Martin: Thank you, Lee, for inviting me, and thank you all for coming here to this very special community of eComm. What I would like to do this morning is to present to you some ideas about the future of communications and future business models. These ideas are very much my own; they're not British Telecom's corporate position. I'm still working on that. If you could put up my presentation, then the thesis I have this morning is a very simple one, which is that the era of minute-based telephony is going; however, there is a huge opportunity to replace it with something new. I'm calling that something new "moments" rather than minutes. These moments will be when a global communications platform helps to make business processes and communications between enterprises and their customers more efficient and more effective.
Goodbye minutes. Back in the 1980's, BT was advertising telephony, front and center of its offering. The message was that there was huge social value in telephony. It was no longer a luxury product that was restricted to business use or essential needs; however, a mere seven years later, the advertising had changed. Production values had gone up. The adverts are much more expensive. There is more celebrity endorsement, but the truth was the product had become one promoted on price, and was essentially a dull commodity.
Roll forward another decade, and telephony disappeared. All of BT's adverts for the consumer space are based on broadband and media. It's the same story, very much in the business space. It isn't just fixed-line operators who have this dilemma. The mobile party is over too. Two charts here, they show you the revenue for the top four operators in the U.K. and it's a similar story for other developed markets. As you can see, the revenue for both voice and messaging is peaking and it's starting to decline.
It's not just price competition. Users are starting to migrate to other tools and services. For example, kids are starting to use BlackBerry Messenger because it avoids SMS charges. However, there is a natural lifecycle to any industry involving technology. Just as wireless communications came along, and cellular technology, and spawned the mobile phone; every kind of technology or products that emerges is put to uses that were never anticipated by its originators. Those new uses spawn new needs, which in turn spawn opportunities for new technologies and products and business models. That, in a sense, is the heart of the message that was put to you this morning; these new needs create a huge opportunity to replace the dying minute model.
What could those new needs actually involve? I'm going to pick as a case study a core telecom's product, which is voicemail. The example I want to share with you is a real voicemail that I personally received from the U.K. tax man. It was about two days after I filed my tax return. I'd done my tax return and it said I owe them some money. Presumably they're calling up to say, "Please pay us some money." I think it's typical of the millions of interactions that occur every day between enterprises and their customers, and very clearly highlights some of the problems involved. I'm going to break for the audio/visual gods and play the first half of the voicemail. I want you to listen very carefully, think hard about what you're really hearing in this voicemail. Think beyond the immediate words. [Audio] "First saved message, from September 29th, at 9:39 a.m." "Good morning, this is a message from [04:43:15] Customs, for Mr. M.R. Geddes. If you could return my call on telephone number ..."
Martin: Okay that's enough. It's boring enough. What did we really hear there? The first thing we heard was a container for the message, which announced the message. It gave us one piece of meta data which is the time of the message. It didn't in any way relate to the specific content of the message. It was completely dumb. The second thing we heard was the medium of the message, which was relatively poor quality audio. You could hear that transition from the better quality audio of the container to the very poor quality audio of the actual message itself. It's hard to understand. Then it was the message content, which was a sequence of business objects which have been encoded in a one-way manner into human voice. Finally, we heard the container again, and the container said, "Press hash to return the call," but was also dumb and in no way related to the actual content of the message. Let's call them back. [Audio] "This is a test message. The service on this number is currently inactive."
Martin: As a special bonus for today only, they'd even given me the wrong number. I think this example highlights very powerfully some of the inadequacies of voicemail as a channel for businesses to communicate with their customers. The first problem is it's ineffective. It relies on me as a customer, writing down all those details, the numbers called back on, the reference number, being in a context in which to do that when I receive the message, remembering to act on that and actually then going to act on it properly.
Also from the perspective of the enterprise, which in this case is a tax man, it's given me a poor customer experience. Before I've even arrived into their call center, I'm already not a happy customer because I've had to go to the poor user interface of the voicemail system.
The second problem is it's highly inefficient. They've had to pay somebody for that one-minute voicemail, to sit there for one minute and hand craft - it's like the hand weaving of the 21st Century - this message. Even if I call them back, they have to then pay someone to re-identify me, and re-authenticate me, which is a process that is both expensive and can go wrong.
