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One of my\nfavourite speakers at ETel (the conference which lead to the birth\nof eComm) was Norman\nLewis. Norman is the Chief Strategy\nOfficer for the Wireless Grids Corporation,\nUSA.\nPrior to joining WGC, he was the Director of Technology Research for the mobile\noperator Orange, UK. Prior to this Lewis was the Director of\nTechnology Research for the Home Division of France Telecom and of\nFreeserve.com.

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There is so\nmuch what I'd call synchronicity between Norman and me at points that one may expect\nmost of the questions had been pre-arranged along with scripted answers. They\nwere not! The only thing I can say is that Norman was chosen for the eComm advisory\nboard because I felt he was in tune with the conference aims. Norman and I\nspoke for quite sometime, so I will need to split it into a further two or even\nthree parts. 

Norman has also kindly agreed to help the\nconference out by co-chairing it!

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2008-01-17-norman-lewis-interview-part1-96.mp3

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The run time is 25 minutes.

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The usual caveats apply, below is not intended to be an\naccurate transcript but rather a pretty good idea of what is covered in the\naudio file (so listen in).

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I started by asking about his job as director of research at the mobile operator Orange to which he\nreplied: 

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...the job\nwas to look three to five years out to look at disruptive technologies and in\nmy case particularly to look at how those disruptive technologies would\ninteract with user behaviours, in other words what technologies would be taken\nup, how they would be taken up. And would this be the basis for new opportunities\nor threats to the existing business.

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I asked why he was attending the conference, to which he replied:

because I\nthink eComm is s a very necessary development especially after the cancellation\nof ETel from O'Reilly. And indeed the problem I always thought with ETel was\nthat it really had the wrong name. Because we are not talking about telephony\nany longer, that is way behind. We are really talking about the future of\ncommunications and communications here means telephony, voice, content,\nentertainment, all other digital technologies, digital media, all together and\nhow these are going to be knitted together, to what we would call the end users\nexperience of how all this stuff will enter into their [consumer] lives. And\nfrom that point of view I am very pleased to be part of this because I really\ndo think this is the direction we need to move the industry in, I don't see\nmuch of this happening within the industry. I see a lot of talk about\nconvergence and all those kinds of things, they've been talking about that for\na long time, I see very little of that actually happening. And so I think it is a great initiative , that we are going to create a\nforum where we can bring together, many kinds of people who are looking , who\nare looking at his space, who are innovating in this space, who have a real\ndesire to work in this space and allow them to meet each other, network\nexchange ideas, clash of opinions, whatever, and indeed hopefully , it will\ngive rise to new ways of thinking , perhaps getting together, starting some\nprojects together, and hopefully establishing this forum as an ongoing interchange\nthat will be repeated every year that will get bigger and better, and attract\nthe kind of attention that I think it should be doing. And act as a pole of\ninnovation attraction for the industry itself. \nBecause I do believe we can influence them [telcos]. But it is very\nimportant that we get together with like minded people and establish that forum\nin the first place. So I am going to be there and hopefully helping to do that

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My next\nquestion to get thing going was \"how do you see the telecoms innovation model\nthat we have today, can you comment on that\"?

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actually I\ncould comment very briefly because I do\nnot see much of an innovation model, in the telco space to be honest, to be\nabsolutely frank. In fact if you look at what is happening in the last ten\nyears or so, all the innovation that has occurred in this space has came\noutside of the telcos. It has particularly came around the Internet., and in\nmany instances this has forced, this has forced the telcos to change what they\nare doing, rather than the impulse for that change coming from within.  I felt\nparticularly strongly, where I was [director of research], where there was a\nreal, where beyond simply the access product was, the real inability to engage\nwith the really significant changes that were happening. Particularly around\nwhat I saw as an enormous amount of innovation, around the Web, around the\nInternet, the telcos where really playing catch up I think

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I put it to\nhim \"but surely telcos should get some praise for upto a hundred billion dollar\na year SMS market? Would you regard SMS as innovation?\"

