October 2009 Archives

Towards the end of last month, I had the pleasure of doing a pre-conference interview with long-term friend Martin Geddes. Back at the very first eComm he expressed (archive video here) the opinion that it was actually lack of business model innovation which was holding communications innovation back as a whole, more than anything else.

Now that Martin has been in his BT role since the very end of last year, I wanted to catch up and see if he has changed his opinion or whether he has in fact further developed it. It turned out to be the latter.

The run time is 59 minutes.

I do have to say if we sound odd and if the interview is not quite as focused as say others we've done together (please see here, and here and if your in love with Martin this transcript also), it's because we were both sick at the time!

The full transcript is also below.

Lee: Okay Martin, you are turning into the "business model" man. Let's begin with a preliminary - if you don't mind me labeling you that, you're Head of Strategy at BT Design. I would like you, first of all for the sake of the readers, as well as listeners, to tell us what a business model is.

Martin: For instance, I'll tell you what a business model is. Let's take an example from outside of telecom. You can compare Southwest Airlines, Ryan Air with other airlines, like British Airways or American Airlines. What is fundamentally different about these companies are not the procedures the pilots follow, or the natures of the airplane, or the kind of thing they offer which is basically travel. It's the business models they use to approach their markets. In telecom, we also see new upstarts with new business models. What we've seen over the last couple of years, and a study by IBM reinforces this, is if you're going to invest money in improving your business, the highest returns are not in investing in new processes or new products but are actually in inventing new business models around the existing propositions.

Lee: Could you elaborate on what business model innovation is? I mean, you've alluded to it. Are you able to expand on what we mean by business model innovation?

Martin: What actually is a business model? I think a very good framework to work with is the business model canvass that a guy named Alex Osterwalder has popularized. It's a very simple diagram. You can draw out the parts of any company's business model. At the heart of it is a value proposition, something they're doing for the user that they're willing to change behavior or part with money to engage with. Then, to either side of that value proposition, you've got a revenue model and you've got a cost model. They come together to give you their profit and loss. On the revenue side, you've got a bunch of segments attaching. You've got distribution channels to reach those segments, and you've got different types of relationships for those customers. In telco, it could be prepay versus post-pay. If you're a supermarket, you might have customers with loyalty cards versus customers who are anonymous to you. On the cost side, you have a bunch of things; you have, assets, not just things you do. Contrast those in the telecom world and network is a thing you have and billing is a thing you do. You have a bunch of partners who help you perform those activities.

In creating a business model, you've got a revenue model which is how you price things. You can disrupt the price products, and a cost model which is how you allocate the costs for the things that you have and do. The traditional way of looking at business is thinking about "How can I build a better product, build a better value proposition to the user?" You try to pour all your money into that. If you look at the airline example again of EasyJet or Ryan Air, or Southwest Airlines, their proposition is just being cheap. They've elevated those other boxes around the user. For example, cutting out all the travel agents in the distribution channels to reach their segments is an example of a business model innovation and going direct to the user, using the web. I think in our world, particularly telephony and voice telecoms, we're going to see the very old, successful, and highly established voice minutes business model being continuously challenged by new ways of working. What we've seen over the last 10 years with new technology and VoIP largely being used to optimize the existing business model, we'll actually start to see much more fundamental and disruptive change.

Lee: You bring us to the exciting part and then you stopped. I'm not too sure if I should ask; would you conclude firstly the current business model for telephony is minutes, or is there more to that business model than just minutes?

Martin: If we take that framework I mentioned earlier, and start thinking about all the different component parts of that framework, the model we have for today's telecom business model is a very simple segmentation enterprise consumer, prepaid/post-paid. The product doesn't vary much, or be adapted much to different segments or needs. It's very much a one-size-fits-all type of product. You might contrast that with Unified Comms products that are attacking the enterprise market, that comes in many flavors. The nature of the relationship with the customer is very shallow. We send you a bill but we know very little about you and how you communicate, how you prefer to communicate. The supply side, as well, is very long established, the network equipment providers basically defining the product and its capabilities through organizations like the GSM Association, 3GPP, designed by committee of what the product does. The evolution of that product, like rich communication suites, the GSM Association is still following the same meta pattern of how we satisfy the user needs.