Finally, it's an insecure process. You might note; there was no reason given to me in the message for why I should call them. That, presumably, is because the tax man can't know for certain that it's really me that's going to receive the message. In return, I can't really for sure know it's them. That's not a minor problem because even at BT we have a problem with people phoning up BT customers, pretending to be BT, and trying to defraud them in various ways. For the telco, it's made about 7 euro cents worth of termination fee for that one message, and that's a declining figure that's being regulated downwards.
It isn't just telecom's products that have this problem of being inefficient and ineffective at communicating between enterprises and customers. For a moment, forget about BT being a telco. BT is a business like any other business that needs to communicate with its customers. We've been experimenting with new channels to reach our customers, and in particular; we've been using social media to try to discover customers who are talking about BT products and services, or maybe having issues with those products, and to proactively reach out to them.
We have had a major trial and we've had over 17,000 interactions with our customers, through Twitter for example. It's proving to be a very effective channel to reach customers. Of our enterprise customers we've talked to, over 50% subsequently go on to spontaneously make a positive comment about BT in a public social media space, so it shows a very high rate of customer satisfaction with this channel. Whilst we've received tremendous support from social media players in running these experiments, we have found limitations in this channel as a customer support tool.
Firstly, around support and accountability is we're still using fundamentally a consumer product with consumer-termed conditions. If we started to have to support millions of our customers, those terms and conditions may not be appropriate for that use. Secondly, there are various systems limitations that affect our use of the product. 140 characters may be appropriate for consumer-to-consumer chatter, but if we want to send the customer, "Here are the instructions to fix your problem," it's a bit hard to do that in 140 characters. We may need richer interactions. Things like the ratio limits on followers to following may be inappropriate for servicing millions of customers.
Next is the security private data. Telcos are entrusted with some of your most personal data, who you talk to. We need to know, for example, that your account number could never become searchable in an index. The limitations of the system constrain the types of conversations that we can have with our customers.
Fourthly, is the timeliness of the data. We're able to poll for new mentions of BT and its products and services, and analyze that contextual data about every fifteen minutes. In that fifteen-minute window, the customer could easily have called into the call center and we could end up double handling the call, which not only increases cost, but then further creates customer dissatisfaction.
So, what's the real need? It's that communication service providers, whether they're telcos or online Web 2.0 type players need to return back to fundamentals. Fundamentally they're to make communications simple and easy; however in doing this, they have to confront two inescapable realities. The first one is that the public increasingly expects the actual services themselves to be free. They want the delivery of those services, the distribution of them, the voice minutes, the MB to also be free but they aren't quite getting it yet. There are products like Google Voice and they're bringing it. Even when they pay, and they are willing to pay sometimes for quality and convenience, they should increasingly feel like free, as part of a standard priced bundle with no extra charges.
The second inescapable truth for enterprises is that minutes waste time, and therefore money. There is a fundamental disconnect between the product that's being sold to enterprises and the revenue model around it, and what they value. Time on the phone is generally undesirable because it costs labor, rather than desirable. The challenge that operators have in replacing the lost minutes is to find new revenue streams. The revenue streams are limited either to the consumers or the enterprises on their own, face limitations. On the consumer side, media as a value chain is very fragmented and undergoing its own world of turmoil. On the enterprise side, cloud computing and unified communications are more tightly associated with IT enterprise players than with telcos.
I believe the real opportunity lies in the space between these two. Enterprises have always communicated with their customers through a variety of different channels. Once upon a time, your customers had to come to your physical premises. Communications over a distance was so expensive using horse and hand that only states and the most enormous enterprises could afford it. The postal system, brought on top of the railroads, democratized communication. The telegraph and telephone brought communication at the speed of light to everybody. Those media in turn spawned others, like couriers or SMS.
However, there is still a very limited range to choose from, and we're still adding to that range with products like IPTV. However, the Internet has fundamentally changed things. The Internet is a kind of meta medium that can spawn new media every day. That creates both a problem and an opportunity. The problem is an increasing complexity in how to deal with customers. The opportunity is a greater range of means of interacting with those customers. Therefore, the challenge to anyone who is trying to sell a communications service faces is to build a rich interface to those customers.
Commercial conversations will migrate to the media or channels that offer the best combination of reach efficiency and effectiveness. The consumers will be attracted to channels that offer low price, and they'll pay in terms of their privacy and their attention. The enterprises will be attracted to channels that give them a breadth of customers, the number of people it can reach, as well as the depth in terms of the types of interactions they can have.
