Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities


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Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities

  1. 1. SAP Mobile Services Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities
  2. 2. SAP Mobile ServicesMobile Operator Guide 2013The Evolution of Mobile Services:Challenges, Strategies, Opportunities
  3. 3. Mobile Operator Guide 2013The Evolution of Mobile Services: Challenges, Strategies, OpportunitiesPublished by Sybase, an SAP CompanySybase, One Sybase Drive, Dublin, CA 94568-7902, U.S.A.© 2013 SAP AG or an SAP affiliate company. All rights reserved.No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG.The information contained herein may be changed without prior notice.Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors.National product specifications may vary.These materials are provided by SAP AG and its affiliated companies ("SAP Group") for informational purposes only, without representation orwarranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Groupproducts and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothingherein should be construed as constituting an additional warranty.SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AGin Germany and other countries. Please see for additional trademarkinformation and notices.Library of Congress Cataloging-in-Publication DataSAP Mobile ServicesMobile Operator Guide 2013, The Evolution of Mobile Services: Challenges, Strategies, OpportunitiesEdited by Peggy Anne Salzp. cm.ISBN 978-0-9885886-2-21.Mobile technology.Library of Congress Control Number: # 2012953199Printed in the United States of AmericaExcept as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form orby any means, or stored in a database or retrieval system, without the prior written permission of the publisher.
  4. 4. Table of Contents10 FOREWARD By John Sims, President, SAP Mobile Services13 PART 1: INTRODUCTION : A WEALTH OF OPPORTUNITIES14 Mapping A New World For Mobile Operators By John Sims, President, SAP Mobile Services18 Driving Growth In The Digital Economy By Stephan Gatien, Global Lead, Telecommunications Business Unit, SAP and Jens Amail, Senior Vice President and General Manager for Services, SAP25 PART 2: STRATEGIES FOR DRIVING REVENUE26 Long Live SMS Text messaging continues to grow from strength to strength as new services and paradigms around mobile marketing and mobile apps drive volumes and usage. By William Dudley, Group Director, Product Management, SAP Mobile Services33 Moving To The SMS Hubbing Model Operators are recognising that SMS hubbing is not just about connectivity; it can ease the management burden around cross-border messaging traffic. By Robert Rose, Senior Director, Global Operator Services, SAP Mobile Services36 Latin America Offers Big SMS Opportunities Personal Paraguay and Tigo Colombia discuss local market requirements and weigh on the tremendous opportunities and innovation that are driving SMS growth.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 3
  5. 5. 43 Cybersafety: Everyone’s Responsibility The Cyber Information Sharing and Protection Act addresses how information should be shared between private companies and the government to catch malicious actors breaching networks to steal information or sabotage systems. By Steve Largent, President & CEO, CTIA-The Wireless Association48 Does The Future Of Mobile Security Lie In The Past? Text messages are a powerful vehicle for reaching people — but they are also increasingly the starting point for malware attacks. By Mary Landesman, Senior Security Researcher, Cloudmark53 Mobile Number Portability: Increasing Competition And Driving Value Mobile Number Portability has come a long way since it was implemented in the 1990s, but it now confronts mobile operators with a variety of commercial challenges. By Mitul Ruparelia, Director of Sales Engineering (EMEA and LATAM), SAP Mobile Services58 Intelligent Hubbing: Easing International SMS Routing Complexity A comprehensive checklist and solid advice aimed at helping operators remove the complexity around establishing and managing SMS routing. By Mark Weait, Vice President Sales, SAP Mobile Services63 Orchestrating Capabilities Delivers High Performance Bharti Airtel details the strategy that has allowed it to spread its wings across the African continent, lay the groundwork for value-added services and deliver high volume at low cost. By N. Arjun, Chief of Projects & Transformation, Bharti Airtel68 PART 3: IPX: INTERCONNECTING OPERATORS FOR UNLIMITED OPPORTUNITIES69 Bundling Services Makes Business Sense Korea Telecom discusses the importance of Voice over IPX in its larger strategy to future-proof its network, ensure end-to-end quality of service and grow its wholesale business. Interview with Incheul Park, Head of Wholesale Team, Global Business Unit, Korea Telecom4
  6. 6. 74 Expanding Voice Connectivity Via IPX: An Operator Perspective In the Philippines Globe Telecom is embarking on an ambitious network change to deliver customer benefit by making cross regional interconnectivity better and easier. By Gil Genio, Head of International and Business Markets, Globe Telecom, Inc.78 The Value Of A True IPX Mobile Operators can best leverage the full benefits and economies of scale that IPX provides if they look beyond just offering basic services, such as voice and data roaming, and focus on delivering the services their customers will demand next. By John Candish, Senior Director, IPX Business, SAP Mobile Services and William Dudley, Group Director, Product Management, SAP Mobile Services83 Nine Ways To Get More Value Out Of IPX IPX offers tremendous value and here are 9 things operators need to do to ensure they can reap and maximise the benefits. By John Candish, Senior Director, IPX Business SAP Mobile Services86 Making The Right Connections SingTel recounts the lessons, learnings and results of its recent IPX trial, the first step in a private international network connecting all the Group companies. Interview with David Ng — Vice President, Regional Technical, of SingTel’s International team in the Group Consumer organization91 A Brave New All-IP World When it comes to IPX, peering among IPX providers is an essential element because it is the enabler of global reachability. By Elena Sacco, Chairman of the IWG at the GSMA and Senior Interconnect Manager, TIM94 Boosting Trust, Building Business In countries like Africa IPX does more than provide interconnectivity; it also meets the needs of local telecommunications authorities for transparency and accountability. By Ranjeet Wilkhu, Director, Neucom Solutions98 Voice: The IPX Killer App A candid view of the many benefits IPX provides. While many focus on future scenarios around LTE roaming, PCCW outlines how IPX can already enhance voice. By Richard Midgett, Managing Director – Wireless Business, PCCWMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 5
  7. 7. 104 PART 4: LTE: UNLEASHING INNOVATION TO DELIVER RESULTS105 Enabling 4G LTE For ALL MetroPCS discusses its early decision to deploy LTE and how this head start on the competition has allowed the U.S. operator to scale its business and satisfy its customers with value-driven services. By Ed Chao, Senior Vice President, Engineering and Network Operations, MetroPCS111 Fighting Smart To Win Big A clever approach harnessing RCS will allow operators to compete with OTT players with new services such as group instant messaging or chat, live video sharing and file transfer across any device, on any network, with anyone in a mobile address book. By Madan Jagernauth, Vice President, Marketing & Strategy, Mavenir Systems117 Positioning LTE For Success Research and insights brings clarity into the industry discussion about LTE, the benefits it delivers and reasons why operators take the lead in educating consumers. By Declan Lonergan, Research VP, Yankee Group124 Breaking Down Borders: Getting The Most Out Of LTE Roaming LTE is reaching a stage of maturity where technology is no longer a barrier to deployment, so now it’s up to mobile operators to architect the strategies that will leverage the complete range of benefits. By James Middleton, Managing Editor, Telecoms.com127 Video Communications: “A Perfect Storm” Consumer use of video has entered a new phase of growth, driven by devices, services and networks built to support it. But the wave of interest in mobile video could overwhelm service providers. By Ramsey Masri, Vice President, Sales & Alliances, Aylus Networks134 Enabling Roaming Across LTE Networks LTE will enable new services, but it will also put high demands on the data roaming backbone and require more bandwidth and resilient network connectivity. By Matthew Tonkin, Global Head, IPX Business, SAP Mobile Services6
