Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities
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Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities Document Transcript

  • SAP Mobile Services Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities
  • SAP Mobile ServicesMobile Operator Guide 2013The Evolution of Mobile Services:Challenges, Strategies, Opportunities
  • Mobile Operator Guide 2013The Evolution of Mobile Services: Challenges, Strategies, OpportunitiesPublished by Sybase, an SAP CompanySybase, One Sybase Drive, Dublin, CA 94568-7902, U.S.A.© 2013 SAP AG or an SAP affiliate company. All rights reserved.No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG.The information contained herein may be changed without prior notice.Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors.National product specifications may vary.These materials are provided by SAP AG and its affiliated companies ("SAP Group") for informational purposes only, without representation orwarranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Groupproducts and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothingherein should be construed as constituting an additional warranty.SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AGin Germany and other countries. Please see http://www.sap.com/corporate-en/legal/copyright/index.epx#trademark for additional trademarkinformation and notices.Library of Congress Cataloging-in-Publication DataSAP Mobile ServicesMobile Operator Guide 2013, The Evolution of Mobile Services: Challenges, Strategies, OpportunitiesEdited by Peggy Anne Salzp. cm.ISBN 978-0-9885886-2-21.Mobile technology.Library of Congress Control Number: # 2012953199Printed in the United States of AmericaExcept as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form orby any means, or stored in a database or retrieval system, without the prior written permission of the publisher.
  • Table of Contents10 FOREWARD By John Sims, President, SAP Mobile Services13 PART 1: INTRODUCTION : A WEALTH OF OPPORTUNITIES14 Mapping A New World For Mobile Operators By John Sims, President, SAP Mobile Services18 Driving Growth In The Digital Economy By Stephan Gatien, Global Lead, Telecommunications Business Unit, SAP and Jens Amail, Senior Vice President and General Manager for Services, SAP25 PART 2: STRATEGIES FOR DRIVING REVENUE26 Long Live SMS Text messaging continues to grow from strength to strength as new services and paradigms around mobile marketing and mobile apps drive volumes and usage. By William Dudley, Group Director, Product Management, SAP Mobile Services33 Moving To The SMS Hubbing Model Operators are recognising that SMS hubbing is not just about connectivity; it can ease the management burden around cross-border messaging traffic. By Robert Rose, Senior Director, Global Operator Services, SAP Mobile Services36 Latin America Offers Big SMS Opportunities Personal Paraguay and Tigo Colombia discuss local market requirements and weigh on the tremendous opportunities and innovation that are driving SMS growth.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 3
  • 43 Cybersafety: Everyone’s Responsibility The Cyber Information Sharing and Protection Act addresses how information should be shared between private companies and the government to catch malicious actors breaching networks to steal information or sabotage systems. By Steve Largent, President & CEO, CTIA-The Wireless Association48 Does The Future Of Mobile Security Lie In The Past? Text messages are a powerful vehicle for reaching people — but they are also increasingly the starting point for malware attacks. By Mary Landesman, Senior Security Researcher, Cloudmark53 Mobile Number Portability: Increasing Competition And Driving Value Mobile Number Portability has come a long way since it was implemented in the 1990s, but it now confronts mobile operators with a variety of commercial challenges. By Mitul Ruparelia, Director of Sales Engineering (EMEA and LATAM), SAP Mobile Services58 Intelligent Hubbing: Easing International SMS Routing Complexity A comprehensive checklist and solid advice aimed at helping operators remove the complexity around establishing and managing SMS routing. By Mark Weait, Vice President Sales, SAP Mobile Services63 Orchestrating Capabilities Delivers High Performance Bharti Airtel details the strategy that has allowed it to spread its wings across the African continent, lay the groundwork for value-added services and deliver high volume at low cost. By N. Arjun, Chief of Projects & Transformation, Bharti Airtel68 PART 3: IPX: INTERCONNECTING OPERATORS FOR UNLIMITED OPPORTUNITIES69 Bundling Services Makes Business Sense Korea Telecom discusses the importance of Voice over IPX in its larger strategy to future-proof its network, ensure end-to-end quality of service and grow its wholesale business. Interview with Incheul Park, Head of Wholesale Team, Global Business Unit, Korea Telecom4
  • 74 Expanding Voice Connectivity Via IPX: An Operator Perspective In the Philippines Globe Telecom is embarking on an ambitious network change to deliver customer benefit by making cross regional interconnectivity better and easier. By Gil Genio, Head of International and Business Markets, Globe Telecom, Inc.78 The Value Of A True IPX Mobile Operators can best leverage the full benefits and economies of scale that IPX provides if they look beyond just offering basic services, such as voice and data roaming, and focus on delivering the services their customers will demand next. By John Candish, Senior Director, IPX Business, SAP Mobile Services and William Dudley, Group Director, Product Management, SAP Mobile Services83 Nine Ways To Get More Value Out Of IPX IPX offers tremendous value and here are 9 things operators need to do to ensure they can reap and maximise the benefits. By John Candish, Senior Director, IPX Business SAP Mobile Services86 Making The Right Connections SingTel recounts the lessons, learnings and results of its recent IPX trial, the first step in a private international network connecting all the Group companies. Interview with David Ng — Vice President, Regional Technical, of SingTel’s International team in the Group Consumer organization91 A Brave New All-IP World When it comes to IPX, peering among IPX providers is an essential element because it is the enabler of global reachability. By Elena Sacco, Chairman of the IWG at the GSMA and Senior Interconnect Manager, TIM94 Boosting Trust, Building Business In countries like Africa IPX does more than provide interconnectivity; it also meets the needs of local telecommunications authorities for transparency and accountability. By Ranjeet Wilkhu, Director, Neucom Solutions98 Voice: The IPX Killer App A candid view of the many benefits IPX provides. While many focus on future scenarios around LTE roaming, PCCW outlines how IPX can already enhance voice. By Richard Midgett, Managing Director – Wireless Business, PCCWMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 5
  • 104 PART 4: LTE: UNLEASHING INNOVATION TO DELIVER RESULTS105 Enabling 4G LTE For ALL MetroPCS discusses its early decision to deploy LTE and how this head start on the competition has allowed the U.S. operator to scale its business and satisfy its customers with value-driven services. By Ed Chao, Senior Vice President, Engineering and Network Operations, MetroPCS111 Fighting Smart To Win Big A clever approach harnessing RCS will allow operators to compete with OTT players with new services such as group instant messaging or chat, live video sharing and file transfer across any device, on any network, with anyone in a mobile address book. By Madan Jagernauth, Vice President, Marketing & Strategy, Mavenir Systems117 Positioning LTE For Success Research and insights brings clarity into the industry discussion about LTE, the benefits it delivers and reasons why operators take the lead in educating consumers. By Declan Lonergan, Research VP, Yankee Group124 Breaking Down Borders: Getting The Most Out Of LTE Roaming LTE is reaching a stage of maturity where technology is no longer a barrier to deployment, so now it’s up to mobile operators to architect the strategies that will leverage the complete range of benefits. By James Middleton, Managing Editor, Telecoms.com127 Video Communications: “A Perfect Storm” Consumer use of video has entered a new phase of growth, driven by devices, services and networks built to support it. But the wave of interest in mobile video could overwhelm service providers. By Ramsey Masri, Vice President, Sales & Alliances, Aylus Networks134 Enabling Roaming Across LTE Networks LTE will enable new services, but it will also put high demands on the data roaming backbone and require more bandwidth and resilient network connectivity. By Matthew Tonkin, Global Head, IPX Business, SAP Mobile Services6
  • 138 LTE Roaming In Latin America: Conditions For Success The deployment of LTE across Latin America brings with it a host of benefits and equips operators to address the spectrum limitations facing their networks. By Alejandro Martinez, Chairman, Billing & Roaming Working Group (BARG), GSMA LA142 LTE: New Technology Boosts New Business A review of the business models, approaches and services, such as mobile video calling, that will allow operators to drive even more revenue out of their costly LTE investments. By Michel Van Veen, Group Manager, Product Management, SAP Mobile Services147 PART 5: OTT: OPEN THREAT OR HIDDEN OPPORTUNITY148 OTT Threat: Top Strategies To Fight Smart Learn from real-life examples, including KPN and China Mobile, about the real impact of OTT services on voice and messaging revenues and how mobile operators turn the tide. By Pamela Clark Dickson, Senior Analyst, Mobile Content & Applications Intelligence Center, Informa Telecoms & Media156 Evaluating Strategies To Face OTT Providers Operators need to be more digital. Does Telefónica Digital, a unit aimed at developing new applications and business models for mobile technology show the way? By Eusebio Felguera, Corporate Regulatory Manager, Telefónica161 NUVOs: An Alternative To Disruptive OTT Not all OTT apps threaten mobile operator revenues. Network Unaffiliated Virtual Operators (NUVOs) actually benefit operators and boost their business. By Austin Murray, Founder & President, textPlus166 OTT Ecosystem: Paving The Way For Opportunity The inevitable arrival of an all-IP world also reinforces the needs for deeper part- nerships between operators and OTT players. MediaFriends discusses apps and approaches showing the way. By Gene Lew, CTO, MediaFriendsMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 7
  • 172 PART 6: UNLEASHING THE POWER OF MOBILE COMMERCE173 Mobile Money For The Masses Qtel has made its mark with its Mobile Money services and an innovative self-serve approach that meets the needs of both migrant workers and affluent customers. By Richard Morecroft, Assistant Director Mobile Money, Qtel179 Driving Mobile Money Usage In Unbanked Regions Driving customer adoption and increasing activation rates in mobile money is no easy task. The key is proper audience segmentation and a sharp focus on customer education. By Yasmina McCarty, Senior Manager, GSMA MMU184 Blueprint For A Successful Remittance Service A review of the mobile remittance services available today reveals a variety of different approaches to tackle the challenges of sign-up, cash-in and cash-out. By Diarmuid Mallon, Head of Global Mobile Marketing Programs, Programs & Demand Generation, SAP190 Operators: Tap Your Strategic Assets Mobile operators might only have scratched the surface when it comes to understanding their true potential to accelerate and enhance the mobile payments and commerce experience for consumers everywhere. By Aditya Kurejkar, Co-Founder and Program Director, Money2020194 Mobile Commerce Opportunities For Operators Building and deploying a successful mobile payment service requires operators to consider a wide range of variables, from business models to local telecom and financial regulations. By Matthew Talbot, Senior Vice President, Mobile Commerce, SAP200 PART 7: LEVERAGING MOBILE TO ACHIEVE LASTING LOYALTY201 Perception vs Reality: What’s Your Mobile Strategy? The arrival of the empowered consumer turns up pressure on operators and enterprises to create and implement a comprehensive mobile strategy that is truly end-to-end, multi-channel and, more importantly, customer-centric. By Howard Stevens, Senior Vice President, Global Messaging Solutions, SAP Mobile Services8
  • 205 The Power Of Push Push notifications also open up new opportunities around customer service and marketing, allowing mobile operators to deliver simple alerts to the customer — and trigger the customer to take action. By Coleen Carey, Director of Product Marketing, Urban Airship211 Harmonising Touch Points, Technology, Processes And People Celcom details the milestones and motivations that have helped it evolve its view of customer experience and sharpen its focus on encouraging lasting loyalty. By Suresh Sidhu, Chief Corporate and Operations Officer, Celcom Axiata Berhad215 Ask, Listen And Build Lasting Loyalty Talk to your customers, and listen to what they say. A successful mCRM program integrates social interaction, customer engagement and customer feedback. By Sally Burley, Director, The 3rd Degree220 Why Customer Engagement Campaigns Pay Dividends An in-depth look at how mobile changes the rules of engagement, allowing mobile operators, brands and businesses to maintain continuous customer touch and drive deeper engagement. By Gregory Dunn, Vice President, Product Management, SAP Mobile Services228 Glossary Of Terms234 Index Of Contributor Companies240 AcknowledgementsMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 9
  • FOREWORDMapping A New World ForMobile OperatorsBy John Sims, President, SAP Mobile ServicesIP is changing the game. Advanced The author in this case was referring tomobile devices, new technologies, mobile video communications, where growth is driven by devices, services andincreased competition and a networks. But mobile video isn’t the onlyshift in subscriber expectations market segment on the brink of the tippingtowards truly personal and point. This Guide shows that other services,relevant interactions are coming such as SMS, LTE, mobile commerce and mobile customer loyalty, are also entering atogether to cause disruption in the new phase of growth and innovation.telecom industry - for operatorsand all the companies in their • SMS: While some analyst reports predictbusiness ecosystems. the decline of text messaging, SMS continues to be the number one dataHowever, the same conditions also spell communications tool and the mostmassive opportunities for companies effective direct marketing channel everprepared to take charge of change. As one created. In almost all emerging markets itof the 40+ industry authorities who has remains the ubiquitous data service ofprovided insights for this Guide, points out: choice. In developed markets, thethe rapid pace of change and the interplay explosion of mobile apps, a developmentof supply and demand for services that are which many thought would mark thealigned with customers’ requirements are death of SMS, has actually pushedcombining to generate the mobile industry’s application-to-person (A2P) trafficown Perfect Storm. growth to a new level. This spells10
  • opportunity for mobile operators and enhance mobile money and mobile service providers to harness text banking services. Now it’s up to mobile messaging to supercharge a variety of operators to map out comprehensive services, ranging from mobile marketing strategies that cultivate partnerships and mobile advertising, to mobile with key players, such as banks, and commerce and mobile banking. adapt to local market conditions, such as regulations, demographics, and the• LTE: As mobile network operators move emergence of new remittance corridors. towards 4G/LTE and an all-IP network, many will cooperate to expand their • Mobile loyalty: Because mobile is a network footprint and pave the way for fiercely personal device, it’s an ideal compelling new services that will delight means to reach customers on every step customers and drive positive results for of their daily journey to encourage inter- everyone in the ecosystem. The advance action and deepen engagement. Whether of LTE will also challenge operators to operators and marketers choose to develop strategies to cooperate with and harness text messaging, new forms of enable Over-the-Top players in a manner IP-based messaging, mobile web or that benefits the ecosystem and wrings mobile apps (or all in combination) they new revenues out of operator core capa- can clearly leverage mobile as a channel bilities such as location information, to boost customer loyalty and recruit true billing support and network management. brand advocates. However, just as in real- life, building a relationship is about talking• Mobile commerce: From researching and listening, and that’s why companies products to making purchases, consum- must develop mobile loyalty programs ers are increasingly reaching for their that effectively do both. mobile devices as an essential shopping companion. At the other end of the This inaugural edition of the Mobile spectrum, and particularly in the under- Operator Guide features the insights of banked regions of the world, consumers industry thought leaders and innovators to are gravitating to services delivered by identify market trends, best practices and mobile operators that have expertly key lessons learned in deploying mobile leveraged their distribution channels, services. The purpose of this industry retail presence and trust to expand and knowledge resource is to provide readersMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 11
  • clear direction and critical information,equipping them to develop strategies todrive messaging revenue, deploy cost savingsolutions, generate new revenue streamsfrom mobile commerce, build loyaltythrough customer engagement programs,plan for LTE roaming through IPX adoptionand maintain competitive advantage in anIP-based world.The onward march of next-generationservices into daily life has created a newworld order in the telecoms industry.Think of this Guide as a starting point to aroadmap, one that will allow you to plot thetransformational path your business needsto follow to succeed in this exciting newdigital economy.12
  • PART ONE: INTRODUCTIONA WEALTH OF OPPORTUNITIES
  • PART ONE: INTRODUCTION: A WEALTH OF OPPORTUNITIESMapping A New World ForMobile OperatorsBy John Sims, President, SAP Mobile ServicesWhat a difference a decade makes. product offerings were comparativelyYou need only go back that far to straightforward, with “all-you-can-eat” pricing plans the industry standard. Itfind the “early days” of mobile seems like a long time ago, but it was onlynetwork operators’ journey with in 2001 that the first inter-operator SMSmobile data, comparatively speak- messages were delivered in the U.S., withing, a world that hardly compares SAP Mobile Services launching the first inter-operator SMS messaging hub into today’s landscape. Amid the concert with AT&T Wireless. More signifi-far-reaching changes that have cantly, during those formative years,taken hold since then, the com- operators took a walled-garden approachplexity that now distinguishes to mobile data, with services delivered within a closed ecosystem – a far cry fromoperator services brings with it the interoperable, pan-operator networka rich abundance of opportunities topology that has evolved since then.to those who are forward-thinkingand adaptive in their strategies From that initial “closed system” approach, rapidly advancing technology and theand capabilities. explosive growth of international travel byA decade or so ago, an operator’s world globe-trotting executives and power usersrevolved almost exclusively around voice. contributed to the dramatic changes weIn an environment of minimal competition, have seen take root since then. The eclipse“  s the cost of spectrum and the pace at which A new network technologies needed to be deployed rose, operators needed to consider cooperative arrangements with their fellow operators, something that would not have previously been on the table.”14
  • Table 1: Global mobile data growth today is similar to global internet growthin the late 1990sGlobal internet traffic growth (fixed) Global mobile data traffic growth1997 178% 2009 140%1998 124% 2010 159%1999 128% 2011 133%2000 195% 2012 (estimate) 110%2001 133% 2013 (estimate) 90%2002 103% 2014 (estimate) 78%Figure 1: Based on data from Cisco. Cisco Visual Networking Index Mobile 2012www.slideshare.net/CiscoSP360/cisco-visual-networking-index-vni-global-mobile-data-traffic-forecast-20112016of voice by data, accompanied by the advent it was clear that mobile network operatorsof successively more powerful generations could no longer dictate the user interface.of network technology leading to 4G, an As the cost of spectrum and the pace atall-IP environment, accompanied by today’s which new network technologies neededopen infrastructure, means operators must to be deployed rose, operators needed togenerate profits by significantly rethinking consider cooperative arrangements withtheir business models. their fellow operators, something that would not have previously been on the table.Traditionally, mobile network operators haveowned and controlled everything, including In addition, in order to accelerate the adv-physical equipment, radio networks, serv- ance of the network effect for new services,ices infrastructure, devices and user inter- operators in some countries have comefaces. But amid their changing economics, together in joint ventures or cooperatives tomany have had to rethink this approach. lower their costs and seed the market withWith the rise of the smartphone, driven by new service technologies – for example, thethe iPhone and Android devices, Isis joint venture in the United States or theMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 15
  • proposed mobile payments venture among to fiercely defend their franchises against theoperators in the United Kingdom. threat from the Internet-based companies or so-called Over-The-Top (OTT) players. AsTo a certain degree this kind of thinking part of their strategy, operators will want tohas been accelerated by operators’ need not only create a strong domestic footprint;to compete against Internet-based players, they will also look to extend this to a globalwhich have arrived in the mobile space as level, much as they have done over the pastcreative and formidable competitors. It also decade or so with SMS.marks a realisation by many mobile networkoperators that their future success depends This is precisely where SAP Mobile Servicesmore upon the innovative services that they provides the most critical value. We areoffer subscribers than it does on the under- delivering the world-class interoperabilitylying network technology – a substantial and reach that comes with our role as anshift in emphasis. independent custodian residing between and among operators. It is a role thatSo, as mobile network operators move demands a truly holistic level of visibility –towards 4G/LTE and an all-IP network, horizontally, across geographies spanningmany will cooperate to achieve a more rapid the Americas, Europe, the Middle East,and ubiquitous network footprint that will Africa and Asia, and vertically, providing theallow them to offer compelling new services technology and connectivity required tothat will capture the imagination of their ensure that today’s ever-expanding operatorsubscribers. In doing so, they will compete ecosystem continues to flourish. Mostagainst other mobile network operators, importantly, SAP Mobile Services possessesbut they will also have to operate in a much the vision and resources to realise its custo-faster cycle of innovation that will allow them dial role in every dimension.“  he advent of a new world for operators follows T decades of incremental improvements punctuated by breakthrough technologies.”16
  • This inaugural edition of the Mobile The advent of a new world for operatorsOperator Guide 2013, The Evolution of follows decades of incremental improv-Mobile Services: Challenges, Strategies, ements punctuated by break-throughOpportunities provides a rich taste of the technologies. The result has been a newbold new world that has materialised and paradigm for communication. All of us atcontinues to take shape. Inside, our expert SAP Mobile Services are working withstable of authors delve into the current state diligence and with our eyes on the futureof play and the most important emerging to enable all participants in the value chainissues in operator services, including: to experience the unprecedented power, ease and benefits of this new world of inter-• Operator strategies for driving and operability, reach and global interaction. optimising messaging revenue• Roaming and interconnect issues, including the interplay of LTE in an John Sims is President of SAP Mobile Services, the recognised global leader in IPX environment mobile messaging and interconnect services.• OTT Messaging, voice and video services, He has more than 20 years experience including managing the challenges con- with companies supplying technology and fronting operators in a BYOD (Bring Your solutions to mobile operators. Sims has Own Device) world been recognised with the prestigious Ernst & Young Entrepreneur of the Year Award in• Mobile commerce and the myriad of the communications category. He is also a opportunities for operators member of the Board of Directors of CTIA• Customer engagement, including a and has been a speaker and panellist at roadmap for building loyalty by numerous industry events. empowering customers.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 17
  • PART ONE: INTRODUCTION: A WEALTH OF OPPORTUNITIESDriving Growth In TheDigital EconomyBy Stephan Gatien, Global Lead, Telecommunications Business Unit, SAPand Jens Amail, Senior Vice President and General Manager for Services, SAPIn July 2012, just before the On one hand, the success of smartphonesLondon 2012 Olympics, no one has led to increased data activities, with subscribers happily clocking time to playcould have imagined that one of games, watch videos, post on social sites,the first headlines in the main- tweet and send text messages. This phe-stream press would be about the nomenon has contributed to the decline oflocal mobile networks’ bandwidth revenues from voice services, once the cash cow of the entire industry without reallyproblems. But this is precisely offsetting it to date.what happened shortly after theGames opened. On the other hand, costs to provide adequate network infrastructure to supportAfter having encouraged athletes and fans this explosion of data traffic are on the rise.to tweet freely, Twitter was blamed for As the 2012 Olympic Games in Londondisrupting the coverage of the cycling road showed, the infrastructure available stillrace. Ironically, the sheer volume of mobile cannot always handle the load and meetsocial traffic along the course was so over- expectations for connectivity and reliability.whelming that it even interfered with theGPS and telemetry updates from the race, Granted, network upgrade investmentswhich left those covering the games without represent a heavy financial burden for allinformation on positions and timings. players in the ecosystem. However, these network investments are essential buildingThis twist of fate was a perfect metaphor blocks for future services and businessfor the dilemma and challenges faced by models. In fact, 2013 is widely expected tocommunications service providers today. be a blockbuster year for infrastructure2013 is widely expected to be a blockbuster yearfor infrastructure spending, with a large number ofoperators aggressively expanding their LTE networks.18
  • London Olympics - UK SMS traffic(Times are local to London - August 6 - 8) +10% + 46% +18% +8% August 8 August 7 August 61:30 2:30 3:30 4:30 5:30 6:30 7:30 8:30 9:30 10:30 11:30 12:30 21:30 23:30 0:30 13:30 14:30 15:30 16:30 17:30 18:30 19:30 20:30 22:30Figure 1: Based on data from SAP.London Olympics - UK SMS traffic(Times are local to London - August 1 - August 5) +46% - 18:20: +36% - 14:20: Men’s team cycling UK’s Andy Murray sprint - UK wins gold beats Roger Federer for gold in tennis August 3 August 4 August 2 August 1 August 5 1:30 2:30 3:30 4:30 5:30 6:30 7:30 8:30 9:30 10:30 11:30 12:30 22:30 13:30 14:30 15:30 16:30 17:30 18:30 19:30 20:30 21:30 23:30 0:30Figure 2: Based on data from SAP.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 19
  • London Olympics - UK SMS traffic(Times are local to London - July 27 - July 31) +36%: 21:10: USA wins gold in Men’s 4 x 200m freestyle relay (swimming) July 27 July 28 July 29 July 30 July 311:30 2:30 3:30 4:30 5:30 6:30 7:30 8:30 9:30 10:30 11:30 12:30 13:30 14:30 15:30 16:30 17:30 18:30 19:30 20:30 21:30 22:30 23:30 0:30Figure 3: Based on data from SAP.spending, with a large number of operators Voice and Skype — allow messaging andaggressively expanding their LTE networks. VoIP calls between users. While these free services may have a strong appeal to customers, they have a decidedlyTough competition negative impact on operators’ bottom line.But network upgrades aren’t the only item Analysts estimate OTT messaging revenueson the business agenda. Operators also as much as $13.9b, or 9% of messagehave to develop strategies and capabilities revenue, in 2011. This decline has led someto compete against new rivals. to wonder whether most incumbent provid- ers are not facing their “Kodak moment”. ByIncreased penetration of smartphones has way of background, Kodak filed for bank-opened the door to powerful and disruptive ruptcy protection in 2012 after recognizingactors offering OTT services. These services its products were obsolete and the competi-— which include Apple’s Facetime, Google tion was insurmountable. Similarly, mobile20
  • UK Olympics - Opening Ceremonies(UK SMS traffic - 27 July 2012 17:00 - 28 July 2012 03:00) 22:30 -22:40: +137% Team Great Britain enters the stadium during Parade of Nations 21:10 +32% Ceremony begins 23:50 +56% official opening of games Queen’s speech 21:40 +40% Rowan 00:20 +25% IOC Atkinson “Plays” during President speaks Chariots of Fire Opening Pre-ceremony - Ceremony up to 56% of normal Traffic Normal Traffic17:30 18:00 18:30 19:00 19:30 20:00 20:30 21:00 21:30 22:00 22:30 23:00 23:30 0:00 0:30 1:00 1:30 2:00 2:30 3:0021:40: +40% The Queen parachutes in 22:30-22:40 +137% Parade of Nations begins23:50 +56% Team GB enters the stadium.Figure 4: Based on data from SAP.players are now struggling to compete position of strength and drive profitableagainst more agile and innovative newcomer growth in this new era.companies, as well as OTT providers. First and foremost, operators — because they are network operators — control the backboneOperator assets of the Digital Economy: connectivity.However, it would be a huge mistake to But owning the network is not enough. Tocount operators out of the Digital Economy avoid being relegated to the role of a “dumbrace too soon. Operators own critical assets pipe,” operators must also be able to capitalisethey can leverage to build competitive on their successful track record of serviceadvantage, establish themselves in a delivery, including five 9s service availability.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 21
  • Porter Telco 2.0 Nature of Characteristicsstrategy strategy smartnessCost leadership Happy Pipe Smart network Cost efficiency - minimal network, IT and commerical costs. Simple utility offering.Differentiation Full-service Smart services Technical and commerical flexibility: Telco 2.0 improve customer experience by integrating network capabilities with on and third-party services and charging either end user or service provider (or both).Figure 5: Based on data from STL Partners. www.stlpartners.com/telco2_index.phpOperators also have proven security and data the conduit between these ‘upstream’integrity capabilities that will increasingly partners and their traditional ‘downstream’appeal to business customers as adoption of customer base, thus increasing their reach,cloud- based models take off. presence and value-add.What’s more, operators also have a long Finally, CSPs have insights into a vast-standing relationship with their customer quantity of data about their customers,base. This puts them in a unique position to such as service usage patterns, locationact as digital service brokers between this -based activities, roaming history andlarge audience and a multitude of partners on-device behaviour on a daily basis. Thisthat want to reach this audience with impressive store of customer informationcontent, software or new services to offer represents a largely untapped monetisationvia the mobile channel. opportunity for operators in an increasingly data-centred economy.Pursuing this model — often referred to asthe Teleco 2.0 model (1) — would allow Com- So, how do CSPs move forward to imple-munications Service Providers (CSPs) to be ment the right strategies and — ultimatelyFOOTNOTES1. As originally defined by STL Partners22
  • 2013 is widely expected to be a blockbuster yearfor infrastructure spending, with a large number ofoperators aggressively expanding their LTE networks.— succeed in the digital era? We believe created new digital divisions to seize newthey will need to focus on some key areas opportunities including mobile commerceto drive profitable growth in the new and machine-to-machine communicationsDigital Economy. (M2M) in order to generate incremental revenue beyond their traditional services.• CSPs should fully leverage their scale, Telefónica’s direct to bill initiative is a strik- superior reliability and service delivery ing example of how an operator can lever- capabilities, to invest in new business age its billing relationship with its mobile models in areas such as Cloud and Mob- customers to increase sales of digital goods ility. Operators such as China Telecom or and services, while learning to partner — Telstra in Australia have already adopted not compete — with OTT players. this strategy with success. They offer on-demand business solutions to a The monetisation of subscriber data, in variety of business customer segments, accordance with privacy laws, is also in particular targeting small and medium emerging as a strong opportunity for CSPs size businesses. Other mobile operators, to grow their revenues. By leveraging the such as Rogers Communications in vast amounts of customer data they own — Canada, are launching business-oriented in real-time and at scale — CSPs can gain mobile app stores. This is part of a larger advantage in two important ways. They can effort to become a one-stop shop for serve their existing customers more effec- business customers, providing everything tively, and they can also use the customer mobility-related, including mobile app information to take advantage of opportuni- hosting and mobile device management. ties in new markets — such as proximity• Large providers should also think beyond marketing or mobile advertising — where connectivity. Telefónica and SingTel are customer data is key. To accomplish this perfect examples of what operators can CSPs will need to adopt a highly scalable achieve. They have transcended their foundation suited for the real-time world. traditional organisational boundaries, and An examination of the results achieved byMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 23
  • However, it would be a huge mistake to countoperators out of the Digital Economy racetoo soon. Operators own critical assets theycan leverage to build competitive advantage,establish themselves in a position of strengthand drive profitable growth in this new era.T-Mobile US, for example, confirms thatan in-memory based platform is very well Jens Amail is Senior Vice President and General Manager for Services Industries atsuited to provide such a foundation. SAP as well as the Business Unit for Billing, Revenue and Innovation Management. PriorFortune smiles on the brave. It is time for to joining SAP in 2008, Jens was with SiemensCSPs to make bold moves to develop their Communications for 10+ years in a variety ofgrowth strategy in the digital era. They have Senior Executive and General Management roles both in Europe and the US. Jens has athe necessary assets to create new growth broad cross-functional background in theengines and focus on the abundant oppor- Communications Industry with Executivetunities in the Cloud and Mobility markets. assignments in Sales, Services, Marketing,Moreover, operators can innovate and invent Solution Management and Operations.new data-driven business models andservices (such as proximity marketing). Stephan Gatien is a Global Lead within the Telecommunications Business Unit at SAPIf operators can arm themselves with the focusing on Business Analytics and Databasecorrect capabilities and business models, & Technology. In that capacity, he is respon-they can seize these opportunities, create sible for the analytics and data platformlucrative new revenue streams and prosper strategy in the industry, including SAP HANA,from the Digital Economy. oversees the related solution activities and leads the  analytics and data platform  go- to-market activities globally Prior to joining SAP, Stephan was with Telus where he held a variety of management roles in the wireless division of this Canadian operator.24
  • PART TWOSTRATEGIES FOR DRIVING REVENUE
  • PART TWO: STRATEGIES FOR DRIVING REVENUELong Live smsBy William Dudley, Group Director, Product Management, SAP Mobile ServicesMobile industry watchers have (and do) use their mobile phones to sendbeen predicting the death of the and receive text messages.humble text message for over Veteran mobile author and analyst Tomia decade, but a raft of recent Ahonen estimates people sent a whoppingresearch confirms that SMS is 6.1 trillion text messages in 2011, up fromvery much alive and kicking. 1.8 trillion in 2007. Meanwhile Informa Telecoms & Media state that total SMSMarking the 20th anniversary of SMS, U.K. traffic will reach 8.7 trillion by 2015, upanalyst firm Portio Research points out that from over 5 trillion messages in 2010. InSMS has been very successful, generating its newest forecast analyst firm Portioapproximately $821 billion for operators Research calculates that total traffic willworldwide since it was invented in 1992. reach nearly 10 trillion messages by 2015.Overall, worldwide mobile messaging was Clearly, SMS is THE most ubiquitous,the highest earner in the industry, raking in non-verbal communications medium in the$179.2 billion in 2010 alone. Portio Research history of mankind. Today, SMS can reachforecasts that this total will increase to more over 5.4 billion people around the world —than $280 billion in 2014, and exceed $300 over 77 percent of the world’s population.billion by 2016. Of this total, SMS alone willgenerate $155 billion worldwide in 2014, and In developing countries SMS plays a special"it promises to continue to play a significant role, transforming lives and economies at anrole in revenue terms in the coming years," amazing scale. Innovation in these regionsthe report said. also allows companies, organisations and governments to harness simple text mes- saging and achieve extraordinary results.Pervasive and personal From life-simplifying reminders to life-saving medical advice, text message services areIt’s the simplicity, pervasiveness and sheer changing the nature of commerce, banking,dominance of text messaging that has made education, healthcare, news reporting andit the world’s leading data communication political participation.tool. People everywhere on the planet can26
  • In developed markets SMS is by far the most In other countries text messaging continueseffective way for people to communicate with to dominate. In Canada The Wirelesseach other — and connect with companies. Telecommunications Association reportsWhether chatting with friends, or receiving the number of personal text messages sentalerts from banks and favourite brands, text every year has nearly quadrupled sinceis the primary communications tool. 2008 and hit a whopping 78 billion messages in 2011. In the U.K. the Ofcom Telecommunications Market Data UpdateContinuing tide of text Q1 2011 reports the total number of SMS and MMS messages sent in Q1 2011 wasSignificantly, even the advance of smart- 36.9 billion, up 22.7 percent over Q1 2010.phones — chock-full of features, functional-ity and a wide variety of mobile applications— hasn’t changed consumers’ dependence The impact of OTTon text messaging to connect with the worldaround them. In fact, a recent consumer Amid this stellar growth, some analystsstudy from Deloitte shows that SMS holds wonder if the text messaging trend couldthe lead. More consumers than ever prefer- flip from growth to decline. New messagingring texting, and the vast majority (90 capabilities bundled with iPhones andpercent) of smartphone users sending at Android phones, as well as the advance ofleast one text message per day. OTT messaging services and applications are among the root causes for the recentAnother trend that shows no signs of slowing dip in SMS volumes in mature markets suchis text use among teenagers. In the U.S. this as Philippines and Taiwan. News that OTTdemographic relies on text more than any player WhatsApp reported hitting the mile-other customer segment. Research firm stone of ten billion messages a day furtherNielsen, which bases its finding on a variety suggests operators could be vulnerable toof data including monthly survey results from this new competition.300,000 consumers, reports that texting hastripled, with teenage girls sending 40 percent However, Analysts point out the race is farmore text messages than boys. That’s an from run. It estimates that companies likeaverage of 3,952 text messages per month. WhatsApp and BlackBerry will generate 35It’s a continuing tide of communication percent of the total messaging traffic inNielsen calls a “mobile data tsunami.” 2016, but only 8 percent of the revenues.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 27
  • Average number of messages exchanged per monthBy age and gender, Q3, 2011 604 802 3,417 1,914 928 709 434 167 64 Male Female 13-17 18-24 25-34 35-44 44-54 55-64 65+Figure 1: Based on data from Nielsen.Moreover, SMS will continue to dominate Open rulesmessaging and revenues, generating 42percent of the traffic and some 65 percent People are empowered by SMS to commu-of total income. nicate with anyone who has a mobile phone. However, alternative messaging apps areIndeed, Informa is not convinced that OTT limiting, not liberating. Unlike text messag-apps and services might undermine estab- ing, these OTT services operate in a vacuum.lished text messaging habits. It argues thatmany factors — including mobile operator Instead of overarching communities thatpricing strategies, the penetration of mobile span the planet, they create isolated islandsbroadband and customer requirements of users who are completely cut off fromto more open communications — will friends and family members on the basis“determine how quickly and to what extent of the handsets and software they use.substitution occurs.”28
  • A Facebook user and a person using iMessage interworks with the existing SMS eco-may be good friends in real-life, but the fact system. Indeed, many of the operatorsthey use different services prevents them featured throughout this first edition ofsending and receiving messages. the Mobile Operator Guide are betting on RCS to drive an interoperable, back-This flies in the face of what communica- ward compatible messaging medium fortions is all about, and presents opportunities subscribers and — ultimately — pavefor mobile operators to bridge the gap. the way for new and innovative services.There are exciting and lucrative optionsto consider. Some mobile operators willchoose to work with OTT players, enabling No limitsthem to achieve the integration of messag-ing communications. Others will follow the Technology advances like RCS will allowlead of operators like Telefónica, which messaging — including text messaging —recently launched a free mobile application to evolve and continue to account for a signi-that combines free text chat, voice calls, ficant share of operator revenues. The futurepicture and location sharing between users. for OTT providers, however, is not quite so positive. Spoiled by choice and delighted byInteroperability will also be delivered by the freedom to communicate with anyonethe GSM Association standard called (and not just people that use that the sameRich Communications Suite (RCS), which application), consumers will no doubt voteincludes a next-gen, real-time, presence- with their feet. It’s clear that many of the OTTenabled messaging component that also players will simply fade away.Unlike text messaging, these OTT servicesoperate in a vacuum. Instead of overarchingcommunities that span the planet, they createisolated islands of users who are completelycut off from friends and family members on thebasis of the handsets and software they use.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 29
  • It’s the simplicity, pervasiveness and sheerdominance of text messaging that has made itthe world’s leading data communication tool.In the meantime, SMS-compatible1 services Ironically, the rise of mobile apps, initiallyfrom companies including textPlus will hailed as a new channel to the customercontinue to flourish, offering customers that could potentially dethrone SMS, hasmore features and greater reach. But it’s actually pushed text messaging growthnot just person-to-person messaging that to a new level.will increase. Growth will be also be drivenby a desire from companies, businesses Brands and marketers, as well as applica-and brands to connect with their customers tion developers, are harnessing SMS to(and potential customers) via SMS. extend the life of their apps, keeping their users posted on updates, breaking news,Research underlines the pivotal role of location-based opportunities, campaignmobile in campaigns to engage with custom- perks and other important information.ers, encourage interaction and boost loyalty. More importantly, text messaging allowsFrom consumer facing brands that use text brands and marketers to re-connect withmessaging to deliver brand messages and customers who haven’t used their appslinks to downloadable content and perks, to recently — or even deleted it altogether. Thelarge retailers that cleverly use text messaging result is a booming Application-to-Personto deliver product vouchers and drive cus- (A2P) market Jupiter Research estimatestomer loyalty, the central role of SMS is will be worth $70.1 billion by 2016.clear. Perhaps the best confirmation comesfrom Coca-Cola, that declared that SMS isthe “number one priority” in its comprehen- Positive outlooksive strategy to reach a global audience andincrease customer engagement. Analysts Clearly, the next five years will see operatorstermed it a “bombshell announcement” in many parts of the world leverage theirbecause other marketers quickly followed all-IP networks, but even this progress willsuit, launching strategies with mobile not shut the door to SMS. To the contrary,messaging at the center. LTE networks using IMS infrastructure will lay the groundwork for messaging servicesFootnote:1. SMS-compatible services include some OTT service providers (also known as NUVOs orNetwork Unaffiliated Virtual Operators that inter-work with the SMS ecosystem. This stands instrong contrast to other OTT providers, such as WhatsApp, that do not offer SMS interoperability.30
  • Global revenue from A2P SMS split by eight key regions 2016 Latin America Indian Sub Continent Africa & Middle East Central & Eastern North America Europe Rest of Asia Pacific Western Europe Far East & ChinaFigure 2: Source: Juniper Research. (1)that will remain interoperable with today’s 1992 between Neil Papworth (of Sematext messaging. In other words, there will be Group Telecoms) and Richard Jarvis ofno interruption in service, or even reach. Vodafone – the message read “Merry Christ- mas”. Today, SMS is the most widely usedThe humble text message that just cele- mobile data service, with two-thirds ofbrated its 20th anniversary has seen a lot the world’s population using the channel toof changes since the first SMS was sent in connect and communicate. From a businessFOOTNOTE:1. www.juniperresearch.com/reports/Mobile_Messaging_MarketsMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 31
  • perspective, SMS is expected to remaina significant source of revenues and trafficfor mobile operators on a global basisfor years to come. The bottom line: theadvance of an all-IP world will transformSMS, but text messaging will also continueto be alive and well.William Dudley has 25 years experiencebuilding and managing telecommunicationsnetwork infrastructures. He leads SAP MobileServices Messaging Team, which focuses onsolutions including inter-operator SMS andMMS products (P2P) and mobile messaginghubs and services (A2P SMS and MMS).Dudley also provides industry commentaryto both internal and external mobile industrypublications, through analyst and mediainterviews, and is active in several industrygroups. http://scn.sap.com/people/william.dudley/content32
  • PART TWO: STRATEGIES FOR DRIVING REVENUEMoving To The smsHubbing ModelBy Robert Rose, Senior Director, Global Operator Services, SAP Mobile ServicesSMS is ubiquitous, universal and services dedicated to message protocolwidely regarded as the truly native conversion. Having met the domestic challenges of the North American market,language of mobile. However, this international messaging between non-phenomenon, and the massive GSM U.S./Canadian operators and theirdevelopment of SMS since the last GSM counterparts worldwide soon alsoyears of the 20th century, has not benefitted from the technology and connectivity offered by the hub solution.been without its challenges aroundenabling — and guaranteeing — In developing countries, scarce humanmessage delivery. and technical resources within operators across these markets has accelerated theNotably, there have been challenges in North requirement for hubbing services. In theAmerica, where differences in technologies case of Tier 1 and 2 operators, for example,prevented the launch of off- net messaging hubbing has tended to be a niche solution.for a few years. In contrast, almost the rest In other words, the solution enabled “gap-of the world was well progressed in its adopt- filling” in a mobile operator’s footprint,ion of inter-operator SMS based largely on thus satisfying subscriber demand forhomogenous GSM standards. international SMS P2P connections when that operator’s own roaming agreementsThe solution to the technology differences were not sufficient to provide the requiredin North America was provided by hubbing messaging interconnects.In developing countries, scarce human and technicalresources within operators across these markets hasaccelerated the requirement for hubbing services.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 33
