business-to business (B2B2B) value chain Emerges from formal R&D and pilots with customers; Contractual obligations Demand pull Networks: managed access and backhaul. Commercial cellular or private
Source: Informa Telecoms & Media, June 2013

Common Internet of Things characteristics Entrepreneur-led Often uses open data or multiple data sources to produce new services. Services sometimes come to market ahead of demand Business-to-business-to-consumer (B2B2C) value chain or business-to-public sector-to-citizen Emerges from start-up incubation, user innovation, crowdsourcing, acquisitions and alliances Supply push Variety of commercial and non-commercial value chains and capillary network technology

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ANALYSIS: OPPORTUNITIES FOR SUSTAINABLE DIGITAL SERVICES

Managing M2M margins Whereas the enterprise segment typically generates 15 to 30 percent of a mobile network operators service revenue, pure M2M is unlikely to add up to much more than 1 or 2 percent. For domestically-focused mobile network operators, the wholesale model may be adequate to serve demand for M2M on a per-connection, per-Megabyte basis. Larger operators will likely create a dedicated unit, though the great danger is that it (re)-creates silos both in technology and business terms [which is one of the motivations behind TM Forums Open Digital Program see page 4]. Careful management is needed to align the business goals of an innovative central unit with sales incentives in local operating companies. M2M demands that operators adapt their operations for very different kinds of traffic from that of person-to-person communications. Sales and marketing, service provisioning, billing and performance management must all be handled somewhat differently if an operator is to provide more than SIM cards and basic data plans. To accelerate the return on these investments, they have several options, including:
n license

from one of a host of independent software vendors and network equipment manufacturers; n emphasize self-service options for the enterprise to lower costs of provisioning and customer service; and n package M2M with more intrinsically valuable services such as field force mobility, secure corporate networks, and IT cloud services (see page 14 for more on this approach). The major challenge is the tension between the operators desire to address specific vertical markets while also achieving scale, which favors a more horizontal approach. Network operators have been proactive in gathering partners with vertical expertise to lower the cost of acquiring customers in fragmented markets. Shared risk and reward, joint service development and co-marketing can deliver value to both parties, including better margins for carriers. The big question is what the carrier brings to the specialist to outweigh the advantages of aggregating coverage from multiple carriers to get the best price for the end customer? As the hype cycle has turned, ITM observes mobile network operators moderating their vertical ambitions and reverting to more manageable horizontal goals. Mobile virtual network

Long-range contenders for non-cellular M2M

M2M that does not rely on pubic mobile networks tends to be dedicated to specific locations or functions. Supervisory control and data acquisition (better known as SCADA) for monitoring electricity substations, for example, commonly uses fiber, microwave radio, fixed leased line or four-wire. Another example is low-power, low-bandwidth wireless networks in industrial plants. Now a new generation of dedicated M2M wireless networks is mounting a serious challenge in the same applications that MVNOs are targeting. The venture of Arqiva, BT, Sensus and BAE Systems, SmartReach will connect millions of smart meters mostly in rural areas of the U.K., using Sensus long-range RF technology on Arqivas licensed frequency band. Sigfoxs Ultra Narrowband technology is deployed throughout France on a restricted license-free band, and recently launched in the Netherlands and Russia. Weightless is a protocol that is gaining attention in the U.K. in combination with cognitive radio techniques and white space spectrum. These approaches are designed for long-range, low latency connectivity for low-power devices, and need fewer base stations than mobile cellular to cover a given territory. They benefit from not having to support the demands of M2M and commercial voice and data. If the LTE standard evolves to incorporate segmentation for M2M, this would allow MVNOs to compete with alternative wireless networks in terms of latency also in its all-IP architecture and IPv6 readiness. This means lower cost operations and better control of device power usage and sleep time, simpler hardware and lower processing requirements. Although trying to anticipate operators 2G/3G/4G roadmaps remains a challenge for enterprises, ultimately LTE will emerge as the future-proof choice and module prices will fall accordingly. In the meantime, expect to see more operators integrate alterative bearers into their M2M services. Orange Business Services for example has a joint venture with Veolia that uses long range RF to connect water meters and environmental sensors. O2 UK has partnered with a Swedish vendor Connode for wireless mesh to complement its GSM/GPRS coverage for smart meters.

platforms for connectivity and applications development DIGITAL LIFE

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operators (MVNOs) have a role in providing an integrated technical platform and vertically-focused channels to market. By acting as a funnel, these specialists can lower the cost of customer acquisition, get services running quickly and respond to customized billing requests. MVNOs can also help mobile network operators predict traffic loads. This model doesnt solve the fragmentation issue, however, as many of these companies are small and independent, and content to stay that way. Four steps toward M2Menabled enterprises Against the backdrop of these issues, mobile network operators must offer more value than connectivity alone to ensure M2M is a genuinely profitable complement to core voice and data services. This means helping enterprise customers realize competitive advantage at each stage of their adoption of M2M services. Regulatory mandates have driven M2M to date. Smart metering initiatives tend to be government-led, such as in the U.K. where Telefnica O2 recently won the contract to connect meters in around 20 million households by 2020. Similarly, Europes mandate that new vehicles must be able to make automated emergency calls (eCall) by 2015 has introduced the embedded SIM into car

makers production lines. Beyond regulatory push, Informa observes four common stages in the way enterprises introduce embedded connectivity (see Figure 1-3). These are visibility, productivity and cost reduction, new business models and finally closed-loop automation and predictive analytics. Initially an enterprise wants visibility. It wants to know where personnel are located, what they are doing, where its assets are and how efficiently its processes are working. Embedded connectivity quickly addresses the visibility issue, then the customer starts looking at deficiencies in productivity and ways of reducing costs. Automobile makers see a huge opportunity in using on-board telematics to detect technical problems. Access to this new information would slash the cost of repairs under warranty. Compliance reporting, to meet regulatory and liability requirements, is also an important driver. By making visible previously unseen processes, the enterprise is able to prove it has delivered a service according to its contractual and legal obligations (see article on page 18 for more on this and the likelihood of important changes). For example, logistics companies can lower the cost of meeting import-export requirements if they can

Figure 1-3: Stages of enterprises adoption of M2M

Predictive analysis Closed loop automation The M2M-enabled enterprise New business models Cost reduction Productivity

Visibility

Automobile makers see a huge opportunity in using onboard telematics to detect technical problems. Access to this new information would slash the cost of repairs under warranty.