  8. 8. 138 LTE Roaming In Latin America: Conditions For Success The deployment of LTE across Latin America brings with it a host of benefits and equips operators to address the spectrum limitations facing their networks. By Alejandro Martinez, Chairman, Billing & Roaming Working Group (BARG), GSMA LA142 LTE: New Technology Boosts New Business A review of the business models, approaches and services, such as mobile video calling, that will allow operators to drive even more revenue out of their costly LTE investments. By Michel Van Veen, Group Manager, Product Management, SAP Mobile Services147 PART 5: OTT: OPEN THREAT OR HIDDEN OPPORTUNITY148 OTT Threat: Top Strategies To Fight Smart Learn from real-life examples, including KPN and China Mobile, about the real impact of OTT services on voice and messaging revenues and how mobile operators turn the tide. By Pamela Clark Dickson, Senior Analyst, Mobile Content & Applications Intelligence Center, Informa Telecoms & Media156 Evaluating Strategies To Face OTT Providers Operators need to be more digital. Does Telefónica Digital, a unit aimed at developing new applications and business models for mobile technology show the way? By Eusebio Felguera, Corporate Regulatory Manager, Telefónica161 NUVOs: An Alternative To Disruptive OTT Not all OTT apps threaten mobile operator revenues. Network Unaffiliated Virtual Operators (NUVOs) actually benefit operators and boost their business. By Austin Murray, Founder & President, textPlus166 OTT Ecosystem: Paving The Way For Opportunity The inevitable arrival of an all-IP world also reinforces the needs for deeper part- nerships between operators and OTT players. MediaFriends discusses apps and approaches showing the way. By Gene Lew, CTO, MediaFriendsMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 7
  9. 9. 172 PART 6: UNLEASHING THE POWER OF MOBILE COMMERCE173 Mobile Money For The Masses Qtel has made its mark with its Mobile Money services and an innovative self-serve approach that meets the needs of both migrant workers and affluent customers. By Richard Morecroft, Assistant Director Mobile Money, Qtel179 Driving Mobile Money Usage In Unbanked Regions Driving customer adoption and increasing activation rates in mobile money is no easy task. The key is proper audience segmentation and a sharp focus on customer education. By Yasmina McCarty, Senior Manager, GSMA MMU184 Blueprint For A Successful Remittance Service A review of the mobile remittance services available today reveals a variety of different approaches to tackle the challenges of sign-up, cash-in and cash-out. By Diarmuid Mallon, Head of Global Mobile Marketing Programs, Programs & Demand Generation, SAP190 Operators: Tap Your Strategic Assets Mobile operators might only have scratched the surface when it comes to understanding their true potential to accelerate and enhance the mobile payments and commerce experience for consumers everywhere. By Aditya Kurejkar, Co-Founder and Program Director, Money2020194 Mobile Commerce Opportunities For Operators Building and deploying a successful mobile payment service requires operators to consider a wide range of variables, from business models to local telecom and financial regulations. By Matthew Talbot, Senior Vice President, Mobile Commerce, SAP200 PART 7: LEVERAGING MOBILE TO ACHIEVE LASTING LOYALTY201 Perception vs Reality: What’s Your Mobile Strategy? The arrival of the empowered consumer turns up pressure on operators and enterprises to create and implement a comprehensive mobile strategy that is truly end-to-end, multi-channel and, more importantly, customer-centric. By Howard Stevens, Senior Vice President, Global Messaging Solutions, SAP Mobile Services8
  10. 10. 205 The Power Of Push Push notifications also open up new opportunities around customer service and marketing, allowing mobile operators to deliver simple alerts to the customer — and trigger the customer to take action. By Coleen Carey, Director of Product Marketing, Urban Airship211 Harmonising Touch Points, Technology, Processes And People Celcom details the milestones and motivations that have helped it evolve its view of customer experience and sharpen its focus on encouraging lasting loyalty. By Suresh Sidhu, Chief Corporate and Operations Officer, Celcom Axiata Berhad215 Ask, Listen And Build Lasting Loyalty Talk to your customers, and listen to what they say. A successful mCRM program integrates social interaction, customer engagement and customer feedback. By Sally Burley, Director, The 3rd Degree220 Why Customer Engagement Campaigns Pay Dividends An in-depth look at how mobile changes the rules of engagement, allowing mobile operators, brands and businesses to maintain continuous customer touch and drive deeper engagement. By Gregory Dunn, Vice President, Product Management, SAP Mobile Services228 Glossary Of Terms234 Index Of Contributor Companies240 AcknowledgementsMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 9
  11. 11. FOREWORDMapping A New World ForMobile OperatorsBy John Sims, President, SAP Mobile ServicesIP is changing the game. Advanced The author in this case was referring tomobile devices, new technologies, mobile video communications, where growth is driven by devices, services andincreased competition and a networks. But mobile video isn’t the onlyshift in subscriber expectations market segment on the brink of the tippingtowards truly personal and point. This Guide shows that other services,relevant interactions are coming such as SMS, LTE, mobile commerce and mobile customer loyalty, are also entering atogether to cause disruption in the new phase of growth and innovation.telecom industry - for operatorsand all the companies in their • SMS: While some analyst reports predictbusiness ecosystems. the decline of text messaging, SMS continues to be the number one dataHowever, the same conditions also spell communications tool and the mostmassive opportunities for companies effective direct marketing channel everprepared to take charge of change. As one created. In almost all emerging markets itof the 40+ industry authorities who has remains the ubiquitous data service ofprovided insights for this Guide, points out: choice. In developed markets, thethe rapid pace of change and the interplay explosion of mobile apps, a developmentof supply and demand for services that are which many thought would mark thealigned with customers’ requirements are death of SMS, has actually pushedcombining to generate the mobile industry’s application-to-person (A2P) trafficown Perfect Storm. growth to a new level. This spells10
