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Disruptive Technology Strategies for Mobile Operators in Emerging Growth Market.   Connected World Forum, December 8 th  2...
Mobile business models …   Dr. Kim Kyllesbech Larsen, Connected World Forum, Dec 8 th  2011, Chengdu, China.
The profitability challenge… Feb. 2011  Tellabs  reports mobile operators profitability challenged within 3 year s , and m...
Mobile Emerging Asia in perspective. Profitability drop of almost 10%. Opex growth faster than Revenue. Highest ARPU YoY d...
OTT Mobile Apps impact. Mobile Apps “attacks” the highest margin services. 22.4  1 12.7 1  Source 2010 & 2015 Pyramid Rese...
OTT Mobile Apps impact. Mobile Apps “attacks” the highest margin services. 22.4  1 12.7 1  Source 2010 & 2015 Pyramid Rese...
Revenue Decline & Profitability Squeeze Business model Breakdown Data Tsunami Spectrum Crunch Transform or Perish Dr. Kim ...
OTT mobile apps impact on Emerging Asia.  Profitability challenge may arrive later. 1  Source 2010 & 2015 Pyramid Research...
The Substantial Growth Market of Emerging Asia. The smartphone decade kick-off! 1,2  Source 2010 & 2015 Pyramid Research S...
The chatty smartphone... iPhone vs Android – same volume, more than twice Signalling. Signaling msg per Device Volume per ...
When data demand exceeds spectral efficiency. ”Houston we have problems”. Illustration 10 20 40 60 85 120 120 120 120 120 ...
Remedies for traffic management. FUP & Throttling … fair and efficient? Volume per User FUP Limit <ul><li>FUP flavors </li...
How to uplift the mobile business case. Demand for new revenue, partnerships & collaboration models. Economics of mobile d...
Vision – Internet of Things (IoT) New revenue opportunities. $1,200 Billion revenues. IoT = Mobile revenues. 20 IoT device...
Vision – efficiency & better service. Optimized service delivery – macro-level. Traffic Profile <ul><li>At least 30+% in-f...
Vision … network friendly apps. Innovation remedy to mitigate network & financial risk. Synched notification Ad-hoc optimi...
What we need to be passionate about… de-risking the broadband business model. How to spend it How to earn it back Device M...
The key value proposition of a mobile network is .... Freedom Contact:  [email_address] Mobile: +31 6 2409 5202 http://nl....
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Disruptive technology strategies for mobile operators in growth markets.

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Delivered at "Connected World"conference on "New Generation Mobile Technologies, Networks and Devices", December 8, 2011, Chengdu, China.

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  • Author / Presentation title 08/29/2007
  • Author / Presentation title 08/29/2007 Operators walled gardens are breaking down. Smartdevices (smartphones and tablets) are increasing customer adaptation of mobile data and increasing demand dramatically. OTT Apps taking over Messaging and eventually Voice Revenue. New apps based services making operator developed services redundant. New Billing based on Amazon and iTunes (etc.) are convinience replacements for traditional operator billing. The sticky SIM card is being challenged by soft SIM devices making it a lot easier for customers to change opetors. iCloud, Whitespaces are new opportunities to disruptive business models and usage patterns.
  • Author / Presentation title 08/29/2007
  • Author / Presentation title 08/29/2007
  • Author / Presentation title 08/29/2007 So we need to be passionate about HOW TO SPEND THE MONEY and HOW TO EARN IT BACK if we want to be around in 10 years time (possible less). Its about finding new revenue streams making up for lost legacy walled garden voice and sms; IOT and Entertainment are certainly worth keeping an eye on, being better at monetizing social media including mobile advertisement given mobile operators natural customer relationship and insights should be pursued. Finally, transforming our mobile business model to the new apps dominated world where the past natural monopoly on products and services no longer prevail will become increasingly important.
