The document discusses future trends in the telecom and media industries that will lead to their integration. It outlines three scenarios for how the industries could evolve: 1) "All cloud" where operators provide only connectivity with no value add, 2) "Mobile play" where industry definitions remain stable with limited convergence, and 3) "Full service world" where operators integrate across the value chain. It then discusses trends like net neutrality, social communications displacing telcos, and access to content from any device. New commercial models and partnerships will be needed for operators to capture revenue as consumption patterns change. Russian realities are also discussed, noting data usage is surging while consumer behavior follows global trends.
Head to Head - The Battle between the Bellheads and the Netheads for control ...Pieter Geldenhuys
Part 1: When the infrastructure is ubiquitous and operates as a utility, like water or electricity, we will move beyond the current paradigm of cyberspace. What happens when information and knowledge are accessible to all who choose to look? What happens when eBusiness, eHealth and eLiteracy have become an invisible normality? What happens after the Ubiquitous Internet has irreparably changed our very understanding of the world we live in? A new Digital Value Chain will be required when the Netheads and Bellheads pit their business models against each other in an epic battle where the only winner is bound to be the consumer. Who will find the right balance between the investments required to support the infrastructure and the money that inevitably will flow to edge of the network where the intelligence and power resides?
Bridgewater Systems 2008 Marketing ReportTMX Equicom
2008 marketing report for Bridgewater Systems (TSX: BWC), a provider of mobile personalization products and services that enable global service providers to manage and profit from mobile data services, content and commerce.
Head to Head - The Battle between the Bellheads and the Netheads for control ...Pieter Geldenhuys
Part 1: When the infrastructure is ubiquitous and operates as a utility, like water or electricity, we will move beyond the current paradigm of cyberspace. What happens when information and knowledge are accessible to all who choose to look? What happens when eBusiness, eHealth and eLiteracy have become an invisible normality? What happens after the Ubiquitous Internet has irreparably changed our very understanding of the world we live in? A new Digital Value Chain will be required when the Netheads and Bellheads pit their business models against each other in an epic battle where the only winner is bound to be the consumer. Who will find the right balance between the investments required to support the infrastructure and the money that inevitably will flow to edge of the network where the intelligence and power resides?
Bridgewater Systems 2008 Marketing ReportTMX Equicom
2008 marketing report for Bridgewater Systems (TSX: BWC), a provider of mobile personalization products and services that enable global service providers to manage and profit from mobile data services, content and commerce.
Technologies in the Networked Society, IP Networks in transitionEricsson Slides
Presentation by Ulf Ewaldsson, Senior Vice President, CTO, Head of Group Technology Ericsson, at Broadband World Forum, Amsterdam 2012.
For more information on 4th Generation IP for mobility and the cloud: http://www.ericsson.com/yourbusiness/telecom_operators/fixed-broadband-convergence
Review of the changes impacting operators, and their need for applications developers to use their network to remain relevant to their customers as operators.
Technology Review | In Focus: Next Generation Service ManagementComarch
Published twice a year, Comarch Technology Review (Telecom Edition) provides expert commentary and analysis on current trends shaping the telecommunications market, as well as insight on how to solve problems most commonly faced by telecom operators
Technologies in the Networked Society, IP Networks in transitionEricsson Slides
Presentation by Ulf Ewaldsson, Senior Vice President, CTO, Head of Group Technology Ericsson, at Broadband World Forum, Amsterdam 2012.
For more information on 4th Generation IP for mobility and the cloud: http://www.ericsson.com/yourbusiness/telecom_operators/fixed-broadband-convergence
Review of the changes impacting operators, and their need for applications developers to use their network to remain relevant to their customers as operators.
Technology Review | In Focus: Next Generation Service ManagementComarch
Published twice a year, Comarch Technology Review (Telecom Edition) provides expert commentary and analysis on current trends shaping the telecommunications market, as well as insight on how to solve problems most commonly faced by telecom operators
I'd appreciate if you leave a comment on the slideshow. You are free to use to use the information as long as you mention the source although I would not be able to share the originals with you since it is not under my ownership alone.
Evaluating Monetization Strategies in an All IP WorldGENBANDcorporate
Consumer adoption of OTT is significant so the question bears asking, will LTE accelerate the success of OTT services? GENBAND's Vice President & CTO, Multimedia, Shalin Sehgal shares his thoughts during this presentation at Futurecom 2012.
