Martin: Hello everyone and greetings from London. I'm orry I can't be at the eComm Conference this year in person. However, I've come down into the basement here at BT, in London, to record a few ideas for you and where I think the business models for telephony and telecoms might go in the future.
My name is Martin Geddes. I'm the Head of Strategy for BT Design, which is the integrated IT network division of BT. I've been thinking about telephony for a long time because it's the core of our business, maybe 80% of all telecoms revenues worldwide, however, it's also strangely neglected and it's stagnates as a product.
There is very rarely a VP for Voice in any telco. We tend to assume that the product will have the features it's always had, will work the way it's always had, and will have a business model it's always had.
It takes newcomers to come along, companies like Apple, to come and challenge our assumptions. For example, with visual voicemail, which changes how we interact with our voice messaging. There remain a lot of gaps between what the customer really wants and what the product currently offers.
For example, with my cell phone which I have here, it has a meeting mode. I can turn meeting mode on and if someone calls me, maybe it doesn't make a noise in the meeting; it just vibrates. However, it isn't integrated with the network and the underlying service. The caller doesn't get told that I'm in a meeting. They still interrupt me, regardless.
What's the source of lots of these problems in the model we have? I think there is underlying assumption that underpins telephony that is no longer true. That assumption is that people's time is cheap and that network resources are expensive.
That is why, every time you call someone, the phone rings regardless. It is to summon the person at the other end. If you knew they were on a phone call already, maybe you wouldn't call them. If you knew that they were on a beach, roaming abroad on holiday, you wouldn't call them. There is a lack of presence data giving use the information to make the judgment on when and how to call people.
Let's look at some of the numbers behind this phenomenon. I was just saying how the difference between people's time and the resources of a network have changed the balance. Think back to 1984. Imagine that in your office you had a college graduate who is making long distance phone calls. Which is more expensive, the time of the college graduate's or the phone calls? Actually, it would have been that the phone calls were more expensive, about 11% more expensive than the time of a well-qualified human being.
Ten years later, by 1994, the phone calls had become four times cheaper. People's time was expensive. By 2004, the long distance phone call would have been 26 times cheaper than the equivalent minute of a person's time.
We've see the same thing happen on mobile telephony. In 1994, a cellular minute was about 70% more expensive than the average wage of college graduates. By 2004, it was 5 times cheaper.
However, the product hasn't changed to reflect that. For example, we see that in how 80% of all business calls go to voicemail, but voice messaging isn't integrated into our core tools like Outlook. It's not seen as part of our standard productivity suite. It's seen as the exception case rather than the norm.
The consequences of this gap between what the product currently does and what the users require is driving them to use other forms of communication. For example, I recently read how usage of voice minutes, fixed and mobile combined, had peaked in Denmark. That's a phenomenon that will be repeated across many of the developed countries and markets.
Even leading edge devices, for example, a Skype phone, which tries to integrate the best of Voice over IP features and traditional telephony, is still only used as an acquisition and retention tool, rather than as a means of driving revenue.
The big question is how can we make more money out of telephony? That's the core of our business. I think there are two ways of approaching this. One is the more traditional ways of thinking about our products and services, which is to create more value add for the end user and to sell that directly to the end user.
I think there is still mileage in that. I think there is integration to be done in personal productivity tools we use that help us organize and arrange our time and make it really to answer who shall I talk to next, and what conversations should I be having, and how can I turn this into actionable and track what I'm doing? Really, that's unified communications invading the consumer space. I think there is plenty of mileage in that and that's already been quite well discussed on other fora.
However, what I think is really disruptive is a complete transformation of the business model which is not trying to satisfy the needs of the end user directly, but trying to satisfy the needs of other parties who want to interact with the end user. For example, a call center - that's a very different way of thinking because you're trying to sell new capabilities to what you might call upstream customers, rather than the downstream end user.
I have a simple model to share with you, today, which describes how that phenomenon might unfold. There are three parts to this model. There is how we connect to users, how users interact, and how they transact.
