The Two-sided Telecoms Business Model Re-thinking the phone company 14 March 2008 Martin Geddes, Chief Analyst, STL Partne...
Before we begin…
Telecoms is a freight business for bits 10100010111001001001011000110 10000101111101010010010101010 0010101011110101010101...
Container shipping: precedent Containers vs. IP packets
Container shipping lessons Value-based pricing of the containers doesn’t work #1
Container shipping lessons New technology and lowered costs are not enough #2
Container shipping lessons Increasing returns to scale for infrastructure #3
Container shipping lessons The ports get the money, not the shipping lines #4
Container shipping lessons People pay most for logistics solutions #5
… with a twist One sided market Multi-sided market
Limits to retail growth
Voice & Data Core Service Pressures 2017 % of Total Mobile Voice Minutes, Europe 2007 2012 Traditional Telephony  IP-Enhan...
The telephony interaction pyramid Comm- unities Relationships Conversations Calls Rendezvous VOLUME TELEPHONY SOCIAL NETWO...
Telcos: still not product innovation businesses How well do we as an industry understand what additional needs users have ...
Revenue opportunities OPEN APIs PRIVACY FEATURES REAL-TIME SERVICES CALLING FEATURES Strongly Agree Agree N=83 INTERNALLY-...
Yes, but… <ul><li>What’s the business model? </li></ul>
Introducing 2-sided markets
Today: Revenue only from 1 Side $ $ Suppliers =  Costs End Users =  Revenue Telco Content, Apps, Devices Network & Termina...
Tomorrow: Revenue from 2 sides $ ‘ Upstream’ Customers   ‘ Downstream’ Customers   Millions of Customers Thousands of Segm...
Telcos have many valuable but latent  data  assets MY PERSONAL DATA MY STUFF MY IDENTIFIERS MY INTERACTIONS MY RELATIONSHI...
Google Envies Operators in Key Areas <ul><ul><li>Sub-Scale in: </li></ul></ul><ul><ul><ul><li>Voice & Messaging </li></ul>...
Telco Future: 3 x business models $$ $$ $$ $$ Upstream Partners Downstream End Users Telcos Payments between telcos Paymen...
Examples of 2-sided markets
Learning from the master
Google: Lowers transaction costs <ul><ul><li>HUGE SCALE </li></ul></ul><ul><ul><li>FREE products for end users </li></ul><...
Betfair: Stock Exchange for Gamblers Bookie Punter ‘ To Win the Champions League’
Strong Growth from Big Scale Platform <ul><ul><li>Explodes in 2003 following launch of open API for bookies </li></ul></ul...
A New Telco Proposition?
Additional Telco Value Proposition Now: Bundled voice,  messaging,  video and  internet access Next: Personalised Logistic...
Logistics Services in the Physical world 1. Distribution Collection Multi-Modal Transport Delivery 2. B2B VAS Tax & Duty M...
‘ Personalised Logistics Services … for Data’ 1. Distribution Origination & Capture Multi-Modal Transport Termination & Di...
1. Distribution Platform
New Types of Wholesale Products Video Content delivery networks for 3 rd  parties Data “ Postage and packing included!” – ...
2. B2B2C Value Added Services Platform
Current Approach: Media & Advertising… $ $ Upstream Customers  Revenue Side 1 Downstream Customers  Revenue Side 2 Telco B...
… but market is too small! Revenue, $ Billions 2006 2010 $2,000bn $2,490bn $425bn $533bn $30bn $62bn Fixed and Mobile Tele...
Open Up More Markets for Telco Platform $ Millions of Customers Thousands of Segments $ B2B2C VAS Distribution Upstream Cu...
VAS: Help Customers Interact More Easily <ul><li>Barriers </li></ul><ul><ul><li>Identifying Other Party, Authorisation & S...
VAS: Telcos assets well suited <ul><li>Barriers </li></ul><ul><ul><li>Identifying Other Party, Authorisation & Security </...
Value of the opportunity
Potential Market of $350+ billion?
Making it happen
Five things to get right Scale Packaging Rewards Privacy Reliability
The Two-sided Telecoms Market Opportunity THANK YOU More info at  www.telco2.net/blog
An   eComm 2008   presentation –   http://eCommMedia.com   for more
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  • Martin Geddes's presentation at eComm 2008

    1. 1. The Two-sided Telecoms Business Model Re-thinking the phone company 14 March 2008 Martin Geddes, Chief Analyst, STL Partners [email_address]
    2. 2. Before we begin…
    3. 3. Telecoms is a freight business for bits 10100010111001001001011000110 10000101111101010010010101010 00101010111101010101010001010 010100110101010001001110101011010100100101011101010010101010001010111011110100010101010 01011100100010001011011001010 11100111010000001011001010100 Voice, video, web, messages
    4. 4. Container shipping: precedent Containers vs. IP packets
    5. 5. Container shipping lessons Value-based pricing of the containers doesn’t work #1
    6. 6. Container shipping lessons New technology and lowered costs are not enough #2
    7. 7. Container shipping lessons Increasing returns to scale for infrastructure #3
    8. 8. Container shipping lessons The ports get the money, not the shipping lines #4
    9. 9. Container shipping lessons People pay most for logistics solutions #5
    10. 10. … with a twist One sided market Multi-sided market
    11. 11. Limits to retail growth
    12. 12. Voice & Data Core Service Pressures 2017 % of Total Mobile Voice Minutes, Europe 2007 2012 Traditional Telephony IP-Enhanced Carrier Telephony Private Voice Apps & Handsets Other
    13. 13. The telephony interaction pyramid Comm- unities Relationships Conversations Calls Rendezvous VOLUME TELEPHONY SOCIAL NETWORKING
    14. 14. Telcos: still not product innovation businesses How well do we as an industry understand what additional needs users have for voice and messaging products, over and above what they have today?
