Monetize diferentiate and create value for your customers short version

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MOBILE OPERATOR COMPONENTS FOR A SUCCESFUL STRATEGY - CUSTOMER EXPERIENCE SHOULD BE AT THE CORE OF YOUR BUSINESS - CUSTOMER INTIMACY IS THE MOST VALUABLE ASSET FOR AN OPERATOR - CUSTOMER EXPERIENCE IS …

MOBILE OPERATOR COMPONENTS FOR A SUCCESFUL STRATEGY - CUSTOMER EXPERIENCE SHOULD BE AT THE CORE OF YOUR BUSINESS - CUSTOMER INTIMACY IS THE MOST VALUABLE ASSET FOR AN OPERATOR - CUSTOMER EXPERIENCE IS THE SECRET WEAPON TO DEFEND THE OTT THREAT - PROTECT YOUR REVENUE BY DEPLOYING REAL-TIME CHARGING CAPABILITIES INSIDE YOUR NETWORK - CONTROL YOUR NETWORK COSTS BY MANAGING PROPERLY THE DATA TRAFIC INSIDE YOUR NETWORK THROUGH YIELD MANAGEMENT

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  • 1. MONETIZE YOUR NETWORKDIFFERENTIATE & CREATE VALUE FOR YOUR CUSTOMERSIulian COSTEA – Head of Customer Marketing Middle East, Alcatel-lucentiulian.costea@alcatel-lucent.comDecember 2012 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 2. AGENDA1. TELECOM INDUSTRY TRENDS – OPPORTUNITY OR CHALLENGE2. THE RIGHT STRATEGY TOUCHES BOTH DIMENSIONS OF YOUR BUSINESS – TOP LINE AND BOTTOM LINE3. ADDRESS THE REVENUE DIMENSION BY CREATING VALUE FOR YOUR CUSTOMERS4. CONTROL YOUR CAPEX/OPEX AND DECREASE PER-BIT DELIVERY COST5. CONCLUSION COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 3. INDUSTRY TRENDS FIXED BROADBAND MOBILE WI-FI M2M CONNECTIONS CONNECTIONS PUBLIC SPOTS DEVICES +30 % +32 % +346 % +990 % 7.3 Billion 691 5.5 Billion 5.8 Million 532 Million 1.3 Million 12 1.1 Million Billion Billion 2011 2015 2011 2015 2011 2015 2011 2015 APPLICATIONS SMARTPHONE PUBLIC CLOUD MOBILE VIDEO DOWNLOADS SALES REVENUE USERS +129 % +134 % +98 % +879 % 41.7 1 428 2.4 18.2 Billion Billion Million 89.4 177 Billion 429 Billion Billion Billion Million 2011 2015 2011 2015 2011 2015 2011 2015 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 4. BROADBAND AND INTERNET ACCESSARE DRIVING FIXED AND MOBILE CONNECTIONS GLOBAL CONNECTIONS 2010- 2016 MOBILE DATA TRAFFIC FOR NAR, EU & APAC BY 2016 2011- 2016 16000 MOBILE DATA TRAFFICBILLIONS OF CONNECTIONS 9 25x TIMES 8 14000 7 2016 12000 6 3G/4G CONNECTIONS PB/MONTH 5 10000 99% OF TRAFFIC IN NAR 4 8000 3 2 6000 ON W i-Fi 2011 27% OF MOBILE DATA 1 4000 0 2009 2010 2011 2012 2013 2014 2015 2016 2000 VIDEO STREAMING Fixed subscriptions Mobile connections 50% OF TRAFFIC 0 Fixed broadband connections Mobile broadband connections 2011 2012 2013 2014 2015 2016 CAGR (2011-2015) EU APAC NAR Fixed Broadband Connections: 9 % Mobile Broadband Connections: 32 % INTERNET TRAFFIC DRIVEN BY SERVICES 4.8 BILLION BROADBAND 7 BILLION PERSONAL REAL-TIME ENTERTAINMENT LIKE NETFLIX, HTTP, YOUTUBE CONNECTIONS BY 2015. MOBILE DEVICES BY 2016 ON MULTIPLE SCREENS OVER 80% ARE MOBILE Source: Sandvine, Gartner, Ovum 2012, Traffic Index, 2012 - Bell Labs Modeling COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 5. COMMUNICATIO TRANZACTIONAL N SESSIONS SESSIONS COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 6. THE NETWORK ISTHE LAUNCHINGPAD BUT THEEXPERIENCE ISTHE PRODUCT. CONVERGENCE COMPETE IN QUALITY OF OF EXPERIENCE EXPERIENCESource: Strategy Analytics COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 7. THE NETWORK