  • As a consequence, operators are recognising that a hubcan enable them to outsource the management burdenaround some of their cross-border messaging traffic.Making the mainstream operator can actually become a much more significant benefit.The situation began to change when theGSM Association launched the OpenConnectivity project in 2005. By seeking Good business senseto manage and regulate (in a light-touchmanner) the development of peering hubs Today, economic pressure on most oper-for person-to-person SMS the GSMA ators is now driving even more traffic (andeffectively endorsed the hubbing concept. more revenue for the networks). HeadcountThis, in turn, ensured the adoption of cuts, affecting even the most-establishedhubbing as a mainstream business practice operators, are reducing their ability tofor the global operator community. manage their interworking activity effectively.Since 2005 the major hub providers have As a consequence, operators are recogn-seen a steady growth in demand for their ising that a hub can enable them to out-services. This has resulted in the develop- source the management burden aroundment of an abundant revenue stream based some of their cross-border messagingon the termination charges on inbound traffic. This approach also reduces thetraffic delivered by hubs. The ability to drive managerial overhead around areas such asnew revenues from additional SMS traffic the negotiation and maintenance of bilateral— possible because hub prov-iders have agreements with destination operators and,extesive global reach and the ability to when traffic is flowing, the upkeep of variousprovide two-way access to operators number ranges within the SMSC.previously unreachable — has been anadded attraction over and above the Routing all traffic for a particular country togreater reach achieved. a hub mitigates number range management tasks and delivers business benefit. AsSince term fees are paid on a strictly per- operators come to embrace the idea ofmessage basis, this revenue source clearly delegating responsibility for some cross-increases in proportion to the organic as border SMS traffic, they also discover thatwell as incremental growth in traffic. As a the more routes they outsource to the hubresult, what might first appear to be a minor provider, the more they can increase theircontributor to the Roaming Department revenue “take” from their inbound traffic.P&L account belonging to a mobile In the end, what started out as a simple34
  • exercise to offload a handful of “awkward” Real-world examples of this problemdestinations soon becomes a full-scale are currently being addressed. Efforts tooutsourcing venture. resolve this effectively will naturally require flexibility on behalf of both operators and hub providers.Growing revenues In summary, in just over ten years subscrib-The financial ecosystem surrounding ers’ need for global two-way communicationcross-border P2P SMS is a complex matrix via SMS has become the fundamental driverof MO charges and MT payments. For hub of mobile network data revenues. Whileproviders, managing this is well worth the domestic interworking is mainly addressedeffort as long as they can continue to make through bilateral relationships, cross-bordera margin on the connectivity services they traffic is increasingly being routed throughprovide. In view of this dynamic, traffic the established, peered hubs. Though thisthrough hubs will continue to grow. Impor- trend is a consequence of the expedient andtantly, the opportunities for operators to effective solution that a hub connection cancultivate a worthwhile revenue stream will provide, the opportunity to develop a newalso grow in parallel. and worthwhile revenue stream is now — more than ever — an incentive for operatorsHowever, it’s worth noting that outsourcing to subscribe to the hubbing model.can impact the revenues operators poten-tially gain from their bulk messaging (or“enterprise messaging”) business. This is A 20-year veteran of the information systems business (both fixed and mobile), Robert Rosebecause outsourcing all messaging traffic began working in the mobile industry as a con-means outsourcing bulk messaging as well. sultant to British Telecom’s mobile operations subsidiary Cellnet. Since 2004 Robert hasBy way of background, this traffic would guided SAP Mobile Services’s internationalhave been reliant on the prior, direct development in P2P messaging services.connect, bilateral routes. Obviously, incases where these are replaced by a hub’sconnections for P2P business, the non-P2Ptraffic needs to secure its own routing and,potentially, its own commercial agreements.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 35
  • PART TWO: STRATEGIES FOR DRIVING REVENUELatin America Offers Bigsms OpportunitesFrom the rural regions, where farmers SMS leads the packand small businesses use mobile to Interestingly, this revolution also brings amanage their workday, to exciting city boost to text messaging services. But it’scentres where youth — in particular— not just about operator services allowingrely on mobile to connect with friends people with ordinary feature phones toand family 24/7, Latin America is communicate. Analysts note that text messaging continues to provide a solidmore connected than ever before. foundation for a wide range of services,In fact, making or receiving a call or text from banking to basic education, tomessage in Latin America has never been widening access to health information.easier. A new report titled Maximising Against this backdrop, it is clear marketsMobile, the third in a series on Information like Latin America — not the more devel-and Communications for Development oped markets of Europe and Northpublished by the World Bank, reveals that America — will lead messaging growthnearly 98 percent of the region’s population and innovation.have mobile cell signal and 84 percent ofhouseholds use a mobile service. Feature phones are the focus because Latin America’s smartphone market is still in itsOn average 81 percent of subscriptions in infancy. Research firm Pyramid ResearchLatin America are prepaid. Understandably, reports that the smartphone segment inmany in the region use mobile phones to Latin America will grow to 48 million in 2014.make voice calls, averaging 141 minutes of This is a marked increase, but doesn’ttalk-time a month. In most markets the vast negate the fact that Latin America continuesmajority of users (97 percent in Argentina, for to lag behind the rest of the world in smart-example) regularly use SMS to communicate. phone adoption.Clearly, the level of growth in mobile usage But this gap also offers mobile operatorswill continue, expanding into ever more a tremendous opportunity to wring morerural areas across Latin America. It marks value out of text messaging. Ironically, it iswhat the report calls “the beginning of the also the low penetration of smartphonesmobile revolution.” that has kept over-the-top (OTT) players36
  • Maximising mobile for developmentGrowth of global mobile subscriptions World’s population with mobile cell signal 2000 Over 6 billion 71% 29% 0.7 billion 2003 61% mobile subscriptions subscriptions worldwide 2010 23% 77% 5.9 billion 2010 75% of the World subscriptions now has access to 90% High-income countries Developing countries a mobile phoneRise of non-voice mobile usage% National population 96 89 82 49 72 72 61 58 48 38 31 29 26 18 22 19 10 15 KENYA MEXICO INDIA INDONESIA EGYPT UKRAINE (ARAB REP) Send text message Take pictures or video with mobile Use mobile internetPace of mobile phones spread globally(billions) The number of mobile subscriptions will soon take over the world’s population Fixed-line8 subscriptions 2002 There are over 1 billion mobile subscriptions, passing fixed-line users Global population6 1978 First commerical cellular mobile services established4 1961 85 years later, fixed-line subscriptions reach 100 million2 1876 Alexander Graham Bell holds the first Mobile two-way telephone conversation subscriptions0 1875 1900 1925 1950 1975 2000 2011 2015Figure 1: Based on data from Infodev. www.infodev.org/en/Document.1178.pdfMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 37
  • at bay. This, in turn, has slowed the advance Personal Paraguay, a leading mobileof messaging apps that enable smartphone operator in Paraguay and part of Personalusers to send unlimited free messages to Telecom group, has extended itstheir friends. These OTT messaging apps international SMS coverage to reapsuch as WhatsApp, Viber and Apple’s significant business benefits. “SMS is aniMessage are cannibalising SMS revenue important part of how our customersand changing the way mobile users comm- communicate,” notes Miguel Ruiz, Personalunicate with their peers. Paraguay Roaming Manager. “Our cust- omers want to be in touch with friends,This is not the case in Latin America, family and colleagues whether they are inaccording to ABI Research, developed the same neighborhood, or living in amarkets have experienced a marked different country.”decrease in SMS sent because of the riseof OTT alternatives, but the drop in regions More importantly, customers expect theirsuch as Latin America and Africa is not text message communications to beas significant. dependable and robust. “To achieve these SMS connections is a huge task that requires negotiations with operators andInternational SMS requirements technical tests to ensure SMS quality and reliability,” Ruiz explains. To streamline theClearly, feature phones have several process and deliver customers the servicemore years to thrive in Latin America. This they expect, Personal Paraguay has teamedprovides operators a window of opportunity up with SAP Mobile Services. “The hub SMSto generate strong revenues from their service helps us to have complete coveragedomestic and international SMS offerings. with all operators in North America, the U.S.,The international SMS business, for example, Canada and Mexico, as well as operatorsprovides operators with the potential to drive across LATAM, Europe, Asia and Africa.”significant volume and earn hefty margins. Opening new international routes, securing SMS hubbing also allows Personal Paraguaytwo-way service for their customers and the capabilities to cater to the portion of itsmarketing attractive bundle packages are customer base that are Paraguay citizensalso part of a strategy that would certainly living and working in neighboring Argentina.help improve the bottom line. “About 1.5 million Paraguayan people have38
  • Against this backdrop, it is clear markets like LatinAmerica — not the more developed markets ofEurope and North America — will lead messaginggrowth and innovation.emigrated to Argentina, and they want to To take advantage of this robust growthbe in contact with friends and family in an in text messaging mobile operators areaffordable way,” Ruiz says. The answer is also migrating to more flexible pricingInternational SMS, a popular service that to encourage use and to appeal to newalso represents an important differentiator. customer segments. A prime example isIn a nutshell, the service allows customers Tigo Colombia, a mobile operator that isto send an SMS to a Telecom Personal developing a new approach to enable usersArgentina customer and be charged the to do what they want most: communicatesame rate as a local SMS. “There are a lot with family and friends in other countriesof opportunities to be gained by offering at affordable prices, observes Juan Felipecustomers services that pair a simple way Velasquez, Latam International Roamingof communication with reasonable tariffs.” Coordinator at Tigo Colombia. At a deeper level, Tigo Colombia’s businessAttractive pricing model is based on partnership to ensure access to key capabilities and technologies.SMS is expected to continue accounting According to Velasquez, the decision tofor a major proportion of value-added cooperate with SAP Mobile Services isservices revenue as services like banking, driven by the internal requirement to keepmobile money and M2M gain traction. pace with innovation. “Many times we failAnother driver is social media, the pastime to seize opportunities because technologyand passion of nearly 100 percent of the changes so fast and we sometimesLatin American population using mobile neglect segments that do not have accessor Internet, according to comScore. While to new technologies.”social media isn’t a new phenomenon, thegrowth is phenomenal.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 39
  • Exciting opportunities ahead Velasquez is also bullish about the outlook for value-added services that harness SMSWhat are the highest areas of opportunity in new ways. Chief among these is M2M. Ason the operator agenda? he puts it: “I think that the next step in our industry is machine-to-machine, where wePersonal Paraguay’s Ruiz is squarely can connect all the machines with machinesfocused on extracting more value out of — and with the people managing them —offering a wide variety of packages with around the world with simple SMS.”truly personal communications at the core. Whether it’s person-to-person or machine-“Our slogan is ‘Cada Persona es un mundo to-machine, it’s clear that messaging is king.— Each person is a world.’ This meansdelivering each customer the services and A promising and fast-growing service thatbundles that are in tune with their lives. They should not be ignored is A2P, or Application-are at the center.” Looking ahead, Personal To-Person messaging. In this scenario, soft-Paraguay is also planning to deploy LTE/4G ware applications and organisations, such“with IPX to support new services” that as enterprises and governments, establishsatisfy customer requirements for quality, a one or two-way communication channelcoverage and convenience. with people using SMS.Tigo’s Velasquez says he is also looking The revenue potential is significant. Accord-to a future where continued cooperation ing to a study published by Portio Researchbetween the stakeholders — operators, Ltd, a research firm based in the U.K., forsuppliers and users — creates a win-win the period 2011-2016 worldwide A2P SMSfor everyone. Additionally, it is important revenue is expected to outpace Person-to add these services onto an IPX, where To-Person (P2P) SMS revenue and grow atconnectivity meets users’ needs for quality a CAGR of 13.1 percent.and desire to communicate on their terms.Looking ahead, Personal Paraguay is alsoplanning to deploy LTE/4G “with IPX tosupport new services” that satisfy customerrequirements for quality, coverage and convenience.40
  • P2P & A2P SMS revenue – worldwide(in USD billions, 2009-2016F)SMS Revenue (in USD billions) 93.6 95.5 89.5 94.2 83.9 85.7 78.5 A2P SMS 73.4 Revenue P2P SMS 75.1 70.1 Revenue 60.4 52.3 44.2 30.7 27.4 25.5 2009 2010 2011F 2012F 2013F 2014F 2015F 2016F Note: The sum of A2P and P2P SMS revenues may not add up to total SMS revenue because of rounding off errors.Figure 2: Based on data from Portio Research Ltd.As of end-2012, A2P traffic represented 23 campaigns, offers and brand messages viapercent of total SMS traffic worlwide, and text messaging. Banks are also harnessing33 percent of SMS global revenues. In Latin SMS to send transaction notifications toAmerica, A2P traffic accounted for 15.2 their clients, a convenient service that con-percent of total SMS traffic, significantly sumers have come to accept and appreciate.lower compared with the U.S. and Canada.This would indicate there is a significant These examples show there is a lot ofpotential for A2P growth in the region in mileage — and value — left in text messag-the years ahead. ing. In Latin America, in particular, the growth of SMS shows no signs of slowing,Indeed, the outlook for A2P SMS growth is a positive trend that benefits mobile opera-positive. A key driver: the advance of more tors that develop the mix of capabilities —conversational commerce and advertising, billing, bundles and international coveragerequiring marketers and retailers to deliver — their customers expect.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 41
  • SMS traffic break-out-regional (in billions, 2009 – 2016F)Region 2009 2010 2011 2012F 2013F 2014F 2015F 2016FLatin P2P 203.4 285.3 341.7 381.6 417.6 443.7 460.5 478.3America A2P 22.7 32.9 50.6 68.6 84.7 101.0 118.1 125.8Note: Sum of regional numbers may not equal total due to rounding off errors.Figure 3: Based on data from Portio Research Ltd.www.slideshare.net/CiscoSP360/cisco-visual-networking-index-vni-global-mobile-data-traffic-forecast-20112016 Strong growth drives penetration, usage By 2015 Latin America is forecast to have being one of the more than 750 million mobile connec- largest, Latin tions, with an average penetration rate of America is also 122 percent. According to the GSMA, the one of the world’s region is one of the world’s largest mobile fastest-growing markets by volume. With HSPA and LTE mobile markets. connections reaching more than 305 We have experienced million by 2015, mobile broadband will be 13 percent growth per a key driver of growth. It will also be the year for the past four years, driven primary means of Internet access for by increasing accessibility, flexibility and people across the region. affordability of mobile services, and boosted by the increasing affluence of Sebastian Cabello, Director of Latin the region and the relative shortage of America, GSMA commented: “As well as the fixed line infrastructure.”42
  • PART TWO: STRATEGIES FOR DRIVING REVENUECybersafety: Everyone’sResponsibilityBy Steve Largent, President & CEO, CTIA-The Wireless AssociationImagine identifying a cyberthreat well as many other significant problems. Howsuch as a virus, worm or malicious can this possibly be considered efficient, effec- tive or “good business”? It’s not.code on your company’s commun-ications network. You know how to If you’re like the CTIA-The Wirelessremove it, but you also believe that Association, and many of its members, thenyour company isn’t the only one you already know that private sector net- works are targeted every day by hackers,under attack. You tell your boss criminals and nation-state actors for cyberthat others, including your comp- exploitation and theft. The scenario I des-etitors and military commun- cribed above, as well as the attacks thatication networks, might likewise confront the private sector daily, are pivotal reasons why we support the Cyber Informa-be affected (but their IT experts tion Sharing and Protection Act [(CISPA)might not have noticed the threat (H.R. 3523)].yet, or simply haven’t figured outhow to stop it). This legislation would pave the way for efficient and effective business practice,As a courtesy, you’d like to alert these other allowing our members to communicateparties and offer your assistance to help with all the stakeholders — competitors,them protect their networks in anticipation of federal government agencies, IT directors,the virus, or help them remove it altogether. academia and experts — to identifyUnfortunately, if you did that, you would put potential issues and create solutionsyour company and yourself in danger of before, during and after the problem.lawsuits and in violation of antitrust laws, asCTIA and its members have already takenan active role in addressing cybersecurity,but time isn’t on our side because the hackercommunity is moving fast.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 43
  • The cybersecurity ecosystem up of more than the operators and their networks. It now encompasses severalThe CISPA’s sponsors, U.S. House of other players, including device manufac-Representatives Permanent Select Comm- turers, mobile app and content creators,ittee on Intelligence Chairman Mike Rogers operating system developers and infra-(R-AL-3) and Committee Ranking Member structure producers. Quite simply, everyDutch Ruppersberger (D-MD-2), recognise single mobile user and company in thethat cyberthreat intelligence sharing and wireless ecosystem has an important roleproviding clear authority for the private in ensuring cybersafety and protecting allsector to defend its own networks is of us from cyberthreats.critically important in today’s world.When passed, CISPA, which has already Work in progressbeen approved by the U.S. House ofRepresentatives and is awaiting the U.S. In recognition of the vast and diverseSenate to vote, will carefully balance appro- wireless ecosystem and the need to bringpriate privacy protections with immunity all the stakeholders together to addressfrom lawsuit protections so that private and cyberthreats, CTIA created a cybersecuritypublic entities are genuinely incentivised to working group in March 2012.share cyberthreat information to help ournation get ahead of the challenge. This group is comprised of our members, and maintains an ongoing dialogue with gov-While CISPA is vital, CTIA and its members ernment agency representatives, researchersalso want to highlight the importance of and experts from around the country to helpother pieces in the cybersecurity puzzle. protect the wireless industry — and ourOf these two are our immediate focus areas. customers — against cyberthreats.First, is to educate policymakers and con- In particular, this group focuses on sharing:sumers about the role they play in fightingcyberthreats. Or, as we like to put it, the role • Best practices and existing standardsthese parties play in ensuring cybersafety. (including technical exchange) • Known vulnerabilities andSecond, is to remind people that the countermeasureswireless industry’s ecosystem is made44
  • 96% Agree that government should allow companies to exchange informationto help identify vulnerabilities and protect users from hacking and cyberfraud Strongly disagree 1.8% Somewhat disagree 2.2% Strongly agree 49.4% Somewhat agree 46.6%Figure 1: Based on data from McLaughlin & Associates. National Survey of IT Decision Makers, July 27, 2012.• Suggestions and ideas on how the easy-to-understand tips on how to protect industry improves security while being themselves, their wireless devices and technology agnostic and maintains the their information. openness of the Internet This is important since today’s smartphonesThe working group has a number of initiatives and tablets have features and functions thatalready in the works, but I can’t reveal them have turned them into mini-computers.yet. However, I can share the new Cybersafety Because these mobile devices are alsopamphlet, which was written in non-techni- packed with personal information, suchcal terms, and provides consumers with as banking and health records, consumersMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 45
  • How should industry and government proceed on cybersecurity? Industry should take the 14.8% lead in defining standards. Government should take the lead in defining standards. 4.0% Industry and government should share information on threats, and work 68.0% collaboratively to define standards. Industry and government should share information on threats 13.2% without defining standards. 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0Figure 2: Based on data from McLaughlin & Associates. National Survey of IT Decision Makers, July 27, 2012.http://files.ctia.org/pdf/IT-Decisionmaker-Survey-FINAL.pdfneed to take more responsibility for the pro- Collaboration is essentialtection of this sensitive data. Specifically,consumers need to actively protect them- Education is key to ensuring cybersecurityselves by following simple tips, such as for everyone, but there’s only so muchusing passwords and PINs. They can also the working group can do without CISPA.back up their personal information on the Right now, the working group may onlycloud, or other external sources, and share limited information, so it isn’tupdate the operating systems on their helping us to address the real issuesmobile devices. at hand: the daily attacks that threaten industry and consumers.46
  • By enacting CISPA, the private sector will be wireless industry ecosystem must beable to better leverage its own cyberdefense allowed to work collaboratively to stemefforts in a coordinated way with govern- the rising tide.ment entities through information sharing toprotect the nation’s systems, networks and For more information and to download theconsumers. Additionally, by helping facilitate cybersafety brochure, please visit: www.ctia.the creation of a more robust cybersecurity org/cybersafetymarketplace, CISPA will lead to expandedresearch, service offerings and more jobsfor cybersecurity experts. Those are positive Steve Largent has served as President andoutcomes that will surely benefit our nation CEO of CTIA-The Wireless Association® andand our economy. President of The Wireless Foundation since November 2003. Previously, Largent repre-CTIA and its members have already taken sented Oklahoma’s First Congressionalan active role in addressing cybersecurity, District in the U.S. House of Representativesbut time isn’t on our side because the from 1994 to 2001. During this time Largenthacker community is moving fast. Several was the Vice-Chairman of the Energy andindependent reports have revealed up to 30 Air Quality Subcommittee and also servedpercent growth in the instances malware. on the Telecommunications Subcommittee,They also report rapid growth in spyware the Oversight and Investigations Subcom-designed to steal sensitive personal, finan- mittee, and the Environment and Hazardouscial and work-related information from Materials Subcommittee.  mobile devices. To counterbalance thissignificant threat, all of the players in theThis legislation would pave the way for efficientand effective business practice, allowing ourmembers to communicate with all the stake-holders — competitors, federal governmentagencies, IT directors, academia and experts —to identify potential issues and create solutionsbefore, during and after the problem.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 47
  • PART TWO: STRATEGIES FOR DRIVING REVENUEDoes The Future of MobileSecurity Lie in the Past?By Mary Landesman, Senior Security Researcher, CloudmarkThe nature of malware and the disposable without penalty – if one socialentire computer attack spectrum campaign fails, the attackers can quickly and cost effectively move on to the next.has changed dramatically over thepast decade. Originally designedto be disruptive to the computer, Open for attacktoday’s malware is no longer the The always-on/always-carried nature ofend game, but rather a tool that mobile devices enhances the potential forserves as a means to a new end: social manipulation. Many social engineer-criminal profiteering. With that ing attacks succeed because they fosterevolution, social manipulation some sense of urgency. Mobile device users may be more distracted while checking orhas become a key facilitator in receiving messages (whether via email ormodern attacks, and messaging SMS). This is because they are encounter-is the obvious medium through ing these messages during the normalwhich it is affected. course of their day, rather than specifically setting aside dedicated time to checkSocial engineering entices potential victims messages at their PC. Being distracted ainto taking some action that will prove recipient may act more hastily and openharmful to themselves and/or the device messages on their mobile device withoutthey are using. Social engineering is plat- thinking about the risk first. Further,form-agnostic, cannot be patched, and people’s inherent trust in their mobilehas a seemingly infinite number of angles devices and the messages received onthrough which susceptible victims can those devices, can exacerbate the situation.be manipulated. Further, there are nodevelopment costs associated with social In concert with evolutionary changes on theengineering, no concerns of cross-platform malware front, smartphone, tablet andcompatibility issues, and is completely general mobile adoption rates are quickly48
  • outpacing traditional computers. In develop- threats are following a similar – yet greatlying nations users are bypassing traditional accelerated – track first witnessed withcomputer adoption altogether and moving traditional computer threats.directly into smartphone and tablet adopt-ion. This leapfrogging to mobile makes For example, there is currently a thrivingperfect sense; mobile devices are generally gray-hat market for Android users engagedless expensive than traditional computers in click fraud and other forms of advertisingand are highly transportable, a distinct manipulation. This closely parallels theadvantage in countries where Internet computer scene in the early 2000s, whencafes are the norm. Web 2.0 first provided the opportunity for affiliate marketing relationships. A subsetThe combination of digital criminal profit- of those affiliates quickly realised theyeering and mobile adoption may well be the could increase their revenue potential byperfect storm. Not only does widespread incorporating unethical (and sometimesmobile adoption provide a steady and illegal) means of generating clicks for profit.increasing supply of potential new victims; Instead of taking several years to crossover,mobile devices are also proving to be cost- this practice has already materialised in theeffective attack tools. Indeed, the ease with mobile arena.which mobile devices can be obtained(either through purchase or theft) signif- Likewise, traditional spam – problematicicantly lowers the barrier to entry for since the beginning of email – received awould-be attackers. tremendous boost in 2003 through illicit spam proxies distributed by the SoBigShort of having a crystal ball, it’s not entirely worm. This shift has already occurred onpossible to determine the exact nature of smartphones, with a wide range of bulkthe future threat for mobile devices. Regard- mail and proxy tools available to would-beless, there are tell-tale signs that mobile spammers who want to use mobile as theThe always-on/always-carried nature of mobiledevices enhances the potential for social manipulation.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 49
  • sending device. In early 2011 the first up to 70 percent of unwanted text messagesobserved spam attack originating from are attempts at financial fraud.Android devices occurred. This culminatedin a mass spam campaign in mid-2012, thus Social engineering factors heavily in scamdemonstrating mobile’s suitability for use and fraud campaigns and, as a result, theas a spam tool. exact pitch, or hook, used by the scammer varies by geographical region. Scams offering free Wal-Mart or Best Buy giftSpam goes mobile cards abound in the U.S., a country where the Wal-Mart and Best Buy chains areThe nature of spam attacks targeting well known. In the U.K. scams use PPImobile users has also adapted to the new compensation or accident claims as theecosystem. Attackers do not necessarily primary hook.need to rely on installation of malware orcovert phishing attacks to profit. Instead, a Text messages are a powerful vehicle formobile attack may simply trick the recipient reaching people. Currently, SMS marketersinto agreeing to send premium rate SMS claim SMS message open rates are highermessages. This results in expensive and than 90 percent and opened within 15unexpected charges to the victim, allowing minutes of receipt. By regionalising topicsthe attacker to profit. to the victim’s locale, attackers are simply ensuring a higher open and reaction rate forIndeed, the majority of SMS spam falls into these text messages in an environment thatthe category of scam or fraud, which is already fosters a high open/reaction rate.defined as a campaign to entice the recip- (Traditional email, by contrast, has an openient into taking some action that unwitt- rate of only 20-25 percent within 24 hoursingly results in information disclosure or of receipt).financial loss. Recent estimates suggest thatAttackers do not necessarily need to rely oninstallation of malware or covert phishing attacksto profit. Instead, a mobile attack may simply trickthe recipient into agreeing to send premium rateSMS messages.50
  • Exacerbating the problem, the typical naturally hamper law enforcement effortsSMS text scam is seldom single-purposed; and make it more difficult to thwart attacks.rather each click through or response fromthe recipient leads to another possible Hopefully, we can all learn from past mis-angle to the scam. For example, a free gift takes. Central to the success of traditionalcard spam may begin with ‘just’ a survey. computer attacks was a failure to recogniseHowever, not only is personal information or act on early indications that malware hadcollected (and sold in aggregate), but the turned to profit. Criminal attacks on mobileoften obscured terms of service for the devices are following an accelerated pathsurvey spell out insidious actions such as leading in the same direction. Let’s hopethe inability to cancel the account or the that we will act as quickly and adopt theunwitting agreement to send SMS texts to appropriate counter - measures before thepremium rate numbers. tipping point is reached.Also, a ‘free’ offer often requires the partici-pant to pay various fees in order to continue Mary Landesman has over 20 years experi-progressing towards the final giveaway. This ence in the security industry and is a widelycan progress to the point that, even if actual cited expert in the field of antivirus, malwaremerchandise is ever ‘won’, the participant and computer security trends. Apollohas spent more in up-front fees and unan- Research named her the top spokespersonticipated SMS charges than the actual for both malware and phishing, the third formerchandise is worth. DLP (data loss prevention) and the third most quoted security spokesperson overall. Additionally, she was recently named one ofFighting back the top 10 women in information security by eWeek. Since 2007, Landesman has alsoMobile devices have already proven to be been an annual recipient of a Microsoft MVPfavourable and cost effective, both as an award for her work in consumer security.attack tool and as an attack target, withsocial manipulation playing a key role.Further, the ease of disposal and/orreplacement of mobile devices willMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 51
  • The growing threat of smartphone hackers.Mobile malware and what you need to know Do you think it’s safe to access sensitive data on your mobile phone? Perhaps you should think again. With malicious programs designed to target cell phones skyrocketing, it’s becoming increasingly dangerous to use your phone without the necessary precautions. Here’s how to prevent malware from taking over your phone... and your life. What is mobile malware Malware is software with a malicious purpose. It may be designed to disable your phone, remotely control your device, or steal valuable information. Mobile malware uses the same techniques as PC malware to infect mobile devices. The growth of malware Number of mobile malware 2,500 853 437 229 52 119 2005 2006 2007 2008 2009 2010 The real dangers of malware • Bank account passwords are stolen • Private information is captured • The phone is forced to send messages to premium numbers • Phone data is deleted • Device is “bricked” and needs replacing •  alware-infected devices can be used by botnet owners to launch M attacks on digital targets.Figure 1: Based on data from Bullguard.52
  • PART TWO: STRATEGIES FOR DRIVING REVENUEMobile Number Portability:Increasing Competition And 9 421Driving ValueBy Mitul Ruparelia, Director of Sales Engineering, SAP Mobile ServicesMobile operators are understand- internal home location registry databases.ably concerned about subscriber The turnaround time for this process depends on the country where this takeschurn and constantly on the watch place because it is dictated by thefor ways to prevent it. But this task technology and regulation present in thehas become more difficult since country in question.the advent of Mobile Number Port-ability (MNP), also known as Wire- MNP advancesless Number Portability (WNP),which allows subscribers to vote MNP was first implemented in the latewith their feet when services are 1990s in mature European markets such as the U.K. and the Netherlands. The objectivenot satisfactory. This is because was to enable mobile operators to competeMNP allows the subscriber to take for customers on other networks.their phone number with them —even when they switch to another To date 70 countries worldwide have imple- mented MNP, and this number continuesoperator in the same country. to increase as new markets and regionsIn principle, MNP simply allows subscribers advance. Predictably, we see it’s theto retain their phone number. However, the dominant mobile operators with strongerprocess of porting a number from one mobile market share that are less likely to supportoperator to the other can be complicated. the implementation of MNP. This is becauseIt involves a number of steps including the they perceive it as a scheme that will likelyinitiation of the port from the subscriber, increase the chances that they will losewhich is the request to the donor network — not gain — subscribers.that starts off the handover. It also involvesan exchange of porting information among Indeed, this is a realistic scenario, and onethe mobile operators, and results in an that has effectively motivated mobile opera-update to the network routing scheme and tors to innovate and deliver value-addedMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 53
  • services to delight and retain their custom- of subscribers in the U.K. ported theirers. They have also introduced lower pricing number from one network to another.and exclusive packages with unique hand-sets in order to meet consumer require-ments for services and — ultimately — grow Fierce competitiontheir subscriber base. Since the economic slowdown that markedA prime example of this approach is how 2008 and 2009, mobile operators acrossmobile operators marketed the Apple the globe have become more cost consciousiPhone to attract customers to their brand. than ever before. This shift in mindset is also a reaction to fierce competition and mount-In the U.K. Apple awarded Telefónica UK ing pressure from regional bodies and insti-(O2 UK) a two-year exclusivity on the tutions to accept MNP. This has combinedhandset, making it the only network sup- to result in a significant decline in operatorporting the iconic device. This gave ARPU. Another outcome of this is theTelefónica UK a significant advantage, impact on OPEX and CAPEX budgets,allowing it to report the lowest churn rate limiting the investments operators canin the country. Churn stood at a mere 1.1 make in key technologies such as LTE/4G.percent in both 2009 and 2010. Regulators and government institutionsDuring the same period other U.K. operators have moved forward with plans to liberaliselost a significant number of their subscrib- markets by mandating the implementationers to Telefónica U.K. — no doubt attracted of MNP. This is also the focus in the moreby the Apple iPhone package. In fact our mature and saturated markets, wherefigures for 2009 show that 15 percent penetration is near 100-percent and thusInvestment in MNP solutions is critical to thecapabilities of any telecommunications companyto satisfy and retain their customers, as well assuccessfully complete calls and messages routedvia their network.54
  • UK contract churn (%)by operator 2005-2010 (annual average) 3.5 3.0 2.5 (Hutchinson)* 2.0 T-Mobile 1.5 Orange Vodafone 02 (Teléfonica) 1.0 Everything everywhere 0.5 0 2005 2006 2007 2008 2009 2010Figure 1: Based on data from Wireless Intelligence.https://wirelessintelligence.com/analysis/2011/04/o2-records-lowest-churn-rates-in-uk/limits the number of new customers/non- all countries, including those where MNPsubscribers that can be won by mobile is not the accepted procedure, to knowoperators in those countries. when subscribers who have chosen to retain their number and to route messagesMNP clearly benefits subscribers by offer- and voice calls to them. This confusioning lower tariffs and the freedom to switch. exists because mobile operators, as aBut it also creates commercial and technical default, will typically route voice callschallenges for mobile operators across the and messages to a subscriber based onboard. Chief among these is the lack of a pre-allocated number ranges.standard process that allows operators inMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 55
  • Regulators and government institutions havemoved forward with plans to liberalise marketsby mandating the implementation of MNP. Thisis also the focus in the more mature andsaturated markets.In cases where MNP has been implemented Critical capabilityby the destination country, the originatingmobile operator is dependent on either As this example clearly shows, investment indirect GSM connectivity (GSM Forwarding/ MNP solutions is critical to the capabilitiesOnward Routing) with all of the operators in of any telecommunications company tothe country to route calls and messages, or satisfy and retain their customers, as well asthey rely on a service provider — such as a successfully complete calls and messagesvoice operator or a SMS hub — to handle routed via their network.both the MNP and delivery. Clearly, MNP is a good news story for sub-Choosing not to adopt one of these two scribers, because it allows them to switchoptions can have a negative impact on the operators and retain their phone numbers.call and message success rate. This was However, it also confronts mobile operatorsprecisely the outcome in January 2011, the with a variety of commercial challenges.year MNP was introduced in India. Two oper- To delight and retain their subscribers andators in the Middle East region were proac- stand up to formidable competition in thetively measuring KPIs at the time. They saw marketplace mobile operators must bea 12 percent increase in failed SMS in the innovative and agile. To accomplish thisfirst quarter alone, which is quite significant operators are well advised to create servicesgiven the tremendous volume of traffic to offer more value to their customers andexchanged between the Middle East and begin — through outsourcing and partner-Asian operators. ship — to build the capabilities to ensure the successful delivery of all messaging, voice and data.56
  • Mitul Ruparelia joined SAP Mobile Servicesin 2007 as a Pre-Sales Engineer aftergraduating with a first-class honoursdegree in Computer Information Systems.In 2010, he was named the design authorityfor the Intelligent Hubbing solution, whichis a unique, patent-pending technology,allowing mobile operators to increaserevenues, reduce operational costs andimprove customer experience.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 57
  • PART TWO: STRATEGIES FOR DRIVING REVENUEIntelligent Hubbing:Easing International smsRouting ComplexityBy Mark Weait, Vice President Sales (EMEA & LATAM), SAP Mobile ServicesAt a high level, most Mobile Operators Second, operators need to have the com-roaming teams are focused on mercial mechanisms in place to monetise the message flow.achieving two key objectives:achieving the best possible Qualityof Service for subscribers, and Sounds simple, right? Well, it isn’t!optimising the associated retail Today operators that want to enable thisand wholesale revenues. are confronted by a variety of hurdles. To complicate matters, operators’ operatingHow does an operator achieve margins are coming under increasingthese aims? pressure, a situation that can limit the avail- able resources operators can direct towardFirst, operators must ensure they have the enabling and monetising the message flownetwork connectivity in place to deliver their in the first place. What’s more, operatorssubscribers’ text messages to their destina- must cope with the advance of Mobiletion. Of course, operators must also enable Number Portability (MNP), a developmenta reply path to guarantee the delivery of the that has made the messaging landscapeSMS response. even more complex.This approach has enabled operatorsto dramatically increase the number ofmessages they have successfully deliveredon behalf of their subscribers. This, in turn,has sharply increased retail revenues andcustomer satisfaction.58
  • The outcome: many operators today strug- operator would need to invest resources andgle to meet the increasing demands of their effort to ensure the following conditions arecustomers messaging requirements. met. Specifically, an operator must have:Failing to satisfy the consumers messaging A  n operator at the receiving end that hasrequirements can lead to customer churn the desire — and the time — to negotiateas well as revenue and margin leakage. Due and conclude an agreementto the increasing pervasiveness of OTTplayers in the market, this has become even A  clearing and settlement providermore of an issue. in place to manage the commercial settlementAgainst this backdrop, many operators arestriving to maximize revenues and customer R  elevant SPAM controls and filters in placesatisfaction by pursuing strategies to inc- to protect the network and subscribersrease their SMS delivery footprint. It’sa smart decision, but operators also face R  esources available to manage the legal,some challenges along the way. technical routing, provisioning and testing requirements of a new AA19, a lengthy process that can take up to 6Ensuring SMS delivery months per connectionClearly, there are three ways to enable A  ccess to the resources necessary to2-way SMS delivery. Operators can use manage the on-going IR21 provisioningan SMS hub; they can set up a direct AA19; needs, a task that — in a country with MNPor they can utilise existing roaming agree- present — often involves monthly activityments. If the operator is focused onensuring wholesale revenue generation, T  he SS7 controls and monitoring in placethen the last option offers little value. to provide end-to-end SMS visibility in case of subscriber complaintsTherefore, lets focus on the first twooptions, highlighting the steps operators If  MNP is present in the country wheremust take to realise benefits. the operator operates, then that operator must either have an MNP feed, or an SS7Imagine an operator has opted to set up connection in place with all the otherand manage an AA19 base. In this case the operators in that countryMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 59
  • OTT players will have a major impact on the telco business modelTotal projected 3-5 year impact on core services Data carriage costs g g g Google Mobile data sales g g Apple Facebook Skype/ Messaging revenues g g Microsoft Skype/Amazon Voice revenues g g -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%NB These projections are based on the sum of a weighted average of respondents’ votes. We regardthem as indicative of the overall market effect and relative impact of the players on different areasrather than an absolute measure.Figure 1: Based on data from Telco2Research.com. Telco 2.0 Survey, September 2011, 301 Respondents.www.telco2research.com/articles/SR_google-apple-facebook-microsoft-skype-amazon-disruption-telco2_SummaryA review of this detailed list confirms that Connecting forthis is not a simple undertaking. In many competitive advantageAfrican countries, for example, an operator’sAA19 footprint would seldom exceed 50 Against this backdrop, many operatorscontracts. However, operators must also are turning to SMS hubs to providereach over 900 operators globally. To holistic connectivity.complicate matters, MNP will shortly bepresent in 90 countries, representing over Operators are making this move becauseone fourth of all the countries an operator by connecting to an SMS hub, they canwould need to reach. immediately gain access to an existing interconnected ecosystem.60
  • Mostly because, by connecting to an SMS ‘Hybrid-solution’ pathhub, the operator can immediately gainaccess to an already existing interconnected Many operators have invested significantoperator ecosystem. Hubs can offer value resources and money into building theiradded services, such as MNP solutions. own bilateral footprints for SMS exchange. In Western Europe, for example, many largeIn practice connecting to an SMS hub allows operators have over 250 direct bilateraloperators to access : agreements already in place, and a number of those are managed AA19 agreements.• A connectivity footprint far greater than Clearly, it’s not an investment in capabilities their own, and one that is continually that operators will want to abandon. increasing• Clearing and settlement from day one What are the other options open to opera- to ensure wholesale revenues are tors? Often operators are advised to go maximised down a ‘hybrid-solution’ path. In this• Global MNP solutions that help maximise scenario operators maintain their AA19 base message delivery success rates and and work with an SMS hub provider. Despite eliminate the management overhead obvious benefits, this path also presents for the operator challenges, particularly in countries where• Constantly evolving SPAM and spoofing MNP is present. filtering solutions• R21 provisioning and associated number So, how does an operator manage to range management services successfully route to AA19 connected• Local support resource with access to operators in a given country, as well as via end-to-end SS7 visibility (where this is the SMS hub to another operator in that offered) same country, whilst in parallel supporting MNP requirements?Such standard hubbing services go a longway to addressing the SMS requirement of Ironically, the traditional approach to stream-today’s operators, but SAP Mobile Services line this generally creates more complexity.believes that this is not the whole answer, What’s more, it often forces operators toand has therefore evolved its standard manage additional and unwanted overhead.market offering to deliver greater value to This is because the traditional approachthe operator. requires the operator to manage the routingMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 61
  • Many operators are striving to maximise revenuesand customer satisfaction by pursuing strategiesto increase their SMS delivery footprint. It’s asmart decision, but operators also face somechallenges along the way.down to the operator level, as opposed to hub and in turn an increase in wholesalethe country level. Due to routing table revenue with the added comfort of knowingrestrictions, operators determined to take those MT payments are guaranteed.this path are also confronted by added tech-nical difficulties. There are additional benefits to this approach, such as reducing the complexity involved with managing SMS routing andProviding an intelligent approach MNP management. But it’s not just about delivering an operator immediate businessThe challenge now is for hubs to provide benefits. This approach also frees up themore functionality, so that operators can Roaming team, enabling them to focus moreremove the complexity associated with time and effort in reducing revenue leakage,routing international SMS from their managing traffic imbalances, preventingnetwork to their hub provider. The ideal spam abuses and — ultimately — buildingsolution is one that routes each SMS along sustainable advantage.the optimal route – whether that is via anexisting bilateral connection or through thehub providers’ network – all whilst dealing Mark Weait runs the commercialwith the challenges MNP introduces. department of SAP Mobile Services across EMEA and LATAM that provides and sellsTaking this approach has enabled operators solutions into businesses across all marketto dramatically increase the number of segments, including telecoms, financialmessages they have successfully delivered services, FMCG, manufacturing, logisticson behalf of their subscribers. This, in turn, and many others.sharply increased retail revenues andcustomer satisfaction. It also drives anincrease of return traffic delivered via the62
