The diversification of killer apps

Voice is the killer app. Speed is the killer app. Video is the killer app. There is no killer app. If I hear ‘killer app’ one more time, I’ll kill the messenger.

Over the years, I’ve likely written, probably spoken and certainly heard all of the above at least dozen times. It’s a natural reaction, really, in an effort to justify spending millions and sometimes billions of dollars on telecom and IT infrastructure every year.

The quest for the next great app is more, though, in the current environment. Think of it as almost a primordial response deep inside your reptilian brain -- that part of the brain that doesn’t think but only reacts to outside forces beyond its control. By contrast, in today’s economic crunch, spending billions on infrastructure, particularly wireline infrastructure, is a delicate decision and one that must be made at the highest thought plane while taking into account data emanating from the core.

Spending a few billion to build out next-generation access infrastructure must be justified by pointing to specific applications that only can be deployed and maintained by that investment. So what exactly is the next great killer app? Pick answer D: all of the above. Or perhaps E: none of the above.

It’s really dependent on one’s location. That conclusion is just one that we at Yankee Group have come to as a result of a study released last week at the FTTH Council Europe Conference.

Among the study’s other conclusion:

• FTTH generates ARPU of 20 percent to 30 percent higher than DSL for those operators with both technologies.
• A number of FTTH operations around the world have broken even already, after only a few years of operation.
• Two-way video communication will be the enabler service that truly allows the bloom of partnership-driven wider economy services.

As part of the study, my colleague Benoit Felten and I analyzed the service portfolios of 20 service providers that have deployed next-generation access networks. Additionally, we interviewed key executives in these organizations that spanned the range of perspectives from incumbent telcos and cable operators to altnets and municipalities.

Not surprisingly, these providers all had their own ideas about what constitutes the killer app. In some cases it was simply a matter of having faster access speed than the competition. In other cases, it was having a massive HD line up as part of an IPTV offering. Still others shrugged their shoulders and submitted to the reality that the next great app likely won’t come from anywhere inside the traditional telecom industry but from the collective genius of a larger developer community.

In the short term, they’re all likely right. Having 1 Gbps symmetric service is killer...in South Korea. Having the most HD channels plays pretty well in Texas.

In the long-term though, we believe that the application driving market share gains won’t be a single application but the ability to provide a highly flexible menu of applications. Service providers, regardless of their technology orientation, no longer can afford to approach their entire footprint as a monolithic mass. Instead they must do a delicate balance between providing users with highly personalized service packages while not creating confusing by offering too many options.