The current business model is more than just minutes. It's that whole ecosystem for how all those parts hang together. It's important not to diss that ecosystem too strongly as a fan of change because it's been extraordinarily successful to have lasted, essentially in its core structure unchanged, from the very beginning of telephony, even dating back into the telegraph, all through to today. There must be something very strong at the core of it. However, until the last couple of years, telephony has never been an easily programmable feature that could be included and incorporated into software products. There is a fundamental shift in the enabling technology that's going on that will have a ripple effect into business models that we see.

Lee: A number of issues have come up now. When you speak about the 3GPP and GSMA and we have a committee to decide on user needs, do you feel that is likely to continue, or at least continue to the extent that has existed; user needs being decided by - I want to call it political committee?

Martin: I think you have to separate out two or three things that those organizations do or achieve in its activities. I think one is providing consistency of meaning to these communications tools or products. We know what a free phone number does. We know that it tends to begin with "800" somewhere. If I send you a text message, I have a very clear idea as to what's going to happen at your end, what the experience is like. Providing a common social semantics to the services; there's some value in that. It won't disappear quickly, but you're finding that increasingly, people can easily find other services like Facebook and they can easily understand what giving someone a poke, or sending a message onto the Facebook wall means. That purpose is a challenge.

The other part is providing interconnectedness. The telco products that make lots of money today, voice and SMS, are interconnected ones. That interconnectedness is something that continues to be a challenge in the Internet sphere. Basic interconnectedness of say instant messaging networks has been a long-standing problem. From the user's perspective, they want to have something that just works and they don't want to have to worry about "Is the problem I'm having sending this message one that comes from my network provider, or the application provider, or the device provider, or some other plug-in provider, or AppStore member." They just want the stuff that works. Another way of looking at it is the users are lazy and we're all users. Providing the bits of glue, whether they're in the NSS stack or the BSS stack that helps all this stuff hang together, remains a valued and valid thing for these organizations to do. They're not dinosaurs who have passed era; I think their purpose will mutate and they'll be less and less involved in the user experience, the presentation layer stuff; however, there still will be a role for these organizations in defining the glue that holds together all the stuff that the application layers do on top.

Lee: That's an interesting perspective. Again, we'll need to wait two, three, five years to see.

Martin: Look what's happening with Apple, where they have a very vertically integrated end-to-end control business model, which gives a highly consistent user experience for their users. It's proving to be very successful. The problem of course is there is only one Apple, and if you don't like the iPhone, then if you really want to have a phone with a keyboard, you can't participate in the Apple ecosystem. How does that interconnectedness and the ability to have many more possibilities of drawing together AppStore, phones, different services, links into the existing voicemail, telephony, whatever, if it's not to have lots of combinations of those things that work together and have a lot more innovation? Then that's what these organizations are good at doing, helping define those interfaces.

Lee: That's an optimistic view that you've cast out. I just want to make sure I definitely got out of you, but did you fully elaborate the best you could on what's driving the change in the business model for telephony?

Martin: I think there are a number of things that drive it. One is technology. Previously, telephony required understanding relatively obscure telecom protocols like SS7, which were, as you know Lee, you had to go on an expensive training course to learn. It's not something you just go down and get the nearest O'Reilly book on how to build a telecoms network. Increasingly, telephony and telecom's capabilities get wrappered up in very standard IT protocols and become easily consumable web services, for example.

The other big changes I see, one of which is that the users have clearly moved on. The user behavior is increasingly embedded into social applications and that threatens the contact book and the dialer of every handset as a means of controlling the user and the business model. As telephony gets embedded into other applications, then those applications have increasing control over which bearer will the call go over and which business model will support that call.