AND BUSINESS MODEL ARE UNDER PRESSUREDRIVEN BY MASSIVE GROWTH IN VIDEO, SIGNALING, AND OTTs • 25X DATA TRAFFIC BY 20161  2/3rd IS VIDEO STREAMING OR VIDEO COMMUNICATION • SIGNALING TRAFFIC EXPLODING1 How to grow  DRIVEN BY 22.6% SMARTPHONE CAGR and profit  46B APPLICATION DOWNLOADS THOUGH 2016 in this • OTT MESSAGING WILL OVERTAKE SMS/MMS environment? WITH 20B MESSAGES ANNUALLY BY 20162 • 200B OTT VOIP MINUTES ANNUALLY BY 20163 From 2012 to 2020, “OTT VoIP will cost the global telecoms “In 2012, Ovum forecasts that mobile operators will lose industry $479bn in lost cumulative revenues, which represents $23.2bn in SMS revenues to over-the-top (OTT) messaging 6.9% of cumulative total voice revenues” - Ovum services. By 2016, Ovum expects this number to increase to $54.4bn.” - OvumSources: 1 Bell Labs Research, 2 Portio Research, 3 Juniper Research COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 8. EXPLODING DATA TRAFFIC AND LTE CREATE NEWOPPORTUNITIES • ALIGN USAGE AND PRICE WITH NETWORK COSTS How to make • BROADEN THE SUBSCRIBER BASE the most of • INCREASE CUSTOMER LIFETIME VALUE these opportunities? • BOOST CUSTOMER QUALITY OF EXPERIENCE • CHANGE OTTs FROM COMPETITORS TO PARTNERS • OPTIMIZE NETWORK EFFICIENCY COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 9. AGENDA1. TELECOM INDUSTRY TRENDS – OPPORTUNITY OR CHALLENGE2. THE RIGHT STRATEGY TOUCHES BOTH DIMENSIONS OF YOUR BUSINESS – TOP LINE AND BOTTOM LINE3. ADDRESS THE REVENUE DIMENSION BY CREATING VALUE FOR YOUR CUSTOMERS4. CONTROL YOUR CAPEX/OPEX AND DECREASE PER-BIT DELIVERY COST5. CONCLUSION COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 10. TELECOM SERVICE PROVIDERS – DRIVING FORCES TOPLINE AND BOTTOM LINE PRESURES PROTECT YOUR REVENUECOMPETITION PRESURE OTT PRESURE • PRICE EROSION • LOST REVENUE ON VALUE ADDED SERVICES • TECHNOLOGY LEADERSHIP • PER-BIT DELIVERED PRICE • INNOVATION AS DIFFERENTIATION FACTOR • VALUE CREATION TELECOM SERVICE PROVIDERSCOST PRESURE REGULATORY PRESSURE • CAPEX & OPEX REDUCTION • SPECTRUM REGULATION • PER-BIT DELIVERY COST • LICENSING CRITERIAS REDUCE YOUR COST COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 11. Over-The-Top THREAT “10% POINT INCREASE IN SMARTPHONE PENETRATION COULD COST EUROPEAN OPERATORS BETWEEN 0.5% AND 0.6% IN SERVICE REVENUES FROM VOICE AND MESSAGING” ( INFORMA)OTT PLAYERS ONLINE APPLICATION PORTALS DEVICE AND OS VENDORS SEARCH PROVIDRS DEVELOPERS E.g. Tencent, MSN, E.g. Apple, Google, Samsung, Microsoft E.g. Google, Baidu E.g. WhatsApp, Nimbuzz Yahoo! SOCIAL CONTENT INTERNET TV ONLINE NETWORKS PRODUCERS CE VENDORS PROVIDERS RETAILERS E.g. Facebook, E.g. Disney, Universal, E.g. Sony, Samsung E.g. Hulu, Netflix E.g. Amazon, Alibaba Cyworld Warner Brothers CONSUMER SERVICES VOICE, MESSAGING, TV AND VIDEO, GAMES, MUSIC, COMMERCE, SOCIAL MEDIATELCO RESPONSE VALUE ADDED SERVICE BECOME AN ventures, Joint SMART SERVICES PARTNERSHIPS OTT PLAYER acquisitions, and ENABLEMENT CONNECTIVITY investments in OTT • PARTNER TO OFFER • JOINT VENTURES, services • SMART ENABLEMENT • MANAGE CONNECTIVITY TO• DIFFERENTIATE WITH VAS THIRD-PARTY OTT SERVICES ACQUISITIONS, AND integration with and OTT SERVICES OF OTT SERVICES AND PLAYERS Deep• USE TELCO NETWORKS TO • PROVIDE THIRD-PARTY OTT INVESTMENTS INadoption of OTT services, OTT • LEVERAGE TELCO