  • PART TWO: STRATEGIES FOR DRIVING REVENUEOrchestrating CapabilitiesDelivers High PerformanceBy N. Arjun, Chief of Projects & Transformation, Bharti AirtelIndian telecom giant Bharti Airtel Meeting local needshas spread its wings across the Analysts note that Africa has many marketAfrican continent to reach nearly conditions that make it a booming market60 million customers in 17 for telecom services. First, there is thecountries including Nigeria, potential for growth. Africa is home to overBurkina Faso, Chad, Congo 1 billion people and has the world’s youngest population. People under 25 account for 60Brazzaville, Democratic Republic percent of the total population, comparedof Congo, Gabon, Madagascar, with around 30 percent in developed coun-Niger, Ghana, Kenya, Malawi, tries. In addition, apart from China and India,Seychelles, Sierra Leone, Tanzania, most of the world’s fastest growing econo- mies are in Africa, according to the IMF’sUganda and Zambia. World Economic Outlook.The strategy paving the way for this expan-sion — and success — is sharply focused on When Airtel entered the African market inbridging the digital divide with affordable 2010 it realised that customer demand fortelecom services. Airtel in Africa has connectivity and coverage, as well as cust-adapted the low-cost, high-volume model omer service, would need to be addressed.— which was employed in the home market First, coverage was boosted by adding moreof India — to serve the African market and sites. Then customer experience and serviceprovide customers world-class and innova- was improved by offering new and innovativetive voice and data services to add value services at an affordable price.to their daily lives.SMS services were a big part of this becauseAfrican youth are more mobile savvy and preferto do text messaging. Airtel responded by creatingand promoting bundles that includes SMS as partof the package.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 63
  • The African mobile market is thriving, reaching over 642 billion connections in 2011 – after exceeding 65% penetration in 2011. Total African mobile connections, penetration rate and growth drive (millions, % penetration) Penetration +30% Connections 1000 90% 85% 82% 900 78% 80% 910 73% 860 800 807 70% 65% Penetration rate (%)Connections (millions) 700 735 60% 57% 600 642 48% 50% 552 500 40% 40% 458 400 31% 379 30% 300 22% 283 20% 200 15% 201 9% 10% 100 136 6% 2% 3% 4% 83 26 37 53 0 17 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F 2013F 2014F 2015F Economic development in the region Introduction of low-cost handsets S  uccess of cost-effective pre-paid services A  mbitious rollout of mobile network (96% of total) and significant price reductions infrastructure –fast expansion of mobile coverage Figure 1: Based on data from Wireless Intelligence. Excludes M2M connections. A.T. Kearney 28/02 2012 MWC www.gsma.com/publicpolicy/wp-content/uploads/2012/03/mea12atkearneyafricapresentation.pdf 64
  • This approach — built on collaboration withstrong partners — lays the groundwork for asustainable model that also equips Airtel tointroduce the latest technology and offercompetitive services.SMS services were a big part of this Tapping talent to achievebecause African youth are more mobile excellencesavvy and prefer to communicate via textmessaging. Airtel responded by creating How does an operator deliver high volumeand promoting bundles that includes SMS at low cost? Across its markets in Asia andas part of the package. Africa Bharti Airtel has successfully driven down costs and ensured quality by part-Today Airtel is focusing efforts on three nering with key companies to manage allareas. These are 2G, which is about deliver- non-core operations — including networking voice services; 3G, which supports data management and IT hardware and softwareservices; and mobile money and mobile needs. Put simply, we tap into the talentscommerce services. The latter is all about and capabilities of partners in all areasbuilding relationships and serving the where we at Airtel feel we do not have aunder-banked. core competency.To date Airtel offers mobile commerce This approach — built on collaboration withservices in 15 of the 17 African countries strong partners — lays the groundwork forin which it operates. The aim is to build an a sustainable model that also equips Airtelecosystem that ensures money stays within to introduce the latest technology and offerthe customer’s wallet. In other words, they competitive services. Additionally, Airtelcan do everything without having to use maintains a sharp focus on core areascash, or go to the bank. within the business — and a core compe- tency is understanding customers.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 65
  • Over the next 5 years Africa will be the second fastest growing region in totalconnections and the fastest growing in subscribersGlobal mobile connections by regions(millions) CAGR 9082 11-15 8484 894 7% 7840 845 7194 790 6524 734 5835 680 4424 627 4154 8% 3861 3548 2823 3200 709 13% 631 555 492 947 1015 7% 389 440 819 876 722 766 656 7% 510 555 607 424 465 413 5% 434 9% 5% 5% 361 5% 388 5% 5% 229 333 552 9% 642 10% 731 10% 815 10% 887 10% 949 10% 10% 2010 2011 2012F 2013F 2014F 2015F ME EEA APAC Africa Others NA LATAM 1)Includes M2M and mobile connectionsFigure 2: Based on data from Wireless Intelligence.A.T. Kearney 28/02 2012 MWCwww.gsma.com/publicpolicy/wp-content/uploads/2012/03/mea12atkearneyafricapresentation.pdfAirtel has chosen to harness the SMS across our African markets as quickly ashubbing capabilities of SAP Mobile Services possible, and at the best quality possible.for two reasons. At a basic level, there arepartners that understand the SMS business This approach also delivers significantbetter than we do. At a more complex level, business benefit. At Airtel we measureit’s about having the capabilities to offer the success in two ways: in terms of how manywidest coverage to our customers in the complaints we have received from custom-shortest possible time. In fact, it is the ers that their messages have not been deliv-approach that allows Airtel to provide SMS ered; and the overall impact on revenues.66
  • Over the last 12 months the number of SMS be open and ongoing, and a key learning hasmessages both in and out has increased by been that there is always room for improve-12 percent. We have also seen a significant ment in this exchange.reduction in the time taken to resolve acustomer complaint. Achieving business objectives is not about owning the capabilities; it’s about orches-Moving forward, the focus is to build on this trating the capabilities of partners. This wayfoundation to increase the percentage of the model itself becomes the way to achievevalue-added services in the mix, and SMS high performance, maintain growth andis one of those services. Airtel will offer deliver customers innovative — and affordablemore bundles to encourage customers to — voice and data services. Airtel follows thisuse text to send out messages on special model to innovate and delight the customer.occasions, for example. It’s all about However, there will always be certain tech-creating specific packages for specific nological innovations, which will come fromcustomer segments. Airtel will also offer partners that we will need to marry with ourspecial rates for communities of interest, deep knowledge of the customer. This waywhere we know these communities exist. Airtel ensures that we offer what theThis approach allows us to increase and consumer wants on time, every time.improve the traffic between the variouscommunities of interest across the globe. N. Arjun is responsible for strategy, plan- ning and rollout of all new projects in Africa,Orchestrating capabilities including projects focused on mCommerce and international voice and data. Prior toHarnessing the talents and capabilities of this Arjun held the position of Integrationspartners has allowed Airtel to export its high Director and was responsible for thevolume/low cost business model to Africa. successful integration of operations,It has also helped Airtel overcome many spanning 15 countries, belonging to thelocal market challenges and close network African operator Zain Telecom. Bharti Airteland services gaps. completed the acquisition of the African operations in 2011.To be effective — and successful — thisapproach requires a constant exchange ofinformation. Dialogue with partners has toMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 67
  • PART THREEIPX: CONNECTING OPERATORSTO REAP BENEFITS
  • PART THREE: IPX: CONNECTING OPERATORS TO REAP BENEFITSBundling ServicesMakes Business SenseIn many ways Korea Telecom (KT) directing voice and mobile datamirrors the history — and the services traffic over its IP Exchangefuture — of telecommunications. (IPX). Incheul Park — Head of theKT was established in 1981, when Wholesale Team, Global Businessit was spun off from the state-run Unit, within KT —discusses theMinistry of Telecommunications. central importance of Voice overFirst on the agenda, KT worked to IPX in KT’s larger strategy to future-make voice telephony services proof its network, ensure end-to-enduniversal and available to every quality of service and grow its whole-citizen. It has since engaged in the sale business.development of advanced commu- Your strategy — which is sharply focusednications services, helping to make on wringing more value and revenues outthe country a leader in communica- of voice — has its roots in your company history. Please explain the connection.tions and prepare for a world wherevoice and data, fixed and mobile, KT started out as the incumbent operator inand communication and broadcast- Korea, so we cover the range from fixed toing services are converged. To mobile, data, Internet, IPTV — the works. Asensure quality of service and you know the technology trend is moving to IP. In the market, we are also seeing a shiftcapture new efficiencies, KT isIPX is clearly a way to reduce costs and increaseefficiency because it’s all about deliveringservices over a single network. At KT we areinterconnecting with IPX providers and we aretrying to find out which model is more efficient.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 69
  • from fixed to mobile. As a result, KT has I always get that question! Frankly speaking,seen a drop in revenue it generates from there is no right answer right now. Everyoffering fixed services, voice as well as basic operator has difficulties dealing with thedata services. Like every other operator, decrease in revenues. In our case, we arewe face the same difficulties and must make working to reduce costs and also generateup for the decreased revenue with a new revenues based on volume — from buyingrevenue business model. power and bundling services, for example.How does the focus on improving voice KT provides a roaming service and offersservices allow you to meet the local international voice services for our operatorneeds of your customers? customers. Additionally, we have a voiceOf course, it all depends on the customer hopping service, so we can increase thesegment. Retail customers always ask for volume of calls while helping our partnersa good price and a good connection. And to reduce their costs. In this way we usewe can deliver this. General wholesale the volume generated to develop new directcustomers are more focused on quality. interconnections with the new operators.They require end-to-end quality as a basisfor international roaming services. This is Put another way, one of our strategic aimsparticularly important when we look at the is to bundle services and get more volume.number of inbound roamers from neighboring That enables us to achieve economies ofcountries like China. Indeed, there are many scale. In the case of data services, we aretourists and business professionals in transit also bundling in voice and IP. This way wein Korea — and this number continues to can offer customers a bundled solution,grow. Therefore, roaming is naturally one and we can benefit from some synergies.of the services we are focused on. So, this is our strategy to recover revenue and recapture customers in the market.There is increasing demand for qualityroaming services. At the same time, you An increasing number of operatorsare witnessing a decline in overall voice in your region recognise the value ofrevenues. What are your objectives and delivering multiple services throughyour strategy to meet and satisfy the a single, secure IPX connection. Thisdemands of both the marketplace and is also a capability that lies at the coreyour customers? of your company’s strategy?70
  • Correct, KT is actively involved in IPX. The I myself do not have a technical background,trend is moving traffic from TDM to IPX. but when I talk with our network engineers,Ultimately, IPX is all about enabling end-to- they tell me the technology itself is not anend traffic delivery and quality of service over issue. In fact, it’s not that different betweena single IP network. That is the concept, but operators when we interconnect witheach operator has a different view of what IPX several IPX providers. Also, the technicalcan provide — and many have different spend out is almost the same because theapproaches to reach their objective. industry standard is there to follow. These guidelines and standards ensure that everyIPX is clearly a way to reduce costs and vendor in the world is providing a highincrease efficiency because it’s all about standard for IPX. If there is a barrier todelivering services over a single network. interconnection via IPX, then it’s the costAt KT we are interconnecting with IPX for interconnection.providers and we are trying to find out One driver behind the shift to IPX is thewhich model is more efficient. Put simply, argument that it provides a proven andthe focus is on interconnecting to gain more simple route to 4G, or LTE, and will beexperience with the technology and what it required to support LTE roaming. Whatdelivers. IPX is the correct direction for KT. are your views?As I mentioned, we also have a voice For LTE roaming we will need more bandwidthwholesale business. If it turns out that it is to support data roaming. So — yes — I seeeasy to move from the existing voice this as one of the key drivers to encouragenetwork to IPX, then we can very simply IPX connectivity within operators.jumpstart our IPX business with operator What is the impact of free phone callcustomers. On top of this, we can add in services such as KakaoTalk on Southservices like signaling and GRX. That is the Korean telecommunications companiesstarting point for IPX here at KT. and giants such as KT? In your view, howMoving to an IPX network is exciting. should operators react to maintain, evenBut the shift can also have its challenges. build, competitive advantage?What can you tell me about your experi- The free phone services may be good fromences and your key learnings so far? the perspective of the consumer, but it’s a real headache for the service providers likeMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 71
  • In the case of data services, we are also bundlingin voice and IP. This way we can offer customersa bundled solution, and we can benefit fromsome synergies.KT. KakaoTalk offers free services, and to Other service providers will introduce theirdo this they are using our existing network own service. Think of Skype, Google andwithout any settlement or pay. What’s more, iPhone. All these offers compete with thethese services raise some issues with the traditional mobile operators and majorcustomer. The customers say they already network operators. But when we comparepaid for unlimited data service, and this ourselves against these OTT players, we asgives them the right to use a service like operators should not compete only on price.KakaoTalk. However, this usage requires For example, we could differentiate bybandwidth and this is a heavy burden on offering value-added services to enhancethe network. There is also the worry that security. Leveraging on our service port-services will collapse altogether if there is folios, we could also bundle various servicesnot enough bandwidth, and then there will together, tailored to the customer that alsoreally be problems. allow us to compete How do you plan to encourage yourGoing to an all IP-network means we will be customers to increase their use of yourable to make an offer that reduces cost and services, to balance out the drop in callcreates more competitiveness. Another revenues?approach, as I mentioned, is to use IPX tobundle services, thus providing services in a For the domestic service, it may be thatway that allows us to compete head-on with we can provide the customer with a morefree phone call services and the providers flexible service or bundled service,this candelivering them. also include security. On the wholesale side, using IPX interconnection will allow us toAnd you have to keep in mind the offer good quality and maintain competitivecompetition is more than just KakaoTalk.72
  • advantage on routes like Philippinesor Vietnam, for example.We are also trying to expand our marketareas, and this is where IPX can also comein. In Asia KT is very strong in the whole-sale business, but this isn’t the case in theMiddle East and Africa. So, we are tryingto expand our network and also offercustomer coverage in Western Africa andto do more interconnection with thoseoperators. If IPX can help us to interconnectwith them easily, it will be also goodadvantage for us to be using IPX.Incheul Park has over 15 years experiencein the international telecoms industry. Heheads the Wholesale Team within KT’s GlobalBusiness Unit, where he is focused on sup-porting the international voice business,which includes bilateral, hubbing and IPbased services. Park was also responsible fordriving the new interconnection and businessdevelopment globally on behalf of KT.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 73
  • PART THREE: IPX: CONNECTING OPERATORS TO REAP BENEFITSExpanding Voice ConnectivityVia IPX: An OperatorsPerspectiveBy Gil Genio, Head of International and Business Markets, Globe Telecom, Inc.For Globe, the capability to support First, a sizable portion of the populationcustomers calling across borders lives overseas, a separation that sometimes spans several generations. Social mediatoday — and cope with the massive is one way families keep in touch over theincrease in mobile data use — will distance, and one of the reasons why thedepend on our ability to leverage Philippines ranks very high in the use andnew ways of connecting and consumption of social media.managing operator partnerships. At the other end of the spectrum, theIPX is a natural path. Philippines is also a top destination for business travelers and vacationers. ManyThe concept of IPX is particularly tourists visit to enjoy the many scenicrelevant to the Philippines, a coun- spots across the country’s 7,000+ islands. Obviously, people and businesses need totry where Globe is also a leading stay connected across boundaries. That’smobile operator, for many critical where IPX comes in. It promises to makereasons. These are linked to the this connectivity easier for both operatorsmakeup and requirements of our and their customers.local customer base.Operators must be able to establish directcommercial and technical interconnect witheach other, specifically for cross regionalconnectivity. This is why our futureinfrastructure plans include IPX.74
  • Ratio of international trips to population %, 2011 65% 35% 10% Europe North America Asia PacificFigure 1: Based on data from GSMA.Voice on the rise enabling Globe to exchange international calls directly with other mobile operators.Globally, international voice traffic has been This has become a key driver for Globe’sstagnant for some time now. This is because initial IPX efforts. Additionally, operatorscustomers are choosing alternative ways to around the world — Globe included — arestay connected. At Globe, however, this is moving to an all-IP infrastructure. It’s a shiftnot the case. We continue to see increased that can’t be ignored.voice traffic, even though customers canalso communicate using alternatives includ-ing social media, VoIP and text messaging. The data challengeBecause of this trend, Globe clearly needed At Globe we also have to adapt to the shiftto build the capabilities to support the in customer requirements.growth in voice traffic in a more cost-effective manner. It was also important for Customers are exploring alternative waysGlobe to make it easier for many operator of staying connected, and we at Globe havepartners to send their similar traffic to our to support this through investments in datanetwork. This is where IPX plays a role, connectivity. Unfortunately, most operatorsMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 75
  • Overview of international roaming technology and operations Initiated call Received call Visited International Home Receiver’s Operator transit operator home services operatorFigure 2: Based on data from GSMA.did not respond quickly enough. The exis- user experience at home and abroad. Intence of complicated, unpredictable and other words, the quality of the experiencehigh priced services, together with bill shock for the roaming customer should beissues, has somewhat stunted traditional consistent and high quality.voice roaming traffic. In other words, itsimply hasn’t grown as quickly — or asmuch — as expected. Quality controlOn the other hand, mobile data use by Globe is well aware of this challenge, andbusiness travelers and roaming customer has therefore taken steps to make it easieris increasing exponentially. This growth is for travelers and roamers to use data. To thisdriven by the increased penetration of end we at Globe have made the customersmartphones, people’s love of social experience a central focus of all we do.media and the constant need of usersto be connected. In the Philippines Globe is embarking on an ambitious network change that will result inThis boom in mobile data use presents a pervasive HSPA+ footprint and the deploy-operators with a new challenge. They ment of tens of thousands of kilometers ofmust work with the visited operators to fiber to support mobile data. And we areensure roaming customers enjoy a good preparing to launch an LTE network. To close76
  • This boom in mobile data use presents operators with a new challenge.They must work with the visited operators to ensure roamingcustomers enjoy a good user experience at home and abroad.the loop with a superior customer experi- Globe believes that — in the long run — IPXence Globe is also moving to a real- time provides the best path to easier connectiv-convergent billing and customer care ity. It also delivers a lower cost structure,platform, and making additional investments savings Globe can pass on to customers.in analytics and other back-end systems. Clearly, IPX offers many benefits toThese are measures that will deliver cust- operators and their customers. Today theomer benefit. However, Globe customers path to IPX implementation is not an easywho travel overseas, or people who come to one. But the effort is well worth it. It isthe Philippines for business or pleasure, will important to keep an eye on the prize, andnot experience these advantages unless we focus on the many advantages IPX delivers.at Globe work to make interconnect better Chief among these are: a better experienceand easier. In other words, operators must for customers, a lower long run cost struc-be able to establish direct commercial and ture for operators and the capability totechnical interconnect with each other, manage current and future voice and dataspecifically for cross regional connectivity. traffic. Keep this top of mind and mobileThis is why our future infrastructure operators, like the pioneers of the past, willplans include IPX. enjoy the first fruits. Personally, I am looking forward to an IPX-enabled future.IPX is inevitable Gil Genio is head of Corporate Strategy andIPX today is a given for two reasons. For Business Development at Globe Telecom.customers, it’s all about being able to He is also the head of International andexperience the same quality overseas that Business Markets, which are the groupsthey have come to expect in their home responsible for sales, relationships, market-network. What’s more, the exponential ing, products and support for Globe’sincrease in data use demands the infra- overseas Filipino and service provider cus-structure can grow to adapt to what tomers, and for business customers fromcustomers need now and in the future. SMEs to the largest enterprises. He also serves as CEO of Innove CommunicationsFor operators, IPX is an easy path to inter- and GTI Business Holdings, subsidiariesconnectivity. More importantly, operators belonging to Globe Telecom. He is also theare moving to all-IP networks. Bottom line: Vice Chairman of GSMA AP.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 77
  • PART THREE: IPX: CONNECTING OPERATORS TO REAP BENEFITSThe Value Of A True IPXby William Dudley, Group Director, Product Management, SAP MobileServices & John Candish, Senior Director, IPX Business, SAP Mobile ServicesIPX is fundamentally about building Strong and capablea connected community of telecom To deliver a full range of services at theoperators, services and applications. highest quality the mobile operator mustIt serves to enable the customers of choose its IPX partners. Additionally, an IPXmobile operators in this community should be strong in all areas, not just basicto connect to one another, as well as services like voice or 3G data roaming.access a wide variety of applications The concept of IPX evolved from GRX, aand services. Being able to guaran- community of mobile operators formed totee quality of experience and keep exchange roaming data. While the under-costs under control are key require- lying network quality is clearly key to an IPX, the services provided are no less significant.ments for the mobile operators.An IPX needs to deliver the full range ofservices, ranging from the basics that Data Roaminginclude data roaming, messaging andvoice, to LTE-based multimedia services, The quality data roaming (specifically,to applications such as OTT services. Once 3G roaming or GRX) depends on theoperators are able to offer the full range of community of mobile operators connectedservices through an IPX, they can leverage to an IPX. This is not just about the numberthe benefits and economies of scale that of mobile operators connected to an IPX.IPX delivers. It’s about which mobile operators areWith IPX there will be no need to set updedicated connections and policies for eachservice, nor will it be necessary to managethe capacity of each separately.78
  • connected. If you take the strategy of conn- calls end-to-end, whilst also achievingecting key Tier 1 operators within a region to full transparency between the partnersan IPX, your ensure the majority of a mobile regarding transit and termination charges.operator’s traffic can be delivered on-netand managed directly end-to-end. IPX voice interconnectivity guarantees delivery Calling Line Identification (CLI) for mobile destinations, as well as assuredMessaging quality based on predefined Answer Seizure Ratio (ASR) and Network Efficiency RatioMost mobile operators are considering or (NER) benchmarks at the destination level.have already engaged with one or more IPX Another benefit of IPX Voice is the significantlyservice providers. Consequently, the ability reduced Post Dial Delay— that is, the timeto leverage the benefits of an IPX to route interval between dialling completion and theSMS (and MMS) messaging traffic to their ringing tone to indicate reception of thehubs is becoming paramount. recipient network response.SMS traffic, for example, may use the IPX Of course, voice destinations may nowas a transport for SMPP or for GSM MAP include VoIP or OTT Voice providers, as wellover IP (SIGTran). The resiliency of an as fixed networks. IPX Voice is by no meansunderlying MPLS network provides multiple just limited to mobile operators.benefits over VPNs (for SMPP) and directSS7-cloud reach. For instance, with SIGTranthe MNO no longer has to incur MSU fees LTEjust to reach their preferred messaging hub.Instead, the messages reach the Messaging The success of 3G roaming services (GRX)hub via SIGTran, where they are delivered to has set a high standard. When LTE servicesthe end destinations. are deployed customers will expect the ability to roam to other LTE networks to beVoice interconnectivity supported from day one. IPX can deliver a one-stop solution for LTE services, manag-Customers and providers are connected to ing end-to-end connectivity and quality. Thecreate an on-net community of IPX Voice. Diameter protocol is essential to roaming inThis allows for all parties to maintain full the LTE world. It manages the authentica-control over the quality and routing of voice tion, access and accounting associated withMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 79
  • Once operators are able to offer the full rangeof services through an IPX, they can leveragethe benefits and economies of scale that IPXdelivers.roaming users. By leveraging an IPX the cell-site locations together), as well asDiameter hubbing service, operators can within the Evolved Packet Core (or EPC)rapidly achieve roaming relationships for and, finally, between networks (the IPX).LTE data services and mobile broadband. Additionally, LTE Roaming will support theFor LTE services such as Voice, the ability concept of 3G fallback. This usually occursof the IPX network to differentiate and when the visited network does not supportmanage the various traffic types appropri- LTE or does support it, but at incompatibleately is key; especially as LTE IMS multime- frequencies. In that case, the device willdia services are deployed including VoLTE connect to the UTRAN (or 3G radio net-(native LTE based voice). work), if it supports such frequency bands. Most LTE devices support both 3G and LTEThe IPX enables connectivity between LTE frequency bands.networks, delivering subscribers virtuallythe same services and quality of servicewhile they are roaming that they know from Applications and OTT Servicestheir home network. This is critical when theroaming customer is using services such as IPX can also reduce the complexity of con-Voice over LTE (or VoLTE). With high-band- necting third-party services and OTT prov-width services such as voice and video iders to a mobile network. With IPX there willcalling, the IP latency and jitter must be be no need to set up dedicated connectionsextremely low from end-to-end to deliver and policies for each service, nor will it becustomers a good experience. Certainly, necessary to manage the capacity of eachthe LTE (E-UTRAN) radio network will separately. A good example of this is theprovide low-latency and high bandwidth inclusion of BlackBerry connectivity. Thisbetween the device and the towers, but service enables mobile operators to connectoperators must also require QoS solutions to BlackBerry cloud services without thefor backhaul (the network connecting all of need to install and manage separate80
  • Intelligent Services IPX Fixed Line 3G LTE LTE Service Provider Service Provider Service Provider Service Provider Internet Figure 1: Based on data from SAP Mobile Services.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 81
  • dedicated connectivity — all enabledsecurely and over a resilient MPLS network. William Dudley has 25 years experience building and managing telecommunicationsOther Cloud/OTT services may leverage the network infrastructures. He leads SAPIPX by using an approach that is similar to Mobile Services Product Management forthe BlackBerry model for connection via P2P and A2P Messaging. Dudley alsoIPX. This enables mobile subscribers easy provides industry commentary to bothreach to the OTT or Cloud services because internal and external mobile industryoperators have created dedicated connec- publications, through analyst and mediativity to the service. Going forward, these interviews, and is active in several industryservices will likely include other advanced groups. blogs. http://scn.sap.com/people/mobile capabilities that leverage existing william.dudley/contentmodels like voice connectivity or inter-working (such as Diameter or Messaging), John Candish is responsible for driving theand for services including — but not limited company’s IPX business globally. Prior toto — RCS and IMS. this Candish held positions within Cable & Wireless, where he was responsible for theSAP Mobile Services believes that by development of the GRX and messagingcombining this breadth of services that Services, subsequently leading the integra-the full benefit of IPX can be achieved. For tion of the GRX & MMX services into themobile operators, the choice of IPX provider SAP Mobile Services portfolio.should not just be decided with a view tothe handful of services they are requiredto deliver today. It should be based on anunderstanding of their long-term needs. Afuture IPX provider will need to be able todeliver capacity and network quality, alongwith the full range of services, to deliver thefull potential of IPX.82
  • PART THREE: IPX: CONNECTING OPERATORS TO REAP BENEFITSNine Ways To Get MoreValue Out Of IPXBy John Candish, Senior Director, IPX Business, SAP Mobile ServicesIPX can reduce connectivity costs, Putting in the right long-term infrastruc-boost service quality and improve ture now will enable the operators to soft upgrade connections rapidly to meetthe time to implement new services demand in the future.and roaming destinations. Clearly,IPX should have a central role in 3 Involve vendors early. Once an operatoroperators’ strategies to develop has connected and tested a service over IPX, whether that be voice, video, messag-and deliver future services. Here ing or another application, they are ableare 9 key lessons to guide operators to access the entire community for thatalong the path to IPX and equip service on the IPX. The initial testingthem to maximise the benefits. process is fundamental to success and enabling infrastructure vendors early is1 Chose a quality network. An IPX is key to this. Even different releases of a about far more than simply roaming data. platform from the same vendor can result A whole range of services from messaging in quite different results. Ensuring equip- through to real time voice and video now ment vendors are closely involved in the flow over IPX. It is therefore critical that process of IPX testing from an early stage operators chose an IPX capable of both significantly reduces project timelines providing the network service levels and and will enable full service launch sooner. resilience to deliver these services, as well as proactively managing the different 4 Recognise the value of community. traffic types. An IPX is about connecting operators together with each other and with services2 Plan for future capacity. The growth and applications. When choosing an IPX, of roaming data volumes between mobile an operator should consider both the operators has been considerable over the range of services provided and the com- last few years. Add to that voice, messag- munity of operators connected. Right now, ing and LTE-based services and the need operators may be connecting with each to plan ahead when deploying IPX is clear. other to enable just one or two particular A 10 M, 30 M or 100 M connection may services, but in the longer term they are look adequate this year, but will it con- likely to want more. tinue to meet demand in 18 months time?Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 83
  • 5 Plan roaming connectivity at the same in control of who can access services and time as domestic role out. The success what policies are applied to that access. of roaming has set a high bar. Users in- It is therefore essential that an IPX creasingly expect all home services to be provides clear control of services and available when roaming, not six months or does not merely function as a ‘dumb’ pipe a year after launch. Although the initial connecting the various parties. An IPX focus may be on the domestic launch of that provides the ‘hubbing’ of services new services such as LTE, consideration such as voice is not only able to increase should be given to roaming of those the interoperability of services through its services early on. IPX can enable rapid roll ability to ‘translate’ between systems (as out of roaming connectivity. Provided described in #6). It is also able to control operators build IPX connectivity into the which partners are able to access services deployment plans for new services early and which originators may connect, as on, roaming revenues can be rapidly well as applying the required policies to achieved for new services. such traffic. As the telecom world moves to LTE and multimedia, services such as6 Ensure the IPX service can translate access and policy management will between systems. IPX is about enabling become even more critical. connectivity and with the rapid roll out of new services this increasingly requires 8 Select an IPX with strong accounting the ability to bring differing implement- capability. Clearly, IPX must enable ations of the same service together. For connectivity of services. But it must also example, two operators may have ensure that the revenue streams follow deployed different voice switches with services. Whether connecting data, mes- different SIP-I implementations. An IPX saging, voice or other applications, IPX should be able to translate between these has a key role to play in accounting func- switches, ironing out the differences and tions ensuring payment follows the traffic. enabling seamless communication 9 Consider the commercial relationships7 Chose an IPX with strong Policy and as well as the connectivity. When Access control. IPX is about enabling testing IPX connectivity it’s important connectivity, but for operators to be able to plan ahead and select the priority to leverage this, it is vital that they remain roaming destinations for a service.84
  • This enables an IPX to be working on the roll out of an operator’s roaming footprint John Candish is responsible for driving the ahead of the initial connection being company’s IPX business globally. Prior to deployed and tested. This significantly this Candish held positions within Cable & shortens the time between the IPX Wireless, where he was responsible for the connectivity being completed and the development of the GRX and messaging revenues and service benefits delivered. Services, subsequently leading the integra- tion of the GRX & MMX services into theBy following this advice you will have what SAP Mobile Services portfolio.you need to make the most out of your IPXdeployment. Having an IPX that is trulymulti-service, thus supporting both existingservices and services on your roadmap,operators will be able to realise full cost-savings and competitive advantage, ratherthan have to make additional investmentssimply to keep step with the pace of change.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 85
  • PART THREE: IPX: CONNECTING OPERATORS TO REAP BENEFITSMaking The RightConnectionsWith major investments in technology and benefits it delivers.Singapore, Australia, Africa, Chief among these is connectivityIndia, Indonesia, the Philippines, to deliver international mobileThailand, Pakistan and Bangladesh, data roaming and voice traffic.SingTel is Asia’s largest multi- However, an international privatemarket mobile operator. In July network also allows the rapid2011 the company embarked deployment of new applicationson a trial of IPX, the first step in and services, shortening theexploring the establishment of time to market and potentiallya private international network increasing competitive advantage. David Ng — Vice President, Regionalconnecting all the Group Technical, of SingTel’s International teamcompanies starting with SingTel in the Group Consumer organizationMobile (Singapore), Globe Telecom discusses the trial, results and overall(Philippines) and AIS (Thailand). outlook for IPX in the Asia Pacific region.SingTel — determined to grow the SingTel has recently concluded its trialbusiness by leveraging scale, reach of IPX. Please share the rationale behind your decision to test this technology.and service innovation — usedthe trial to better understand theMoving forward, IPX would offer a flatter IPnetwork architecture, enabling Voice over LTEservices and supporting new services likeRCSe. This is an important considerationsince OTT players are also moving in thedirection of Voice over IP services.86
  • In my position, it is part of my responsibility enables when we carry voice and howto look at technology on the horizon and it performs when it carries this trafficunderstand what it provides in terms of both between two geographical territories.service capabilities and competitive advan- Let’s discuss the IPX trial. Where aretage to the business we are operate in. In you in the process and what have youthe case of IPX, we wanted to see how we achieved?can best manage our mobile data roamingcosts. We identified IPX as a good platform Originally, we picked three operationsto achieve this and looking again to the in three locations — SingTel Mobile inhorizon, LTE is also emerging strongly and Singapore, Globe in the Philippines andsteadily in the market landscape. And this AIS in Thailand where each operatoralso plays a role in our thinking. Moving connected to a private international IPforward, IPX would offer a flatter IP network network provided by SAP Mobile Servicesarchitecture, enabling Voice over LTE IPX™ via the respective local points ofservices and supporting new services like presence. To date, we have concluded theRCSe. This is an important consideration IPX validation test on delivering mobile datasince OTT players are also moving in the roaming, mobile voice roaming anddirection of Voice over IP services. international IDD voice amongst the three operators over the IPX connection. TheFor these reasons, we thought IPX would validation test covered a good mix of testbe a good platform. It addresses the mobile cases based on SIP-I interconnect (fordata roaming problem we originally set out mobile voice roaming and international IDDto solve and, looking ahead, it might also voice), GSMA IR87 (for inter-operator SIP-Ideliver us an advantage when LTE is rolled inter-working) and GSMA IR35 (for mobileout aggressively across the region. At that data roaming). I am pleased to share thatpoint, LTE roaming will need to be enabled, the test results were positive.and IPX is certainly the right platform tofacilitate LTE roaming. What’s more, IPX The IPX trial successfully demonstratedallows the ability to do a local breakout, the reliability of IPX as a managed privatewhich naturally provides a better customer IP network that can transport multipleexperience to the roamer. services within a single IP connection across different geographies. What I can also shareSo, before we jump onto the IPX platform, with you is that — internally — we arewe conducted this trial to understand its brainstorming and discussing how tocapabilities, performance and deployment take IPX forward.challenges. That is, what kind of quality IPXMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 87
  • Global mobile data traffic growth/regions MEA has the highest growth rate (104%) from 2011-2016 APAC* will generate 40% of all mobile data traffic by 2016 12 78% CAGR 2011-2016 10 5.88% 6.54% 6.83%Exabytes per month 8 18.18% 6 22.56% 4 2 40.01% 0 *Includes 2011 2012 2013 2014 2015 2016 Japan Middle East and Africa (MEA) Central and Eastern Europe (CEE) Latin America (LATAM) North America (NA) Western Europe (WE) Asia Pacific (APAC) Figure 1: Based on data from Cisco Visual Networking Index. Global Mobile Data Traffic Forecast, 2011-2016. www.slideshare.net/CiscoSP360/cisco-visual-networking-index-vni-global-mobile-data-traffic-forecast-20112016 SingTel clearly has an understanding of facing margin squeeze due to the scissor- the benefits of IPX. Interestingly, Asia effect of diverging mobile data traffic and Pacific leads in awareness of IPX overall. revenues. This forces them to think about Why do you think this is? ways to generate revenues and identify new services they can offer to customers. As we all know, this region is seeing a shift At the same time, it’s very important for us in the market landscape due to the rise of as operators to manage our bottom line. OTT players. According to the Cisco Visual Against this backdrop, cost management Networking Index Mobile 2012, Asia Pacific becomes a key issue. If the IPX platform is expected to account for up to 40 percent performs and delivers its promises, then it of global mobile data traffic by 2016. As a will allow us as operators to consolidate and result, many — if not all — operators are 88
  • optimise our IP interconnect for delivering effectiveness. For the customer it’s aboutpacketised traffic outside our network. quality of service and the requirement for a consistent and good experience noFor example, if IPX does indeed allow us matter where they are.to consolidate and deliver mobile dataroaming, BlackBerry and tele-presence via a If you go through IPX, then you can solvesingle IP pipe, then it is clearly more efficient these issues because you have the controland cost effective. This is why I believe and can deliver a desired quality of servicemany operators in the region are looking — a level of service that also delivers a userinto exploring IPX. IPX is also seen as a way experience the customer will enjoy. And thisto ‘future-proof’ the networks and support is where the local breakout capability I men-future IP services such as HD services like tioned before comes into play. With IPX ifHD voice and HD video. you can do a local breakout, which means the roamer will be able to enjoy the sameWe have discussed the business benefits level of quality as the local customer does.of IPX — what are the benefits to the It’s a better experience all round.customer? Your trial focuses on using IPX to connectTake the case of customers who are access- operations within the group company.ing data while roaming. Their Internet traffic What is it about IPX that makes goodwhen they are abroad is actually routed all business sense in this scenario?the way back to their home network first. Inother words, the signalling and payload part I think if you take the perspective of a groupof the data session is passed to the local company, a company where it has manyoperator’s network and then back to the operations across different countries, thencustomer’s home network. there is an incentive to find a way to better interconnect the operations with each other.This presents two challenges. For the At the least it’s about making sure that theoperator: it’s about how to maintain cost mutual customer, who roams between theIf you go through IPX, then you can solve these issuesbecause you have the control and can deliver a desiredquality of service — a level of service that alsodelivers a user experience the customer will enjoy.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 89
  • different countries that are interconnected exchange video or other visual contentvia IPX, will have a more consistent quality are turning phones into a medium that isservice experience. more about seeing content and seeing people than necessarily just speaking.Looking back at your recent IPX trial,what can you share in the way of key Overall, where do over-the-top servicelearnings, impressions or surprises? providers fit into the IPX landscape? Are they a threat, an opportunity orThe findings are positive. Aside from the something else?technology, we also learned more about thetalents and the skills set that we would need My personal philosophy is that there is noin a service team in order to offer IPX and to ‘forever enemy’. We can compete on onesupport it. The service team plays a very hand, but we can also be allies on the other.important role in delivering the service in So, yes IPX may play a role in bringing OTTa timely manner. players and telecom players together to cooperate in a slightly more meaningful way,As you pointed out, IPX allows operators which will also benefit the mutual customer.to control and deliver quality services to In my view, there are similarities here toroaming customers, for example. Look- Open Innovation, an approach and a mind-ing at the range of what an IPX network set that is all about finding ways to collabo-can support — new multimedia services rate for mutual benefit.or even provisioning services into cars— what excites you most?Without divulging too much of our internal David Ng is the Vice President (Regionalstrategy, I would say the type of services we Technical) within the International arm ofare going to offer are likely to be more IP Group Consumer at SingTel. In this role heoriented. There is a very good match bet- drives the regional network initiatives andween what we can use IPX for and how it can strategies within SingTel to shape technologybenefit us at SingTel as a group operator, as strategy and achieve synergies across thewell how IPX can benefit our customers. SingTel Group. Prior to this Ng was Director of Operations at Telkomsel, a SingTel jointThe multimedia services are also interest- venture company in Indonesia, where heing. If the analysts are correct, IPX will drive was in charge of network design andmore video, more social sharing and more operational management.visual content to our phones. Therefore,the high quality of voice and the ability to90
  • PART THREE: IPX: CONNECTING OPERATORS TO REAP BENEFITSA Brave, New, All-IP Worldby Elena Sacco, Chairman, The Interconnection Working Group (IWG),GSMA & Senior Interconnect Manager, TIMAn open and flexible model for the market and the economy have hadservice exchange will be part of the some impact on contingency plans, operator targets and —ultimately — thecritical path the industry will travel pace of progress.in order to implement Voice overIP (VoIP). Dramatic dynamicsIP eXchange, or IPX, is the industry standardsolution to solve the interconnect problem At first glance, it may seem that IPX is aby setting out common specifications for chicken-and-egg situation. But that willend-to-end IP traffic delivery and quality of change dramatically as more operatorsservice. On the market there is a high level of launch IP services.awareness and interest in IPX. This is linkedto the fact that the industry is moving to an To understand the hold-up, it’s importantall-IP environment, which creates the need to understand the dynamics at play here.for an interconnection enabler over a private For mobile operators, moving to an all-IPsecure network, at an affordable price and environment means a revolution in commu-with the guarantee of the required QoS. nications, and this implies high investments.Clearly, there are benefits to IPX, but there VoIP services are expected to drive theis currently a low level of demand for IPX move to an all-IP environment that willservices due to the low number of IP inter- stimulate the use of IPX.connections between operators on themarket. This is because mobile operators Nonetheless, several factors, such asare not yet launching IP data services on the existence of VoIP services offered bya large scale. non-telecom players, solutions such as Circuit Switch (CS) Fallback, the high costHowever, this is changing. There is strong of LTE implementation and the availabilityevidence of a shift right now as the market of LTE devices, are slowing down themoves toward an all-IP world. But, of course, advance of VoLTE. These same factors areMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 91