  12. 12. opportunity for mobile operators and enhance mobile money and mobile service providers to harness text banking services. Now it’s up to mobile messaging to supercharge a variety of operators to map out comprehensive services, ranging from mobile marketing strategies that cultivate partnerships and mobile advertising, to mobile with key players, such as banks, and commerce and mobile banking. adapt to local market conditions, such as regulations, demographics, and the• LTE: As mobile network operators move emergence of new remittance corridors. towards 4G/LTE and an all-IP network, many will cooperate to expand their • Mobile loyalty: Because mobile is a network footprint and pave the way for fiercely personal device, it’s an ideal compelling new services that will delight means to reach customers on every step customers and drive positive results for of their daily journey to encourage inter- everyone in the ecosystem. The advance action and deepen engagement. Whether of LTE will also challenge operators to operators and marketers choose to develop strategies to cooperate with and harness text messaging, new forms of enable Over-the-Top players in a manner IP-based messaging, mobile web or that benefits the ecosystem and wrings mobile apps (or all in combination) they new revenues out of operator core capa- can clearly leverage mobile as a channel bilities such as location information, to boost customer loyalty and recruit true billing support and network management. brand advocates. However, just as in real- life, building a relationship is about talking• Mobile commerce: From researching and listening, and that’s why companies products to making purchases, consum- must develop mobile loyalty programs ers are increasingly reaching for their that effectively do both. mobile devices as an essential shopping companion. At the other end of the This inaugural edition of the Mobile spectrum, and particularly in the under- Operator Guide features the insights of banked regions of the world, consumers industry thought leaders and innovators to are gravitating to services delivered by identify market trends, best practices and mobile operators that have expertly key lessons learned in deploying mobile leveraged their distribution channels, services. The purpose of this industry retail presence and trust to expand and knowledge resource is to provide readersMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 11
  13. 13. clear direction and critical information,equipping them to develop strategies todrive messaging revenue, deploy cost savingsolutions, generate new revenue streamsfrom mobile commerce, build loyaltythrough customer engagement programs,plan for LTE roaming through IPX adoptionand maintain competitive advantage in anIP-based world.The onward march of next-generationservices into daily life has created a newworld order in the telecoms industry.Think of this Guide as a starting point to aroadmap, one that will allow you to plot thetransformational path your business needsto follow to succeed in this exciting newdigital economy.12
  15. 15. PART ONE: INTRODUCTION: A WEALTH OF OPPORTUNITIESMapping A New World ForMobile OperatorsBy John Sims, President, SAP Mobile ServicesWhat a difference a decade makes. product offerings were comparativelyYou need only go back that far to straightforward, with “all-you-can-eat” pricing plans the industry standard. Itfind the “early days” of mobile seems like a long time ago, but it was onlynetwork operators’ journey with in 2001 that the first inter-operator SMSmobile data, comparatively speak- messages were delivered in the U.S., withing, a world that hardly compares SAP Mobile Services launching the first inter-operator SMS messaging hub into today’s landscape. Amid the concert with AT&T Wireless. More signifi-far-reaching changes that have cantly, during those formative years,taken hold since then, the com- operators took a walled-garden approachplexity that now distinguishes to mobile data, with services delivered within a closed ecosystem – a far cry fromoperator services brings with it the interoperable, pan-operator networka rich abundance of opportunities topology that has evolved since those who are forward-thinkingand adaptive in their strategies From that initial “closed system” approach, rapidly advancing technology and theand capabilities. explosive growth of international travel byA decade or so ago, an operator’s world globe-trotting executives and power usersrevolved almost exclusively around voice. contributed to the dramatic changes weIn an environment of minimal competition, have seen take root since then. The eclipse“ s the cost of spectrum and the pace at which A new network technologies needed to be deployed rose, operators needed to consider cooperative arrangements with their fellow operators, something that would not have previously been on the table.”14
  16. 16. Table 1: Global mobile data growth today is similar to global internet growthin the late 1990sGlobal internet traffic growth (fixed) Global mobile data traffic growth1997 178% 2009 140%1998 124% 2010 159%1999 128% 2011 133%2000 195% 2012 (estimate) 110%2001 133% 2013 (estimate) 90%2002 103% 2014 (estimate) 78%Figure 1: Based on data from Cisco. Cisco Visual Networking Index Mobile voice by data, accompanied by the advent it was clear that mobile network operatorsof successively more powerful generations could no longer dictate the user interface.of network technology leading to 4G, an As the cost of spectrum and the pace atall-IP environment, accompanied by today’s which new network technologies neededopen infrastructure, means operators must to be deployed rose, operators needed togenerate profits by significantly rethinking consider cooperative arrangements withtheir business models. their fellow operators, something that would not have previously been on the table.Traditionally, mobile network operators haveowned and controlled everything, including In addition, in order to accelerate the adv-physical equipment, radio networks, serv- ance of the network effect for new services,ices infrastructure, devices and user inter- operators in some countries have comefaces. But amid their changing economics, together in joint ventures or cooperatives tomany have had to rethink this approach. lower their costs and seed the market withWith the rise of the smartphone, driven by new service technologies – for example, thethe iPhone and Android devices, Isis joint venture in the United States or theMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 15
  17. 17. proposed mobile payments venture among to fiercely defend their franchises against theoperators in the United Kingdom. threat from the Internet-based companies or so-called Over-The-Top (OTT) players. AsTo a certain degree this kind of thinking part of their strategy, operators will want tohas been accelerated by operators’ need not only create a strong domestic footprint;to compete against Internet-based players, they will also look to extend this to a globalwhich have arrived in the mobile space as level, much as they have done over the pastcreative and formidable competitors. It also decade or so with SMS.marks a realisation by many mobile networkoperators that their future success depends This is precisely where SAP Mobile Servicesmore upon the innovative services that they provides the most critical value. We areoffer subscribers than it does on the under- delivering the world-class interoperabilitylying network technology – a substantial and reach that comes with our role as anshift in emphasis. independent custodian residing between and among operators. It is a role thatSo, as mobile network operators move demands a truly holistic level of visibility –towards 4G/LTE and an all-IP network, horizontally, across geographies spanningmany will cooperate to achieve a more rapid the Americas, Europe, the Middle East,and ubiquitous network footprint that will Africa and Asia, and vertically, providing theallow them to offer compelling new services technology and connectivity required tothat will capture the imagination of their ensure that today’s ever-expanding operatorsubscribers. In doing so, they will compete ecosystem continues to flourish. Mostagainst other mobile network operators, importantly, SAP Mobile Services possessesbut they will also have to operate in a much the vision and resources to realise its custo-faster cycle of innovation that will allow them dial role in every dimension.“ he advent of a new world for operators follows T decades of incremental improvements punctuated by breakthrough technologies.”16
