Mobile Video Syndicated Study Cb Mar 4 2010

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Details of the STL Partners' Mobile Video Syndicated Research Study.

The growth in mobile data, and in particular mobile video, is placing increasing strains on the cost structure of some mobile networks. Telco 2.0 is undertaking a syndicated study to define the general and market specific economic choke points, and propose alternate business model solutions.

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Mobile Video Syndicated Study Cb Mar 4 2010

  1. 1. Business Model Innovation for the Digital Economy Mobile Video Understanding the threat (and opportunity) of growth for operators Chris Barraclough chris.barraclough@stlpartners.com www.Telco2.com
  2. 2. Mobile video growth is placing the current business model under considerable strain Video traffic growth will far outstrip revenue ...resulting in margin squeeze and potential losses for growth... mobile operators 4,500 4,000 3,500 Indexed to 2008 = 100 Revenues 3,000 Users 2,500 Costs Traffic £ Revenue 2,000 1,500 1,000 500 0 Time 2008 2009 2010 2011 2012 2013 2014 2015 Key question facing mobile operator management: • How fast will this occur: when will the current broadband business model reach ‘end-of-life’? © STL Limited • Proprietary and Confidential -2-
  3. 3. STL Partners’ study will answer the key operator question about the sustainability of the current mobile broadband business model Key Question: Answer provided for different market scenarios based on changes in: • How long will it take for 1. Demand-side variables: video-related costs to • End-user consumption profile outstrip broadband access revenues: 2. Supply-side variables: • Network and device technology • When will the current mobile broadband • Video delivery method business model reach 3. Market and business model variables: ‘end-of-life’? • End user broadband pricing • Operator network capacity profile (RAN, backhaul, core) • Operator network cost profile (fixed, semi-variable, variable) Clients will be able to select specific operators within (mature) markets and assess when video growth is likely to be a ‘business-critical’ issue under 3-4 market scenarios. © STL Limited • Proprietary and Confidential -3-
  4. 4. Methodology summary: developing a detailed mobile video economic model Macro Forecast Country Forecast Company Forecast 1. Demand • Consumer use cases • Video consumption by delivery method 3. Video Traffic 6. Video Traffic 8. Operator P&L • By delivery method, and Broadband • Revenue forecasts device , network Revenue • Opex and Capex • By region and major • By country forecasts 2. Supply country • Developments in • Devices • Networks • Delivery methods 5. Pricing 7. Network costs • Mobile broadband & capacities access • RAN, backhaul, core • 3-4 scenarios developed for video traffic growth: • Fixed, semi-variable, • 3-4 different macro-trends variable • Scenarios impact country trends (volume and pricing) 4. Market Dynamics • Scenarios also affect network costs and • Market structure & competition ultimately individual operator P&L • Market shares © STL Limited • Proprietary and Confidential -4-
  5. 5. The economic model will provide a number of valuable outputs Macro Forecast Country Forecast Company Forecast Revenue and cost forecasts for individual operators’ broadband businesses in key markets Scenario 1; Operator X, UK Consensus on specific Costs Revenue consumer use cases £ for mobile video Video volume and revenue forecasts by country Time 1. Demand 6. Video Traffic and 8. Operator Video 3. Video Traffic Broadband Revenue P&L 2. Supply 7. Network costs & 5. Pricing capacities Per MB mobile broadband access 4. Market Dynamics price forecasts by Consensus on supply- country side (technology) developments © STL Limited • Proprietary and Confidential -5-
  6. 6. Why a syndicated approach? 1. Garner input from multiple specialists: • Chipset vendor • Device manufacturer • NEP • IT vendor • Content industry • Operator 2. Reach consensus across the value chain on the business model issues associated with video delivery 3. Spread cost of this significant project © STL Limited • Proprietary and Confidential -6-
  7. 7. Next steps • Please contact : Chris Barraclough, MD STL Partners chris.barraclough@stlpartners.com © STL Limited • Proprietary and Confidential -7-

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