To reinvent the telecoms business, there are three things that have to happen. The first one is that we have Telcos have to use their existing communication channels more effectively. How might they do this? The first is the prerequisite; they have to keep the customers on their existing channels, which is by making sure it's a fixed price bundle and not overcharging, and reducing termination fees. If you think back to the voicemail example I was talking about earlier, there are tools out there already that help to try and fix this. You might hear, later in the conference, about Phweet, as an example, which would let you send a text message to the user with a subject, why do they want to talk to me, and a hyperlink embedded. If I click on the hyperlink, it will set up a phone call and I will be put through to the relevant person.
However, there is a revenue option that's being missed here for telcos. This involves one bulk SMS and two originated phone calls being bridged together. These three things could be packaged together as a bundle, and sold together to solve the customer contact interaction problem, and promoted in price differently. Currently they're not.
The second thing that has to happen is operators of communication services have to start to enhance the existing channels to support more efficient and effective communication with customers. How? Let's think about that voicemail example I gave you earlier. Here are five ways in which voicemail could be reinvented to make communication with enterprises and their customers more effective.
Firstly, simple APIs: insert, update, delete. A common scenario is something like this. The tax man calls me to leave me a voicemail saying, "Please pay your taxes." I didn't listen to that voicemail immediately. I know I have to pay my taxes. I've just submitted my tax return. I go back to the website, and pay my taxes. I then pick up the voicemail, and it tells me, "Dear Mr. Geddes, you haven't paid your taxes." I call their call center and make an unnecessary call to their call center, and it's wasted another 10 Euros cost to them. If they could have simply expired the voice message when I went to the website and paid my taxes, then that was a chargeable moment that would have improved that business process; nothing to do with minutes.
The second example is if I can't understand what they're saying, the business process doesn't go forward. If the customer experience is poor, it doesn't go forward. Why can't they record the voice message for me in high-definition audio, locally, move it around as a file as just a bag of bytes, and say if I've got visual voicemail, I can play it back in high definition? There are no dropouts in the cellular system in the middle. That's a chargeable event.
Thirdly, personalize the interaction. For example, if I am on a business trip to China and it's 3:00 in the morning. If you call me to remind me to pay a bill, I will not be happy. If you try to call me to make a sale, I will be even more unhappy. However, if I'm in the U.K. and it's good timing; great. If I'm a prepaid user, sending me a text message with a hyperlink embedded may make me unhappy because there are high data charges. If I'm an iPhone user on unlimited data, it's fine.
Fourth, make the container smart. That can be done in various ways, for example, it could be the container lets you put a voice XML document rather than just a bag of audio bytes. I can have an IVR right there inside the voice message, and I can complete voice processes inside the voice message; no calling back to a call center. Or, it could simply be press hash to have the voicemail system set up a call, or call you back when their call center reopens.
Lastly, make communications multi-modal. For example, BT with Ribbit offers voice-to-text function. Start bundling that and selling that with the termination fee to the call center.
That was voicemail. What about social media? Well what does Twitter for business look like? Two things have to be done. Firstly, an enterprise customer experience, that means service level agreements and enterprise support. Companies like BT, thinking of BT as a generic enterprise, would be willing to pay for that because it is an efficient channel.
Secondly, create the features enterprise as required, so yes, multimedia messaging enriches the level of communication we can have with the customers. Federated identity, if you recycle a Twitter account and it's assigned to someone different, we need to know. All our employees using a single Twitter ID, how can we federate our employee IDs with the Twitter IDs? Security, authorization features, we need to know that certain types of data that we send to customers maybe it doesn't get re-tweeted. And, make it real time. It's all about "now." Taking the lag out of the business process is where the value is.
The third thing to do is to create whole new channels for interacting with customers. The example I'd like to give is everybody in this room has a cell phone either in their pocket or in their bag. It has a call log: missed calls, dialed calls, received calls. I believe, maybe five years from now, there will be a huge battle over placing on the idle screen people who want to talk to you and why, and who gets on there, and in which order they're presented, and how it's presented will be a huge business. If telcos don't do it, somebody else will.
For example, Google in Google Mail has a new feature of sponsored messages where a little icon appears next to the mail and you can roll your mouse over, and you can interact with that enterprise without opening the email, let alone going to their website. It's talking away the friction.
BT is also in this game. We're trying to enhance the range of communication channels to customers, so we're the preferred voice engine for Google Wave and that's creating a richer set of end points and a richer set of interactions that enterprises can have with their customers. What's interesting is it also opens up potentially, in the future, upsell for future transaction which in this case is an advert.