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ANALYSIS: OPPORTUNITIES FOR SUSTAINABLE DIGITAL SERVICES

confirm the location of cargo shipments. New business models present challenges The third stage, enabling new services and business models, is where revenue potential heats up but deployments typically slow down. Technical integration often takes longer than expected, and the need for testing can also be underestimated. Pilot deployments must provide evidence to support the business case. This is difficult where the connected service is not only novel but ahead of quantified market demand. Telehealth presents one of the most challenging of these evidence gaps. Remote monitoring of patients at home with chronic conditions, such as diabetes and heart disease, saves money if it reduces the number of hospital visits and ultimately the number of hospitals required. It also frees up nursing staff to monitor more patients and allows highly-qualified doctors

to take an oversight role. So it seems intuitive that telehealth would quickly reduce costs for customers in the healthcare system. However, the U.K.s flagship study, the Whole System Demonstrator (WSD), found cost savings were negligible. Results from the worlds largest telehealth trial to date (over 6,000 patients), reported in 2012, seemed to confound everyones expectations of connected healthcare. The underlying reasons are complex and aspects of the WSDs design its duration, selection of patients and lack of mobile technology would be improved if it were re-run today. However, the key factor in M2M terms is that healthcare centers on people and their working practices rather than solely on the chatter between machines. Telehealth is therefore more susceptible to uncertainty and its benefits are harder to quantify for users. O2 can testify to this, having recently withdrawn its telehealth and telecare services in the U.K., citing

lack of demand. [However, TM Forum believes much can be done to address these issues and ensure digital health services are sustainable see page 25). Other vertical industries, such as logistics, have more prosaic requirements. These customers will arrive more quickly at the fourth stage. Here the focus is on gathering data from the field and deriving predictive intelligence that can enhance service delivery and decision support for the enterprise and provide additional benefits to its customers. Recognizing the opportunity As ever, these four stages are not strictly sequential or discrete when deployed in large organizations, as business units are responding to different requirements at different times. The key point is that enterprises do not buy M2M as such. They are looking for business benefits and a partner that can help them move through all four stages, as required, over time.

The key point is that enterprises do not buy M2M as such. They are looking for business benefits and a partner that can help them move through all four stages as required, over time.

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DIGITAL LIFE

Figure 1-4: Partnerships are a key requirement for communications service providers in the digital services market
80% 70% 60% 50% 40% 30% 20% 10% 0% 4G/LTE Cloud Superfast Computing BB M2M Converged Ethernet billing HD video Other 2012 2013 80% 70% 60% 50% 40% 30% 20% 10% 0% Other 2013
Other SDN VOD Multiscreen video Wi-Fi Apps/stores

Source: Informas Industry Outlook surveys 2012 and 2013; 240 communications service provider respondents

The mobile operators opportunity is to take the enterprise from initial process automation toward an enhanced portfolio that is continually refined based on streams of data from connected services.

Resetting expectations ITMs annual Industry Outlook Survey 2012 asked telecom executives to identify the opportunities that would drive top-line growth in the following 12 months (see Figure 1-4).

Although the sample isnt statistically significant, the drop in M2M as a growth source from 30 to 20 percent of respondents in 2011-2012 probably indicates that we have passed the peak of the hype curve.

Analysis of activity and public announcements in 2013 regarding the provision enterprise services shows a shift from healthcare in 2011-2012 to the connected vehicle in 2013 by operators. Public statements only reflect

Figure 1-5: Operators publicized activity

40% 35% 30% 25% 20% 15% 10% 5% 0% Automotive Horizontal Consumer (B2C) Financial Healthcare Logistics Public sector Media Other Utilities 2011 2012 2013

Source: Informas Industry Outlook surveys 2012 and 2013. 240 communications service provider respondents

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ANALYSIS: OPPORTUNITIES FOR SUSTAINABLE DIGITAL SERVICES

Figure 1-6: Comparison of typical characteristics of M2M in automotive and healthcare

Automotive Customers Services New value chains Pricing Bandwidth Mobility OEMs, consumers, fleet owners, insurers Infotainment, usage-based insurance, fleet management Multiple 3rd party service providers insurance, parking & navigation Various subscription and advertising models High (infotainment) and low (telematics) All services mobile wireless. Healthcare Public & private healthcare providers, insurers, consumers Remote patient management (RPM), telecare Operator opportunities in B2C micro-health insurance Per patient, per month, low or no capital expenditure. Cloud-hosted data, pay per use. High (diagnostics), medium (video consultations), low (vital signs) Mobilization of RPM and telecare to give patient confidence to travel outside the home

Source: Informas Enterprise Verticals Activity Monitor

a portion of total activity, but they tell us where each service provider is staking a claim. Both automotive and healthcare (see pages 23 and 25) offer potentially huge M2M opportunities but with mostly unproven business models (see China Mobile case study on page 26). Otherwise, the sectors are different in most key aspects (see Figure 1-6). Many operators are finding that healthcare markets take longer than expected to deliver. Meanwhile, the 2015 deadline for eCall compliance in Europe, plus similar regulatory mandates in other regions, means operators are battling for original equipment manufacturers contracts, which are typically of six or seven years duration. This isa couple of years longer than in other M2M sectors (again, see article on page 18). ITM believes most operators will focus on two or three vertical sectors and not try to chase every rabbit down its burrow. Their 14 DIGITAL LIFE