Let's take the first one of those, which is connecting users. The traditional way in which the telecom's business model and the game of competition is played, is we are each trying to have a network that reaches more customers than the other telco does. We try to have a network that is faster than the other telco.
Companies like Verizon, in the US, famously have the "Can you hear me, now" advertising campaign to emphasize their distribution advantage over other networks. We will inevitably see that phenomenon continue to play itself out.
For example, I can imagine trying to make money from an upstream customer by offering video interaction between a call center representative and an end user. Or, in the case of BT, we have Ribbit as our product for embedding telephony into the web experience, which again, extends distribution of communications into new context. That's only the start. I think that there are all kinds of untapped opportunities going forward to optimize our products and services in largely unthought-of of ways, to take pain and friction out of interactions between these upstream customers and the end users.
Let's take a more specific example. Let's say outbound calling from a call center. Typically, a call center representative will spend about 20-30 minutes per hour actually talking to customers. Some of those customers will be very annoyed to receive those calls. They'll be roaming abroad and being charged outrageous amounts of money and would rather the call never had been made.
Other of those customers will answer the phone and say, "Thank you for calling me, but actually it's not a good time. Please call me back later." The actual amount of productivity of those call center representatives is quite low.
We can see all kinds of new companies and capabilities coming along to help take out some of those pain points. For example, what if the call center representative, rather than calling an end user, could record a voice message or even have a prerecorded voice message and directly deposit it into your voicemail without your phone ringing, and have the choice of not interrupting you? That would save them time, money, labor costs, and potentially offers a better experience for the end user.
There are other companies and services emerging in this field. For example, at eComm, there is Fonolo in attendance. They have deep dialing capability from within a web page, that lets you bypass IVRs and interact directly with a person or division that you want to get to.
We can imagine reinventing all kinds of other products that we offer today, rather than trying to improve them to create more revenue directly from the end user and try to optimize these interactions. Let's take SMS, text messaging; a common use case might be a marketing campaign where someone has responded to a short code and in return they've been asked, "Which product sample would you like; product A, product B, or product C? Are you male or female?" - simple interaction. Now, today, we can send them an SMS that says, "Please text back the number 1 if you want product 1, number 2 if you want product 2."
What if we wanted to send someone an SMS with a URL embedded? For some customers, that would be a bad experience. Maybe their telephone doesn't support a browser. Maybe they're prepaid and mobile data is expensive. Maybe they're post-paid and on an unlimited data plan but they're roaming abroad? They will not appreciate being charged a large amount of money for clicking on the text message. What we would have to do is offer a capability to integrate the understanding of the customer, for example, what price plan they're on, and whether they're roaming, with the kind of interaction the enterprise wants to have with that customer.
It's all quite simple, almost mundane stuff, but text messaging is a very simple product and it's almost $100 billion business. It's actually by creating huge volumes of transactions and interactions with these small improvements that we generate huge amounts of money.
We've talked about connecting people in new ways by extending the reach of service and the capabilities of connection, like with video. We've talked about optimizing interactions. Where I think the big money is, in integrating transactions with the underlying telecom's products.
Let's go back to that previous example I was talking about, which was voicemail. I gave you the example of rather than someone in a call center being paid to listen to your phone ring, listen to your voicemail greeting, and then recording your voicemail message for you, that they could direct deposit that thing into your voicemail box.
The kind of interaction they might be having is, "Dear Sir, we're returning your call. The widget you wanted is in stock. Please call us back at 0800-whatever, to order this product." The user gets this voice message. They write the number down on a Post-It note. They call back and they hear something like, "We're very sorry but our call center is open between 9:00 a.m. and 5:00 p.m. Please call us back tomorrow." The business process doesn't complete.
Instead, what if that call center could have deposited a voice XML document into your voicemail, and the user would have heard, "Thank you very much for your inquiry. The widget you wanted is now in stock. Press 1 to have it delivered immediately to your registered address. Press 2 to have it delivered some other time. Press 3 to cancel your order." It lets you complete the business process right there inside the voicemail system.
