Will Carriers Finally Get Their Piece of the Apple Pie?

“Better coverage… fastest network… fewest dropped calls…” Which mobile carrier am I talking about?

ALL OF THEM

There is a huge gap in the current capacity and the demand that is being created by new high-bandwidth mobile devices like the iPhone, iPad, RIM smart-phones, Androids, Nokia Nxxx’s, MiFi/RocketStick 3.5G/4G devices used with laptops/netbooks, and Kindles. This capacity gap is inspiring another internet arms-race, just like the catastrophic that contributed to the ‘.com bubble burst’ of 2000/1. All of these competing wireless carriers are upgrading their wireless network capacity many-times over (10-100x+). The main difference –this time– is that demand exceeds supply… for now.

Dilbert.com

Right now, customers are very much choosing carriers based on the phones available, but this will soon change as cachet devices like the iPhone are made available on multiple networks. Then people will start switching from one to another because they are dissatisfied with the service (probably because a carrier is picking up high bandwidth users faster than their network engineers can deploy capacity). Then we will reach an equilibrium…

Then What?

Well, until recently, the answer would be –like any commodity market– a race to the bottom. The raging ‘red ocean’ of the wireless market would lead to the survival of the cost-cutting fittest. Just like pork-bellies, barrels of oil & even computer RAM, the winners will be those that produce a common unit for the lowest cost. The only people making real money (margin anyway) in this scenario will be those who can create differentiated products: handset makers & those that own the content (Apple and Apple respectively – I kid).

But then ‘net neutrality’ & the FCC got a big kick in the nuts courtesy of Comcast.

People who don’t care about FCC regulations (probably 99.99999% of you) may have missed the recent ruling in favour of Comcast on their ability to control how their customers use the internet (whether they were ‘neutral’ or could treat data from different sources differently).

Comcast, by challenging the FCC’s right to control neutrality, has now set a precedent that would allow carriers to be less ‘neutral’ when providing these over-the-top services (particularly those that make it hard to identify the source of all the bandwidth, like BitTorrent, etc.). This could potentially mean that they can have more control over the internet experience the user has. They could treat websites preferentially (higher speed) that agree to do revenue sharing, or block/restrict the bandwidth to those they don’t like.

The wireless and wireline carriers now have another way to differentiate from each other, aside from the “Better coverage… fastest network… fewest dropped calls…” mantra they all currently drone.

The internet experience could end up being VERY different from one carrier to the next, with an infinite combination of content/carrier/geography relationships possible. A very basic example would be a carrier winning business based on allowing BitTorrent traffic to your cell phone vs. one that does not allow it.

Things just got a whole lot more complicated… will carriers finally get a piece of the Apple pie?

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Success at NORTEL

Now there is two words you probably haven’t heard in a the same sentence for a while!

During a presentation to a large consulting firm on Chip & Dan Heath’s ‘Made to Stick’, things got rather casual/direct and I ended up presenting some of my challenges at moving forward with my next career (which we’ll call ‘management consulting’ for lack of a better term):

  1. How do I package the ‘Made to Stick’ principles for my purposes?
  2. How do I translate this information session into a consulting opportunity for me?
  3. And the biggie… How do I address the fact that the last 12 years of my career has been with a company the public associates more with management ineptitude, than an environment that could foster an effective ‘management consultant’?

One of the attendees said something which took the whole room aback: “Why don’t you use this ‘Sticky’ method to convince people that there was ‘Success at Nortel’?” After a pause, and about a minute of laughter from the room at what was clearly a joke, he says: “No, I’m serious, wouldn’t that prove your point?”

While others in the room suggested that the employee in question may be off some important medicine, I told him I really liked the idea, didn’t see a path to get there, but I would certainly give it more thought!

That challenge stuck in my mind until I had a lunch meeting with one of my previous Nortel managers (ironically).  I was discussing how my new venture was going to be focussed on a systematic process to increasing customer and employee engagement in organizations to boost productivity, boost profit and –in Seth Godin’s words– increase the level of humanity. He matter-of-factly said: “Wasn’t our network planning team exactly that [success via customer and employee engagement]?”