I also think that's kind of the consumer behavior moving on to social applications. The other part is the enterprise user; we're still sort of living in the tyranny of email and the silo'd, separate communications apps. I think Unified Comms, in some ways, is still exacerbating the problem, rather than relieving it. I still don't have a communication system that helps to manage my productivity and my time. Who should I be talking to and of all the people who would like to talk to me, where is the Unified Comms that lets people register they would like to talk to me, say something they would like to talk to me about, and let me schedule that or automatically schedule that in my calendar for me, and help to organize my life? Where can I tag those conversations, archive them, integrate them with my to-do list and projects, my email? It isn't there. The idea of the PBX and the separate thing called telephony that's different from Unified Comm and social networking is they're all going to be managed together in something new.

That will also drive business model change, so I think maybe the last aspect driving business model change is the sheer inefficiency of interaction between consumer users and enterprises is that so many calls I have to contact centers keep asking me over, and over again "Please dictate your name, your address, your mobile phone number, your email address." There is basic information that is so easily automated away with new tools and protocols. It's hard to carry that data over SS7. You'd have to adapt the existing systems. It's increasingly easy to do it over other protocols and tools. I think that those things taken together will drive the new business models and it will take a while for them to embed themselves. Business model change doesn't generally happen fast, but those who manage to dominate the high ground of new business models early on tend to be very hard to displace, so it's like once Windows got established om the PC, it's dominate for twenty or thirty years.

Lee: There are a number of points I would love to jump in on, but I would like to jump back a little for now. You had said and correct me if I'm wrong, that VoIP, Voice over IP only enhances the old business model. Did I pick you up correctly when you said that, because it's very much how it sounded to me; that VoIP is not a revolution. It was as you put it; only enhancing that old minute model in some fashion, optimizing it is a way you seemed to put it across.

Martin: Yes, now Voice over IP is being used as a way of converging networks, reducing costs, and employing slightly more commodity IT networks. Because of the pricing elasticity, as we drop in price of telephone calls, the number of calls has gone up and the minutes have gone up. It's helped to drive increased value in these network.s However, if you look at the applications that are out there, they're still either trying to collect termination fees or origination fees and even Skype's business model is based on interconnect with the PSTN, which is its business model.

What it doesn't address and the crisis that the users increasingly have is how can I better use my time for the communication that I actually want to do, particularly in the context of interaction with companies or interaction with work colleagues? If you're in a consumer-to- consumer space, then let's just chat and gossip away. There isn't necessarily a revolution in the business model around that, but I think the more consumer-to-business space there definitely is one, and yes, having cheap minutes or free minutes is a good start, but the cost of the call center agent per minute is the problem now, not the cost of the telephone call. How do we use those call center agents to do things that are valuable and that only humans can do, which isn't dictating names and addresses?

Lee: And do you feel or should I use the word think, that - I won't give my opinion here - that there is a demand for what's being called high definition voice? Do you feel high definition voice is going to inject new cash into the system in any way? Is it a revolution? Is it bringing new money into the system, or likely to bring in fresh money?

Martin: I think the answer is yes, not a huge amount, but I think there's only two things that users are clearly willing to pay for as a value added service. One of which is the improved sense of the other person being there with you, which HD voice brings. People have always been prepared to pay for that enhanced richness in media. There is a great paper by an economist at the FCC, called Douglas Galbi called "Presence in Communication". It's a story of the history of communication from the parchment onwards. There is a clear theme; the sense of the other person being there with you over time and space is something that's fundamental in the human need and desire. HD voice does that for you.

You experience the first ever Skype call where the audio's really good; it's like a goodness, it's like a real positive surprise that telephony is capable of that. The other thing I think people are willing to pay for is crossing over different media, so it's voicemail to email, or I have Ribbit for mobile on my work mobile, so I get my voicemails as little text SMS summaries. That integration of different media and bridging their different strengths is something that people are willing to pay for.