choices will be strongly influenced by the make-up of their existing enterprise customer base rather than M2M opportunities alone. Extending existing services Orange (formerly France Telecom), for example, has provided satellite and wide area network services to shipping for many years. Recently it has extended its maritime portfolio with end-to-end managed M2M services over VSAT for cargo track and trace, engine diagnostics and fuel consumption monitoring classic M2M transport applications. Together with partner Maxis, it bundles these services with broadband for real-time electronic navigation (ECDIS) and crew Internet access and welfare services, such as telehealth. Flat-rate pricing of $2,000 a month for unlimited voice and data usage is a departure in this market, which is used

to paying by the Megabyte. Orange aims to increase the customers average communications spend overall by bundling several business-critical services that address current pain points. Firstly, electronic navigation is a regulatory requirement most large passenger and commercial vessels must have this installed by 2018. Secondly, the combination of ECDIS and Maxis Voyage Decision Support (VDS) application reduces fuel consumption, equating to $9,000/day savings at current fuel prices, according to Orange. The companies say these cost savings, together with competitive advantage from optimized route selection, mean the VSAT service pays for itself. Risk factors As well as transforming vertical industries, the sheer scale of M2M as envisaged is imposing its own changes

onto the communications sector. Billions of sentient devices will affect issues as fundamental as supplier contracts, regulation and number allocations, technology standards, spectrum management and so on. On top of that, operators forays into vertical industries may involve new liabilities as services become increasingly business critical even life-critical in the case of healthcare, though operators will seek to avoid this. Recently a major port in Europe suffered a power failure due to an outage in the mobile network providing smart grid connectivity. A petro-chemical factory in the port lost 15 million in production just in a few hours while power was restored as precision plastic materials simply melted. Yet neither the power company nor the mobile network operator was found liable as their contracts had get-out

clauses. Customers will soon get wise to this loop hole. New competition rules Competition rules will also need to grapple with M2M and the Internet of Things. The European Union has historically focused on supplier switching as a means to ensure markets are competitive. The ability to re-provision SIM cards over-the-air will make it easier for enterprises to move to a new service provider. However, servicelevel factors and contract issues may be more significant barriers. Some enterprises say they are facing steep price increases when contracts are due for renewal. If regulators intervene, this could unleash the c word that no one likes to mention in the context of M2M, namely churn. The implications for an average revenue per connection that is already low business could be damaging. M2M contracts today average three years or so, but they are getting shorter. The biggest threat to operators in M2M/Internet of Things comes from competitors who seek to

diminish the mobile network operators role. This is the familiar smart pipe vs. dumb pipe battle. Meanwhile, module vendors are experiencing price pressure and looking at higher level business models, such as bundling hardware with cloud services. Though mobile network operators are also customers, margins get thinner as the value chain gets longer. Conclusions M2M is an exciting growth area of communications. Now were on the more rational part of the hype cycle, were able to see more clearly where the opportunities and challenges lie. The market requires that each mobile network operator decides on its primary role, whether consumer brand, enterprise brand, network technology/ managed services provider, cloud services provider, big data/intellectual property rights (IPR) specialist, or even vertical industry player. In summary The key issues that each mobile network operator

must address are: n decide where to strike the right balance between horizontal scale and vertical depth; n recognize the potential hazards of innovation units turning into business and technology silos, and have a long-term strategy in mind to address this; n optimize the ability to innovate across diverse alliance/partner networks; n package M2M with highervalue services by leveraging mobile connectivity and operators expertise in small-to-medium-sized enterprise and channels M2M should be a component of these offers. n recruit external partners to lower the costs of customer acquisition; n respond to enterprise pain points with applications above the connectivity layer; n create IPR from big data, cloud and network optimization; n monitor developments in regulation and competition law; and n build a compelling offer to dissuade customers from switching service provider.

Some enterprises say they are facing steep price increases when contracts are due for renewal. If regulators intervene, this could unleash the c word no one likes to talk about in the context of M2M, namely churn. The implications for an average revenue per connection that is already low could be damaging.

DIGITAL LIFE 15

SPONSORED FEATURE

DEVELOPING A NEW ENGAGEMENT PROPOSITION: THE REALITIES OF LEVERAGING THE ENTERPRISE DIGITAL SERVICES OPPORTUNITY
By Moritz Zimmermann, Chief Technology Officer, hybris

In the past decade the telecommunications industry has undergone massive transformational change. The decline in public switched telephone network (PSTN ) revenues, the explosion of over-the-top (OTT) communication services, and the meteoric rise of mobile Internet usage and apps have changed the rules of engagement. As a result, Telcos have become key enablers in the digital world, and entertainment-centred content and connectivity has become the focus for offsetting traditional voice and messaging revenue declines. The move to a 24/7 connected society has driven a new approach to consumers. For Telcos, managing the overall customer experience has become a strategic priority in the battle to improve subscriber loyalty, reduce costs and drive new revenue streams. Today, a cross-channel presence and the delivery of a seamless omnichannel engagement experience for customers is the name of the game when it comes to performing against the expectations of todays technology empowered consumers. As a result, Telcos are mining the opportunities thrown up by Big Data to improve the customers experience and exploring how best to monetize the provision of this information to third parties. A new and even more complex transaction environment is emerging. Enterprise digital services represent a significant opportunity for Telcos to leverage return on investment from their network assets and platforms. Successfully opening up this market will depend, however, on overcoming some key challenges that include delivering enterprise grade services, maintaining operational integrity and enabling 16 DIGITAL LIFE

rich, new and innovative services and consumer experiences. But providing connectivity to any person, device or object is just part of the story. Providing access in itself will not be enough. Participating successfully in the enterprise digital services arena will depend on the ability of Telcos to transition into the role of carrier service providers, acting as primary enablers between upstream and downstream partners and enterprise customers. Telcos are already well on the way to managing the retail aspect of digital services cloud, VoIP, unified communications, entertainment services and digital advertising all fit well with todays consumer-facing models. However, managing the complex partnership ecosystems that are part and parcel of the enterprise digital services landscape require a mind-set change and a new approach to building end-to-end propositions that deliver a premium customer experience. A brave new digital world Were already seeing the emergence of a new wave of mobile services. Developments like machine-to-machine (M2M) connectivity are hot topics for enterprises looking to transform lives and how they interact with consumers. Telcos are already engaging in vertical industry partnerships, covering off deployments across a wide range of sectors including energy and utilities, public services, eHealth, security, transport, logistics and automotive. Consumer electronics manufacturers are already looking at cloud-based software solutions that enable them to use data collected from their machines to understand consumer usage and behaviors. They are building new service

