Capital Markets Day 2011<br />Our View on the Industry<br />Fredrik Linton<br />
Major Trends Influencing the Communication Market in 2020<br />Devices<br />-Smartphones<br /><ul><li>Screens
 Things</li></ul>People<br />- Always access<br />Increased Value<br />of Connectivity<br />Services<br /><ul><li>Digitali...
OTT</li></ul>Competition<br /><ul><li>Cross industry
consolidation</li></ul>Access/Technology<br />- performance<br />
Important Implications for Operators<br />Key trends<br />Implications<br /><ul><li> People
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CMD2011 - Fredrik Linton - Our View on the Industry


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  • Communication-related macro trends that have an impact on communication service providers have been identified.PEOPLE:Always connected, Always access, Easy-to-use, Seamless, Control identity and integrity, SecurityDevicesSmartphones, multiple screens, embedded connectivityServicesDigitalisation, Virtualisation, OTT services, Web of thingsCompetitionMaturing, Cross ICT competition, Industry innovation, consolidation, regulatoryAccess/TechnologyIP connectivity, Acceleration of connectivity performance, Wireless- independent of technology, NFC enabled transaction services
  • The new digital lifestyle will lead to a huge demand for connectivity and bandwidth.A solid Internet infrastructure will be the lifeline for major functions in society, businesses and individuals’ everyday life.The old closed telephony value chain will be replaced by an open Internet based ecosystem where many actors, better positioned in the value chain, can claim ”customer ownership”. There is a major risk that operators will be reduced to utilities.Operator take key ”access provider” roleOperators will address customer needs by providing an always best connected experience, wherever you are and wherever you go.To offer customers “solutions” ,operators will bundle access, devices and services.Develop our business modelsNew opportunities will emerge ranging from pure wholesale to supplying full communication solutions to privates and businessesPartnerships will be an important ingredient.Operators will consequently have to master a variety of business models. Manage the shift from voice to dataOperators will have to adapt to a data centric world where the majority of traffic and revenues are data based.New attractive offers will have to be created to customers.Network and systems require updating.Cost efficiencyTo stay competitive operators will have to focus on costs; - Operational efficiency - Capex efficiency; network sharing, fixed-mobile - Scale - In-market consolidation - Cross border synergies - Control of infrastructure - Optimise fixed and mobileNew services will be access independent (OTT) and customers expect to use their services anywhere and anytime without being bound to a specfic access or network operator. As a concequence operators will have difficulties in competing on the service layer and have to focus on their unique assets, ie the access and traffic. Operators could still be the reseller of devices and services and make targeted packages. Buying decision for device and access will most likely be strongly linked also in the future. However, buying behaviour for most online services (OTT) will probably differ significantly from the access/device buying decision, forcing operators to focus on bundles with access related services or other services that correlates with the device/access buying decision.
  • Conclusion:New (and old) services provided by global internet players and device manufacturers require access, resulting in increased demand for the industry’s core services
  • This slide illustrates the potential business models and strategic options for operators in the new open eco system. As a model it does not reflect all aspects of reality....The five layers in the center represent potential business models. To secure and control a full end-to-end customer experience all five layers have to be in control of the provider. Currently there seem to be very few, if any, operator going for all five layers. A well known example in this area is Vodafone 360.The control of the full customer experience is rather in the hands of device and operating system providers (Apple IOS, Android, Microsoft/Nokia).Apple dont directly control the access layers but have via strict contracts with operators (almost?) secured a full customer experience. Another example of a player controlling the full model is Amazons Kindle where access and data traffic is included from start.Operators can of course still do bundles and packages of all layers and act as a reseller to end customers as shown in the left hand side of the slide. As applications and services moves to the Internet as OTT services operators will have difficulties in competing on the service layer, even with current core offerings like voice and messaging. However, operators will most likely provide voice and messaging services for many years to come because of legacy, but their importance as revenue generators will decline significantly the next coming years.The two layers in the bottom represents the access business and operators will be forced to focus on these as voice and messaging revenues erodes. The basic access levels represents a model where the operator do very little to differentiate and refine the access. In this model the operator only focus on providing raw access in the most simplest and cost efficient way.The smart access level is where we expect most operators to position themselves. In this level operators invest in refining and differentiating the access with tools like quality of service and traffic management.The middle layer, the Enabler, is to a big extent a new business opportunity for operators. Operators who go also for this model will explore new opportunities like selling billing services to other players, selling data traffic to online service providers who would like to include the data cost in their offerings (”data is included when you rent this video”, a sender pays model), selling customer data to advertisers, open up network to third party developers who would like to integrate e.g.the possibility to send sms from a website or application.Operators in the Enabler level will invest in platforms and interfaces to support these opportunities.Customer segments for the enabler layer are shown in the right hand side of the slide. These are not the traditional end customers but other players in the eco system who uses services from operators as components in their offerings to end customers. On this side we also find more traditional wholesale of access and traffic.CONCLUSION: In general, Operators will have to manage several business models depending on customer type and the relevant offering Partnerships could become an important ingredient in some of these models
  • AnimeradNeed to differentiate to avoid/limit commoditization and to grow.Is price leadership enough?Excel in managing data traffic in the most intelligent and efficient way.Need to improve quality in all customer touch points to meet the increased expectations on user experience from consumers.Provide seamless and easy-to-use services that give an ”always best connected” experience.Embrace a data centric world, while securing current revenues and profitability in the shift from voice to data. Find ways to keep a strong relation to the end customer segment and at the same time explore new business models and monetize new business opportunities.There will be in-market consolidation to reach economic efficiency and search for new business opportunities to reach growth.Where do we find new growth?Need for partnerships for new growth.Increased complexity in business models increases the need for better performance management.Purpose in what we do will make a clear stand on corporate responsibility as a competitive differentiator.
  • CMD2011 - Fredrik Linton - Our View on the Industry

    1. 1. Capital Markets Day 2011<br />Our View on the Industry<br />Fredrik Linton<br />
    2. 2. Major Trends Influencing the Communication Market in 2020<br />Devices<br />-Smartphones<br /><ul><li>Screens
    3. 3. Things</li></ul>People<br />- Always access<br />Increased Value<br />of Connectivity<br />Services<br /><ul><li>Digitalisation
    4. 4. OTT</li></ul>Competition<br /><ul><li>Cross industry
    5. 5. consolidation</li></ul>Access/Technology<br />- performance<br />
    6. 6. Important Implications for Operators<br />Key trends<br />Implications<br /><ul><li> People
    7. 7. Access/Technology
    8. 8. Services
    9. 9. Devices
    10. 10. Competition</li></ul>A<br />B<br />C<br />D<br />
    11. 11. Operators Take Key ”Access Provider” Roles<br />Access<br />Devices<br />Internet services<br />
    12. 12. Need to Manage Several Business Models<br />End Customer Segments<br />Non-End Customer Segments<br />Consumer<br />M2M providers<br />Service providers<br />Corporate<br />SME<br />Device providers<br />Variety of solutions<br />Integration<br />Enabling services<br />Operators offer<br />Devices<br />Smart Access<br />Basic Access<br />Applications and Services<br />
    13. 13. Huge Mobile Data Growth, but Uncertainty in Revenue Effect<br />Global mobile network<br />traffic growth<br />Relative size of total revenues<br />X SEK/MB<br />Source: Informa 2010<br />
    14. 14. Need to Increase Scale and Cost Efficiency<br />Clear Correlation between size and profitability<br />
    15. 15.
    16. 16. Our Challenges – And How we Solve Them<br />