Shailin is the SVP & CTO for the Multimedia Group within GENBAND where he is responsible for the product management, & systems architecture of companies multimedia product portfolio including SBC, Security Gateways, & Application Servers. Shailin joined GENBAND from Sonus Networks where he held several executive management roles including the VP of Product Management and Marketing and the founding GM and VP of Engineering of the Indian subsidiary. Prior to joining Sonus Networks, held several management roles at MCI (Verizon Business) including product planning and deployment of long distance and local voice networks. He holds a masters degree in Computer Science from University of Texas at Dallas and bachelor’s degree in Electronics Engineering from Nagpur University, India
I presented at a recent sales conference for a large security / IT solution provider on the evolution of the telco industry and the role security and protection plays in that evolution.
In summary: customer data, trust, security and protection are critical for operators to get right in this emerging environment.
Operators need an integrated security and protection layer, not point solutions for each service as is the case today. Protection from malware across all network services e.g. IP, SMS, MMS, WAP push, widgets, apps, etc. Protection in the network, in devices and in services.
SDP vendors need integrated security solution across network, services and end-points, which means a partnership with security / IT providers is key. Its a rapidly growing problem as its a highly profitable and more importantly safe criminal business compared to drugs smuggling or prostitution; hence a specialist security/protection partner is essential.
Mindtree's expertise in machine to machine (M2M).Mindtree Ltd.
Mindtree offers end-to-end service capabilities in the field of M2M for various verticals. This includes smart energy, home automation, consumer systems, healthcare, telematics and navigation. Our customer base comprises device manufacturers, software vendors and service providers.
1. Future transformation and integration
of Telecom and Media
Dr. Sören Grabowski
Moscow, June 8th, 2011
2. Agenda
Evolution of the consumption patterns and Internet value chain
Selected trends 2020: Net Neutrality, Social Communications and Media
Redistribution of the revenue streams and new partnership models
Russian realities and a word of caution
A.T. Kearney 05.20110 2
3. Industry trends and uncertainties point towards three likely
scenarios of how the communication industry could evolve
Industry Scenario Approach
Major industry trends Global
communications
industry scenarios
Device and
New neighbors,
Stagnant core Data explosion service
new threats
integration
Integration New business
Size matters LTE All cloud: Commodity pipe
finally happens models
Major industry uncertainties
Share and role of Customer
Regulatory Delivery service user generated preferred Mobile Play: Status quo
role paradigm content relationship
Full service world:
Pipe Dream
Source: A.T. Kearney analysis A.T. Kearney 05.20110 3
4. Industry scenarios range from a high value-added role for
MNOs to a fully commoditized, web-payer-dominated world
Industry scenarios
Global communications market scenarios
All cloud: Mobile play: Full service world:
Commodity pipe Status quo Pipe Dream
• Mobile industry evolves along • Mobility as all encompassing • Operators integrate the value
same path as fixed – operators service chain, driving convergence
provide access with no value • Industry definitions stay stable across content, delivery and
add – dumb pipe device
• Limited additional convergence;
• Operator split between evolution is incremental • Acquire online players and
wholesales and fixed media firms
• Each player leverages its assets
• OTT players capture service for revenue sharing • Disintermeditate OEMs by going
revenues direct to ODMs – use subsidies
• Handsets commoditize like PCs to control device
(OEMs that transform into all-
out web-players win, e.g.,
Apple)
Source: A.T. Kearney analysis A.T. Kearney 05.20110 4
5. Each scenario results in a different value chain
configuration with a specific set of winners and losers
End state value chain configuration by scenario
Device Service Distribution
Service
Platform Applications & Network
OEM Media provider
software online services operator
(MVNOs)
Online services Fixed operator
Mobile operator
Devices
All cloud
Online services Online services Fixed operator
Mobile operator
Mobile
Devices
operator
Mobile play
Online services Online services
Fixed operator Fixed operator
Devices
Full service Mobile operator
world Mobile operator
All cloud Mobile play Full service world
• Software and online services players • No major changes in value chain • Operators consolidate and converge. They
succeed in the online services battle thus • More activity for media players starting to control distribution and contact points along