  • also slowing the evolutionary path of Peering mattersmobile operators towards offering VoIPservices in general. When it comes to IPX, peering among IPX providers is an essential element because it enables global reachability. Without fullDriving demand peering among IPX providers on the market there is the risk that IPX services will beHowever, if VoIP services may not be developed as ‘silo’ solutions. This certainlyconsidered the imminent driver of IPX deploy- doesn’t serve the better interests of mobilement on a large scale, data services requir- operators, or their customers. Solutionsing a guaranteed QoS might serve to cannot be offered as ‘islands’, so this isstimulate market demand for IPX services. exactly what operators must avoid.LTE Roaming is the perfect example. With Peering enables general interoperabilitythe high-speed data transmission enabled of services on IPX between operators andby LTE, it might be risky to keep on applying multiple connections and global reachabilitydata pricing plans for roaming traffic based via one-stop connectivity. In other wordson volume or usage per month. Such pricing when full peering among IPX providers is amodels may, in fact, impact consumers neg- reality on the market, operators, through justatively as faster data speed will significantly one contract with IPX providers, can updateincrease data consumption. connections to hundreds of operators and third-party players around the world.New pricing schemes, where charging ismore in line with the transmission opportu- Peering also enables the offering of datanities enabled by LTE, may be based, for services on IPX at a high QoS and, aboveexample, on different guaranteed QoS levels all, the migration of voice services over IP.per different services (and also per applica- Indeed, with the migration of voice servicestion, as it may happen in the case of cloud on IP there is clearly the need to ensure cross-services). In this case IPX would be the border interconnection on a global level.essential enabler, being the only current Equally important is the guarantee of a level ofsolution for a QoS guaranteed IP inter- quality related to these voice services, whichconnection able to ensure proper traffic can be applied globally and which is comp-exchange between different players on arable to the high level of QoS end-usersthe market. already experience. Worldwide peering makes IPX the key enabler of such a migration.92
  • Cooperate and interconnect Elena Sacco works within the IndustryThe move to an all-IP world doesn’t only Relations & Roaming Division of Telecompresent operators with a world of opport- Italia, where her areas of expertise includeunities. There is also the increased comp- business development, Interconnection andetition from alternative service providers Roaming with a strong focus on the evolu-offering services to subscribers, creating tion of mobile TLC services. Sacco alsothe need for operators to interconnect with chairs the Interconnection Working Groupthese players. (IWG), one of the eight permanent Working Groups under the GSM Association (GSMA)Clearly, the big question is how to imple- IWG brings together more than 350ment a proper interconnection with these members including mobile operators,parties and find a model that properly com- international carriers, hubbing providerspensates all the players in the value chain. and equipment providers.There will be many approaches — but onecommon objective. The operator’s task hereis to find a model of co-existence andcooperation that allows them —and otherplayers — to achieve their objectives andstay relevant. In this case, the IPX network,because of all the characteristics highlightedabove, will be the key solution to support themarket’s interconnect objectives.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 93
  • PART THREE: IPX: CONNECTING OPERATORS TO REAP BENEFITSBoosting Trust,Building BusinessBy Ranjeet Wilkhu, Director, Neucom SolutionsIn some African and the Middle Mixed resultsEastern countries, the practise The first model centers on new controls andof outsourcing international traffic visibility. Some MoCs have empowered themanagement is seen by regulators regulator to have access to near real-timeand Ministries of Communications data for all international traffic — voice,(MoCs) as a means to get their SMS, MMS — managed by the local opera- tors. To gain visibility into this data withinfair share of revenues from local the operator network the regulator investsoperators. The outsourcing model in traffic monitoring systems. The informa-is considered by MoCs as a way tion gathered by such a system allows theround the notion that operators MoC to calculate and collect correct amount of levy from the operators. A number ofdeclare lower levels of international traffic management and monitoring sys-traffic than they actually handle, tems tailored to a specific regulator’sresulting in lower payments to requirements are available on the marketthe local MoC. to make this an easy task.While outsourcing may be a way to collect The other business model being adopted is‘true’ revenues, MoCs and regulators have around third-party management. According toto balance between enforcing license this model the MoC outsources internationalconditions without damaging competition traffic management to an independent thirdat the consumer level and having a negative party or to an international Wholesaleimpact on quality of service (QoS). The two Operator. All domestic operators in a givenoperating models gaining traction with country are then required to send and receiveMoCs are monitoring operator traffic international calls through single or multiplestreams and outsourcing international international gateways (switches) managedtraffic management to third parties. by the third party.94
  • Some MoCs have even gone so far as to Clearly, this would have obvious andoutsource financial settlements between negative repercussions for the operator.local operators and international operators, At one level, an operator suffers a loss inmaking the third party responsible for revenues. At the other end of the spectrum,billing, collections and payments. In this the perceived lack of attention for QoS couldscenario the third party may also earn result in an increased number of customerrevenue from the financial transaction. In complaints and an increased burden onaddition, the third party may be entitled to customer care services.a percentage of revenue, or be permitted tocharge a fixed fee plus a share of revenues,or gross margin. The third party is also IPX solves issuesresponsible for all operator activity, includ-ing negotiation of operator interconnects When it comes to connectivity across theand traffic routing. region and with the rest of the world, the advance of IPX provides interesting optionsUnder the latter model local operators are and opportunities. By way of background,concerned that their interests and the inter- provisioning connectivity for operators inests of the third party — the company to Africa and Middle East can be an expensivewhich traffic management has been out- and a lengthy process.sourced —are not aligned. Put another way,operators believe the third party may be The high cost of provisioning connectivity,more focused on maximising profit for be it via cable or satellite circuits, is driventhemselves than on reducing termination by scarce capacity. At present a large pro-cost for the operator, or delivering QoS portion of voice and SMS traffic is carriedfor the customer.Operators believe the third party may be morefocused on maximising profit for themselves thanon reducing termination cost for the operator, ordelivering QoS for the customer.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 95
  • Providers deliver guaranteed QoS and gain a share of the revenue stream $ $ $ SP A IP Network IPX 1 IPX 2 IP Network SLA SLA SLA MNOs MNOsFigure 1: Based on data from GSMA.over expensive TDM networks to and from IPX, which means the traffic will notthese regions to manage and maintain QoS. trombone. Instead, it will be completed using single hop.Connecting to IPX reduces this cost since theoperator does not have to procure individual Once IPX reaches maturity and createsTDM circuits for each operator interconnec- adequate connected communities, thention. Additional savings are gained from not an operator connecting to IPX will not needhaving to send traffic destined for a neigh- multiple connections to multiple operatorsbouring country via Europe or the U.S. For for multiple products. A single connectionexample, telephony traffic from Iran to Iraq to an IPX will do the job. This is becauseis directed to Europe/U.S. first, and then voice calls, SMS, MMS and other trafficdelivered to the final destination, Iraq. There- are carried on the same, single and securefore, two separate expensive TDM circuits are network connected point-to-point, thusused to transport a single call. On IPX, both ensuring optimal routing, an improved QoSoperators may be connected to the same and excellent customer experience.96
  • The needs of MoCs for transparency and and out of the country - visibility that buildsaccountability are also addressed. In other trust and — ultimately — puts operatorswords, IPX would provide MoCs or regulators back in charge.access to traffic reporting and monitoring,giving them visibility into near real-timetraffic data. Such information, obtained Ranjeet Wilkhu is a Director with Neucomthrough an operator-independent source, Solutions, an independent telecoms consult-would further give MoCs and regulators ing company. His efforts to forge relationshipsconfidence that they are paid their share with telecom businesses globally allowed himof dues for international traffic. This, in turn, to make a major contribution to the success-would build trust in the system, and remove ful implementation of a program under thethe need to invest in expensive monitoring Iraqi Ministry Of Communications titledsystems, or outsourcing international traffic “International Marketing and Managementmanagement to third parties. of Voice, SMS and MMS Traffic.”In Africa and the Middle East IPX is in an earlyroll out phase. One hold up is the furtherwork needed to establish standards andencourage acceptance within the operatorsand mobile network operator community. Ido not expect to see a huge uptake of IPXinterconnects in Europe or the U.S. in thenear future. In Asia, the Middle East andAfrica IPX offers a viable option for manag-ing multiple interconnects with a single IPconnection. This has a number of advan-tages. Chief among these: it would allowdomestic operators the flexibility to negoti-ate their own termination rates with otheroperators connected to IPX, while maintain-ing QoS. At the other end of the spectrum,MoCs and regulators would have access toaccurate information about traffic flows inMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 97
  • PART THREE: IPX: CONNECTING OPERATORS TO REAP BENEFITSVoice: The Ipx Killer AppBy Richard Midgett, Managing Director, Wireless Business,PCCW LimitedHong Kong is a vibrant telecommu- both local and international — with a widenications market where customers range of services, including 4G/3G/2G mobile and public Wi-Fi wireless services,have come to expect — even demand traditional and next-generation fixed line— high-speed, high quality service of- services, Internet access and broadbandferings through fixed-line and mobile pay-TV, a wide array of business services,services. Naturally, operators, includ- as well as large-scale IT solutions.ing PCCW, have responded with Trace the history of PCCW and there is atriple-play and even quadruple keen and consistent focus on deliveringplay services. Now, as the region’s value-add to fixed-line and mobile services.mobile industry shifts from being This approach has allowed PCCW to evolve from a franchised monopoly fixed operatorvoice-centric to data-centric, LTE to become the provider of Hong Kong’s firsthas emerged as the foundation of quadruple-play experience. In addition tooperators’ future business. What offering local services, PCCW operates inter-motivated PCCW to launch LTE in national carrier services under PCCW Global and has recently launched an LTE networkApril, and what services will drive in the U.K. via its UK Broadband subsidiary.adoption? How can LTE both boostdomestic service and support Hong Kong is a crowded and competitiveinternational roaming? To what market where customers have developed a tremendous appetite for — and appreciationextent is IPX an essential route to of — data services. Even before PCCW4G and next-generation services? launched LTE in April 2012 the residents ofRichard Midgett provides us a Hong Kong were long accustomed to havingcandid and first-hand perspective. the highest quality of coverage and extremely fast data connections. At home,PCCW is the largest and most comprehen- a majority of the population has access tosive provider of communications services the Internet at speeds up to 1 Gbps via fibrein Hong Kong, where it meets the needs of services. In fact, the typical offering now isconsumer customers and enterprises — considered to be 100 Mbps. On the move,98
  • high-speed access is everywhere, even Of course, investments in this new infra-in unusual indoor areas: parking garages, structure should also deliver the bestelevators, subways — the works! performance possible for our customers. LTE is an obvious choice for technology,Put another way, the Hong Kong consumer but an adequate supply of handsets thatis accustomed to high fixed-line speeds that make use of that technology in the relevantare widely available. Against this backdrop, spectrum is also critical. This point cannotmobile is not typically a substitute where be overstated.fixed-line access is not available. Instead,mobile functions as an extension of the Look back to the introduction of 2G (GSM)high-speed access consumers have come technologies. Operators built the networks,to expect in their daily lives. Spoiled by high- but customer adoption lagged behindspeed access at home, these consumers because the handsets failed to deliver thedemand this when they step out of their quality and performance they wanted. Theyhome, and across a variety of devices. were big, clunky and battery-life was limited. It was only after new and improved handsets hit the market that we saw a significantHighly motivated increase in customer adoption of 2G. The launch of 3G followed a similar pattern.Asia-Pacific, as a whole, is poised to become Although the 3G networks were operational,the largest LTE market in the world by 2015. the mass-market move to 3G didn’t happenAccordingly, Hong Kong is seeing an expo- until the handsets were mature.nential growth in data adoption and in thevolume of data consumption on the mobile And it’s the same with LTE, which is whynetworks. Naturally, this creates concerns PCCW purposely launched in April withabout the availability of adequate spectrum. a suite of handset products that meetAs a rule, more customers on a mobile customer requirements. Specifically, PCCWnetwork will cause each user’s speed to started offering LTE handsets, tablets anddrop because everyone on that network dongles from major brands like Samsung,shares it. Keeping pace with this dynamic HTC, LG and Huawei in the run-up to the fullrequires operators to increase the capacity commercial launch of its 4G network. Evenof the network. At PCCW, acquiring new so, LTE handsets are currently a two-chipsetcapacity was one of the drivers behind the solution, which means they have the existingdecision to launch LTE. chipset that is used in 3G phones plus anMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 99
  • additional chipset to extend that capability frequency band for LTE, which could holdto 4G. The downside: they use more battery great promise for roaming in the future.to power the two chipsets, which either Most handset manufacturers will find itimpacts the performance or increases impractical to support all the frequencythe size and weight of the handsets. bands being used globally for LTE, so itNonetheless in relative terms these will be important to identify the key bandshandsets perform better than prior- which represent the greatest commongeneration predecessors, are improving denominator for travelers. In view of this,rapidly, and are expected to become fully I think it’s no mistake that the 1800 bandoptimised by 1Q 2013. is already supported in many handsets. It’s still early days for LTE and for thoseLTE Business benefits customers who are enjoying LTE in their domestic markets. So, when these earlyAt PCCW our core strength is providing the adopters travel out of their domestichighest quality networks which enable cus- market, their roaming service will probablytomers to communicate with each other fall back to 3G networks. But there is noand with services on the Internet. To this ignoring the fact that LTE has alreadyend we have built — and continue to build — created the customer expectation for highernetwork capability that meets customers’ quality service — at home and abroad. Atneeds for coverage and speed. This is where PCCW it will be a challenge for us to keepLTE comes in — PCCW made the decision to our customers satisfied because theylaunch LTE to continuing delivering on these already expect to enjoy the same servicesobjectives. Of course, LTE roaming also when roaming that they have at home, andplays a role, but there are challenges. that will soon include LTE data speeds.Currently, there is a great disparity in termsof what frequency bands are being identified IPX underpins dataand made available for LTE globally. Whilethe 2600 frequency band is broadly adopt- At PCCW we view IPX as a managed IPed as a primary band it is not available network, one that provides a reliable qualityeverywhere. Some markets, including Hong of service and enables operators to connectKong, are actively re-farming the 1800 to one another and offer a managed quality100
  • of service to their customers. That is a given. altogether when usage exceeds a pre-It’s what operators deliver over IPX in the way determined threshold. In many cases,of services that becomes the real question. PCCW being one, this emphasis on protecting customer interest is now in place.At PCCW the first service to be embraced,under what was called GRX, was all about Accordingly, until ‘remote controls’ can bethe capability to have our roaming custom- put into place, there will continue to be aers’ data traffic routed back to us. This demand for the GRX model of data traffic,arrangement has been essential in with the traffic being routed back to the homedetermining how, and how well, we serve networks, where operators have visibilityour customers. More recently there is and control. Therefore, IPX is part of andiscussion about local breakout and the on-going business plan for GRX traffic. Thisbenefits it delivers. We may indeed see will certainly be the case for the near-term,arrangements move in this direction, and will continue until the systems to enablebut not until the service management local breakout materialise and are tested.capabilities are in place to enable operatorsto have their own policy controls. This isessential because operators need to have Voice gets a boost‘remote control’ to ensure visibility,enforcement of policies and the ability But this scenario is not just about theto manage service quality. benefits to roaming customers using data services. There is also an opportunityBut it’s not just about maintaining control around voice.of the service; it’s also about avoidingunfortunate outcomes for the customer. Awareness of the main benefits whichTake the example of ‘bill shock’. Customers, IPX provides are currently focused onand some regulators, have called for future scenarios for LTE roaming customers.operators to inform roaming customers In other words, the use cases around LTEof the amount of data they use — and the roaming and — later— VoLTE immediatelyprecise cost — when they are abroad. There come to mind. However, there is a muchis also the expectation that operators will more immediate opportunity to consider:enforce limits to protect the customer from how IPX can already enhance today’sbill shock by suspending data services 3G/2G voice roaming.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 101
  • Consider when a PCCW customer roaming right now. First, there is more controlledoverseas receives an incoming call. Today routing. As a result, there is also a higherthis call is rerouted to the visited network quality of service. Second, the operatorvia a traditional IDD operator. In other can determine what to do when a call is notwords, PCCW passes that call to the IDD answered. Should it be connected to voiceoperator, and it is delivered via an uncertain mail, or some other answering services?number of network connections, albeit The operator can decide and take specifichopefully with the CLI — or calling line action. With this comes the opportunity foridentity— so the PCCW roaming customer operators to offer value-added services tocan see who is calling in the first place. roaming customers to manage those calls in new and innovative ways. Perhaps theWith an IPX it is possible to redirect this IDD roamer would like calls routed to a servicetraffic and deliver added value. In practice that records the message and delivers it,the IPX provider can deliver a guaranteed similar to Bubble Talk. This is the type ofquality of service between mobile operators. service travelers could find useful, andFurthermore, the IPX provider can ensure one that operators cannot deliver sothe call-control signaling is reliably exchan- easily today.ged between home and visited networks tofacilitate enhanced home- network control ifthe call is unanswered. Because of this Three IPX scenariosbenefit, IPX also becomes the obvious firstchoice path for an operator to route voice Broadly speaking, there are three keytraffic to a roaming customer. scenarios around IPX involving mobile- originated voice traffic, which offer a varyingPut simply, this approach provides the degree of benefit to the home operator.operator important visibility into what is Imagine first a scenario where the roaminghappening on the other end. Is the sub- customer makes a local call in the localscriber busy on the phone? Is the subscriber country. If you are the home operator youoffline? Knowing this for sure equips the still have to rely on the visited network tooperator to manage the call, rather than deliver the call. In other words, IPX doesn’tjust blindly sending it to the IDD operator deliver notable benefit. This is not the casewith hopes for the best. in the next scenario.Thus, IPX enables a number of advantages Imagine, however, that a roamer wants tofor the operator and the roaming customer call a number in their home country. In this102
  • scenario there is the potential for the Clearly, IPX services can take all the guess-visited network to route that call back work out of call delivery control for thethrough the IPX to the roamer’s specific home network. There are benefits for mobilehome network operator, not just back to operators and their roaming customers, asthe roamer’s home country. In this way, well as the IDD operators. For IDD operatorsthe home network operator is not only it means modifying their current businessdelivering the call, it is controlling how model to become IPX providers. Underliningthe call is delivered. IPX equips the home this shift is the recognition that IPX will benetwork operator to manage that call in the medium for voice communications innew and innovative ways. the future. Granted the IPX business model is built around the potential of mobile-to-The final scenario is an IDD call to a third mobile data connectivity, but IPX is also atcountry, where the home network operator the core of the more traditional killerand the visited network operator are dep- app: voice.endent on other operators to manage andterminate the call. Whether or not IPX isused in this scenario would be subject to Richard Midgett has over 30 years experiencean agreement between the operators on in the telecommunications industry. He beganhow to manage such calls. Nonetheless, a his career with Cable & Wireless USA, wherebenefit for that traffic to be routed back to he served in a range of technical managementthe home network, where it can be roles. After joining Hong Kong Telecom’s CSLmanaged, potentially still exists. mobile team in 1989, he served in a variety of areas spanning business and product devel-The second scenario, in particular, illus- opment, government policy and regulation,trates how IPX delivers benefits to the and overseeing the commercial business forcustomer by enabling the home network roaming, international operator, and whole-operator to enhance quality of service and sale services before moving to PCCW. Mr.— if they choose —deliver additional value Midgett has also held active positions in a-add on top of the service. But it doesn’t stop number of industry organisations includingthere. There are likely to be cost —or cost most notably serving as chairman of themanagement — benefits, which the home GSM Association, chairman of GSM Asia-operator can pass along to its customers. Pacific, and as a member of the board of governors of the Universal Wireless Communications Consortium.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 103
  • PART FOURLTE: UNLEASHING INNVOVATIONTO DELIVER RESULTS
  • PART FOUR: LTE: UNLEASHING INNVOVATION TO DELIVER RESULTSEnabling 4G LTE For AllBy Ed Chao, Senior Vice President, Engineering andNetwork Operations, MetroPCSMetroPCS Communications, Inc. — approximately 9 million customers. In Sep-the fifth largest U.S. facilities-based tember 2010, MetroPCS was the first U.S. operator to deploy a commercial 4G LTEwireless carrier operating on its own network, a network that today covers thenetwork — reached a milestone in majority of the Company’s CDMA footprint.August 2012, becoming the firstoperator globally to launch Voice MetroPCS began operations just over a decade ago. Since then the operator hasover LTE (VoLTE) services. The roll- focused on deploying technology that equipsout of these services marks a win it to scale its business and satisfy its custom-in the international race to provide ers with reliable, robust and value-drivennext-generation mobile voice and services. Naturally, the decision to deploy LTE also had its roots in that strategy.paves the way for MetroPCS toachieve significant spectralefficiencies and enhance the 4G Extracting valueLTE experience for customers. We at MetroPCS knew we needed to buildInnovation and first-mover advantage are our future on a technology that would deliverpart of the corporate DNA at MetroPCS long-lasting capability and competitive edge.that has allowed the company to be a With three key benefits in mind, MetroPCSpioneer and become the U.S. leader in started down the path to LTE.no-annual-contract mobile service withSoon customers will feel limited by these verticallyintegrated application ecosystems and contentecosystems. That’s when MetroPCS will leveragerich communication services (RCS) to providecustomers with a unified experience that cannot beachieved with today’s OTT services.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 105
  • First, LTE is a global standard within Delivering value-driven servicesthe 3GPP ecosystem. Therefore, it wouldallow MetroPCS to benefit from economies LTE provides MetroPCS with the capabilitiesof scale. It would also ensure access to a to stand up against the competition whilelarge supply of smartphones at attractive also allowing us to be agile and deliver on ourand affordable prices, meeting the unique chief value proposition: to deliver service thatrequirements of our customers and is predictable, simple and affordable. Thisincreasingly important demand of value proposition resonates with our customers-conscious consumers. desire for easy to use, value- driven services and a better mobile experience.Second, LTE can squeeze more capacityout of spectrum. In the case of MetroPCS, MetroPCS’ key theme began as deliveringthis would support our own aim to refarm “Wireless for All,” reinforcing our aim tospectrum and achieve efficiencies. LTE will provide our customers with predictabilityallow the company to convert 2G airwaves and simplicity when it came to theirto 4G, opening capacity for new customers wireless service. We achieved thisand new services. through offering complete transparency by including taxes and regulatory fees forFinally, it was clear that LTE would enable unlimited voice, text and data packages.MetroPCS to send voice calls and provide It also gave customers a comfort levelbetter voice quality in the process. because they could be certain there would be no surprises in their monthly bill.After carefully weighing available options ,we decided that LTE was the technology In 2011, in line with the rollout of LTE,that would best complement our capabili- MetroPCS took this theme and campaignties, equip us to serve our customer base, to the next level and launched the secondand ultimately, allow us to be the David chapter of its Wireless for All strategy –,among the four other ‘Goliaths’ in aptly called “Android for All,” which was also athe U.S. 4G mobile market. world-first. Android for All aimed at providing our no-contract customer base an Android phone and a great smartphone experience at an affordable price — namely, under $100.106
  • throughout our major markets, which comprise 11,000 cities and towns. The beauty of this rollout was the alignment between strategy and tactics, and how industry forces are converging to deliver significant business benefits. In addition to being first to offer 4G LTE at unmatched affordability, MetroPCS was also the first in the world to launch a commercial voice-Figure 1: Based on data from MetroPCS. over-LTE (VoLTE) service. This is significant for several reasons. First, by converting voice to data, VoLTE makes better use ofLTE (and more) for all our radio spectrum. Second, it allows for better voice quality for our customers.Fast forward to mid-2012, when MetroPCS Finally, VoLTE is a technology that willmarked a new and successful chapter in its also provide the basis for future RCS (Richevolution. Specifically, MetroPCS launched Communication Services) offerings later on.“4G LTE for All,” a campaign to promote theU.S. debut of an unlimited 4G LTE data planthat bundled unlimited voice, text and data, Rich services, just in timefor just $55 per month. The offer is coupledwith the lowest priced 4G LTE smartphone MetroPCS has worked hard to provideever launched at $129. customers 4G LTE technology and enable a great user experience that incorporatesWith these services, David once again has fast speeds, affordable phones and thea leg up on the Goliaths in the marketplace. latest technology. We are focused on whatMetroPCS is able to maintain a competitive we do best, namely offering communica-edge by offering 4G LTE for All because of tions. That said, it is difficult for a smallerthe early decision to make the move from operator like MetroPCS to provide every-CDMA to LTE. To date, MetroPCS has thing a customer wants. To ensure thatcompleted 97 percent of its LTE coverage we meet our customers’ needs, we wantMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 107
  • We decided that LTE was the technology thatwould complement our capabilities, equip us toserve our customer base and ultimately, allow usto be the ‘David’ among the four other Goliathsin the U.S. 4G mobile market.to make it possible for our customers to services (RCS) to provide customers with aget content, apps and services that we are unified experience that cannot be achievednot able to offer, and this is where Android with today’s OTT services.comes in to provide customers with a widechoice of apps and content they can access Customers will be free to communicate withand enjoy on their smartphones. anyone they want, regardless of the applica- tion they use. RCS will bridge this divideThe same approach applies to communica- between applications and extend the usertions. Customers should be able to choose experience customers have with MetroPCSand to use the services they want. Its up to on voice and text to the next generation ofthem whether they use Skype, Google Voice communications services.or Facebook. MetroPCS supports thisvariety of Over the Top (OTT) services to In a way, its almost as if history repeatsdrive a desire among customers for the itself and takes us back to the early 2000sinteroperability of these services. when there was no SMS interoperability because operators wanted to make sureImagine a customer on Facebook, who has they could differentiate their services.a good friend on Google+. The two friends As we now know, SMS interoperabilitycant communicate freely using those plat- unleashed a lot of value for operators andforms because they dont use the same their customers. And we see the sameapplication. Soon customers will feel limited potential with RCS.by these vertically integrated applicationecosystems and content ecosystems, andMetroPCS will leverage rich communication108
  • Unleashing value Back to the futureAgainst this backdrop, the goal at MetroPCS The pace of change is only accelerating,is to rollout RCS to its markets and educate and the impact on mobile is profound andour consumers so that we can deliver a often unpredictable. Just five years ago itgreat user experience. MetroPCS also wants seemed the appeal of smartphones wouldto work with partners — and competitors — surely be limited to an audience of affluentto drive more rich communication services early-adopters willing to spend $500 onacross the ecosystem. To this end, a device and $200 a month on limitedMetroPCS plans to launch an initial set of rate plans.RCS services later this year and then moverapidly to RCS 5. Today, smartphone penetration in the U.S. market has passed the 50 percent mile-One other important part of MetroPCS’ stone (with total mobile device saturation atplans going forward is 4G LTE roaming. more than 105 percent) — and that doesn’tThere are some challenges around the count the increase in tablet shipments andestablishment of agreements that must be usage. Whats more, it is now typical forovercome in order for MetroPCS and other people to have multiple devices. As a result,operators to move forward. However, this mobile operators have introduced sharedsituation will change the next 12 – 18 data plans and packages that allow peoplemonths once agreements are in place. When to have and use a multitude of connectedthese issues are resolved, and operators devices on their terms.have a common foundation on which toenable LTE roaming across the ecosystem, What will happen another five years fromwe will have a clear path to deliver additional now? Theres no way of knowing. But itsvalue for our customers. Its here that IPX important to prepare now, which is whyprovides the necessary foundational MetroPCS has consciously and consistentlyelement to this strategy, allowing MetroPCS made technology decisions and investmentsto connect with roaming partners, both that allow us to be agile and flexible.domestically and internationally and scaleup quickly. Another benefit of IPX is the MetroPCS built the foundation for our futureinteroperability it facilitates. when it made the early decision to move toMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 109
  • 4G LTE. Today, we’re beyond the heavylifting, and from here its about adding Mr. Chao joined MetroPCS as Senior Vicecapacity so we can continue to evolve President Engineering & Network Opera-LTE. This is where policy control becomes tions in September 2008. Prior to joiningessential to guarantee our customers have the company, Mr. Chao served as Vice Presi-a certain level of quality of experience, dent Product Management at Alcatel-regardless of the application they may Lucent in the CDMA Networks Businessbe using. Division. He held a variety of other positions at Alcatel-Lucent, including Business Devel-Clearly, MetroPCS is delivering on our 4G opment and Strategic Planning, as well asLTE vision that is built on the decision to conducting research on wireless applica-deploy LTE. The capabilities are in place tions in Bell Labs. Prior to Alcatel-Lucent,to serve and retain our customers, remain Mr. Chao worked with Nortel/ BNR where herelevant and stand up to the Goliaths was primarily involved in defining front-endfor years to come. requirements and standards in support of the company’s entry into CDMA. Mr. Chao holds a MBA from Columbia University, a MS in Electrical Engineering from Georgia Tech, and a BS in Electrical Engineering from Rutgers University.110
  • PART FOUR: LTE: UNLEASHING INNVOVATION TO DELIVER RESULTSFighting Smart To Win BigBy Madan Jagernauth, Vice President, Marketing & Strategy,Mavenir SystemsIn the mobile industry nothing The Apple iPhone, the smartphones fromexcites analysts and investors as other manufacturers that followed, and the app store model that swept in behind are allmuch as disruptive technology that developments that can certainly be classi-can potentially change all the rules. fied as disruptive. Granted these innovationsThey are in awe of technology that were quickly absorbed into the overallcan be labeled as a “game-changer,” mobile ecosystem, laying the groundwork for a new phase of growth and innovationor can be seen to “re-write the around smartphones, mobile apps and anrules” that came before. Disruptive ever-growing array of connected devices.technology spells opportunity andpaves the way for new players. But the impact of these disruptive technolo- gies on the operator business models wasBut not all players welcome the profound. The space was shaken to its coretremendous change it brings. before anyone in the industry could react.Network operators, for example, In fact, the advance of smartphones pavedwould rather see disruptive tech- the way for the most potentially disruptive development of all: a whole raft of new,nology integrate smoothly, and so-called Over the Top (OTT) competitorsoffer up business opportunities, and services that could marginalisenot problems. operators in the revenue chain.It [RCS] capitalises on the operators’ coreproposition of ubiquity, reliability and reach,providing a common approach to a set of newvalue-added services that operators can offeron existing 3G infrastructure, as well as futureLTE networks.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 111
  • Number of mobile VoIP users (millions) 2010-2012 by eight key regions120 Africa & Middle East Rest of Asia Pacific Indian Sub Continent Far East & China Central & Eastern Europe Western Europe Latin America North America 0 2010 2012 2012Figure 1: Source: Juniper Research. (1)Connect the dots, and the swift advance of in the game doesn’t require massive invest-smartphones, mobile apps and new services ment in long-term infrastructure overhaul.have changed the rules of the game forever.The good news: the game just started. The Get rich quicksame disruptive technology — and the newbusiness models it enables — offers opera- Over the past years, the GSMA has investedtors a way to get back in the game. And if time and resources to enhance its Richthey develop and deploy the right strategies Communication Suite (RCS) concept, aimedthey can even move back up to the top of at allowing mobile operators to offer innova-the revenue chain. Better still for an industry tive and competitive services. RCS builds onthat was created through the vision of the universal success of the GSM standardworldwide standards, this disruptive tech- and is an opportunity for operators to re-nology has created a new space that is big invigorate and expand their product andenough for everyone. What’s more, getting service portfolios. It capitalises on the oper-Footnote1. www.juniperresearch.com/reports/mobile_voice_strategies112
  • This cloud-based approach to deliveringVoice, regardless of data path, will enableoperators to jumpstart deployment ofenhanced services.ators’ core proposition of ubiquity, reliability players. It has the global support of theand reach, providing a common approach to operator community and it is also embraceda set of new value-added services that oper- by many of the major handset vendors,ators can offer on existing 3G infrastructure, companies that have committed to theas well as future LTE networks. project and are embedding RCS services onto their latest handset models.RCS will allow operators to fight backagainst OTT players by enabling them tomove beyond traditional voice, text and Fast trackdata services to offer new services such asgroup instant messaging or chat, live video Before operators can launch RCS servicessharing and file transfer across any device, and reap the benefits, they will need toon any network, with anyone in a mobile implement some changes within theiraddress book. RCS will enable operators to network. One key change will be the imple-provide services that meet the increasing mentation of IMS but not all operators arerequirements of today’s hyper-connected ready to move forward on this.consumer because they are completely insync with how people share their content — Clearly, there are RCS services whoseand their lives — with each other via laptops, deployment is dependent upon the roll-outtablets and smartphones. of LTE networks. Fortunately, the advent of cloud-based solutions offers operators aFor operators, and their customers, RCS short-cut, allowing them to offer RCS-likeis a compelling proposition. RCS also enjoys services starting today, without IMS.the support of the several mobile ecosystemMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 113
  • Take the case of operators looking at that the simple act of making a call triggersVoice over LTE as a way to compete against the question: “Do you want to use Skype,services offered by the VoIP players such as Viber or the Phone?”Skype and Viber. Rather than wait for theroll-out of their LTE networks (necessary for However, operators shouldn’t only be con-VoLTE), these operators can start fighting cerned about the loss of the connectionback now by migrating to Voice over Wi-Fi with the customer, or the impact on their(VoWi-Fi) using the same voice (and video) position as the go-to trusted supplier ofcall control infrastructure that is needed for voice services.VoLTE and incidentally, the same infra-structure that supports Voice over HSPA Research shows that OTT-provided VoIP(VoHSPA) in the future. services hardly use bandwidth effectively. In fact, they typically occupy about 25This cloud-based approach to delivering percent more bandwidth to handle trafficVoice, regardless of data path, will enable than operators could achieve usingoperators to jumpstart deployment of VoWiFi or VoLTE.enhanced services. In fact, the cloud canbecome a fast-route-to-market service There is no shortage of sources that usedelivery platform for a host of operator- significant amounts of bandwidth. Givenprovided fully integrated RCS style services, the demands on mobile data networks, theincluding messaging. pressure is on operators to find ways to save capacity and avoid a bandwidth crunch. PutAnd there are other advantages to consider. another way, operators must find ways toGroup messaging services like Viber not free up capacity, and opting to deliveronly overtake the operator network, they messaging service using VoMBB is clearlyalso access information stored in the add- a path operators should seriously consider.ress book on the device, and use this toshow users who else among their contacts In exploring the many compelling reasonshas Viber and can make a call using the app. why operators should explore the RCS-styleThis integration plays in favor of OTT services they can deliver now by using aplayers, making it easy to find and call cloud-based service delivery model, let’s notcontacts using the same software. On some forget the key competitive advantage thesesmartphones this has been automated so services can deliver. Indeed, a prime driver114
  • This cloud-based approach to deliveringVoice, regardless of data path, will enableoperators to jumpstart deployment ofenhanced services.and benefit of RCS is the level playing field The benefits of this approach can already beit can create. This is a positive outcome seen in countries such as Spain. Operatorsbecause RCS effectively equips operators there jointly launched RCS services underto stand up to the OTT players. joyn, a new consumer-facing brand developed by the GSMA for RCS.Smooth moves While RCS has created a level playing field, it has not changed the business dynamicsThe GSMA is taking a market-by-market that separate the market-leaders from theapproach to enable a smooth launch of RCS. also-rans. The task now for those operatorsIn practice this means working with a group is to market and deliver joyn services, aof operators to ensure the full ecosystem goal that forces them to compete head-— including the necessary network infra- on against both the OTT players and eachstructure and handsets — is in place other. Significantly, the transition fromacross each market. working together to speed market implem- entation to competing against each otherAs a result, all operators in a particular for market success has been virtually anmarket can be positioned to launch overnight process.RCS services at the same time. Moreimportantly, the RCS promise of cross- Against this backdrop, we believe operatorshandset and cross-network compatibility can benefit from disruptive technology —can be supported. and beat the competition at their own game — provided they make the right choices.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 115
  • But they shouldn’t wait to innovate.Operators that make the move to deliver Madan Jagernauth has 20 years experienceRCS-style services now by using a cloud- in the wireless industry. As a mobile broad-based platform over their existing infra- band pioneer, Madan managed wirelessstructure will have a head start in the access products from GSM/GPRS to WiMAXmarketplace. But it’s not just about and LTE. Prior to joining Mavenir, Madan wasintroducing RCS services first, operators with Huawei for four years where he heldwill also gain valuable and practical responsibility for wireless marketing andexperience that will help them maintain product management, and mobile broad-their competitive edge against both OTT band solutions, with Nortel Networks for 21players and local market rivals. years and Honeywell for 9 years.116
  • PART FOUR: LTE: UNLEASHING INNVOVATION TO DELIVER RESULTSPositioning LTE For SuccessBy Declan Lonergan, Research VP, Yankee GroupResearch underlines the pivotal Who are the tablet-owners? Our researchimportance of LTE. But success shows they are:with LTE is not dependent upon Younger. In fact, tablet owners today arehow operators implement the tech- more than 10 years younger on averagenology. They must also succeed in than non-owners.how they launch and communicate More affluent. The average tablet owner earns $70,000 per year and has an annualtheir offer in the marketplace. To household income of $87,000. The averageguide operators as they define their non-owner earns $56,000 per year and hasapproaches we have identified six an annual household income of $66,000.ways to position LTE in today’s Smartphone-enthusiast. Respondents who own a tablet are 31 percent more likelydata-centric world. Whilst this to own a smartphone than people whois not an exhaustive list, it does don’t yet own a tablet.introduce needed clarity into theincreasingly murky discussion In our view, tablets plus LTE is a match made in heaven. Against this backdrop,about this technology and the operators that position LTE as the idealbenefits it delivers. connectivity solution for tablets are on the right track. Additionally, operators have the opportunity to establish their company (andNo. 1 for Tablet Users their brand) as THE number one choice for this discriminating demographic.Pitch LTE as the preferred connectivitysolution for tablet owners who want more And let’s not forget the chance to attractthan patchy Wi-Fi service. Keep in mind that customers who are migrating their PCtablet owners differ — both in demographics behavior to tablets and therefore needand behavior — from non-owners. Under- to get online using their tablets. Connectstanding these differences allows operators the dots, and a market leadership positionto cater their LTE packages to tablet-own- awaits smart operators that grab hold ofers, a demographic that clearly sees the this opportunity and make it a central partvalue in robust and reliable connectivity. of their marketing and communications.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 117
  • No. 1 for Cord-Cutters No. 1 for FamiliesEstablish LTE as the answer for customers Focus on presenting the family unit — orlooking to discontinue their land-line similar groups — with a subscription offerconn-ections and move to a mobile-only they can share. The concept of offeringlifestyle. As we know, 3G-based mobile multi-user or multi-device price plans hasbroadband may have been positioned as gained significant traction and attentiona viable alternative to land-line services, during the first half of 2012. This trend ishowever, its performance is hardly on a par pronounced in markets such as the U.S.,with fixed broadband. LTE changes all the where the state of LTE services is relativelyrules, allowing operators to provide cust- advanced. This is not yet the case in Europe,omers the promises of an untethered life- where operators plan their LTE launchesstyle and position themselves as the go-to for later in 2012 or 2013. Clearly, it makescompany for cord-cutters in the process. good business sense for European opera-The timing is perfect as consumers are tors to follow the U.S. example and makealready begin-ning to substitute mobile for multi-device plans a core part of their offers.fixed broad-band, even in 3G scenarios. A The result is a proposition that covers the2011 survey commissioned by U.K. commu- bases to deliver households improvednications industry regulator Ofcom, for price-certainty, thus enabling operators toexample, revealed that 44 percent of U.K. differentiate their LTE offers from existinghouseholds with a mobile broadband 3G services. Granted mobile services haveservice had discontinued their land-line traditionally been purchased and consumedbroadband connection. Significantly, the by individuals, but this is changing. The con-highest instance of mobile-only broadband venience and cost advantages of sharingwas among households at the lower end of data allowances across multiple devices willthe socio-economic scale. This sends a no doubt encourage more Europeans toclear message to operators that LTE pricing explore family plans. Operators should getmust be suitable to the needs of these ahead of this potential demand, andprice-conscious customers. Prepaid plans promote their family-friendly LTE servicesand price-transparency are important, and from day one.— if operators get the pricing and packagesright — then they can count on attractingcust-omers eager to cut their cords andcontrol their costs.118
  • No. 1 for Prepaid No. 1 for RoamingAdapt your offer to the shift in prepaid — Cash in on the confusion around datafast. While the lion’s share (62 percent) of roaming. Consumers’ continued uncert-all mobile lines in Europe are prepaid, these ainty about data roaming charges, as wellservices are under pressure. In fact, the as recent initiatives by European regulatoryerosion of the prepaid base is particularly authorities to reduce roaming fees arenoticeable in markets like the U.K., where shining a spotlight once again on the dataprepaid services accounted for only 50 roaming issue. The public discussionpercent of all mobile lines at the end of 2011, presents operators with an opportunity todown from 65 percent in 2007. Naturally, aggressively pursue a market leadershipmobile operators prefer to deliver postpaid position. But to get there from here opera-services, catering to a customer segment tors must first equip themselves to deliverthat guarantees steady ARPU and lower fair and transparent data roaming pricing.churn rates since customers are locked into They must also ensure customers havea contract. But mobile operators can’t take access to all the service features they enjoythe easy way out. When it comes to LTE, our on their home networks, including Qualityadvice to operators is simple: ignore prepaid of Service and class-of-service parameters.at your peril. Prepaid has an important role What’s more, the rapid migr-ation to all-IPto play in LTE, especially as consumers traffic in domestic mobile networks willmove from having just one mobile phone to make IP eXchange (IPX) a natural choice foradding connected devices such as laptops, LTE operators as they work to ensure theirtablets and games consoles. For cost- customers’ experiences remain consistentconscious customers who need more than — even when customers travel beyond theirWi-Fi connectivity for this array of devices home networks.prepaid LTE fits the bill nicely. To take fulladvantage of this opportunity operatorsshould partner with device manufacturers Lessons Learned From 3Gto offer products with embedded LTE andthe option to connect via prepaid. A good Whether operators pursue one (or more)example is Lenovo, which recently intro- of the approaches we have presented—duced a 3G version of its ThinkPad laptops. or come up with their own strategy — theSuch offers are precursors to what we can end-game is all about successfully position-expect with LTE. Smart operators will recog- ing LTE for the future without repeating thenise the opportunity here to establish them- mistakes that marked the past.selves as the No. 1 choice for prepaid LTE.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 119
