The Two-sided Telecoms Business Model Re-thinking the phone company 14 March 2008 Martin Geddes, Chief Analyst, STL Partners [email protected]
May 15, 2015
The Two-sided Telecoms Business Model
Re-thinking the phone company14 March 2008
Martin Geddes, Chief Analyst, STL [email protected]
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Before we begin…
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Telecoms is a freight business for bits
1010001011100100100101100011010000101111101010010010101010001010101111010101010100010100101001101010100010011101010110101001001010111010100101010100010101110111101000101010100101110010001000101101100101011100111010000001011001010100
Voice, video,
web, messages
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Container shipping: precedent
Containers vs.
IP packets
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Container shipping lessons
Value-based pricing of the
containers doesn’t work
#1
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Container shipping lessons
New technology and lowered costs are not
enough
#2
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Container shipping lessons
Increasing returns to scale for
infrastructure
#3
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Container shipping lessons
The ports get the money, not
the shipping lines
#4
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Container shipping lessons
People pay most for logistics solutions
#5
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One sidedmarket
Multi-sidedmarket
…with a twist
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Limits to retail growth
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Voice & Data Core Service Pressures
2017
% of Total Mobile Voice Minutes, Europe
2007 2012
Traditional Telephony
IP-Enhanced Carrier Telephony
Private Voice Apps & Handsets
Other
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The telephony interaction pyramid
Comm-unities
Relationships
Conversations
CallsRendezvous
VO
LU
ME
TE
LE
PH
ON
Y
SO
CIA
L N
ET
WO
RK
ING
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Telcos: still not product innovation businesses
How well do we as an industry understand what additional needs users have for voice and
messaging products, over and above what they have today?
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Revenue opportunities
OPEN APIsPRIVACY
FEATURESREAL-TIMESERVICES
CALLINGFEATURES
StronglyAgree
Agree
N=83
INTERNALLY-DRIVEN INNOVATIONEXTERNALLY-DRIVEN
INNOVATION
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Yes, but…
What’s the business model?
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Introducing 2-sided markets
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Today: Revenue only from 1 Side
Content, Apps, Devices
Network & Termination
Interconnect & Storage
Consumers
$ $Enterprises
SMEs
Multi-Nationals
Suppliers = Costs
End Users = Revenue
Telco
Products (partners’)
Products (own)
Packets & Platters
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Tomorrow: Revenue from 2 sides
$
‘Upstream’ Customers ‘Downstream’ Customers
Developers
Retailers
Government
Brand Advertisers
Content Owners
Telco – Retail
Millions of Customers
Thousands of Segments
Content Owners
Telco$
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Telcos have many valuable but latent data assets
MY PERSONAL DATA
MY STUFFMY IDENTIFIERS
MY INTERACTIONS
MY RELATIONSHIPS
MY CONTEXT
MY DEVICES
Name
Address Gender
ProfilePreferences
SIM SoftSIM
Serial NumberDevice details
Location Presence
On/OffRoaming
Pictures Videos
CalendarAddress Book
Bank School
FriendsWorkplace
Browsing History
.mobi domains QR Codes
MY CREDIT
Bad debt Demographics
Average balance
Number SIP address
IP AddressEmail
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Google Envies Operators in Key Areas
1. Sub-Scale in:
1. Voice & Messaging
2. Billing & Payments
3. Retail sales and customer care
4. Interoperability
2. Limited Knowledge of Customer
Google increasingly paying for inventory, skills & data
MY PERSONAL DATA
MY STUFFMY IDENTIFIERS
MY INTERACTIONS
MY RELATIONSHIPS
MY CONTEXT
MY DEVICES
Weak!
MY CREDIT
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Telco Future: 3 x business models
Developers
Retailers
Government
Brand Advertisers
Content Owners
Telco (Retail)
$$
Telco Retail
Telco Wholesale
$$$$
$$
Up
stre
am P
artn
ers
Do
wn
stream E
nd
Users
Telcos
Payments between telcos
Millions of Customers
Thousands of Segments
Telco Platform
Payments between telcos
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Examples of2-sided markets
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Learning from the master
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Google: Lowers transaction costs
HUGE SCALE
FREE products for end users
CHEAP advertising for brands=
+
LOW COST per transaction
+
Massive investment in Google platform
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Betfair: Stock Exchange for Gamblers
Bookie Punter‘To Win the Champions
League’
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Strong Growth from Big Scale Platform
• Explodes in 2003 following launch of open API for bookies
• More transactions than all European stock exchanges COMBINED
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A New Telco Proposition?
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Additional Telco Value Proposition
Now:Bundled voice,
messaging, video and
internet access
Next:
PersonalisedLogistics Services
for Data
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Logistics Services in the Physical world
1. DistributionCollectionMulti-Modal TransportDelivery
2. B2B VASTax & Duty ManagementDocumentation ManagementDenied Party ScreeningScheduling & Supply Chain ManagementSystems IntegrationTracking & Monitoring
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‘Personalised Logistics Services … for Data’
1. DistributionOrigination & CaptureMulti-Modal TransportTermination & Display
2. B2B2C VASIdentity, Authentication, SecurityAdvertising, Marketing ServicesEcommerceOrder FulfilmentBilling & PaymentsCustomer Services
Telco (2.0)
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1. Distribution Platform
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New Types of Wholesale Products
Video
Content delivery
networks for 3rd parties
Data
“Postage and packing
included!” – for data
Become supplier for 3rd
party voice services
Voice
+
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2. B2B2C Value Added Services
Platform
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Current Approach: Media & Advertising…
TelcoBrand Advertisers
Consumers
$ $Enterprises
SMEs
Multi-Nationals
Upstream Customers Revenue Side 1
Downstream Customers Revenue Side 2
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…but market is too small!
Revenue, $ Billions
20062010
$2,000bn
$2,490bn
$425bn $533bn
$30bn $62bn
Fixed and MobileTelecoms
Global advertising
On-line and mobileadvertising
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Open Up More Markets for Telco Platform
$
Developers
Retailers
Government
Brand Advertisers
Content Owners
Telco – Retail
Millions of Customers
Thousands of Segments
Content Owners
Telco Platform$
B2B2C VAS
Distribution
Upstream Customers Downstream Customers
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VAS: Help Customers Interact More Easily
Developers
Retailers
Government
Brand Advertisers
Content Owners
Telco – Retail
Customers – Revenue Side 1
Customers – Revenue Side 2Barriers
Identifying Other Party, Authorisation & Security
Promoting Offer
Conducting transaction
Fulfilling Order
Billing & Payment
Service & Support
Millions of Customers
Thousands of Segments
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VAS: Telcos assets well suited
Developers
Retailers
Government
Brand Advertisers
Content Owners
Telco – Retail
Customers – Revenue Side 1
Customers – Revenue Side 2Barriers
Identifying Other Party, Authorisation & Security
Promoting Offer
Conducting transaction
Fulfilling Order
Billing & Payment
Service & Support
Telco Capabilities &
Assets
Millions of Customers
Thousands of Segments
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Value of the opportunity
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Potential Market of $350+ billion?
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Making it happen
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Five things to get right
ScalePackaging
Rewards
PrivacyReliability
The Two-sided Telecoms Market Opportunity
THANK YOUMore info at www.telco2.net/blog
An eComm 2008 presentation –
http://eCommMedia.com for more