WHOA!

Some background: Network Planning is a function that exists in all companies that build telecom networks, but was rather unique at Nortel because we were a company that sold equipment to build telecom networks, and we offered this service for free. As a simple analogy, imagine an architect who works with you to help design your home for free, before you have have even committed to buy it.  Sounds like a bad business model doesn’t it?  Not so fast!

Vendor-provided network planning services started at Nortel (AFAIK) and became an industry table-stake over the years as clients clearly decided to do more and more business with companies that would help them design their networks, evaluate new technology and specify the equipment required. This was widely replicated by our competitors with all companies in our product segment –even the smallest startups– having this function in some way, shape or form.  Some will charge for it (a bad idea, but that is worthy of another post), others offer it as a free service.  I joined Nortel to become part of the planning team, stayed in it for 7 years, unable to find a more appealing job in the whole company.  Anyone who had experience in Nortel Network Planning will tell you how great a team it was, and most of its alumni have moved on to great success in roles such as PLM, market development, sales and planning leadership roles at other companies.

Gallup Research, in their fabulous book Human Sigma (little to do with Six Sigma by the way) identifies two hierarchical pyramids that characterizes what is required for customer and employee engagement to exist.  Gallup asserts, and I certainly concur, that companies that strive to engage customers and employees significantly improve business results. I am going to apply the elements of one of these two pyramids to Network Planning at Nortel to highlight why it was so successful:

Elements of the Customer Engagement Pyramid

  1. CONFIDENCE : Can I trust the company, and do they always deliver on their promises? The kind of business Nortel is in has long product lead-times and product cycles. It is often very hard to develop a rapport with key decision makers purely through standard interaction on products, especially since these decision makers are far removed from the products themselves (they may never actually see them). The planning function allowed for regular and deep discussions about what the customers problems were, allowing us to help them do their job.  By doing this with great competence, and to schedule, we could build trust and deliver on our promises in a parallel stream to our products. To perform this function needed great trust between the carrier and vendor, because we often had as much –or more– information on their network than they did to do our job well.
  2. INTEGRITY: Does this company treat me fairly? Again, planning was in a position to develop a rapport with decision makers that sales or operations could not.  Sometimes this was even taken to extremes: I can remember one case where the customer was under time pressure, and asked us to rework a network design over the Christmas break, which we did (it showed we had engaged employees!).  Reactions like this clearly showed the customer that we were committed to their business and –more importantly– to the individuals that were decision-makers.
  3. PRIDE: Am I proud to be their customer, do they treat me with respect? I think another company providing you with extremely bright and energetic people to help you do your work is a great sign of respect! The planning teams were often providing these clients with detailed network designs and studies which would in-turn be presented with great pride as their own work. In other cases, the planners themselves became an integral part of the customer’s team, even assigned their own office space in some cases.
  4. PASSION: This company is perfect for a person like me, I can’t imagine a world without this company. What more proof do you need of this than the customers hiring the planners to be their own employees? This happened in several occasions. Because the roles of the people we were interacting with were typically cost-centres (not revenue generating) they were often under-staffed and under-appreciated.  They were asked to evaluate many complex options of how their networks were to evolve, and had many potential vendors & products to consider.  Nortel would come in with great talented people and give them a helping hand, and make our customer contacts look like miracle workers with their own executives. If you had someone make you look like a star to your boss, could you imagine a world without them?

So according to Gallup, we had created a function that created a very high level of customer engagement!

Were the results of having the planning function directly measurable? Unfortunately not*, but here is a few data points:

  • The function still exists to this day. It would seem obvious that functions that do not directly contribute to revenue were great opportunities for trimming in a company with severe financial trouble, especially after >80-90% of the workforce has been cut! The function had such a reputation in the industry, and was so leveraged by other teams like market development, sales, R&D and PLM, that I don’t think it was ever considered for the chopping block, even while many other valuable functions were thrown over the side.
  • Alumni of this function were heavily recruited by established industry players and start-ups because of the relationships these people had made with customers, and their broad network & business perspective.
  • As already mentioned, planners were regularly imbedded as key members of the customer’s own organizations or even hired by our customers.
  • Many of the networks in existence today were designed by planners from Nortel with Nortel equipment (the latter was the big payoff).