In the mass market, there are lots of other niche features that people find extremely compelling; if you're a real estate agent or a dentist or something that's vertical, so that you need a program for telephony API and platform. In terms of mass market, I think the only two big mass market things out there that will make money are HD voice and what I call cross medium integration.

Lee: That mass market - this might sound like an outlandish question, do you feel that the mass market is likely to continue being a mass market in the long, long term, or will it all become niches?

Martin: The value of interconnectedness will always be high. Having some kind of lowest common denominator of how we communicate is likely to persist for a very long time, and the patterns of interaction that the existing mobile and landline network have is likely to persist for a very long time. We've seen little changes that people almost hardly notice, so like on fixed line there's a dial tone and mobile there's not, and that results in very subtly different, slightly different behavior. There is no busy tone on a mobile phone.

Lee: What I wanted to get at is the mass market was always what you end up before, in telecoms, in order to make money.

Martin: It will fragment, it would be this slightly paradoxical way of each of these little fragments needs its own communication needs satisfied, and they still need to communicate with all the other people. I think there will be some - maybe ten years out from now, I can imagine there being half a dozen global communications platforms that aggregate together existing - interconnect with existing landline, mobile, and Skype and Facebook and a whole bunch of other SIP termination points and your talking picture frame and your TV, and, and.... So, there'll be these new platforms that are the mass networks, but they aren't necessarily branded and sold directly to the customer and they don't necessarily correspond either to today's telcos, which have the physical structure underneath.

Yes, the user experience will fragment. Yes, we'll be communicating from a huge range of devices and applications. Yes, there will be some extremely successful new ones that, maybe in the context, are "mass market," so just like iPods today are dominant in the mp3 player segment, there will be things that are dominant in their segment and will be regarded as mass market and will have voice capability embedded in them. But, there will be no one, dominant communications media platform. I think the thing in the middle is these aggregators and how they help make it easy to integrate all kinds of end points and product protocols into any application device; that's where the business is.

Lee: I didn't want to jump there just yet, but I like the way that the case you're slowly building up here, I think you're going to end up saying that Ribbit's in the perfect position to sit there in the middle of where there's this value exchange.

Martin: Clearly, I wouldn't have joined BT if I didn't think Ribbit was a good idea. Yes, I think the greatest value will come from being able to offer what one might call the best network, but that network isn't the cell towers and the fiber; it's the ability to connect to, interact with, and transact with the greatest possible number of endpoints, at low cost, and great ease of integration. It's a different way of competing compared to the past, where the network was a physical asset. Increasingly, the network is a virtual asset and sort of relationships you have. Think back to our original discussion about business models, it's about all those suppliers and partners and how you will be able to integrate with those that's now the differentiator, not owning some piece of physical infrastructure asset.

Lee: I'm glad I wasn't wrong and it wasn't my imagination; If you don't mind me just jumping back a little again, we spoke about the mass market and we spoke about possible things you can do to cause incremental value changes, possibly, like HD communications or media conversion like voice to text, like Ribbit does. But surely, the greatest value going forward is in the long tail of communications, i.e. away from the mass market. You'd mentioned estate agents [realtors], so surely the money is in the long tail. It's in servicing niches. It's in building applications, communication applications, which are tailored to specifics, be it teenagers in love or people who sell cars or doctors. Don't you agree that the money, long term, is in the long tail?

Martin: Yes and each of those applications will generate a whole bunch of systems integration revenues and revenues [0:29:14?] vertical, and still people using those applications need to communicate with everyone else. Real estate agents need to communicate with people buying houses, and people buying houses aren't going to go out and buy a special application to help them communicate during their house buying period or program. The opportunity that's out there is for the person who offers to "the network," to offer the features and capabilities that integrate with the realtor application, that makes that application save time for realtors, which can be simple stuff like if a realtor wants to leave a message for one of his customers, he doesn't really want to have a long social chat with that customer, or that customer might be roaming abroad and he doesn't want to call that customer while it's 3:00 in the morning. Why can't they just record a voice message, in fact, why can't they even just deposit a pre-recorded voice message that maybe synthetically injects the right text, spoken or voice, into the message to the user can pick it up on a voice medium and respond, assuming voice is the way to communicate for that? I think that it's the middlemen in the platform that going to enable all these applications we build that will be the powerful players in this, the Windows of voice.

