Farewell to the Noughties, a decade sandwiched between two crises: The dotcom bust and the current – but sputtering – downturn.  In that time, Europe accomplished much: The Euro was adopted, DSL went mainstream and telcos went NGN.

Not least, consumers woke up to the pleasures of mobile content, although it’s questionable whether MNOs will ever see a fair return for their expensive 3G licenses. Roaming charge crackdowns and market saturation haven’t helped financials either.

Time again to put a nebudchadnezzar on ice? There’s plenty under the tree for 2010:

1. Ethernet will be everywhere. Ethernet is in the LAN, it’s in the WAN, it’s transforming mobile backhaul economics, and it’s converging the datacenter. Fiber remains best, but clever vendors (see Hatteras, Actelis) are delivering copper-bonded Ethernet in the first mile. And new Ethernet exchanges (see CENX and Equinix) aim to speed order to cash with their interconnect services. Want a unifying communications fabric? Well duh!

2. The CDN bubble will burst. Telco CDNs can offer compelling features, but how many service providers can the market sustain, even if video traffic is exploding? Many partnerships are already in place: Tata Communications with BitGravity, Verizon with Velocix, Deutsche Telekom with EdgeCast and Global Crossing with Limelight Networks and EdgeCast. If you’re not in the game now, you’ll need deep pockets to buy in.

3. The cloud’s hot air will expand. Resilient, liquid (and probably Ethernet-based) connectivity is going to save the outage-prone cloud. To invest in cloud services enterprises require robust network as well as applications-specific SLAs, as well as network redundancy, say Yankee Group enterprise surveys. Offering on-demand VPN connectivity to cloud services (on a wholesale or retail basis) could help defuse concerns about their security and resilience.

4. Equipment vendors will want to be your new best friend. The ratio of CAPEX to revenue currently stands at 12.6 percent among European operators, according to Yankee Group analysis. It’s not going to recover much. That’s why European equipment vendors like Alcatel Lucent, Ericsson and Nokia Siemens Networks are on a charm offensive with managed services propositions and aims to transform telco business models. Listen to their pitch. And talk to Huawei:  With a new SDP partner program and growing software division, it’s got more in its arsenal than cheap kit.

5. Smart wholesale will become sexier than dumb wholesale. Get big, get niche or get out. Embrace revenue-sharing models with non-traditional partners. And work mobile angles: International remittances, GRX to IPX interconnect, content transcoding, white-label mobile UC and M2M are among many rich avenues of investigation.

Best wishes for the New Year – and decade – look forward to continuing the conversation!

The economic crisis proved a major obstacle for consumers, enterprises and network builders, and each has had to evolve to survive. The changes from 2009 will create new opportunities in the Anywhere ecosystem, especially in the areas of cord-cutting, devices, cloud computing and network innovation.

Earlier today, I was joined by my colleagues Jon Paisner, Camille Mendler and Josh Holbrook to unveil Yankee Group’s top predictions for the 2010 communications industry. We discussed six of our eleven published predictions and took questions live from the audience. Check out the webinar replay below. You can also register as a Guest on the Yankee Group Web site to get the full report for free.

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

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.

Given the opportunity to join IBM’s Global Executive Forum again this year, I jumped. Past experience has proven that it’s an intimate, powerful gathering where C-level execs from global communications and media firms convene to mull key questions in leadership.

Last week we convened in the foggy but serene wilds of rural Hampshire, U.K., for two days of discussion about how to succeed in the new economic environment. The challenges offered by IBM were capture in the subtitle for this year’s event: Taking Risk and Finding Opportunity in Unprecedented Times.

My favorite remark of the sessions, one that I’ve repeated several times already, concerned the need for change in our legacy communications networks to embrace exploding demand for video, data, and new services. In the past I’ve heard a defensive posture from network leaders, rationalizing slow progress in the face of rapidly rising threats. But Jean-Philippe Vanot, EVP for innovation and marketing at France Telecom, said, “It’s no longer a question of if, but when.” Amen to that. Eelco Blok, KPN board member and managing director of its business and wholesale operations, talked about the imperatives to change that his firm’s leadership saw as early as 2005, triggering the brave decision to invest in an aggressive move to an all-IP network infrastructure despite a very challenging financial situation.

I shared this slide, from research that YG analyst Camille Mendler did earlier this year with the Telecommunications Executive Network (TEN), surveying network operators. She asked them what they believed the core selling proposition of a network operator is.

What 50+ network operators think they provide

Thank God, I observed, that the most popular answer was the correct one: a service management platform. Operators of networks who see their mission as providing a platform for the creation of network services of any stripe, offered either by them or by third parties, have the best opportunity to contribute to the increase in collective smarts around the world.

(However, the second most popular answer to her question is just total puffery, to put it kindly. Brand is not a selling proposition for any company, whether it runs networks or makes toothpaste. Brand is rather a means to an end. A valuable brand helps a business do things — reach a target market, for instance, or instill confidence in the minds of buyers that this toothpaste will whiten their teeth better. But brand isn’t something valuable on its own. Operators who identify brand as their selling proposition are more likely to invest in brand promotion and identity ahead of the non-trivial work of transforming their core networks. Brand is thus a dangerous red herring in a converging world.)