If I need to make a case for ‘Success in Nortel’, I would have no trouble positioning the network planning function as a great success story that was about engaging people and not technology.  It built stronger relationships with our customers, allowed a deeper understanding of the customer’s challenges and requirements, and helped Nortel build better products while creating a large pool of Nortel employees who could speak the customer’s language.

So now I have the content of the presentation, now I just have to go put it together.

*I have since figured out a way to do this, but you will have to drop me a line for that advice.

Nortel’s Downfall – The Mini-Series

2010-6-5 – Note that Constantin film has blocked all of these videos based on protecting their copyright. This only goes to show that Constantin film execs. have their heads firmly up their asses. While this is certainly within their right, they don’t seem to appreciate the role that social media and ‘mashups’ like these have in promoting their artist’s great work. I had never heard of the movie ‘Der Untergang’ until I saw the first video below, and it was only when I saw Bruno Ganz’s passionate performance that I had any interest in seeing their movie. Unfortunately their loss is ours as well. – Adrian

My previous post “Who Killed Nortel?“, featured columnist James Bagnall presenting a very balanced view of the contributing factors to Nortel’s demise.  Time now for the corresponding ‘unbalanced’ view:

I think many people saw the original ‘Downfall’ youtube video, but many apparently didn’t know there was actually 12 of them! While these videos don’t express my personal views (do I have to say that again?), they are really funny, and the production values are pretty slick. They are based on the 2004 movie “Der Untergang” (German for ‘The Fall’), which provided a great canvas for this topic because it contains many profound Hitler rants (adeptly ranted by Bruno Ganz).

For those of you not familiar with the names referenced, Mr. Bagnall’s articles linked above are good background.  You will also be confused by both Hackney and Mike Z. both looking a lot like the Führer.

Part 1 – The Original: “There Will Be No New 3-5 Year Plan”

Part 2 – “Those Lousy Stinking Peasants!”

Part 3 – “Synergy My Ass”

Part 4 – “The ‘Free Press’ Won’t Let Us Do Our Jobs in Secret!”

Part 5 – “I Say: To Win You Must Quit!”

Part 6 – “Get In Line Behind the Other Creditors”

Part 7 – “Business Made Simple”

Part 8 – “Unfortunately, You Are Not a GE Man.”

Part 9 – “Who Are They to Tell Us What to Do With Their Money?”

Part 10 – “The Price You Ask For is Way Too High!”

Part 11 – “I believe… in Executive Bonuses.”

Part 12 – “Don’t You Understand? Nortel is Bankrupt! It’s Over!”

Who Killed Nortel?

James Bagnall of the Ottawa Citizen has been covering Nortel for a long time, much longer than my time with the company.  It was with great interest that I heard from a co-worker that James was doing an 8-part series called “Who Killed Nortel?”.

Would it tell me things I didn’t know?  Would it point the finger at people I respected?  Would it conclude the collapse was due to bad luck, incompetence, or something more sinister?

Even knowing the series was on the Ottawa Citizen, I found it horribly hard to find the articles and then to navigate them (its improved a bit now that the series is complete).  To save you the same frustration, I collected them here:

I found the series very enlightening.  It points to leadership apathy, a board that lacked knowledge of the telecom industry, bad luck, incompetence, and -of course- the well known financial scandals as contributing causes.