Just like Windows made it much less relevant as to which PC you need to have bought, they've abstracted away all different kinds of hardware; these communications platforms will abstract away all different underlying networks, protocols, and differences in the end points, and that you intelligently interact with them appropriately. Whether I'm sending you and SMS or a Facebook poke, or an instant message, or whatever, it will help you manage those communications and the relevant business processes.

Lee: Okay, so do you see the mass market being as relevant going forward, or less relevant, and do you see more of a rise of fulfilling niches? What I'm trying to push at is the old telephony was very vanilla. It served everybody the same. It didn't depend what you were trying to do with it, and as you said at the beginning, it made the money from minutes. Would you like to say anything on the widgetization of telephony?

Martin: I think there will be new mass markets, but they'll be within the categories into which voice and telephony and other communications are embedded. Whether it's gaming consoles, or medical imaging machines, or whatever it might be, healthcare monitoring, [0:32:32?] they'll be successful and there'll be dominant players within those categories, which will be "mass markets." The number of underlying platforms that power these, I think, will be relatively small.

Today, there are huge numbers of suppliers that can sell you interconnect with minute-based voice. But once you start to go beyond that and start thinking of a multi-application, multi-modal communications world, where you want to interact with customers via SMS, email, instant messaging, Facebook, ten different social networking applications, and the emerging end points like IPTV, set top boxes, and embedded applications in cars, for example; once you start to get that huge range of end points, then that will drive just a few major players to control the platforms. In a sense, it's the invisible engine in the middle, the software platform -

Lee: But it's interesting that you're saying the software platform because when you talk about these services, traditionally that would have been telecom equipment and vendors, your Siemens, your Logica, Alcatel and so on. They would design, approximately by committee, standards in order to sit in the middle to build multimedia conferencing units etc. The way you're talking, this all has become software platforms?

Martin: Yes, they'll still operate across the stack, Cisco, WebEX and Cisco telepresence at the top of the stack, and they're still doing stuff down at the bottom end of the protocol range as well. There's nothing stopping all the players from participating at all levels, but I think the greatest rewards will be the specialization of the one thing really well.

The patterns of how these companies and the industry associations work will shift. It won't be - without trying to open up the range of possibilities for innovators rather than necessarily closing them down, rather than defining this is what an IP video telephony system should do and here's what a busy signal should mean and this is what happens when you try and call someone. Make this IP video thing look like telephony but with a video, then instead it's about how do you just enable the basic building blocks that say, "Hey, maybe I just want to be able to see what's going on in my hallway twenty-four hours a day when I'm away on holiday, see my dog who's in the kennels" for a pet owner who goes away on holiday for two weeks, and how that application works might be very different to ring a dog. [laughs] A dog can't press the answer button, so the applications need to work in a very different way and be transported in a different way and priced in a different way.

Probably use connectivity rather than video being seen as this super important, real time thing that has to be the highest quality possible in the network, actually dog monitoring might be the opposite. Discovering, scavaging capacity that was left on this network at the lowest possible price, probably free, and if I lose contact with my dog for two minutes, it really doesn't matter. Allowing these new ranges of possibilities, technically and economically, that's a challenge.

Lee: It's interesting; it sounds like Ribbit could enable the future of pet watching.

Martin: Frog watching, of course being an amphibious company. [laughter]

Lee: I just want to have you stress and earlier point if possible. The unified communications, some people will interpret what you said in some fashion as meaning "unified" and so to resolve any ambiguity, can you stress in your own words how the direction of unified communications is different to that which you've been speaking?