That's really the hope to how we need to think about fundamentally reimagining the offering. Businesses everywhere engage in six common business processes that fundamentally add no value underlying goods or service, and these business processes often find a bottleneck in the interface to the customer. By intelligently reimagining their products to solve those interaction problems, there is a huge opportunity.
For example, every day in call centers around the world, call center operators are paid to transcribe names, addresses, credit card numbers of people for whom the telco they're placing the call from already knows. Trucks deliver parcels to homes where the telco knows you're already out. Utilities send out bill payment reminders by post to people for whom the telco already knows the email address, the Twitter ID, the mobile phone number associated with that home.
To solve those problems, there has to be a platform that has three functions: the ability to connect the enterprise to its customer to make the bits flow, to interact with that customer in some way, and then to be able to transact the business process. I'll give you some examples.
Here is what the revenue model might look like for these moments. Let's imagine we're delivering a high-definition audio voice message into a voicemail system. The conventional wisdom for conventional HD audio tries to charge the customer for this improved feature. The unconventional wisdom is charge the enterprise for leaving a high-definition audio voicemail.
Interact - what if that voicemail avoids a call to the call center because it has a voice XML document and IVR embedded; don't charge for the minutes. Charge for the business process outcome and avoid a call to the call center. Think of my taxes; if I'm going to pay several thousand Euros in some transaction, potentially I could have completed that actually inside the voicemail, and that PayPal for voice product, if you compare the transaction fees to say maybe a Visa or MasterCard, it could have been a tenuary opportunity. There is a huge amount of revenue being left on the table here.
I believe that solving these problems is going to spawn a global race to become the platform that enables this. The platform is required because there is enormous complexity in the middle of this ecosystem. There are too many combinations of enterprises, communication channels, and telcos for any one player in this market to be able to act on its own, no matter how big. These platforms will aggregate together the enabling capabilities of telcos, so for example, APIs to insert into voicemail system. They'll aggregate together enabling capabilities in Web 2.0 properties. They'll aggregate together data about customer profile an preferences. They'll offer these rich interaction services as a communications-as-a-service offering as part of a global cloud computing fabric.
Featured communications is global. The Internet is the global on ramp. The Web is the global user interface. However, the applications for that user interface, today, exists in little stovepipes and they're unable to interact to communicate with each other, and that's where the inefficiency in these business processes come from. The trillion dollar question is who will profit from operating that platform; will it be telcos?
Telcos actually have, naturally, quite a large head start. We have the users. We have the people using our products today. We control those channels. We can innovate around those channels. We have real-time customer data about those people - your location, your presence, your calling history. We're able to bill for millions of events that would naturally be produced by this platform.
However, there is also a danger that online players and new entrants come and re-intermediate telecom's value chain. For example, could a Salesforce.com start aggregating together CRM data from multiple CRM enterprises and start to paint that picture of this is how this customer communicates. "You, Mr. Enterprise, know a lot about your customer in terms of their grocery purchases or the furniture or whatever it is that you do, but we know a lot about that customer in terms of how they communicate."
Or will it be someone new? Just as how Skype, Google, and YouTube, and all these good things burst on the scene and were not ever forecast to be the way they are; will we see a whole new raft of entrants come in and seize this opportunity? Regardless, I think we'll see an unfolding of a new stage in the evolution of the business model of the communications industry. Over the last hundred fifty years, we've seen five stages to this journey.
The first one was born by postal system and telegraph and telegram, which was bringing to everybody the ability to communicate at a distance with messages, and SMS is the current manifestation of that.
The second was an increased democratization of that technology. The telegraph was the specialist activity. The telephone everyone could use, and mobile telephony brought communications everywhere, but only for one application.
The third stage was data. Data enabled any kind of application to be run over generic data networks. The current focus of many operators is on media, which is how to package and deliver that content; not just to move the bits and bytes, but also to be able to present it as an edge device.
I believe we're seeing the birth of the fifth stage of evolution of communications industry, which is moments. These moments are when enterprises connect, interact, and transact with their users to create business process efficiency. That, I believe, is the foundation of the future. I am very interested in hearing from any of you who would like to join me on that journey. Thank you very much. Moderator: That tied in very nicely with my dreams of efficiency. Can we have a bit of Q&A with Martin, here? Please, over to this gentleman at the back.
