Taking a Stab at Telco 2.0

Say what you will about telecom, but it’s an industry that loves its buzzwords. Despite the prevalent use in any technology conversation of the term “Web 2.0,” I’d argue that there are few people who understand what it actually means. And the latest term du jour is a particularly cryptic one: “Telco 2.0.” The telecom industry now is being pushed to figure out what it means and come up with a strategy and a set of PowerPoint slides around it.

Here’s my stab at it: A model in which operators will be able to offer multiple services and applications from a wide variety of sources, including unique combinations of applications, and deliver these services to their customers. Services based on mashups and wikis and social networking are cited most frequently as examples of Telco 2.0, but that’s only the beginning. To me, Telco 2.0 means any application or combination of applications, delivered over any network technology, to any end-user device, all determined entirely by the end user.

This, in turn, sounds very much like the definition of a service delivery platform. In fact, I’d argue that Telco 2.0 is essentially a manifestation of what the SDP has been promising for years, and perhaps the push that service providers need to ramp up their investments in SDPs. When the concept of the SDP was introduced, one of the challenges suppliers faced was helping service providers understand how to use them. IDC found that operators spent nearly a billion dollars last year on off-the-shelf SDP hardware, software and services, from suppliers such as HP, IBM Corp., Microsoft Corp., Oracle and smaller niche vendors such as Appium, Leapstone, Drutt and Unipier. Yet, they still are trying to figure out how to make the most of their investments. They understood the need to implement a new breed of services; the question was: What would these services be and where would they come from?

Telco 2.0 provides an answer: Put the enablers out there and the services will follow, whether developed internally or by third parties or even by end users themselves. The next wave of consumers, dubbed “Generation Me,” wants information in a specific format, delivered to them in a way that is uniquely personalized for them. Web 2.0-based services such as Google Maps, Wikipedia, Dodgeball and del.icio.us have met that requirement in the consumer market, and IDC’s research has found that these users are extending their use of these new technologies into the workplace for business purposes. Telcos have come to understand that they must adopt similar models in order to remain relevant and avoid the very real risk of becoming dumb pipes.

The challenge for operators is determining how to monetize those services, and that’s where the back office comes into play. In the Telco 2.0 world, next-generation OSS and billing becomes more important than ever. Taking center stage will be real-time billing and charging solutions that prevent revenue leakage; partner management capabilities that ensure each player along the value chain receives its share of revenue; flexible rating engines that enable dynamic pricing; and end-to-end service management that isolates a service interruption anywhere along the value chain.

It’s likely that Telco 2.0 will be the engine to drive the industry’s growth over the next several years, but without the right OSS and billing to support these initiatives, service providers may stall right out of the gate.

Shira Levine is a senior research analyst of OSS and billing at IDC, which provides market intelligence, advisory services and events for the information technology, telecommunications and consumer technology markets.