Chris Barraclough: Shareholder Value for Telcos - Telco 2.0 7th Executive Brainstorm
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Chris Barraclough: Shareholder Value for Telcos - Telco 2.0 7th Executive Brainstorm

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Telco 2.0 MD Chris Barraclough's presentation from the Shareholder Value session at the 7th Telco 2.0 Executive Brainstorm.

Telco 2.0 MD Chris Barraclough's presentation from the Shareholder Value session at the 7th Telco 2.0 Executive Brainstorm.

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  • The ability of the 5 domains of a business model to influence two factors will ultimately drive the success or failure of that business model:Value = value within the value network. Value network = collection of actors in an industry. E.g. Mobile telecoms industry = operators + partners/vendorsControl = amount of control an individual company or collection of companies that do same role can exert on value network. E.g. Mobile telecoms operators have very strong control over mobile telephony market
  • Currently operators providecore services to individuals within their customer segments (P2P) communications and they collect money from millions of customers in thousands of segments using hundreds of devices. In doing this they have a collection of assets and skills that can be reused to develop new platform services for delivery to upstream customers (like the merchants in amazon model). Operators can be paid for these services by new upstream customer group.Now going to cover what they are and challenges of realising the opportunity…
  • Lots needs to be done but 3 key things are important:Leadership. Concept has to be embraced at the top of the organisation. New way of making money from new customers using new skills = major shift. Without board level leadership then 2SBM will fail. Encouraging signs = Telco 2.0 exec brainstorm attended by senior commercial players – marketers and strategists from operatorsAction group potential Colao painted very similar vision of future in recent presentationSkills. Mentioned that platform knowledge and information exchange is key to future success. Google = 2-sided master because it can capture and manage data so well. Starting to invade telco space – maps, triangulation, chrome, accounts etc. and most recently opt-in to traffic monitoring service using mobile phone location being offered direct to end user. Operators have lots of assets but others will work around. Value depreciating and operators have to find a way to become very skillful and managing upstream and downstream customer data well (and within privacy laws). 2 options – do anonymously or only use data on transactions that take place within telco (Google model)Collaboration. As mentioned – scale is king. Problem for operators is that none are big enough to dominate on their own as they have network boundaries (defined by regulation and economics). Upstream customers want to reach ALL telco customers not just those on a single network in a single retion. Therefore if they are to develop a large-scale platform for upstream providers, operators are going to have to work together and with partners to overcome this fragmentation. Aggregation services will be key. This could happen via a 3rd-party aggregator like Mblox and Ericsson IPX in premium SMS or it could be via operators collaborating directly as with Zoompass (a JV in Canada between Rogers, Bell Canada and Telus) to provide digital wallet.

Chris Barraclough: Shareholder Value for Telcos - Telco 2.0 7th Executive Brainstorm Presentation Transcript

  • 1. Rebuilding value & control via a 2-sided business model
    Chris Barraclough, MD, STL Partners/Telco 2.0
  • 2. Agenda
    What is a business model?
    Problems with Telco 1.0 business model
    New opportunity: Telco 2.0
  • 3. A business model is the COMMERCIAL architecture of a business: how it makes (or loses) money
    A 5-domain model
    The marketplace
    Service Offering
    Value Network
    Technology
    Finance
    Source: Faber et al; Designing business models for mobile ICT services, 2001; adapted and developed by STL Partners
    Note: Each domain breaks down into several inter-related components that make up the overall business model.
  • 4. The success of a company’s (or collection of companies’) business model is ultimately a function of two factors
    Value
    Control
    +
  • 5. Control Drivers
    Value Drivers
    Control & Value Drivers
    Value Network
    Technology
    Service Offering
    Finance
    The Marketplace
    • Low/no growth in end user revenues
    • 6. More companies sharing revenues and generating costs
    • 7. More substitute products
    • 8. Unable to match free
    Telco 1.0 business model is now under pressure in several domains
    • More modular technology
    • 9. Decentralised network intelligence
    • 10. More punitive regulation
    • 11. Less vertical integration
    • 12. Weaker customer relationships
    Source: Ballon 2007; STL Partners analysis
  • 13. Sexy new services paid for by end user will NOT yield continued revenue and profit growth
    Short term revenue growth only +
    Medium term capacity & cost issues =
    Falling margins, lower profits… 
  • 14. Pre-2005
    • Retailer of books and games
    Now
    • Retailer + platform (Amazon Marketplace)
    Amazon – retailer-cum-platform provider
  • 15. Pre-2005
    • Retailer of books and games
    • 16. 52,000 SKUs
    Now
    • Retailer + platform (Amazon Marketplace)
    • 17. 100,000s of SKUs
    Amazon – retailer-cum-platform provider
  • 18. Pre-2005
    • Retailer of books and games
    • 19. 52,000 SKUs
    • 20. Revenue from end user sales
    Now
    • Retailer + platform (Amazon Marketplace)
    • 21. 100,000s of SKUs
    • 22. New revenuefrom enabling services to traders
    Amazon – retailer-cum-platform provider
  • 23. Pre-2005
    • Retailer of books and games
    • 24. 52,000 SKUs
    • 25. Revenue from end user sales
    • 26. Profitable but margin squeeze
    Now
    • Retailer + platform (Amazon Marketplace)
    • 27. 100,000s of SKUs
    • 28. New revenue from enabling services to traders
    • 29. Profit underpinned by platform
    Amazon – retailer-cum-platform provider
  • 30. Pre-2005
    • Retailer of books and games
    • 31. 52,000 SKUs
    • 32. Revenue from end user sales
    • 33. Profitable
    • 34. Best-in-class logistics
    Now
    • Retailer + platform (Amazon Marketplace)
    • 35. 100,000s of SKUs
    • 36. New revenue from enabling services to traders
    • 37. Profit underpinned by platform
    • 38. Improved, lower cost logistics (more scale)
    Amazon – retailer-cum-platform provider
  • 39. Pre-2005
    • Retailer of books and games
    • 40. 52,000 SKUs
    • 41. Revenue from end user sales
    • 42. Profitable
    • 43. Best-in-class logistics
    • 44. Big consumer base,strong relationships:
    • 45. E.g. peer reviews
    Now
    • Retailer + platform (Amazon Marketplace)
    • 46. 100,000s of SKUs
    • 47. New revenue from enabling services to traders
    • 48. Profit underpinned by platform
    • 49. Improved, lower cost logistics (more scale)
    • 50. More customers, stronger relationships:
    • 51. E.g. Premium logistics – Amazon Prime
    Amazon – retailer-cum-platform provider
  • 52. A new telecoms business model
    $
    $
    Source: STL Partners Analysis
  • 53. A successful Telco 2.0 business model restores elements of value and control to the Telco industry
    Control Drivers
    Value Drivers
    Control & Value Drivers
    Value Network
    Technology
    Service Offering
    Finance
    The Marketplace
    Single platform for multiple industries
    Operator remains gateway to end users
    • New revenue source from upstream customers
    • 54. Services more complementary
    • 55. End-users add value to platform
    • 56. More customer intimacy
    • 57. Centralised intelligence – resides in platform
    • 58. Unclear – potentially a move into less regulated markets
    ?
    Source: Ballon 2007; STL Partners analysis
  • 59. Three things required to bring Telco 2.0 to fruition
    Bad debt
    Demographics
    Leadership
    MY CREDIT
    MY PERSONAL DATA
    MY RELATIONSHIPS
    Address
    Gender
    Average balance
    Skills
    Name
    Profile
    MY INTERACTIONS
    MY DEVICES
    Preferences
    Location
    Presence
    SIM
    SoftSIM
    Number
    SIP Number
    Pictures
    Videos
    Bank
    School
    Browsing History
    Collaboration
    MY CONTENT
    MY IDENTIFIERS
    MY CONTEXT
    QR Codes
    IP Address
    Serial Number
    Device details
    Calendar
    Friends
    On/Off
    Source: STL Partners analysis
    .mobi domains
    Address Book
    Workplace
    Roaming
  • 60. $375 billion opportunity (not guaranteed!)
    EU-27 and North American Telecoms
    $1,230bn
    $689bn
    Source: STL Partners, Telecoms Two-Sided Business Model Opportunity and Future Broadband Business Models, both published in 2008
  • 61. Thank You
    More at www.telco2.net