Calling all marketers: How do you sell a network?  While operators fear their offering being reduced to nothing more than dumb transfer of bits, the actual internal complexity of their infrastructure gets more impressive every day. But I’m a geek. That stuff doesn’t lend itself to mass-market messaging.

Talking the other day about the most important attributes of networks, I said they were reach (where does it go), capacity (how much traffic can it support) and intelligence (how much software in the network helps bits move around with other useful stuff to the right places at the right time).

Verizon Wireless is doing a yeoman’s job of talking about reach and capacity. With Google taking over our map consciousness, who’d have thought that it would be a network taking over the use of maps in marketing?

I haven’t seen a network operator in the U.S. or elsewhere yet talk about its network being more intelligent than the other guys’. While networks are indeed getting more intelligent with the addition of technologies like IMS, SDP, DPI and whatever other TLA* I’ve forgotten to mention, it may take another couple of years before operators figure out how to translate those assets into a simple, clearly-articulated marketing message for their clients. So I guess we have to wait for the competitive battle over network IQ.

So what about speed? From gamers to financial services firms, many network users know that they want the fastest possible network. But it might be a case of the positive (going fast) not being as compelling in marketing messages as the negative. Fast is nice — but missing out on something is bad. When offered the chance to pay a higher toll to use a less congested lane on the highway, the most compelling way to get my attention would be to suggest that if I don’t do it, I might be late for my meeting. Put up a clock over the roadway and estimate the arrival time at an exit using the main path versus the low-congestion path.

The way to sell the negative when it comes to network speed, is to talk about latency. But then that’s one of those words we geeks favor that makes normal people’s eyes glaze over.

Akamai, the content and app delivery network people, has struggled with how to talk about this, using words like acceleration. Their messaging includes discussions of latency using lots of facts and figures. Cable operator Comcast takes a softer, more comedic approach, linking slower networks with turtles. These approaches to marketing network speed, or the lack of latency, fall at either end of a spectrum: very techie (which admittedly Akamai’s customers may require) versus very cutesy.

There must be solutions in the middle. The experiences we can all relate to are missing trains and airplanes. The movie image of subway doors closing on the smirking bad guy, just as our hero in hot pursuit rushes down to the platform only to see the train pull away, is familiar yet compelling. Network marketeers need to develop our sense of urgency around the negative impact of slow networks. Missed messages, missed packets, missed trades… lateness means missing out.

*TLA of course stands for Three-Letter Acronym; along with its sibling the FLA, irresistible candy to tech geeks and policy wonks alike.

As the strategic value of online content assets continues to grow, chaos and confusion are rampant within the content delivery network (CDN) market. Challenging dynamics coupled with increased demand for content delivery solutions means that a diverse array of companies are keeping a close watch on the space and the relevant players within it.

Yankee Group has developed an Anywhere Scorecard for the CDN market that assesses the relative strengths and weaknesses of the key global providers. The scorecard takes an objective look at how a provider’s Vision and Ability to Transform in the market influence the strength of its offering, and how these dynamics inform customer buying decisions.

Earlier today, I hosted a webinar were I explored the transformative trends affecting the CDN market and ranked 10 of its most significant players. The presentation also featured Yankee Group Senior Vice President Zeus Kerravala, who introduced the new Anywhere Scorecard concept. You can read more about the Anywhere Scorecards here.

The webinar runs about an hour: audio (mp3) and slides (pdf).

Remember that scene in the The Graduate, where the older guy whispers in Dustin Hoffman’s ear? He’s revealing where future riches lie. What he says is: “Plastics.” Not a bad steer in 1967.

Today, the word in your ear is – wait for it – interconnect. Wikipedia claims that interconnect is the “physical linking of a carrier’s network with equipment or facilities not belonging to that network.” Oh yawn, right?

In fact – as a raft of CTIA Wireless and VoiceCon-linked announcements from Cisco, GSMA, Telcordia and others underscore – our industry’s current and future revenues critically depend on supply-side ‘interconnect’ mechanisms that go far beyond physical network infrastructure.

Although superficially fragmented, the crowded landscape below needs to merge fast to monetize the much-touted benefits of hyper-connectivity.

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The downturn is forcing tough decisions about what remains core. In the past week, three telecom operators made their choice: KPN’s Belgian subsidiary BASE is outsourcing network operations to Alcatel Lucent; Nokia Siemens Networks will run Orange’s UK and Spanish networks; and Vodafone UK will hand over network maintenance and operations to Ericsson along with 350 employees.