That's an example of the kind of different way of thinking about this problem that we could all adopt. Rather than trying to think about how to sell more $1 or $2 a month capabilities or $.10 transactions to the end user, how do you use that relationship with the end user to take problems with efficiency and effectiveness out of the business processes for other people?
I can imagine some time, five or ten years from now, who knows; perhaps the future will arrive more quickly than expected. Perhaps as a PayPal for voice rather than having to dictate my name, my address, my strange foreign accent to people in call centers who have even stranger foreign accents, maybe all I hear is "Thank you for your call; we're now going to hand you back to your telco," when you hear, "We're had a request to release your name, address, and payment details to Company X. If you agree with this, please enter your PIN," and it's done.
The summary is that I think the money isn't in trying to package up and sell new end user services. The money is in trying to serve these upstream customers, by optimizing how we connect, how we interact, and how we transact. By doing this, we take out costs of labor and gasoline trucks running around trying to deliver things to people who aren't in, and people on telephone calls trying to play voicemail tag between different businesses.
To do that, we need to exploit our customer data and relationships. It's what we know about the customer; do we know your email address, do we know what communications methods you prefer; when do you communicate; how do you communicate; who else you communicate with that is going to be the raw material that we build this new business from.
I believe it's going to be a very profitable business. Just like today, when someone wants to call you, a telco receives a termination fee because they have a monopoly on that connect part to you. Likewise, when some company wants to interact with you, if it's only the telco that really understands you, then those can be very healthy margins in exploiting those capabilities.
I think the opportunity is in servicing some of the companies that you see at eComm, at the moment, for example, Voicesage, who are also presenting, and to whom I'm an advisor, who tried to optimize these communications-enabled business processes. The challenge for telcos is to think about how do you make Voicesage's business more effective, or Ribbit's business more effective, by exploiting your locational presence and customer intimacy.
To achieve this, I think there is one last thing to think about, which is no one telco on its own, no one operator can achieve this alone. It's going to require a great deal of cross-industry collaboration and interaction with each other. eComm is the perfect forum for which to start that conversation. Thank you.
My name is Martin Geddes. I'm the Head of Strategy for BT Design, which is the integrated IT network division of BT. I've been thinking about telephony for a long time because it's the core of our business, maybe 80% of all telecoms revenues worldwide, however, it's also strangely neglected and it's stagnates as a product.
There is very rarely a VP for Voice in any telco. We tend to assume that the product will have the features it's always had, will work the way it's always had, and will have a business model it's always had.
It takes newcomers to come along, companies like Apple, to come and challenge our assumptions. For example, with visual voicemail, which changes how we interact with our voice messaging. There remain a lot of gaps between what the customer really wants and what the product currently offers.
For example, with my cell phone which I have here, it has a meeting mode. I can turn meeting mode on and if someone calls me, maybe it doesn't make a noise in the meeting; it just vibrates. However, it isn't integrated with the network and the underlying service. The caller doesn't get told that I'm in a meeting. They still interrupt me, regardless.
What's the source of lots of these problems in the model we have? I think there is underlying assumption that underpins telephony that is no longer true. That assumption is that people's time is cheap and that network resources are expensive.
That is why, every time you call someone, the phone rings regardless. It is to summon the person at the other end. If you knew they were on a phone call already, maybe you wouldn't call them. If you knew that they were on a beach, roaming abroad on holiday, you wouldn't call them. There is a lack of presence data giving use the information to make the judgment on when and how to call people.
Let's look at some of the numbers behind this phenomenon. I was just saying how the difference between people's time and the resources of a network have changed the balance. Think back to 1984. Imagine that in your office you had a college graduate who is making long distance phone calls. Which is more expensive, the time of the college graduate's or the phone calls? Actually, it would have been that the phone calls were more expensive, about 11% more expensive than the time of a well-qualified human being.
Ten years later, by 1994, the phone calls had become four times cheaper. People's time was expensive. By 2004, the long distance phone call would have been 26 times cheaper than the equivalent minute of a person's time.
