The graph representing this has been presented ad nauseam over the past few years.   With good reason: it’s an important market trend with significant implications for the industry.

Another sea change is occurring in our industry that’s equally important, if not more important:  the ascendance of applications, emerging as a dominant means to access the internet.  Consider:

In 2008, browsing commanded 80% of “facetime” (a measure of the time a user spends looking at an application).  Almost overnight, that’s fallen to only 50%.

• Most conservative estimate shows app store revenue at 15 billion in 2013.
• 3.8 billion apps downloaded in 1H2010;  on track to double the metric from 2009 (only 3.1 billion)

These numbers are abstract, but it’s easy to see the implications with simple use cases from a typical day.  To paraphrase a recent Wired article by Chris Anderson: People wake up and check email.  That’s one app.  Browse the Economist, New York Times, or BBC during breakfast.  More apps.  Tweet to friends on the bus to work.  Another app.  Listen to Pandora during the work day.  Another app.  Look at Facebook on the bus home.  Another.  Watch a Netflix movie after dinner.  Another.  And so on.   Significant time spent using the internet without ever opening a browser.

In short, “going on the internet” as a subscriber behavior is becoming less and less meaningful; it’s akin to a television viewer “going on the antenna.”   Applications, and the specific content they deliver, is meaningful.  This is important for operators, because it means that charging and policy for generic internet access is less and less meaningful.  Happily, application context enables significant business model flexibility.

Convergence: anticipated for a decade, finally meaningful
Applications enable convergence – they enable easier management of state so that cross platform consistency can be more easily achieved.

A good example of this is how cable operators in the United States are using applications to enable delivery of media between platforms.  The application can query profile and entitlement information maintained within the operator and ensures a well understood and consistent technical environment (codecs etc.) between devices for media delivery.

All major cable operators in the U.S. have announced apps that provide their subscribers a consistent experience between the television and the mobile device.  These apps typically include both entitlements (if you subscriber to premium content on the TV, you can see it on the app) as well as DVR management so that a user can pause a movie on a television and pick up where he left off using a mobile device.

Charging Flexibility and Enhanced Control
Applications make flexibility, in terms of charging and policy, much easier.

Most service aware policy and charging solutions require a DPI and flow analyses.  Such solutions aren’t strictly service aware in a direct sense; rather, they infer a service through layer 7 analyses.  However, if an app is interacting directly with the PCC system, service-awareness is available by definition.  Not only is this a more efficient architecture, it has a significant benefit otherwise unavailable: application context.

Intra-application context
Application context enables understanding of changes within the application that have policy or charging implications.  A streaming app that offers both premium and standard content can directly indicate to the PCRF which type of content a subscriber is consuming, for example.  This enables the operator to partner with the content provider, applying charging and policy rules without the administrative overhead of tracking specific content.

Inter-application context
Applications enable much easier execution of intra-service policies – policies that affect one application based on the context of a separate application.   For example, imagine a user engaged in a face to face video chat session and receives an incoming VOIP call from a totally different application.  An operator maintained PCC rule can enable users to determine if that incoming call can interrupt the chat session, or should be sent to a voicemail system.  These rules can even be dynamically applied based on who the incoming call is from.

Need for enablers
An obvious implication is that to capitalize on any of the potential within applications, a robust interface must exist between the application layer and the operators PCC infrastructure.

A great deal of effort has already gone into defining the complementary, southbound, interface between the PCC and the network.   And the Rx interface has some depth behind it in the context of the P-CSCF within an IMS infrastructure.

But there is a requirement for a must more robust expansion of the Rx interface to accommodate application signaling and entitlement queries across a broad spectrum of use cases.

Finally, applications enable much easier execution of intra-service policies that, for example, define how a second application interacts with a user when another application is active.  For example, if a user is engaged in a face to face video chat session and receives an incoming VOIP call from a totally different application.  A operator maintained profile can enable users to determine if that incoming call can interrupt the chat session, or should be sent to a voicemail system.  These rules can even be dynamically applied based on who the incoming call is from.

Conclusion
Next generation business models are not about the application of creative new schemes within the context of legacy pre-paid and post-paid paradigms.