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most definitely,\nbut just remember that the impulse for SMS did not come from the telcos. No\noperator ever envisaged that SMS was going to be a business and indeed if you\nhad prepared a business case 10 years ago saying that I've got a wonderful idea\nfor a new business which is this thing called SMS and that you put forward the\nbusiness case as to how it would work and construed what it cost and\neverything, you either would have been fired or drummed out of the boardroom...SMS\nis a great example of exactly what I am talking about, it was exactly the kind\nof areas we were studying which where, you had the telecom operators going on\nabout WAP, and about 3G and how you where going to surf the web with your\nmobile phone and you know blah blah blah. And what did the customers do?\nParticularly younger people. They started texting. Which as I said earlier, was\nnever envisaged as a service. And thank\nGod for the young people and texting became what it did become, as that as far\nas I am concerned, really saved the operators, because without it, they\nwould not be enjoying the revenues that they are enjoying today...of course they\nreinvent history so everything is read backwards so that they take the claim  for that innovation . You know the innovation\nhad nothing to do with what it subsequently became. And indeed I think the\nhistory of the telco industry is precisely that; that they've got this God\ngiven right because they've invested some money in the network, which is great\nand I've got nothing but praise that they've rolled out these networks, but\nthat does not therefore give them the right for in perpetuity, to charge people\nbecause they've laid out this expense. I think they've got to understand that\nthe world has changed and it has changed as a consequence of what they have\ndone. But they really have to get with\nthe programme now and adapt themselves to this new environment not hold it\nback, which I think in fact they are more often than not, doing.

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I had to\nlead on and ask \"do I detect that telecoms innovation is and should be,\ndecentralised and a part two to that question is that you are saying that\noperators are hindering that decentralisation of telecoms innovation, is\ndecentralisation the issue at the heart of what we are really speaking about\nhere?\"

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I think it\nis....it's very interesting, if you look at the Internet space, if you look at\nthe web, the point is that once you establish this backbone, once you establish\nthis IP network and you establish the simple rules like the end-to-end principle,\nit meant that you no longer could control it, in the way you might have done in\nthe past. Because nobody needed permission to put something onto the web, as\nlong as whatever you built, conformed to those basic principles, you know you\ncould put it on there, to be consumed by anybody; anybody could get access to\nit. And as a consequence of that, it's almost like despite themselves [telcos],\ninnovation occurred, and this kind of platform was created, that enabled\nanybody to come along and build some new services, new ideas Etc. which was\nfantastically fruitful. But I'd say that happened you know, despite the telcos,\nit was like outside of their control. And indeed what I see today, I see the\nstructural barrier...I think the [mobile operators], they are basically where the PC industry was 10-15 years ago.... I\nthink what is really important here is what has happened within business, is\nyou've got these large telcos, which potentially are more accountable to the\nfinancial markets than they are to their end user customers. You have a very\nkind of institutionalized , structural barrier now to a lot of innovation, and\nthe structural barrier is the following. They are very much based upon short\nterm financial returns, i.e. what are you figures going to look like in the\nnext quarter? And that is basically what every CEO in every telco around the\nworld is doing. They are concentrating\non the next quarter.  They are not\nthinking long term. They are only concerned about, basically, the\nrequirements, the commitment they have made to the financial institutions, to\nthe shareholders Etc. So what you have now is a kind of short-termism that is\nvery much geared towards what can we get out of the door, in the next quarter\nthat is going to generate revenue? And therefore what is happening is that if\nyou look at the investments which are going into R&D, increasingly it is\nbased more and more around development rather than the research side of things.\nAnd that I think is a real problem, because all that means is you have a kind\nof pragmatic culture which is looking for success continuously now. For me\ninnovation is about making mistakes as well as successes. You know you learn a\nlot more from failed projects than projects that might be successful, because\nthe success can be related to a number of issues, which you have very little\nunderstanding. But the more you create a culture that enables you to take\nrsisks that fail, a failed project is not necessary a failure, because you can\nlearn an enormous amount and it can set you off in a new direction, which might\nbe very very fruitful, in the future. That culture does not exist. They\n[telcos] pay a lot of lip service to this. But that culture does not exist\nwithin the telcos. It is all about success driven endeavour.  And\ntherefore what happens is, you stay safe, i.e. you don't take risks, you stay\nwith what you know, and you stay with what so far has been generating you\nrevenue and basically you try and cling onto that. But of course the\ncontradiction in all of this is that it\nno longer suffices. So even now we\nsee we see the decline of revenues to voice for example, as we see\ndisruptive technologies become much more mainstream etc etc. So that no longer works, so you have this\nkind of real, what I call institutional stasis, where you have this kind of\ntension continuously that immediate short term goal and that which you are\ngoing to have to do in the long term. And at the moment I can't see within\nthe cultures of these organisations that they have the management, the vision\nor the courage or the kind of risk culture that will enable them to break out\nof this kind of vicious cycle. I think the only thing that will force them to\ndo that will be changes in the market as we see other players come into the\nspace as we've seen very interesting, in the last five years or so. Some very\nnew players who are starting to impinge upon them. And you know they are\nbeginning to recognise the threats and that fact will be possibly will spur\nthem, but it really comes down to the quality of the kind of thinking of the\nmanagement that they have which, in these organisations, which I don't think\nhave the agility to manage this kind of process, I'm, as you can tell, it was\nthe main reason why I decided to get out of that [telecoms] environment, an environment which was not productive,\nwhich was not fruitful of any real innovation. It was just copying; it was just\nfollowing on from what everybody else was doing.