ASSETS • DEFENSIVE STRATEGIES – PROVIDE VAS SERVICES AS PART OF THE SERVICES SUCH AS BILLING, NETWORK CAPPING OR “OTT TAXES” distribution, and business• HARNESS THE WEB FOR TELCO OFFERING • DEEP INTEGRATION WITH APPLICATION • OFFENSIVE STRATEGIES – modelsOTT SERVICES • ENGAGE WITH OTT AND ADOPTION OF OTT PROGRAMMING MANAGED CONNECTIVITY/ PLAYERS TO INTEGRATE SERVICES, DISTRIBUTION, INTERFACES, CUSTOMER WHOLESALE SERVICES AND BUSINESS MODELS INSIGHTS/ANALYTICS, AND SECURITY TOOLS COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 12. TWO BUSINESS DIMENSSIONS – DEMAND & SUPPLYCREATE VALUE BY ADDRESSING THEM BOTH THROUGH AN ORCHESTRATEDSTRATEGY SUPPLY DEMAND • INTANGIBLE ASSETS • VALUE CREATION • AIRTIME • REAL TIME SERVICES • SPEED • FLEXIBILITY • CAPACITY • RELIABLE SERVICE • CONNECTIVITY • USER EXPERIENCE • CUSTOMER • REWARD EXPERIENCE VOLATILE PERISHABLE COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 13. AGENDA1. TELECOM INDUSTRY TRENDS – OPPORTUNITY OR CHALLENGE2. THE RIGHT STRATEGY TOUCHES BOTH DIMENSIONS OF YOUR BUSINESS – TOP LINE AND BOTTOM LINE3. ADDRESS THE REVENUE DIMENSION BY CREATING VALUE FOR YOUR CUSTOMERS4. CONTROL YOUR CAPEX/OPEX AND DECREASE PER-BIT DELIVERY COST5. CONCLUSION COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 14. DESIGN AND DELIVER A MARKET-LEADING CUSTOMER EXPERIENCE CUSTOMER ANALYTICS EXPERIENCE MANAGEMENT OPTIMIZATION CONSULTING COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 15. CUSTOMERMANAGEMENT: SIMPLIFYCUSTOMERINTERACTIONSTO IMPROVEPROFITABILITY. TOUCHPOINTS SERVICE FUNCTION MODEL CHANNEL COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 16. ANALYTICS:USECUSTOMERINSIGHTS TOIMPROVE Quality Care Value Customer SatisfactionBUSINESSPERFORMANCE. COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 17. OPTIMIZATION: CREATE ANEXPERIENCETHATPOSITIVELYINFLUENCESUSAGEBEHAVIORTOWARDSSTATES OFHIGHERPROFITABILITY COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 18. CONSULTING: DEVELOP A PRIORITIZED ACTIONABLEPLAN TO IMPROVE THE CUSTOMER EXPERIENCE. Deep Expertise Patented Methodology for CSPs A Prioritized, Actionable Plan COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 19. MOBILE MONETIZATIONFRAMEWORK COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 20. MOBILE MONETIZATION FRAMEWORK 1 ST STEP: VOLUME BASED - ASSIGN VALUE TO BANDWIDTH 2 ND STEP: VALUE BASED - START TO MEASURE AND ACCOUNT FOR DATA, BASED ON THE APPLICATION THEY ARE USING (DPI, POLICY) 3 RD STEP: SEGMENTATION/DISCRIMINATION - USING SMARTS FROM POLICY AND CHARGING TO CREATE SERVICE BUNDLES AND PERSONALIZED OFFERS THAT CAN ENCOURAGE MORE USAGE OF THE INFRASTRUCTURE 4 TH STEP: NETWORK APIS - ACCESS NEW BUSINESS MODELS COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 21. AGENDA1. TELECOM INDUSTRY TRENDS – OPPORTUNITY OR CHALLENGE2. THE RIGHT STRATEGY TOUCHES BOTH DIMENSIONS OF YOUR BUSINESS – TOP LINE AND BOTTOM LINE3. ADDRESS THE REVENUE DIMENSION BY CREATING VALUE FOR YOUR CUSTOMERS4. CONTROL YOUR CAPEX/OPEX AND DECREASE PER-BIT DELIVERY COST5. CONCLUSION COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 22. TRAFFIC VS REVENUE DICHOTOMYHOW CAN OPERATORS MANAGEDATA GROWTH AND INCREASEREVENUE? INCREASE REVENUE: • Deliver personalized services • Accelerate time to market • Develop new business models