capturing major part of profit pools provide online services the value chain
• OEMs and operators driven out of new • OEMs still have a significant role, specially • Operators provide online services and
income sources integrated OEMs like Apple become a dominant players
Source: A.T. Kearney analysis A.T. Kearney 05.20110 5
6. Agenda
Evolution of the consumption patterns and Internet value chain
Selected trends 2020: Net Neutrality, Social Communications and Media
Redistribution of the revenue streams and new partnership models
Russian realities and a word of caution
A.T. Kearney 05.20110 6
7. Ten trends will shape the telecommunications industry till
2020 creating a rich, but horizontal segmented environment
Telco trends 2020
1 6
Fragmented Infrastructure – Personal Advertising –
Network of Networks Internet ads take over the ad world
2 7
End of Net Neutrality – Augmented Reality –
Natural evolution of QoS in networks Sensor, machines and data ease life
3 8
Social Communications – Cloud commodity –
Disaggregating largest community IaaS is commodity, SaaS grows
4 9
N-Screen Environment – Lean operations –
Content anywhere on all devices Simple and reduced to the bone
5 10
New TV – Consolidation in distance –
The end of any schedule limited synergy effects
Source: A.T. Kearney analysis
A.T. Kearney 05.20110 7
8. 2 Due to massive traffic increase, net neutrality will end –
one way or the other as the invest is not sustainable
End of net neutrality Europe1)
Massive Data Increase Massive Add‘l Investments Options for Change
Additional Capex Required
Fixed Fixed Capex Trendline
- PB/month - 14611 - €bn/year -
YoY Modification of
+35% €9.8 bn retail price schemes
2,7 3,0 add‘l
0,3 1,5 2,4
8409 CAPEX
+
5,2 5,2 5,2 5,2 5,2 5,2 €116bn Traffic-dependent
3236 4,4 for FTTx charges for all traffic
(50% HH)
YoY Enhanced quality services
Mobile Mobile
- PB/month - +107% 1217 - €bn/year - 5 €21 bn over the public internet
6 6 5
add‘l
764 CAPEX
399 13 11 12 12 13 13 14 Enhanced quality services
185 (LTE not based on bilateral
1 3 11 32 77 incl.)
agreements
06A 07A 08A 09A 10 11 12 13 14 08A 09A 10 11 12 13 14
If congestion hits the Internet, QoS-based services (via CDNs) are in demand by OTT providers
1) Data included for Western, Central and Eastern Europe, for Consumer and Business users
Source: A.T. Kearney Whitepaper “A Viable Future for the Internet”
A.T. Kearney 05.20110 8
9. 3 Social networks like Facebook internalize inter-personal
communications, crowding out telcos
Social communications
Facebook: Google:
• 250 mn mobile users using • 1.5 mn Google Voice users 7
200 service providers in 60 months after launch
countries
• 150 mn mobile users for Google
Chat Ads Coupons Status Maps alone
Apps/Gaming Sharing
VoIP Calls Messages
Places Wall Posts
While telcos have always focused on providing connectivity to their subscribers,
social networks are serving the communication needs of their communities
Source: Facebook; Google; A.T. Kearney
A.T. Kearney 05.20110 9
10. 4 Media, personal content & services are accessible any-
where from any device – stored distributed in a cloud
N-screen environment
Home Cloud Enterprise
Video Conf.
Smart TV
NAS Server & Server & Server &
Storage Storage Storage
Audio Set-top Box Consumer Cloud Enterprise Cloud Desktop
Internet
Laptop Router Router Servers
On-the-Move
Tablet Smartphone Electronic Paper Car Laptop Smartphone Tablet
Source: A.T. Kearney
A.T. Kearney 05.20110 10
11. Agenda
Evolution of the consumption patterns and Internet value chain
Selected trends 2020: Net Neutrality, Social Communications and Media
Redistribution of the revenue streams and new partnership models
Russian realities and a word of caution
A.T. Kearney 05.20110 11
12. Giving the unsustainable economics for carriers, new
commercial models need to evolve to handle the traffic
Net Neutrality – Alternative Commercial Models
Option 1: Increase average retail prices Option 2: Standard termination charges for all
traffic
Traffic flow
Additional payment flow
Retail Connectivity Provider End Users
Traffic flow
Additional payment flow
Retail Connectivity Provider End Users Last mile
Online Connec- Internet Aggregation
Last mile Service tivity Core / Backhaul
Online Connec- Provider Provider
Internet Aggregation
Service tivity RAN
Core / Backhaul
Provider Provider
RAN
€ € €
€ Payment is passed down to the ‘last mile’ providers via
termination charges factored into wholesale prices at each
Access charge: Increase in level/handover point
retail prices supported by
differentiated pricing
Option 3: Enhanced QoS over Public Internet Option 4: Enhanced QoS based on bilateral
agreements
Traffic flow
Additional payment flow
Traffic flow Services Retail Connectivity Provider End Users
Additional payment flow
Retail Connectivity Provider End Users Public Internet
Last mile
Last mile Online Connec- Internet Aggregation/
Online Connec- Internet Service tivity
Aggregation Core Backhaul