Martin: I see Unified comms as trying to bring together previously disparate communication medium experiences into one "seamless" experience. It hasn't taken off as fast as it originally expected. You have to ask yourself why? It could be that there's value in keeping these different things separate, just like you have a personal mobile phone and a business mobile phone at weekends, and only one of those is with me. I don't have to worry about setting up a web page to say, "I'm working today. I'm not working today." I just pick up the right phone. It's really easy.

It's really about creating combinatorial experiences that are appropriate to that moment, that context, that application rather than being an application called "Unified Comms.", I'm now in my word processor, and I'm now in my unified comms application, and I'm now in my browser. These are all separate things. Actually, it's how does that particular web page where I'm trying to visit my mortgage earlier today, why can't I have the widget in that mortgage page that says, "Contact customer care." That widget doesn't know anything about me today, and in the future it could be that widget is one that knows this is my mobile phone. This is my landline phone. I'm at home, you can call my landline, or actually I'm on Skype at the moment, you can call me on Skype. I'm abroad and I'd rather have free Skype calling in my hotel room than $2 a minute calling on my mobile phone. I think the personalization aspect and the ability to integrate communications is maybe more of a compelling story than the ability to "unify" them in to a single user experience.

Lee: Thanks for that clarification. Now, when you spoke earlier about UC, you had said it cannot be separated from productivity and time. If telephony cannot be separated from productivity and time and as you said, a lot of UC clients can unenhanced - what's the word for unenhance? I've got a mental block here - unenhanced; I like that word. Let's keep it there - unenhanced your productivity and time, let's take things a step forward. Ultimately when you're talking about productivity and time, productivity is more of a business term. But we also want productivity in our home lives. The distinction between home life and business life is anyways blurring, as more people work at home etc. What you're ultimately speaking about, when you say productivity, is fulfilling wants, needs, and desires.

So really, what you're saying is that telephony cannot be separated from fulfilling wants, needs, and desires? Would I be correct in going that far; fulfillment of human intentions, so the future of telecoms, therefore, is fulfilling intentions, human intentions, not dog intentions?

Martin: So I'll tell you where my thought process comes from. I use my personal life, and people know, I have a plug-in called GTDInbox, which helps me use the "getting things done" methodology inside Gmail. I can just tag Gmail with the context it relates to in a project and whether it's something that I should do someday, whether I need to do it next action, until it's completed. I can just click on different contacts and different projects to see what I'm supposed to be doing.

It makes it easy to integrate these two worlds. If someone sends me a voicemail message, I can't today tag that. I can't do anything with it. It's not a digital object that I can manipulate in any way, whatsoever. I'm just utterly captured by the telco's voicemail system and it throws itaway after twenty-one days. It's like the exact opposite of Gmail. If I need to get back and actually there was something really useful, a reference number in that voicemail that got sent eight months ago, tough. It's gone. It's an empty productivity tool.

There is no way of me integrating my voicemail messages into my personal work flow. What I do see it being; of course the role of unified comm's is being an interface into my world of personal productivity. It isn't a communications application, unified comms, it's a work space in which I can work and I can integrate the digital objects like text files I'm working on and blog posts, and bits of additional media, and communicate and share them. What I see missing over, and over again is that work flow, that personal work flow element. Yes, there's lots of stuff about sharing media, but almost every time I've tried to use any of these tools, they don't easily adapt to my way of managing my work flow. They try to embed somebody else's idea of doing it. I see mostly unified comm's apps as being too tightly coupled. I've tried to use the sharing stuff inside, like the Microsoft Office Suite, and it's good. It's great if you buy into the complete Microsoft vision, but I've got Google mail and GTD Inbox. Please work with my way of doing things and that, today, doesn't happen.

Lee: I learned something new about you today, Martin. I didn't know you were so deeply into the cult of David Allen and reading 43Folders.com daily. Again, nice to learn something new [laughs].

