Fixed-Mobile Convergence Summit 2007 SOCIAL NETWORKING AND CONVERGENT SERVICES Vladimir Dimitroff Sanderson & Neale

Social Networking - What is all the noise about? Networking existed before the Pyramids; it is an inseparable attribute of society The wider meaning of ‘social’: interconnections at family, community, economic, political and… ‘social’ levels 21 st Century networks: the digitalisation of communities; Main implications: - the disappearance of distance (global village) - the shrinking of time (instant interactions) - exponential growth What all this means to business? To an inherently network business (telecoms)?

Networking existed before the Pyramids; it is an inseparable attribute of society

The wider meaning of ‘social’: interconnections at family, community, economic, political and… ‘social’ levels

21 st Century networks: the digitalisation of communities; Main implications:

- the disappearance of distance (global village)

- the shrinking of time (instant interactions)

- exponential growth

What all this means to business? To an inherently network business (telecoms)?

Social Networking - Fundamental principles Based on shared needs : from fundamental needs (to stay in touch, be part of a ‘family’) to niche interests (hobby, profession, faith, political ties). The value of a network is exponentially related to the number of ‘nodes’ in it. (How powerful is a team of one member? How useful was a single telephone?) Some ‘nodes’ are more connected than others! - quantity of connections, frequency of interactions and depth of relationships - influence and influencers Communities Dominate*: why you can never ‘manage’ or ‘run’ a digital social network. * “Communities Dominate Brands” by T. Ahonen and A. Moore, 2006

Based on shared needs : from fundamental needs (to stay in touch, be part of a ‘family’) to niche interests (hobby, profession, faith, political ties).

The value of a network is exponentially related to the number of ‘nodes’ in it. (How powerful is a team of one member? How useful was a single telephone?)

Some ‘nodes’ are more connected than others!

- quantity of connections, frequency of interactions and depth of relationships

- influence and influencers

Communities Dominate*: why you can never ‘manage’ or ‘run’ a digital social network.

* “Communities Dominate Brands” by T. Ahonen and A. Moore, 2006

Social Networking, mobile and convergent telecoms ‘ Social networks’ before convergence: voice, SMS, IM/chatrooms, mobile gaming, mobile front-ends for SN portals Mobile communities currently number 50M members worldwide, to grow to 174M by 2011(ABI Research) Examples of community / SN applications and services: www.playtxt.net/playtxt.do www.streethive.com www.dodgeball.com The ‘other’ convergence: telecoms and (broadcast) media MTV ‘Mobile Junk 2.0’: uploading mobile UGC to web sites  downloading to mobiles  voting  broadcast on MTV channels (MTV, VH1, Nickelodeon, Comedy Central) “ Nobody is as clever as everybody” Alan Moore, co-author of “Communities Dominate Brands”

‘ Social networks’ before convergence: voice, SMS, IM/chatrooms, mobile gaming, mobile front-ends for SN portals

Mobile communities currently number 50M members worldwide, to grow to 174M by 2011(ABI Research)

Examples of community / SN applications and services:

www.playtxt.net/playtxt.do

www.streethive.com

www.dodgeball.com

The ‘other’ convergence: telecoms and (broadcast) media

MTV ‘Mobile Junk 2.0’: uploading mobile UGC to web sites  downloading to mobiles  voting  broadcast on MTV channels (MTV, VH1, Nickelodeon, Comedy Central)

“ Nobody is as clever as everybody”

Alan Moore, co-author of “Communities Dominate Brands”

Generation ‘ C ’ (for c ontent) Social networks thrive around interactions and content Content exists within the interactions, but also separately as object of exchange and consumption. This can be - professionally created for mass consumption - created within the community for sharing From ‘the audience of one’ to the UGC explosion - and back (the ‘long tail’ effect) The example of video content: TV video clips ‘ see what I see’

Social networks thrive around interactions and content

Content exists within the interactions, but also separately as object of exchange and consumption. This can be

- professionally created for mass consumption

- created within the community for sharing

From ‘the audience of one’ to the UGC explosion - and back (the ‘long tail’ effect)

The example of video content:

TV

video clips

‘ see what I see’

What’s different with convergence? Convergence is a journey : Fixed Mobile Bundles Converged billing Dual mode / UMA IMS / S I P Full IP integration

Convergence is a journey :

Challenges of convergence - and opportunities Fundamental difference between the fixed and mobile phone: - The home line is ‘family’ ( shared ) and just needs ‘to be there’ for everyone and work reliably - The mobile phone is highly personal , people identify with their phones and have very specific preferences 2/3 of mobile MOU takes place from within the home (O2 Germany) The challenge of pricing/economy expectations - BT Fusion started marketing ‘cheap’ mobile calls; their learning experience: value to people with poor mobile coverage, now fast surfing is in their message - TIM Unica still shouts ‘Parli gratis…’ The opportunities of added value Image source: BT Fusion

Fundamental difference between the fixed and mobile phone:

- The home line is ‘family’ ( shared ) and just needs ‘to be there’ for everyone and work reliably

- The mobile phone is highly personal , people identify with their phones and have very specific preferences

2/3 of mobile MOU takes place from within the home (O2 Germany)

The challenge of pricing/economy expectations

- BT Fusion started marketing ‘cheap’ mobile calls; their learning experience: value to people with poor mobile coverage, now fast surfing is in their message

- TIM Unica still shouts ‘Parli gratis…’

The opportunities of added value

Potential adopters and target communities So, who would be our ideal converged subscribers? Demographics: four generations exist side by side in today’s marketplace: - Veterans born before 1946 - Boomers born from 1946 to 1964 - Gen Xers born from 1965-1980 - Gen Yers (Millennials) born after 1980 There are significant differences in how quickly and completely these groups embrace technology and how they learn and communicate. Gen Yers prefer to learn in teams or networks , using multimedia, and learning experientially (like video gaming). Gen Y decision-making is much more collaborative Counter-intuitive trend: >50% of active MySpace members are older than 35 Behaviour/lifestyle segments (DiamondCluster research): - "technophiles“ - mainly males in their late teens to early 30s; already on a mobile contract, above average usage of cable TV, VoIP, broadband and mobile phone services. - "convenience seekers“ - adults in their late 20s to mid 40s in a household with children, and above-average buyers of mobile services.

