Paul Wallbank – Brilliant Communications

Tag: telco

  • Who pays for the internet of things?

    Who pays for the internet of things?

    “If there’s one number I’d like you to remember, it’s 19 trillion.” Cisco CEO John Chambers told the 2014 International CES during his keynote speech earlier this week.

    Chambers was referring to the economic value of the Internet of Things or machine to machine technologies as they get rolled out across society, but who pays for the connectivity?

    In the case of the smart home, office, factory or farm the data costs go onto the existing internet bill, but once you get out of the office or on the road then the bills start mounting up as systems start connecting to a cellular or satellite network.

    Certainly the telcos see the opportunity with Ovum Research predicting telco’s M2M revenues will grow to reach US$44.8bn over the next five years.

    While for logistics companies and similar businesses this will be just another cost of doing business, for many consumers being stuck with an expensive mobile data plan with their smart car might not be attractive.

    As car manufacturers start to push their vehicles as being more like smartphones, suddenly the choice of network provider, compatibility with apps and operating systems starts to become a valid concern.

    In that world, choosing a car on the basis of which telco it connects to is a sensible idea.

    Of course it may be that consumers may not own cars by the end of the decade. The vision of companies like Zip Car and Uber is that we just call for a towncar or pick up a share car when we need one.

    Certainly that vision makes sense from an economic perspective and the trends right now show that millennials are nowhere near as interested in cars as their parents and grandparents were.

    As with every technological change, it’s not always obvious in the early days how things will pan out. In 1977 the founder of Digital Equipment Corporation Ken Olsen said, “there is no reason anyone would want a computer in their home.” Within 15 years he was proved very wrong.

    The motor car drove western society during the Twentieth Century and to assume we’ll continue to use it the same way in the 21st is as flawed as believing a hundred years ago that we’d continue to use horse carriages the same way as previously.

    So the assumptions about where money is to be made with the Internet of Things may turn out to surprise us all.

     

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  • Door to door blues

    Door to door blues

    The news that energy companies have decided to drop direct door to door selling in the face of prosecution is the latest example of poor thought out performance metrics and managers unsuccessfully trying to shift risks out of their business.

    Electricity and gas distributors Energy Australia and AGL embarked on a door-to-door sales campaign to gain more customers. Like most modern corporations, they don’t do this stuff themselves and engaged outsourcing companies who in turn took on commission salespeople to do the ground level selling selling.

    It didn’t work well and in face of complaints, both companies had to back away from their campaigns after suffering legal and reputational damage.

    The sad thing this has happened before, at the time of telecoms deregulation in the 1990s telcos did the same thing to grow their market share. Door to door sales teams fanned out across the suburbs to sign households up to telephone plans.

    In one example, a company hired dozens of backpackers, bussed them to outlying suburbs and sent them out on the streets to sign up as many households as possible.

    Initially the campaigns were a success with providers reporting increased signups, greater market share, fat executive bonuses and happy commission earning salespeople.

    Then the complaints began.

    Customers discovered they’d been lied to, or in some cases falsely signed up, as hungry salespeople did everything they could to get a commission.

    At first the telcos thought they could throw the problem over the fence so they blamed the contractors. Eventually the damage became so great the telcos had to back down on their door to door selling as problems multiplied and consumer protection agencies expressed their irritation.

    At the heart of the problems with this type of door to door selling is the mismatch of incentives – for managers, contractors and the teams going door to door in the suburbs.

    Door to Door Blues

    At the coalface are the salesteams trudging around suburbs. In the 1990s telco boom they were largely made up of backpackers whose interests were to sign up as many customers as possible in order to fund the next stage of their travels.

    Often, the telco or its contractor would only discover a sign up was the family dog or toddler long after the traveller was sunning themselves at Koh Phi Phi.

    Using Indian students as the energy contractors were doing largely fixed some of the worst excesses of the 1990s but it didn’t address all of the problems

    Management misalignment

    Driving the rush for sign ups are usually poorly designed  management Key Perfomance Indicators – a dumb set of executive benchmarks rewards poor  behaviour and creates unforeseen risks. Particularly when those KPIs are focused on short term metrics.

    Very quickly the risks in the short term focus become apparent and managers back off from these programs.

    In this case it appears Energy Australia’s managers heeded the early warnings and backed off before the problem became too great, unlike the telcos who let the sales teams run rampant before reigning them.

    What’s saddening about Energy Australia’s and AGL’s problems is they were totally forseeable and those who warned of the risks in a door-to-door customers acquisition strategy – and there were almost certainly some in these organisations – were overuled by enthusiastic executives aiming to bust their sales and market share metrics.

    Sometimes we are condemned to repeat history repeatedly in business.

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  • Explaining the NBN on 702 Sydney ABC Radio

    Explaining the NBN on 702 Sydney ABC Radio

    I’ve covered what the NBN is previously on the ABC for Tony Delroy’s Nightlife and on Technology Spectator last year looked at the challenges ahead for the project in 2013.

    The National Broadband Network was always going to be one of the key issues in the 2013 Federal election, The Liberal Party’s policy launch on Sunday and Malcolm Turnbull’s comments on ABC Radio station 702 Sydney on Friday illustrated how critical it will be.

    His assertion that wireless should be affordable is laudable, but the indications are that it is increasingly going to become less affordable.

    It also puts the coalition in a bad position, losing the three to four billion dollars expected from the spectrum auction wouldn’t help their budget position.

    One comment from Malcolm that particularly sticks out is on subsidies;

    If I could just make one other point Linda, possibly the most important. The government as we know is spending a stupendous amount of money on building a national fibre to the premises broadband network. And the subsidies there run into the tens of billions of dollars –

    The member for Wentworth is facturally wrong; there are no subsidies for the NBN, the government is providing the capital for the project which they hope will be paid back by 2018.

    the value of the network once completed will be a fraction of what the government is spending on it.

    On what basis? Certainly fibre has a 25 to 40 year expected life cycle, but that’s true of a roadway or an office building; does Malcolm suggest we don’t spend on that as well.

    you could make a very powerful argument that the form, the channel of broadband communication which adds the most to productivity is in fact wireless broadband.

    Possibly, but let’s see that argument. Currently data downloads to fixed lines still dwarfs mobile, both are growing exponentially.

    Malcolm actually touches on the problem we’re facing with wireless — the shortage of bandwidth.

    The government has been very slow at getting it out. As of the last report there was only about eight and a half thousand premises connected to the fibre optic network that they’re building throughout all of Australia

    This is true, the rollout so far of the NBN has been disappointing. This is what observers are watching closely on this.

    The Fibre to the Node setup also creates another problem – that of ownership. If Telstra retain ownership of the copper cable from the node to the premises, it means providers have to deal with two wholesalers one of whom is their competitor.

    In fact it creates a whole rabbit’s nest of problems for retailers and could very quickly find us in a situation where telco access requires dealing with two monopolies — Telstra and NBNCo.

    One the disappointing things about the National Broadband Network has been the poor debate around the topic, indeed the whole debate at times has been wrong headed. Any hope it’s going to improve during the election campaign isn’t likely

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