1) The document discusses the concept of "two-sided telecom markets" and how telecom companies can leverage a "two-sided business model" to access a $375 billion growth opportunity. 2) It describes how telecom companies are well positioned to act as a platform to connect different types of customers and reduce "friction" by leveraging their existing capabilities in areas like identity/authentication, payments, distribution etc. 3) By embracing this "two-sided" approach, telecom companies can generate new revenue streams and better position themselves against potential threats from "over-the-top" players, while capitalizing on untapped customer data assets.

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

2. Introduction – the Telco 2.0 TM Initiative To help players in the Telecoms-Media-Technology sector grow through business model innovation. Mission Approach A research-based approach to developing new business models through a blend of four activities: Research Brainstorms Consulting Operator Club

3. Telco 2.0 Research Agenda for 2009 Issues and opportunities Corporate Strategy & Industry Issues Industry issues & new business model concepts Growth Opportunities: Retail Services: Digital Kids/Generation Y – next gen consumers Voice & Messaging 2.0 – next gen personal comms Wholesale Services: Online Video Distribution – fixing broken value chain Enterprise VAS: Advertising and Marketing services Enterprise Services – Comms-enabled CRM Transaction services – billing and payments Moving forward Enablers: Open API commercial model – an industry framework Regulation & standards – for Telco 2.0 world Infrastructure : Telco 2.0 Reference Architecture – Exploiting customer data and on-demand systems Devices – Mobile, Consumer premises equipment Implementation : Operational Agility – Building the low cost transactional platform

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

5. Telco 2.0 and the ‘two-sided’ business model $375 billion telco growth opportunity New telco proposition: “Reducing friction in the digital economy” OTT threat if telcos don’t embrace it

6. Friction in the Digital Economy Barriers Other Party, Authorisation & Security Promoting Offer Conducting transaction Fulfilling Order Billing & Payment Service & Support Providers Users Millions of Customers Thousands of Segments Barriers Identifying Other Party, Authorisation & Security Promoting Offer Conducting transaction Fulfilling Order Billing & Payment Service & Support Developers Retailers Government Brand Advertisers Content Owners Telco – Retail

7. Telco assets: well suited to reducing friction Barriers Identifying Other Party, Authorisation & Security Promoting Offer Conducting transaction Fulfilling Order Billing & Payment Service & Support Providers Users Telco Capabilities & Assets       Millions of Customers Thousands of Segments Developers Retailers Government Brand Advertisers Content Owners Telco – Retail

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

9. …by contrast, Google has very few Search Term URLs

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

11. Many successful two-sided market players

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

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

14. Examples and Use Cases See www.telco2.net/blog Or www.telco2.net/research Or www.telco2.net/event

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

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

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

18. Next steps towards Telco 2.0 Pilots around Telco 2.0 (two-sided) business models ‘ Joined-up’ strategy and business case Board-level support Separate dedicated organisation for B2B VAS business Expertise in two-sided business models and pricing strategies Enhance downstream relationships Build upstream capabilities Establish a process for cross-operator collaboration

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

20. Powerful Platform Performance Precedent

21. Telco 2.0 and the ‘two-sided’ business model $375 billion telco growth opportunity New telco proposition: “Reducing friction in the digital economy” OTT threat if telcos don’t embrace it

22. Thank you More at: www.telco2.net [email_address] Business Model Innovation for the Digital Economy