delivery models, driving subscription or usage-driven pricing initiatives, introducing consumer reward programs (for example, car insurance companies are pioneering the monitoring of safe-driver behaviors or low vehicle mileage to reward policy holders with a personalized or reduced premium) and provide new differentiated services and experiences to customers. Similarly, consumers desire for apps is driving new enterprise service and support delivery models. For example, the global adoption of mobile payment is growing as consumers gain confidence in using mobile devices to pay for a wide range of services and digital or physical goods. Financial institutions and issuers are engaging in partnerships to deliver mobile apps to customers that transform their phones into mobile payment devices (such as mobile wallet, near field communications payment, mobile web payment collection) or make it possible to transact on the move (mobile banking). Tapping into this incremental business means Telcos will have to evolve to support new business models and manage a new era of value chain interactions and intermediaries. As connectivity wholesale service providers, Telcos will have to respond to the needs of wholesale customers to win and retain their business, providing automated interfaces to handle routine transactions efficiently and cost effectively. All of which will require a broadening of the services and support offered to intermediary customers. At the present time, Telcos are grappling with the implications of deploying commercial enterprise digital services in terms of network capacity, provisioning and open access.

But Telcos must also look to identify and address how they will deliver on the demands of new services like M2M and cloud, especially when it comes to supporting the customer/consumer experience within an integrated ecosystem and across multiple touch points. Who owns the customer relationship? One consequence of the emerging enterprise digital services landscape is a blurring of the lines when it comes to who owns or manages post event, customer-facing interactions. In the role of the wholesale connectivity provider (such as in the delivery of M2M services) Telcos are more likely to operate as hidden intermediaries where the focus will be on the effective management of interactions between ecosystem partners, and enabling data or service updates to support and manage the customer experience. In the case of the delivery of digital apps via a subscribers mobile device, this circumstance firmly puts Telcos in the sights of customers when it comes to problem resolution or support. Therefore, the ownership of the relationship is paramount. Who do customers contact first when they lose their mobile phone or its stolen? This is particularly critical for secure apps such as banking and payment. Furthermore, payment and banking apps are certified for a limited period only, so who owns the communication with the customer before these certifications end, or when a consumer changes their device? Telcos need to frame who owns these aspects of the customer experience and deliver channels for consumers to manage issues relating to the range of secure apps they are likely to download

to their devices. Failure to provide this support will risk additional cost, and an erosion of the brands standing in the eyes of subscribers. They are unlikely to differentiate between a community of providers when it comes to delivering a seamless and protected experience. All of which represents a potential threat to the core subscription relationship. In a future where complex enterprise ecosystems will become increasingly prevalent, every customer interaction represents a moment of truth that determines the course of multiple relationships. Initially, Telcos will

need to understand what information an enterprise customer will need to manage the customer experience. Whats more, the fragmentation of customer engagement across the partnership-based ecosystem puts strategic online and offline relationships at risk for all concerned. New digital services are accumulating fast, and Telcos need to address digital services engagement from the customer experience perspective and ensure that they, and their partners, can meet customer expectations in terms of the customer journey between them. DIGITAL LIFE 17

REGULATION

REGULATORY ISSUES THAT COULD IMPACT M2MS COMMERCIAL VIABILITY

Machine-to-machine communications (M2M) and the Internet of Things is a new stage in the evolution of communications and the Internet which will bring legal and regulatory challenges that affect operators. By Blanca Escribano, Partner, Olswang Spain LLP
A car may be able to report the status of its various subsystems using embedded sensors so that it communicates how you drive to your car to the insurance company. Information about the contents of your fridge could be sent to smart phones so that you can pick up milk on the way home. Personal devices may deliver the latest healthcare updates of patients receiving remote care to a central location. Environmental data may be collected and processed globally to enable real-time decision making. Communicating objects will be able to interact with the environment and react to events. The challenge for the industry is in assessing the trade-off between the potential economic and societal benefits and the control we want to retain over an environment where machines will gather, exchange, process and store information automatically. Machine-to-machine communications (M2M) demands an alternative business model to traditional voice/data services as the user will have different needs: a single subscription bundles thousands of devices, switching costs are escalated and in many cases, global coverage is needed. Roaming wont work M2M users have completely different demands of their communication suppliers and consequently, there are new challenges and bottlenecks to be tackled. One of the main challenges is the international scope. The operators M2M billing relationship is usually with a multinational company and not with an individual spending most of their time in one country (there is no home network). M2M applications are typically always-on. This means we need a new approach to enable machine roaming, otherwise global services will be hindered. Traditional roaming agreements wont work, so we need those changes and regulations to enable them for M2M. The EU 531/2012 Roaming Regulation introduces some important changes that could help in the European market, such as enabling aggregators to act as wholesale providers. Market foreclosures Avoiding market foreclosure is one of the main concerns of regulators and industry operators. M2M users need

We need a new approach for M2M roaming, otherwise global services will be hindered. Traditional roaming agreements wont work.

18

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to have inter-sector (the verticals) and inter-network mobility. The power of M2M relies on connecting billions of devices and merging data within and across industry sectors to provide new services. To do this, the multiple systems that will make use of this data need common protocols for communications or the potential of M2M will be limited. In addition, M2M users need to be able to switch networks at the end of contracts or in case of disputes. However, M2M applications are often bound to one operator for the entire lifetime of the device. Tools under discussion to help unlock the market and reduce switching costs include: interoperability, standardization, number/ Internet domains portability and using future-proof technologies. Assessing constraints to competition Regulators and competition law authorities will have to monitor these markets to assess whether there are competition constraints. The European Union Commission is determined to set minimum requirements to boost competition and
1 2

consumer choice or as it terms it: Open object identifier solutions that allow smart devices to be used for different apps and be operated by multiple service providers, with unbundling between information and device. This could have big implications for all concerned particularly on the length of M2M contracts between operators and other service providers. Privacy and data protection There are also privacy and data protection challenges. Not all M2M services have a privacy component to them, but when there is one, it can give a detailed view of facets of a users life. The volume and detail of data collected using M2M will introduce new risks to security and privacy. There are different layers in the privacy evaluation, as the registration is not just recorded in the database of the M2M service provider, but equally in a database of a (mobile) network provider and/or in a home gateway or device. Sharing and combination of data through cloud services will increase the locations and jurisdictions where personal data resides.

