Mobile VAS and Multimedia Ecosystem and Value‐Chain over 4G and 4.5G Network Key Drivers and Critical Success Factors

Mobile VAS and Multimedia Ecosystem and
Value‐Chain over 4G and 4.5G Network:
Key Drivers and Critical Success Factors
By ALI Saghaeian
Chief Analyst & Consultant
Telecoms, IT and Media
Ali.Saghaeian [at] gmail.com

Objectives
• Understanding Today’s Challenges of Operators
• What are the Global Market Developments
• Learning about the New Evolving Ecosystem
• Strategies of other Players in the Value Chain
• Evolution of Mobile Operators' Business Model
• How to take the Smart Pipe VAS Strategy
• Key Drivers and Success Factors in Future Networks

Agenda
• 4G and 4.5G as the Next Uplift of Growth
• The Evolution of Digital Technologies
• Global Mobile Data Traffic Growth
• Possible Changes in the Value Chain
• Data as the key to create Competing Value
• Mobile Operators' Business Model Evolution
• Operators' Strategies in the Value Chain
• Value with Digital Economy and the Evolving Ecosystem

Definition of Value-Added Service (VAS)
A value-added service (VAS)
•is non-core services i.e. all services beyond standard voice calls, SMS and data products;
•enable mobile operators to develop additional revenue streams; and
•can be used in any service industry, for services available at little or no cost, to promote their primary business.

4G and 4.5G are bringing the next uplift of
growth
Today, Telecommunication industry is in data–centric world …
MNOs to reinvent business model and build new engine for growth …
SON: Self-Organizing Networks

The Evolution of Technologies
1970 - 80 1990 2000 2010 2020 2030
Early
Information
Systems
Mobile
Number
Connected
Objects
& Locations
Augmented
Reality,
Virtual Reality,
Artificial Intelligence
EVOLUTION OF DIGITAL TECHNOLOGIES
Internet of
Things
IOT
Big data
Cloud Computing
Social Networks
Broadband
Impact of
technology
on Experience
and Productivity
EVOLING TECHNOLOGICAL CAPABILITIES

Some key trends observed over the last year
6
Rise of the second device 1
Mobile penetration has crossed 100% in many of the countries and consumers are carrying second connection/ device. Effective ARPU monetization from the second device is a major challenge for Service providers
Decline of traditional Voice ARPU
2
Service providers are losing traditional Voice Revenues but are now fighting back to ensure the “share of wallet”. Strategies include Bundling voice, launching digital voice and creating innovative services targeting voice revenues
Network Congestion/ Outage
3
Increased data demand and spikes in geographies are leading to Network congestion / outage. The continuous outage is forcing Service Providers to relook at their long term network strategy
Social media savvyconsumers
4
APAC now has one of the highest Facebook users/ Linked in users. Service providers are increasingly looking at social media but do not have a clear strategy.
OTT – Clear and present danger
5
OTT threat is clear and present danger and operators do not have a well defined strategy to counter the threat of OTT players.

The big problem for the mobile industry…
Copyright Disruptive Analysis Ltd 2014
June 2014
0
200
400
600
800
1000
1200
1400
2012
2013
2014
2015
2016
2017
2018
2019
Voice telephony
VAS / digital
Internet/data access
SMS/MMS
$bn – Global Mobile Operator Revenue
?
New/partner services?
Voice/video-based?
Verticals?

Today’s Challenges of Operator
IT/Network Convergence
Improve and Enrich Customer Experience Rapid service launch and overall service performance
Address OTT competition The “dump pipe” / commoditization challenge
Leverage Big Data Data Analytics from OSS & BSS
Build Ecosystems - Digital Services and M2M/IoT To compensate for traditional services erosion
Stronger focus on Enterprise Solutions Cloud, ICT & managed services
Technology shift All-IP & 4G/LTE + pre 5G Data monetization
Lean & Mean – new paradigms for CAPEX and OPEX spendings New business models and managed services

Monumental Disruption by 2020
9 billion
people on
the planet
collaboration
will be
KEY
Internet is the
dominant
delivery
medium
mobile traffic
will grow
10X
Media
value chain
will forever
evolve
content
will grow
Richer
& bigger
agile
networks
will
thrive
IP traffic
will grow
3x
90% of the
world will be
covered by
MBB
78%
of all traffic
will be
Video

Global Mobile Data Traffic Growth: Mobile
Video Will Generate Three-Quarters by 2020
Cisco Forecasts 30.6 Exabytes per Month of Mobile Data Traffic by 2020

Global Mobile Traffic by Connection Type

LTE users – what’s important?
New opportunities, new challenges
69% say Internet access has to work at all times from everywhere 45% want to be rewarded based on usage history 40% would pay more for better download speeds
40% want to manage their plan in real-time
64% prefer access to data over voice in time of crisis