We've see the same thing happen on mobile telephony. In 1994, a cellular minute was about 70% more expensive than the average wage of college graduates. By 2004, it was 5 times cheaper.
However, the product hasn't changed to reflect that. For example, we see that in how 80% of all business calls go to voicemail, but voice messaging isn't integrated into our core tools like Outlook. It's not seen as part of our standard productivity suite. It's seen as the exception case rather than the norm.
The consequences of this gap between what the product currently does and what the users require is driving them to use other forms of communication. For example, I recently read how usage of voice minutes, fixed and mobile combined, had peaked in Denmark. That's a phenomenon that will be repeated across many of the developed countries and markets.
Even leading edge devices, for example, a Skype phone, which tries to integrate the best of Voice over IP features and traditional telephony, is still only used as an acquisition and retention tool, rather than as a means of driving revenue.
The big question is how can we make more money out of telephony? That's the core of our business. I think there are two ways of approaching this. One is the more traditional ways of thinking about our products and services, which is to create more value add for the end user and to sell that directly to the end user.
I think there is still mileage in that. I think there is integration to be done in personal productivity tools we use that help us organize and arrange our time and make it really to answer who shall I talk to next, and what conversations should I be having, and how can I turn this into actionable and track what I'm doing? Really, that's unified communications invading the consumer space. I think there is plenty of mileage in that and that's already been quite well discussed on other fora.
However, what I think is really disruptive is a complete transformation of the business model which is not trying to satisfy the needs of the end user directly, but trying to satisfy the needs of other parties who want to interact with the end user. For example, a call center - that's a very different way of thinking because you're trying to sell new capabilities to what you might call upstream customers, rather than the downstream end user.
I have a simple model to share with you, today, which describes how that phenomenon might unfold. There are three parts to this model. There is how we connect to users, how users interact, and how they transact.
Let's take the first one of those, which is connecting users. The traditional way in which the telecom's business model and the game of competition is played, is we are each trying to have a network that reaches more customers than the other telco does. We try to have a network that is faster than the other telco.
Companies like Verizon, in the US, famously have the "Can you hear me, now" advertising campaign to emphasize their distribution advantage over other networks. We will inevitably see that phenomenon continue to play itself out.
For example, I can imagine trying to make money from an upstream customer by offering video interaction between a call center representative and an end user. Or, in the case of BT, we have Ribbit as our product for embedding telephony into the web experience, which again, extends distribution of communications into new context. That's only the start. I think that there are all kinds of untapped opportunities going forward to optimize our products and services in largely unthought-of of ways, to take pain and friction out of interactions between these upstream customers and the end users.
Let's take a more specific example. Let's say outbound calling from a call center. Typically, a call center representative will spend about 20-30 minutes per hour actually talking to customers. Some of those customers will be very annoyed to receive those calls. They'll be roaming abroad and being charged outrageous amounts of money and would rather the call never had been made.
Other of those customers will answer the phone and say, "Thank you for calling me, but actually it's not a good time. Please call me back later." The actual amount of productivity of those call center representatives is quite low.
We can see all kinds of new companies and capabilities coming along to help take out some of those pain points. For example, what if the call center representative, rather than calling an end user, could record a voice message or even have a prerecorded voice message and directly deposit it into your voicemail without your phone ringing, and have the choice of not interrupting you? That would save them time, money, labor costs, and potentially offers a better experience for the end user.
There are other companies and services emerging in this field. For example, at eComm, there is Fonolo in attendance. They have deep dialing capability from within a web page, that lets you bypass IVRs and interact directly with a person or division that you want to get to.
We can imagine reinventing all kinds of other products that we offer today, rather than trying to improve them to create more revenue directly from the end user and try to optimize these interactions. Let's take SMS, text messaging; a common use case might be a marketing campaign where someone has responded to a short code and in return they've been asked, "Which product sample would you like; product A, product B, or product C? Are you male or female?" - simple interaction. Now, today, we can send them an SMS that says, "Please text back the number 1 if you want product 1, number 2 if you want product 2."