Data encryption and device authentication are key, as is the challenge of providing adequate protection against false requests for information and protection against unauthenticated commands. In the European Union, it seems that there is no consensus about whether the current Data Protection Framework is sufficient. The right to be invisible within the concept of connected living is at stake. There is also the big question of how to guarantee that the explicit consent, purpose and proportionality principles, data anonymization and privacy by default are feasible. The Draft Regulation 2012/0011 under discussion needs to take these types of communications into consideration and ascertain whether it provides the appropriate tools. Spectrum and resources Regulators have an important role to play in ensuring that scarce resources such as numbering rights and spectrum dont become congested or exhausted by the connection and access to an Internet of millions of objects. On the basis of growth predictions, if millions of objects are simultaneously connected and access the

Internet, it will have an impact on communications networks. As a result, the deployment of the next generation of networks will become more urgent and the wireless M2M devices will influence spectrum policy. M2M services are not specifically regulated in any jurisdiction, but the Organization for Economic Cooperation and Development1 and the European Union Commission2, for instance, have already identified where the bottlenecks and legal challenges are. Questions, not answers There are more questions than answers so far, and there no consensus on whether specific M2M/ Internet of Things governance should be enforced or whether their deployment should be governed by current horizontal regulation (privacy rules, safety and environmental legislation, competition law, etc). The success of M2M will be determined by the right approach of regulators and by fair and balanced agreements entered into by operators and M2M users. This sector will only grow if these agreements convey value for both parties.

http://www.oecd-ilibrary.org/science-and-technology/machine-to-machine-communications_5k9gsh2gp043-en http://bookshop.europa.eu/en/europe-s-policy-options-for-a-dynamic-and-trustworthy-development-of-the-internet-of-things-pbKK0113297/;pgid=y8dIS7GUWMdSR0EAlMEUUsWb0000ZrvDF 4OO;sid=b-Ni1rOhSJ9ixeG9xf78cdGEaDBkBbRyaTA=?CatalogCategoryID=cKYKABsttvUAAAEjrpAY4e5L

DIGITAL LIFE 19

INNOVATION

SEVEN DIGITAL DISRUPTERS JOIN IN OR LOSE OUT

Digital services are changing just about every area of human activity often in ways that are unexpected and sometimes challenging. Annie Turner, Editorial Director, TM Forum, presents a snapshot of activities from education to financial services and big brands potential to improve the lives of the least well-off. In some areas there is huge progress; in others established practices and vested interests are holding progress back. One thing is clear: Communications service providers are likely to lose out if they dont embrace what the digital world has to offer.
1. Free university education for everybody The importance of education to the advancement of individuals and economies alike is key. The traditional methods of university (tertiary) education wont scale to meet demand, while the cost of getting a degree is prohibitive for many all over the world. In India alone, where the government wants to increase tertiary completion rates from 12 percent to 30 percent (typical of developed economies) by 2025, it would have to build 1,500 new campuses, according to Indias National Knowledge Commission, compared to around 370 now. Apart from the time and expense involved, Indias existing education institutions, outside the top ones, are often woefully short of teaching staff, in the 20 DIGITAL LIFE worst cases with staffing as low as 25 percent. Happily, a number of universities around the world are working on programs to improve access to tertiary education. Perhaps the best known is Coursera.org, founded by two professors of computer science, at Stanford University, California, Daphne Koller and Andrew Ng. Coursera has a simple, but hugely ambitious goal: providing higher education to everyone on the planet for free. The implications are huge think about it in terms of what iTunes did for the music industry or what Google has done to publishing. Coursera launched in April 2012 with a handful of free, online courses developed at low cost by a select group of American universities. At the time of writing,

Although Professor Koller has said its a quest, not a start-up, intriguingly, Coursera is a commercial outfit. The paid-for Signature track was launched in January 2013.

there were 390 courses, from computational molecular evolution to a history of photo-journalism. They are supplied by some of the worlds leading lecturers, from 73 universities as diverse as Yale and the University of Tokyo. Some 4 million people from every continent enrolled in Coursera during the first 18 months, and the school attracted its first million users faster than Facebook. Under half the students are in the U.S., with a particularly high showing from Brazil, Canada, China, Germany, India, Japan, Russia and the U.K. Students do the basic learning outside classes, using class time to talk with their instructors and peers and learn critical-thinking and problem-solving skills. Enrollment is open to anyone, but the courses are intellectually demanding and time-consuming. The bar is high and if students dont clear it, they fail the course. Although Professor Koller has said, Its not a start-up; its a quest, intriguingly, Coursera is a commercial outfit. The paid-for Signature track was launched in January 2013 with courses costing between $30 and $80

and averaging $50. Already more than 10,000 students have signed up. Cousera has secured several rounds of funding and, according to Forbes, it booked more than $600,000 in revenue from its Signature services in the quarter ended June 30, up from $220,000 the previous quarter. More than 90 percent of students opting for the Signature track successfully complete their courses far above the usual retention rate. Signature students opt in by confirming their realworld identity, submitting a government-issue picture ID, which is compared with their web-cam photo. Then they set up a profile, which uses keystroke biometrics: It turns out that the way we use a keyboard is an individual as our finger prints. People who cheat are locked out. Those who complete Signature courses receive a certificate, which carries the universitys brand and is stored on Courseras platform with a verification code to prove the student has completed the class. Professor Koller recently said in a BBC interview, In a matter of five to 10 years, well have enough content