    15. 15. Revenue opportunities OPEN APIs PRIVACY FEATURES REAL-TIME SERVICES CALLING FEATURES Strongly Agree Agree N=83 INTERNALLY-DRIVEN INNOVATION EXTERNALLY-DRIVEN INNOVATION
    16. 16. Yes, but… <ul><li>What’s the business model? </li></ul>
    17. 17. Introducing 2-sided markets
    18. 18. Today: Revenue only from 1 Side $ $ Suppliers = Costs End Users = Revenue Telco Content, Apps, Devices Network & Termination Interconnect & Storage Consumers Enterprises SMEs Multi-Nationals Products (partners’) Products (own) Packets & Platters
    19. 19. Tomorrow: Revenue from 2 sides $ ‘ Upstream’ Customers ‘ Downstream’ Customers Millions of Customers Thousands of Segments $ Developers Retailers Government Brand Advertisers Content Owners Telco – Retail Content Owners Telco
    20. 20. 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
    21. 21. Google Envies Operators in Key Areas <ul><ul><li>Sub-Scale in: </li></ul></ul><ul><ul><ul><li>Voice & Messaging </li></ul></ul></ul><ul><ul><ul><li>Billing & Payments </li></ul></ul></ul><ul><ul><ul><li>Retail sales and customer care </li></ul></ul></ul><ul><ul><ul><li>Interoperability </li></ul></ul></ul><ul><ul><li>Limited Knowledge of Customer </li></ul></ul>Google increasingly paying for inventory, skills & data MY PERSONAL DATA MY STUFF MY IDENTIFIERS MY INTERACTIONS MY RELATIONSHIPS MY CONTEXT MY DEVICES Weak! MY CREDIT
    22. 22. Telco Future: 3 x business models $$ $$ $$ $$ Upstream Partners Downstream End Users Telcos Payments between telcos Payments between telcos Developers Retailers Government Brand Advertisers Content Owners Telco (Retail) Telco Retail Telco Wholesale Millions of Customers Thousands of Segments Telco Platform
    23. 23. Examples of 2-sided markets
    24. 24. Learning from the master
    25. 25. Google: Lowers transaction costs <ul><ul><li>HUGE SCALE </li></ul></ul><ul><ul><li>FREE products for end users </li></ul></ul><ul><ul><li>CHEAP advertising for brands </li></ul></ul>= + <ul><ul><li>LOW COST per transaction </li></ul></ul>+ <ul><ul><li>Massive investment in Google platform </li></ul></ul>
    26. 26. Betfair: Stock Exchange for Gamblers Bookie Punter ‘ To Win the Champions League’
    27. 27. Strong Growth from Big Scale Platform <ul><ul><li>Explodes in 2003 following launch of open API for bookies </li></ul></ul><ul><ul><li>More transactions than all European stock exchanges COMBINED </li></ul></ul>
    28. 28. A New Telco Proposition?
    29. 29. Additional Telco Value Proposition Now: Bundled voice, messaging, video and internet access Next: Personalised Logistics Services for Data
    30. 30. Logistics Services in the Physical world 1. Distribution Collection Multi-Modal Transport Delivery 2. B2B VAS Tax & Duty Management Documentation Management Denied Party Screening Scheduling & Supply Chain Management Systems Integration Tracking & Monitoring
    31. 31. ‘ Personalised Logistics Services … for Data’ 1. Distribution Origination & Capture Multi-Modal Transport Termination & Display 2. B2B2C VAS Identity, Authentication, Security Advertising, Marketing Services Ecommerce Order Fulfilment Billing & Payments Customer Services Telco (2.0)
    32. 32. 1. Distribution Platform
    33. 33. New Types of Wholesale Products Video Content delivery networks for 3 rd parties Data “ Postage and packing included!” – for data Become supplier for 3 rd party voice services Voice +
    34. 34. 2. B2B2C Value Added Services Platform
    35. 35. Current Approach: Media & Advertising… $ $ Upstream Customers Revenue Side 1 Downstream Customers Revenue Side 2 Telco Brand Advertisers Consumers Enterprises SMEs Multi-Nationals
    36. 36. … 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
    37. 37. 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
    38. 38. VAS: Help Customers Interact More Easily <ul><li>Barriers </li></ul><ul><ul><li>Identifying Other Party, Authorisation & Security </li></ul></ul><ul><ul><li>Promoting Offer </li></ul></ul><ul><ul><li>Conducting transaction </li></ul></ul><ul><ul><li>Fulfilling Order </li></ul></ul><ul><ul><li>Billing & Payment </li></ul></ul><ul><ul><li>Service & Support </li></ul></ul>Customers – Revenue Side 1 Customers – Revenue Side 2 Millions of Customers Thousands of Segments Developers Retailers Government Brand Advertisers Content Owners Telco – Retail
    39. 39. VAS: Telcos assets well suited <ul><li>Barriers </li></ul><ul><ul><li>Identifying Other Party, Authorisation & Security </li></ul></ul><ul><ul><li>Promoting Offer </li></ul></ul><ul><ul><li>Conducting transaction </li></ul></ul><ul><ul><li>Fulfilling Order </li></ul></ul><ul><ul><li>Billing & Payment </li></ul></ul><ul><ul><li>Service & Support </li></ul></ul>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
    40. 40. Value of the opportunity
    41. 41. Potential Market of $350+ billion?
    42. 42. Making it happen
    43. 43. Five things to get right Scale Packaging Rewards Privacy Reliability
    44. 44. The Two-sided Telecoms Market Opportunity THANK YOU More info at www.telco2.net/blog
    45. 45. An eComm 2008 presentation – http://eCommMedia.com for more
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