I like IBM’s Smarter Planet mantra; I believe in it. But to have one, we need smarter networks. In the words and reported deeds of network and media leaders at GEF, coupled with the early, admittedly modest, green shoots in the global economy, I see progress.

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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How many customers does it take to matter in the world of wireless infrastructure? Well, if you are trying to partner with customers on the product roadmap for an important technology, maybe one is enough. And if it’s one of the biggest operators in the world, even better. So Mary Chan, president of Alcatel-Lucent’s 4G/LTE group is excited to have won the Verizon deal. It has given them a real goal to execute on this ambitious transformation for the industry.

Most operators would prefer to work with one partner who can share the risk and reward of a multi year technology roll out. ALU is betting on that as it rolls out its wireless LTE plans. The desire to be seen as an end to end player in this technology space is a differentiating factor for ALU as highlighted in the diagram below.

I spoke to Mary Chan earlier this week and here is what I learnt about their wireless/LTE plans:

• Create one organization within Alcatel Lucent to provide end to end service on the wireless LTE technologies.
• Leverage its strength in IP wireline products and technology and bring it to bear for the IP mobility solutions and achieve scale. Focus on adding policy management, mobility management features to the Evolved Packet Core (EPC) architecture.
• Go it alone and not co-develop the RAN aspects of the architecture with NEC.
• Launched the ngConnect program last month to allow partners to develop applications on the LTE technology platform.

The streamlined organization structure within ALU creates a point of differentiation for them. My belief is that this was one of the reasons for Verizon choosing to partner with ALU. Given that LTE is the next big wave in infrastructure spending, it is a crucial win for ALU to remain competitive.

Although there is a risk of sending mixed messages by not partnering with NEC on the core Radio Access Network (RAN) architecture  and yet being open to partnerships under the  ngConnect umbrella, it makes business sense. ALU is focusing on what they are known for- solid proven engineering of the wireline and wireless products and solutions. It demonstrates the ability to focus on their strengths and change what was not working that well in the first place.

They must pay careful attention to managing this “open’ eco system to truly encourage greater innovation and creativity rather than apply a heavy hand in the management of the program.

One customer win is a solid start to make the LTE possibilities real. I am looking forward to hearing more details of their wireless LTE strategy as CTIA concludes this week.

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.

I had an opportunity to meet with several HP executives at the annual industry analyst summit they held in Boston this week.  HP used this event to reveal all of the devil in the details of the massive new business unit created a few months back, CMS, which is short for Communications and Media Solutions.  This is a company that loves acronyms and always has.  CMS should not be confused with CME, which was a matrix’d organization targeting communications, media and entertainment industries and did not carry a P&L and is now gone [it was swallowed into CMS.]

The “CMS” business unit represents a first for HP, they have officially stitched together all of the various communications and media assets stashed in the company and aligned them against a P&L.  This is the first time they have organized like this for a specific vertical industry.  CMS includes the telecom network service delivery assets like OpenCall, NGOSS/BSS/SDP software, all of the EDS assets targeting C&E, and consulting and integration services and so on.
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Ben Verwaayen’s maiden speech to the 19th Alcatel-Lucent Enterprise Forum was not what I expected. The new CEO did not focus on the company financials, he did not bluster. Instead, he perched on the podium and said thank you to ALU’s customers and partners.

His pitch focused on new opportunities in our digital knowledge-based economy if we learn to collaborate better. Various government stimulus packages shouldn’t recreate what we have today, but what we really need, he said. Not least, he stressed the imperative to harness digital innovation to build a more sustainable world.

This was all good stuff, but I thought I’d hear it at Davos, not in Paris. Where was the beef? It was left up to Tom Burns, president of ALU’s enterprise product group, to get into more detail. Upon reflection, that was a wise move. Whatever goodwill the industry may have toward Ben, building a cult of personality around him is not what ALU needs now.

The company must demonstrate that the right people are in place – and empowered – throughout the organization. And Tom did a nice job, helping to dispel lingering doubts about ALU’s commitment to the enterprise line of business. Out on the show floor, customers and partners were tripping over each other to check out the demos, where a heavy focus on ALU’s verticals push was evident.

ALU claimed a turnout exceeding 7,000 attendees, slightly more than non-recessionary years. That said, I don’t recall that the Forum usually shares its venue with other events. But a wrong turn off the escalators took me to the European Sandwich and Snack Show, which was also jam-packed.

What the heck is this crowd up to I wondered? Just for fun, I compared respective conference agendas:

• Trends: “What’s new in IP communications” vs. “Canapé spoons, a new trend for crumbles & gratins”
• Education: “How IP address management can simplify your VoIP projects” vs. “All about kebabs”
• Sales: “Revenues through communications as a service” vs. “How pricing affects the snacking offer” 

Perhaps the juxtaposition of ICT and snack foods isn’t so dumb: Defying the doom-mongers, KFC just announced plans to create 9,000 new jobs in the UK. And sandwich chain Subway aims for 7,000 new jobs across Ireland and the UK as consumers change their spending habits in the downturn.

Maybe they’re examples of what Ben was talking about: A downturn is an opportunity to reshape your company if you listen to your customers and, crucially, keep investing in innovation.

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.