Audience: : I wonder if you could speak to the privacy concerns. What I saw you write earlier is that you have a very nice BT-centric view that BT will spy on me as I leave my home, track where I go; my bill collectors who thank God are not after me right now, will have the opportunity to remorselessly pursue me down the street. I personally have well over 200 email addresses for the purpose of preventing privacy violations, but what I heard over here was a massive privacy violation. BT will sell my data to the bill collectors so they can pursue me.
Martin: Quite the opposite. Imagine there is this evil company called Google that continuously tracks everything you're interested in on the Web. I have Google Latitude on my phone that watches me everywhere. I, as a user, love it. I opt in because I get something in return. It's completely transparent as to what they're doing and I get value out of it. It's an exchange of value, so I do not want to ever receive again a little on my door saying, "We are sorry you were out. We sent the truck to your door to send you this little note." I don't want it.
It's definitely not a class of how do we flog our customer data, because that would be a disaster. The question is how do you offer both sides of this equation value; the customer increasingly gets cheaper or free services and in return they allow their data to be offered up and to be used in very specific and limited ways. Yes, I too used to recycle email addresses and there are a few enterprises I could name who have had definitely privacy spillages, but I think operators are trusted - trusted is a dangerous word to use. There is confidence in operators and they also have huge expertise in managing very private data and managing the regulatory and legal concerns around that.
Audience: : Hi Martin, thanks for the great presentation. Coming back to the comment that was made and building on what you said, do you see the carriers going through a revenue transition from subscriber-funded services, which is the bulk of their revenue base today, to the types of revenue models you are describing here? Do you see those models coexisting, or is it really an either/or proposition?
Martin: I believe the transition will be messy. It will happen at different speeds in different regions. Different types of players will emerge with different kinds of platforms. There will not be just one global platform but will be different sets of platforms. There will be lots of coexistence and it's too early to tell. I wish I had a crystal ball as clear as that.
Chair: Martin, would you describe it as a bloodbath, or is that going too far?
Martin: No, because often these changes are more dramatic and take longer than expected.
Audience: : Martin, are operators trusted or tolerated, and do you think customers would like to break the link between identity and numbering so you do not know who I am because you're not paying me to know?
Martin: Are they trusted or tolerated? I think it's a mixture of both. The operators have this partial and incomplete knowledge about households and users - the person that has the bill and the person that uses the phone; however, they have more of this information than anyone else and if they're clever enough to work out "how do I partner with the right players to make these business processes more efficient and effective", then I think users will be - the trust and tolerance thing kind of goes away a bit. "You want me to do what in turn for what; okay, that's a clear deal. I'll do it."
Imagine that voicemail example - there is potential to ask the customer, in real time, "Would you like your operator to give us this piece of information in return for this piece of value to you? Press 1 if you agree," or enter your PIN. That's the opportunity. It's not a generic - solve this problem for every business process in the world. It's like let's just deal with little problems at a time; how do I return a call to a customer when they are actually likely to be able to answer it? How do I deal with the text message? It's pre-paid versus post-paid. Are you willing to tell us what kind of contract you're on? That's the kind of very small privacy release that improves the customer experience.
Chair: I'm not sure how to pronounce your name. Is it Jap or Jahn?
Audience: : Yap is okay. Martin, you speak about quality moments. Isn't the key issue the perception of the users instead of the efficiency and effectiveness? Do you really look into what users see when they look at you?
Martin: Last night, I was editing my slides on the train here. I was wondering whether that last slide to say "Moments to Efficiency," or "Moments for Experience" because efficiency that is very obviously a benefit to enterprise and experience is the thing that benefits the customer. In reflection, having heard your question, the next time I present this it's going to be "experience."
Chair: Okay, one final question from the gentleman over here.
Audience: : I wanted to ask about regulation because we've had quite a nice few years where lots of these services like Amazon and so on, have invented themselves and have given us the luxury of being able to interact very easily and buy things very easily, but now it seems that the state and regulation has caught up with that and is kind of a force that's trying to break that again. Recently, I've had several examples of companies telling me the Data Protection Act was a reason they couldn't do things for me that I wanted to do, for example, be able to suspend my daughter's phone account because her phone had been stolen. [chair interruption] The question is what is the regulation factor?
Isn't regulation going to take over and stop this innovation from happening?
Martin: No, because Google exists. Clearly, our existence proofs of business models based on the users voluntarily sharing their personal data and the data protection is a set of very good principles around which any good enterprise rebuilding its business, so no, I don't see regulations being a major hurdle.
Chair: Thank you very much Martin.