They are not alone: Globally, deals are escalating in size, scope and length, according to our historical analysis of more than 800 telco outsourcing transactions since 2002. Operators will double annual expenditure on outsourced and managed services from $16 billion today to $32 billion by 2013, as noted in my report, Redefining the Core: Outsourcing and the Virtual Telco.

But let’s not get carried away. Outsourcing can bring rapid balance sheet results, but that doesn’t automatically translate into long-term business value. There’s a vast difference between externalizing to achieve financial re-engineering versus business transformation. Yet this is exactly where many operators and their investors are getting confused.

Scattergun usage of outsourcing as a weapon to cure all corporate ills is more than unwise, it’s dangerous. A vendor can nearly always be found to undercut internal operational costs – and how attractive if they can also rebadge employees, or pay a success fee up front to win the business.

While this might improve the bottom line, it won’t drive top line growth. That’s the real issue that operators must address – with or without external help.

There was a wolfish grin on the man’s face, and I swear he licked his chops.  “Oh yes, there’s going be a lot of money, really quite a lot, in presence brokering,” he said.

It was a conversation that I had at Mobile World Congress in Barcelona. I’ve been mulling it over ever since.

If you’re a fan of Charles Dickens, you’ll remember Mr Micawber, a character from David Copperfield. Despite a spell in debtor’s prison, Mr Micawber remained the eternal optimist. His catchphrase: “Something will turn up.”

Presence brokering is another manifestation of a global pursuit for monetizable assets. Telecom operators are rummaging through their asset base to see how the pieces might fit. Put together a subscriber database, geo-location information and some comms applications and hey presto!

The thinking goes that quite a lot of network horsepower will be needed to figure out where a subscriber – let’s call her Miss Jones – is at a given time, how and when to reach her (maybe with a targeted ad), and how to share her personal information with various contacts. Because Miss Jones might want to discuss her bra size with her friends, but not with her clients. Or is it the other way around?

Irrespective, exchanging rich presence information across global networks requires technical brilliance. But who will collect the value in such transactions? And as the telcos seek new client types, what’s the likely backlash from Facebook’s recent actions: A blanket attempt to assert ownership and distribution rights on any content and personal info you have uploaded – whether or not you are still a Facebook member?

If you’ve worked in aerospace, you’ll have heard of TCAS, the Traffic Alert and Collision Avoidance System. It’s what planes use not to crash into each other. Let’s make a bet that instead of presence brokering, the real killer app – for us privacy-loving citizens at least – will be presence avoidance brokering.  Caveat emptor.

I spent the past few days at a conference for Procera Networks, a provider of deep packet inspection-based solutions for network monitoring and service control. There was talk of the direction of the DPI market, the overall direction of service provider investment in the current economic climate, and how network intelligence can work in conjunction with other distinct network elements to improve efficiency. But the biggest question on everyone’s minds (mine included) was when will operators finally wake up to the need to change their subscription service models?

For years now, there has been discussion from the vendor, service provider and analyst community about movement towards tiered services and premium priority-based charging. It’s a tried and true story. Operators must avoid relegation to the dreaded DUMB PIPE OF DOOM (apologies for the emphasis, but this expression has become so over-saturated that it has taken on the life of a catch phrase). The opposite of a dumb pipe is a “smart pipe”. Ergo, operators must invest in technologies that provide greater network intelligence, and this will allow them to provide differentiated service to subscribers based on subscriber priority, application, time of day, location, etc, as well as implement convergent charging models that incorporate both pre-paid and post-paid. Easy, right?

Actually, no, it hasn’t been. Operators have been strikingly slow to implement priority-based or tiered subscriber plans. This despite the fact that in just about all discussions with the operators, they say this is what they ultimately want. And Yankee Group’s survey data bolsters this as well. Operators know that flat-rate business models aren’t sustainable, and they want to move beyond them (our resident network software systems guru, Ari Banerjee, just published a report detailing these operator preferences and how to address them).

But when you search out models that are already out there, they are few and far between. The one that always jumps to mind belongs to PlusNet in the UK (now part of BT). You can view some of the details here, but this actually doesn’t show all of the depth in the tiers that PlusNet has created. Subscriber plans are tiered by price, bandwidth, particular application allowance and expected quality of experience (QoE). And PlusNet has been remarkably successful with this model since its introduction. They’ve received positive customer feedback for it. They’ve won industry awards for it. Most importantly, they’ve made money with it. But other than a few limited deployments and endless trials and rumors, we’ve seen few operators introduce something similar. And this was something that was first constructed four years ago! What is beyond the bleeding edge? The hemorrhaging edge?