  18. 18. This inaugural edition of the Mobile The advent of a new world for operatorsOperator Guide 2013, The Evolution of follows decades of incremental improv-Mobile Services: Challenges, Strategies, ements punctuated by break-throughOpportunities provides a rich taste of the technologies. The result has been a newbold new world that has materialised and paradigm for communication. All of us atcontinues to take shape. Inside, our expert SAP Mobile Services are working withstable of authors delve into the current state diligence and with our eyes on the futureof play and the most important emerging to enable all participants in the value chainissues in operator services, including: to experience the unprecedented power, ease and benefits of this new world of inter-• Operator strategies for driving and operability, reach and global interaction. optimising messaging revenue• Roaming and interconnect issues, including the interplay of LTE in an John Sims is President of SAP Mobile Services, the recognised global leader in IPX environment mobile messaging and interconnect services.• OTT Messaging, voice and video services, He has more than 20 years experience including managing the challenges con- with companies supplying technology and fronting operators in a BYOD (Bring Your solutions to mobile operators. Sims has Own Device) world been recognised with the prestigious Ernst Young Entrepreneur of the Year Award in• Mobile commerce and the myriad of the communications category. He is also a opportunities for operators member of the Board of Directors of CTIA• Customer engagement, including a and has been a speaker and panellist at roadmap for building loyalty by numerous industry events. empowering customers.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 17
  19. 19. PART ONE: INTRODUCTION: A WEALTH OF OPPORTUNITIESDriving Growth In TheDigital EconomyBy Stephan Gatien, Global Lead, Telecommunications Business Unit, SAPand Jens Amail, Senior Vice President and General Manager for Services, SAPIn July 2012, just before the On one hand, the success of smartphonesLondon 2012 Olympics, no one has led to increased data activities, with subscribers happily clocking time to playcould have imagined that one of games, watch videos, post on social sites,the first headlines in the main- tweet and send text messages. This phe-stream press would be about the nomenon has contributed to the decline oflocal mobile networks’ bandwidth revenues from voice services, once the cash cow of the entire industry without reallyproblems. But this is precisely offsetting it to date.what happened shortly after theGames opened. On the other hand, costs to provide adequate network infrastructure to supportAfter having encouraged athletes and fans this explosion of data traffic are on the tweet freely, Twitter was blamed for As the 2012 Olympic Games in Londondisrupting the coverage of the cycling road showed, the infrastructure available stillrace. Ironically, the sheer volume of mobile cannot always handle the load and meetsocial traffic along the course was so over- expectations for connectivity and reliability.whelming that it even interfered with theGPS and telemetry updates from the race, Granted, network upgrade investmentswhich left those covering the games without represent a heavy financial burden for allinformation on positions and timings. players in the ecosystem. However, these network investments are essential buildingThis twist of fate was a perfect metaphor blocks for future services and businessfor the dilemma and challenges faced by models. In fact, 2013 is widely expected tocommunications service providers today. be a blockbuster year for infrastructure2013 is widely expected to be a blockbuster yearfor infrastructure spending, with a large number ofoperators aggressively expanding their LTE networks.18
  20. 20. London Olympics - UK SMS traffic(Times are local to London - August 6 - 8) +10% + 46% +18% +8% August 8 August 7 August 61:30 2:30 3:30 4:30 5:30 6:30 7:30 8:30 9:30 10:30 11:30 12:30 21:30 23:30 0:30 13:30 14:30 15:30 16:30 17:30 18:30 19:30 20:30 22:30Figure 1: Based on data from SAP.London Olympics - UK SMS traffic(Times are local to London - August 1 - August 5) +46% - 18:20: +36% - 14:20: Men’s team cycling UK’s Andy Murray sprint - UK wins gold beats Roger Federer for gold in tennis August 3 August 4 August 2 August 1 August 5 1:30 2:30 3:30 4:30 5:30 6:30 7:30 8:30 9:30 10:30 11:30 12:30 22:30 13:30 14:30 15:30 16:30 17:30 18:30 19:30 20:30 21:30 23:30 0:30Figure 2: Based on data from SAP.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 19
  21. 21. London Olympics - UK SMS traffic(Times are local to London - July 27 - July 31) +36%: 21:10: USA wins gold in Men’s 4 x 200m freestyle relay (swimming) July 27 July 28 July 29 July 30 July 311:30 2:30 3:30 4:30 5:30 6:30 7:30 8:30 9:30 10:30 11:30 12:30 13:30 14:30 15:30 16:30 17:30 18:30 19:30 20:30 21:30 22:30 23:30 0:30Figure 3: Based on data from SAP.spending, with a large number of operators Voice and Skype — allow messaging andaggressively expanding their LTE networks. VoIP calls between users. While these free services may have a strong appeal to customers, they have a decidedlyTough competition negative impact on operators’ bottom line.But network upgrades aren’t the only item Analysts estimate OTT messaging revenueson the business agenda. Operators also as much as $13.9b, or 9% of messagehave to develop strategies and capabilities revenue, in 2011. This decline has led someto compete against new rivals. to wonder whether most incumbent provid- ers are not facing their “Kodak moment”. ByIncreased penetration of smartphones has way of background, Kodak filed for bank-opened the door to powerful and disruptive ruptcy protection in 2012 after recognizingactors offering OTT services. These services its products were obsolete and the competi-— which include Apple’s Facetime, Google tion was insurmountable. Similarly, mobile20
  22. 22. UK Olympics - Opening Ceremonies(UK SMS traffic - 27 July 2012 17:00 - 28 July 2012 03:00) 22:30 -22:40: +137% Team Great Britain enters the stadium during Parade of Nations 21:10 +32% Ceremony begins 23:50 +56% official opening of games Queen’s speech 21:40 +40% Rowan 00:20 +25% IOC Atkinson “Plays” during President speaks Chariots of Fire Opening Pre-ceremony - Ceremony up to 56% of normal Traffic Normal Traffic17:30 18:00 18:30 19:00 19:30 20:00 20:30 21:00 21:30 22:00 22:30 23:00 23:30 0:00 0:30 1:00 1:30 2:00 2:30 3:0021:40: +40% The Queen parachutes in 22:30-22:40 +137% Parade of Nations begins23:50 +56% Team GB enters the stadium.Figure 4: Based on data from SAP.players are now struggling to compete position of strength and drive profitableagainst more agile and innovative newcomer growth in this new era.companies, as well as OTT providers. First and foremost, operators — because they are network operators — control the backboneOperator assets of the Digital Economy: connectivity.However, it would be a huge mistake to But owning the network is not enough. Tocount operators out of the Digital Economy avoid being relegated to the role of a “dumbrace too soon. Operators own critical assets pipe,” operators must also be able to capitalisethey can leverage to build competitive on their successful track record of serviceadvantage, establish themselves in a delivery, including five 9s service availability.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 21
  23. 23. Porter Telco 2.0 Nature of Characteristicsstrategy strategy smartnessCost leadership Happy Pipe Smart network Cost efficiency - minimal network, IT and commerical costs. Simple utility offering.Differentiation Full-service Smart services Technical and commerical flexibility: Telco 2.0 improve customer experience by integrating network capabilities with on and third-party services and charging either end user or service provider (or both).Figure 5: Based on data from STL Partners. also have proven security and data the conduit between these ‘upstream’integrity capabilities that will increasingly partners and their traditional ‘downstream’appeal to business customers as adoption of customer base, thus increasing their reach,cloud- based models take off. presence and value-add.What’s more, operators also have a long Finally, CSPs have insights into a vast-standing relationship with their customer quantity of data about their customers,base. This puts them in a unique position to such as service usage patterns, locationact as digital service brokers between this -based activities, roaming history andlarge audience and a multitude of partners on-device behaviour on a daily basis. Thisthat want to reach this audience with impressive store of customer informationcontent, software or new services to offer represents a largely untapped monetisationvia the mobile channel. opportunity for operators in an increasingly data-centred economy.Pursuing this model — often referred to asthe Teleco 2.0 model (1) — would allow Com- So, how do CSPs move forward to imple-munications Service Providers (CSPs) to be ment the right strategies and — ultimatelyFOOTNOTES1. As originally defined by STL Partners22