  • Author / Presentation title 08/29/2007 By 2015 we expect that at least 80% of the mobile devices will be smartphone based. The recent trend is that OTT Messaging and VoIP Apps have caused a reduction in ARPU that has not been compensated by increased data ARPU. Looking at 2015 operators could face a world where there is no longer any SMS revenues and mobile voice revenues has been reduced due to VoIP. The big question is how to make up for this substantial decline in ARPU and of course Topline. In some scenarios the loss that needs to be compensated could be as much as 40+% This is one of the most interesting challenges facing the mobile industry!
  • Author / Presentation title 08/29/2007 By 2015 we expect that at least 80% of the mobile devices will be smartphone based. The recent trend is that OTT Messaging and VoIP Apps have caused a reduction in ARPU that has not been compensated by increased data ARPU. Looking at 2015 operators could face a world where there is no longer any SMS revenues and mobile voice revenues has been reduced due to VoIP. The big question is how to make up for this substantial decline in ARPU and of course Topline. In some scenarios the loss that needs to be compensated could be as much as 40+% This is one of the most interesting challenges facing the mobile industry!
  • Author / Presentation title 08/29/2007
  • Author / Presentation title 08/29/2007
  • Author / Presentation title 08/29/2007
  • 8 December 2011 As the demand reaches the spectral limitations the cash pressure will continue to rise as more and more network resources will be committed (i.e., densification, smarter antennas/DAS, etc..). Eventually the mobile business models break down (Note: this has also been shown by a detailed Tellabs study from February 2011) due to revenue decline (due to mobile data adaptation) and cash pressure as the spectrum limitations becomes increasingly severe.
  • Author / Presentation title 08/29/2007 Vision … none of the examples presented here is currently implemented but are natural measures with todays smartphone challenge. Can only be implemented effectively if there is a good collaboration across Apps, smartphone and network developers. Apps and devices needs to be better aligned traffic optimization and networks. Timed delivery outside peak hours could be an option. Requires apps, smartphone and mobile operators to collaborate closely.
  • Author / Presentation title 08/29/2007 Vision … none of the examples presented here is currently implemented but are natural measures with todays smartphone challenge. Can only be implemented effectively if there is a good collaboration across Apps, smartphone and network developers. Apps and devices needs to be better aligned traffic optimization and networks. Timed delivery outside peak hours could be an option. Requires apps, smartphone and mobile operators to collaborate closely.
  • Author / Presentation title 08/29/2007
  • Author / Presentation title 08/29/2007
  • Author / Presentation title 08/29/2007
  • Transcript of "Disruptive technology strategies for mobile operators in growth markets."

    1. 1. Disruptive Technology Strategies for Mobile Operators in Emerging Growth Market. Connected World Forum, December 8 th 2011, Chengdu, China. Dr. Kim Kyllesbech Larsen (Speaker) & Xi Bin Technology Economics, Technology, Deutsche Telekom.
    2. 2. Mobile business models … Dr. Kim Kyllesbech Larsen, Connected World Forum, Dec 8 th 2011, Chengdu, China.
    3. 3. The profitability challenge… Feb. 2011 Tellabs reports mobile operators profitability challenged within 3 year s , and mobile internet is forcing operators to transform their networks and business models 1 .   Oct 2011 China Telecom Corp reported  third-quarter profit that missed analysts' estimates , as additional 3G users increased the company's costs 3 Aug. 2011 China Unicom, at the moment only Chinese carrier selling iPhone in the country, H1 profit down 9% …. has been struggling to grow its profitability due to heavy subsidies 2 . 1 Tellabs; 2 Reuters; 3 China Daily; 4 Business Review India; 5 MediaNama; 6 Telecom Asia; Nov. 2011 Bharti Airtel reports profit dip again , in the seventh quarter 4 . Oct. 2011 Idea Celluar profit down 40.3% QoQ, despite revenue increases of 13.2% 5 . Nov. 2011 South Korea’s KT reported a 41% slump in Q3 net profit , as a result of discounts and other initiatives to lure more smartphone users 6 . Dr. Kim Kyllesbech Larsen, Connected World Forum, Dec 8 th 2011, Chengdu, China.