What if we wanted to send someone an SMS with a URL embedded? For some customers, that would be a bad experience. Maybe their telephone doesn't support a browser. Maybe they're prepaid and mobile data is expensive. Maybe they're post-paid and on an unlimited data plan but they're roaming abroad? They will not appreciate being charged a large amount of money for clicking on the text message. What we would have to do is offer a capability to integrate the understanding of the customer, for example, what price plan they're on, and whether they're roaming, with the kind of interaction the enterprise wants to have with that customer.
It's all quite simple, almost mundane stuff, but text messaging is a very simple product and it's almost $100 billion business. It's actually by creating huge volumes of transactions and interactions with these small improvements that we generate huge amounts of money.
We've talked about connecting people in new ways by extending the reach of service and the capabilities of connection, like with video. We've talked about optimizing interactions. Where I think the big money is, in integrating transactions with the underlying telecom's products.
Let's go back to that previous example I was talking about, which was voicemail. I gave you the example of rather than someone in a call center being paid to listen to your phone ring, listen to your voicemail greeting, and then recording your voicemail message for you, that they could direct deposit that thing into your voicemail box.
The kind of interaction they might be having is, "Dear Sir, we're returning your call. The widget you wanted is in stock. Please call us back at 0800-whatever, to order this product." The user gets this voice message. They write the number down on a Post-It note. They call back and they hear something like, "We're very sorry but our call center is open between 9:00 a.m. and 5:00 p.m. Please call us back tomorrow." The business process doesn't complete.
Instead, what if that call center could have deposited a voice XML document into your voicemail, and the user would have heard, "Thank you very much for your inquiry. The widget you wanted is now in stock. Press 1 to have it delivered immediately to your registered address. Press 2 to have it delivered some other time. Press 3 to cancel your order." It lets you complete the business process right there inside the voicemail system.
That's an example of the kind of different way of thinking about this problem that we could all adopt. Rather than trying to think about how to sell more $1 or $2 a month capabilities or $.10 transactions to the end user, how do you use that relationship with the end user to take problems with efficiency and effectiveness out of the business processes for other people?
I can imagine some time, five or ten years from now, who knows; perhaps the future will arrive more quickly than expected. Perhaps as a PayPal for voice rather than having to dictate my name, my address, my strange foreign accent to people in call centers who have even stranger foreign accents, maybe all I hear is "Thank you for your call; we're now going to hand you back to your telco," when you hear, "We're had a request to release your name, address, and payment details to Company X. If you agree with this, please enter your PIN," and it's done.
The summary is that I think the money isn't in trying to package up and sell new end user services. The money is in trying to serve these upstream customers, by optimizing how we connect, how we interact, and how we transact. By doing this, we take out costs of labor and gasoline trucks running around trying to deliver things to people who aren't in, and people on telephone calls trying to play voicemail tag between different businesses.
To do that, we need to exploit our customer data and relationships. It's what we know about the customer; do we know your email address, do we know what communications methods you prefer; when do you communicate; how do you communicate; who else you communicate with that is going to be the raw material that we build this new business from.
I believe it's going to be a very profitable business. Just like today, when someone wants to call you, a telco receives a termination fee because they have a monopoly on that connect part to you. Likewise, when some company wants to interact with you, if it's only the telco that really understands you, then those can be very healthy margins in exploiting those capabilities.
I think the opportunity is in servicing some of the companies that you see at eComm, at the moment, for example, Voicesage, who are also presenting, and to whom I'm an advisor, who tried to optimize these communications-enabled business processes. The challenge for telcos is to think about how do you make Voicesage's business more effective, or Ribbit's business more effective, by exploiting your locational presence and customer intimacy.
To achieve this, I think there is one last thing to think about, which is no one telco on its own, no one operator can achieve this alone. It's going to require a great deal of cross-industry collaboration and interaction with each other. eComm is the perfect forum for which to start that conversation. Thank you.