REDUCE COSTS: • Scale and manage capacity • Reduce cost of operations • Environment SustainabilityDATA TRAFFIC GROWTH AND DECLINING OR FLAT ARPU PUTS SERVICE PROVIDER PROFITABILITY AT RISKSource: Informa Global mobile network traffic and ARPU Forecast (2011) COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 23. HIGH LEVERAGE NETWORKA PLATFORM FOR INNOVATION THAT REALIZES THE VALUE OF THENETWORK • CREATE VALUE • PERSONALIZATION INCREASE REVENUE VOLATILE • DELIVER PERSONALIZED SERVICES Revenue • ACCELERATE TIME-TO-MARKET • DEVELOP NEW BUSINESS MODELS PERISHABLE REDUCE COSTS • SCALE AND MANAGE CAPACITY Cost • HIGH COST • REDUCE COST OF OPERATIONS • LOW UTILIZATION • REDUCE FOOTPRINT A CONVERGED, SCALABLE, INTELLIGENT EFFICIENT ALL-IP NETWORK THAT DELIVERS BANDWIDTH AT THE LOWEST COST PER BIT. COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 24. NETWORKCONVERGENCESTRATEGY COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 25. BUSINESS CASE OVERVIEWPURPOSE ­ A generalized service provider business model that evaluates an Alcatel-Lucent IMS overlay onto an existing LTE network, inclusive of a full range of IMS services such as VoLTE, RCS, messaging, and video communications. This is compared to a network which overlays Circuit Switched Fallback (CSFB) for voice. OBJECTIVES ­ Two primary modes are evaluated. 1. Mode 1: Launch with LTE laptops, then add smartphones and mobile internet devices (e.g., tablets) in Year 3 2. Mode 2: Launch with all 3 types of devices – LTE laptops, smartphones, and mobile internet devices In addition to IMS versus CSFB, a migration from CSFB to IMS in Year 3 was studied SERVICE PROVIDER ­ A Tier-1, French service provider who already has an LTE network or who has decided to use LTE, which is considering whether to use IMS’ full suite of services or CSFB’ voice-centric service. COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 26. DEMAND: MODELING WILLINGNESS-TO-PAY BASED ON PRIMARYMARKET RESEARCH Converged Comm. LTE/IMS LTE /CSFB Video Comm. & Location LTE/IMS LTE /CSFB Messaging √ √ Enhanced Mobil Video √ Multi-Screen √ √ Multi-Party Video Call √ Mobile/PC Synch √ √ Mobile Video Monitoring √ One-number Voice √ Location-based Services √ √ Enhanced NAB √ Live Messaging √ Presence enabled Calendar √ Relative Market Value 5x 1x Video share & calling √T E K R A M RE MUS N OC Relative Market Value 16x 1x Converged Comm. LTE/IMS LTE /CSFB Video Comm. & Location LTE/IMS LTE /CSFB Unified Messaging √ √ Mobil Collaboration √ Mobile Extension √ Multi-Party Video Call √ Video Conferencing √ Wireless BB Branch Office √ Video Mail √ Location-based Services √ √ Web Conferencing √ Interactive Mobile Kiosk √ Location Services √ √ Relative Market Value 7x 1x Enhanced NAB √ RP RET NE Relative Market Value 7x 1x Source: ALU Primary Market Research, 2009 IMS enables a richer set of services with a higher market value COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 27. PROVIDING A NEW CONVERSATION EXPERIENCE FOR 4G LTESUBSCRIBERS versus CSFB: IMS: LEGACY VOICE, MESSAGING IMS VOICE, VIDEO, RCS, MESSAGING; APIS FOR MANY APPS, QUICKLY DIRECTLY LAUNCHING IMS ONTO AN EXISTING LTE NETWORK PROVIDES SUPERIOR ECONOMIC RESULTS, WHEN COMPARED TO CSFB OR A CSFB-TO-IMS MIGRATION COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 