It’s about multi-dimensional charging and policy that is dynamically applied based on the context of a specific subscriber.  The ascent of applications is an important industry evolution enabling operators to realize this opportunity.

Larry’s right, though.  The “Cloud” has become this catch-all term that means everything, and therefore nothing.  So I’ve got a suggestion.

I submit that a “cloud” service is one that was traditionally hosted locally. Example: Yahoo webmail is a “cloud” service in that web clients (and, in business, servers) were traditionally local. Yahoo search is not a “cloud” service because it didn’t (and can’t) exist outside the context of the web.   Salesforce.com?  Cloud.  Amazon.com (retail services)?  Not.  Virtual instances?  Cloud.  Twitter?  Not.  And so on.

I know.  Why isn’t Amazon (retail) a cloud service?  After all, traditionally you got a physical catalogue, and now the catalogue is in the “cloud”.  Well, that doesn’t count – what counts is computing services that were traditionally local, and now aren’t.  Amazon web services, S3 and so on, is an exception.  Cloud.

Hulu?  (and Netflix streams, and Amazon streams).  Not cloud.  Or maybe.  Hm.  Content streams were never  hosted locally.  “All in the Family” came in via analogue signals.  But they were bounded, temporally and spatially.   So, viola, Hulu is a cloud service.  (This is my definition, after all).

And the definition changes: a cloud service is a one that has traditionally been subject to spatial and/or temporal boundaries (as in local deployments of hardware, software, and networks), but is no longer subject to these boundaries because it is virtualized via IP.

See http://nyti.ms/cNnzSz –

But David P. Barash, psychology professor at the University of Washington, writes that, for many, sports spectatorship taps a primordial human instinct for belonging, much as militaristic nationalism does. It indulges “the illusion of being part of something larger than ourselves and thus nurtured, understood, accepted, enlarged, empowered, gratified, protected.”

My support for Obama in ’08 has landed me in the spam directories of various left-leaning organizations. I’m constantly being asked to sign various petitions, or contribute money to support various candidates, or write my representatives about some initiative or other. Sometimes I’m supportive, sometimes I’m not. But I’m not blindly supportive, and I’m not a fan of the Democratic party, or any other party.

Net neutrality is a case in point. I’m getting lots of requests lately to sign a petition urging the FCC to codify net neutrality on the grounds that it “protects my rights.” Whatever. It’s a complex issue, and it’s easy to support such a position with limited information. I understand. But I get tired of explaining to my well-meaning San Francisco friends that it’s unwise to be “neutral” about the distribution of a valuable, limited resource.

So from now on, I’ll just forward this article (and man, I wish I had written that title!): Don’t Block the Pipe, Lubricate the Market http://bit.ly/9mjGGt

“It’s a business model that relies, in fact, on discrimination,” he said this morning on On Point, a talk show aired by WBUR, a National Public Radio station in Boston. “You can only get certain things through your Kindle.”

“In theory,” he continued, “a very, very strict version of Net Neutrality, taken to its extreme, could, in fact, outlaw, or at least make it very difficult, to operate a business service like the Kindle.”

Great minds think alike — I said the same thing at Telco 2.0 last year. Watch the video: http://bit.ly/czNXUE

I’d be really surprised if anyone is able to duplicate it, but lemme know:

Perhaps I have a special Luddite super power that breaks technology?

Here I’m searching for “Balsamiq”. No luck.

So I go look for it manually. It’s right there, on top, with “Balsamiq” as both the sender and subject. I think this explains why I had trouble finding my receipt for the Mark Knopfler concert I’m going to next week (the Ticketmaster entry in the image is for Roger Waters next December. I’ll probably have trouble finding that one, too).

There are lots of nice things about the airport; it’s got a nice transit hotel, a gym, amazing shops, and reasonable food. But there are some things that set it apart. Top five reasons I love Singapore’s Changi Airport:

Reason Five: It’s got some beautiful areas. Here’s the orchid garden, which surrounds a koi pond complete with dabbling brook, nice wooden bridge and huge voracious koi. To give you an idea of how big this “meditation area” is, the woman at the left of the photo is sitting at the edge of the koi pond with her feet dangling above the water:

Reason Four: Free video games and free WiFi(!) throughout the airport. Lots of geeky types congregating in the XBox area, so of course I didn’t stay long.