So do we see this changing? Ultimately, yes. Operators will eventually move away from flat-rate and embrace more personalized service models, but due to necessity rather than foresight. There is a tipping point at which bandwidth constraints and the economic burden of over-provisioning the network will reach a level where operators will be compelled to act (where exactly it is, no one knows). We are already seeing the beginning stages of this as operators such as AT&T, Comcast, Time Warner and T-Mobile play around with bandwidth caps. There is talk that mobile operators are being more progressive in constructing service plans than their fixed-line brethren, and that this community of operators will evolve before they absolutely have to. But again, this is mostly talk with little concrete evidence of commercial deployments to date. So we are left waiting for the point at which a good idea becomes a business imperative. And when we ultimately cross this threshold, operators will be forced to evolve and they’ll be pushed into a more profitable and efficient business model, kicking and screaming all the way.

3.5 B Euros of revenue in Q3 of 2008 and a merger that has been executed better than the some of their peers in the industry. My observations from the NSN event at Barcelona held a couple of weeks ago.

The Good 

• The elements to be a successful end-to-end network builder that can build,operate and run networks exist. Their product portfolio ranges from good core network component technologies, solid radio access products such as the Flexi base station platform that provides software based upgrade options to LTE from HSPA+, the billing and OSS software products and the managed services unit which has won some significant business across the world.
• Every executive I spoke to consistently talked about NSN helping operators define a better customer experience which is evidence of alignment within the company.

• Ubiquitous connectivity. Broadband everywhere. As Mika Vehviläinen, the COO explained the NSN vision to us,  it felt like an internal Yankee Group meeting talking about making the Anywhere vision real for our customers. I did follow up with the NSN leaders and they agree that the Anywhere vision will be seen as table stakes in the communication world within the next decade.
• An expanded focus on software under the leadership of Mike Mathews, the new head of strategy, to enhance the company vision in the coming months.

  The Bad

• NSN executives admitted that though they were present in Americas, a much better job needs to be done to present their value proposition.
• The economic environment has taken a toll on all network vendors including NSN, as revealed by their financial statements. It will be a very tough year for network builders to win new business in this economic climate as described in a Yankee group report “It’s the Economy, Stupid: Yankee Group’s 2009 Predictions” published last week.
• In order to make the vision a reality, NSN will have to demonstrate that an engineering company understands the end customer experience (consumers and enterprises) and that it can think and act like a B2P (Business to People) company it aspires to be. I personally believe that enhanced customer experience at all touch points will be a differentiator for the service provider since I worked for one in the past that executed successfully on providing the ICE (ideal customer experience). However, this is an old story which is often paid lipservice to – we will see how NSN executes on this concept.

The Ugly

• The NSN analyst event was held at the Nokia world event and clearly it was far away from the limelight. The Nokia keynotes did not mention NSN’s role in building and powering the network and connecting people which is Nokia’s mission.
• I left unconvinced that NSN was leveraging the Nokia’s experience with end consumers to the extent possible, especially since the NSN vision is about enabling a rich customer experience. Clearly it is tough to integrate a consumer oriented culture at Nokia with the engineering mindset at NSN. We shall find out.

  p.s: The post got delayed due to my move to Boston the week following the event. Apologies.

Spent a day with nice folks at Tekelec the other day.  I know them pretty well so there were no big surprises in terms of product strategy—they are signaling specialists on both the SS7 and IP side of the telco network and they have some ancillary products that build off of that position of strength.  They’ve been excelling in this area for years.   The question that always hounded them was, “what happens to Tekelec once when everything goes IP”??  Theoretically, with the SS7 footprint getting smaller and smaller, companies like Tekelec would be left out of the party without a drastic re-invention.  Its actually not true.

First of all, the idea that signaling issues go away with the introduction of layer 5 IP session control protocols like SIP is a pipe dream.  In fact, they may even be exacerbated given the fragmentation that we’ve witnessed in terms of proprietary SIP extensions softswitch and IMS vendor insist on for a number of reasons.  Tekelec removes all of this pain by sitting in the middle and playing quarterback, i.e. doing all of the necessary session and management control and even better, reducing capex and opex by increasing headroom on deployed equipment.  Check out there SSR product for more detail.

So, what did surprise me?  The discussion with the CFO.  Tekelec has been rewarded for its relevance in the center of the signaling network, or at least they haven’t been decimated like so many others.   Mr. Everett showed a great chart tracking the stock performance of several telco industry bellweathers for the past year including Acme Packet, Alcatel-Lucent, Sonus, Nortel, Ericsson, etc, etc.  TKLC beat them all, albeit with single digit price growth.  But they did GROW.  They’ve also got the type of balance sheet that affords their customers the sense of comfort that they’ll be around for a while.  This is especially important these days.  Lets see if they can keep it up.