  24. 24. 2013 is widely expected to be a blockbuster yearfor infrastructure spending, with a large number ofoperators aggressively expanding their LTE networks.— succeed in the digital era? We believe created new digital divisions to seize newthey will need to focus on some key areas opportunities including mobile commerceto drive profitable growth in the new and machine-to-machine communicationsDigital Economy. (M2M) in order to generate incremental revenue beyond their traditional services.• CSPs should fully leverage their scale, Telefónica’s direct to bill initiative is a strik- superior reliability and service delivery ing example of how an operator can lever- capabilities, to invest in new business age its billing relationship with its mobile models in areas such as Cloud and Mob- customers to increase sales of digital goods ility. Operators such as China Telecom or and services, while learning to partner — Telstra in Australia have already adopted not compete — with OTT players. this strategy with success. They offer on-demand business solutions to a The monetisation of subscriber data, in variety of business customer segments, accordance with privacy laws, is also in particular targeting small and medium emerging as a strong opportunity for CSPs size businesses. Other mobile operators, to grow their revenues. By leveraging the such as Rogers Communications in vast amounts of customer data they own — Canada, are launching business-oriented in real-time and at scale — CSPs can gain mobile app stores. This is part of a larger advantage in two important ways. They can effort to become a one-stop shop for serve their existing customers more effec- business customers, providing everything tively, and they can also use the customer mobility-related, including mobile app information to take advantage of opportuni- hosting and mobile device management. ties in new markets — such as proximity• Large providers should also think beyond marketing or mobile advertising — where connectivity. Telefónica and SingTel are customer data is key. To accomplish this perfect examples of what operators can CSPs will need to adopt a highly scalable achieve. They have transcended their foundation suited for the real-time world. traditional organisational boundaries, and An examination of the results achieved byMobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 23
  25. 25. However, it would be a huge mistake to countoperators out of the Digital Economy racetoo soon. Operators own critical assets theycan leverage to build competitive advantage,establish themselves in a position of strengthand drive profitable growth in this new era.T-Mobile US, for example, confirms thatan in-memory based platform is very well Jens Amail is Senior Vice President and General Manager for Services Industries atsuited to provide such a foundation. SAP as well as the Business Unit for Billing, Revenue and Innovation Management. PriorFortune smiles on the brave. It is time for to joining SAP in 2008, Jens was with SiemensCSPs to make bold moves to develop their Communications for 10+ years in a variety ofgrowth strategy in the digital era. They have Senior Executive and General Management roles both in Europe and the US. Jens has athe necessary assets to create new growth broad cross-functional background in theengines and focus on the abundant oppor- Communications Industry with Executivetunities in the Cloud and Mobility markets. assignments in Sales, Services, Marketing,Moreover, operators can innovate and invent Solution Management and data-driven business models andservices (such as proximity marketing). Stephan Gatien is a Global Lead within the Telecommunications Business Unit at SAPIf operators can arm themselves with the focusing on Business Analytics and Databasecorrect capabilities and business models, Technology. In that capacity, he is respon-they can seize these opportunities, create sible for the analytics and data platformlucrative new revenue streams and prosper strategy in the industry, including SAP HANA,from the Digital Economy. oversees the related solution activities and leads the  analytics and data platform  go- to-market activities globally Prior to joining SAP, Stephan was with Telus where he held a variety of management roles in the wireless division of this Canadian operator.24
  27. 27. PART TWO: STRATEGIES FOR DRIVING REVENUELong Live smsBy William Dudley, Group Director, Product Management, SAP Mobile ServicesMobile industry watchers have (and do) use their mobile phones to sendbeen predicting the death of the and receive text messages.humble text message for over Veteran mobile author and analyst Tomia decade, but a raft of recent Ahonen estimates people sent a whoppingresearch confirms that SMS is 6.1 trillion text messages in 2011, up fromvery much alive and kicking. 1.8 trillion in 2007. Meanwhile Informa Telecoms Media state that total SMSMarking the 20th anniversary of SMS, U.K. traffic will reach 8.7 trillion by 2015, upanalyst firm Portio Research points out that from over 5 trillion messages in 2010. InSMS has been very successful, generating its newest forecast analyst firm Portioapproximately $821 billion for operators Research calculates that total traffic willworldwide since it was invented in 1992. reach nearly 10 trillion messages by 2015.Overall, worldwide mobile messaging was Clearly, SMS is THE most ubiquitous,the highest earner in the industry, raking in non-verbal communications medium in the$179.2 billion in 2010 alone. Portio Research history of mankind. Today, SMS can reachforecasts that this total will increase to more over 5.4 billion people around the world —than $280 billion in 2014, and exceed $300 over 77 percent of the world’s population.billion by 2016. Of this total, SMS alone willgenerate $155 billion worldwide in 2014, and In developing countries SMS plays a specialit promises to continue to play a significant role, transforming lives and economies at anrole in revenue terms in the coming years, amazing scale. Innovation in these regionsthe report said. also allows companies, organisations and governments to harness simple text mes- saging and achieve extraordinary results.Pervasive and personal From life-simplifying reminders to life-saving medical advice, text message services areIt’s the simplicity, pervasiveness and sheer changing the nature of commerce, banking,dominance of text messaging that has made education, healthcare, news reporting andit the world’s leading data communication political participation.tool. People everywhere on the planet can26
  28. 28. In developed markets SMS is by far the most In other countries text messaging continueseffective way for people to communicate with to dominate. In Canada The Wirelesseach other — and connect with companies. Telecommunications Association reportsWhether chatting with friends, or receiving the number of personal text messages sentalerts from banks and favourite brands, text every year has nearly quadrupled sinceis the primary communications tool. 2008 and hit a whopping 78 billion messages in 2011. In the U.K. the Ofcom Telecommunications Market Data UpdateContinuing tide of text Q1 2011 reports the total number of SMS and MMS messages sent in Q1 2011 wasSignificantly, even the advance of smart- 36.9 billion, up 22.7 percent over Q1 2010.phones — chock-full of features, functional-ity and a wide variety of mobile applications— hasn’t changed consumers’ dependence The impact of OTTon text messaging to connect with the worldaround them. In fact, a recent consumer Amid this stellar growth, some analystsstudy from Deloitte shows that SMS holds wonder if the text messaging trend couldthe lead. More consumers than ever prefer- flip from growth to decline. New messagingring texting, and the vast majority (90 capabilities bundled with iPhones andpercent) of smartphone users sending at Android phones, as well as the advance ofleast one text message per day. OTT messaging services and applications are among the root causes for the recentAnother trend that shows no signs of slowing dip in SMS volumes in mature markets suchis text use among teenagers. In the U.S. this as Philippines and Taiwan. News that OTTdemographic relies on text more than any player WhatsApp reported hitting the mile-other customer segment. Research firm stone of ten billion messages a day furtherNielsen, which bases its finding on a variety suggests operators could be vulnerable toof data including monthly survey results from this new competition.300,000 consumers, reports that texting hastripled, with teenage girls sending 40 percent However, Analysts point out the race is farmore text messages than boys. That’s an from run. It estimates that companies likeaverage of 3,952 text messages per month. WhatsApp and BlackBerry will generate 35It’s a continuing tide of communication percent of the total messaging traffic inNielsen calls a “mobile data tsunami.” 2016, but only 8 percent of the revenues.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 27