Reason Three: The bizarro Asian soda you can get at the airport 7–11. Note that the Bird’s Nest Drink by Super brand features “The Best Good Taste,” as opposed to the inferior good taste offered by other, lesser, Bird’s Nest Drink distributors.

Reason Two: Free Movies, playing 24 hours a day in a real theater. “It’s Pat” was playing when I took this picture. Had I stuck around, I could have caught “First Blood” followed by “Porky’s.”

And the number one reason Changi is the best airport in the world:

Here’s the kicker: when I took this picture, there was no one monitoring the whiskey tasting station. Just a bunch a booze and a stack of paper cups. I’m not kidding.

Finding telecoms link in the value chain.

Personally, I think that net neutrality will force operators to innovate a bit — this isn’t about discriminating against heaviest users, it’s about changing the business model from flat rate all-you-can-eat access to one in which heavy usage isn’t a problem that requires random throttling. Operators should offer access that does NOT include video, VOIP, or P2P unless the user pays an extra fee for access to those services (for example).

Qualcomm, the world’s biggest maker of chips for mobile phones, has entered the net neutrality debate in the US with its chief executive calling for heavy data users to be discriminated against as wireless networks reach capacity.
Paul Jacobs’ call at the CTIA wireless industry conference in San Diego came a day after Julius Genachowski, head of the Federal Communications Commission, warned that there was not enough room available on the airwaves for the “explosion” in wireless data traffic.

Mr Jacobs said he had given the FCC chairman his views on “traffic shaping” as one solution to what the FCC describes as a “looming spectrum crisis”.

He described traffic shaping as “the ability to say: ‘let’s be fair, this person’s moved a lot of data, this person’s used a little’, if they’re paying the same amount, then the person who’s used less will get more access”.
John Donovan, AT&T’s chief technology officer, told the conference that smartphones and the applications they ran had caused a 5,000 per cent increase in data usage over three years.

“We will need to manage our way through data-hungry applications or devices on our network that would degrade the experience for others,” he said.

Supporters of net neutrality say there should be no discrimination on a free and open internet.
Internet providers should not block, speed up or slow down web content based on its source, ownership or destination.

Mr Jacobs said this “more radical notion” of net neutrality was born out of the internet bubble and the notion that bits of data were free, when in fact they had now become very expensive for providers.
“Regulators may not know that, the lawmakers may not know that, and so we need to make that clear, and it’s very obvious that we are pushing the limits of the amount of capacity we have.”

Mr Jacobs said it would perhaps be too intrusive to go down the route of saying one internet service was fine on a network and another was not, but operators needed to be able to manage their networks.
In his speech, Mr Genachowski had said that the FCC had not yet decided what measures to take to preserve an open internet. Proceedings would begin this month to establish “rules of the road”.

He conceded that mobile had unique congestion issues and the last thing the FCC wanted was to impose “heavy-handed and prescriptive regulation”.

http://www.ft.com/cms/s/0/cf650104-b463-11de-bec8-00144feab49a.html

That is, in times of high demand, a choice must be made as to who gets connectivity and who does not.

I argue that this will require operators to rethink their existing subscriber model, because a subscriber by definition has a right to access t he network. Put another way, the existing subscriber model precludes new business models because it eliminates operator flexibility in terms of allocation of bandwidth.

The solution is to eliminate the subscriber model, and instead bundle connectivity directly to services. People will purchase a voice service, or an email service, with associated connectivity (and SLA) bundled with it. Ad hoc access for general browsing will be provided only if bandwidth is available after servicing access connected to an SLA.

To be fair to subscribers, and to spur innovation and competition, ad hoc access must then be open — people will connect to whatever network is available at the time. This has a number of implications:

1. Any given subscriber can connect to multiple networks simultaneously, e.g. network A for email and network B for general browsing
2. Operators can find niche service areas — for example, some operators might specialize in providing ad hoc access during busy hours
3. Account management for ad hoc access will require federation. All subscribers essentially become roamers, with the HLR information maintained in a clearinghouse.

I’m curious to see reaction to this piece…