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I next put\na rather largely worded question over to Norman - \"What I am hearing here is\nthat telecoms has two vertical products, voice and SMS which are couple with\nthe device and the connectivity. Voice makes large returns, so does SMS. It is\na trillion or multi-trillion dollar industry depending on how you measure it.\nAnd it is an industry that is working its vertical two products which are\ngenerating revenue; the mobile industry is the world's largest market. Now you\nare expecting them to be agile and to move and so on, but surely if you where\nin their position, which I guess you where, you would just stay protecting\nthose two vertical products as they are doing and paying lip service to\ninnovation. Is it not correct of them to try and protect those two vertical\nproducts?\"

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His reply:

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Of course\nyes, there is certain truth in what you saying, but it is very self-defeating\nprocess because it is maybe one they can\nmilk for the next ten years. But unless they innovate in this space, unless\nthey take notice of what is happening outside, they are going to get to a point where this is not sustainable -\nbecause their revenues are being eroded....I\nspent a lot of time going to our R&D labs across the world. We were in China, Japan,\nKorea;\nwe met with all the key operators there.\nEverybody showed exactly the same slides.\nDifferent language, slightly difference cultural emphasis but the same slide,\nwhich essentially was that you have\naccess and the value of access going down. And you have this other graph\nwhich is showing usage going up and the\nproblem you have got is this massive gap, growing gap between the revenues you are\ngenerating through your access product and your basic, what your calling your\ntwo products [voice and SMS] and the usage that is going up and the\neconomics are just unsustainable, and so the gap between them, they all had the same slides saying the way\nwe will overcome that is thru value added services. And so we said, so what's\nthe value added service and of course they said that is the key question.\nOf course they don't know the answer to that because they [operators] have\nnever been able to anticipate these things because these things have been much\nmore driven by user behaviours than by anything that has came out of the telcos,\nthey [users] have adopted the technology and used it in ways that never where\nunderstood or envisaged in the first place. So they [telcos] recognise in the long term that there is a big\nproblem here. Because you have this growing gap and it is going to become unsustainable at a certain point where those\nrevenues [from telephony and SMS] are not going to be enough to generate, to\nenable them to realise the demand that there is going to be from the end user.\nThere's just a lot more people to be connected on this, you know there is a lot\nmore a lot more speed, bandwidth and everything else that will be needed to\ndrive usages in the future and that is going to require investment, that is\ngoing to require an understanding. Now if your approach to this whole thing\n[disruption] is simply to be defensive and to try and hold onto what you have\ngot [telephony and SMS revenues], you know, as I said these are rich cash cows,\nthere is no doubt about it - you know there're generating billions but those\nbillions, relatively speaking, in the\nnext three to five years are not going to be as big as they are now. And\nthey are going to be representative of a major problem which is where are you going to sustain longer term\ninvestment that can prepare you for the next generation of things and that is\nwhere I think you are seeing other players coming into the market, who are\ntaking a bit more of a longer term of it and being a little more disruptive.\nAnd I think this has long term consequences for the whole ecosystem and I\nreally think this needs to be discussed and debated much more so we can start\nshaking this up and changing the way people are thinking about this