on the platform that we can pretty much teach anyone anywhere pretty much anything they want to learn, which I think is going to be an amazing change in the world as so many problems that plague the world are caused by a lack of education. The impact on universities around the world that fail to embrace this new paradigm remains to be seen. 2. Bringing extra value benefits brands Jasmine Montgomery, Founder, Seven Brands, helps big brands sell into emerging markets. People with little disposable income aspire to products from global brands like everyone else, yet Montgomery argues brands too often take value out of offerings, rather than add it. An illustration is selling sachets (small packets) of shampoo with enough for one wash. She says, youd have to be a millionaire to buy the equivalent of a bottle. She believes brands need to be a lot more creative. Recently while in Kibera, Kenyas biggest slum, Montgomery noticed a little girl carrying a plastic pot that had contained hot chocolate, treating it like a

doll: People in Kibera cant afford toys, Montgomery says. I thought, What a shame they didnt make the packaging like a doll and add value to somebodys life. If you get people now as loyal consumers of your brand, in 10 years time, this will be where its at. At TM Forums Management World, in May 2013, Dr. Hans Wijayasuriya, CEO, Axiata Digital Services, gave an inspiring presentation on translating this philosophy to the digital world. He talks about adapting rather than adding value. The Axiata Group Bhd serves seven emerging markets in Asia with over 250 million customers. Wijayasuriya points out that about 50 percent of the worlds population will be in the middle class by 2020 and half of them will be in Asia. At the moment 54 percent of Asias population has smartphones, but this will rise rapidly by 2020. Already mobile penetration in markets is six to eight times Internet penetration. Axiata is taking the approach of providing digital services to the less welloff by what Wijayasuriya describs as digital sachets DIGITAL LIFE 21

INNOVATION

breaking down the services bought by those who can afford bundles of services into small, affordable pieces, on a pay-as-you-go basis. This means poorer people only pay for what they need immediately and are not disproportionately charged. If you look at the penetration of digital services that is, digital commerce, advertising and payments theres a vast gap, he says. Wijayasuriya argues that if service providers could close the gap, making them comparable with developed markets, then, We would have 100 times the growth potential in the Asian emerging markets. Further, he points out that the digital sachet approach to including the less well-off in the digital economy acts as a four times multiplier that is every $1 invested in wdelivery of these services results in an indirect contribution of $4 to the countrys gross domestic product. 3. Making mobile money profitable for all parties Consult Hyperion reckons mobile money services have expanded from perhaps four in emerging markets in 2006 to 191 deployments in 79 countries in 2013. Probably fewer than 10 percent are profitable or likely to be in the foreseeable future. Clearly, we are nowhere near expanding and scaling these services to their full potential. This is mostly because many mobile money 22 DIGITAL LIFE

schemes dont cater to retail transactions, so much as monthly remittances, although people who live in hot countries often lack refrigeration so buy food every day. For retail transactions to fulfill their potential, shop keepers and market traders need to be able to accept payments from multiple mobile money schemes without being involved in the schemes. This approach would allow multiple acceptance without formal or technical interoperability. Further, this could all happen without the high cost and complication of conventional card payments, as shown by a working prototype Consult Hyperion has developed, Wingupay. The idea is that the complex middle of conventional card payments can be removed, with functionality pushed out to the edge. Paul Makin, Head of Mobile Money, Consult Hyperion, explains a live commercial service would need a scheme operator a party trusted by all the other stakeholders. Banks and mobile money operators could then join by providing a simple applications program interface (API) for the authorization of merchants transactions, that conforms to standards set by the scheme operator. They would be responsible for recruiting customers and merchants. Merchants would need a low-cost, Internet-enabled

mobile phone or suitable point of service (PoS) device loaded with the schemes app, which has the merchants certificate (this identifies the merchant and their bank or mobile money account) embedded in it. To use the scheme, customers would need a cheap-to-produce sticker on the back of their phones

or within the usual time for their location and setup. At the same time, the mobile money operator notifies the customer that their transaction has gone through, and the merchants bank does the same to the merchant, closing the circle. This would simplify and remove much of the cost associated with conventional

For retail transactions to fulfill their potential, shop keepers and market traders need to be able to accept payments from multilple mobile money schemes, without being involved in the schemes.
containing a scheme certificate, or a near-field communications-enabled mobile device, and mobile money account. The customers certificate would identify them and their mobile money account, so that the merchant knows where to apply for payment. When the customer taps the merchants PoS device to make a payment, the merchant receives information from the customers certificate about where to go to authorize the transaction and collect payment, typically a URL. Makin says the authorization process could use the existing, universally accepted ISO 8583 standard. The merchant receives an authorization message from the mobile money operator, which also notifies the merchants bank, and settlement is made overnight card schemes because it doesnt need switches, acquirers and acquiring networks that is, it could leapfrog the so-called developed markets payment mechanisms. It would also enable fast transactions, open up new revenue streams for scheme operators, and the whole system would be secured by modern cryptography. Wingupay could be extended to offer cash in/ cash out transactions and is designed to for easy integration with banks back office systems, via standard APIs, to support merchants. Whichever pragmatic solution becomes widely adopted to make mobile money mainstream, it is inevitable. Now is not the time for potential players in mobile money schemes to hold fast to vested interests and practices.