  • Prepaid was essential to early 3G success 6.0% 3 Italia 5.0% 3 U.K. 4.0%mobile customersShare of national 3.0% Aug 2004: 36% of U.K. 2.0% Feb 2004: U.K. prepaid 3G users were prepaid 3G service launched 1.0% 0.0% 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05Figure 1: Source: Yankee Group, 2005.The technology won’t sell itself. An LTE content that drove the move to 3G. LTE isbadge won’t mean a lot to consumers. They sure to produce a similar surprise motivator.didn’t care much about 3G until they couldunderstand how it improved their connected Prepaid is essential. 3G adoption wasexperiences. Operators should therefore sell severely hindered in the early stages due tothe benefits of LTE (or 4G), not the acronym. limited availability of prepaid (see Figure 1). When it comes to LTE, prepaid should notExpect the unexpected. While most be an afterthought.expected the promise of video telephonyto move 3G devices off the shelves, it was Handsets matter. Once operatorsreally the lure of better mobile access to improved the quality and choice in their 3GFacebook, YouTube and other Web 2.0 handset portfolios, they saw a dramatic120
  • Many US consumers still don’t understand what 4G isYankee Groups US Mobile Broadband Survey, April 2012. Are you aware of, and do you have a basic understanding of 4G? (n=601) I have never heard of the term 4G 9% I have heard of the term 4G 35% but I don’t understand it I have heard of the term 4G and I 38% understand what it means I am anxiously awaiting 4G products 8% I am already using 4G 10%Figure 2: Source: Yankee Group.increase in 3G adoption rates. It’s the same roaming by proactively helping customersfor LTE. From day one, operators must to manage their consumption and spending.ensure a good supply of desirable LTEphones for the mass market. Clarity Is the Key to SuccessRoaming must be addressed.Frequent instances of bill-shock, caused The approaches we outline here are reallyby customers’ unintended use of 3G-based only a sample of the options available todata services while traveling abroad, created operators seeking to position LTE in a waynegative headlines and disgruntled custom- that both benefits customers and theirers. Operators must do a better job with 4G company bottom line.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 121
  • Tablet owners and non-owners have different profiles Tablet owner Tablet non-owner Demographics 22% 78% Average age 34 45 Gender Male 56% Male 49% Female 44% Female 51% 36 32 43 46 Average age by gender M F F M Minutes per day spent 22 19 on mobile internet Minutes per day spent 24 22 in mobile apps Mean personal income $70 000 $56 000 Mean household income $87 000 $66 000 Smartphone owners 81% 50%Figure 3: Based on data from Yankee Group. Consumer Survey, 2012.122
  • No matter how operators choose to markettheir offers, success depends on their ability Declan Lonergan is a vice president ofto position LTE (and the benefits it delivers) Yankee Group’s research team andclearly and consistently in the minds of their produces and manages research thatcustomer base. This is a tall order since improves service providers’ and technologyresearch shows many consumers simply vendors’ business results. Lonergan has 20don’t know what LTE (4G) is, let alone the years of experience in the communicationsservices it supports. (see Figure 2). industry. He spent several years with BT, where he held management positions inRead between the lines, and boosting radio systems procurement and accessawareness (not use) is the chief challenge network planning.operators face. The pressure is onoperators to take the lead in educatingconsumers about the real-life benefitsof LTE and show how LTE is superior toexisting 3G services without losing the keymessage in a sea of confusing acronymsand technology-speak. Operators cannotafford to fail in this basic task.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 123
  • PART FOUR: LTE: UNLEASHING INNVOVATION TO DELIVER RESULTSBreaking Down Borders:Getting The Most FromLTE RoamingBy James Middleton, Managing Editor, Telecoms.comAgainst the backdrop of the eco- operators might underestimate thenomic slowdown and its debilitating challenges they need to address.effect on the global roaming In the early days of mobile roaming operatorsmarket, the advent of Voice over would strike bilateral agreements betweenIP (VoIP), which marks the end of their networks to cater to the needs of theiran era for circuit-switched voice, roaming customers. But this approach had its limits. To meet customer demand andrepresents the most significant increase efficiency specialist providers setindustry shift to date. up roaming hubs to ease the burden on the operators and improve scalability.Whilst the majority of voice traffic today isstill generated by legacy circuit-switched The trend now is to look at GRX as part ofnetworks, packetised voice will eventually the IPX (IP eXchange) offering. In thisbecome the norm, driven by the transition scenario mobile operators use a specialistto LTE. Shifting TDM traffic to packetised supplier that manages the hub to which thenetworks opens up opportunities to extend operator community connects. The hubcommunities and services between the solution is a remedy for roaming issueswired and wireless worlds, but this is not going forward, particularly as the barrierswithout its challenges. Without automated between roaming and interconnect blur withend-to-end monitoring in place and a proper the introduction of LTE and the flexibilityunderstanding of the teething problems still that it introduces.present in the nascent area of LTE roaming,Operators are switching their traffic to the hubbecause it’s more efficient and provides themwith greater control over the management andoutsourcing of interconnects into the hub.124
  • Breakthrough progress opportunity for mobile operators. Rather than seeing these new entrants as aThe first hubbing deployments broke signifi- competitive threat, many mobile operatorscant ground by paving the way for a more are beginning to understand that they canconnected global mobile industry. The IPX benefit from carefully structured andextends this concept by enabling deeper managed partnerships with OTT players.connectivity for fixed, wireless and inter-net-based service providers in a much more The key for mobile operators is to offeropen and flexible environment. connectivity to these rival providers without giving away control of their network assets.Today these hubs allow networks to extend Fortunately, operators can leverage theirtheir footprint and services to countries fixed and mobile network assets throughwhere they do not have bilateral deals in IPX, so successful interaction with OTTplace, but it’s not just about reach. Operators players is just a case of finding the rightare switching their traffic to the hub because business model.it’s more efficient and provides them withgreater control over the management and As Michel Van Veen, Group Manager,outsourcing of interconnects into the hub. Product Management, at SAP Mobile Services, observes: “If an LTE operatorIn terms of interconnect, third-party supplied starts to offer LTE roaming to customers,voice and messaging services will be avail- the only way to establish a short time toable from day one on LTE networks. These market is to use a hubbing solution.” Thus,services could also potentially show improv- if operators were to only establish roaminged QoS compared to 2G and 3G, whilst ben- agreements with a small number of trustedefiting from lower regulated data charges. roaming partners, then they wouldn’t neces- sarily use a Diameter hub in the middle. But,On one hand, the traditional operator menu he stresses, “in reality operators need toof services — which includes voice, SMS establish roaming agreements withand data roaming — are necessary to avoid hundreds of their peers and hubbing is thea massive shift of traffic to third parties, only way to scale up quickly and efficiently.”including OTT service providers. On theother hand, inter-working with OTT serviceproviders introduces a wealth of commercialMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 125
  • Rather than seeing these new entrants as acompetitive threat, many mobile operators arebeginning to understand that they can benefitfrom carefully structured and managedpartnerships with OTT players.Overcoming obstacles The first successful deployments of LTE are in place and rollouts are growing at a rapidSome operators may think they can control pace. Clearly, LTE is reaching a stage oftheir network end-to-end and beyond, thus maturity where technical challenges ofsatisfying the needs of their roaming cus- deploying LTE are no longer a barrier. Nowtomers. However, this is a mammoth effort it’s up to the operator community to over-that can be fraught with challenges and come the last hurdle and develop a com-commercial headaches. If the operators mercial strategy that wrings value out ofinsist on running this in-house, then the LTE to enable roaming services that benefitrequirement for a fully managed, specialist customers and drive positive results forservice to share the burden becomes all the everyone in the ecosystem.more pronounced. After all, failing to offera high quality of service in global roamingservices, results in a drop in roaming usage, James Middleton has over 12 years’ experi-and a loss of roaming revenue. Another ence of writing and reporting on the tele-outcome is unhappy customers, which coms and tech sectors. Middleton has alsoresults in churn and higher customer helped to build and launch several success-service costs. ful websites with a keen focus on content management and community building.126
  • PART FOUR: LTE: UNLEASHING INNOVATION TO DELIVER RESULTSVideo Communications:“A Perfect Storm”By Ramsey Masri, Vice President, Sales & Alliances, Aylus Networks“You’re headed right for the middle In the last few years we have seen a seismicof the monster.” These were the shift in consumer acceptance and use of mobile video. Smartphones and tabletswords of Linda Greenlaw, the boat — popular devices equipped with videocaptain in The Perfect Storm, a cameras — have reached the mass-marketgripping film released in 2000. tipping point.The true-life drama recounted the We have also seen a dramatic change in howtragic fate of the fishing vessel consumers use Skype to do more than justAndrea Gail in 1991, when weather make voice calls. In fact, Skype now reportsconditions combined to form a kill- that over half of all Skype calls now progresser storm in the North Atlantic. The to video. Likewise, we have seen a slew of communications services, including Apple’sdetails of this unusually intense Facetime, Facebook’s video calling andstorm pattern were captured in Google’s Hangouts, embrace and offer video.computer-generated graphics,detailing the relentless power of At the same time we are witnessing the advance of mobile broadband networksa perfect storm and what happens designed to support video communications.when seemingly routine shifts in In fact, video is widely promoted as the flag-wind and temperature come ship service that can be supported by LTE.together to produce a monster. Connect the dots, and we have a seriesToday, we are seeing a similar alignment of of separate and significant events thatkey conditions in the video communications are combining to have a massive impactlandscape, where the rapid pace of change on the industry.and the interplay of supply and demand arecombining to generate the mobile industry’s Clearly, consumer use of video has enteredown Perfect Storm. a new phase of growth, driven by devices,For long-term viability, video calling mustgenerate its own revenue.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 127
  • Annual global IP traffic will surpass the zettabyte threshold2015 The annual run rate of total IP traffic reaches the zettabyte 90threshold. Internet traffic from wireless devices exceeds internettraffic from wired devices. The number of network devices is doublethe size of the entire global population 802014 1/5 of consumer internet video 70now originates from non-PC devices 60 502012 Internet video reaches 50% consumer internet Exabytes per monthtraffic. The number of households generating >1 TBper month hits the million mark 402011 The screen surface area of all consumer devicesreaches 1 sq. foot per capita. The number of networked 30devices equals the size of the entire global population2010 Internet video surpasses P2P as the 20largest consumer internet video traffic category 102000 Consumer internetsurpasses business internet 0 2000 2005 2010 2015Figure 1: Based on data from Cisco, 2011.www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/VNI_Hyperconnectivity_WP.html128
  • services and networks built from the ground in how they communicate and with whom.up to make this experience easy and enjoy- These Islands have been created by aable. The result is a wave of excitement variety of companies that include Over-the-around video that could overwhelm service Top (OTT) video networks (example: Skype,providers gearing up to deliver video com- Apple’s Facetime); Social Networksmunications right now. In my view, these (example: Google+, Facebook) and networkservice providers are headed right into a operators (example: Verizon Wireless andmonster of a storm. Japan’s DoCoMo). In practice, Skype users can video call theirPrepare for impact Skype friends; Facebook users can conduct video calls with their Facebook friends onTo complicate matters video communication Facebook; and Google+ users can employis not the same as voice communication. ‘Hangout’ on a video chat with friends inMake a voice call and you can expect to their Google+ circles. As a result, users exist“connect” with anyone you wish because the in Islands, and they cannot reach out andoperators themselves are also connected. connect with their wider communities.The glue that holds it together, and makes itpossible to contact people we want, is the The different services don’t talk togetherhumble telephone number. These digits, — full stop. This is because each video com-coupled with all the dialing codes that we munications service uses different address-(mostly) love and cherish, provide the basis ing capabilities, different client softwarefor a unique and universal address system and makes use of different video formatsthat allows us to ring anyone. that exist in the industry.IPX networks connect data networks in thesame way, but there is a catch. Video com- Mind the gapmunications (carried over IP) is predomi-nantly peer-to-peer, which means users are Clearly, the emergence of these videoonly able to reach people on the same video service Islands effectively limits users,service using the same calling software. barring them from connecting with all their contacts regardless of the video call serviceThe upshot: Users sit on different video they choose to use. However, this issue hasservice “Islands” where they are limited neither hampered the growth in OTT videoMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 129
  • Average mobile user, traffic per monthFigure 2: Based on data from Cisco.www.slideshare.net/CiscoSP360/cisco-visual-networking-index-vni-global-mobile-data-traffic-forecast-20112016communications, nor has it harmed the the OTT model has serious shortcomings.brand appeal of the players that offer them. For one, there is a huge question mark over the scalability and sustainability ofTo the contrary, Google, Apple, Facebook a model that effectively isolates usersand Skype all now manage powerful brands, on service Islands.offering a free service model largely atthe expense of the operators who have Indeed, a video calling service that onlyinvested in the networks to make video per mits users to communicate with theircommunications possible. friends who use the same service may be deemed acceptable among the DigeratiFor the moment, the storm rages on. How and the Facebook masses, but it is anlong will it last, and what will be the impact? alien concept to everyone else out in theTough questions, but one thing is for sure: wider ocean.130
  • In the last few years we have seen a seismic shiftin consumer acceptance and use of mobile video.Smartphones and tablets — popular devicesequipped with video cameras — have reachedthe mass-market tipping point.Accustomed to the simplicity and Come togetherseamlessness of voice communicationsusers expect — and demand — universal Service providers are presented with bothconnectivity that allows them to connect a problem and a golden opportunity.with anyone they please. The problem is how to wring more value outNaturally, users will require the same free- of today’s IPX networks. The solution can bedom and flexibility when they make a video found in an approach where these networkscall. However, for this to happen, there will are used as smart inter-operator video hubs.need to be companies that have the capabil- In this scenario the hubs connect incompat-ities to bridge the service Islands. Put ible video services and apply transcodinganother way, the door is wide open for and transrating policies to ensure videoservice providers to step up to the helm and call service quality and consistency.use their networks to connect the Islands,even better if they can address all the The opportunity lies in the ways providersincompatibilities that currently exist can make money by charging for inter-between different video call services. operator video connectivity on their IPX networks. And no worry that the space willProviding universal connectivity is crowd too quickly when word of this massivenecessary if video is to reach its full market opportunity spreads. Video is inherentlypotential. This capability comes at a cost more complex than voice, a factor that— but there is also a significant benefit creates a significant barrier to entry for anyto the providers equipped for the job. service providers who simply want to jump on the bandwagon.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 131
  • Properly implemented, universal video con- Will users pay for the interexchange thatnectivity should ‘just work.’ And, because bridges the service Islands, allowing themthey combine universal addressing with to make video calls to anyone they choose?smart video hubs, they should operate in the The evidence that consumers will buy in tobackground making sure users don’t experi- this proposition is overwhelmingly positive.ence or realise the incompatibilities betweenservices and devices. What’s more, video Today users already accept the conceptshould also be a simple upgrade option to an of a call plan bundle that permits them toexisting voice call. Finally, this connectivity call family and friends at a reduced rate andand convenience should come at a price. charges separately for calls they make toIn fact, there is no reason why it shouldn’t numbers that are not part of their call plan.command premium interconnection fees. This suggests users will see the value of being able to connect with their friendsConnectivity is baked into IPX networks. and family, and thus agree to pay forTherefore, connecting video service Islands interexchange video traffic.should be seen as a logical and natural nextstep and an extension of the IPX network Clearly, video calling is a service that will paycore business model. its way. But developing the pricing and pack- ages will hardly be this simple. Driven by theThe remaining question, therefore, centers widespread adoption of LTE, 2-way videoon the economics. calling is just one of a whole spectrum of video communications services that willVideo calling occupies a significant amount soon reach the mainstream. Already valueof bandwidth, which is quite costly. For long- -added video services such as video voice-term viability, video calling must generate mail, multi-way video calling, 1-way live videoits own revenue. Only in this way will the sharing and HD video are gaining traction.broadest range of operators be able to part-icipate and provide a truly universal service. In time we can expect to see many moreThis is a challenge since video calling is bundles and offers hit the marketplace,already a free service within service Islands choice that we enjoy (or suffer!) today,such as Skype. It’s difficult to see how there with value-added premium servicescan be any going back on this one. charged separately.132
  • As the storm clouds gather we can ask whatlies beyond the horizon. Ramsey Masri has over 17 years experience in the mobile applications and infrastructureExpect operators to make significant invest- space. After starting his career at Oracle,ments to launch video communications that Ramsey went on to become what has beenprovide universal connectivity, with the defined as a turnaround specialist, helpingaim of charging for interconnect to other three companies transition to profitabilityservice providers. Equally, you can expect and success. In his role with Aylus Networks,interexchange operators to invest in video he created the go-to-market strategy thatinterconnect hubs to join up and monetise led to the successful partnership withthe video world. SAP/Sybase.It’s a huge task that lies ahead, and one theindustry must face. As Billy Tyne, captain ofthe Andrea Gail in The Perfect Storm, put it: “There is no rest for the weary.” But thedetermination of the industry is necessaryto embrace — and benefit from — thisopportunity. To borrow from the words ofcrewman Bobby Shatford: “I’m out herebecause I need the money.”Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 133
  • PART FOUR: LTE: UNLEASHING INNVOVATION TO DELIVER RESULTSEnabling Roaming AcrossLTE NetworksBy Matthew Tonkin, Global Head, IPX Business, SAP Mobile ServicesOnce again the mobile industry In view of this requirement mobile operatorsis entering a new phase of that deploy LTE networks in their domestic markets are starting to review options avail-technological change. With the able to ensure LTE services allow seamlessproliferation of data services and roaming overseas. The first users of LTE willsmartphones, the mobile operator typically be VIP customers or key corporatecommunity is working to address accounts, a segment made up of high-end users and frequent travelers. To serve thesethe increasing need for bandwidth premium customers operators will need towith the rollout of next generation address LTE Roaming requirements sooner,4G networks, known as LTE rather than later.networks. This developmentwill pave the way to full IP Prepare for roamingconvergence, enabling mobileoperators to accelerate the time- LTE will enable new services such as videoto-market for new services that streaming, HD voice and Voice over LTE app- lications. However, these services will alsodrive customer satisfaction and put high demands on the data roaminggenerate new revenues. backbone and require much more bandwidth and resilient network connectivity. As mobileAs operators launch LTE services in their operators review their LTE Roaming connec-home markets, consumers will naturally tivity options, they will need to consider theexpect the same quality experience every- following business and technical factors inwhere — especially when they are abroad. preparation to enable LTE Roaming:As operators launch LTE networks over thecoming years, new roaming connectivity willbe required with each new operator. Effectively,the work performed over the last 10 yearswill need to be repeated.134
  • 1 Diameter Signaling 4 An IPX Provider The build out of high-speed LTE networks It is widely accepted that LTE Roaming is different from the technologies that with Diameter signaling will be connected preceded it. LTE requires a completely across IPX networks. As LTE Roaming new signaling protocol. Put another way, proliferates, there will be a need for SS7 MAP— which has been the rule for IPX providers to enable peering both at 2G / 3G mobile networks — is no longer the data level and at the signaling level. needed. A new signaling protocol has Consideration will also be needed to been introduced, called Diameter. ensure Quality of Service (QoS) SLAs re implemented.2 New Roaming Connectivity In a roaming environment, the existence of this new protocol will require mobile Important choices operators to establish new roaming con- nections. As operators launch LTE net- In the new LTE world, mobile operators works over the coming years, new will have a choice: they can work with LTE roaming connectivity will be required with Roaming hubs, or they can directly connect each new operator. Effectively, the work with mobile operators. performed over the last 10 years will need to be repeated. The hubbing concept is not new to the industry. There is a wide variety of these —3 Diameter Relay Agent including iSMS hubs, iMMS hubs, roaming To enable this connectivity, operators hubs and clearing hubs — and all fulfill a will require a Diameter Relay Agent (DRA). similar role. Depending on the operator In the initial build out of LTE networks, the requirements, hubbing allows them to reach majority of mobile operators have not operators with one-to-many connectivity, deployed a DRA into their networks. Oper- reduce efforts and testing time, accelerate ators are facing challenges of the immedi- time-to-market for services and facilitate ate business requirements to enable LTE transaction settlements between operators. Roaming versus the need to obtain CAPEX budget approvals to acquire the In the LTE Roaming environment, mobile required DRA equipment. operators can connect to an LTE RoamingMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 135
  • hub, a hub that will also facilitate connectiv- 5 Immediate time-to-market.ity to the wider operator community made This equips operators to deliver an imme-up of operators that also connected to diate service to their high-value customers.the same hub. 6 Cost effectiveness.To facilitate active deployment for mobile Whilst LTE roaming capability will be key,operators, the LTE Roaming hub will also network rollouts will take time and theneed to provide an outsourced DRA capabil- number of roaming users to start will beity running on the hub itself. Operators have low. Mobile operators can monetise theirthe option to utilise this outsourced DRA initial rollouts through an LTE Roaming Hub.capability immediately to connect toroaming partners. 7 Technical readiness. Many operators are missing a key techno-This may sound easy, but, as the industry logical component, the Diameter Relayhas experienced through operator trials, Agent. An LTE Roaming hub — whichinterworking with suppliers’ DRA equipment offers an outsourced DRA capability —can be challenging. Whilst specifications are will enable operators to move forwarddefined for the Diameter protocol, unique with an LTE roaming solution.supplier variations are evident and requiremapping to enable seamless interworking. As the market matures, LTE revenues proliferate, and the necessary networkIn the initial stages of LTE Roaming equipment is deployed, mobile operatorsdeployments, it is likely operators will use will also have the option to connect directlytheir connection to an LTE Roaming hub with each other. As in today’s hub environ-to facilitate LTE Roaming. The business ments, it’s likely that mobile operators willbenefits delivered by this approach connect directly to key operator partnersare as follows: and roaming destinations. Other operators will pursue a dual strategy for LTE Roaming.Mobile operators can monetise their initialrollouts through an LTE Roaming Hub.136
  • Connecting directly to key roamingpartners, and also work with LTE Roaming Matthew Tonkin oversees SAP Mobilehubs to access the community. No doubt Services’s global GRX/IPX/LTE Roamingthere will also be some operator groups that business. In addition Tonkin is responsibleoperate their own hub, with a lead operator for managing and driving the company’ssponsoring the hubbing capability and growth and market leadership in both Enter-enabling connectivity across the group. prise Services and Mobile Operator Services businesses across the AsiaPac region,Incorporating the roaming hub principles, through a combination of direct sales andan LTE Roaming hub running over the IPX a partner & alliances sales network.network will enable and ensure the rapidrollout of LTE Roaming for the operatorcommunity. The IPX network will also deliverthe bandwidth and network resiliencydemanded by consumers.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 137
  • PART FOUR: LTE: UNLEASHING INNVOVATION TO DELIVER RESULTSLte Roaming In Latin America:Conditions For SuccessBy Alejandro Martinez, Chairman, Billing and Roaming Working Group(BARG), GSMA LADespite numerous announce- Clearly, LTE will equip mobile operatorsments by Latin American mobile to increase revenues by delivering new services and improving their currentoperators to deploy LTE as early offering. But it’s not only about providingas 2012, it’s clear the shift will not customers with high-speed and highhappen overnight. However, as quality data and voice services. LTE willwith 3G, the move to LTE will have also address the spectrum limitations facing many Latin American operators.a significant impact on each To this end it will allow greater spectralmarket in the region. efficiency, and thus boost the amount of spectrum available.In view of this development the GSMA LatinAmerica BARG Working Group has been In fact, this is one of the conclusions ofworking to encourage discussion of the mig- GSMA Latin America BARG Working Group.ration to LTE, as well as the opportunities Our discussions determined that LTE willand implications for operators. A chief focus have an immediate and significant impactof this exchange has been the technical and at the Access level, and not so much at thecommercial impact on international Core level. We expect this to be the case forroaming services. the next few years.Spectrum benefits Hurdles to overcomeThe deployment of LTE across Latin Predictably, the barriers to LTE deploymentAmerica brings with it a host of benefits. in Latin America will be similar to those thatThe advance of LTE will create the need for newbilling models that allow customers more controlof their services consumption.138
  • Although still embryonic, MBB is expected to become asignificant driver for the mobile industry in Latin America.Number of mobile broadband connections and expected usage Mobile Broadband Connections Mobile data traffic in LatAm and per capita, (millions)1 (petabytes per month) 22MB per 850MB per capita in 2010 capita in 2015 +566% +3,967% 344 488 257 127 72 52 60 12 26 2010 2011 2012F 2013F 2014F 2015F 2010 2011 2012F 2013F 2014F 2015F 2010 saw 35 LTE commitments, 7 trials and 4 commerical launches. The number of LTE connections is expected to reach 15 million by 2015Figure 1: Based on data from GSMA. The GSMA Latin American Mobile Observatory 2011.A.T. Kearney 12/13557www.gsma.com/publicpolicy/wp-content/uploads/2012/03/latam12presentationatkearneythestatusofthemobileindustryin-latammobileobservatory.pdfmarked the introduction of 3G and previous of frequencies and overall shortage oftechnological evolutions. spectrum. These factors will cause higher terminal and dongle prices. Since theThe difficulty to reach economies of scale current level of subsidies is already high, thisin the region is combined with problems development will mean higher CAPEX costsaround disparities in the current assignment for mobile operators across the region.Footnote1. Numbers have been updated after the publication of the Latin America Mobile Observatory.Q4 each year based on technology: # of subscribers to CDMA 2000 fxEV-DO (Rev. A and Rev. Balso), WCDMA HSPA and LTE. Source: The GSMA Latin American Mobile Observatory 2011.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 139
  • If no new spectrum is made available in suitablebands, then it will be difficult for operators to evolve —and migrate their customer base — from 3G to LTE.On the other hand, investment in the net- delays. A prime example is Argentina, therework elements will be significant given the the cap per operator is only 50MHz, andgeographical extension of the majority of even that frequency is not fully allocated.the territories in the region. What’s more, the auction for AWS spectrum has no certain schedule at this time.In view of these costs and obstacles, thereis a trend among Latin American operators To date the spectrum currently availableto share networks and the infrastructure is fully utilised by GSM/3G. If no newrequired for LTE. However, experience with spectrum is made available in suitablenetwork sharing in other regions shows bands, then it will be difficult for operatorsthis option is not free from major difficulties to evolve — and migrate their customerand limitations. base — from 3G to LTE. Put another way, the shift from 3G to LTE will be gradual, and there will need to be a coexistence of theseGradual shift technologies for a while to come.For operators to capitalise on the benefitsof LTE, a spectrum band of at least 20 MHz Roaming and rewardsmust be available. While it is possible todeliver services using a smaller allocation No doubt there will be some cases whereof spectrum, the experience delivered at operators will launch LTE networks focusedthis suboptimal speed will not be much entirely on offering high-speed datafaster than what we know from 3G. services. But it is likely that operators will eventually decide to extend their offer andIn Latin America spectrum caps are very provide voice services for two reasons.low in comparison to other regions. To First, voice is essential to complete a solidfurther complicate matters, several of the commercial offering. Second, the accessspectrum auctions that were announced resources that voice services require inhave not yet taken place due to repeated comparison to data are reduced.140
  • To date the provision of voice services under In recognition of this requirement the BARGLTE is held back by the lack of standards of GSMA Latin America has fostered debateand the strong convenience of fall back between operators and vendors to promotecapacity to legacy networks. progress toward these new billing models at a regional level. As a result, several opera-In terms of Roaming Service, LTE will inherit tors have launched commercial servicesthe difficulties of the disparity of frequen- that include billing caps for periods of time.cies. Terminals should be multiband, furtherincreasing its cost, in order to work in differ- Clearly, LTE will drive benefits for operatorsent countries. Fallback capacity to legacy and their customers. But the path to LTEnetworks will be necessary in order to will be gradual. Indeed, the pace of mass-provide a good footprint from the beginning. market deployment will be subject to a variety of factors, including the allocation ofAt wholesale billing level, it will be necessary additional spectrum and the availability ofto migrate to TAP 3.12 version and make handsets and dongles at a reasonable priceadjustments throughout the supply chain customers are willing to pay. LTE paves theand service assurance. The traffic gener- way for new and better value-addedated by roamers from LTE home networks services provided operators succeed inwill be a source of revenues for Latin finding business models and approachesAmerican operators. that allow reasonable profitability.In time an extra advantage of LTE — similarto 3G —will be the possibility of roaming Alejandro Martinez is the Corporate & B2Bbetween networks that were previously Marketing Manager at Telecom Personalnot interoperable. This benefit opens up Argentina. He has more than 12 yearsbusiness opportunities in both directions. experience in the retail, product, technical, and wholesale mobile business, and is theThe advance of LTE will create the need for current Chairman of the BARG Groupnew billing models that allow customers of GSM LA.more control of their services consumption.Operators will therefore need to adjust theiroffering to match customer needs for moretransparency. What’s more, operators willneed to be sure these models and offersalso support a sustainable business.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 141
  • PART FOUR: LTE: UNLEASHING INNVOVATION TO DELIVER RESULTSLTE: New TechnologyBoosts New BusinessBy Michel Van Veen, Group Manager, Product Management,SAP Mobile ServicesAbout 10 years ago, operators The cost of fixed bandwidth may haveoffering IP-based VPN services to declined in the last decade. But this is not the case for mobile networks. Radiocompanies introduced Classes of networks are generally costly to build outService (or CoS) to enable more and maintain. In view of this many Mobileefficient use of bandwidth. The Service Providers have become increasinglyprinciple is simple: assign a high creative in improving the return on their investment. One way they have achievedCoS to a quality-sensitive app- this is by pursuing strategies around sharinglication, like video calling, to make radio network infrastructure with Mobilesure IP packets associated with Virtual Network Operators.that application get a higher However, the advance of LTE puts the topicpriority on the backbone than of how to balance high costs associatedpackets associated with less with radio network capacity back on thecritical applications, such as agenda. In many countries LTE will useemail and web browsing. This higher frequencies than 3G, thus requiring the deployment of even more antennas inhelps guarantee the performance metropolitan areas, and further adding toof more demanding services in the cost and the challenge.situations where a connection toan IP-VPN has limited capacity, It therefore comes as no surprise that CoS has been built in to the 3GPP standards forand bandwidth upgrades are costly.The roll-out of LTE networks and the growingpenetration of smartphones and tablets are finallymaking the mobile Internet a reality. As a result,mobile video calling is getting a second chance.142
  • Huge increases in mobile data capacity demand threaten to outstrip mobilenetwork capacity supply Capacity demand Demand risks outstripping supply 4G Capacity supply 3G Demand Data becomes primary demand driver 2G Mass market adoption of mobile voice TimeFigure 1: Based on data from HSBC .www.hsbcnet.com/gbm/about-us/global-research.htmlLTE, thus providing operators a way to deal Premium quality forwith bandwidth limitations in a smart way. premium customersBut how smart is this really? CoS is normallyviewed as just a technical tool to guarantee One of the services sure to take off on LTEthe quality of a service, particularly in networks is mobile video calling. IP-basedsituations where bandwidth is limited. video calling has been available on theBut the creative Mobile Service Provider Internet for many years now, provided bywill see a revenue-generating opportunity Over-the-Top (OTT) providers like Skype andhere as well. Let’s look at some examples Google. Video conferencing on traditionalof how these companies can wring more telephone networks has been around forvalue out of CoS. even longer.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 143
  • HD Voice trials or network deployments (copyright GSA- May 21, 2012) TMN, Portugal Trialling HD Voice in 3G network Du, UAE Trialled HD Voice in 3G network AT7T, USA VoLTE planned in LTE network Sasktel, Canada VoLTE planned in LTE network Sprint, USA Deploying VoLTE in LTE network Verizon Wireless, USA Deploying VoLTE in LTE network LG U Plus, South Korea Deploying VoLTE in LTE network KT, South Korea Deploying VoLTE in LTE network StarHub, Singapore VoLTE trial planned by end of 2012Figure 2: Based on data from Gsacom. www.gsacom.com/gsm_3g/info_papers.php4Early attempts by Mobile Service Providers marginalised and relegated to the role ofto launch mobile video calling on 3G basic ISPs is obviously there. And this is allnetworks have failed. This was not just the more painful if we consider the costs ofbecause 3G handsets have the camera on licenses and the investments Mobile Servicethe opposite side of the display. The Providers have made to build their business.deciding factor was the call quality, which This is the risk, but the reality looks quitewas quite disappointing. To complicate different. Customers are accustomed tomatters video calling was often only the high bandwidth — and high quality ofpossible between compatible handsets. service — delivered via fixed-line InternetBut now all that has changed. The roll-out access. The limitations on radio bandwidth —of LTE networks and the growing penetra- even on LTE networks — means customerstion of smartphones and tablets are finally cannot always get the quality they expect.making the mobile Internet a reality. As a This is where Mobile Service Providers haveresult, mobile video calling is getting a a great opportunity. After all, they controlsecond chance. the LTE network.This development puts the OTT providers in By cleverly applying CoS, Mobile Servicean ideal position to strengthen their hold on Providers can control the quality of servicecustomers and to grow their business. The that is delivered to individual customers,risk that Mobile Service Providers might be even by application. What’s more, Mobile144
  • Collaboration with OTT providers makes sense. However,it should at least result in seamless interoperabilitybetween the services provided by both parties.Service Providers can now launch their own to get that content streamed flawlesslyOTT-like communication services with guar- to your brand new HD tablet ?anteed performance down to the mobiledevice. This is something OTT providers In other words, wouldn’t it be great if youcannot do. And it may be easier for Mobile could get access to premium bandwidthService Providers to offer these services at a one-off charge, and just when youthan one might expect, particularly now that need it? Absolutely.standards for the Rich CommunicationSuite (RCS) have matured and many This idea — sometimes referred to as thevendors are offering compliant solutions. slot machine model (“throw in a quarter and get 15 minutes worth of bandwidth”)This benefits customers, who now have a — can become a reality with LTE. In thischoice between the “best-effort” type OTT same scenario managing CoS is only oneservices and premium-charged quality part of the challenge. CRM systems andservices offered by their Mobile Service billing systems will also need to be fullyProvider. And, as the successful launch and integrated with the core network. So, eventake up of HD Voice on 3G networks in some though the slot machine proposition hasmarkets clearly shows, there is a significant as much potential as prepaid cards, thesegment of customers willing to pay for general expectation is that we will needpremium services. to be patient.Slot machine Collaborative modelsGranted, many consumers will not be pre- The more adventurous Mobile Servicepared to sign up for premium services. But Providers will not stop there. They willthere will also be moments when these con- certainly look for collaborative businesssumers will wish they had. models to drive even more revenue out of their costly LTE investments.A video call from your friends showing thelitter of newborn puppies is certainly no Collaboration with OTT providers makesfun when the image freezes all the time. sense. However, it should at least resultAnd what about that movie trailer you in seamless interoperability between thehave been waiting so impatiently to see? services provided by both parties –Wouldn’t it be a much better experience including a translation between mobileMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 145
  • phone numbers on one side, and user IDs,such as Skype handles, on the other. But Michel Van Veen is responsible for managingit is also conceivable that Mobile Service and driving the GPRS Roaming ExchangeProviders could offer access to their LTE (GRX)/ IP eXchange (IPX) product line fornetworks under some wholesale arrange- SAP Mobile Services. He began his careerment – either by choice or because they at KPN Telecom where he worked on majorare forced to do so by regulating bodies. projects including international standard-Collaboration with content providers, not isation of ISDN and Fiber-to-the-Homea new phenomenon in itself, could be taken systems, and establishment of an opera-to the next level once LTE technology makes tional management center for the first GSMit possible to tailor services down to the network in The Netherlands. Van Veen isindividual customer. also the current Deputy Chairman of the GRXIPX Working Group, which is a sub-Before Mobile Service Providers can tap into working group under GSMA’s IREGany of these new revenue streams, they will (Inter-Working Roaming, Expert Group).need to get very familiar with this new LTEtechnology. Controlling a high-performingradio network is key, but being able tomanage the core network and have it fullyintegrated with IMS platforms, as well asCRM and billing systems, is crucial.And let’s not forget the other challenge thatmakes the mobile Internet so different fromthe fixed Internet: roaming. The first quest-ion that immediately comes to mind is: howcan the operator guarantee — and deliver— a roaming customer the same quality ofservice they enjoy in the home network?Tough question, indeed! But I will leave thatdiscussion for some other time.146
  • PART FIVEOTT: OPEN THREAT ORHIDDEN OPPORTUNITY
  • PART FIVE: OTT: OPEN THREAT OR HIDDEN OPPORTUNITYOTT Threat: Top StrategiesTo Fight SmartBy Pamela Clark-Dickson, Senior Analyst, Mobile Content& Applications Intelligence Center, Informa Telecoms & MediaThe rise of Over-the-Top providers receive messages for “free” that are also(OTTs) of mobile VoIP (mVoIP) and posing a very real threat to mobile opera- tors’ voice and messaging revenues.IP-based messaging is significantlyaltering the dynamics of the mobileservices market. The “KPN effect”The growing penetration of smartphones In May 2011 KPN became the first mobileand mobile broadband, combined with the operator to report that subscriber use ofavailability of open application programming OTT voice and messaging applications – ininterfaces (APIs) for handsets, has created particular, WhatsApp – had caused a declinean environment where third-party applica- in voice and messaging traffic and revenues.tion and service providers can more easily Initially, what became known in the widerdevelop and distribute mobile applications, industry as “the KPN effect” was confinedincluding mobile voice-over-IP (mVoIP) and to KPN’s “Hi” brand. The operator found thatIP-based messaging applications. In this 85 percent of its Hi subscribers were usingenvironment, mobile operators risk being WhatsApp, usage that resulted in a year-onrelegated to becoming providers of network -year decline of 24 percent in outgoing SMSaccess only. traffic by 3Q 2011. The effect quickly spread to the operator’s mainstream brand, KPN,Significantly, it’s the third-party applications causing outgoing SMS per customer toand services from OTTs that enable sub- decline 5 percent year-on-year by 3Q 2011.scribers to make voice calls and send andSignificantly, it’s the third-party applications andservices from OTTs that enable subscribers to makevoice calls and send and receive messages for “free”that are also posing a very real threat to mobileoperators’ voice and messaging revenues.148
  • KPN Mobile, Netherlands, SMS per subscriber, 1Q2010-2Q2012 60 55 50SMS per subscriber 45 40 35 30 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12Figure. 1: Source: KPNDespite KPN’s attempts to stem its declin- OTT impact spreadsing SMS traffic and revenues through theintroduction of integrated tariffs — which Vodafone Group has also experienced aincluded a mixture of voice minutes, SMS decline in its SMS traffic and revenues,and mobile data — the year-on-year decline partly because its subscribers preferredin SMS traffic among KPN’s overall cons- to use OTT alternatives. The operator’s 1Qumer mobile customer base accelerated 2013 financial results paints a fairly grimfrom 19.6 percent in 3Q 2011 to 32.7 percent picture, showing a decline in messagingby 2Q 2012 (see figure. 1). revenues across most of its operating divisions (see figures. 2, 3).Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 149
  • Vodafone Group, messaging revenues by division, 1Q2012 and 1Q2013 7 6 Revenues (£ billions) Group 5 4 Europe 3 2 Africa, Middle East & Asia 1 0 1Q12 1Q13 Notes: £:1=US$1.62 *Ends June 30,2012Figure. 2: Source: Vodafone.The impact of OTT services was not limited As a result of this competition, Chinato Europe. China Mobile stated in its 1H Mobile’s SMS and MMS revenues declined2012 financial report that competition in the 2.6 percent year-on-year (see figure. 4).Chinese mobile services market was intensi- Despite this drop, China Mobile is still thefying. The operator stressed that revenues largest in the world in terms of SMS traffic.from traditional voice and messaging According to Informa Telecoms & Media’sservices were under pressure from mobile World Cellular Data Metrics, China Mobile’soperator rivals and “new technologies and 624 million subscribers sent a total of 736services that are replacing traditional com- billion text messages in 2011.munications services.”150
  • Vodafone Group, messaging revenues by country, 1Q2012 and 1Q2013 350 UK 300 Revenues (£ billions) 250 Germany 200 Italy 150 100 Vodafone (South Africa) 50 Spain India 0 1Q12 1Q13 Notes: £:1=US$1.62 *Ends June 30,2012Figure 3: Source: Vodafone.Formidable competition combination mobile instant messenger and social network. (see figure. 5).Key OTT providers range from nimble new-comers to established handset manufactur- In August 2012 WhatsApp announceders. Their ranks include: start-up companies that its daily traffic hit a record 10 billionsuch as WhatsApp, KakaoTalk, Viber Media messages. This represents a five-foldand Line; handset vendors such as RIM increase in the six months since March(BlackBerry Messenger) and Apple 2012, when WhatsApp’s average daily(iMessage); and South Africa’s MXit, a traffic was 2 billion messages.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 151