  29. 29. Average number of messages exchanged per monthBy age and gender, Q3, 2011 604 802 3,417 1,914 928 709 434 167 64 Male Female 13-17 18-24 25-34 35-44 44-54 55-64 65+Figure 1: Based on data from Nielsen.Moreover, SMS will continue to dominate Open rulesmessaging and revenues, generating 42percent of the traffic and some 65 percent People are empowered by SMS to commu-of total income. nicate with anyone who has a mobile phone. However, alternative messaging apps areIndeed, Informa is not convinced that OTT limiting, not liberating. Unlike text messag-apps and services might undermine estab- ing, these OTT services operate in a vacuum.lished text messaging habits. It argues thatmany factors — including mobile operator Instead of overarching communities thatpricing strategies, the penetration of mobile span the planet, they create isolated islandsbroadband and customer requirements of users who are completely cut off fromto more open communications — will friends and family members on the basis“determine how quickly and to what extent of the handsets and software they use.substitution occurs.”28
  30. 30. A Facebook user and a person using iMessage interworks with the existing SMS eco-may be good friends in real-life, but the fact system. Indeed, many of the operatorsthey use different services prevents them featured throughout this first edition ofsending and receiving messages. the Mobile Operator Guide are betting on RCS to drive an interoperable, back-This flies in the face of what communica- ward compatible messaging medium fortions is all about, and presents opportunities subscribers and — ultimately — pavefor mobile operators to bridge the gap. the way for new and innovative services.There are exciting and lucrative optionsto consider. Some mobile operators willchoose to work with OTT players, enabling No limitsthem to achieve the integration of messag-ing communications. Others will follow the Technology advances like RCS will allowlead of operators like Telefónica, which messaging — including text messaging —recently launched a free mobile application to evolve and continue to account for a signi-that combines free text chat, voice calls, ficant share of operator revenues. The futurepicture and location sharing between users. for OTT providers, however, is not quite so positive. Spoiled by choice and delighted byInteroperability will also be delivered by the freedom to communicate with anyonethe GSM Association standard called (and not just people that use that the sameRich Communications Suite (RCS), which application), consumers will no doubt voteincludes a next-gen, real-time, presence- with their feet. It’s clear that many of the OTTenabled messaging component that also players will simply fade away.Unlike text messaging, these OTT servicesoperate in a vacuum. Instead of overarchingcommunities that span the planet, they createisolated islands of users who are completelycut off from friends and family members on thebasis of the handsets and software they use.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 29
  31. 31. It’s the simplicity, pervasiveness and sheerdominance of text messaging that has made itthe world’s leading data communication tool.In the meantime, SMS-compatible1 services Ironically, the rise of mobile apps, initiallyfrom companies including textPlus will hailed as a new channel to the customercontinue to flourish, offering customers that could potentially dethrone SMS, hasmore features and greater reach. But it’s actually pushed text messaging growthnot just person-to-person messaging that to a new level.will increase. Growth will be also be drivenby a desire from companies, businesses Brands and marketers, as well as applica-and brands to connect with their customers tion developers, are harnessing SMS to(and potential customers) via SMS. extend the life of their apps, keeping their users posted on updates, breaking news,Research underlines the pivotal role of location-based opportunities, campaignmobile in campaigns to engage with custom- perks and other important information.ers, encourage interaction and boost loyalty. More importantly, text messaging allowsFrom consumer facing brands that use text brands and marketers to re-connect withmessaging to deliver brand messages and customers who haven’t used their appslinks to downloadable content and perks, to recently — or even deleted it altogether. Thelarge retailers that cleverly use text messaging result is a booming Application-to-Personto deliver product vouchers and drive cus- (A2P) market Jupiter Research estimatestomer loyalty, the central role of SMS is will be worth $70.1 billion by 2016.clear. Perhaps the best confirmation comesfrom Coca-Cola, that declared that SMS isthe “number one priority” in its comprehen- Positive outlooksive strategy to reach a global audience andincrease customer engagement. Analysts Clearly, the next five years will see operatorstermed it a “bombshell announcement” in many parts of the world leverage theirbecause other marketers quickly followed all-IP networks, but even this progress willsuit, launching strategies with mobile not shut the door to SMS. To the contrary,messaging at the center. LTE networks using IMS infrastructure will lay the groundwork for messaging servicesFootnote:1. SMS-compatible services include some OTT service providers (also known as NUVOs orNetwork Unaffiliated Virtual Operators that inter-work with the SMS ecosystem. This stands instrong contrast to other OTT providers, such as WhatsApp, that do not offer SMS interoperability.30
  32. 32. Global revenue from A2P SMS split by eight key regions 2016 Latin America Indian Sub Continent Africa Middle East Central Eastern North America Europe Rest of Asia Pacific Western Europe Far East ChinaFigure 2: Source: Juniper Research. (1)that will remain interoperable with today’s 1992 between Neil Papworth (of Sematext messaging. In other words, there will be Group Telecoms) and Richard Jarvis ofno interruption in service, or even reach. Vodafone – the message read “Merry Christ- mas”. Today, SMS is the most widely usedThe humble text message that just cele- mobile data service, with two-thirds ofbrated its 20th anniversary has seen a lot the world’s population using the channel toof changes since the first SMS was sent in connect and communicate. From a businessFOOTNOTE:1. Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 31
  33. 33. perspective, SMS is expected to remaina significant source of revenues and trafficfor mobile operators on a global basisfor years to come. The bottom line: theadvance of an all-IP world will transformSMS, but text messaging will also continueto be alive and well.William Dudley has 25 years experiencebuilding and managing telecommunicationsnetwork infrastructures. He leads SAP MobileServices Messaging Team, which focuses onsolutions including inter-operator SMS andMMS products (P2P) and mobile messaginghubs and services (A2P SMS and MMS).Dudley also provides industry commentaryto both internal and external mobile industrypublications, through analyst and mediainterviews, and is active in several industrygroups.