4. WHATS DRIVING TELEMATICS AND THE CONNECTED CAR?

DB: What are the main areas of focus for automobile telematics right now? SM: Vehicle safety, mobility and commercial services are the primary areas. Vehicle safety is only the purview of the automaker because it has to be something thats done automatically and instantaneously to adapt your anti-lock brakes to the road and weather conditions, to change your steering based on pavement friction and speed, or to get information that someone ahead is braking. Mobility is what the [U.S.] Department of Transportation cares about; its objective is to manage traffic flow. Then there are commercial services like infotainment. DB: What is the role for network operators? How can they ensure that theyre more than just connectivity providers for telematics? SM: One of their biggest strengths is customer relationship management (CRM) capability. Second is their ubiquity theyre everywhere. And third they can do device certification (such as certifying SIM cards). Automakers market to consumers, but they sell to dealers; the CRM they have is not geared to consumers. But with telematics, youre talking about servicing a community of consumers who all want different information. Communications providers and insurance companies are some of the types of companies that know how to manage that customer relationship. Network operators already have the requisite skill set, and they know how to apportion dollar value to each member of the value chain. They do it now with smartphone apps. DB: What are the challenges in delivering telematics? SM: Privacy and security are two of the biggest. In the past, automakers were entirely self-contained. They had security by obscurity it cost thousands of dollars to get the SAE [Society of Automobile Engineers] message sets that translate your car data. With cellular, Wi-Fi and DSRC [Dedicated Short Range Communications], youve created three gateways, or portals, into the car, so security becomes a big concern. There is standards work going on in mobility and safety, but not in commercial services, and thats where the risk will occur. DB: Whats on the horizon for telematics? SM: We will see more smartphone integration. One Japanese carmaker is using a phone to take audio profiles during all kinds of weather, road conditions and traffic. Then over time, the phone listens to the ambient noise in the car, measures it against the sound profile it has on record and tells you when you need a tune-up. Were also talking about the intersection of e-health and automotive. The phone and car could warn someone that theyre getting drowsy before an accident happens. Right now, everyone is trying to figure out what kinds of services people will pay for and how to make them secure.

Scott McCormick, President, Connected Vehicle Trade Association, talked to Dawn Bushaus, Editor, TM Forum, about the future of telematics and the role network operators can play in a market thats in its infancy. Theres lot to be excited about.

DIGITAL LIFE 23

INNOVATION

5. Finding better models for pharmaceuticals For the past 50 years, the pharmaceutical industry had a robust and profitable model for bringing new products to market. Now it needs a quicker route to market and more innovative ways of and working to drive returns. BT for Life Sciences R&D is addressing this through a cloud service that brings together new digital service technology and management systems. Computer-based, or in-silico, modeling and simulation reduces the need for lab work, saving time and money. Combined with cloud, it enables life scientists to tap into an almost infinite universe of people, computing power and data sources. BTs solution (which was a finalist in TM Forums New Services Excellence Awards 2013) incorporates a range of online applications, information sources and tools, to speed the R&D of new life-enhancing and life-saving medicines, while working across ecosystems ranging from biotech and clinical researchers through content providers and independent software vendors (ISVs). The company says it has created an environment that is flexible, connecting only the people and partners on any particular program and flexing computing resources up and down as required. This means participants 24 DIGITAL LIFE

only pay for what is needed and the program shuts down on completion. There is a service store of applications covering areas such as insilico analysis. Scientists can communicate and share results with commercial and academic research partners and access data sources and applications on the virtual server platform to run in-silico analysis. TM Forums Frameworx (see page 27) played an important role in the systems architecture and development. Innovation and collaboration were fostered by participation the Forums Catalyst projects. Catalysts are short-term collaborative projects led by teams of members that create solutions to pressing operational and systems challenges and help evolve TM Forums best practices and standards, including Frameworx. BTs commercial service enables large datasets and applications to be moved within and between parties, and across geographic boundaries safely and quickly. A robust, secure network supports a collaborative world which connects an extended ecosystem of partners, suppliers and colleagues.

Each programs data is segregated in a secure, monitored environment. The service also provides an environment suitable for many regulated applications to be used collaboratively by partners who may have differing risk profiles. TM Forum engaged in bringing the benefits of Frameworx and other work to the pharmaceutical industry. This includes its Open Digital Program and efforts to promote Computing Infrastructure as a Service. Members of the Forums Enterprise Cloud Leadership Council (ECLC) have joined forces with the PISTOIA Alliance, an organization dedicated to lowering the barriers to R&D and innovation for the pharmaceutical industry, in establishing best practices for leveraging cloud computing to conduct R&D. The Forums ECLC comprises many of the worlds largest multi-national companies and government bodies dedicated to sharing actionable best practices to advance enterprises use of the cloud operating model. The joint effort involves establishing how pharmaceutical firms can bring together data and applications

BTs solution incorporates a range of online applications, information sources and tools to speed the R&D of new, life-enhancing and life-saving medicines, while working across ecosytems...

6. eHEALTH NEEDS TRANSFORMATION, NOT DISRUPTION

AT: What do you see as the most exciting digital developments in eHealth? JR: Wearable computing is taking off with many devices focusing on fitness. They use many of the same sensors needed for the medical home, which measure multiple vital signs for managing chronic disease. Sensors and the Health Internet of Things can collect information from the environment and our behaviors, which together comprise 50 to 60 percent of overall health outcomes, yet we invest 80 to 90 percent of the time in medical care. Sensors combined with what we already have and good data analytics could make a big difference if we create the right policy incentives, address the huge interoperability challenge and business models. AT: How are processes changing for digital service providers and what impact will they have? JR: Previously [private] healthcare systems did more the more they were paid, a great recipe for inflation, not good health outcomes. Incentives are changing toward rewarding those who provide good health outcomes within a reasonable budget. This will gradually become the way it works. In the past, health service providers didnt focus on keeping us healthy, but treating symptoms downstream, hence digital health service providers couldnt create a viable business model. AT: Has eHealth got a positive future? JR: The idea that eHealth business models dont work is based on early evaluations. Many were poorly designed with small sample sizes that dont support a generalized statement. Plus many healthcare systems are not designed to address chronic diseases. We need to bring the tech sector together to help drive improvements in interoperability and use of open standards, build cooperative business models to transform health systems globally. There a very bright future but over the next 10 or 20 years. Disruptive innovation in this context doesnt carry much weight: Its more about poverty of imagination and lack of leadership, which has allowed fragmentation to dominate. We need to cooperate on how we innovate on a scale like never before. AT: Which developments will most impact the healthcare industry in the next year? JR: It will be more about industry cooperation than devices in peoples hands. We need the integration of tools, data and platforms that can scale and address the complex drivers of health outcomes. Thats where the ultimate truth of healthcare rests. Standardization is a key prerequisite and enabled a team of communication service providers, universities, commercial software and healthcare companies to come together and demonstrate how immediate, relevant and profitable services that improve healthcare can be assembled and delivered. They collaborated using TM Forums Frameworx, which provides an holistic model for the definition of management processes and information models for service providers. The demonstration, eHealth Curing the Complexity, was shown at TM Forums Digital Disruption event in October. Frameworx will be the foundation of more work within TM Forum toward making sustainable home healthcare through multiple parties a reality.