Service tivity Core Provider Provider
/ Backhaul
Provider Provider RAN
RAN
€ € € Private network
Commercial agreements to Technology Enabler e.g. Akamai
Differentiated pricing for
guaranteed QoS distribute additional revenues for
end-to-end services Content Delivery Services Managed Services Delivery
€
Probably a combination of models is necessary
Source: A.T. Kearney
A.T. Kearney 05.20110 12
13. New Value Capture: In a changed ecosystem new MNO
business models will need to evolve
Evolution of MNO revenue models Illustrative
(Mature Markets)
2006 2010 2014
Access Services Access Services Access Services
(voice & data) (voice & data) (voice & data)
High F
usage F F T F
segment
F
U U F P A P
+ + +
U
Low usage U
segment U U
0% 100% 0% 100% 0% 100% 0% 100% 0% 100% 0% 100%
• Revenue for mobile voice and data and • A higher share of subscribers – primarily • For some subscribers, third party-
services are primarily transaction-based, high-volume users – pays flat-rate access advertising pays for (part of) the access –
i.e., subscribers pay by units consumed, tariffs, especially for data plans mostly in the low usage segment
either for every single unit or for bundles • VAS still primarily transaction-driven • MNOs create revenue-share models with
with a specified number of units (e.g., service providers
minute, SMS, MB) – only few high-volume • MNOs widely adopt tiered pricing models
users have flat fees for data access to better monetize high
volume users
MNO business models need to evolve to capture new revenue sources
through new pricing structures and partnerships
F = Revenues from flat-rate tariffs; P= Revenue share from partnerships; A = Revenue from advertising revenue sharing;
T = Tiered-pricing based revenues; U = Usage / transaction based revenues
Source: A.T. Kearney
A.T. Kearney 05.20110 13
14. Agenda
Evolution of the consumption patterns and Internet value chain
Selected trends 2020: Net Neutrality, Social Communications and Media
Redistribution of the revenue streams and new partnership models
Russian realities and a word of caution
A.T. Kearney 05.20110 14
15. Russia’s current data consumption trend is already on a
surging slope with data ARPU doubling over a period of
just two years
Data ARPU evolution in Russia Data contribution as % of ARPU,
(EUR, Q1 2009-Q4 2010) (June 2010, %, global examples)
Data ARPU ARPU 35%
31%
28% 27% 26% 25%
24% 23% 23%
19%
1,3 1,4
1,2
1,1
0,9
0,7 0,7 0,7
Norway
Germany
Spain
Sweden
Switzerland
Portugal
Russia
Austria
Netherlands
Belgium
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2009 2009 2009 2009 2010 2010 2010 2010
Customers are increasing their non-voice consumption irrespective of
operators’ access technology and capacity
Source: Global Wireless Matrix, A.T. Kearney analysis, Client data
A.T. Kearney 05.20110 15
16. And there is no fundamental difference in Russia neither in
device preferences nor in the user behavior
Smartphone Sales statistics Top 10 Countries for Social Networking
(mln. units) (August 2010, Total Worldwide Audience1))
Russia Worldwide 296,6 Average time spent by visitor, hours per month
Russia 9,8
Israel 9,2
Turkey 7,6
172,4 United Kingdom 7,3
139,3 Philipinnes 6,2
122,3 7,0
Canada 5,8
80,0 Indonesia 5,3
4,4
3,4 Finland 5,0
37,4 2,7
1,2 Spain 5,0
0,7
Puerto Rico 4,9
2005 2006 2007 2008 2009 2010E
Russian players are likely to join worldwide value chain trends
1) Age 15+ - Home and Work Locations, excludes traffic from public computers or access from mobile phones or PDAs
Source: Gartner, MForum Analytics (2011), comScore Media Metrix (2011), A.T. Kearney analysis
A.T. Kearney 05.20110 16
17. Media and Telecom integration
Critical factors for Russia
1 • Russia offers a attractive field for operators to extend activities and to
Individual model the market according to their own needs
operators and
providers • However, new value chain will rather lead to the redistribution of the
revenue streams among the players and to less extent to the increase of
customer spending
• Efficient execution, access to state-of-the-art know how, lean operational
models and sound partnership strategies are key for the defending
profitability
• Existing regulation in Telecommunications lags behind technology trends,
2 the entrance of the new players (e.g. internet service providers) leaves
Regulators even less options for traditional technology-based regulation
• With further evolution of the value chain the role of cross-industry
(telecom, media, finance, antimonopoly) regulatory cooperation will
increase
• Thus, a broader understanding and consensus should be reached for the
success, the right balance has to be found to ensure healthy competition
and sustainable industry development
Source: A.T. Kearney
A.T. Kearney 05.20110 17
18. Dr. Sören Grabowski
Principal
Head of Communications, Media &
High Tech-Practice – Moscow & Kiev
Soeren.Grabowski@atkearney.com
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A.T. Kearney 05.20110 18