  34. 34. PART TWO: STRATEGIES FOR DRIVING REVENUEMoving To The smsHubbing ModelBy Robert Rose, Senior Director, Global Operator Services, SAP Mobile ServicesSMS is ubiquitous, universal and services dedicated to message protocolwidely regarded as the truly native conversion. Having met the domestic challenges of the North American market,language of mobile. However, this international messaging between non-phenomenon, and the massive GSM U.S./Canadian operators and theirdevelopment of SMS since the last GSM counterparts worldwide soon alsoyears of the 20th century, has not benefitted from the technology and connectivity offered by the hub solution.been without its challenges aroundenabling — and guaranteeing — In developing countries, scarce humanmessage delivery. and technical resources within operators across these markets has accelerated theNotably, there have been challenges in North requirement for hubbing services. In theAmerica, where differences in technologies case of Tier 1 and 2 operators, for example,prevented the launch of off- net messaging hubbing has tended to be a niche solution.for a few years. In contrast, almost the rest In other words, the solution enabled “gap-of the world was well progressed in its adopt- filling” in a mobile operator’s footprint,ion of inter-operator SMS based largely on thus satisfying subscriber demand forhomogenous GSM standards. international SMS P2P connections when that operator’s own roaming agreementsThe solution to the technology differences were not sufficient to provide the requiredin North America was provided by hubbing messaging interconnects.In developing countries, scarce human and technicalresources within operators across these markets hasaccelerated the requirement for hubbing services.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 33
  35. 35. As a consequence, operators are recognising that a hubcan enable them to outsource the management burdenaround some of their cross-border messaging traffic.Making the mainstream operator can actually become a much more significant benefit.The situation began to change when theGSM Association launched the OpenConnectivity project in 2005. By seeking Good business senseto manage and regulate (in a light-touchmanner) the development of peering hubs Today, economic pressure on most oper-for person-to-person SMS the GSMA ators is now driving even more traffic (andeffectively endorsed the hubbing concept. more revenue for the networks). HeadcountThis, in turn, ensured the adoption of cuts, affecting even the most-establishedhubbing as a mainstream business practice operators, are reducing their ability tofor the global operator community. manage their interworking activity effectively.Since 2005 the major hub providers have As a consequence, operators are recogn-seen a steady growth in demand for their ising that a hub can enable them to out-services. This has resulted in the develop- source the management burden aroundment of an abundant revenue stream based some of their cross-border messagingon the termination charges on inbound traffic. This approach also reduces thetraffic delivered by hubs. The ability to drive managerial overhead around areas such asnew revenues from additional SMS traffic the negotiation and maintenance of bilateral— possible because hub prov-iders have agreements with destination operators and,extesive global reach and the ability to when traffic is flowing, the upkeep of variousprovide two-way access to operators number ranges within the SMSC.previously unreachable — has been anadded attraction over and above the Routing all traffic for a particular country togreater reach achieved. a hub mitigates number range management tasks and delivers business benefit. AsSince term fees are paid on a strictly per- operators come to embrace the idea ofmessage basis, this revenue source clearly delegating responsibility for some cross-increases in proportion to the organic as border SMS traffic, they also discover thatwell as incremental growth in traffic. As a the more routes they outsource to the hubresult, what might first appear to be a minor provider, the more they can increase theircontributor to the Roaming Department revenue “take” from their inbound traffic.PL account belonging to a mobile In the end, what started out as a simple34
  36. 36. exercise to offload a handful of “awkward” Real-world examples of this problemdestinations soon becomes a full-scale are currently being addressed. Efforts tooutsourcing venture. resolve this effectively will naturally require flexibility on behalf of both operators and hub providers.Growing revenues In summary, in just over ten years subscrib-The financial ecosystem surrounding ers’ need for global two-way communicationcross-border P2P SMS is a complex matrix via SMS has become the fundamental driverof MO charges and MT payments. For hub of mobile network data revenues. Whileproviders, managing this is well worth the domestic interworking is mainly addressedeffort as long as they can continue to make through bilateral relationships, cross-bordera margin on the connectivity services they traffic is increasingly being routed throughprovide. In view of this dynamic, traffic the established, peered hubs. Though thisthrough hubs will continue to grow. Impor- trend is a consequence of the expedient andtantly, the opportunities for operators to effective solution that a hub connection cancultivate a worthwhile revenue stream will provide, the opportunity to develop a newalso grow in parallel. and worthwhile revenue stream is now — more than ever — an incentive for operatorsHowever, it’s worth noting that outsourcing to subscribe to the hubbing model.can impact the revenues operators poten-tially gain from their bulk messaging (or“enterprise messaging”) business. This is A 20-year veteran of the information systems business (both fixed and mobile), Robert Rosebecause outsourcing all messaging traffic began working in the mobile industry as a con-means outsourcing bulk messaging as well. sultant to British Telecom’s mobile operations subsidiary Cellnet. Since 2004 Robert hasBy way of background, this traffic would guided SAP Mobile Services’s internationalhave been reliant on the prior, direct development in P2P messaging services.connect, bilateral routes. Obviously, incases where these are replaced by a hub’sconnections for P2P business, the non-P2Ptraffic needs to secure its own routing and,potentially, its own commercial agreements.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 35
  37. 37. PART TWO: STRATEGIES FOR DRIVING REVENUELatin America Offers Bigsms OpportunitesFrom the rural regions, where farmers SMS leads the packand small businesses use mobile to Interestingly, this revolution also brings amanage their workday, to exciting city boost to text messaging services. But it’scentres where youth — in particular— not just about operator services allowingrely on mobile to connect with friends people with ordinary feature phones toand family 24/7, Latin America is communicate. Analysts note that text messaging continues to provide a solidmore connected than ever before. foundation for a wide range of services,In fact, making or receiving a call or text from banking to basic education, tomessage in Latin America has never been widening access to health information.easier. A new report titled Maximising Against this backdrop, it is clear marketsMobile, the third in a series on Information like Latin America — not the more devel-and Communications for Development oped markets of Europe and Northpublished by the World Bank, reveals that America — will lead messaging growthnearly 98 percent of the region’s population and innovation.have mobile cell signal and 84 percent ofhouseholds use a mobile service. Feature phones are the focus because Latin America’s smartphone market is still in itsOn average 81 percent of subscriptions in infancy. Research firm Pyramid ResearchLatin America are prepaid. Understandably, reports that the smartphone segment inmany in the region use mobile phones to Latin America will grow to 48 million in 2014.make voice calls, averaging 141 minutes of This is a marked increase, but doesn’ttalk-time a month. In most markets the vast negate the fact that Latin America continuesmajority of users (97 percent in Argentina, for to lag behind the rest of the world in smart-example) regularly use SMS to communicate. phone adoption.Clearly, the level of growth in mobile usage But this gap also offers mobile operatorswill continue, expanding into ever more a tremendous opportunity to wring morerural areas across Latin America. It marks value out of text messaging. Ironically, it iswhat the report calls “the beginning of the also the low penetration of smartphonesmobile revolution.” that has kept over-the-top (OTT) players36