So, who would be our ideal converged subscribers?

Demographics: four generations exist side by side in today’s marketplace:

- Veterans born before 1946

- Boomers born from 1946 to 1964

- Gen Xers born from 1965-1980

- Gen Yers (Millennials) born after 1980

There are significant differences in how quickly and completely these groups embrace technology and how they learn and communicate. Gen Yers prefer to learn in teams or networks , using multimedia, and learning experientially (like video gaming). Gen Y decision-making is much more collaborative

Counter-intuitive trend: >50% of active MySpace members are older than 35

Behaviour/lifestyle segments (DiamondCluster research):

- "technophiles“ - mainly males in their late teens to early 30s; already on a mobile contract, above average usage of cable TV, VoIP, broadband and mobile phone services.

- "convenience seekers“ - adults in their late 20s to mid 40s in a household with children, and above-average buyers of mobile services.

Potential adopters and target communities ‘ Social’ networking exists in the business community, too: - 60% of workers now travel for business and the figure keeps rising (IDC) - 30.3M mobile professionals worldwide, growing to 41.1M by end of 2007; only 21% equipped for mobile email (Gartner) - CRM and SFA seen as leading applications to be deployed (IDC) Music is not only a huge industry, but also one of the main shared subjects around which many (digital) social networks are formed ‘ Hybrid’ communities and convergence model variations: the Skype / T-Mobile / Sony case Mobile gaming is a vast (and growing) industry: Source: Telephia / eMarketer Inc.

‘ Social’ networking exists in the business community, too:

- 60% of workers now travel for business and the figure keeps rising (IDC)

- 30.3M mobile professionals worldwide, growing to 41.1M by end of 2007; only 21% equipped for mobile email (Gartner)

- CRM and SFA seen as leading applications to be deployed (IDC)

Music is not only a huge industry, but also one of the main shared subjects around which many (digital) social networks are formed

‘ Hybrid’ communities and convergence model variations: the Skype / T-Mobile / Sony case

Mobile gaming is a vast

(and growing) industry:

‘ Show me the money!’ Generation ‘ C ’ (for c a$h) One lucrative target community is that of digital traders: users who joined online communities are - spending 54% more money in total - paying 24% higher prices - earning 6 times as much per month - winning 25% more auctions Resulting in 56% increase in sales for e B a y

Generation ‘ C ’ (for c a$h)

One lucrative target community is that of digital traders:

users who joined online communities are

- spending 54% more money in total

- paying 24% higher prices

- earning 6 times as much per month

- winning 25% more auctions

Resulting in 56% increase in sales for e B a y

‘ Show me the money!’ Monetizing social networks on converged services : Direct operator revenues (subscription and/or traffic) - Trend towards flat rate mobile data drives usage of services - Similarly, ‘at home’ speed/cost will boost uptake Advertising: variety of evolving models - AdMob served 1Bn mobile ads in its 1 st year - Search advertising on mobile expected to explode Brand sponsorships (of relevant communities) Community-specific revenue (merchandise, UGC) Already worth $3.45Bn in 2006 (IHT). Data traffic will soon dominate over voice and data revenues will be the main source for operators by 2014 (ABI Research). Notable deals by Vodafone with MySpace, YouTube, eBay and Google Maps.

Monetizing social networks on converged services :

Direct operator revenues (subscription and/or traffic)

- Trend towards flat rate mobile data drives usage of services

- Similarly, ‘at home’ speed/cost will boost uptake

Advertising: variety of evolving models

- AdMob served 1Bn mobile ads in its 1 st year

- Search advertising on mobile expected to explode

Brand sponsorships (of relevant communities)

Community-specific revenue (merchandise, UGC)

Already worth $3.45Bn in 2006 (IHT). Data traffic will soon dominate over voice and data revenues will be the main source for operators by 2014 (ABI Research).

Notable deals by Vodafone with MySpace, YouTube, eBay and Google Maps.

Wrapping up - a checklist Have you got a clear, long-term convergence roadmap ? Do you know your target communities ? Are you building strong content capabilities ? - through acquisition and in-house production - through strategic alliances and partnerships - through the power of UGC Think stakeholders : are you ready to accept the customers as your employees - and investors? If you answer positively, you are on a firm path to long-term success! Q&A ?

Have you got a clear, long-term convergence roadmap ?

Do you know your target communities ?

Are you building strong content capabilities ?

- through acquisition and in-house production

- through strategic alliances and partnerships

- through the power of UGC

Think stakeholders : are you ready to accept the customers as your employees - and investors?

If you answer positively, you are on a firm path to long-term success!

Q&A ?

Thank you! Vladimir Dimitroff Director PRISM Consulting (UK) Ltd 22 Cheviot Drive Charvil Reading RG10 9QD United Kingdom Phone: +44 (0)7947034944 E-Mail: [email_address] www.prism-gb.com Austria • Czech Republic • Germany Hungary • Italy • Malta • Poland • Russia Spain • Switzerland • Turkey • UK