Jody Ranck, Special Advisor, TM Forum Digital Health Program, leads Ranck Consulting where he advises startups, technology firms and companies including PwC on digital health strategy. He has worked as a healthcare consultant for more than 20 years for think-tanks, non-governmental organizations, the United Nations and the private sector. He talked to Annie Turner, Editorial Director, TM Forum.

*Jody Ranck is the author of Connected Health: How Mobiles, Cloud and Big Data Will Reinvent Healthcare

DIGITAL LIFE 25

INNOVATION

from multiple sources and vendors to leverage the processing capacity resident in the cloud as needed and pay for it as a service. For more information about the ECLC and its work with the PISTOIA Alliance within the Open Digital Program, see www.tmforum.org/digital 7. Building a dynamic M2M ecosystem worth $240 million a year China Mobile boasts the worlds largest mobile network and customer base with 710 million subscribers. It has embraced a new digital service strategy to build up smart pipes, open platforms, featured services and friendly interfaces, to create a new mobile market. China Mobile has established Machine-toMachine (M2M) capabilities across its 31 subsidiaries marketing, product sales, and customer services. It has also set up a onestop support for business development, business support, and business operation with multiple tenants. By the end of 2012, there were 45 business categories in China Mobiles M2M services with over 500 partners and applications.

Some 21.6 million terminals are connected to its M2M Services, generating annual revenue of $240 million. This business serves vertical industries such as telematics, smart grid, eHealth, agriculture, security, and smart city. As a technology and market enabler in the M2M value chain, China Mobile is providing a platform to integrate and promote cooperation among different players along the value chain, such as operators, new M2M service providers, vendors, enterprises and end users. Its complex businessto-business-to-any model is designed and built to be flexible and extendable to meet the rapidly changing business requirements to capture this lucrative opportunity. China Mobile built its M2M service business framework and technology architecture based on TM Forums Business Process (eTOM), Application (TAM) and Information (SID) Frameworks (all elements of its Frameworx suite of standards-based tools and best practices see page 27). With the help of Frameworx tools and best

practices, China Mobiles M2M service has achieved the goals of: Establishing orderly market dynamics for creating industry standards, reducing the barriers to entry for new M2M services, and decreasing the total cost of ownership. n Setting up a co-existence and cooperation model with small and mediumsized enterprises, sharing revenue, forming an operator-oriented, mobile virtual network operator ecosystem. n Sharing the integration platform, and facilitating the development and marketing of M2M services across the 31 subsidiaries. n Providing an open application program interface, unifying customer experience management and customer service with pre-set business processes, assuring fast time-tomarket for new M2M services and improving the service delivery quality.
n

By the end of 2012, there were 45 categories in China Mobiles M2M services with over 500 partners and applications. Some 21.6 million terminals are connected to the services generating annual income of $240 million.

You can read a full version of this case study with more details about how China Mobile used Frameworx in the forthcoming edition of TM Forums Case Study Handbook 2014 which anyone can download free of charge from www.tmforum. org/CSH2014.

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DIGITAL LIFE

Whats new in Frameworx 13.5 and how can it help you?

Frameworx 13.5 centers around the crucial issues facing service providers of all kinds in an open digital economy which are reflected in TM Forums three Strategic Programs:
n Agile

Business and IT Program focuses on improving operational agility while reducing cost and risk; n Open Digital Program is designed to drive new digital services revenue growth; and n Customer Engagement Program targets better market share retention and greater growth. Frameworx was created by and is constantly evolved to meet changing needs by TM Forums members. They include all sorts of service providers, software suppliers, integrators, universities, and enterprises. Members set priorities and lead collaborative project groups to implement the work and create updates to the standards and best practices. While Frameworx major releases are published every six months, some features in Frameworx 13.5 were developed in short term agile-style development projects and have been made available to the broader membership several months in advance. Frameworx releases cover the full suite of TM Forums best practices and standards including our core Frameworks Business Process, Information, Application, and Integration as well as our Business Metrics and our broad range of best practices. Frameworx 13.5 is no exception with 47 new items introduced across the full range. Facts about Frameworx 13.5: n 27 projects were chartered to create this release n 141 companies participated in creating the deliverables n About 380 individuals joined projects in the community; approximately 40 percent of them were active contributors while the rest had the opportunity to observe and review, comment or ask questions. New B2B best practices and APIs TM Forum has defined a comprehensive set of Accelerators tools, methodologies and standardized interfaces for creating and managing partnerships in a B2B2X environment with multiple partners, in a repeatable manner, and at industrial scale. They include new REST 2 application program interfaces (APIs) for catalog management, trouble ticketing and partner ordering. Big Data Analytics Guidebook Unleash the power of big data held by service providers using the new reference model, methodology and 30+ use cases. This document defines a crucial linkage between business value that analytics can unlock and the big data technologies and information sources represented in the documents Big Data Reference Model. Threat Intelligence Dashboard and ROI Calculator The Cyber Security Readiness Dashboard uses newly defined metrics to communicate Cyber Security readiness for C-Level management. The dashboard reduces risk by providing insight into issues that could have financial, legal/compliance and human safety impacts. Customer Experience Management Take a new approach to managing customer engagement with integrated Maturity Model, Lifecycle Model and Metrics. This new version of the Guidebook (incorporating 250 new metrics) marks the first step in the transition from managing customers experiences in a snapshot piecemeal way toward managing engagement with the customer across their entire lifecycle. Core Frameworks Enhancements There have been key new additions to all four Frameworks to extend their application and make them more immediately useful. For more information about how they apply to you and your business, please see www.tmforum.org/ FutureRelease135/15581/home.html

DIGITAL LIFE 27

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