28. COMPETITIVE TRANSFORMATION – IMS versus CSFB TELCOS NOW DRIVEN BY COMPETITION FROM ADJACENT MARKETS Customer experience NEW METRICS ARE NEEDED (EXPERIENCE, INNOVATION,  IMS EFFICIENCY) BECAUSE ONLY FINANCIAL, TECHNICAL, AND Innovation Efficiency NETWORK METRICS NO LONGER  IMS  IMS PAINT THE COMPLETE PICTURE  CSFB IMS ENABLES COMPETITIVE THE “TRANSFORMATION TRINITY” (1) TRANSFORMATION; CSFB TAKES CARE OF ONLY THE NETWORK’S EFFICIENCY (1) “What do transforming telcos measure?” Ovum, 30 June 2010 {includes BT, DT, FT, KPN, Telefonica, TNZ, Telstra COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 29. HOW IS 4G LTE USED?OPERATORS USE LTE’S … … TO PROVIDE MOBILE DATA SERVICE WITH High bandwidth with low latency  Faster speed Per-service QoS  Improved experience Spectral and CapEx efficiency improvement  Multiple concurrent sessions THAT’S THE DATA STRATEGY, BUT WHAT ABOUT COMMUNICATION SERVICES? IMS provides CSFB provides Voice and beyond  Voice, only voice Connect, share, & organize conversations  Minimizes near-term spending Full LTE utilization: all-IP, multi-application concurrency,  Perpetuates 2G/3G’s CS + PS duality video, …   Cost-centric strategy  User-centric strategy IMS PROVIDES COMMUNICATIONS THAT FULLY UTILIZE 4G LTE’S PERSONAL, UNTETHERED BROADBAND COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 30. WHY IS VoLTE ESSENTIAL FOR 4G LTE? OTT/ACP VoLTE CSFBSubscriber’s service Providers New conversations Voice-centric Many servi ces Global roaming w/ full feature suite   XStandards’value Global interoperability w/ full feature suite   X End to end QoS; also Emergency calling   X All-IP path enables video-comms, etc.  X Multimedia Multiple concurrent services enabled by 4G LTE  X  Blend voice with video, web, RCS-like, etc.  X  Simultaneous voice and 4G LTE data service  X Voice Minimal voice call setup delay  X  Evolved voice: HD, new features, clickable URL, etc.  X  VOLTE ENABLES COMPETITIVE VOICE AND IS FOUNDATIONAL FOR FURTHER SERVICES COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 31. GO TO MARKET, QUICKLY: A COMPETITIVE LAUNCH STRATEGY 2011 2012 2013  Entice subscribers to IMS/LTE, because the service is not available in 3G. LTE video  Video calls, sharing, storage lockers, social networking, multiscreen, etc.  Across LTE, fixed, and web portals. communications  2nd line VoLTE. Price low or free; no incentive to switch to alternative voice providers. VoLTE: 2nd line VoLTE: mass market  Mass market VoLTE. When ready, sell at a premium. Unbeatable appeal the OTT can’t match due to geographic coverage (legacy handover), global service via roaming, global service inter-operability for all-IP services (HD audio, video), QoS, etc.  RCS spans 3G, fixed, and the web; also LTE. Collaboration & messaging  Wraps comms with collaboration and messaging. Application Enablement  Quickly create and deploy many apps  Innovative apps for the network Convergence  Fully embrace the subscriber, everywhere Use IMS to define the early LTE communications market, fueling profits. Then expand into mass services, having won the initial battles. COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 32. COMPARING THE TOTAL COST OF OWNERSHIP Total Investments Comparison Investments Comparison 25 80 LTE IMS 70 20 LTE CSFB 60 50 15 40 M O U R E S M O U R E S 