    4. 4. Mobile Emerging Asia in perspective. Profitability drop of almost 10%. Opex growth faster than Revenue. Highest ARPU YoY decline. ca. 70% mobile penetration today. Main 3G growth still ahead. Emerging Asia trends. Emerging Asia Growth on expense of profitability  Long-term development troublesome. Dr. Kim Kyllesbech Larsen, Connected World Forum, Dec 8 th 2011, Chengdu, China.
    5. 5. OTT Mobile Apps impact. Mobile Apps “attacks” the highest margin services. 22.4 1 12.7 1 Source 2010 & 2015 Pyramid Research September 2011 Western Europe. 2010A MNO Centric 15.7 Voice 3.4 SMS 3.3 Data 6.5 Voice 6.2 1 Data ARPU 13.0 Voice 3.8 SMS 2015E MNO Centric 6.2 1 Data 23.0 15+% Dr. Kim Kyllesbech Larsen, Connected World Forum, Dec 8 th 2011, Chengdu, China.
    6. 6. OTT Mobile Apps impact. Mobile Apps “attacks” the highest margin services. 22.4 1 12.7 1 Source 2010 & 2015 Pyramid Research September 2011 Western Europe. 2010A MNO Centric 2015E Apps Centric 15.7 Voice 3.4 SMS 3.3 Data 6.5 Voice 6.2 1 Data ? + 9.7+ Data ARPU ARPU MoIP  Death to SMS. +43% VoIP @Home & maybe @Work. 15+% Dr. Kim Kyllesbech Larsen, Connected World Forum, Dec 8 th 2011, Chengdu, China. By 2015 more than 70% of users have a smartphone
    7. 7. Revenue Decline & Profitability Squeeze Business model Breakdown Data Tsunami Spectrum Crunch Transform or Perish Dr. Kim Kyllesbech Larsen, Connected World Forum, Dec 8 th 2011, Chengdu, China.
    8. 8. OTT mobile apps impact on Emerging Asia. Profitability challenge may arrive later. 1 Source 2010 & 2015 Pyramid Research September 2011 Asia Pacific. 2.6 1 67% mobile 0.3 SMS <9% + 10% pa vs +25% in ‘11 <ul><li>2% pa </li></ul><ul><li>vs </li></ul><ul><li>7% in ‘11 </li></ul>Dr. Kim Kyllesbech Larsen, Connected World Forum, Dec 8 th 2011, Chengdu, China. 2010A 2015E 3.8 Pop. 4.0 Pop. Mobile take-up (in Bln) 9.2 1 8.2 1 2010A MNO Centric 2015E Apps Centric 6.0 Voice 0.8 SMS 2.4 Data 4.4 Voice ARPU: Emerging Asia (in US$) - 11% 3.5 1 Data Better Off and Worry Free? 4.1 1 + 57% 2 103% mobile
    9. 9. The Substantial Growth Market of Emerging Asia. The smartphone decade kick-off! 1,2 Source 2010 & 2015 Pyramid Research September 2011 Asia Pacific. 3 Cisco Visual Networking Index: GMD 2.6 1 4.1 1 2010A Subscriptions 2015E Subscriptions 3.2 Prepaid Subs: Emerging Asia (in Billions) 0.9 1 Postpaid 2.0 Prepaid 0.6 Postpaid Smart phone 33% 2 Smart phone 52% 2 3G 15% 1 3G 38% 1 Data Data 219 PB/mth 3 3,500 PB/mth 3 16 times! Dr. Kim Kyllesbech Larsen, Connected World Forum, Dec 8 th 2011, Chengdu, China. 23%  21%
    10. 10. The chatty smartphone... iPhone vs Android – same volume, more than twice Signalling. Signaling msg per Device Volume per Device Apple iOS Android iOS Android Browsing Volume Signaling ×3 ×1.2 Example: Dr. Kim Kyllesbech Larsen, Connected World Forum, Dec 8 th 2011, Chengdu, China.