  • China Mobile, wireless data services revenues 1H2011 and 1H2012 30 Wireless data trafficRevenues (CNY trillions) Applications & 25 information services SMS & MMS 20 15 10 5 0 1H11 1H12 Notes: CNY1=US$0.15Figure. 4: Source: China MobileOther OTT providers gained similar traction. Five key strategiesApple announced in June 2012 that usersof iMessage had sent 150 billion messages How can mobile operators turn the tide andsince the service’s launch in October 2011. compete with OTT providers on their turf?Meanwhile, South Korea’s KakaoTalk Fortunately, mobile operators do have a num-managed to significantly reduce SK Tele- ber of competitive capabilities they can usecom’s SMS traffic. To avert a similar decline to provide subscribers an OTT-like service,in voice traffic from KakaoTalk’s recent one that could potentially be far richer thanlaunch of its mVoIP capability in South the services provided by the OTTs.Korea, the South Korean mobile operatorSK Telecom teamed up with rival operators It seems mobile operators need little conv-KTF and LGT to lobby the Korean Communi- incing of the merits of this approach. In fact,cations Commission for permission to block Informa has identified service emulation astheir subscribers’ use of KakaoTalk’s mVoIP one of the five key strategies mobile opera-capability on their networks. tors are pursuing in answer to the threat posed by OTTs.152
  • Key over the top mobile VoIP and IP-based messaging providers OTT Services No. users Messaging traffic Voice providers traffic Apple iMessage 140 million 150 billion messages n/a (June 2012) since launch in October 2011; 1 billion messages a day (June 2012) Kakao Talk Kakao Talk 45.2 million registered: 1.2 billion n/a 36 million local, messages a day 9.2 million international (February 2012) (June 2012) Line Line 40 million registered: Not disclosed Not disclosed 22 million local, 9.2 million international, 18 million local (June 2012) Mxit Mxit 12.5 million 750 million n/a (February 2012) messages a day (February 2012) RIM BlackBerry 55 million 100 million messages n/a (May 2012) a month(May 2011) Viber Viber 100 million 6 billion messages 2 billion Media registered users a month minutes a (September 2012) month WhatsApp WhatsApp Not disclosed 10 billion messages n/a a day (peak traffic, August 2012)Figure. 5: Source: Informa Telecoms & MediaMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 153
  • Mobile operators own and control the billingrelationship, assets that position it to chargesubscribers for the use of OTT-like services,either through a monthly subscription or ona per-event basis.Specifically, Informa regards service emula- Operators can also play a central role enablingtion and partnership with an OTT as the two new ecosystems and new innovation. Thisstrategies that are most sustainable for is possible because network infrastructuremobile operators. vendors are exposing application program- ming interfaces (APIs) associated with theirThe remaining three strategies operators equipment. The aim here is to open thesecan adopt include: 1) doing nothing, or platforms, thus enabling operators and thirdembracing OTTs as the driver of data traffic parties to quickly develop and launch serviceson operator networks, 2) blocking access on the mobile operator networks.to OTT services on their networks; and 3)trying to neutralise the impact of OTT The result is new and innovative servicesservices by restructuring of their price that could conceivably connect into multipleplans to be more competitive. network assets, including voice, voice-mail and messaging infrastructure. This would also position mobile operators to provide aOperator assets network- or application-based converged communications service, as well as a rangeOperators also have competitive capabil- of value-added services around communi-ities and assets that give them the edge over cations. These services may either beOTT players. Put simply, the operators alone proprietary to the operator that offers them,own and control their existing network or they may be based on Rich Communica-assets. Operators also own and control tions Suite (RCS) or RCS Enhancedtheir subscriber base because of the long- (RCSe) standards issued by the GSMA.standing billing relationship they have withtheir customers.154
  • Ownership matters could act as a catalyst for operators to compete by creating far richerBecause the mobile operator owns and OTT-like services that bind subscriberscontrols the network, it alone can ensure to their networks.service reliability and quality for subscrib-ers. OTTs, on the other hand, can exercise As always, execution will be key. Mobilerelatively little control over reliability and operators do have significant advantagesquality of service. Put another way, their over the OTTs, but it’s up to the operatorssphere of influence is limited to the infra- to ensure that they can transform thesestructure and apps they use to deliver and advantages into revenue-generating services.support their services.What’s more, mobile operators own and Pamela Clark-Dickson is a senior analystcontrol the billing relationship, assets that at Informa Telecoms & Media with over 16position it to charge subscribers for the years experience in the field. She focusesuse of OTT-like services, either through a on mobile messaging and producesmonthly subscription or on a per-event analysis of the global messaging marketbasis. Alternatively, the operator could for the Mobile Content and Applicationsalso include free access to these OTT-like Intelligence Centre. Her areas of expertiseservices as part of an existing, or new price cover all aspects of mobile messaging inplan, that may also include voice minutes, the consumer, enterprise and marketingSMS and/or data. Adopting the latter industry sectors globally, includingapproach may well help the mobile operator SMS, MMS, mobile e-mail, mobile instantto minimise the rate at which its subscribers messaging and rich communications. Shechurn to the networks of other operators, also co-edits Mobile Media and Messaging,or to OTT services. a continuous research service published by Informa.As the examples outlined here show, subs-cribers’ use of OTT services has provento have a negative impact the traffic andrevenues many mobile operators generatefrom their traditional communicationsservices. However, it is possible that OTTsMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 155
  • PART FIVE: OTT: OPEN THREAT OR HIDDEN OPPORTUNITYEvaluating Strategies To FaceOTT ProvidersBy Eusebio Felguera, Corporate Regulatory Manager, TelefónicaNo one doubts the Internet has In other words, it’s about focusing on whatbecome an integral part of our operators do best. Operators have always been successful in creating services to meetlives. Likewise, no one doubts the specific customer needs and they shouldInternet ecosystem will be continue to focus on this core capability. Adifferent in the next 3-7 years. customer-first focus has allowed operators to prosper, and this approach will also beThe evolution of the Internet is marked by a key to their future growth.series of developments that have decoupledthe networks from the services they offer. Operators are also innovative in offeringThis has opened the door to third parties services where vertical integration is a must,and over-the-top players (OTT), allowing a strategy that plays in their favour.them to provide services over the top of theoperator network. This, in turn, has led to a Significantly, OTT players cannot reach thisgreater level of service flexibility and innova- level of vertical integration by themselves.tion. Thus, a departure from the vertical They need operators — and these operatorsintegration of services that operators must offer much more than just connectiv-provide has paved the way for new services. ity by leveraging their network assets. Why? Because OTT players need much more. For operators this means offering services thatBut that isn’t the only outcome. demand expertise and experience in areas including Customer Relationship Manage-The advance of OTT players means it’s time ment (CRM), billing and customer servicefor operators to reinvent themselves. But and support.it’s not about pursuing strategies to becomethe new Google or Facebook. Any initiative Fortunately, these capabilities are built intoto copy these companies will simply fail. the competitive DNA of operators. AnotherThis is about developing new and different advantage operators have is a trustedservices that complement and compete relationship with their customers. Thiswith the services these OTT players offer to is a relationship that operators have builtusers, while building strength in the services up over years. These trust assets are keyoperators have traditionally offered. and operators can benefit from their unique position.156
  • A world of opportunity Another area of opportunity is banking. A huge number of people in developingWhat are the vertical services that markets worldwide — and particularly inshould be high on operators’ agendas? Latin America — do not have bankOpportunities will come from services accounts. But they do have a pre-paid(mobile, fixed and WiFi) and verticals mobile phone. This is a vertical whereincluding finance, government, health, operators clearly have a role to play insecurity, advertising, digital content the delivery of mobile banking anddistribution and M2M (machine-to- mobile money services. In developedmachine) communications. There are markets operators can also benefitalso opportunities for operators around from the advance of NFC, which lays thethe Cloud and the delivery of cloud-based groundwork for mobile payment services.services. And no doubt there are manymore services — and growth opportunities And let’s not forget the huge market— still to come. opportunity in providing M2M communication and services, enablingInterestingly, these services also build machines to talk to each other and theon the close relationship operators people managing them. The overall M2Malready enjoy with their customers. market encompasses an extraordinarily broad range of applications, includingMore importantly, these services are not automotive telematics, smart meteringjust plug ‘n play. This is key since it’s the and smart cities. In these smart citiesclose relationship the operator has with the sensors, networks and intelligent systemscustomer that also allows them access to help authorities manage water, gas,the customer’s home or business to install electricity, waste, transportation, fuel usethe equipment that makes these services and provide urban dwellers an improvedpossible in the first place. quality of life.A prime example is healthcare, which Finally, there is video. This is an area ofrequires the installation of expensive and opportunity many consider to be the nextcomplex monitoring tools, tools that also “killer app” and a space where operators areneed to be connected and maintained. well positioned to capture value. Since manyHealthcare is an increasingly important industry reports forecast rapid growth inservices offer in Western countries, mobile video content and communications,where there is an ageing population. there is no doubt the space will becomeMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 157
  • crowded and competition will be fierce. capabilities to offer value in key areas, such asBut operators should play in that space. billing, connectivity and services innovation. This is precisely our model at TelefónicaRethink and react Digital, where we have launched TUENTI — a social communications platform — toThe growth opportunities are there, but compete with other social networks. Weoperators must first change their mindset. achieve this by leveraging in our key asset:We cannot react as traditional telecom mobile network access. And we add valueoperators; we must evolve to be more by offering users confidentiality, somethingflexible and cut time-to-market. In other no other social network can provide.words, operators need to be more digital. We have also launched To Me, a free mobileThis is precisely our approach at Telefónica. application that combines free text chat,We started out in 2009 by creating a new voice calls and picture and location sharingstructure within Telefónica focused on between users. To Me is part of the largerthe development of new IP services. The Tu family of services, which will come tooutcome is Telefónica Digital, a specially include other services such as Tu Go. Duecreated unit established in 2011 to develop out later this year, Tu Go allows customersnew applications and business models for to use their voice minutes and SMS pack-IP technology. This new unit recently had its ages on any device or platform, notfirst ‘investors day’ in London, an event that just their phone.gave the new unit the opportunity to sharerecent developments in this field. TelefónicaDigital now has more than 2,500 employees Collaborating forworking on new and innovative ‘Over the competitive edgeTelco’ services, and is always thinking out-side of the box. I’ve outlined the B2C opportunities oper- ators can — and should — take advantageWhat have we learned? It’s important that of today. But we should also be aware of theoperators learn from OTT players. But this opportunities around B2B2C.isn’t about merely borrowing from theirapproaches. Operators must wield their158
  • Once again, delivering these new services Clearly, operators must work with OTTwill require more vertical integration than players to achieve mutual benefit andOTT players can provide. Indeed, we can market advantage. But it’s not just aboutconclude that there is an enormous opport- partnerships that pair one operator withunity for operators that have expertise and one OTT player. Telefónica believes that —trust assets to provide new services to this in order to be attractive for an OTT player—customer segment — one that OTT players an operator must have extensive coverage.cannot serve on their own. This is also wherecollaboration between operators and OTT Since no single operator can provide thisplayers is essential and will open the door to connectivity alone, it makes sense for thea wide range of opportunities and innovation. operator to work with other operators. Through agreements and partnershipsOperators should offer OTT players attrac- operators can provide a full footprint totive ways to leverage all their assets — not deliver services on a global scale. Partner-just network connectivity. This approach will ship also makes it possible for operatorslay the groundwork for win-win relationships to fill the gaps in local services, wherethat will drive a new stage of growth and access is mainly via fixed networks andinnovation in Internet services. mobile connectivity is a must.To this end operators have to create a new To offer all these services operators mustfamily of horizontal services that will exist have a reliable platform that allows them toright below the OTT layer of services. These provide these capabilities to OTT players inservices include: Managed Connectivity, a seamless way. Fortunately, that platformData Collection & Analysis, Operator Billing exists today: it is IPX.and Device Installation & Management. Telefónica is leading this (r)evolution by har-Cooperation between OTT players and nessing this platform and by creating strongoperators will allow both providers to create partnerships with OTT players. This providesservices customers will be willing to pay for. OTT players a single point of entry, allowingThis collaboration will also pave the way for them to benefit from vast coverage on amobile commerce, mobile advertising and reliable network. This also deliversenormousother services that provide sustainability opportunity and benefits to both parties.for all the players in the value chain.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 159
  • In summary, should operators compete withOTT players? Yes, they should — by doing it Eusebio Felguera manages the regulatorybetter. Should they collaborate? Yes. I have and public policy strategy of Telefónica. Heshown how OTT players and operators can has over 23 years experience in the mobilework together to win big. Should operators industry, where he is an expert in the areastry to be like OTT players? Again, the answer of Interconnect and Roaming. Felguera alsois a resounding “yes, they should.” represents Telefónica in the GSMA with regard to interconnection issues and servesDespite the advances of OTT players, opera- as the IMQ subgroup chair.tors can do and achieve a lot to maintaintheir competitive advantage. In all cases, thekey to success is to take action, rather thannot doing anything.160
  • PART FIVE: OTT: OPEN THREAT OR HIDDEN OPPORTUNITYNuvos: An AlternativeTo Disruptive OTTBy Austin Murray, Founder and President, textPlus Inc.The iPhone launched a revolution numbers. The result is a win-win forthat is changing the face of mobile NUVOs and MNOs that both satisfies consumer demand and drives innovation.telecommunications. As a result,millions of applications are nowdelivered “over the top” of mobile IM: Closed and fragmentednetwork operators (MNOs) to app- Before we discuss how NUVOs benefithappy consumers. Some MNOs, MNOs, it is important to understand thehowever, are not quite so pleased. current landscape and the challengesThis is because most over-the- posed by OTT apps such as Facebooktop (OTT) communications Messenger, WhatsApp, Viber, and TuMe. These OTT apps operate like desktopapplications use IP to reach their Instant Messaging (IM) clients, requiringcustomers, effectively bypassing both senders and recipients of messagesthe networks owned and managed or voice calls to use the app. As a result,by MNOs., and disrupting MNO these OTT apps bypass other networks, like the Public Switched Telephone Networkbusiness models. (PSTN), and do not require users to useBut there is one kind of OTT app that supp- existing address mechanisms like telephoneorts MNO business models. This particular numbers. Put another way, these OTTkind of app — often called a Network Unaffil- apps use the Internet to route around theiated Virtual Operator (NUVO) – benefits traditional mobile telecom networks toMNOs by interconnecting with them and the service their customers.broader telecom ecosystem via telephoneThe result is a win-win for NUVOs and MNOsthat both satisfies consumer demand anddrives innovation.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 161
  • Industry research shows the rise of OTT NUVOs increase reach, revenuesmessaging and calling apps is already hav-ing a tremendous effect on MNOs. Industry NUVOs like textPlus and Google Voice allowAnalysts estimate that MNO messaging users to communicate with anyone — notrevenue declined by $13.9 billion in 2011. just other people who use the app — byWhat’s more, consumers are increasingly interconnecting with the PSTN and its 8choosing OTT messaging apps over SMS billion telephone numbers.because they provide enhanced features atan improved price point. But the advance By assigning telephone numbers to users,of OTT apps is not just displacing MNO text NUVOs may transmit messages (via SMS)messaging revenues. The rise of alternative and voice calls (via SIP/RTP) to anyone withOTT voice solutions such as Skype and a telephone number. This is importantViber is also negatively impacting core MNO because it allows an app user to communi-voice usage and revenues. cate with anyone simply by dialing a phone number – just as they normally do with anyClearly, these increasingly popular applica- garden-variety telephone – rather thantions are poised to threaten the long-term limiting their communications to otherviability of current MNO business models. app users, as most OTT apps do.How can MNOs compete? This convenience benefits customers andFortunately, there is a solution that provides MNOs alike. It is estimated that five billionusers a better alternative to the disruptive SMS messages a month in the U.S. aloneOTT apps, while at the same time driving are sent by people using textPlus and otherMNO voice, messaging and data traffic NUVOs. In addition to providing services onand revenues. Moreover, this solution MNO handsets, NUVOs also turn connected,enables connected, non-telephonic devices non-telephonic devices – including iPodto be addressable by MNO services via touch, iPad and tablets – into functionaltelephone numbers. NUVOs bring these mobile phones that can send real SMS andMNO benefits and more to the smartphone make phone calls. Connect the dots, andapp ecosystem. this means a significant increase in the market of devices addressable to core MNO services.162
  • Like other OTT services, Unlike most OTT, NUVOs NUVOs connect app users also reach phone numbers text+ text+Figure 1: Based on data from textPlus.Lessons learned WhatsApp, Viber, Facebook Messenger — each requires users to be on the same appThe 1990s saw the rapid consumer uptake in order to communicate. It’s up to usersof PC-based Instant Messaging services. to make sure all their friends and familyICQ was the first to gain traction, but AOL’s members have also downloaded the appAIM, Microsoft’s Windows Messenger, — and understand how to use it — beforeYahoo’s Y! Messenger, and Google’s Gchat they can send a message or make a call,closed the gap quickly, becoming the lead- not exactly the best user experience.ing players in the fast-moving IM space. Despite their shortcomings, these OTT appsUnfortunately, there was no underlying — and the closed networks they support —standard at the time — like SMTP (email) count a significant number of users. Thereor E.164 (telephone numbers) — to unite are two market conditions that have allowedthese closed networks. For a long time they these apps to grow their reach.were islands unto themselves, unable tocommunicate with each other directly. First, the app distribution model is friction- less and efficient, allowing users to down-This fragmented and closed approach did load these apps quickly and easily to theirnot help when the world made the leap to smartphones. Second, consumers havesmartphones. Instead, desktop IM quickly come to demand more choice than MNOslost mobile market share to new, native and their OEM partners currently provide.mobile OTT apps like WhatsApp and Viber, Users want it all: group messaging, walkie-apps that are likewise closed networks. talkie, rich picture messaging and sharing,Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 163
  • video calling, social networking, and more, maintaining MNOs’ traditional central roleall in one convenient place. And they want in the communications ecosystem.these features at a lower price point thantheir MNOs provide. One of the immutable laws of telecommuni- cations is “just interconnect.” This is whereThe good news: Consumers have a healthy the PSTN with its 8 billion E.164-standardappetite for OTT apps. The better news: not telephone numbers enables everyone toall OTT apps bypass MNOs and disrupt their connect with everyone else. It’s ubiquitousbusiness models. NUVOs like textPlus cover — and it’s easy. Everyone knows how to usethe bases to meet consumer demand for a telephone number, and no one needs to bebetter features, thus pushing the boundaries invited or read the FAQs to use it. It just works.of what is possible in communications, while Granted, these new, closed IM/OTT • Turning connected, non-telephonic networks may continue to gain traction, devices – like iPod touch, iPad and but their reach and communities will likely tablets – into functional phones by remain significantly smaller than the giving them a real telephone number PSTN. This difference translates into less utility for IM/OTT users and more opport- • Driving traditional SMS and voice unity for NUVOs and the ecosystem they traffic volumes, as well as data enable together with MNOs. • Leveraging the common, well- NUVOs like textPlus enable all the fantastic understood user behavior of dialing features one expects from a smartphone telephone numbers to make ubiquitous app — and more. In addition to connecting communications possible via its users to MNOs and the broader telecom smartphone applications ecosystem via real telephone numbers, NUVOs provide the following benefits: • Providing a better alternative to all-IP • Enabling communication with the PSTN OTT apps, thus keeping and its 8 billion telephone numbers - the MNO voice/SMS/data largest social network in the world services central to the mobile Internet164
  • The good news: Consumers have a healthyappetite for OTT apps. The better news: notall OTT apps bypass MNOs and disrupt theirbusiness models.Austin Murray is Founder and Presidentof textPlus, Inc., a leading mobile communi-cation destination. Prior to textPlus, Murrayco-founded wireless entertainment pub-lisher JAMDAT Mobile, and held positions ata variety of digital content companies.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 165
  • PART FIVE: OTT: OPEN THREAT OR HIDDEN OPPORTUNITYOTT Ecosystem: Paving TheWay For OpportunityBy Gene Lew, CTO, MediaFriends, Inc.The mobile app market is more is similar to the one that defined thethan a new distribution channel ‘dotcom’ era. But there is a difference because investors have learned from thefor applications and software. dotcom bust that a business built onIt ushers in a new business para- ‘eyeballs’ alone — without a path toward adigm. As a result, companies and sound business model — is fatally flawed.individual developers can market Freemium models also centre on chargingand monetise their mobile apps one-time fees for downloading the app,supported by an ecosystem where or collecting ongoing monthly/annual fees.mobile operators no longer have Finally, freemium models also support acomplete control. pay-as-you-go approach.As of June 2012 the app stores combined Are these the only monetisation models?offered 500,000+ mobile applications. It’s hard to say. The avalanche of appsMany of these apps rely on a freemium — from games and entertainment, to socialbusiness model to generate revenues and networking and business productivity —reach customers. In practice this model would indicate that the app market is justallows various monetisation approaches. beginning. There is much to come and there is no telling what monetisation models willFor example, advertisers or other third emerge to enable this new economy.parties can sponsor the app, thus subsidis-ing the cost of providing the services andfunctions delivered by the app. This modelAfter all, billing is not the business of OTT players.They are focused on innovation and deliveringapps their users will appreciate.166
  • Figure1: Based on data from MediaFriends.The rise of the OTT These are the same services — voice, SMS/ MMS and data — supported by featureA popular app category is communications. phones and delivered by mobile operators.These apps provide services — such asvoice, SMS, MMS and video, but they do Another example is Apple’s iMessage.this without using the mobile networks This OTT app provides the native SMS/MMSowned and managed by mobile operators. functionality as well as other capabilitiesInstead, they perform all the functions and services (only available via IP). Butwithin an all-IP realm, and only ‘gateway’ there’s a catch, Apple’s iMessage onlyinto the SS7 world when necessary. These works with other Apple devices. If the userapps allow communications over the top is sending a message to a non-Apple device,of operator networks — which why they or an Apple device that does not have IPare known as OTT. connectivity, the app falls back on SS7, the default transport of the operator’s SMS.A prime example of an early OTT app isSkype. It started on the PC and migrated to Because Apple’s iMessage is IP-based, itsmartphone platforms. Based entirely on IP, also allows additional functionality, such asthis app offers voice, video and data services. SMS, that is not supported by SS7 services.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 167
  • Mobile Device Mobile Device Applications IP IP Applications IP IP Apple iOS Apple iOS Apple iMessage Carrier SS7 SS7 CarrierFigure 2: Based on data from MediaFriends.Apple’s iMessage also provides presence agnostic and uses IP — a default for everyand real-time notifications, features that network and one that works anywhere in theSMS doesn’t support. world and is not limited or constrained by geography, operator or technology.More functionality The MediaFriends, product BNDWGN™ is a prime example an OTT service that is not aOTT apps are IP-based, which means they replication of a legacy operator or SS7are not limited by SS7. In fact, just the based function (voice, SMS, etc.). Instead,opposite is true. This opens the door to a BNDWGN™ is a completely “new” app thatvariety of ways to enhance communications is specifically designed for mobile use.and deliver a good user experience. The OTT app BNDWGN™ enables users toThe OTT app HeyWire, offered by combine and share social media in privateMediaFriends, — is a good example. It groups, and message one another aboutprovides real SMS text messaging. But it common social media interests. This isalso allows Twitter and Facebook messag- done using graphics, video, text (not SMS),ing, as well as a plethora of other services Twitter, Facebook, Pinterest, and many otherthat only an IP-based platform can deliver popular social media content sources.such as cloud-based storage and multi-device honing. Finally, the app is network168
  • Figure 3: Based on data from MediaFriends.Cooperation breeds success players have been banned by government regulators, or blocked by operators.The rise of OTT players and apps hascreated conflict between multiple players But there’s no reason to generalise andin the ecosystem. Some operators believe, declare that OTT apps, as a category, poserightly or wrongly, that OTT players are a threat to operators. In many ways thesegetting a free ride over their infrastructure. players — the operator and the OTT providerAt the other end of the spectrum, some — need one another.OTT players feel they are unjustly restrictedby rules and models dating back to an era Cooperation between operators and OTTwhen operators were in control. players can yield a richer, more diverse and robust ecosystem. This positive outcomeThe conflict isn’t new. Operators and is similar to the Internet, which has evolvedOTT players have competed head-on since by meshing proprietary, isolated environ-Skype launched in the 1990s. As more OTT ments into an open and collaborativeplayers entered the market, the conflict market. The outcome is an open Internetgrew. Today WhatsApp, a private messaging and one that has indisputably generatedproduct, dominates in several markets more benefits and opportunity than all of itsaround the world. Other ‘not so good’ OTT proprietary predecessors.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 169
  • Figure 4: Based on data from MediaFriends.More is better Cooperation and partnerships between operators and OTT players is essential andOn one hand, the operators provide the mutually beneficial. In the past, operators’underlying infrastructure of mobile technol- reach was often limited by geography. Todayogy, facilitating the complex management of operators can forge partnerships to givethe network and the services it delivers. In them international customer reach instantly,other words, it is the operator that ensures and without huge investments of capitalthe core foundation of the OTT app. This is and resources.significant since operators ensure that theIP transport and the associated technology Taking billing, for example. A partnershipsurrounding it are robust, reliable and fast. with operators would allow OTT players access to operator billing capabilities. AndOn the other hand, the OTT players have it doesn’t stop there. Operators can alsothe flexibility and innovation to deliver build a business offering OTT players accessthe functions and apps that address the to technology unique to mobile operators,ever-evolving needs of customers on an such as geo-location, as well as the data-international scale. bases operators manage to resolve payments and allow financial reconciliation.170
  • But there’s no reason to generalise and declare thatOTT apps, as a category, pose a threat to operators.In many ways these players — the operator and theOTT provider — need one another.This is critical since the monetisation demand for services that require an all-IPmodels for apps are still evolving. Clearly, ecosystem. It is therefore critical thatfreemium and paid models dictate how operators and OTT players work togethercompanies currently monetise their apps, to determine what an all-IP ecosystembut this could change. will look like and deliver. In this new environ- ment the winners will be the players thatFor this reason, it would be mutually work together to innovate and adapt to thebeneficial for both parties if OTT players lesson of the Internet: open is better.had the billing capabilities —provided bythe operator — to invoice users on arecurring basis. After all, billing is not the Gene Lew has more than 25 years ofbusiness of OTT players. They are focused technology management and engineeringon innovation and deliv ering apps their experience in the Internet, mobile, telecom,users will appreciate. Even the app stores cable, and multimedia industries. He hasoffered by Apple, Google and Microsoft are worked with some of the world’s largestlimited in their ability to do recurring billing operators and involved in the developmenton regular cycles. Moreover, custom service of key IP communications technologies,billing is a difficult, if not impossible, task. including broadband, FTTH and messaging services. Before joining MediaFriends, LewIt’s a given that the ecosystem will eventu- served as VP of IP Advanced Technologyally become an all IP-based environment. for NeuStar; CTO for PAIX/Switch and Data;It’s just a matter of time. VP Advanced Technology for RoadRunner of TimeWarnerCable; VP Advanced Technol-The inevitable arrival of an all-IP world ogy for Verizon and began his career withalso reinforces the needs for deeper part- MCI focusing on IP technology before “IPnerships between operators and OTT was cool”.players. After all, OTT apps play an import-ant role in helping to shape and drive theMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 171
  • PART SIX UNLEASHING THE POWER OF MOBILE COMMERCE172
  • PART SIX: UNLEASHING THE POWER OF MOBILE COMMERCEMobile Money For The MassesBy Richard Morecroft, Assistant Director Mobile Money, QtelQatar Telecom (Qtel) has built its including Nepal, India, Bangladesh, andMobile Money service from the Sri Lanka. These workers generally earn between $150 and $500 a month, and theyground up to satisfy the needs of demand a service that allows them to remittwo different customer segments. most of their monthly salary to their familiesOn one level, average Qatari in their home countries.residents rely on the Mobile Money Of course, the Qtel Mobile Money serviceservice to pay their monthly mobile caters to this demographic, making surephone bills — and will soon be able that the service works on all mobile phoneto make merchant payments and makes and models, including low-endpurchases using their Qtel mWallet. feature phones. But we have also taken this approach one giant step further, making itAt the other end of the spectrum, possible for the Mobile Money customersmigrant workers without bank to use Qtel’s own network of Self-Serviceaccounts use the Qtel Mobile Machines, or SSMs.Money service to send money Like ATMs, the SSMs allow customers 24/7back home, add airtime to their access to deposit their money (in cash) andpre-paid account and send airtime conduct transactions. Customer can alsoas a gift to family and friends. use these machines to top up their pre-paid cards and pay their phone bill. We haveTo date Qtel counts around 2.38 million deployed more than 200 of these SSMscustomers, a significant proportion of whom across the country.are migrant workers who traditionally workin the construction sector. They come from These locations — together with a networkcountries across the South Asian continent, of more than 20 retail shops — strengthenMoving forward, we are considering plans to expandthe service to offer additional financial services suchas insurance and micro-loans.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 173
  • Qtel’s market presence. They also lay the network of SSMs and ATMs when theygroundwork for an innovative strategy that want to make a cash withdrawal. It’s simplewill extend Qtel’s influence and offer far and it’s secure.beyond what mobile money and bankingservices deliver today. Mutual benefitEasy does it The Mobile Money service is also frictionless because we have a forged a solid partner-Take remittance for example. We know it ship with a leading bank, thus overcomingis possible to transfer money using mobile the tensions that traditionally existsphones and text message services that between banks and mobile operators toautomatically updates the mobile wallet, focus the efforts on achieving a commonbut is it really convenient for customers? objective. It’s all about serving the customerAt Qtel we think there must be an easier and building the customer base.way. Specifically, we envision that this canbe done as a wallet-to-wallet transaction. Why does the relationship work? You need to look at the region, Qatar is a developingMoreover, we believe the service must be market, which means that a significant per-extended into ATMs. This is why we have centage of the population is under-banked.released cardless cash in and out, a service In Qatar arguably up to 75 percent of thethat harnesses the network of ATM’s by country does not have access to financialenabling customers to deposit and withdraw services, but they do have mobile phones.money by entering a secure code receivedby SMS without the need for an ATM card. In Put another way, the under-banked are morepractice, this new service allows customers likely to have established relationships withthe flexibility to put their money into their mobile operators. What’s more, operatorsmobile wallet through Qtel’s self-service are in a prime position to encourage theirmachines. Likewise, they can also withdraw customers to use mobile banking services.their money in cash by using the ATMsmanaged by Qtel’s partner bank Qatar Not so for the banks. They don’t have thisNational Bank (QNB). In other words, long-standing relationship with the lower-customers can use their mobile for mobile income customer because these customersbanking, and they can access the vast don’t have bank accounts. To complicate174
  • Total mobile payment market ($ millions) split by eight key regions, 2012-2017 Africa & Middle East$1,400,000 Rest of Asia Pacific Indian Subcontinent Far East & China Central & Eastern Europe Western Europe Latin America North America $0 2012 2017FFigure 1. Source: Juniper Research. (1)matters, the effort to reach out to this It’s a completely different picture in devel-customer segment would require banks to oped markets such as Europe and Northinvest in a complex and expensive network America. In these countries customers areof bank offices. It’s what they want to avoid, not under-banked, nor are they underservedso they partner with mobile operators to by the banks operating in these countries.reach these customers. This has a huge impact of how banks and mobile operators can work together.Footnote1. www.juniperresearch.com/reports.php?id=446Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 175
  • Instead of cooperating and collaborating But it’s not limited to making bankingto increase reach and grow their customer simple and convenient for the under-base, banks and mobile operators in devel- banked. Our Mobile Money service alsooped markets are competing head-on for benefits the country’s wealthy, providingthe same customers. Little wonder industry them a secure and simple way to do theirobservers warn mobile operators and all the banking. In many cases, this affluentother companies in the emerging mobile customer segment employs staff — maids,money ecosystem — banks, credit card gardeners, cooks — who don’t have bankcompanies and payments providers — accounts. With our Mobile Money serviceare heading for a showdown. it is possible to pay staff directly and electronically, rather than cash.Another point in our favor is regulation. Theregulatory environment in Qatar is different There are also plans to enable merchantsfrom other regions, allowing us to partner to accept electronic payments fromwith the QNB. The agreement, under the customers. They can then either withdrawguidance of the Central Bank, allows us to the money from their mWallet, or movetake deposits and deposit these into a bank the money to a bank account at theiraccount. Of course, financial regulation does convenience. In this sense, we’re actuallylimit the amount of money that can be trans- replacing the electronic point-of-sale.ferred and these limits need to be clearlyexplained and indicated to customers. We’re also looking at delivering services aimed at allowing customers to pay their monthly utility and water bills. Beyond theGaining serious traction obvious benefits around security and convenience, enabling these paymentsThe Qtel Mobile Money service targets the would also provide customers anotherunder-banked, providing them a service that reason to have an mWallet.allows money to be paid into their mWallet.Moving forward, we are considering plansto expand the service to offer additional Powerful assetsfinancial services such as insurance andmicro-loans. Mobile Money services have gained traction since we took the wraps off the first offer in November 2011. The next phase of growth176
  • Instead of cooperating and collaborating toincrease reach and grow their customerbase, banks and mobile operators indeveloped markets are competing head-onfor the same customers.and opportunity is on the horizon, and it would receive a text message on mywill be about convenience and enabling phone confirming my purchase.everyone to pay for goods and productselectronically at retail. All that is possible right now.How do we get there from here? The goodnews: mobile operators already have a deep But it becomes tricky in a scenario where werelationship with their customers based on want to enable this seamlessly on a largertrust. Our own research shows that our scale. For example, what happens if I want tocustomers are very comfortable with Qtel, a shop at a supermarket where the partnera mobile operator, handling their money. bank for the Mobile Money service — in this case, QNB — isn’t the acquirer bank for theThe even better news: technology is not an supermarket? It’s a tough question.issue. In fact, it’s easy to imagine a scenariowhere I buy goods in a supermarket usingmy Mobile Money service. NFC challengeIn practice, this is how it would work. I would Interestingly, this is where NFC may providemake my decision to pay for my groceries an answer. NFC provides the second level ofusing Mobile Money, then I would be direct- authentication that banks require because ited to the terminal. There I would pay by enables secure communication between thesimply inputting my number and the four- phone and the terminal.digit PIN that I was provided for authentica-tion when I signed up for the Mobile Money The big question is: is NFC coming fastservice in the first place. To close the loop, I enough? In my view, it will likely be 3 to 5Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 177
  • five years before ers. In summary, we have an NFC solution in NFC becomes the market right now, but it’s not targeted at mainstream. our Mobile Money customers — yet. Why? Because smartphone Clearly, the industry is only on the cusp of penetration has realising the full potential of mobile money changed all the and mobile banking services. At Qtel we rules. have made our mark with the Mobile Money services, services we can — and Put another way, will — expand and enhance to serve the smartphones two distinct customer segments: migrant — which are workers and affluent residents. Our exper- mini-computers ience has shown that technology is a factor, — have a longer but it’s the ability to satisfy increasing shelf life than customer demands for convenience andFigure 2: Based on data from QTel. low-end feature security that is at the core of lasting success. phones. These devices are alsomore expensive than feature phones, which Richard Morecroft has over 25 years experi-mean they require longer contracts. The ence in telecommunications. He spent theresult is a slowdown in the handset replace- first 11 years serving in the U.K. armedment cycle — and that presents the industry forces in locations all over the world. Sincewith a huge challenge. After all, NFC take up leaving he has led projects and businessesand use depends on consumers having NFC- that have transformed the consumer tele-enabled devices. communications space including building AOL’s UK internet access platform andWhat can be done in the interim? It’s a launching the U.K.’s first “Free” broadbandtough one to call, but it’s also clear that business at TalkTalk. Morecroft joined Qtelwe in the industry can’t be spectators. in 2008 to lead the new and emerging business team.In Qatar our partner bank QNB has begunrolling out contactless payment terminals.At Qtel we have also collaborated with QNBand MasterCard to deliver an NFC solutionto market that caters to these bank custom-178
  • PART SIX: UNLEASHING THE POWER OF MOBILE COMMERCEDriving Mobile Money UsageIn Unbanked RegionsBy M. Yasmina McCarty, Senior Manager, GSMA MMU(Mobile Money for the Unbanked)The mobile money industry is were just six million active mobile moneygrowing fast. Today there are over customers as of June 2011. Activity rates across deployments also varied quite130 live mobile money deploy- significantly with some mobile moneyments, up from the approximately deployments having just 0.2 percent of their20 at the beginning of 2009. There registered customers’ active, while othersis also a significant increase in the boasted an 80 percent active customer rate.number of registered users. TheGSMA Global Mobile Money The Mobile MoneyAdoption Survey counted over 60 customer journeymillion registered mobile money Customer activation has shown to be acustomers as of June 2011 and significant hurdle and a number of mobilefound a 49 percent growth rate money services find themselves facingin the number of subscribers these common challenges:from 2010 to 2011. • Customers are aware of the mobileThe top line growth has been impressive, money service, but do not understandbut customer activation rates lag behind. how it could be beneficial to themExcluding the active mobile money custom- • Customers get bogged down in the regis-ers of Safaricom’s M-PESA and Smart, there tration process and never try the productThe trick is to identify which marketingmechanisms are effective at each stage in thecustomer journey and which elements of themarketing toolbox are simply not effectiveMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 179
  • Number of registered customer accounts by service, June 2011 16millions 49% Increase in the number of mobile money customers CAGR in the second half of 2011 14 12 10 8 6 4 2 0 Between 31 December 2010 and 30 June 2011, the number of registered mobile money customers of the services in our sample-excluding Safaricom, SMART, and Globe-grew at an annualised rate of 49% Figure 1: Based on data from GSMA. www.gsma.com/mobilefordevelopment/wp-content/uploads/2012/05/MMU_State_of_industry_AW_Latest.pdf 180
  • Unaware Awareness Understanding Knowledge Trial Regular Use Customer Customer has Customer Customer Customer Customer has never heard of understands knows the tries the habitually heard of mobile money how mobile steps service uses the mobile and knows money could necessary to mobile money what it is be useful to transact money them serviceFigure 2: Based on data from GSMA.• Customers don’t understand the services must also build understanding mechanics of performing transactions to help users see how this new service is and are hesitant to try something as both relevant and beneficial to them. novel as mobile money • Knowledge: Once the customer under-• Customers don’t trust the operator’s stands what mobile money is, what it brand or network and are hesitant to does and how it could be useful to them, conduct financial transactions the customer needs to learn how to transact. This customer educationUnderstanding the mobile money customer typically requires the assistance ofjourney can shed light on the issues which mobile money agents, or a friend and/lead to customer inactivity. The customer or family member.journey, as shown below, is comprised of • Trial & Regular Use: Once a customer is6 stages: (1) unaware, (2) awareness, (3) aware of the mobile money service, knowsunderstanding, (4) knowledge, (5) trial, what it is, is convinced that it can beand (6) regular use. useful for them, and understands the pro- cesses for performing transactions, then• Awareness & Understanding: At the they are ready for to try the service. After start of the customer’s journey, custom- a number of positive transaction experi- ers become aware of the existence of a ences, users can become regular users. mobile money service. But it’s not enough to simply know the name of the mobile Whilst not listed as a separate step in the money service or even what the mobile customer journey, the customer registration money service is. Rather, mobile money process is an important consideration.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 181
  • Mobile money services that can be access- Equally important as the size of a segmented over-the-counter, allow customers to is the intensity of the demand. To put thisbecome regular users before they register, more strongly, operators can focus on theand therefore make the registration step a segment of customers that is suffering fromnon-issue. However wallet based services the most acute ‘pain points’ that mobiletypically insist on some type of registration. money might solve.In situations where customers struggle tomeet KYC requirements, the registration With the target market selected, mobileprocess becomes so onerous, that custom- money marketing is the process ofers would rather not enrol in the service. persuading potential customers to become regular users. Operators have a range of marketing tools that they can use to helpEffective approaches for customers along this journey. The trick heredriving usage is to identify which marketing mechanisms are effective at each stage in the customerFinancial services are more complex than journey and which elements of the market-mobile value-added services because they ing toolbox are simply not effective.must meet a wide variety of customer needsand requirements. For this reason, market Awareness-building campaigns, typicallysegmentation is essential to develop a com- done through mass media advertisingprehensive marketing strategy. campaigns, help customers learn what mobile money is and how mobile moneyNeed-based segmentation can be a useful might be useful to them. Beyond these ATLfirst step, quantifying the customer seg- campaigns, however, a significant amount ofments which have frequent need to make work remains to be done to compel users tohigh volumes of remote payments. It is actually try the service. Customer educationimportant to have a reasonably large initial typically requires a more personal approach.target market in mobile money for two As such, operators should leverage transac-reasons: 1) because of the strong econo- tional agents, field agents, and/or currentmies of scale present at both the platform users to guide potential customers fromand the agent level, and 2) because trans- awareness to use.fer-oriented mobile money services benefitfrom strong network effects.182
