Startup Disruption in Telco

JAMES PARTON, DIRECTOR OF TWILIO EUROPE

@JAMESPARTON !

STARTUP DISRUPTION IN TELCO

IBEGYOURPARTON.COM @JAMESPARTON

WHAT SPRINGS TO MIND WHEN YOU THINK OF YOUR MOBILE PROVIDER?

http://IBEGYOURPARTON.COM

A LITTLE ABOUT ME


INTERSECTION OF TELCO AND STARTUP

!


SO WHAT’S THE PROBLEM?


TELCO REVENUE DECLINING FOR FIRST TIME

Source: ETNO

UK 4G spectrum auction generated £2.3bn!2000 UK 3G action made £22.5bn



THE TELCO BUSINESS MODEL IS BROKEN

Voice is God’s gift to humanity. It’s what differentiates us from the animals. And we position voice at zero — you don’t have to pay for voice. Voice is dead.”

“

Hakam Kanafani!Group CEO of Turk Telekom!

Mobile World Congress 2013



..BUT TELCO’S REMAIN CASH GENERATION MACHINES

Source: Company websites

$0

$33

$65

$98

$130

AT&T China Mobile Telefonica Deutsche Telekom Vodafone FT

59.360.9

76.481.884.1

126.4

2012 Revenue (USD Billions)



CROSS INDUSTRY COMPARISON

Source: Company websites, Wikipedia, Business Week, BBC

$0

$45

$90

$135

$180

Samsung Apple AT&T IBM Sony Unilever Luxembourg Coca Cola Nike Heinz

11.624.1

4858.3

67.479.1

107

126.4

156.6

173.9




OIL, FOOD, TRANSPORT, COMMUNICATION

Source: Company websites, Wikipedia, Business Week, BBC

$0

$125

$250

$375

$500

Exxon Mobil Wallmart Toyota AT&T

126.4

226

443.9482




Source: Company websites

$0

$33

$65

$98

$130

AT&T China Mobile Telefonica Deutsche Telekom Vodafone FT

59.360.9

76.481.884.1

126.4


SO WHAT ABOUT THE DISRUPTORS...?



SO WHAT ABOUT THE DISRUPTORS....

Source: Company websites, insideris.com

$0

$35

$70

$105

$140

AT&T Telefonica Vodafone Google Skype

0.30.75

50.159.360.9

76.481.884.1

126.4




SO WHAT ABOUT THE DISRUPTORS....

Source: Ovum, Company websites, insideris.com

$0

$33

$65

$98

$130

AT&T OTT 2016 China Mobile Telefonica Deutsche Telekom OTT 2013 Vodafone FT

59.360.971

76.481.884.1

106

126.4


OTT 2013

OTT 2016


http://insideris.com


THE DECLINE IS PREDICTED TO CONTINUE

Source: Telco 2.0


http://www.telco2research.com/articles/EB_European-mobile-future-brutal-telco_Summary

NEW KIDS ON THE BLOCK


THE RISE OF MESSAGING APPS

Source: Crunchbase, Wikipedia, mobilesquared , Ben Evans

2005

2010

2011

280m active

465m active

236m active

Over 50 social messaging apps on Google Play have more than 1 million downloads


NEW KIDS ON THE BLOCK


CASE STUDY:

Source: ReadWriteWeb

mobile picture messaging user experience done right...



CASE STUDY: PHOTO MESSAGING

Source: OnDevice



CASE STUDY: RISE OF

Source: TeleGeography


SPEED AND AGILITY


RADICAL INNOVATION IN COMMUNICATIONS

~3,000 BC 1838 1876 1984

~4,800 years 38 years 108 years



SOFTWARE TIMESCALES

2003 2006 2007 2008

3 years 1 year

3G Launch

2009

1 year 1 year


DNA


SOFTWARE IS EATING TELCO

• Marc Andreessen was right about software eating the world, especially when it comes to Telecommunications...

- The innovation void is being filled by software people, not Telco’s

- Software people think web first. This style of thinking is inherently open

- Software people think collaboratively - APIs, collaborative working, open source

- Software people think about building communities & ecosystems

Why software is eating the world: http://parton.ly/17u5g5z Andreessen photo: http://www.flickr.com/photos/36521958135@N01/2443764501


http://parton.ly/17u5g5z

http://www.flickr.com/photos/36521958135@N01/2443764501

Innovation

INTERNET

Copper

Switching

WWW

TELECOM

Copper

Switching

CONTROL = #FAIL


YE OLDE MOBILE INTERNET



CASE STUDY: INTERNATIONAL CALLING

Avg. cost of a 3 minute transatlantic call: !1927: $75 (today’s equivalent $1,000) 1964: $12 (today’s equivalent $90) 2010: $0.21 !Volume of transatlantic call minutes: !1964: 20 million 2010: 114 billion !!

Source: TeleGeography


http://www.telegeography.com/products/telegeography-insider/paleotelegeography/2012/11/19/you-can-telephone-all-over-the-world/index.html


CHANGING USER BEHAVIOUR

Source: Ofcom

!Weekly mobile activity by 12-15s in UK with a smartphone, 2013!

Per Week

0

100

200

300

400

Phone Calls SMS App Messages

192

311

27



NO BUSINESS HAS A DIVINE RIGHT TO SURVIVE

“The fact is time is racing on: the economy is declining, technology is moving ahead and so are other parts of the world. The telecoms sector hasn’t had its ‘Lehman’ moment yet. But with declining revenues, rising debt and dated business models, I worry about that happening,”

European Commission Vice President !

Neelie Kroes


SO WHAT CAN WE LEARN?


TAKE AWAYS

• Search for complacent industries with high margins and poor user experiences!

• Don’t just talk to your customers, implement what they tell you!

• Watch trends in your direct and indirect markets!

• Ensure your business model is multi faceted!

• Think about your DNA - create and integrate into ecosystems, become de facto.!

• Have a Plan B, anticipate change



PAYOFF IS HUGE

2005 & 2011

$2.6bn & $8.5bn

eBay & Microsoft

2009

$207m

O2

2014

$900m

Rakuten

2008

$105m

BT

2012

$1.1bn

Facebook

2014

$19bn

Facebook



CASE STUDY: M&A

• Think about what we have covered today!

• Despite being the clear number 1, Zuckerberg is not making the same mistakes!

• Facebook is under performing in Youth segments, Emerging Markets, and Mobile!

• Decision making at software speed, whilst resisting the temptation to build in house!

• He wants the next Facebook to be Facebook



FURTHER READING

Alan Quayle!http://www.alanquayle.com/blog !Tomi Ahonen!http://communities-dominate.blogs.com/brands/ !Disruptive Wireless!http://disruptivewireless.blogspot.co.uk/ !Martin Geddes!http://www.martingeddes.com/ !Benedict Evans!http://ben-evans.com !Telco 2.0!http://www.telco2.net/blog/


http://www.alanquayle.com/blog/

http://communities-dominate.blogs.com/brands/

http://disruptivewireless.blogspot.co.uk/

http://www.martingeddes.com/

http://ben-evans.com

http://www.telco2.net/blog/

THANK YOU. @JAMESPARTON

IBEGYOURPARTON.COM SCOOP.IT/T/SOFTWAREANDTELCO

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Startup Disruption in Telco

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