    11. 11. When data demand exceeds spectral efficiency. ”Houston we have problems”. Illustration 10 20 40 60 85 120 120 120 120 120 120 0 5 10 15 2010 2012 2014 2016 2018 2020 Total spectrum in use Effective Spectral Efficiency (*) Spectral Demand Spectral Demand Limited Proportional increases over 2010 Not good at all!! (*) realWireless report for Ofcom,: 4G Capacity Gains, Final Report, January 2011. Spectral demand could exceed spectral efficiency between 2014 - 2016. Dr. Kim Kyllesbech Larsen, Connected World Forum, Dec 8 th 2011, Chengdu, China.
    12. 12. Remedies for traffic management. FUP & Throttling … fair and efficient? Volume per User FUP Limit <ul><li>FUP flavors </li></ul><ul><li>Hard volume-limit throttling. </li></ul><ul><li>BH throttling. </li></ul><ul><li>Service based (dpi) throttling. </li></ul><ul><li>Traffic de-prioritization … etc… </li></ul>FUP implementations might not be very efficient as traffic management remedies. <ul><li>Re-active remedy. </li></ul><ul><li>Typically capture <10% of users. </li></ul><ul><li>Little structural network impact. </li></ul>1 Mbps 2 GB 0 31 Subscription days per month Throttling 64 kbps Days of “ normal” usage Dr. Kim Kyllesbech Larsen, Connected World Forum, Dec 8 th 2011, Chengdu, China.
    13. 13. How to uplift the mobile business case. Demand for new revenue, partnerships & collaboration models. Economics of mobile data Free Cash Flow Business model breakdown Innovation Increased spectrum availability. Early LTE deployment. Mobile – Fixed partnership models. Structural off-loading 1 Network APIs. Smarter & network friendlier devices. Femtos cells. Network Aware Apps & Devices Internet of Things Location / Notifications / Payments Customer insights New revenue streams HSPA only, no LTE HSPA + LTE w. 50% off-load from 2012 Illustration of a European market 1 Note: off-loading here means any traffic migration from legacy technology or legacy spectrum bands to something else. LTE Dr. Kim Kyllesbech Larsen, Connected World Forum, Dec 8 th 2011, Chengdu, China. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
    14. 14. Vision – Internet of Things (IoT) New revenue opportunities. $1,200 Billion revenues. IoT = Mobile revenues. 20 IoT devices for every mobile. Dedicated IoT network. Apply to white-space spectrum. By 2015 Worldwide Source: Internet of Things from GSMA (2011). Dr. Kim Kyllesbech Larsen, Connected World Forum, Dec 8 th 2011, Chengdu, China.
    15. 15. Vision – efficiency & better service. Optimized service delivery – macro-level. Traffic Profile <ul><li>At least 30+% in-fill possibility. </li></ul><ul><li>Cognisant network required. </li></ul><ul><li>Optimized service delivery </li></ul><ul><ul><li>Network friendly apps. </li></ul></ul><ul><ul><li>Cloud-Device optimization. </li></ul></ul><ul><ul><li>E2E SON. </li></ul></ul>voice data Primary indoor usage -> off-load possibilities What can we learn? Off-busy-hour In-fill delivery Dr. Kim Kyllesbech Larsen, Connected World Forum, Dec 8 th 2011, Chengdu, China.
    16. 16. Vision … network friendly apps. Innovation remedy to mitigate network & financial risk. Synched notification Ad-hoc optimized route N × Events vs 1 × Event Dr. Kim Kyllesbech Larsen, Connected World Forum, Dec 8 th 2011, Chengdu, China. BH time frame (sec by sec) Average load Capacity limit Optimized delivery
    17. 17. What we need to be passionate about… de-risking the broadband business model. How to spend it How to earn it back Device Manufacturers Mobile Network Operators Apps Developers Dr. Kim Kyllesbech Larsen, Connected World Forum, Dec 8 th 2011, Chengdu, China.
    18. 18. The key value proposition of a mobile network is .... Freedom Contact: [email_address] Mobile: +31 6 2409 5202 http://nl.linkedin.com/in/kimklarsen Acknowledgement: we are indebted to the Technology Economics Team for their great suggestions in creating and improving this presentation. Last but not least Dr. Larsen in particular acknowledge his wife Eva Varadi for her great support and understanding during the creation of this presentation. & Mobility
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