  • Market segmentation is essential to developa comprehensive marketing strategy.To leverage mobile money agents for technological platform, well designedeffective BTL customer activation, there products, and an enabling regulatory envi-are three important considerations: ronment. But, if customers do not see the value in the service, or do not know how to1 Training: Well-trained agents are proven use a product, then the success of the to be effective in driving customer business can be severely hindered. activation2 Incentives: It is important that agents In her role as Senior Manager at GSMA’s have been incentivised properly for Mobile Money for the Unbanked programme both registration and usage, and for M. Yasmina McCarty works with Mobile the balance between those incentives Network Operators in emerging markets to be right on their mobile money services. Prior to joining the GSMA, she co-founded and led3 Oversight: Agents can be a powerful GreenMango in India and held positions at force for driving customer adoption. Women’s World Banking, working in microfi- Unfortunately, if unsupervised, these nance in LAC, Africa and South Asia, and at agents can just as easily drive Goodby Silverstein & Partners, working on customers away. marketing and advertising. To read the full version of this article, visit mmublog.org .Driving customer adoption and increasingactivation rates in mobile money is no easytask. But understanding the customerjourney, segmenting and prioritising thetarget market and identifying the bestsuited marketing tactics to move the userthrough each stage of that journey, canhelp mobile money services achieve highcustomer usage rates.A mobile money deployment can have allthe right conditions in place such as aubiquitous and liquid agent network, reliableMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 183
  • PART SIX: UNLEASHING THE POWER OF MOBILE COMMERCEBlueprint For A SuccessfulRemittance ServiceBy Diarmuid Mallon, Head of Global Mobile Marketing Programs,Programs & Demand Generation, SAPWithout a doubt the single most like M-PESA. This explains why P2P issuccessful mobile payment service not the killer app for most operators.for operators has been person Beyond that initial hurdle, operators face-to-person (P2P) payments. two other challenges. First, frequency, thatSafaricom, a mobile operator is, how often consumers would use such ain Kenya, led the way with their service. After all, buying a coffee is some- thing people do every day, buying a concertgroundbreaking M-PESA service. ticket, on the other hand, is a service mostSince then many other operators people might only use once a year.have launched mobile paymentson the back of that success. Second, interoperability with other payment services. The cash in your pocket works forBut winning is not about being a first-mover any proximity payment, and the credit cardor a fast-follower. Market conditions are in your wallet works in many remote anddecisive here. For an operator-led P2P proximity payment scenarios. For anpayments scheme to succeed within a operator considering offering a new pay-country there must be some very specific ment method, it clearly either needs to workmarket conditions. Chief among these: a in wide range of scenarios, or offer clearsingle operator must have the dominant benefits over existing payment methods.market share. In other words, there is noroom for market rivalry when the goal is to How do people use these services? Anddeliver a successful P2P payments service how often do they really need them? OurOur experience is that the more steps there are tosign-up, and the longer the wait from initial sign-upto the service being active, the lower the successrate for enrolling consumers.184
  • Total value of international mobile money transactions sent p.a ($ billions)Split by eight key regions 2011-2016 $60 Africa & Middle East Rest of Asia Pacific Indian Subcontinent Far East & China Central & Eastern Europe Western Europe Latin America North America $0 2011 2016Figure 1. Source: Juniper Research (1)Footnote1. www.juniperresearch.com/reports/mobile_money_transfer_and_remittancesMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 185
  • own daily routines provide some clues. Ask But don’t break out the champagne just yet.yourself: How often do you need to give Like P2P payments there are a number ofmoney to any other person, and in what cir- challenges to overcome before remittancecumstances? Sure, you might loan someone services really deliver. These are: the initialsome cash for lunch, but it is not something Sign-up, the KYC (know your customer) pro-people do regularly. In reality, many P2P cesses, and details around how consumersmobile payment services are not focused get cash-in and cash-out of the service.on this scenario. First and fore-most, theyenable people to send money back home. Before customers can use a remittance service they must first be enrolled. Ideally,Now let’s consider the few occasions when I the registration process should be fast andwant to send money to a friend or colleague. straightforward. After all, keeping it simple isAre they on the same mobile network? If the best way to ensure maximum take-up ofnot, then how do I send funds from one the service. Our experience is that the moremobile wallet to another? Clearly, interoper- steps there are to sign-up, and the longerability is critical to make these services work the wait from initial sign-up to the serviceend-to-end. Currently, only a few operators being active, the lower the success rate forare working on interoperable wallet solu- enrolling consumers.tions. Among these Telefónica, Qtel andthe Axiata Group are notable examples of Keeping enrolment quick and simpleinteroperable schemes. needs to be balanced with additional KYC requirements that are core to a remittance service. Many mobile remittance servicesP2P playbook accomplish this by making use of the existing operator retail store networks. TheThe real opportunity for P2P payments is benefit to the operators is that they can useremittances. A remittance is a lot like a P2P their staff, IT systems and much of theirmoney transfer, except the amount trans- existing business process when on-boardingferred leaves the country. new users of the service.Research firm Juniper Research estimates In Malaysia Celcom has gone one stepthe total value of mobile remittance world- further. It allows new customers to enrollwide will be nearly $55 billion by 2016. This for the remittance service direct from theirunderlines the real potential of this market. mobile phone. The final stage of the KYC186
  • However, if you must enable customers tosend funds that be withdrawn as cash, thenyou can’t go it alone.process is completed when these custom- local operator store, then there is no clearers enter a Celcom store to deposit or benefit for the consumer. And there is abso-withdraw funds. lutely no reason to use a mobile phone to make the transfer.Successful approaches This is why Qtel in Qatar has come up with an entirely new approach that joins ourIf the concept of on-device sign-up for a mobile and physical worlds. The mobileremittance service seems daunting, then operator has launched a remittance servicethere are other blueprints you can follow. that is also supported by a network ofIt’s worth looking at how banks handle this self-service machines, or SSMs.task. South Africa’s Standard Bank, forexample, has not stopped at streamlining After the initial sign-up in the operator retailthe sign-up service. It allows people to open store, users of their remittance service canup a full service bank account using only use these SSMs to add funds into theirtheir mobile device. mobile wallets. Once the funds are loaded, the consumer can make the money transferCash-in is another area to address. The using their mobile phone at a time that suitsvalue proposition behind remittance serv- them. Another plus: these SSMs, which areices is centered on convenience. In other located in shopping malls, are convenient towords, it must be simple and easy for cus- access, so users can easily use one withouttomers to use these services. In the real taking a detour from their usual routine.world migrant workers already line up atmoney transfer stores on payday to send Finally, there are a variety of challenges thatmoney home. If all a remittance service complicate cash-out, the last stage of thedoes is swap the line they would stand in at remittance transaction. While there is no onethe money transfer store for a line at the solution, there are several options to consider.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 187
  • One option is to not send cash at all. where both sending and receiving sidesInstead, create a service that allows people have mobile wallets.to transfer airtime, rather than cash, fromtheir mobile wallet. This is what Celcom Once you have a wallet funded remittancedoes to enable airtime remittance. This service in place, there are two ways to growenables consumers to remotely transfer the service. First, add more remittanceairtime credit instead of money as an inter- routes. What corridors should be included?national remittance. Since the transfer This decision will be driven by demograph-involves airtime the rules governing the ics, and the requirement of specificremittance are much simpler than they customer segments — such as migrantwould be if the pay-out was cash. With workers — to use your service to sendfewer regulatory hurdles to negotiate, the money back home. It’s also a good idea toservice is also much quicker to implement. look at your international P2P SMS traffic for clues to help identify potential new remittance corridors.Building an ecosystem Second, you can grow the service by addingHowever, if you must enable customers more services to the Wallet. The leadto send funds that be withdrawn as cash, services for this are prepay top-up and billthen you can’t go it alone. pay. In Qatar Qtel has boosted its mobile wallet service with salary disbursements forYou will need to form a partnership with a small business. This allows small businesslocal entity on the receiving side of the owners to pay their workers direct to theirremittance transaction. Some operators mobile wallet. To enable cash-out Qtel haspartner with existing money transfer net- also partnered with a local bank to tap intoworks. In practice, this enables the receiver the bank’s network of ATMs.to collect the sent funds via agent networksof these services. A review of the mobile remittance services available today reveals a variety of differentOther operators work with local banks. This approaches to tackle the challenges ofhas advantages because it allows the rec- sign-up, cash-in and cash-out. Clearly, oper-eiver to use bank branches or even ATMs to ators interested in launching their ownwithdraw funds. Against this backdrop, we remittance service need to identify anare starting to see Wallet-to-Wallet transfers, approach that best matches their local188
  • market conditions and customer needs sinceno one approach is universally applicable. Diarmuid Mallon is Head of Global Mobile Marketing Programs for SAP, which includesThe different challenges — when addressing the SAP Mobile Services division and SAPboth the needs of the sending side and the Mobile Commerce solutions. Before joiningreceiving side of the transaction — require SAP, Diarmuid was Product Manager ofa considered approach to service design. Logicas Wireless Networks division. He hasOnce the initial remittance corridor/service worked in mobile messaging since 1996,is successful, and the service expands with holding a wide variety of range of roles andthe addition of new remittance routes, new titles ranging from Business Developmentchallenges will surely arise because each to Product Evangelism. Follow him oncountry has its own financial and mobile twitter @diarmuidmallon and read his blogoperator requirements and regulations at http://scn.sap.com/community/mobile.regarding money transfers. The wide rangeof potential solutions means you need toensure you have the flexibility within yoursolution that will enable you to expandto new markets and match those localmarket requirements.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 189
  • PART SIX: UNLEASHING THE POWER OF MOBILE COMMERCEOperators: Tap Your Strategic AssetsBy Aditya Khurjekar, Co-Founder and Program Director, Money2020Mobility — like transportation financial services value chain. Moreover,and electricity — is an increasingly all services related to money are heavily regulated. For sustainable and at-scalepowerful enabler for many other innovation in mobile payments andindustry sectors. A prime example commerce, existing mobile-uniqueis banking and financial services. capabilities must be brought to bearThis is a space that benefits greatly in the infrastructure layer of payments and commerce, not just in the endfrom advances in mobile technolo- user experience.gies, open platforms, and efforts todeliver engaging user experiences. Mobile enables many consumer-facingWhile mobile wallets and digital technologies, especially on the handset, that provide better interactivity, richercurrencies are the center of atten- experiences, and choice in how customerstion in the market and the press, consume financial services innovationswe see the potential for some key offered to them by service providers usinginfrastructure innovations to the mobile channel. Against this backdrop, there are several operator-owned assetssurface at this fascinating intersec- that are not fully appreciated. But it istion of multiple industries. Mobile precisely these operator assets that canoperators bring many core assets provide valuable enabling capabilities,to this emerging ecosystem. skills that are beneficial and essential to creating compelling user experiences.Whilst mobile operators are uniquelypositioned to bring these core capabilities In this article, I outline three unique andto the table, they are probably not leveraged strategic operator-owned assets that canto their full potential due to the historical be leveraged to deliver superior mobilerelationships — and tensions — in the payments and commerce propositions.It is here that mobile operators excel; theyhave continuously launched new productsand services successfully for decades.190
  • 1 Operator-Grade Billing Systems the operator with their personal infor- mation and volunteer it freely to receive Mobile Operators, cable companies and and benefit from services provided by Internet Service Providers serve tens of the operator. If the operator enters into millions of customers. Larger companies an agreement with a company in the serve a hundred million subscribers and financial services sector, and agrees to more. Their mission-critical billing and share subscriber or billing data, then it is rating systems support their subscribers the respons-ibility of the operator to be during every transaction and at every transparent about this and obtain clear billing cycle. These capabilities also allow consent from the subscriber. these companies to maintain critical subscriber information — such as name, 2 Highly Efficient Distribution Channels address, and personal data — and, in & Customer Service some cases, even payment credentials. In many countries, it’s the mobile More importantly, for post-paid subscrib- operator — not a department store chain ers, operators can build bill payment — that runs the largest retail operations. histories. Such rich information, both Mobile operators sell cutting-edge tech- the static identification data as well as nology with many diverse propositions dynamic/cumulative data, is extremely that change every few months. They valuable to a financial institution or source products from multiple global online merchant for a variety of reasons. vendors and operate extremely efficient Specifically, financial institutions and supply chains. They also serve an merchants can use this operator- amazing number of individual customers managed subscriber data to establish and customer segments. Indeed, no two the identity of their customers, assess customers are ever identical and opera- the credit worthiness of customers tors must manage innumerable combina- when assigning a risk profile, or simply tions of handset brands, operating complete a checkout with minimal user systems, preloaded applications, pricing intervention on a connected device. plans and account hierarchies. Of course, privacy and confidentiality Despite this complexity, most mobile considerations, as well as country-spe- operators excel at the point of sale in cific regulations regarding subscriber stores or online. They also get high marks data, are paramount. Subscribers trust in customer service, a key area of exper-Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 191
  • In many countries, it’s the mobile operator— not a department store chain — that runsthe largest retail operations. tise that can make or break the business 3 Globally Interoperable Authentication in this age of openness and consumer & Provisioning Protocols choice. This is important when it comes to offering a new mobile-eabled financial Whenever a mobile subscriber buys a product or service. Delivering financial new handset, replaces a SIM card, or services requires a high degree of sophis- roams into a new coverage area — in tication, both in selling and servicing the another area or even on a different customer, especially if the customer is continent — the operators’ provisioning not educated about the value the new and authentication protocols are at work service delivers. It is here that mobile behind the scenes to allow for seamless operators excel; they have continuously communications. These same capabili- launched new products and services ties also allow a trusted reconciliation successfully for decades. of the revenues that are shared between the operators and other players in Offering financial products and services the value chain. would normally be a burden on the sales and service teams of any company. How- As long as a customer has sufficient ever, mobile operators are well-equipped coverage and enough money on their to meet the challenge, this because oper- account, they have what they need to ators, as a rule, manage a well-oiled make a phone call or conduct a transac- system of distribution and employ the tion. But it’s more than that: customers trained staff to support it. There is really benefit from a seamless and simple no substitute for this high-touch engage- experience, one that transcends the ment at the customer touch-points — a boundaries of both countries and tech- capability mobile operators own and nology. The customer doesn’t need to which is critical to the successful market- know what device the other party has, ing of financial products and services. or worry about network protocol, it just works. This same seamless and border-192
  • less experience is desirable in mobile surface when it comes to understanding commerce and payments as well. In the their true potential in this space and in-store payments world, this is concep- offering the mobile-specific enablers tually similar to the ease with which con- to accelerate and enhance the mobile sumers can also pay for goods and payments and commerce experience for services using a mag-stripe card. In consumers everywhere. practice, a mag-stripe card with a global payment mark/scheme, such as a credit card, is honored as tender by all Aditya Khurjekar is Co-Founder and merchants and banks worldwide that Program Director of Money2020 Expo, a accept that particular card as payment. new conference that attracts a community of thought leaders in emerging payments Commerce transactions on any conn- and financial services, bringing together ected device, especially if they are innovators from financial institutions, conducted via a consumer mobile device, mobile, retail and advertising to discuss should also be as seamless and simple. key issues and the consumer experience. Specifically, they should be able to His independent consulting practice, TNBT benefit from a globally interoperable Global, advises companies on optimising protocol that enhances the user experi- their next-generation mobile money strate- ence by leveraging the connectivity and gies, especially around mobile payments. intelligence of the device and the mobile Prior to this, Khurjekar was responsible for network. This is essential to remove Verizon’s strategy and partnerships in unnecessary steps and friction from commerce and payments and managed a shopper’s mobile commerce and it’s investments in its NFC venture Isis. payments experience.As I have shown, mobile operators havethe capabilities mix to play a defining andleading role in mobile commerce. I haveidentified the three most obvious ones here.However, time will tell if there are additionalassets mobile operators can leverage toimprove and innovate mobile commerceand mobile payments. Indeed, mobileoperators might only have scratched theMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 193
  • PART SIX: UNLEASHING THE POWER OF MOBILE COMMERCEMobile Commerce OpportunitiesFor OperatorsBy Matthew Talbot, Senior Vice President, mCommerce, SAPMobile commerce has a track was quickly commercialised by operatorsrecord dating back to the late with the introduction of premium SMS (PSMS). PSMS enabled the cost of the1990s. In the last few years the content to be charged directly to thetypes of services mobile commerce customer’s monthly mobile phone bill. And,makes possible have significantly while there have been several refinementschanged. So, if you are looking to to this model (such as WAP Billing), this model has remained the dominant charginglaunch a mobile commerce serv- method for digital content.ice, what should you consider? In the last few years we have seen moreArguably, the first mobile commerce operators move past this payment mech-services centered on enabling payments anism to offer more flexible mobile paymentfor early digital content such as ringtones, services to their customers. The biggestwallpapers and operator logos. In 1998 benefit of PSMS for payments — similar toNokia introduced a mobile phone that SMS — was its ubiquity. However, the manysupported a customisable ringtone and limitations around the PSMS chargingoperator logo graphic, which were del- model (high costs, charging not linkedivered over the air via SMS. to delivery of goods, and poor roll-back mechanisms) made it best suited for theThe advance of digital content allowing purchase of low-value digital goods.users to personalise their mobile phonesOnce you have chosen your approach, you willneed to decide between the payments services.Most mobile operators start this journey by movingexisting airtime top-up services for their prepaidcustomers to mobile payments.194
  • The payments landscape Each of these approaches has both clear benefits and challenges. The GlobalWhile PSMS works today as a payment approach offers the greatest potentialmethod for digital goods and services, it rewards, however, developing a solution thatdoesn’t allow the purchase of real-world can span developed and developing marketsgoods and services, nor does it enable is not a simple task. Beyond the technicalperson-to-person payments. For that a challenges, there are wide range of businessnew payment mechanism is needed. models and local regulations. But the advan- tages of a global approach are clear, after all,These new payment services are centred the bigger the ecosystem for payments,on mobile wallets and stored value accounts the greater the chance of success.(SVA), with financial models much closerto that of credit card interchange than the Once you have chosen your approach, yourevenue-share models of PSMS. Funding will need to decide between the paymentsmoved away from charging via the SMSC, services. Most mobile operators start thisand to either debiting the SVA or charging journey by moving existing airtime top-upvia the mobile wallet (which is funded by services for their prepaid customers tocredit, debit, bank account and phone bill). mobile payments. This approach offers obvious cost-saving benefits over traditionalUnlike the early years of mobile commerce, top-up mechanisms. More importantly,there is no single business model for mobile these benefits are clear and easy for cus-commerce. Instead, operators have adopted tomers to understand.a variety of models that reflect local marketneeds and regulatory constraints. In developing markets, top-up services are often followed by P2P payments andOverall, payment services can be divided remittance services. The lack of otherinto five broad categories. remote payment mechanisms in theseMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 195
  • Payment services can be divided into five broad categories Type Description Advantages Challenges Solo •• Single operator •• Quickest to •• Lack of scheme implement interoperability •• Service is only •• Difficult to scale available to the operator’s customers Cross •• Single country •• Instant scale •• Additional Operator scheme •• Increased reach complexity that •• Service is run as through partners comes from a joint venture (and their running a multiple- between multiple customers and party payment operators. merchants) scheme, Joint •• Mobile payment •• Credit card •• Need to integrate Ventures schemes that companies bring multiple payment include partners interoperability networks and from the wider with their payment interfaces in a payments ecosystem network and single solution •• Can include merchants credit card •• Money transfer companies and companies can money transfer provide cash-in/ companies cash-out locationsmarkets makes these services very attract- potential to be more affordable thanive to consumers. This is because many of existing mobile transfer services.these consumers are among the unbankedand will have limited or no access to pay- Developed markets are a different story.ment mechanisms other than cash. Mobile Their customers’ needs are served by aP2P and remittance services also have the variety of existing payment mechanisms,196
  • Payment services can be divided into five broad categories (cont) Type Description Advantages Challenges Group •• Operator group •• Potential for scale, •• Services must mobile wallet with tens of millions reflect each market •• Local wallets that of users. •• Platform needs to are interoperable •• Interoperability for comply with multiple May include mobile roaming customers financial regulations wallet hub •• Hub based approach speeds deployment of remittance services Global •• Global play to •• Huge potential for •• Services must launch global scale, with hundreds reflect each market mobile wallet of millions of users •• Platform needs to services ••  nteroperability for I comply with multiple •• Group based roaming customers financial regulations approach that •• Need to support spans continents developed and •• Likely to include emerging market other partners such business models as card networks •• •• •• ••Figure 1: Based on data from SAP Mobile Services.such as credit cards, debit cards, cheques In these developed markets, servicesand even inter-account transfer via online focused on convenience feature highly.banking. In a market with so many options A great example is paybox in Austria, ait’s clear that P2P can only be a feature cross-operator service that allows usersof the payments service, not a lead to pay their car parking via mobile. Theservice in itself. service also warns users when the parkingMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 197
  • When mobile NFC arrives full force it will providethe basis for additional payment use cases andsignificantly improve existing services such asmobile ticketing for transport by speeding uptransaction times.period is about to expire and offers the are picking up momentum in some moreoption to top-up the meter remotely. developed markets. When mobile NFC arrives full force it will provide the basis for additional payment use cases andBuilt to last significantly improve existing services such as mobile ticketing for transport byIf your focus is emerging markets, then you speeding up transaction times.should also consider adding a SVA (storedvalue account) to your service. This enables With so many variables to consider — theyour customers to load cash in to the choice of business models, the array ofmobile wallet that can then be used to pay potential services and local telecom andmerchants and bills. financial regulations — there is no one way to build a successful mobile paymentAdding partners to the mobile wallet service service. In addition, any service created stillhelps grow the ecosystem the mobile wallet needs to be aligned with the local marketsupports. For example, adding a credit card conditions and customer demographics.company or money transfer network willprovide valuable interoperability to theservice, which will help it to grow and scale. No matter the model you choose, be prepared to adapt it over timeFinally, you need to factor in the impact ofnew technologies such as mobile NFC on As the service is rolled out there will come ayour payments services. While these new time to add functionality, build partnershipstechnologies are still not mainstream, they and scale the service. And, as new198
  • technologies become mainstream, there willbe the need to incorporate these into the Matthew Talbot is senior vice president ofservice as well. No matter what the initial SAP Mobile Commerce division. Prior toservice design, the requirements will this, he was vice president of SAP in Asia.change. Operators determined to build a Before joining SAP, Talbot was the CEO ofsuccessful mobile payment service need to Mobile Internet Group (MIG), a leadingbuild in flexibility. wireless application service provider and co-publisher with offices in Beijing,Over a decade ago, when operators first Shanghai, Hong Kong, London, Sydney,rolled out Premium SMS services to enable and the U.S. Read his blog at: http:/ /scn.sap.teenagers to customise the ringtone on com/people/matthew.talbot/activitytheir mobile phones, one could not foreseehow mobile commerce services wouldevolve. The idea that migrant workers inQatar would use automated self-servicekiosks to load their mobile wallet and remitmoney home to friends and family wasbeyond imagination. This progress in a shortspan of time teaches an important lesson:no matter what the initial launch require-ments are, if the service is success-ful, it willvery quickly outgrow them.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 199
  • PART SEVEN LEVERAGING MOBILE TO ACHIEVE LASTING LOYALTY200
  • PART SEVEN: LEVERAGING MOBILE TO ACHIEVE LASTING LOYALTYPerception vs Reality: What’s YourMobile Strategy?By Howard Stevens, Senior Vice President, Global Messaging Solutions,SAP Mobile ServicesThe enormous success of expense of those deemed “legacy.” However,smartphones generally, and of forward-thinking enterprises in today’s world need to get past “perception,” lookingApple’s iPhone and the Android beyond the latest trends in mobile apps,operating system in particular, for example (without overlooking them, ofhave elevated the ‘mobile app’ to course). They must start thinking about thea status shared by few peers in the realities of how they can help their custom- ers fulfill a robust mobile strategy, one thathallowed halls of tech history. So is truly end-to-end, multi-channel and,it’s no surprise that many mobile perhaps most important, customer-centric.network operators and enterprisesfind them-selves over-allocating Multi-Channel, Customer-Centrictime, money and resources towardan app-centric view of their The importance of having a real mobilecustomers rather than taking a strategy, while obvious to some organisa-more holistic view. Even more tions, is by no means a foregone conclusion for many others. Many are in “consider-disconcerting is the number of ation” mode, while others have taken someenterprises that have yet to initial steps. Few enterprises, however, haveembrace a substantive mobile implemented a genuine mobile strategy.strategy at all, despite the presence Moreover, they have yet to regard mobile as a rich, multi-channel platform throughof competitors that have done so. which consumers and others are interact-There is enormous pressure today to ing, often on a 24/7 basis. Answering theemphasise certain popular services at the question, “What is your mobile strategy?”Marshalling the complete arsenal of tools in yourmobile strategy will enable you to look at yourcustomers in materially new ways.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 201
  • begins with close consideration of how tactics that enable enterprises to learn andend users behave in the mobile realm, what understand consumer behaviors and in turnthey’re looking for, then determining how shape consumer experiences. At the heartbest to package that solution. of this eco-system is a commitment to multi-channel, multi-faceted mobile market-For example, in the unrelenting spotlight ing capable of becoming a game-changerof the media, all we seemingly hear about for an enterprise.is apps. Meanwhile, feature phones stillaccount for roughly 70 to 80 percent of theglobal customer base with SMS and MMS The ‘Rite’ stuffbeing the only viable non-voice channels tothese customers. In fact, both of these That said, virtually any of the particularchannels need to be synchronised as part of channels mentioned above can constitutea full complement of value-added, strategic one of many roads to Rome. One primeofferings necessary to engender loyalty, example of how SMS, for example, can serveretention, as well as acquisition in order to as a gateway to richer services can be seenrealise a comprehensive mobile strategy. with Rite Aid.Indeed, an effective mobile strategy is one When this national brand set out to increasethat builds on a foundation of multi-channel customer convenience and maintain pre-options (e.g., SMS, MMS, apps, mobile scription compliance, it chose to implementbrowser) to support longer-range customer a strategy that employed customers’engagement strategies. Marshalling the preferred communication methods. In thiscomplete arsenal of tools in your mobile case, Rite Aid provided a service allowingstrategy will enable you to look at your patients to be notified when the prescrip-customers in materially new ways. The tions are ready by opting in to pharmacydividends such a strategy bestows upon alerts. In addition to notification by conven-enterprises are numerous, including break- tional mail, the alerts are delivered, basedthrough techniques to build awareness with on customer preference, via email, phoneconsumers, enabling them to transact easily or text message. Patients who opt in arethrough those multiple channels. The automatically enrolled in the free Wellness+eventual outcome is a virtuous circle loyalty program, which includes a monthlyconstituting a continuous engagement newsletter and weekly special offers.cycle, leveraging loyalty, coupons and other202
  • Until organisations overcome these and otherhurdles, they will continue to miss out on theholy grail of a continuous engagement cycle thatrewards customers for their loyalty by allowingthem to transact easily through multiple channels,when and how they wish to.The results include heightened brand These and other issues impede organisa-loyalty and increased in-store foot traffic. tions from doing the real work of redefiningImportantly, Rite Aid is looking at ways to the way they look at their customers, whichincorporate mobile vouchers as part of the in turn influences the nature of their aware-loyalty mix to drive traffic between different ness strategies. Until organisations over-parts of its stores. All of which began by come these and other hurdles, they willoffering a service based on the most continue to miss out on the holy grail of awidely used mobile channels, SMS. continuous engagement cycle that rewards customers for their loyalty by allowing them to transact easily through multiple channels,The Next Leap when and how they wish to.What’s holding enterprises back from At the same time, technological leaps haveseizing a sustainable competitive advantage delivered the operator community fromthrough a robust mobile strategy? Surpris- person-to-person and person-to-machineingly, there is still a fundamental need for communications to an era of machine-to-greater realisation by enterprises with machine communications. This has alsoregard to what consumers are doing, how helped drive a need for discrete, segmentedthey’re behaving on mobile channels, and services, delivered under a usage-basedwhat they want. Generational issues at pricing model, that are far more differenti-some organisations have inhibited pursuing ated than so-called commodities such asmore than a cursory mobile-aware approach. voice service, for example. The features that are being ushered in by 4G and continuingMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 203
  • LTE deployments, for example, have ledmobile network operators to compete Howard Stevens is responsible for theas they move to generate new revenues continued profitable growth of SAP Mobileand profits while managing costs more Services’s global messaging revenuescarefully than ever. across the telecommunications community and all other market verticals. Stevens hasThe progression of mobility has taken us driven the overall go-to-market plan andfrom a sharply defined, voice-driven model overseen targeted M&A activity to helpto a dramatically dynamic model of remark- augment the overall SAP offering. Prior toable reach and power. At each step along joining SAP, Stevens ran global sales teamsthe way, we have seen the extraordinary for ADC Metrica and First Hop.become ordinary. Along with these adv-ances has come an ever-widening grid ofinteroperability, complexity, intelligence andanalytics. It is in the midst of this trajectorythat enterprises and mobile network opera-tors need to be thinking pro-actively aboutwhat their customers and their subscriberbase need in order to succeed in the longerterm, in ways that remain customer-centric.Customers will soon begin to pose thequestion themselves: How do I reach youthrough my mobile? At which point somevery clear answers will be needed.204
  • PART SEVEN: LEVERAGING MOBILE TO ACHIEVE LASTING LOYALTYThe Power of PushBy Coleen Carey, Director of Product Marketing, Urban AirshipSmartphones are with us in every also rely on their mobile phonessituation — every day, all day. at every stage of the consumerThey’re the medium that allows journey. From researching prod-us to record our daily routines, stay ucts, to shopping, to sharing aup to date, manage our social and product review with their socialbusiness lives, and figure out what network, people reach to theirto do next and where. As a result, smartphones.people are increasingly moving Ironically, smartphones aren’t really smart.away from personal computers It’s the mobile apps that have given theseand using their smartphones to devices the information and authority to play a major role in their daily lives. Putconduct business and make daily another way, it’s all about communication.decisions. Significantly, people The rise of third-party apps has created theWhat is the size of the mobile market of the worlds 4 billion mobilephones in use? 1.08 billion are smartphones 27% 25% 3.05 billion are SMS enabled (950 million are not SMS enabled) 75%Figure 1: Based on data from Urban Airship.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 205
  • Push messaging is critical for app engagementEngagement % of total app opens 81% 4x 74% increase in app engagement 67% Push No Push 33% 26% 19% 1 2 3 Months Important Essential Critical 67% of app usage 74% of app usage 81% of app usageFigure 2: Based on data from Urban Airship. Good Push Index, July 2012.need for a new kind of conversation, one over the data network, which means nothat allows developers to connect with the relationship with the operator is required.people who use their apps and communi- Push messaging allows businesses to sendcate helpful and relevant information. targeted messages that bring users back to the app and build loyalty.This is where push notifications come in.Push notifications are messages sent from In fact, a recent Urban Airship study foundthe app directly to the devices’ home screen that many customers who implement pushor to the notification center. Contrary to notifications have seen increases in appSMS messages, push notifications are sent206
  • engagement of up to 4 times within the provided to customers, a mobile operatorfirst three months of sending notifications. is well- equipped to deliver highly effective programs that drive results.Without push notifications, an application is‘just another app’ It is relegated to the ranks . Wielding hard data and deep insights mobileof the other 45-60 apps people download to operators can improve their services — includ-their smartphones, only to use them sporadi- ing their own marketing efforts — to createcally. In worst case, these apps are ignored new revenue streams that, in turn, result inand abandoned completely within a month. ARPU uplifts for data and voice packages. This ultimately helps offset the cannibalisation of SMS revenue, improve customer satisfactionDeep(er) insights and reduce customer churn.Clearly, push notifications are a bonus for What’s at stake if mobile operators fail todevelopers because they boost customer see the benefits of encouraging userengagement and extend the life of the app. engagement with apps on their smart-But mobile operators can also reap huge phones? It’s a risky business, to say thebenefits from enabling this ongoing exchange. least, for the following reasons:Indeed, operators are in a unique position to 1 The lack of a ‘conversation’ between appbe the organisation that best understands developers and their customers meansthe customer, based on insights into all lower overall data usage. This is anaspects of the user’s relationship with the outcome operators certainly want tomost intimate device they own, their mobile avoid as they move their business modelphone. How is this possible? By combining from one that is voice centered to oneUrban Airship’s highly scalable Push Notifi- that is data centered.cations with analytics reporting capabilitiesBy participating in this exchange operators canbuild loyalty, increase the value of the device theyoffer and — ultimately — reduce churn.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 207
  • Push notifications also open up newopportunities around advertising andmarketing, allowing mobile operators tobetter understand and service theircustomers.2 Failing to encourage customers to engage Push notifications also open up new oppor- with their apps might actually backfire tunities around advertising and marketing, and increase customer churn. allowing mobile operators to better under- stand and service their customers, both3 By making it difficult for users to realise with integrated customer lifecycle messag- — let alone experience — everything apps ing and with an operator-controlled opt-in can deliver; users may fail to see the value advertising/deal network. in owning a smartphone and reject the additional costs of owning a smartphone. The potential customer service benefits enabled by push notifications are veryBy embracing and using push notifications powerful. Operators have an additionaleffectively operators can avoid these neg- channel to the customer, one that allowsative scenarios and outcomes. them to quickly and effectively provide their customers relevant information around upgrade eligibility, internationalPush pays dividends data package availability, network upgrades and a wide range of service offers.The customer service benefits around pushnotifications are huge. While apps create an Good push notification messages give theopportunity to build a relationship with a app a voice, allowing them to communicatecustomer, push notifications can take it with the customer and deliver a superiorto the next level. Push notifications allow customer service experience. This lays aoperators to deliver simple alerts to the solid groundwork for an ongoing conversa-customer — and trigger the customer to tion. By participating in this exchangetake action. operators can build loyalty, increase the value of the device they offer and —208
  • ultimately — reduce churn. Operators are The process is permission based, whichin a thought leadership position to encour- means the user must opt in to push andage the practice of sending relevant push be open to receiving notifications. Beyondmessages to the developer community. that, its important users get the right message at the right time. Anything else might be dismissed as annoying spam.The Importance of Good Push Without careful consideration of the end user’s reaction to the message, the comm-Push notifications represent a new comm- unication will be wasted leaving a negativeunications channel and a new way to conn- impression of the app on the user. Byect with the customer. Little wonder that pursuing a careful approach aimed atpeople are experimenting with different getting the right message to the rightways of using it. By providing the customer person at the right time, operators havethe ability to choose when, how, and what unlimited opportunities to lead the way ininformation they receive, you put the an emerging — and exciting — market.customer in control and reduce the risk thatthey will grow tired of your app and delete it. The 7 Rules of Good Push. For more information go to http://urbanairship.com/goodpush/ 1. Give the customer control over when they receive messages. 2. Engage customers with relevant messages. 3. Allow customers to personalise their experience. 4. Stay consistent with your brand. 5. Deliver an engaging experience. 6. Make messages better over time by analysing customer engagement. 7. Adapt messages to your users ever changing locations and situations.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 209
  • Our high performance push messaging platform ise Ta Enable your team to: im t rg Op et • Target the right audience • Maximise messaging reach & speed Urban Airship • Enhance conversion Opportunities ert • Evaluate success to optimise nv Co M es sa ge Figure 2: Based on data from Urban Airship.Coleen Carey brings over 20 years oftechnology and consumer packaged goodsexperience to Urban Airship. As Directorof product and partner marketing, sheleads the charge in bringing Urban Airship’sindustry-leading push messaging platformto market aligned with key strategic part-ners. She has held leadership positions atKimberly-Clark, Keebler, NEC, 3Com andWebTrends.210
  • PART SEVEN: LEVERAGING MOBILE TO ACHIEVE LASTING LOYALTYHarmonising Touch Points,Technology, Processes And PeopleBy Suresh Sidhu, Chief Corporate & Operations Officer,Celcom Axiata BerhadThanks to the proliferation of tors need to embrace a more holisticconnected devices —mobile approach to customer experience.phones, smartphones and tablets While a customer-centric approach has— consumers across all demo- always been at the core of our strategygraphics now share a common at Celcom, there is a greater understandingtrait: they are empowered. They now that telecommunications is not solely about technology. Put another way, techn-have the freedom to choose how ology must adapt to customer needs, notthey interact with companies and the other way around. The shift from a “walkeach other. and talk” mobility approach to a “sit and play” one requires mobile operators toThey also demand flexible services that rethink experience.truly match their personal profiles andneeds, and they want these services any- The traditional telecom approach of improv-time, anywhere. While this is an exciting ing call success rates, reducing droppedprospect for consumers, it represents a calls and providing VIP service is still appli-profound challenge to the traditional cable. However, the “data anywhere” needstelecom business model. Operators have of today’s consumers are changing the land-been used to a mass model of provisioning scape. A tweed-jacketed banker just may beand deployment, with customer interaction a secret mobile gamer, while low voice ARPUhappening through a few formal channels. elderly ladies may also be high consumersIn order to harness the opportunity, opera- of Bollywood content. Customers haveFrom sales to service, from voice to surfing,customers now look for very different supportfrom their operator.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 211
  • many facets. This challenges the customer In Celcom’s bid to win back share it hadsegmentation approach, often based on lost, it followed exactly this approach. Weusage or demographics that operators have embarked on a program to “fix the basics”assumed and applied. by solving billing issues, reducing the time needed by call centre agents to respondCelcom has taken specific steps to evolve to customer calls and streamlining howits view of customer experience to match customers sign up for a service plan.how people have made mobility an integral Besides internal improvements, the pro-part of their daily routine. The approach that gram also enabled customers everywhereworks is to design services that encompass in Malaysia to reach Celcom by dialing aall the stages of daily life. These are: Rest, single number (1111).which is about how customers enjoymobility at home; Work, which is about how However, the increasing growth of data onusers harness mobile in the office or to networks has challenged this approach. It’sperform their job; and Play, which is about no longer enough to focus on voice qualityhow customers use the mobile device to or even connectivity assurance. From salesenhance their leisure or travel time. Today, to service, from voice to surfing, customersthe key to customer satisfaction comes now look for very different support fromfrom harnessing four key pillars – touch their operator. Some examples of thesepoints, technology, process and people. customer needs are: • Always having the latest devices availableTime for a rethink in well designed retail stores • Staff that is knowledgeable about mobile,Many of the approaches to customer including the differences between devicesexperience stem from the days when the and versions of Android, and can providenetwork was largely about delivering voice. help with trouble shootingEven with the advent of 3G, the demands • Single sign on across a range of services,were often still focused on voice quality from mobile to Wi-Fiand the traditional elements of customer • High-speed access everywhere in urbanservice – call centre response, complaint centresmanagement and differentiated service • High quality connectivity in rural locationsfor premium customers. • Easy to understand pricing and transparent billing212
  • Put another way, technology must adapt tocustomer needs, not the other way around.• Convenient self-service channels, ments we are making and the aspirations integrated with physical ones we have when the work is completed.This is a daunting list, and by no means • Touch Points: We are transforming ourexhaustive. The operator that rises to this stores from branches to real retail stores.challenge, and executes well, is likely to Device sales are central to this vision.reap significant rewards. Equally important, staff is equipped with tablets and a sound knowledge of our products so that they are able to provideThe Four Pillars expert advice and comparisons while customers shop. This year, we will launchOur approach at Celcom to this challenge our flagship store and even roll-out storeshas been to ensure everything we do is int- focused entirely on offering Apple devices.egrated across the four pillars of Customer • Technology: We are focusing not justExperience – Touch Points, Technology, on our IT capabilities, but also on ourProcess and People. We would be the first to network. In IT, we have a major pro-admit that we have a long way to go. We are gramme to upgrade our end-to-endvery much in the early phase of the change, capabilities with a brand new Businesswith significant investments committed. But Support Systems and analytics capability.many projects are still in its implementation At the heart of this approach is the singlephase. There are also other valid approaches screen for customer service, so that time– but these are the ones we feel suit our spent with customers is maximised andcustomers’ needs best. personalised. On the network side, Celcom is investing in its next-generationTo provide an illustration of what we aim to network and upgrading to an intelligentachieve, I have outlined some of the invest- packet core that is standards-based and supports rich features and functionality.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 213