10 30 20 5 10 0 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 LTE IMS LTE CSFB Total Expenses Comparison 1,200 Expenses Comparison Device Subsidies 1,000 400 Opex 350 Sales & Marketing LTE IMS 800 General & Administrative 300 LTE CSFB 250 M O 600 U R E S 200MOURE 400S 150 100 200 50 0 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 LTE IMS LTE CSFB IMS’ TCO IS MODERATELY HIGHER Pro-rated Device Subsidies dominate any other investment or expense COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 33. NETWORK COSTOPTIMIZATION COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 34. CAPACITY IS WASTED IN MOBILE NETWORKS TODAY • A study Alcatel-Lucent conducted for a major Tier-1 operator in North America revealed: ­ 68% average base station busy hour utilization ­ The busy hour is unpredictable. It differs from base station to base station and even differs day to day for the same base station ­ 13% daily traffic in busy hour ­ 27% base station average utilization outside the busy hour during the Percentage of daily load in busy hour of cell productive day (8 a.m. to midnight) 30% 25% 20%  UNPARALLELED DEGREE OF WASTE 15%  LOTS OF CAPACITY FOR LOW PRIORITY TRAFFIC 10% 8 9 0 7 11 12 13 4 5 6 0 0 1 0 01 01 01 0 0 0 0 0 0 20 2 2 2 2 2 2 2 2 2 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 35. CONSIDERATIONS FOR YIELD MANAGEMENT IN MOBILENETWORKS1. CELL IS THE CRITICAL RESOURCE TO CONSIDER FOR YIELD MANAGEMENT­ 80% of network cash cost is in the Radio Access Network Distribution of resource consumption whole network­ Radio Frequency is generally a scarce resource 7% % Daily consumption 6%­ Core Network peaks are long (8am – midnight) and flat 5% 4% Bytes Contrary to cell peaks 3% ­ 2% Airtime Signalling ­ Offering less interest for Yield Management then 1% 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Hour2. CELL LOAD SHOULD BE CONSIDERED AT EACH CELL INDIVIDUALLY Traffic Distribution of 20 Busiest Base Station (% of daily base station load)­ Each cell has a different traffic profile 25% 20% 15% 10%3. CELL LOAD SHOULD BE CONSIDERED DYNAMICALLY 5% 0%­ There is no static traffic profile for a given cell 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (hour 24 hour clock) (Done for a Tier-1 mobile operator, using the Alcatel-Lucent 9900 ­ Trends can be observed but cell load is mostly unpredictable Wireless Network Guardian – WNG)­ There is a great deal of free capacity in each cell even when people are active ­ 70-90% of the time between 8AM and midnight COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 36. UNUSED ACCESS NETWORK CAPACITY PLENTY OF NETWORK RESOURCES AVAILABLE FOR MONETIZATION AT VIRTUALLY NO INCREMENTAL COSTDemand (as % of capacity) Cell Data Traffic * 100% "Spoilage" (unsold) Traffic demand (sold) 80% Decreased cost 60% Reduced congestions In one Radio Cell 40% Increased Revenue 20% 0% 8:00 16:00 0:00 RADIO ACCESS NETWORKS OBJECTIVES: RESOURCES: • Reduce overall network costs by lowering cell peak traffic. • Abundance of unutilized capacity • Realize the value of spoiled capacity: Introduce offers that • Meets basic Yield Management requirements: increase RAN usage during off-peak hours at virtually no Limited and “perishable” capacity with dynamic incremental cost. demandYIELD MANAGEMENT IS THE PROCESS OF