1. The Two-sided Telecoms Business Model Re-thinking the phone company 14 March 2008 Martin Geddes, Chief Analyst, STL Partners [email_address]

2. Before we begin…

3. Telecoms is a freight business for bits 10100010111001001001011000110 10000101111101010010010101010 00101010111101010101010001010 010100110101010001001110101011010100100101011101010010101010001010111011110100010101010 01011100100010001011011001010 11100111010000001011001010100 Voice, video, web, messages

4. Container shipping: precedent Containers vs. IP packets

5. Container shipping lessons Value-based pricing of the containers doesn’t work #1

6. Container shipping lessons New technology and lowered costs are not enough #2

7. Container shipping lessons Increasing returns to scale for infrastructure #3

8. Container shipping lessons The ports get the money, not the shipping lines #4

9. Container shipping lessons People pay most for logistics solutions #5

10. … with a twist One sided market Multi-sided market

11. Limits to retail growth

12. Voice & Data Core Service Pressures 2017 % of Total Mobile Voice Minutes, Europe 2007 2012 Traditional Telephony IP-Enhanced Carrier Telephony Private Voice Apps & Handsets Other

13. The telephony interaction pyramid Comm- unities Relationships Conversations Calls Rendezvous VOLUME TELEPHONY SOCIAL NETWORKING

14. Telcos: still not product innovation businesses How well do we as an industry understand what additional needs users have for voice and messaging products, over and above what they have today?

15. Revenue opportunities OPEN APIs PRIVACY FEATURES REAL-TIME SERVICES CALLING FEATURES Strongly Agree Agree N=83 INTERNALLY-DRIVEN INNOVATION EXTERNALLY-DRIVEN INNOVATION

17. Introducing 2-sided markets

18. Today: Revenue only from 1 Side $ $ Suppliers = Costs End Users = Revenue Telco Content, Apps, Devices Network & Termination Interconnect & Storage Consumers Enterprises SMEs Multi-Nationals Products (partners’) Products (own) Packets & Platters

19. Tomorrow: Revenue from 2 sides $ ‘ Upstream’ Customers ‘ Downstream’ Customers Millions of Customers Thousands of Segments $ Developers Retailers Government Brand Advertisers Content Owners Telco – Retail Content Owners Telco

20. Telcos have many valuable but latent data assets MY PERSONAL DATA MY STUFF MY IDENTIFIERS MY INTERACTIONS MY RELATIONSHIPS MY CONTEXT MY DEVICES MY CREDIT Name Address Gender Profile Preferences SIM SoftSIM Serial Number Device details Location Presence On/Off Roaming Pictures Videos Calendar Address Book Bank School Friends Workplace Browsing History .mobi domains QR Codes Bad debt Demographics Average balance Number SIP address IP Address Email

22. Telco Future: 3 x business models $$ $$ $$ $$ Upstream Partners Downstream End Users Telcos Payments between telcos Payments between telcos Developers Retailers Government Brand Advertisers Content Owners Telco (Retail) Telco Retail Telco Wholesale Millions of Customers Thousands of Segments Telco Platform

23. Examples of 2-sided markets

24. Learning from the master

26. Betfair: Stock Exchange for Gamblers Bookie Punter ‘ To Win the Champions League’

28. A New Telco Proposition?

29. Additional Telco Value Proposition Now: Bundled voice, messaging, video and internet access Next: Personalised Logistics Services for Data

30. Logistics Services in the Physical world 1. Distribution Collection Multi-Modal Transport Delivery 2. B2B VAS Tax & Duty Management Documentation Management Denied Party Screening Scheduling & Supply Chain Management Systems Integration Tracking & Monitoring

31. ‘ Personalised Logistics Services … for Data’ 1. Distribution Origination & Capture Multi-Modal Transport Termination & Display 2. B2B2C VAS Identity, Authentication, Security Advertising, Marketing Services Ecommerce Order Fulfilment Billing & Payments Customer Services Telco (2.0)

32. 1. Distribution Platform

33. New Types of Wholesale Products Video Content delivery networks for 3 rd parties Data “ Postage and packing included!” – for data Become supplier for 3 rd party voice services Voice +

34. 2. B2B2C Value Added Services Platform

35. Current Approach: Media & Advertising… $ $ Upstream Customers Revenue Side 1 Downstream Customers Revenue Side 2 Telco Brand Advertisers Consumers Enterprises SMEs Multi-Nationals

36. … but market is too small! Revenue, $ Billions 2006 2010 $2,000bn $2,490bn $425bn $533bn $30bn $62bn Fixed and Mobile Telecoms Global advertising On-line and mobile advertising

37. Open Up More Markets for Telco Platform $ Millions of Customers Thousands of Segments $ B2B2C VAS Distribution Upstream Customers Downstream Customers Developers Retailers Government Brand Advertisers Content Owners Telco – Retail Content Owners Telco Platform

40. Value of the opportunity

41. Potential Market of $350+ billion?

42. Making it happen

43. Five things to get right Scale Packaging Rewards Privacy Reliability

44. The Two-sided Telecoms Market Opportunity THANK YOU More info at www.telco2.net/blog

45. An eComm 2008 presentation – http://eCommMedia.com for more