Peace eventually broke out after a pantomime style opening to a panel session on reinventing the telco business model moderated by AsiaInfo’s VP of Global Product Marketing Andy Tiller at the Total Telecom Congress last week.

It started when Fernando Nunez Mendoza, the founder and CEO of Spanish firm fonYou Telecom, delivered the ‘oh no you can’t moment’ when he said operators shouldn’t innovate because when they did – “it doesn’t work.”

Unfortunately, joining Mendoza on the panel was Telefonica’s MD of digital commerce, Robert Franks – who just happens to be the executive charged with helping the global operator develop and deliver innovative new services.  Mendoza had explained that he thought telcos should concentrate on finding the right partnerships and should leave the innovation to those companies.

As might be expected Franks delivered the ‘oh yes we can’ reply to Mendoza’s opening salvo.  He agreed that partners were important to the future operator business model but also spoke about the need for operators to be active themselves and to look for new areas of business to develop and grow.

Andy had started by asking the panel, which also included Vivian Woodell, chief executive of the user-owned and run MVNO The Phone Co-Op, whether the traditional telco business model was doomed and how they saw the saw it evolving?

Woodell’s view was that, while the giant global telcos can often stifle market innovation from the smaller players; by concentrating on business rather than technical innovation, he believed that smaller telcos could in fact thrive and create their own market niche.

Mendoza picked up on the point and cited a service fonYou is developing for operators in Latin America. He said that they were providing real-time credit scoring and analysis for pre-pay operators to enable them to issue micro-credits and therefore maintain data connectivity to targeted customers even if they had a zero balance.

“There is no need to deprive a customer of data connectivity for one day when you know from your credit analysis and scoring that they will have funds tomorrow,” he said.

And Franks admitted, with a tip of the hat towards Mendoza’s opening comments, that with all the innovation on offer from smaller nimble players in the market, it was hard for operators to find gaps in the market for new products.  He did however highlight some O2 successes – including GifGaf, the Just Call Me conference call app, and the Voice over WiFi services that could be offered to the 23m O2 UK WiFi customers.

And, in a sentiment that moderator Tiller and all the panellists agreed with, Franks also said: “While connectivity has never been more important, operators must not allow their business model to drift down to a simple commodity service based on price.”

This led Tiller to ask whether operator innovation should be based on monetizing customer insights and collaborative services with third-party players.  I was interested to see how the answers from the panel matched AsiaInfo’s own research into these areas.

Not surprisingly, both Mendoza and Franks thought that monetizing that data through partnerships had tremendous potential for innovation and carefully targeted growth.

Franks, in fact, explained how O2 already uses bulk, anonymised customer data in its Smart Steps service – which provides transport and planning authorities with detail on the mass movement of people.  Mendoza meanwhile outlined a service his company was developing with operators in South America looking to carefully mine customer data in order to provide targeted offers or services to customers.

In contrast, Woodell instinctively felt, that monetizing its customer database was against the principles of The Phone Group and its member-run ethos.  However, he accepted his business wasn’t particularly representative of the industry and he also didn’t completely shut the door on the idea; instead saying that he was open to the idea of working with some ‘ethical” data mining companies, but only with full transparency and the agreement of the full member base rather than just its management team.

Despite the apparent disagreements at the start, the panel did come together and peace broke out on the innovation issue with everyone agreeing that innovative operator thinking was certainly required, that the telco model would continue to evolve, and that partners were going to be crucial to the process.

And the way the discussion developed, it certainly seemed that the collaboration initiatives, that companies like AsiaInfo are looking to help telcos deliver, are exactly what is needed to support the business model transformation that is undoubtedly underway.