UNDERSTANDING, ANTICIPATING AND INFLUENCING CONSUMERBEHAVIOR IN ORDER TO MAXIMIZE YIELD OR PROFITS FROM A FIXED, PERISHABLE RESOURCE (SUCH AS AIRLINESEATS, HOTEL ROOM RESERVATIONS OR NETWORK RESOURCE/CAPACITY) COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 37. YIELDMANAGEMENT COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 38. BUILDING BLOCKS OF YIELD MANAGEMENT VENDORS & SUBSCRIBER SERVICE PROVIDER PARTNERS •USER INTERFACES DATA COLLECTION •APPLICATION •DEVICE ENABLEMENT ANALYTICS •NETWORK USAGE ANALYTICS •CONNECTION •MARKET ANALYTICS MANAGEMENT •DEVICE-CLIENT STATISTICS CAPACITY & PRICING DECISION •USER BEHAVIOR PREDICTION & SCORING (SEGMENTATION) •NETWORK CAPACITY ALLOCATION & PRIORITIZATION •DYNAMIC PRICING EXECUTION •POLICIES & CONTROL •RULES ENFORCEMENT •BILLING •CUSTOMER RELATIONSHIP MANAGEMENT COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 39. INTELLIGENT TRAFFIC MANAGEMENTLEVERAGING NETWORK INTELLIGENCE WITH POLICY Customer Analytics 9900 Wireless Network Guardian 5780 DSC (Dynamic Services Anomaly Notification Controller) Process and Monitor and Trigger Analyze Enforce and Deliver COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 40. AGENDA1. TELECOM INDUSTRY TRENDS – OPPORTUNITY OR CHALLENGE2. THE RIGHT STRATEGY TOUCHES BOTH DIMENSIONS OF YOUR BUSINESS – TOP LINE AND BOTTOM LINE3. ADDRESS THE REVENUE DIMENSION BY CREATING VALUE FOR YOUR CUSTOMERS4. CONTROL YOUR CAPEX/OPEX AND DECREASE PER-BIT DELIVERY COST5. CONCLUSION COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 41. OPERATOR NETWORK STRATEGY CONSIDERATIONS1. CUSTOMER EXPERIENCE SHOULD BE AT THE CORE OF YOUR BUSINESS I. CUSTOMER INTIMACY IS THE MOST VALUABLE ASSET FOR AN OPERATOR II. CUSTOMER EXPERIENCE IS THE SECRET WEAPON TO DEFEND THE OTT THREAT2. PROTECT YOUR REVENUE BY DEPLOYING REAL-TIME CHARGING CAPABILITIES INSIDE YOUR NETWORK3. DEPLOY ONE CONVERGED, SCALABLE, INTELLIGENT ALL-IP NETWORK THAT DELIVERS BANDWIDTH AT THE LOWEST COST PER BIT4. CONTROL YOUR NETWORK COSTS BY MANAGING PROPERLY THE DATA TRAFIC INSIDE YOUR NETWORK THROUGH YIELD MANAGEMENT COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 42. OPERATORS BUSINESS STRATEGY CONSIDERATIONSMAINTAIN A STRONG MARKET PRESENCE Service providers will have to develop services and applications that may well cannibalize their existing revenue streams. While this may affect their bottom lines, it well help them to defend IMPROVED against new disruptive players and remain relevant to their CUSTOMER customers. EXPERIENCECREATE NEW PARTNERSHIPS Forming partnerships will help service providers to increase innovation and time-to-market, which will enable them to exploit BEST-OF-BREED NEW REVENUE new gaps in the market. DATA MINING AND OPPORTUNITIES ANALYTICSLOOK FOR NEW WAYS TO MONETIZE Existing business models will be hard to maintain, so service providers will need to work hard to find new innovative ways to monetize their services. INFRASTRUCTURE AND COST OPTIMIZATIONTURN CUSTOMER DATA ASSETS INTO REVENUES Service providers will need to leverage customer data by investing in best-of-breed analytics platforms and capabilities. COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 43. Q&A COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 44. COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION