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Business Model Innovation in the Digital Economy The Two-Sided Telecoms Business Model Martin Geddes, Chief Analyst, STL Partners [email_address] www.telco2.net
Core messages ,[object Object],[object Object],[object Object],[object Object]
Many successful two-sided market players
Why you should pay attention ,[object Object],[object Object],[object Object]
Introducing two-sided markets
Betfair: Beats one-sided rivals Joins two groups who want to interact vs. Bookies Punters Punters
Google: Two-sided master  FREE! Need to attract users that upstream party values Advertisers Audience
Chicken and egg problem: need an audience Build audience Introduce revenue model
Mastercard: Balancing two sides Mirror of termination fee debate in telecoms “ Acquiring” (Merchant) Banks “ Issuing” (Customer) Banks
A New Telco Proposition?
New Telco Value Propositions Now: Bundled voice, messaging,  video and  internet access Supply Chain Platform Personalised Logistics Services for Data Retail Relationship Platform Media & Content Services Provider ECONOMIES OF SCOPE ECONOMIES OF SCALE
1. New  Retail  Platform
Telco: traditional one-sided retail model INVENTORY RETAILER VALUE PROP “ Connected lifestyle” “ Affordable fashion”
Two-sided retail models Rent shelf space Provide business intelligence & payment services  Rent portal space Provide payment and customer care services No inventory risk No inventory risk
Telco media services supply chain platforms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],ODI Innovation World Web21C Litmus Live! + Betavine Content Provider Access
2. Supply Chain Platform
Supply Chain Logistics: Physical World Distribution Collection Multi-Modal Transport Delivery 1. Distribution Collection Multi-Modal Transport Delivery B2B VAS Tax & Duty Management Documentation Management Denied Party Screening Scheduling & Supply Chain Management Systems Integration Tracking & Monitoring
Telco 2.0: New Wholesale + VAS Wholesale Distribution Capture/Origination Multi-Modal Transport Display/Termination B2B2C VAS Identity, Authentication, Security Advertising, Marketing Services Ecommerce Order Fulfilment Billing & Payments Customer Services Telco (2.0)
New  Wholesale Distribution  Platform
Current Approach: One-sided Bulk Wholesale $ Upstream Customers  Revenue Side 1 Downstream Customers  Revenue Side 2 Customer relationship is with someone else Other Telcos (e.g. MVNO) Consumers Enterprises SMEs Multi-Nationals Your Telco
Future Approach: Fine-grained Wholesale Partners can re-package minutes and messages to achieve higher margins Wholesale Aggregator £15/month £ 20/ month Consumers Your Telco
New Wholesale – Video & Data Connectivity included with the application Tomorrow : Multi-modal delivery Machine-to-machine Wholesale VPN products Packaged apps “comes with data”
New B2B2C  Value Added Services   Platform
Help customers interact more easily ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Customers –  Revenue Side 1 Customers –  Revenue Side 2 Millions of Customers Thousands of Segments Developers Retailers Government Brand Advertisers Content Owners Telco – Retail
Telcos assets well suited ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Customers –  Revenue Side 1 Customers –  Revenue Side 2 Telco Capabilities & Assets       Millions of Customers Thousands of Segments Developers Retailers Government Brand Advertisers Content Owners Telco – Retail
Telcos have many valuable but latent  data  assets MY PERSONAL DATA MY STUFF MY IDENTIFIERS MY INTERACTIONS MY RELATIONSHIPS MY CONTEXT MY DEVICES MY CREDIT Name Address Gender Profile Preferences SIM SoftSIM Serial Number Device details Location Presence On/Off Roaming Pictures Videos Calendar Address Book Bank School Friends Workplace Browsing History .mobi domains QR Codes Bad debt Demographics Average balance Number SIP address IP Address Email
Current Approach: Media & Advertising… $ $ Upstream Customers  Revenue Side 1 Downstream Customers  Revenue Side 2 Telco Platform Ecosystem Brand Advertisers Consumers Enterprises SMEs Multi-Nationals
[object Object],Advertising & Marketing Example: Blyk Source: STL Partners’ estimates and calculations; core assumptions not articulated here
… but market is too small! Revenue, $ Billions 2006 2010 $2,000bn $2,490bn $425bn $533bn $30bn $62bn Fixed and Mobile Telecoms Global advertising On-line and mobile advertising
Upstream customers want more than just ads ,[object Object],[object Object],[object Object],[object Object],[object Object]
Open up more markets for telco platform $ Millions of Customers Thousands of Segments $ B2B2C VAS Distribution Upstream Customers  Downstream Customers Developers Retailers Government Brand Advertisers Content Owners Telco – Retail Content Owners Telco Platform Ecosystem
Example: Customer Service
Customer Service Example:  The Problem User Call centre Se habla español… Your name… Credit card security code… I’m sorry but David is unable to take your call right now… Freephone 1.0 Voicemail 1.0 INBOUND CALLS OUTBOUND CALLS
Customer Service Example:  The Solution “ Live voicemail” Form fill Payment services Identity & authentication User Call centre Enter your PIN to release your name and address to Acme Corp, and authorise payment for £188. Your delivery is scheduled for 7 July. To change your order, press one. Freephone 2.0 Voicemail 2.0 INBOUND CALLS OUTBOUND CALLS
Example: Identity
Identity & Authentication Example: Banking Transaction Request Authentication Request Authentication Request Digital Signature Signature Validation Transaction Result Operator
Example: Billing & Payments
Billing and Payments Example: Paypal =   ,[object Object],Compound Annual Growth Rate: 39% Merchant Consumer $$
Billing and Payments Example: Mobile =   ,[object Object],Source: www.gamemobile.co.uk
Value of the opportunity
$375bn from New Wholesale & VAS Platforms?
B2B VAS revenue c. $125bn* * Total W Europe & US Market, 2017: $125 Billion * See new report, Sizing the two-sided market opportunity for a full analysis.  http://www.stlpartners.com/telco2_2-sided-market/index.php   Identity, Authen-tication & Security Advertising Marketing Services & Business Intelligence E-Commerce Sales Order Fulfilment - Offline Order Fulfilment – Online (Electronic content) Billing & Payments Customer Support
Opportunity into perspective
Summary
Three different parts to the future Telco Operator $$ Downstream End Users Consumers Retailer SMEs Enterprises Public Sector 1. Developers E-tailers Government Brand Owners Content Owners Telco (Retail) $$ Wholesale Platform Upstream Customers 2. VAS Platform $$ $$ 3.
Next Steps for Operators ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
THANK YOU More info on this topic at  www.telco2.net/blog www.stlpartners.com/telco2_research-analysis.php www.telco2.net/event/  Business Model Innovation in the Digital Economy

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Telco 2.0 - Introduction to 2-Sided Markets

  • 1. Business Model Innovation in the Digital Economy The Two-Sided Telecoms Business Model Martin Geddes, Chief Analyst, STL Partners [email_address] www.telco2.net
  • 2.
  • 3. Many successful two-sided market players
  • 4.
  • 6. Betfair: Beats one-sided rivals Joins two groups who want to interact vs. Bookies Punters Punters
  • 7. Google: Two-sided master FREE! Need to attract users that upstream party values Advertisers Audience
  • 8. Chicken and egg problem: need an audience Build audience Introduce revenue model
  • 9. Mastercard: Balancing two sides Mirror of termination fee debate in telecoms “ Acquiring” (Merchant) Banks “ Issuing” (Customer) Banks
  • 10. A New Telco Proposition?
  • 11. New Telco Value Propositions Now: Bundled voice, messaging, video and internet access Supply Chain Platform Personalised Logistics Services for Data Retail Relationship Platform Media & Content Services Provider ECONOMIES OF SCOPE ECONOMIES OF SCALE
  • 12. 1. New Retail Platform
  • 13. Telco: traditional one-sided retail model INVENTORY RETAILER VALUE PROP “ Connected lifestyle” “ Affordable fashion”
  • 14. Two-sided retail models Rent shelf space Provide business intelligence & payment services Rent portal space Provide payment and customer care services No inventory risk No inventory risk
  • 15.
  • 16. 2. Supply Chain Platform
  • 17. Supply Chain Logistics: Physical World Distribution Collection Multi-Modal Transport Delivery 1. Distribution Collection Multi-Modal Transport Delivery B2B VAS Tax & Duty Management Documentation Management Denied Party Screening Scheduling & Supply Chain Management Systems Integration Tracking & Monitoring
  • 18. Telco 2.0: New Wholesale + VAS Wholesale Distribution Capture/Origination Multi-Modal Transport Display/Termination B2B2C VAS Identity, Authentication, Security Advertising, Marketing Services Ecommerce Order Fulfilment Billing & Payments Customer Services Telco (2.0)
  • 19. New Wholesale Distribution Platform
  • 20. Current Approach: One-sided Bulk Wholesale $ Upstream Customers Revenue Side 1 Downstream Customers Revenue Side 2 Customer relationship is with someone else Other Telcos (e.g. MVNO) Consumers Enterprises SMEs Multi-Nationals Your Telco
  • 21. Future Approach: Fine-grained Wholesale Partners can re-package minutes and messages to achieve higher margins Wholesale Aggregator £15/month £ 20/ month Consumers Your Telco
  • 22. New Wholesale – Video & Data Connectivity included with the application Tomorrow : Multi-modal delivery Machine-to-machine Wholesale VPN products Packaged apps “comes with data”
  • 23. New B2B2C Value Added Services Platform
  • 24.
  • 25.
  • 26. Telcos have many valuable but latent data assets MY PERSONAL DATA MY STUFF MY IDENTIFIERS MY INTERACTIONS MY RELATIONSHIPS MY CONTEXT MY DEVICES MY CREDIT Name Address Gender Profile Preferences SIM SoftSIM Serial Number Device details Location Presence On/Off Roaming Pictures Videos Calendar Address Book Bank School Friends Workplace Browsing History .mobi domains QR Codes Bad debt Demographics Average balance Number SIP address IP Address Email
  • 27. Current Approach: Media & Advertising… $ $ Upstream Customers Revenue Side 1 Downstream Customers Revenue Side 2 Telco Platform Ecosystem Brand Advertisers Consumers Enterprises SMEs Multi-Nationals
  • 28.
  • 29. … but market is too small! Revenue, $ Billions 2006 2010 $2,000bn $2,490bn $425bn $533bn $30bn $62bn Fixed and Mobile Telecoms Global advertising On-line and mobile advertising
  • 30.
  • 31. Open up more markets for telco platform $ Millions of Customers Thousands of Segments $ B2B2C VAS Distribution Upstream Customers Downstream Customers Developers Retailers Government Brand Advertisers Content Owners Telco – Retail Content Owners Telco Platform Ecosystem
  • 33. Customer Service Example: The Problem User Call centre Se habla español… Your name… Credit card security code… I’m sorry but David is unable to take your call right now… Freephone 1.0 Voicemail 1.0 INBOUND CALLS OUTBOUND CALLS
  • 34. Customer Service Example: The Solution “ Live voicemail” Form fill Payment services Identity & authentication User Call centre Enter your PIN to release your name and address to Acme Corp, and authorise payment for £188. Your delivery is scheduled for 7 July. To change your order, press one. Freephone 2.0 Voicemail 2.0 INBOUND CALLS OUTBOUND CALLS
  • 36. Identity & Authentication Example: Banking Transaction Request Authentication Request Authentication Request Digital Signature Signature Validation Transaction Result Operator
  • 37. Example: Billing & Payments
  • 38.
  • 39.
  • 40. Value of the opportunity
  • 41. $375bn from New Wholesale & VAS Platforms?
  • 42. B2B VAS revenue c. $125bn* * Total W Europe & US Market, 2017: $125 Billion * See new report, Sizing the two-sided market opportunity for a full analysis. http://www.stlpartners.com/telco2_2-sided-market/index.php Identity, Authen-tication & Security Advertising Marketing Services & Business Intelligence E-Commerce Sales Order Fulfilment - Offline Order Fulfilment – Online (Electronic content) Billing & Payments Customer Support
  • 45. Three different parts to the future Telco Operator $$ Downstream End Users Consumers Retailer SMEs Enterprises Public Sector 1. Developers E-tailers Government Brand Owners Content Owners Telco (Retail) $$ Wholesale Platform Upstream Customers 2. VAS Platform $$ $$ 3.
  • 46.
  • 47. THANK YOU More info on this topic at www.telco2.net/blog www.stlpartners.com/telco2_research-analysis.php www.telco2.net/event/ Business Model Innovation in the Digital Economy

Editor's Notes

  1. 1