It does pose a question that there will be an interesting play between the things we use to communicate in operating systems, because today an Apple Mac comes with iCalendar and contacts and often, it's frustrating that your communications don't tie into that very well. If you get an email on the Mac, yes, it can auto populate certain things in iCal by stripping out dates and times, but the integration is less than elementary.

The future is quite interesting in terms of how the OS will develop as well. I know you've got a cold and I can hear you sounding tired. I feel racked with guilt so let's just string this more towards British Telecom and their platform Ribbit. You had earlier said that more and more third parties, i.e. non-telcom operators will disintermediate the operator by "stealing" the dialer, by stealing the contact book, i.e. the way people are using Facebook, i.e. potentially people can use telephony within Facebook. That old solid interface that telcos have, the telephone dialer and also the phone contact book, will be taken out of their control. Once that interface is taken out of the control of an operator, then as you said earlier, people can decide or applications can decide which bearers to use. I assume if we turn this up again, asking you about how BT's reacting, I assume they want to stop the dialer and contact book being taken out of their control?

Martin: Different parts of each telco have different sets of interest essentially. There is a retail answer, and the wholesale answer is yes at the retail side it's very profitable to control the user. It takes a Verizon with their FIOS offering, they lay a fiber to your home. They control the access. They give you a set top box you can plug in the set top box. And as a consequence they can charge you $7 a month to be able to access your home media and your PC on your set top box. The control of the fiber extends all the way back into the home. They can ding you for watching your own stuff in kit that you've bought, which is a great business model if you can manage it.

Who wouldn't want to extend those revenue streams on behalf of the shareholders? At the same time, there's this other world going up of fragmented communications and the consumers are increasingly being tilted toward using third party applications. The history from the IT industry is it's the platform makers who become the dominant players in this ecosystem. BT has clearly bought into a very highly developed and successful platform with Ribbit and it's acquired over 10,000 developers in a very short period of time, and lets you build communications applications without having to worry about the weird nuances of how thirty different people have interpreted the SIP protocol.

Lee: I'd asked about dialers and contact books. Maybe it was better to back up even a little further and say hey, what might the future business model look like before I ask about BT and Ribbit? Can you shed any light on future business models and then go on to talking about BT and Ribbit, and then we'll go on to talking about BT and Ribbit, and then we'll wrap up for the sake of you needing your next Lemsip.

Martin: I think there's a Googilization of voice going on and it's gotten very literal with things like Google Voice where the flip is from trying to charge the end user for relatively simple software applications to instead monetizing the relationship with the user via some third-party. Google do it because they want to advertise to you, so the business process there is marketing.

The business processes that still retain most of the inefficiency are customer care, billing and payments, and identity-based services. That's where the telco is strong, so I think the business model of the future will increasingly see enterprises being charged for accessing what the telco knows about you and what they can do to help interact with you more efficiently and effectively.

Whether it's the telco that actually sells that capability straight to the enterprise, I think there will be middlemen who make sure that enterprise doesn't have to have a relationships with thirty different telcos to cover off their user base. There is yet to be a "Windows" of telephony that acts as that platform, that embeds that rich communication capability, manages those relationships with all the telcos and the customers and deals with all the privacy and regulatory issues that span different jurisdictions that the enterprise doesn't want to have to think about. I think we'll see this Googlization process of going from a single-sided market towards the multi-sided market. The opportunity for the telcos is to build on is the termination fee regime that it is today. Today, they already have a couple of forms of this market structure. One is termination fees. You get to charge the inbound caller, not the end user customer that you already have. Another example is free phone [toll free], it flips the model on its head, you get to charge the other side of the communication. Those are probably the templates for the future, rather than trying to charge the user directly, to having enhanced voicemail or privacy or other features.

Lee: That's very interesting, the two templates that you gave there. I think it would be hard to disagree with that, and it reminds me of the next month's event; one of the Platinum sponsors, VoiceSage. When you said "interact more efficiently than users" I think you know enough about VoiceSage to comment whether or not that's the type of business you also mean.

