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2009 IBC VAS Mobile Forum LATAM
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2009 IBC VAS Mobile Forum LATAM

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Draft for my presentation 2009 IBC VAS Mobile Forum LATAM, Miami June 9-10

Draft for my presentation 2009 IBC VAS Mobile Forum LATAM, Miami June 9-10

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  • 1. Mobile VAS Forum 2009 Finding Opportunities In A Year Of Economic Uncertainty Raúl Castañón M.
  • 2. Agenda o Telecom Industry Outlook o Industry Trends o Latin America Market Outlook o Finding Opportunities In A Year Of Economic Uncertainty o Market Segmentation Analysis By ARPU And Usage Behavior In LATAM o Can Operators Generate More Revenue From The Low ARPU Segment? o Understanding Subscriber Usage And Opportunities Of The Low ARPU Segment o How To Adapt VAS Offering Using Market Segmentation And Usage Trends o Summary And Conclusions
  • 3. Industry Trends and Latin America Market Outlook
  • 4. Expected growth rate for 2009 for the Telecom equipment market, compared to the year before (IDATE).
  • 5. Expected negative growth rate for 2009 for mobile phone shipments, compared to the year before (IDC).
  • 6. Nortel will cut 3,200 positions on top of previous cuts, Nokia will cut another 1,700 jobs and Microsoft will cut 5% of its workforce over the next 18 months.
  • 7. Mobile apps and Smart phones will drive growth in 2009. Apple's AppStore reached 25,000 applications in March and is expected to become a $1B business in 2009. Palm, RIM, Nokia, Windows and Android are launching app stores in 2009.
  • 8. New players will benefit from new opportunities. Traditional infrastructure vendors will struggle through the recession but 2009 will be a big year with opportunities for Smartphones and Mobile Applications.
  • 9. LATAM To Grow At Slowest Pace In Seven Years LATINFOCUS expects Latin America to grow at the slowest pace in seven years. Industry analysts estimate wireless subscriber growth in 2009 to be between 5% (Yankee Group) and 8% (Moody's), down from double digit growth in previous years.
  • 10. Operators face delayed investments, re duced CAPEX and slower growth rates. Pricing might be an option to grab new subscribers but in a year of economic hardship and with subscriber growth coming mainly from lower ARPU segments, price discounts can only get them so far.
  • 11. Operators will limit CAPEX to maintain healthy cash flows. Since the region is still expected to grow in total number of subscribers, expanding capacity of existing network infrastructure will be their top priority.
  • 12. Despite the downturn, some operators still expect 10% subscriber growth for 2009. With mobile penetration reaching saturation in major markets and slower growth rates this year, the only way they can achieve this is via churn from other operators.
  • 13. Even as subscribers limit spending there are opportunities to generate revenue,. Opportunities can come from increased MOU or SMS, introducing SMS based services in countries with low voice usage or new data services where usage and ARPU show potential for rapid adoption.
  • 14. Opportunities can also be found in network productivity improvement. Some of these opportunities can be positioned as new services; this year operators will have limited resources but they cannot afford to miss opportunities to maintain or improve their position in the market.
  • 15. There are still opportunities to generate more revenue from voice. Call Completion practices in Latin America focus on “B” party solutions: Voice Mail and Missed Call Alert. Slam down at voice mail or regulatory prompt in Latin America is between 70% and 80%.
  • 16. Market Segmentation Analysis By ARPU And Usage Behavior In LATAM
  • 17. Opportunity Map Latin America The chart above shows three key factors: (x) Average Monthly SMS; (y) MOU - Minutes of Usage; and ARPU - Monthly Average Revenue per User (bubble size) for the six largest markets in the region; Brazil, Mexico, Chile, Colombia, Venezuela and Argentina.
  • 18. Heavy Users 1% Mass Users 14% Non Users 51% Light Users 34% Voice Mail Revenue Generation Approximately 50% of voice mail subscribers generate no revenue but do generate significant traffic in the network. This does not include an additional ~30% of subscribers that are not provisioned in the voicemail system.
