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Future Challenges of the Mobile Operator Business Model
 

Future Challenges of the Mobile Operator Business Model

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  • 78% France 85% Belgium 89% Switzerland 90% Germany 98% Norway 99% Europe 100% Netherlands 100% Denmark 101% Portugal 103% Ireland 103% Finland 103% Austria 104% Spain 107% UK 107% Greece 111% Sweden
  • 141 Europe 147 UK 124 Switzerland 133 Sweden 155 Spain 122 Portugal 189 Norway 135 Netherlands 125 Italy 215 Ireland 139 Greece 76 Germany 228 France 276 Finland 178 Denmark 149 Belgium 136 Austria 3Q05 Country
  • 13 Europe 10 UK 9 Switzerland 16 Sweden 22 Spain 7 Portugal 9 Norway 10 Netherlands 13 Italy 16 Ireland 22 Greece 12 Germany 13 France 16 Finland 27 Denmark 5 Belgium 14 Austria In Portugal 60% of traffic is mobile originated. In Switzerland the figure is only 25%
  • Annual spend on content excluding data: 2006 - US$15.94 per annum 2010 - US$21 per annum Monthly content spend of: US$1.33 in 2006 US$1.75 in 2010 And daily content spend of: US$0.04 in 2006 US$0.06 in 2010

Future Challenges of the Mobile Operator Business Model Future Challenges of the Mobile Operator Business Model Presentation Transcript

  • Future challenges for the mobile operator business model Mark Newman, Chief Research Officer
  • More than one phone for every person in Europe
  • Subscription growth forecast Source: Informa Telecoms & Media
  • ARPU is on the slide in most European markets (% annual change) 4Q04 1Q05 2Q05 3Q05 -2.8 -2.4 -2.1 -0.9 Europe -2.1 -4.5 -6.5 -4.7 UK -6.6 -3.3 -3.2 -3.5 Switzerland -5.3 -2.7 -9.4 -13.3 Sweden 2.5 5.5 6.9 8.3 Spain -9 -8.8 -2.4 1.9 Portugal -2.6 -6 -5.7 -5.2 Norway -4.2 -9.8 -10.3 -10.9 Netherlands -4.3 -3.4 -2.1 0.4 Italy 1.8 2 1.7 -0.1 Ireland -5.6 -2.3 -1.9 2.5 Greece -5 -4.1 -2.8 -1.9 Germany 1.4 1.8 2.5 1.9 France -21 -17.6 -14.3 -11.9 Finland 7.7 7.5 3.4 3.7 Denmark -0.4 -0.3 -1.5 -0.4 Belgium -5.6 -3 -1.9 2.1 Austria
  • But people are making more phone calls…..
  • But people are making more phone calls…..
  • Never have there been so many opportunities for mobile operators
    • Mobile entertainment and 3G
    • Mobile television
    • Mobile commerce and payments
    • Fixed mobile substitution
    • Fixed mobile convergence
    • Mobile broadband
  • But there may be even more threats than there are opportunities
    • Internet technnologies and economics
    • Faster and faster, but why?
    • Wi-fi and wimax
    • Broadband pipe versus public network
    • Closed business models
    • The love-hate relationship between handset brands and mobile operators
  • Key themes
    • Mobile entertainment and 3G
    • Mobile vs Internet economics
    • Public network vs broadband pipe
    • Fixed mobile convergence
    • Mobile operators and handset manufacturers
  • Do the maths! – mobile data and 3G are still flattering to deceive
    • Average European ARPU = Euro 30
    • Voice ARPU = Euro 25
    • SMS ARPU = Euro 4
    • Mobile data ARPU = Euro 0.5-1
    Mobile Entertainment and 3G
  • Mobile content spend “breakdown”
      • 2006:
      • 2010:
    Source: Informa Telecoms & Media Mobile Entertainment and 3G
  • There is genuine excitement about the potential for mobile music
    • Devices and UIs are rapidly improving
    • Vodafone has cut the prices of downloads to the same level as online downloads
    • Music companies believe in mobile music
    • HSDPA will bring down the cost and time of full track downloads
    • Hutchison has already recorded 50 million downloads
    • Operators are starting to wholesale data capacity
    Mobile Entertainment and 3G
  • Games and gambling are flattering to deceive
    • Prices are too high
    • Poor gaming experience
    • Long tail
    • Too many devices, form factors, technical challenges
    Mobile Entertainment and 3G
  • While the TV industry rolls out time-shifted television, mobile operators set their sights on broadcasting Mobile Entertainment and 3G
    • Subscription or advertising?
    • Operator-tv company relationships
    • Video versus television
    • Personal TV or mobile TV?
  • Mobile Entertainment and 3G Operators are reviewing their role in the mobile content business
    • Off-portal strategies
    • Cutting back content teams
    • Data wholesale and MVNOs
    • User generated content
  • Mobile versus Internet economics GSM versus TCP/IP – only one winner?
    • Not so much telly addicts as Internet addicts
    • Open versus closed business models
    • High cost versus low cost. Expensive versus cheap (free)
    • Microsoft, Google, Skype versus mobile operators (fast companies versus slow ones)
    • Wi-fi and VOIP versus telephony businesses
    • Do we need mobile operators?
  • Public network versus broadband pipe Was cellular technology ever designed for high-speed broadband communications?
    • 70% of calls are made from the home or the office
    • Is 3G coverage good enough to offer mobile broadband in the home?
    • FMC takes the initiative away from the public mobile network to the broadband pipe
  • Fixed mobile convergence Has anyone bothered asking their customers if they want FMC services?
    • Fixed = home and family, mobile = personal
    • Technology choices and timetables
    • IMS = operator-centric Internet = wishful thinking?
    • Handset availability
    • Fixed mobile substitution – now you’re talking
  • Mobile operators and handset manufacturers And the balance shifts back in favour of the global handset brands?
    • The lunacy of handset subsidies
    • Are long contracts the only strategy for reducing churn?
    • ‘ Play videos on your MP3 player’
    • The Korean and Japanese models
  • What are we going to do now?
    • Cut costs
    • Set up a wholesale business – voice and data
    • Price entertainment services competitively
    • Invest in a long term strategy to serve enterprises
    • Take an open mind to IP based services
    • Take an open mind to FMC
    • Welcome Microsoft – cautiously!
  • And remember, SMS became a bigger industry than Hollywood despite operators, not because of them! Mark Newman Chief Research Officer Informa Telecoms & Media Tel + 44 20 7017 4263 [email_address]