Martin: Yes, so VoiceSage offer the Software as a Service (SaaS) application to, for example, make it very easy to send out automated reminders to all their customers who haven't paid their bill this month, i.e. please send us some money. The limitation that VoiceSage or any other application provider is presented with is interface the telco's expose today. You can send a bulk SMS, you can send a phone call, but if you want to do anything different beyond that, even if the underlying networks and system supports it, tough; those capabilities aren't exposed. It's simple stuff like I want to contact these users but not if they're roaming. I can't do it. I want to expire this voicemail message because the users just finished paying their bill on the website. I can't do it. What happens as a result is the user calls in the call center and says, "You sent me this voicemail saying pay my bill but I've already paid my bill." Well, the voicemail message was sent to you yesterday. But you've already wasted $10 on the phone telling the customer that, whereas you really want to just expire the voicemail.

Lee: Exactly, so VoiceSage fits into that picture very nicely and if British Telecom go where you're suggesting BT go, then British Telecom is likely to support other businesses like VoiceSage in doing what they do.

Martin: Yeah, that's where I think the future revenues are; the next network is a software-defined network, interconnected with huge numbers of endpoints and makes it easy for businesses to interact with their customers, or other businesses.

Lee: Interesting stuff and I'm ill. My throat's getting sore, and you're ill. I know you're energy is lagging; I can hear it. What we'll do is finish off with the easy question [laughs], which is how is British Telecom responding to the changed landscape, to templates that you spoke of etc., and how does their acquisition of Ribbit some time ago, as a platform for developers, fit into that in response of British Telecom in the long term?

Martin: I can't share BT's trade secrets, but it's obvious that Ribbit aims to democratize access to telecom's protocols in communication to the mass space of IT developers rather than the small base of telecom developers. I joined BT because BT has a unique combination of capabilities as well as the motivation to deploy them. Global services give BT possibly the strongest of relationships with enterprises. A strong wholesale division gives you relationships with other telcos. Existent retail base lets you boot strap new businesses by starting off with your own end customers so the experiments with how to use new enablers like interactive SMS to engage our customers more efficiently and effectively. An integrated IT and network division in BT Innovate and Design to actually be able to execute on building these solutions, rather than being stuck in separate silos and IT and networks and not talking to each other.

Lee: It's going to be very interesting taking your projections, beliefs if I may call them that, or knowledge, and hopefully for some of them, Ribbit and general sentiment at British Telecom and seeing how it goes over the coming years. I'm sure that over time we're going to hopefully see a lot of the leading innovation in terms of business model coming from British Telecom and I'm sure we'll expect your leading thought on those topics. Once again, for the third time running, you're keynoting at the Emerging Communications conference, which takes place the end of next month, for the first time in Europe. I really appreciate you keynoting. Can you just say the topic that you're keynoting on, and we'll finish off there.

Martin: Many of the same things as this conversation today, but in a more succinct form. Going beyond minutes what is the business model, and describing it as moments because the critical moment is when you try and bring two people together. How do you set up that communications channel to bring the right people together, at the right time, in the right way, and solve some business process problems for somebody who's willing to pay for it and put new money into the communications world? I'll be reviewing what the opportunity might look like, who the players might be, what kind of business models we might see, what their goals are and how I see maybe this world unfolding over the next five to ten years, which may be a very different kind of communications landscape than the one we've seen in the last ten or fifteen years.

Lee: Okay Martin, I will let you get back to your Kleenex, your Lemsip, and I'll go drink tea with honey. Once again, I really feel that the time, an hour or so we spent chatting together, was very beneficial to get an insight into where you see the entire industry going. Once again, I want to thank you from the eComm community for coming and supporting such an event and meeting with people.

Martin: Thank you Lee. I look forward to being there next month.

Lee: Thank you.