Now that you have seen the ‘balanced view’, you may want to check out the ‘unbalanced’ view for a laugh: Nortel’s Downfall – The Mini-Series

Why I Love My iPhone…

I was enjoying an audio book called “Brain Rules: 12 Principles for Surviving and Thriving at Work, Home, and School” by John Medina and I ran into a situation which really made me stop and think about just how awesome mobile internet is:

The author was describing a pivotal event in his life, that guided him to a career in math and science.   It was a trip with his mother to see the Disney Movie “Donald in Mathmagic Land” which he cited as one of the best uses of pictures to teach a subject.  It apparently was also good enough for an Oscar nomination in 1959 (won by ‘Glas’,  -a movie on glass-blowing set to a jazzy score- so in hindsight perhaps not a hot year for short films).

I had the sudden urge to pause the book, and get a visual idea of what he was talking about.  A quick search on the iPhone’s YouTube application found the short (below in 3 parts) and I was able to watch it, then return to the book with a much richer perspective on what the author was trying to explain.  Imagine trying to do that on your PHONE 3 years ago? Wow!

So not only does my iPhone allow me to get through 2-3 books per month (in contrast to my previous 0), but I can also get much more context on the material I am ‘reading’. Pure heaven for a geek like myself!

And some good mathemagical tips on playing pool:

AAPL: Sold the Shares I Picked Up Yesterday

Apple LogoSince I really didn’t want to have to pay for them, I wanted to sell and take the gains from my shares I purchased yesterday, and left the rest in to take advantage of gains that will hopefully come over the next few weeks.

Based on pre-market trading, I was hoping for more of a pop in the stock, but I always find that pre-market numbers don’t give you much idea of what is going to happen at market open.  I will take the 9% gain for one day, and return to a more long-term view on this stock.

My biggest struggle when considering if to sell or not is really more to do with the CDN-USD exhange rate.  Since I have been buying AAPL stock, the $USD has ramped from close to parity to a +26% rate.  This gain in the USD would make transferring the USD held in Apple stock back to Canadian dollars attractive.

Generally, based on how soundily AAPL trounced their estimates, I was hoping for more.  RIM is climbing like crazy, but the only explanation I can see is that Obama has one.  This just doesn’t make any sense.

Broadcast TV: 5’11” Deep and Still Digging

When originally started this article, I was going to start with a bunch of statistics that showed that broadcast TV was dying quickly, due to video-on-demand (VoD) and the internet, and then assert that they need to change to become more attractive to their existing viewers.

After a bit of Googling, it appears that this is a bit of a myth.  TV viewing is still growing as an advertising medium, but the dominance of specific networks definitely seems to be dropping.  There is a proliferation of channels, enabled by things like VoD, fiber to the home (Verizon FiOS for example) and switched digital video to optimize cable plant.  Certainly things like TiVo and PVR’s allow you to skip commercials, which makes attracting advertising revenue more difficult for broadcasters (why should an advertiser pay for broadcast TV spots if more and more people can just skip the adds?).

So after some thought, it turns out that the point I wanted to make, is still valid:  Broadcasters should really stop doing things to drive away the viewers they still have!  While TV viewership is maintaining, or even increasing, the share that any one network has is being reduced by an increasing amount of choice on TV and elsewhere.

The biggest gripe I have is the mucking about with volume levels.  It has long been a tactic to attract viewers attention to commercials by jacking up the volume as the commercials start.  I guess there must be some empirical evidence to back up the value of this tactic.  The problem is, this is really annoying!

This was further compounded by a seemingly new tactic that I have noticed on CNN: dropping the volume to almost inaudible levels after the commercial break, then slowly ramping up the volume to normal levels.  This one I don’t understand at all?!  I regularly have to up the volume after the commercial break just to hear what people are saying, then drop it again as the volume jumps back up.  It seems that CNN is desiring audience participation with their volume knob!

When your customers have an increasing amount of choice, you want to make your product more attractive to keep them wanting your product.

For me, these audio shenanigans make it a really attractive option to get rid of broadcast TV in favour of something like the Apple TV, which doesn’t muck about with my sound, doesn’t push commercials on me, and I get to choose the content I want.  If only they could get more content providers to provide their content!!

Broadcasters might want to think of ways to make their offer MORE attractive, instead of less!

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