  38. 38. Maximising mobile for developmentGrowth of global mobile subscriptions World’s population with mobile cell signal 2000 Over 6 billion 71% 29% 0.7 billion 2003 61% mobile subscriptions subscriptions worldwide 2010 23% 77% 5.9 billion 2010 75% of the World subscriptions now has access to 90% High-income countries Developing countries a mobile phoneRise of non-voice mobile usage% National population 96 89 82 49 72 72 61 58 48 38 31 29 26 18 22 19 10 15 KENYA MEXICO INDIA INDONESIA EGYPT UKRAINE (ARAB REP) Send text message Take pictures or video with mobile Use mobile internetPace of mobile phones spread globally(billions) The number of mobile subscriptions will soon take over the world’s population Fixed-line8 subscriptions 2002 There are over 1 billion mobile subscriptions, passing fixed-line users Global population6 1978 First commerical cellular mobile services established4 1961 85 years later, fixed-line subscriptions reach 100 million2 1876 Alexander Graham Bell holds the first Mobile two-way telephone conversation subscriptions0 1875 1900 1925 1950 1975 2000 2011 2015Figure 1: Based on data from Infodev. Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 37
  39. 39. at bay. This, in turn, has slowed the advance Personal Paraguay, a leading mobileof messaging apps that enable smartphone operator in Paraguay and part of Personalusers to send unlimited free messages to Telecom group, has extended itstheir friends. These OTT messaging apps international SMS coverage to reapsuch as WhatsApp, Viber and Apple’s significant business benefits. “SMS is aniMessage are cannibalising SMS revenue important part of how our customersand changing the way mobile users comm- communicate,” notes Miguel Ruiz, Personalunicate with their peers. Paraguay Roaming Manager. “Our cust- omers want to be in touch with friends,This is not the case in Latin America, family and colleagues whether they are inaccording to ABI Research, developed the same neighborhood, or living in amarkets have experienced a marked different country.”decrease in SMS sent because of the riseof OTT alternatives, but the drop in regions More importantly, customers expect theirsuch as Latin America and Africa is not text message communications to beas significant. dependable and robust. “To achieve these SMS connections is a huge task that requires negotiations with operators andInternational SMS requirements technical tests to ensure SMS quality and reliability,” Ruiz explains. To streamline theClearly, feature phones have several process and deliver customers the servicemore years to thrive in Latin America. This they expect, Personal Paraguay has teamedprovides operators a window of opportunity up with SAP Mobile Services. “The hub SMSto generate strong revenues from their service helps us to have complete coveragedomestic and international SMS offerings. with all operators in North America, the U.S.,The international SMS business, for example, Canada and Mexico, as well as operatorsprovides operators with the potential to drive across LATAM, Europe, Asia and Africa.”significant volume and earn hefty margins. Opening new international routes, securing SMS hubbing also allows Personal Paraguaytwo-way service for their customers and the capabilities to cater to the portion of itsmarketing attractive bundle packages are customer base that are Paraguay citizensalso part of a strategy that would certainly living and working in neighboring improve the bottom line. “About 1.5 million Paraguayan people have38
  40. 40. Against this backdrop, it is clear markets like LatinAmerica — not the more developed markets ofEurope and North America — will lead messaginggrowth and innovation.emigrated to Argentina, and they want to To take advantage of this robust growthbe in contact with friends and family in an in text messaging mobile operators areaffordable way,” Ruiz says. The answer is also migrating to more flexible pricingInternational SMS, a popular service that to encourage use and to appeal to newalso represents an important differentiator. customer segments. A prime example isIn a nutshell, the service allows customers Tigo Colombia, a mobile operator that isto send an SMS to a Telecom Personal developing a new approach to enable usersArgentina customer and be charged the to do what they want most: communicatesame rate as a local SMS. “There are a lot with family and friends in other countriesof opportunities to be gained by offering at affordable prices, observes Juan Felipecustomers services that pair a simple way Velasquez, Latam International Roamingof communication with reasonable tariffs.” Coordinator at Tigo Colombia. At a deeper level, Tigo Colombia’s businessAttractive pricing model is based on partnership to ensure access to key capabilities and technologies.SMS is expected to continue accounting According to Velasquez, the decision tofor a major proportion of value-added cooperate with SAP Mobile Services isservices revenue as services like banking, driven by the internal requirement to keepmobile money and M2M gain traction. pace with innovation. “Many times we failAnother driver is social media, the pastime to seize opportunities because technologyand passion of nearly 100 percent of the changes so fast and we sometimesLatin American population using mobile neglect segments that do not have accessor Internet, according to comScore. While to new technologies.”social media isn’t a new phenomenon, thegrowth is phenomenal.Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 39
  41. 41. Exciting opportunities ahead Velasquez is also bullish about the outlook for value-added services that harness SMSWhat are the highest areas of opportunity in new ways. Chief among these is M2M. Ason the operator agenda? he puts it: “I think that the next step in our industry is machine-to-machine, where wePersonal Paraguay’s Ruiz is squarely can connect all the machines with machinesfocused on extracting more value out of — and with the people managing them —offering a wide variety of packages with around the world with simple SMS.”truly personal communications at the core. Whether it’s person-to-person or machine-“Our slogan is ‘Cada Persona es un mundo to-machine, it’s clear that messaging is king.— Each person is a world.’ This meansdelivering each customer the services and A promising and fast-growing service thatbundles that are in tune with their lives. They should not be ignored is A2P, or Application-are at the center.” Looking ahead, Personal To-Person messaging. In this scenario, soft-Paraguay is also planning to deploy LTE/4G ware applications and organisations, such“with IPX to support new services” that as enterprises and governments, establishsatisfy customer requirements for quality, a one or two-way communication channelcoverage and convenience. with people using SMS.Tigo’s Velasquez says he is also looking The revenue potential is significant. Accord-to a future where continued cooperation ing to a study published by Portio Researchbetween the stakeholders — operators, Ltd, a research firm based in the U.K., forsuppliers and users — creates a win-win the period 2011-2016 worldwide A2P SMSfor everyone. Additionally, it is important revenue is expected to outpace Person-to add these services onto an IPX, where To-Person (P2P) SMS revenue and grow atconnectivity meets users’ needs for quality a CAGR of 13.1 percent.and desire to communicate on their terms.Looking ahead, Personal Paraguay is alsoplanning to deploy LTE/4G “with IPX tosupport new services” that satisfy customerrequirements for quality, coverage and convenience.40