New Book from Alcatel-Lucent Guides Communications Players Through 'The Shift'

By Paula Bernier, Executive Editor, TMC  |  September 01, 2010

Alcatel-Lucent (News - Alert) has published a book to share its research on consumer market opportunities within North America. According to the work, there is a $100 billion revenue opportunity for U.S. service providers that open up their networks to third parties.

The book, which is titled “The Shift: The Evolving Market, Players and Business Models in a 2.0 World”, is self-published by Alcatel-Lucent and available at

NGN Magazine recently interviewed Allison Cerra, the book’s author, who has extensive experience studying emerging markets. Cerra is vice president of marketing, communications and public affairs for Alcatel-Lucent in the Americas region.

What was the motivation for this book?

Cerra: We wanted to explore how the shifts from a Web 1.0 to a 2.0 orientation fundamentally require a transformation of business models. In a 1.0 world, the user remains on the receiving end of entertainment and information. In a 2.0 world, the user is both creator and consumer. At the same time, a 1.0 world was largely characterized by a few providers’ pursuit of the next proverbial killer app. In a 2.0 world, millions of developers can be leveraged to create applications that appeal to the masses or the niches. Yet for all of these changes between 1.0 and 2.0, the broadband business model popularized in the 1990s still largely remains in play.

However, if we shift our thinking and view the network as a development platform, we can create new business models and value chains to augment the existing retail pricing model that exists between end users and providers today. Using the findings of an Alcatel-Lucent primary research study aimed at thousands of developers, end users and advertisers to measure their appetite for such an idea and corroborating the conclusions with scores of secondary data among these segments, we estimate a $100 billion opportunity in the U.S. when networks are leveraged as development platforms and new business models are created. In essence, we’re talking about creating agile business models that are able to keep pace with technology to help fuel future innovation. And that benefits everyone in the ecosystem – including end users, developers, advertisers and service providers.

Who is the target reader of the book?

Cerra: The book is aimed at anyone with an interest in the health and vitality of our ecosystem and the emerging business models required as users, developers and advertisers continue to shift their needs. Certainly service providers are a key target, but we also want to open the dialogue to developers, advertisers, regulators and even end users to explore what could be possible with this approach. In the end, this is not a zero-sum game, and we believe the entire ecosystem stands to benefit when new value is created and inserted. Further, the book discusses the larger societal benefits to health care, government and education when innovation is accelerated, rather than sub-optimized, with agile business models. As global citizens in a 2.0 world, these are topics that would be of interest to all of us.

What is the key takeaway of the document?

Cerra: Using the network as a platform for what we call application enablement inserts an estimated $100 billion in value to our ecosystem. In addition, it creates better end user experiences, addresses fragmentation challenges facing developers and advertisers, and supports service providers with new revenue streams to fund the next wave of broadband investments.

The book says there is a $100 billion revenue opportunity for U.S. service providers that open up their networks to third parties. Explain.

Cerra: We’ve seen the success Apple (News - Alert) has generated with the iPhone – hundreds of thousands of applications on one device alone. Apple and other smartphone providers have unlocked key intelligence within their hardware to allow developers to create their next masterpiece. In the end, developers have an outlet to showcase their wares, end users benefit from multiple applications, and the smartphone provider creates additional value to attract customers to its brand.

If the intelligence in one device can create such value, imagine when capabilities within the network are exposed in the same way. Networks have advantages – they are device-agnostic and powerful. The network knows where the user is, the type of device he is using, the bandwidth available, and his habits and preferences across devices, among other things. If service providers offer developers access to these capabilities in a managed and controlled way, they stand to gain incremental revenue.

To be clear, this is not to suggest that device intelligence goes away. As devices become more powerful, so do networks. We also are not proposing that developers must choose to either develop for devices or networks. Instead, we believe that incremental value is inserted into the ecosystem when network capabilities are exposed as additional ingredients for developers to create their next application. Finally, and perhaps most importantly, it requires that the end user remain in control of his profile and privacy at all times through a conspicuous and clearly defined opt-in approach.

What is Alcatel-Lucent doing to enable service providers to open up their networks to third parties?

Cerra: We offer a suite of solutions that allow service providers to expose capabilities of their networks in a managed and controlled way. We also provide a variety of go-to-market support tools, aggregation capabilities and expertise to service providers interested in attracting developers and advertisers. Finally, we offer operators an elegant glide path toward an intelligent, multiservice IP network, what we call the High Leverage Network, which can be instrumental in extracting value from the network while transporting traffic at the lowest cost per bit.

What are the benefits of service providers opening their networks to those service providers?

Cerra: Service providers face a challenging dichotomy today. On one hand, they are faced with exponential traffic increases on fixed and mobile networks due to a seemingly insatiable user appetite. On the other, they are not seeing ARPUs increasing at a commensurate rate. The book articulates an opportunity for service providers to tap into new revenue streams to extract more value from their networks. In the end, they can deliver a better end user experience while generating a return on their invested capital.

To third parties?

Cerra: Developers and advertisers both face an increasingly fragmented marketplace comprised of multiple device and OS environments. By tapping into network capabilities that sit at a higher abstraction layer, these stakeholders benefit from faster speed-to-market capabilities at reduced costs.

To end users?

Cerra: End users benefit from a richer experience – from more choices to smoother, more ubiquitous access. Once we accelerate innovation, the end user perhaps has the most to gain. We explore through the book, end users from every walk of life – including gamers, social networkers, online video enthusiasts, small/medium businesses, large enterprises, governments, educators and health care decision makers. Each of these segments benefits when we unleash the potential of smart network capabilities as additional ingredients incorporated by a burgeoning developer community. NGN