Global market developments
Customers would rather spend money for content than connectivity,
putting pressure on telcos – who need to develop innovative service
delivery capabilities
8
Customers would rather spend money for
content than connectivity, putting pressure on
telcos – who need to develop innovative service
delivery capabilities
Source: Arthur D. Little- Exane BNP 2012, PWC 2011
Telcos will have to establish an innovation
portfolio that enables them to start charging the
supply
side of content & applications
Customer Spending on
Telecom Services Is
Forecast to Decrease
Customer Spending on
OTT Applications Is
Forecast to Increase
Content & Application
Providers Are W illing to
Pay for Quality Content
Delivery
104 100 98 97
0
20
40
60
80
100
120 CAGR: -2.2%
2012 2013 2014 2015
16
22
26
12
0
5
10
15
20
25
30
CAGR +30%
2012 2013 2014 2015
6
5
4
3
2
1
0
2.8
CAGR +28%
2015
5.8
2014
4.5
2013
3.5
2012
CDN revenues in bn
USD
OTT app revenue in bn
EUR
Telco revenues in bn EUR
Share of Telecom
Services in Customer
Spending is Forecast
to Decrease
2%
88%
10%
Content & Application Providers
OTT Applications
Telecom services
75%
5%
20%
Customer
spending
in 2012
Customer
spending
in 2015
1 Global Trends & The Role of Telcos
Global market developments

APAC Telecom revenues: Increasing data
consumption will drive the revenues
3 Source: Frost & Sullivan analysis
2013
2018
2.8%
-0.6%
1.9%
2.7%
4.1%
4.7%
Others
North Asia
ANZ
South East Asia
India
China
In Billion USD CAGR (2013 -2018)
532.5 Billion
ANZ
High smartphone penetration of 72% drive mobile broadband and value-added services around digital content.
North Asia (Japan & Korea)
Marketing and promotions aimed at acquiring and upgrading subscribers to high value added service.
Others*
Low cost smartphones priced below US$80 driving data usage among first time users in emerging markets.
SE Asia
India
Growing ubiquity of smartphones and tablets in the second tier market bringing about mobile data growth.
1.0%
5.2%
Voice
Non-voiceKey demand drivers by region
China
Private consumption backed by steady economic growth offer a boost to spending on handheld devices and spending on mobile services.
Generous voice and data packages through bundling of service to reduce churn and drive steady growth.

Possible changes in the value chain also adds
a new level of uncertainty
Creation Packaging
Distribution Access Devices
End user Lots of legal and illegal free content sources
User owned devices are getting smarter and more connected
Distributor network providers still have a strong lock on large audiences
OTT players are separating the packaging from the distribution layer Content creators are experimenting with direct viewer access

Data is the key to creating value and competing
– in all parts of the media value chain
Advantage from data in media
Content
licensing/
creation
Content
discovery
personalisation
Churn
reduction
Improved ad
targeting
Targeted
promotions
Cross
selling/
ecommerce
Locational
relevance
Reduced
costs
Audience
experience
Revenue
growth

Mobile Operators Business Model Evolution
Number and structure of network parameter have become large and complex…
..e.g. UK telecoms are focused on finance fundamentals, innovative solutions,
improving user experience and keeping their competitive position stable…

Understand and anticipate the strategies of other
players in the value chain
Communication services business models
[Source: Analysys Mason, 2014]
Value of
communicati
on services
increasingly
co-opted
Increasing
overlap between
communications
services and
social networking
Operators’ standalone value
proposition currently looks weak
Player Core
business
Feature set Comms
Voice Messaging Video Location
Social business model
Hardware Indirect
Advertising Indirect
Advertising Indirect
Software
licensing Moving to indirect
Communication
services Direct
Content
distribution Indirect
MNOs Communication
services? Direct

DIGITAL ECONOMY to create top value
Operators must operate the 4 “complexity dials”
beside handling the continuously growing data traffic
Manufacture
Government
Utility
Finance
Home
Appliance /CPE
Telecommunications
Media
Healthcare
Self-driving
Mobile Finance
ecommerce
Convergent
Communications
Digital Health
Smart
Home
Social
Media
Digital Gov
Smart City
Retail
Terminal
view on Digital Economy, focus on Telecom Operator role Interdependence
Connectedness
Diversity
Adaptation&
Learning
Increase ARPx via personalized bundles
Smart connectivity drives diversity of smart devices
Market differentiation through selective partners Develop adjacent products and services
Become a service & platform enabler for B2B Value Fabric

Smart Pipe VAS Strategy!
Retention / fight churn!
Create new revenue models!
Create communication channels!
Acquire new users

New Evolving Ecosystem

Any Questions?

Mobile VAS and Multimedia Ecosystem and Value‐Chain over 4G and 4.5G Network Key Drivers and Critical Success Factors

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