  • 19. 70% 60% 50% 40% 30% 20% 10% 0% A B C D E F G SUBS % TOTAL Ch SOU % Voice Mail Revenue Generation Approximately 50% of voice mail subscribers generate no revenue but do generate significant traffic in the network. This does not include subscribers that are not provisioned in the voicemail system.
  • 20. Can Operators Generate More Revenue From The Low ARPU Segment?
  • 21. The Low ARPU Segment represents approximately half of total subscribers. This segment includes a majority of young, prepaid subscribers that generate traffic but no significant revenue. Most calls end in slam down with no billable SOU.
  • 22. Understanding Subscriber Usage And Opportunities Of The Low ARPU Segment
  • 23. Regulation plays an important role in user behavior. The introduction of regulation prompt has had a major impact in call completion. Slam down on calls diverted to voice mail on Unreachable/Busy/No Answer in Latin America is between 70% and 80%.
  • 24. Regulation also impacts technical deployment of solution. Operators can choose to play the regulation prompt at the switch or use the voice mail platform for this purpose; however, when calls are not forwarded to the voice mail system the call information that can be used for notifications is usually lost.
  • 25. Connected 70% Unreachable 10% No Answer 15% Busy 5% Voice Mail Revenue Generation Busy/Unreachable – calling party tends to hang up and redial. Ring No Answer - user might send SMS; less likely to redial. Busy with call waiting – this scenario overlaps with No Answer.
  • 26. 450.0 400.0 375.8 350.0 300.0 250.0 200.0 150.0 100.0 87.0 50.0 23.6 34.6 3.9 15.9 0.0 0.0 A B C D E F G Opportunities Of The Low ARPU Segment Approximately 25% of subscribers bring in 95% of total revenue. This means that 75% of subscribers generate almost no revenue.
  • 27. How To Adapt VAS Offering Using Market Segmentation And Usage Trends
  • 28. User behavior can be used to segment the market and define the right service for users. VAS managers have followed the strategy of deprovisioning services from low usage segments. This looks good on paper but translates into playing with financial formulas instead of providing services to increase revenues.
  • 29. Incoming Call No 30% Answer? Yes 70% Yes 70% VM user? End No 30% Yes 70% Slam down? End 30% Missed Call No Alert Billable event End End
  • 30. 100 Connected 70% 70 Not Connected 30% 30 No Answer 15% 15 Unreachable 10% 10 Busy 5% 5 Yes 70% VM User? No 30% Yes 70% Non Users 30% 9 Slam No Answer 4.5 down? Unreachable 3 Busy 1.5 No 30% Billable VM Deposit 30% 6.3 event Missed Call Alert End Slam down 70% 14.7 End
  • 31. Usage Behavior ARPU Segment Plan Solution Goal A and B Missed “A” Party services, price No VM Low Youth Prepaid Call Alert, A Party sensitivity. voice to SMS/MMS A and B Missed Light Call Alert, A or B Low Youth Prepaid Users Party voice to SMS/MMS “A” Party services New and exciting, trendy services. A and B Missed Mass Medium Youth Prepaid Call Alert, B Party Market voice to SMS/MMS New services that don’t A and B Missed require high end handsets. Mass Young Call Alert, Voice Medium Prepaid Make traditional services Market professionals Mail delivery to exciting and trendy, increase MMS, E Mail. VM usage. A and B Missed Loyalty, for subscribers that Heavy Young Medium/High Postpaid Call Alert, VVM, may want the iPhone but Users professionals Voice To Text. don’t want to switch. A and B Missed Corporate solutions such as Heavy Corporate High Postpaid Call Alert, VVM, Blackberry or high end Users Users Voice To Text handsets like Nokia N95.
  • 32. Summary and Conclusions By analyzing end user behavior, traditional services can be repackaged and launched as new services, leveraging existing VAS infrastructure and reducing CAPEX normally required for new services. Repackaging existing services is a smart strategy in an economic downturn. Operators can introduce new services with minimal CAPEX, providing a faster ROI for new investments and increasing productivity by utilizing existing infrastructure.
  • 33. Raul Castanon http://telcolatam.blogspot.com/ http://www.linkedin.com/in/rcastanon http://latamtelecom.net/