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At this\npoint I jumped in to ask if he could name at least one player who is taking such\na longer view? He replied:

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Well I think if you look at some of the web\nbased players, if you look at the Amazons of this world, if you look at Google,\nif you look at some of the strategies that they are beginning to evolve where\nyou know, they have a much more deeper understanding where things are going and\nwhat they need to do to take advantage of this IP world. I think they, you see them, you\nsee the kinds of moves that they are beginning to make which I think are very\nvery interesting. I think they are going to pose some very big questions. Can I\njust get back to you on just one other point though? The problem with this defensiveness is they are missing a huge\nopportunity. That to me is the frustration. As I said earlier I understand\nwhy you would have this culture [defensiveness within telcos] and most\ncertainly that was the frustration I had a lot of the time when I was in,\nworking in that space. That you know, if you were responsible for this revenue\n[telephony and SMS] and this revenue was coming in, you know you would be\nsitting there feeling quite good and you would be very jealously guarding that\nand ensuring that nothing disrupted that.\nBut for me the real tragedy if I could use that term, is that there is such a\nhuge opportunity now such a huge space for innovation that could generate new\nvalue that if we were able to take advantage of the innovations and the\ntechnologies that we now have at our disposal. You take something like voice and\nnow for me one of the most interesting and challenging questions is what the\nfuture of voice is going to be? I think voice has been static for the past\nhundred years. I think for the first time now, that you have IP I think it is\nquite possible that voice becomes something quite different to what it has been\nup until now. Voice just becomes another application that can be delivered\nacross this network that means you can integrate voice into things that you\ncould not have done in the past. So the whole experience of voice and how we\nuse it, if you combine voice with presence and things like that, it just means\nthe experience for the end user is going to become that much greater. And that\nrepresents a huge space for changing the way we think about communications and\nthe way we will communicate in the future. That to me is an enormous\nopportunity. In fact I am doing some work on this question on trying to\nquantity what the new opportunities might represent and my instinct, although I\ndon't have the research to back this up yet is that I think there is a huge pot\nthere that no one is even envisaging as an area of value creation. In fact in\ntime I suggest it will be bigger than existing voice revenues

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I had to\nchirp in a verbose fashion then cut myself off having remembered I was meant to\nbe the interviewer not the interviewee, to which Norman then replied:

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I really couldn't\nagree with you more. I think when you look at something like voice and you\nthink about what you could do, it's really remarkable to me, actually I've been\ndoing some work with Martin Geddes on this very question and it's remarkable to\nme that looking at all this research, I might be wrong, but from the research\nso far there is very little qualitative study on a very basic question which is\nwhy do people make phone calls? There is a lot of quantitative  stuff which say when they do it [make calls],\nhow they do it, etc. etc. but there is not qualitative studies that really\nbreak down what is behind a phone call, what's the motivations, what's the\nemotional content, of phone calls. Because very very often phone calls are just\nsignals of something else and not just practical things about you know I am\ndoing such as such or I will meet you at such and such. There are so many subtleties to why people make phone calls and what\nthey are doing in a phone call, that I think if you understood that better, and\nif you could embrace some of those motivations, I think you could create an\nentirely new communications experience. Which I think people will value very very highly. And there for me is\nthe future of value expansion

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Again I had\nto chirp in and add my own views in agreement, so Norman continued:

This is the\nfrustrating thing you see because, it's almost like this [telecoms] industry\ndespite itself has made, as you said, billions of dollars, and it's a trillion\ndollar industry and everything but what is remarkable about it is that they do\nthis despite themselves, I find that remarkable. Obviously something has to be written about this at some point,\nhistorically, about the relationship between intended outcomes and conscious\napplication of technology because there is such a huge gap between the two\nthings here, but for the telco industry, they've, they are obviously meeting\nsuch a basic human need. That despite the fact that they themselves still don't\nunderstand what that is, they are still able to generate billions.

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