Telco 2.0 'two-sided' business model - Intro

‘ Two-Sided’ Telecoms Markets The $375 billion growth opportunity Simon Torrance, CEO, Telco 2.0 TM Initiative 20th January 2009 [email_address] www.telco2.net Business Model Innovation for the Digital Economy

Introduction – the Telco 2.0 TM Initiative

To help players in the Telecoms-Media-Technology sector grow through business model innovation.

Mission Approach A research-based approach to developing new business models through a blend of four activities: Research Brainstorms Consulting Operator Club

Telco 2.0 Research Agenda for 2009

Issues and opportunities

Corporate Strategy & Industry Issues

Industry issues & new business model concepts

Growth Opportunities:

Retail Services:

Digital Kids/Generation Y – next gen consumers

Voice & Messaging 2.0 – next gen personal comms

Wholesale Services:

Online Video Distribution – fixing broken value chain

Enterprise VAS:

Advertising and Marketing services

Enterprise Services – Comms-enabled CRM

Transaction services – billing and payments

Moving forward

Enablers:

Open API commercial model – an industry framework

Regulation & standards – for Telco 2.0 world

Infrastructure :

Telco 2.0 Reference Architecture – Exploiting customer data and on-demand systems

Devices – Mobile, Consumer premises equipment

Implementation :

Operational Agility – Building the low cost transactional platform

What do telco execs really think today? Source: Telco 2.0 Executive Brainstorm, 4-5 Nov 2008. Participant survey N = 250

Telco 2.0 and the ‘two-sided’ business model

$375 billion telco growth opportunity

New telco proposition: “Reducing friction in the digital economy”

OTT threat if telcos don’t embrace it

Friction in the Digital Economy

Barriers

Other Party, Authorisation & Security

Promoting Offer

Conducting transaction

Fulfilling Order

Billing & Payment

Service & Support

Providers Users Millions of Customers Thousands of Segments

Barriers

Identifying Other Party, Authorisation & Security

Promoting Offer

Fulfilling Order

Billing & Payment

Service & Support

Developers Retailers Government Brand Advertisers Content Owners Telco – Retail

Telco assets: well suited to reducing friction

Barriers

Identifying Other Party, Authorisation & Security

Promoting Offer

Fulfilling Order

Billing & Payment

Service & Support

Providers Users Telco Capabilities & Assets       Millions of Customers Thousands of Segments Developers Retailers Government Brand Advertisers Content Owners Telco – Retail

Telcos have a wealth of untapped data assets… MY CREDIT MY PERSONAL DATA MY STUFF MY IDENTIFIERS MY INTERACTIONS MY RELATIONSHIPS MY CONTEXT MY DEVICES Bad debt Demographics Average balance Name Address Gender Profile Preferences SIM SoftSIM Serial Number Device details Number SIP Number IP Address Location Presence On/Off Roaming Pictures Videos Calendar Address Book Bank School Friends Workplace Browsing History .mobi domains QR Codes

…by contrast, Google has very few Search Term URLs

Google is a ‘two-sided’ business model master FREE! Attracts audience that upstream players (advertisers) value $$$ Advertisers Audience

Many successful two-sided market players

The Telco 2.0 platform connects providers to users, creating a ‘two-sided’ market $ ‘ Upstream’ Customers ‘ Downstream’ Customers Millions of Customers Thousands of Segments $ Developers Retailers Government Brand Advertisers Content Owners Telco – Retail Content Owners Telco Platform

New Telco 2.0 revenue sources – from ‘two sides’ now $$ Downstream End Users Consumers Retail Platform SMEs Enterprises Public Sector 1. Developers Retailers Government Brand Owners Content Owners Telco (Retail) $$ Wholesale Platform Upstream Customers 2. B2B VAS Platform $$ 2.

Examples and Use Cases

See www.telco2.net/blog

Or www.telco2.net/research

Or www.telco2.net/event

Telco growth potential (Mature Markets) to 2017 $1,230bn $689bn

B2B VAS: seven buckets of value potential Total Market: $125 Billion

Only telcos have the breadth of capabilities Note: The relative quality of solutions has not been considered. Ability for players to offer specific B2B VAS platform capabilities 1. Via Google Checkout Identity, Authentication and Security     Advertising, Marketing & Business Intelligence   Content Distribution   Billing and Payments  (  ) 1.  (Voice-based) Customer Care  

Next steps towards Telco 2.0

Pilots around Telco 2.0 (two-sided) business models

‘ Joined-up’ strategy and business case

Board-level support

Separate dedicated organisation for B2B VAS business

Expertise in two-sided business models and pricing strategies

Enhance downstream relationships

Build upstream capabilities

Establish a process for cross-operator collaboration

Telco 2.0 strategies now seen by leading practitioners as very important to future profitability (comparison with current strategies) Source: Telco 2.0 Executive Brainstorm, 4-5 Nov 2008. Participant survey N = 250 Very important Not important Telco 2.0 Strategies Telco 1.0 Strategies

Powerful Platform Performance Precedent

Telco 2.0 and the ‘two-sided’ business model