  • This simplified but flexible architecture lenges, we have learnt that persistence will enable seamless movement between and consistency are the keys to success. services, allowing Celcom to deliver on its customer experience with features like The future data-centric world will challenge single sign on and integrated policy operators in ways we may not be able to management. imagine today. The major risk is that of dis-• Process: A key part of our process work intermediation, that operators will become is to embed “The Celcom Way” into nothing more than a pipe for customers to product and service design. We have reach Facebook, Google, or OTT messaging developed a ‘moment of truth’ approach services such as WhatsApp. To rise to this that we use to ensure a new service, or challenge operators will need to deploy even an existing one, has the customer many different strategies from pricing to experience built into our design. new businesses. However, Celcom is con-• People: People are always part of the vinced customers will stay loyal provided equation of a unique customer experi- they are provided with the right experience. ence. Our approach is aimed at ensuring that the store experience is more like Starbucks, than a traditional telecom Suresh Narain Singh Sidhu is responsible store. Naturally, this culture change for technology operations across Network doesn’t happen overnight, so it’s here that and IT, Strategy and Regulatory affairs as we are also currently focusing the most well as the end to end business transform- time and effort. ation of Celcom. Prior Sidhu was at Dialog Telekom PLC in Sri Lanka where he held the role of Group Chief Officer – Enterprise andNext-gen customer experience Global at Dialog Telekom PLC. He also helped create two new ventures for Dialog -The transformation into a true service expe- a branded Overseas Foreign Workersrience is still at an early stage. However, partnership in the UK, Dialog Vizz, and aCelcom aspires to be at the forefront of joint venture in the Business Processwhat it calls the “Next Generation Customer Outsourcing space with First SourceExperience.” Whilst our approaches have Solutions of India.had their fair share of successes and chal-214
  • PART SEVEN: LEVERAGING MOBILE TO ACHIEVE LASTING LOYALTYAsk, Listen And BuildLasting LoyaltyBy Sally Burley, Co-founder & Director, The 3rd DegreeWe live our lives on mobile. Our — independent consultant and author ofdevices are never more than three several industry best-selling argues that mobile is a new mass media. Following printfeet away. What’s more, we look at from the 1500s, recording from the 1900s,our mobile phone displays at least cinema from the 1910s, radio from the150 times a day, that’s roughly 1920s TV from the 1950s and Internetevery 5 minutes! Mobile also plays from the 1990s, mobile is the mass media where “all forms of content anda central role in our daily routines. communications converge.”We reach to mobile devices toliberate our work lives, organiseour home lives and strengthen Real relationshipsour social lives. Connect the dots, and it is theMobile is also our primary communications pervasiveness and sheer dominancetool. Two-thirds of the human race rely on of mobile devices that have given themtext messaging to connect with a growing a central position in our daily lives. Butnetwork of family, friends, businesses, mobile is also a fiercely personal device,organisations — even governments. Little which makes it ideal mass media forwonder that SMS is the most widely used interaction and engagement. This isdata application on the planet. why mobile can also improve customer relationship management.Mobile is the most potent form of media inthe history of mankind. In fact, Tomi AhonenFinding out why a customer is unhappy, andworking to fix it straight away with customer carefollow up, can turn a potential defector into apowerful advocate.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 215
  • The combination of the two — referred to Fortunately, for both the operator andas Mobile CRM (mCRM) — offers a way for other players in the business ecosystem,companies to build lasting relationships with the information necessary to deliver per-their customers by harnessing the unique sonalised and targeted communicationsbond we all have with our mobile devices to — communications that is therefore alignedconnect with us in a way we appreciate. But with our personal preferences and require-it’s not just about deepening ties with the ments — is baked into the relationshipcustomers; mCRM also allows companies operators have with their customers. Thisto gain instant insight and feedback about long-standing and intimate relationshiphow their audience thinks, feels and acts. ensures that first communications bet- ween companies and consumers areOperators sit in a unique position to use engaging and relevant.mCRM in its most capable and potent formto create and maintain a 360-degree viewof their customers. This is possible because Two-way communicationoperators own the customer billing relation-ship and important data including usage Just as in real-life, building relationshiplevels, personal preferences and purchasing is about talking and listening. A successfulpatterns. Access to this powerful combina- mCRM program integrates social interac-tion of insights and information puts opera- tion, customer engagement and customertors in a strong position to benefit from feedback. It also uses the conversations itdeep and ongoing mobile engagement. enables between customers and businesses to support and assist buying decisions, driveAnother factor in favor of operators is loyalty and encourage brand advocacy.their ability — powered by customer data At the same time, the program gathers— to satisfy our growing requirement for insights and customer data that will helppersonal and relevant information and ensure the relationship remains healthy,communications. This is imperative on a ongoing and relevant.mobile device, where we have created ahighly intimate space and expect companies Clearly, the customer relationship is builtand businesses to respect the rules of on engagement and a successful programengagement. Put another way, relevance seeks ways to deepen that engagement.and personalisation are the key elements This is where mCRM comes in to extend andof a successful ongoing dialogue. enhance the relationship every step of the216
  • Operators sit in a unique position to use mCRMin its most capable and potent form to createand maintain a 360-degree view of theircustomers.customer journey. But it’s not just about also an excellent way to deliverenabling interaction between companies customer service.and their customers. A whopping 5.6 billion people use mobileAn mCRM platform should also enable phones. In addition, 1.8 billion people accessa two-way conversation using SMS, and the Internet via their mobile devices — that’sharness all the other channels — mobile more than the total number of PC-basedweb, apps and social media — to ensure Internet users worldwide. Clearly, mobilethe exchange is deep and ongoing. plays a key role in developed markets and itFollowing this approach allows companies has become the first and only screen forto create engagement, build loyalty, gain people in developing markets.customer insights and gather customerdata. It also lays the groundwork for a Ensuring that existing and potentialsuccessful strategy to achieve a deeper, customers can rely on their mobile devicesmore valuable relationship with customers. to ‘self-serve’ quickly and easily is key toBelow I outline the specific benefits and customer acquisition in the mobile space.use cases that underline the growing Enabling customers to perform a simplerequirement for mCRM. task on their own — like requesting a SIM card via text, for example — can take pressure off operator call centers andCustomer acquisition walk-in retail stores. What’s more, it goes a long way toward removing the barriersMobile is the smartest and fastest way to and friction new customers can encounter.build a bond with your audience. But it isMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 217
  • Loyalty and advocacy advocacy by encouraging loyal customers to recruit new customers using a varietyLoyalty ensures that customers become of channels including text messagingfans and brand advocates. The process and social media.usually starts when people make apurchase. After that the pressure is on thebrand to deliver on its promise— which, in Feedback loopmany cases, spans the lifetime of theproduct or service. For operators this can Mobile lets companies begin the conversa-be an even bigger task. After all, we rely on tion, but it’s also important to listen to whatour mobile devices every step of our daily customers have to say. It’s easier to serve —routine. If our operators fail to deliver the and consistently delight — a customer onceservices and support we need, then it’s a you get to know them. To accomplish thisspeedy decline to customer dissatisfaction. companies need a deep understanding of the customer. And it helps to be able to askBut it doesn’t have to end that way. Mobile — and find out —their interests, personalallows operators to create and deliver preferences and motivations. This informa-campaigns that talk directly to customers, tion allows companies to refine and improveto nip problems in the bud. With mobile and their customer segmentation and targeting,a comprehensive mCRM program operators ensuring the delivery of personal andcan ask questions, gauge reactions, gather relevant information and communicationsfeedback and grow their relationship with that are essential to boost customer loyalty.individual customers. Get it right and opera- This approach also provides the basis fortors can not only reduce churn; they can all communications with the customer.also boost loyalty and use of their services. Using mobile as a tool to conduct researchThe goal is to build a loyal legion of is approach that delivers dividends. Thisbrand advocates. These are fans that proactive outreach allows companies tohave engaged with a brand and enjoyed the monitor customer satisfaction and sent-results. Based on this good customer expe- iment. These are important indicators thatrience, these fans pass the good word on. allow companies to achieve two key object-It’s word-of-mouth advertising, but mobile ives: get to know their customers better, andincreases its reach and effectiveness. In detect situations quickly that — unattendedthis scenario mCRM can nurture brand — could cause customers to switch.218
  • Finding out why a customer is unhappy, and Customers are empowered to request —working to fix it straight away with customer even demand — products and services oncare follow up, can turn a potential defector their terms. Against this backdrop, it’s neverinto a powerful advocate. With mCRM this been more important for companies toresearch and feedback process can be know and understand their customers. Itongoing and automatic. A prime example is is essential to create a 360-degree view ofhow SMS can be used to survey customers. your customers based on details about theirIntegrating this in mCRM shows your cus- preferences, personal tastes and how theytomers that you care — interaction that can are using their mobile devices, but thisincrease overall satisfaction levels — and information is just part of the equation.provides the organisation instant and Companies and mobile operators shouldactionable insights. Significantly, this infor- also harness mobile to ask questions andmation can be immediately accessible to listen to the answers. Enable an ongoingcustomer care centres, and even the board conversation and you can build the capabili-can be monitoring this data in real-time. ties mix to satisfy the customer, reduce churn and maximise revenue opportunities.Good listener Sally Burley is Co-founder and Director ofWe are mobile. Therefore it is critical to The 3rd Degree. Burley began her career asmake sure that mobile communication a cognitive scientist working with artificialchannels are leading the way in the conv- intelligence systems before specialising inersation between you and your customer. SaaS applications and GUI design. She hasAn mCRM platform is essential to ensure worked with mobile technology since 1999.the exchange delivers value to both parties.This can be achieved in two ways: mCRMcan be used as a tactical tool to enable anddeepen the mobile relationship, or it can beintegrated — as needed — to support yourstrategic CRM capability to empower theongoing mobile relationship.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 219
  • PART SEVEN: LEVERAGING MOBILE TO ACHIEVE LASTING LOYALTYWhy Customer EngagementCampaigns Pay DividendsBy Gregory Dunn, Vice President, Product Strategy and Solutions,SAP Mobile ServicesMobile has come to represent Perkins Caufield & Byers (KPCB), showsthe most pervasive channel of that feature phone users still outnumber smartphone users by a ratio of nearlycommunications and targeted six-to-one.engagement on the planet. What’smore, the immediacy, convenience Overall, mobile phone users vastly outnum-and personal attachment around ber PC Internet users by a ratio of more than four to one. According to the globalour connected devices makes research firm Gartner, there are roughly onemobile an ideal mass media and billion PCs installed worldwide, and themeans of delivering relevant number of users connecting to the Internetmarketing messages and app- via their PCs is estimated at 1.7 billion. This pales in comparison to the number oflication interaction to a global mobile Internet users, which is pegged at 6customer base. billion-plus. Of that total, a whopping 80 percent send and receive text messages,Portio Research projects over 7 billion making SMS the most widely used datamobile subscribers globally by end-2013 application in the world.and annual handset shipments of over 2.15billion by 2016. While smartphones already In fact, worldwide SMS traffic reached 8.6account for a significant number of handset billion messages in 2012, a number expect-shipped, a mega-trends presentation comp- ed to exceed 9.5 trillion by 2015, accordingiled by the venture capital firm Kleiner to Portio Research.From researching products, to conductingtransactions, to sharing a product review with theirsocial network, people rely on their mobile devicesto access advice and make the right decisions.220
  • Despite tremendous ramp so far, smartphones usage still has huge upside. Global smartphones vs. mobile phone subscribers, 2011E 5.6B Mobile 6,000 phone subscribers 5,000Global users (millions) 4,000 3,000 2,000 835MM Smartphone subscribers 1,000 0 Smartphones Mobile phone users users Note: While there are 936MM global 3G subscribers as of Q2: 11, not all of them were smartphone users. One may have multiple mobile subscriptions, therefore actual users #s may be lower than subscriber #s. Figure 1: Based on data from KPCB. Smartphone subscriber estimates per Morgan Stanely Research; Mobile phone subscribers per Informa (as of Q2: 11). http://kpcb.com/insights/2012-internet-trends Creating a conversation The marketing firm Ruder Finn, for example, reports that 91 percent of mobile phone Mobile changes the rules of engagement, users reach to their devices to connect with impacting how people communicate with their social networks and keep up-to-date each other and how they choose to connect with their communities. Mobile and social with brands and businesses. Reams of are morphing, and the impact on business consumer research support the existence is profound. of a seismic shift in human behavior and show the boundary between mobile and Indeed, mobile has empowered people social is blurring. to expect (even demand) marketers to Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 221
  • Vertical explosionYear over year spend growth -2011/2010 Verticals Growth Technology 698% Finance 314% Health:Fitness & Wellness 229% CPG/FMCG 199% Retail & Restaurants 193% Automative 185% Pharmaceuticals 159% Entertainment 133% Education 122%Figure 2: Based on data from Millennial Media. www.millennialmedia.com/mobile-intelligence/conduct conversations with them on their rather receive product information anddevices and — more importantly — listen to marketing messages through SMS camp-their responses. More importantly, because aigns than any other channel.this interaction takes place on their personalmobile phones, marketing messages must But the applications of SMS are not justalso match the context of what matters limited to enabling personalised, two-waymost to these always-on individuals: their dialog around marketing and advertisingpreferences, interests and daily experiences. messages. Analysts report that nearly 80 percent of best-in-class call centers areResearch reveals that nearly half (44 already leveraging SMS to increase effi-percent) of consumers say they would ciency and support customers who prefer222
  • the convenience of self-service to the hassle funnel (awareness, consideration, engage-of waiting for a live call center agent to ment, conversion and loyalty). In short,answer their query. people are relying on their mobile phones at every stage of the consumer journey. From researching products, to conductingMobile at the center transactions, to sharing a product review with their social network, people rely onMobile as a marketing channel has trem- their mobile devices to access advice andendous potential. Google — in its research make the right decisions.aptly titled “The new Multi-screen World:Understanding Cross-platform ConsumerBehavior"— shows that mobile has become Engaging at every stageour constant companion. In partnership withSterling Brands and Ipsos Google surveyed Our increasing dependence on mobile1,611 consumers in the U.S. to determine devices for assistance and advice paves thetheir media interactions and behaviors. way for marketers to harness mobile as part of an ongoing strategy to engage customersPeople have become what Google terms at every stage of the purchase process, from‘multi-screeners,’ choosing their screen building awareness all the way through to(mobile, tablet, PC or TV) depending on boosting loyalty.their context and what they want to accom-plish. Against this backdrop, mobile phones It’s a huge opportunity that brands aroundhave become “the backbone of our daily the world are grasping with both hands.media interactions.” Smartphones, in partic- The result is what mobile ad and platformular, have the highest number of user inter- company Millennial Media calls a “verticalactions per day and serve as the starting explosion” and one that has seen triple digitpoint for activities across multiple screens. growth or greater in mobile advertising spend. From Technology to Entertainment ,Mobile clearly plays a central role in our and from Automotive to Education, a widedaily lives. The impact on retail, for example, variety of brands are using mobile to reachis well documented. Market research firm and engage their customers.comScore finds that mobile reaches andinfluences people throughout the purchaseMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 223
  • Mobile operators that break down messaging silosand build the capabilities to complement theirregular text communications with related marketingmessages that show a deep understanding of theindividual user can position themselves to make theirsubscribers an offer they will find hard to refuse.But it’s also an area of opportunity where First, mobile operators own the network.mobile operators can — and must — This control allows them to connect withbecome more active. their audience and deliver targeted market- ing messages about services, tariffs and special offers. Second, mobile operatorsNew mandate own the customer relationship. This allows them visibility into key subscriber informa-Faced with the decline in the ‘average tion, including service usage, personalrevenue per user’ (ARPU) mobile preferences and purchase patterns.operators have two options: they can These insights are essential and enable theattract more customers from rival mobile operator to deliver marketing theiroperators, or they can wring more subscribers will genuinely appreciate.value from their existing customers. Put another way, mobile operators are inSuccess is all about learning how to sell the enviable position to deliver personal,more services to more customers better. relevant and valuable marketing messagesFortunately, mobile operators are already from the get-go because these commun-extremely well equipped to achieve this ications are completely aligned with thegoal. Several factors provide them customer data the mobile operatorcompetitive advantage. already owns.224
  • Deep trust respondents would welcome mobile marketing messages as part of top-upBest of all, surveys show consumers trust confirmations (9 percent), missed calltheir operators to deliver useful marketing. and voicemail alerts (8 percent), balanceIt’s a close relationship the mobile operator updates (7 percent) and roamingenjoys and can deepen through targeted notifications (7 percent).SMS communications.A recent Upstream Mobile Marketing Lasting loyaltyConsumer Attitudes Report confirms theclose (and untapped) relationship mobile Imagine the effectiveness of a personalisedoperators have with their subscribers. and targeted marketing message that pairs an account balance notification with an offerBased on a survey of 2,198 U.K. adults the based on the subscriber’s own unique usagereport reveals that over half (59 percent) and requirements.of consumers are happy to be contacted bytheir operator with relevant offers. Notably, Mobile operators that break down mess-15 percent of respondents said they would aging silos and build the capabilities towelcome personalised suggestions for plan complement their regular text commun-upgrades, and 13 percent would like to ications with related marketing messagesreceive advertising about discounts aligned that show a deep understanding of thewith their actual usage and requirements. individual user can position themselves to make their subscribers an offer they willHow do consumers want to be contacted find hard to refuse.by mobile operators? Again the Upstreamsurvey offers some key insights. But it’s not just about wielding the power of mobile to cross-sell and up-sellThe most popular format was text message subscribers based on their profiles and(61 percent), and 51 percent said that they preferences. Mobile also enables mobilewould like to be informed about new offers operators —and the marketers thatand services within the normal flow of SMS partner with them — to super-chargemessages that they already receive from their CRM strategies.their mobile operators. Specifically,Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 225
  • Put another way, the optimised use of the Clearly, mobile complements all marketingmobile channel allows mobile operators and messaging channels. As an effectiveto maintain continuous customer touch, mass media on its own or well integratedenabling them to deliver sustained support into a comprehensive digital strategy,and service and participate in two-way mobile has vast potential to create businessconversations with their subscribers. value, improve process efficiency, triggerThe result is an approach that rewards product consumption and use, and increaseboth stakeholders. customer feedback. Executed correctly, mobile doesn’t simply clinch the one-offSubscribers are encouraged to engage in deal. It furthers loyalty, cements relation-‘conversations’ on their terms, interactions ships and improves CRM.that boost loyalty and build intimacy. Mobileoperators gain greater insights into whattheir subscribers want and appreciate, Gregory Dunn manages the global productdata that also helps operators refine management group within SAP Mobiletheir services and —ultimately — ensure Services. Dunn has over 28 years of tele-customer loyalty is deep and long-lasting. communications experience, with primary focus in the wireless industry. He started hisMobile can also extend the impact and value career at the divestiture of AT&T, spendingof advertising. Case in point: point-of-sale time at Pacific Telesis, where he held seniordisplays where mobile allows marketers to management positions of increasing respons-gauge response in real-time and track the ibility, with a core milestone achievement ofdegree to which that particular advertising launching the first statewide 900mhz mes-is attracting the attention of consumers saging system in the US.and prompting them to interact using theirmobile device. It’s a similar story in printmedia, where innovations such as 2Dbarcodes make it possible for consumersto access more information using theirmobile phones.226
  • APPENDIXMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 227
  • APPENDIXGlossary Of TermsA2P (Application to Person) - This is CISPA - Cyber Information Sharing andtypically a human communicating with Protection Act [(CISPA) (H.R. 3523)] -an application via messaging. CISPA addresses how information would be shared between private companies andARPU (Average Revenue Per User) - This the government to catch malicious actorsis usually abbreviated to ARPU is a measure breaching networks to steal information orused primarily by consumer communica- sabotaging systems.tions and networking companies, definedas the total revenue divided by the number CoS - Classes of Serviceof subscribers. CSP - Communications Service ProvidersASR (Answer Seizure Ratio) - In Voicetelecommunications, this is a measure of DRA - Diameter Relay Agentnetwork quality defined as the number ofsuccessfully answered calls divided by the DSC - Diameter Signalling Controllertotal number of calls. Defined by ITU E.411specifications. Diameter - An Authentication, Authoriza-BARG (GSMAs Billing and Accounting tion, and Accounting (AAA) protocolRoaming Group) - This is a working group for computer and telecommunicationsthat manages the various standards and networks. It is the successor to the Radiusprocedures for GMS billing and roaming. Protocol. In LTE networks, used toVarious regional and international BARG authenticate subscribers on networksgroups meet at various times through (home or visited).the year. Dongle - This is a small piece of hardwareBYOD - Bring Your Own Device that plugs into an electrical connector on a computer and serves as an electronic "key"BYON - Bring Your Own Number for a piece of software; the program will run only when the dongle is plugged in. The termCAPEX (Capital Expenditure) - A capital "dongle" was originally used to refer onlyexpenditure is incurred when a business to software-protection dongles; however,spends money either to buy fixed assets or currently "dongle" is often used to refer toto add to the value of an existing fixed asset any small piece of hardware that plugs intowith a useful life extending beyond the a computer.taxable year.228
  • E.164 - The ITU standard for defining tele- GSMA (GSM Association) - An associationphone numbers. Consists of a country code of mobile operators and related companies+ local dialing digits. All Telephone Numbers to manage standardization, deployment andshould comply with E.164. promotion of the GSM-based mobile tele- phone system.E-UTRAN - Evolved Universal TerrestrialRadio Access Network - the LTE radio/air GSMA AA.19 - A GSMA document used tointerface. exchange SMS parameters and termination fees for bi-lateral interworking.Fallback [Capacity] - The ability for an LTEsubscriber to connect to the 3G (non-LTE) GMSA IR.21 - A GSMA document that isinfrastructure while roaming. used to define the protocols and informa- tion regarding roaming procedures as wellFive 9s service availability - Also written as messaging parameters between mobileas 99.999%. This is used in Service Level operators.Agreements (SLAs) that indicate that aservice should be available 99.999% of GSMA IR.35 -A GSMA document describingthe time (or greater). "End-to-End Functional Capability Test Speci- fication for Inter-PLMN GPRS Roaming".GNU - GNU is not Unix. A Unix-likecomputer operating system developed by HPLMN (Home Public Land Mobilethe GNU Project, ultimately aiming to be Network) - A subscribers home networka "complete Unix-compatible software in a roaming scenario.system" comp-osed wholly of free software. HSS (Home Subscriber Servicer) - ThinkGPRS (General packet radio service) - of this as a net-gen HLR (Home LocationA packet oriented mobile data service on the Register). The HSS is used in LTE networks.2G and 3G cellular communication systemsglobal system for mobile communications. HSPA (High Speed Packet Access) - A combination of two mobile packet proto-GRX (GPRS Roaming Exchange) - A hub cols: High Speed Downlink Packet Accessfor GPRS connections from roaming users, (HSDPA) and High Speed Uplink Packetremoving the need for a dedicated link Access (HSUPA) to extend and improve 3Gbetween each GPRS service provider. networks using the WCDMA protocols. Some call this 3.5G (a marketing term only).Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 229
  • HSPA+ - Evolved HSPA - Extends HSPA to M2M - Machine to Machinehigher speeds. Some networks marketinggroups refer to this as "4G." MDN (Mobile Directory Number) - An alternative (mostly CDMA based) nomen-IDD (International Direct Dial) - clature for a subscribers telephone number.A telecommunications system that enablescallers to dial direct an international tele- MMS (Multimedia Messaging Service) -phone number for a voice call. A messaging service that enables users to send/receive rich content (images, audio,IP-VPN - IP - based Virtual Private Network and video clips).IPX - IP eXchange - A global extremely MNO (Mobile Network Operator) -high speed, high quality of service network Also known as a "mobile carrier." Abackbone used to provide interworking of service provider that provides mobilemobile and fixed operator services such services (voice, messaging, networkas voice, messaging, data roaming, video, access) to subscribers.RCS and more. MNP (Mobile Number Portability) -ISP - Internet Service Providers Enables mobile telephone users to retain their mobile telephone numbers whenJoyn - The GSMA brand name of the RCSe changing from one mobile network operatorimplementation for many operators in to another, also known as Wireless NumberEurope. Joyn was rolled out in 2012. Portability (WNP).Local breakout - The ability for a roaming MO (Mobile Originated) - Trafficsubscriber to reach the Internet cloud originating from a mobile or user devicethrough the visited network instead of all IPdata being routed (via GRX) back to the MSISDN (Mobile Station Internationalhome network. Subscriber Directory Number) - A subscribers telephone number on a GSMLTE (Long Term Evolution) - Standard for or UMTS network.wireless communication of high-speed datafor mobile phones and data terminals. Many MT (Mobile Terminated) - Traffic receivedtimes LTE is referred to as "4G." on a mobile or user device.230
  • NER (Network Efficiency Ratio) - P2P - Person to Person (or human to humanA measure of network quality defined as: via telecommunications devices)Answers + User Busy + Ring No Answer_ Terminal Rejects / Total call attempts PLMN (Public Land Mobile Network) -(seizures). Defined as an addition to A Mobile networkITU E.411. PSMS - Premium SMS (PSMS).NFC (Near Field Communication) - A setof mobile device standards to establish a PSTN (Public Switched Telephoneclose-proximity radio connection. Network) - The legacy telephone networkNGN (Next Generation Network) - QoS (Quality of Service) - Refers toA broad term used to describe key architec- several related aspects of telephony andtural evolutions in telecommunication core computer networks that allow the transportand access networks. of traffic with special requirements.NUVO (Network Unaffiliated Virtual RCS (Rich Communications System) -Operator) - A service provider that assigns RCS is a GSMA initiative to support nextalternate telephone numbers to provide generation messaging, voice calls withMessaging and/or Voice services with advanced capabilities including presence,interoperability to legacy Messaging & Voice video, real-time messaging with inter-work-networks (e.g. Mediafriends, Pinger, etc). ing and compatibility with legacy voice & messaging services.OPEX (Operational Expenditure) -An ongoing cost for running a product, RCSe - Defines a subset of the full RCSbusiness, or system. standard. RCSe is being established in Europe at several operators in 2012, usingOTT (Over The Top) - In the fields of broad- the "Joyn" brand.casting and content delivery, over-the-topcontent (OTT) means on-line delivery of SIGTran - GSM MAP (or SS7) over IPvideo and audio without the Internet serviceprovider(Comcast, Verizon, etc.) being SIP (Session Initiation Protocol) -involved in the control or distribution of the The Session Initiation Protocol (SIP) is ancontent itself. IETF-defined signalling protocol widely usedMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 231
  • for controlling communication sessions TAP (Transferred Account Procedure) -such as voice and video calls over Internet This is the process and document formatsProtocol (IP). that allow a visited network operator to send billing records of roaming subscriberrs toSMS (Short Message Service) - A text their respecitive home network operators.messaging service component of phone, The latest version of the standard is TAP 3.web, or mobile communication systems,using standardized communications TAP 3.12 - A GSMA specification, releasedprotocols that allow the exchange of short in GSMA document TD.57 v30.1 on May 1,text messages between fixed line or mobile 2012. New functionality includes LTEphone devices. Service support for voice and SMA as well as charging flexibility and validationSocial Engineering - Social engineering improvements among other chagnes.entices potential victims into taking someaction that will prove harmful to themselves TDM (Time-Division Multiplexing) - A typeand/or the device they are using. of digital multiplexing in which two or more bit streams or signals are transferred appar-SS7 (Signalling System No 7) - A set of ently simultaneously as sub-channels in onetelephony signalling protocols which are communication channel, but are physicallyused to set up most of the worlds public taking turns on the channel.switched telephone network telephone calls. Transrating - Transrating means changingSSM - Self-Service Machines the bitrate (bandwidth) of a stream by means of processing. For instance, process-SVA - Stored Value Accounts ing an input video stream of 1Mbps so that the output stream is 256Kbps only. Tran-SAP Mobile Services Number Resolution srating can increase or decrease the bitrate,System - A globally distributed database of and usually involves changing the encodingnumbering plans and number portability parameters.information for countries around the world.NRS is continually updated (real-time for Transcoding - A two-step process in whichsome countries) with the latest number the original data/file is decoded to an inter-portability and number range data. mediate uncompressed format, which is then encoded into the target format.232
  • TN - Telephone NumberVPLMN (Visited Public Land MobileNetwork) - In a roaming scenario, thenetwork that the subscriber is currentlyconnected to.VoHSPA - Voice over HSPAVoLTE - Voice over LTEVoIP (Voice over Internet Protocol) -Commonly refers to the communicationprotocols, technologies, methodologies,and transmission techniques involved in thedelivery of voice communications and multi-media sessions over Internet Protocol (IP)networks, such as the Internet.VoWIFI - Voice-over-Wi-FiWAP Billing - This is a capability for mobilesubscribers to buy content from WirelessApplication Protocol sites (or mobile sites)and have the purchases charged directlyto their mobile phone bills from theirmobile operator.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 233
  • APPENDIXIndex Of Contributor CompaniesAylus Networks CTIA – The Wireless Association ®Aylus Networks, helps mobile operators and CTIA is an international non-profit member-communications service providers deliver ship organisation that has represented thelive video services for consumers and enter- wireless communications industry sinceprises. Solutions range from live video 1984. Membership in the associationsharing, including social networks and RCS/ includes wireless operators and theirRCSe devices, to multi-party video calling on suppliers, as well as providers and manufac-mobile networks. Aylus’ innovative, IP-based turers of wireless data services andcore infrastructure platform is unique in its products. The association advocates onability to serve as a video calling inter- behalf of its members at all levels of govern-exchange, enabling mobile service providers ment. CTIA also coordinates the industry’sto optimise video communications among voluntary efforts to provide consumersdifferent networks (3G/4G/Wi-Fi) regard- with a variety of choices and informationless of the endpoints, build new revenue regarding their wireless products andstreams through QoS/QoE, and drive services. This includes the voluntarymass-market adoption of mobile video industry guidelines; programs that promoteservices based on existing voice calling mobile device recycling and reusing; andofferings. Visit www.aylus.com wireless accessibility for individuals with disabilities. Visit www.ctia.orgBharti Airtel Celcom AxiataBharti Airtel is a leading integrated telecom-munications company with operations in 20 Celcom is Malaysia’s leading mobile tele-countries across Asia and Africa. Headquar- communications provider with over 12tered in New Delhi, India the company ranks million customers. Established in 1988, itamongst the top 5 mobile service providers has the widest national 2G and 3G networks,globally in terms of subscribers. In India, the covering over 98 percent of the population.company’s product offerings include 2G, 3G Celcom, that is also the country’s numberand 4G services, fixed line, high speed one mobile broadband provider, is movingbroadband through DSL, IPTV, DTH, enter- towards offering integrated multi-accessprise services including national and inter- and multimedia services that are alignednational long distance services to operators. with consumer behaviour and demand.In the rest of the geographies, it offers Celcom is part of the Axiata Group of Com-2G, 3G mobile services. Bharti Airtel had panies, one of the world’s largest telecom-over 246 million customers across its munications companies, with more than 180operations at the end of February 2012. million customers across 10 Asian markets.Visit www.airtel.in Visit: www.celcom.com.my.234
  • Cloudmark GSMA LACloudmark is the global leader in messaging GSMA Latin America (GSMA LA) has foursecurity solutions, delivering the industry’s Operator Expert Working Groups coveringfastest and most effective protection Billing and Roaming (BARG), Regulatoryagainst the widest range of messaging (REGU), Technical and Terminals (TECT),threats to mobile operators, Internet Service and Security and Fraud (SEGF) issues in theProviders and social networks. Cloudmark region. GSMA LA hosts two key plenaries asimplifies and advances the management year, featuring working group sessions plusof messaging abuse, thereby increasing workshops and seminars on other keynetwork utilisation and reducing infrastruc- GSMA initiatives. In Latin America, theture costs. Protecting 1.8 billion subscribers GSMA member companies serve overfor the world’s largest carrier networks, 630 million connections, accounting forincluding AT&T, Verizon, T-Mobile, Comcast, 95% of the total mobile region’s connec-MySpace, NTT, Swisscom and Time Warner- tions. Visit: www.gsma.com/latinamericaCable, Cloudmark currently scans 15 GSMA MMUpercent of the world’s mobile network traffic,15 percent of the world’s Internet traffic and GSMA’s Mobile Money for the Unbanked50 percent of the world’s social networking Programme help mobile operators andtraffic. Visit: www.cloudmark.com the financial industry collaborate to deliver affordable financial services that provideGlobe Telecom safety, security and convenience to millionsGlobe Telecom is a full-service telecommun- of previously unbanked customers. Sinceications provider in the Philippines, with its the Mobile Money for the Unbankedown international gateways, cable landing programme was founded, the industry hasstations, domestic fibre backhaul and a increased in size five-fold, with over 100national access network (data, fibre, 3G/ mobile money deployments active in theHSDPA). It offers a range of wireless and world today – 80% of which are in develop-wireline voice and data services (including ing markets. The GSMA represents theMobile GSM/ 3G/ HSDPA, broadband, PSTN interests of mobile operators world-Fixed lines, IDD, NDD, Corporate Data, IPLC wide,spanning more than 220 countries,and Internet). Globe offers the most compre- and uniting nearly 800 of the world’s mobilehensive coverage for international roaming, operators, as well as more than 200with more than 600 partner networks companies in the broader mobile ecosys-worldwide. Visit: www.globe.com.ph tem, including handset makers, software companies, equipment providers, Internet companies, and media and entertainmentMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 235
  • Mavenir Systemsorganisations. Visit: www.gsma.com.To learn more about the Mobile Money Mavenir delivers Converged Voice, Videofor the Unbanked Programme Visit and Messaging solutions, based on thewww.mmublog.org mOne™ Convergence Platform, to wireless operators globally. Mavenir’s value-addedInforma Telecoms & Media IMS and cloud-based solutions enable theInforma delivers strategic insight, key market transformation of legacy core networks bydata and forecasts to help clients make offering compelling new services such asbetter business decisions for more than 25 VoLTE and RCS, and by providing uniquelyyears. It counts 65 analysts in nine research innovative solutions to address theoffices offering pragmatic advice to the challenge of migrating subscribers andleading global operators and builders of com- services to 4G. These solutions are deployedmunications infrastructure. Its chief objective by customers in both North America andis to be accessible, responsive and connected Europe. Visit: www.mavenir.comboth to the markets it serves and the clients MediaFriendsit assists. Visit: www.informatandm.com MediaFriends enables the world toKorea Telecom communicate more freely by breakingKT provides telecommunication services down barriers of device compatibilityincluding local, long distance, and interna- through its patent pending Mobile-to-IPtional calling, satellite communication, and Multi-Screen Messaging technology.data transmission, and wireless telephone HeyWire™, the company’s real-time socialservices in South Korea. The company also messaging hub, empowers consumersoffers network portal and high-speed worldwide to connect with each other inInternet access, and has the largest share better ways using mobile messaging (SMSof the South Korean local telephone and & MMS), IM, Facebook and Twitter onhigh-speed Internet business. KT is using its virtually any Internet enabled device.broad capabilities to lead the global market Visit: www.mediafriendsinc.comin an era of convergence that sees the Metros PCSboundaries blur between voice and data,wired and wireless, and broadcasting and Dallas-based MetroPCS Communications,telecommunications. Visit: www.kt.com Inc. (NYSE: PCS) is a provider of no annual contract, unlimited wireless communica- tions service for a flat rate. MetroPCS is the fifth largest facilities-based wireless carrier236
  • in the United States based on number tion especially in Next Generation fixed lineof subscribers served. With Metro USA(SM), services, broadband pay-TV and InternetMetroPCS customers can use their service access, IP-based business services, 3G & 2Gin areas throughout the United States mobile and public Wi-Fi services, and large-covering a population of over 280 million scale IT solutions. Visit: www.pccw.compeople. As of September 30, 2012, Qatar TelecomMetroPCS had approximately 9.0 millionsubscribers. For more information please Qtel provides a full range of telecommunica-visit www.metropcs.com. tions services in Qatar and across its presence in 17 countries. The companyMoney2020 offers leading-edge products and services,Money2020 Expo is a new conference and enjoys partnerships with many of thefocused on emerging payments and next world’s leading telecommunications players.generation financial services that brings Qtel has invested over US$3.2 billion intogether innovators from financial Qatar’s technology infrastructure and hasinstitutions, mobile, retail and advertising developed leading-edge Fibre and 4Gto discuss issues around mobile money Solutions, as well as an exciting portfolioand the customer experience. Money2020 of mobile, fixed-line and entertainmentwas co-founded by industry veterans in services. Qtel is part of the Qtel Group,payments and mobile to bring together all a leading international communicationsstakeholders. Visit: www.money2020.com company, with a significant presence in the MENA region and Southeast Asia, andNeucom Solutions a consolidated customer base of 83.7Neucom Solutions provides consulting million as of June 2012. Its companiesservices to the telecom sector focusing include Indosat, Asiacell, Wataniya, Nawras,on areas including: business planning, Nedjma and Tunisiana. Visit: www.qtel.qacommercial management, partnering, SAPchange management, businesstransformation and new market entry As the market leader in enterprise applica-strategy. Visit: www.neucom.eu.com tion software, SAP (NYSE: SAP) helps com- panies of all sizes and industries run better.PCCW From back office to boardroom, warehousePCCW is the largest and most comprehen- to storefront, desktop to mobile device, SAPsive provider of communications services in empowers people and organisations to workHong Kong, offering award-winning innova- together more efficiently and use businessMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 237
  • insight more effectively to stay ahead of the Group’s consumer-related functions andcompetition. SAP applications and services focuses on setting new benchmarks inenable more than 195,000 customers to customer experience. Visit www.singtel.comoperate profitably, adapt continuously, and Telecoms.comgrow sustainably. Visit www.sap.com. Telecoms.com is the go-to website for any-SAP Mobile Services one and everyone in the global telecommu-SAP Mobile Services is the global leader, in nications industry. Visit. www.telecoms.comenabling mobile information services for Telefónicamobile operators, financial institutions andenterprises. It provides customers the Telefónica has one of the broadest geo-widest offering in SMS, MMS, GRX, IPX graphic footprints of any operator. It isInteroperability and innovative mobile con- present in 25 countries and provides tele-sumer engagement services. SAP Mobile communications services to over 300Services processes more than 1.8 billion million customers in Europe and Latinmessages per day reaching 900 operations America. In addition, through its industrialand 5.5 billion connections around the world alliances, which are unique in the sector, itvisit www.SAP.com shares a joint customer base of more than 700 million, 10 percent of the world’s popu-Singtel lation. Telefónica operates with four brands:The SingTel Group is Asia’s leading commu- Telefónica, Movistar, O2 and Vivo. Visit:nications group, providing a wide spectrum www.telefonica.comof multimedia and infocoms technology textPlus(ICT) solutions, including voice, data andvideo services over fixed and wireless plat- textPlus is the world’s leading mobile com-forms. Headquartered in Singapore, SingTel munication destination. It’s where the worldhas more than 130 years of operating expe- goes to say hello - anytime, anywhere,rience and has played a pivotal role in the anyplace. Over 35 million people worldwidecountry’s development as a major commu- use textPlus to text and talk for free ornications hub. As at 30 June 2012, the extremely low cost. textPlus works onGroup serves 462 million mobile customers multiple platforms and devices includingaround the world. The Group is structured iOS, Android, Symbian and Windowsalong three key businesses: Group Phones. The company was founded in 2007Consumer, Group Digital L!fe and Group ICT. and backed by leading VC firms MatrixGroup Consumer brings together the238
  • Urban AirshipPartners, GRP Partners, and Kleiner PerkinsCaufield & Byers. Visit: www.textplus.com. Urban Airship is the unrivalled leader in push messaging, delivering billions ofTIM messages per month with unparalleledThe Telecom Italia Group is Italy’s leading speed and scale for leading brands such asICT enterprise, active in fixed-line and CBS Interactive, Groupon, Soundtracking,mobile telecommunications, the Internet Walgreens and Warner Bros. Urban Airshipand media, office and system solutions, enables these brands and 65,000 other cus-research and development. The Group tomers to engage consumers directly onalso has a significant presence in Latin their mobile device home screens with pre-America. Group growth is driven by cision-targeted mobile messaging. Com-providing leading-edge infrastructure, plete mobile engagement suites offer easythe latest technology, a customer centric and effective end-to-end management oforganisational model and the capabilities the push messaging process from customerto cater to the needs of each customer and location targeting, to automation andcluster. Visit: www.tim.it delivery including message composition, instant in-app landing page creation andThe 3rd Degree analytics to optimise effectiveness. VisitThe 3rd Degree was founded in 2001 to www.urbanairship.combring enterprise class, real-time research Yankee Groupcapabilities to the mobile platform. Theplatform quickly extended to become a Yankee is the preeminent research andfull mobile CRM solution delivering highly advisory firm equipping companies to profitscalable, secure, reliable mobile services in a mobile world. The core of its content isincluding mobile research, marketing, proprietary research and analytics on theloyalty, mobile web site builder and language attitudes, behaviours and usage patterns ofanalysis. Today Synapta mCRM offers a mobile users. Based on this research, the firmunified mobile platform utilised by mobile provides a range of actionable data, insightsoperators, FMCG companies, research and advice. Visit: www.yankeegroup.comagencies, the government, banks andretail environments worldwide. Visit:www.the3rddegree.co.ukMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 239
  • Mobile Operator Guide 2013Editorial DirectionCarmel CosciaDiarmuid MallonProject ManagersShahzia BanthJean LohMatthew SimsDesignBoing Design ParisBoingDesignParis@yahoo.co.ukDeveloped and producedPeggy Anne Salz,Publisher & Chief AnalystMobileGroovewww.mobilegroove.compeggy@mobilegroove.comAmanda RoulstoneAssistant to Peggy Anne Salzwww.dragonvirtualassistants.co.ukAmanda@dragonvirtualassistants.240
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