Market Drivers and New Business Models

Karl Whitelock – Director Global OSS BSS Strategy

Stratecast | Frost & Sullivan

Analyst Briefing Presentation

July 24, 2013

Market Drivers and New Business Models

The Impact on Business Operations – What is Really Going On?

Page 2© 2013 Stratecast | Frost & Sullivan, all rights reserved.

Proprietary and Confidential to Stratecast.

Today’s Presenter

One of the original founders of Stratecast focused on the business strategies of the communications industry, Mr. Whitelock established the OSS/BSS Competitive Strategies practice.

He has authored over 175 publications concerning problems relative to the OSS/BSS marketplace. He presently covers the BSS functions including mediation, rating & charging, core billing, policy management, interconnect & settlements, content partner management, and subscriber data management.

Director Global OSS BSS StrategyStratecast | Frost & Sullivan

Director Global OSS BSS StrategyStratecast | Frost & Sullivan



Agenda

Where Are We Today?

Game Changing Realities• Business and Operations Impacts

Conclusion



What Customers Really Want CSPs to Get Right for Them

Consumers, Small Business and EnterpriseConsumers, Small Business and Enterprise

But do customers really know what they need? Did anyone want touch screen technology before it was available?

But do customers really know what they need? Did anyone want touch screen technology before it was available?



But Something Weird is Happening

Source: CognizantSource: Cognizant



The World Around Us is Changing Dramatically

?What Industry Will Be Next?

Source: Graphics from CognizantSource: Graphics from Cognizant

Many companies are only configured to address the business challenges of the past, even those of just five years ago …

If companies stop evolving, customers will stop coming.



Communications Industry – Business Model of Yesterday

Our ConnectedWorld

Fixed-Line

MobileIP Voice

MMS / SMS 2.5G Data (GPRS/EDGE)

3 G Data (UMTS) 3.5G Data (HSPA)

4G Data (LTE)

Mobile

Routers Switches

Databases

IP

Voice Broadband DSL

Cable

Fixed-Line

Network TechnologySource: TM Forum TAM, TMF GB929

Fulfillment Assurance Billing

Customer Management

Service Management

Resource Management

Supplier/Partner Management

Enterprise Management

Product Management

Market/Sales Management

OSS / BSS

• Consumers• Small Medium Business

• Enterprise

Focus on Technology:•Fixed-line Voice

•Mobile•Broadband Data



Today’s New Business Reality

Our ConnectedWorld

Market ChangesAnd

Business Drivers

A New Business Landscape



Agenda

Where Are We Today?


Conclusion



Key Business Drivers for the Communications Marketplace Today (1 of 2)

Enterprise Solutions

• Mobility Into Existing Services

• Personalized Access

RetailHealthcare UtilitiesTransport Logistics Education

3rd Party Applications

•Retailing•Gaming & Entertainment•Business Enablement•Books & Education•Sports & Finance

Regulatory Change

•Bill Shock (Roaming)•National Broadband Networks•Lawful Data Retention (EUDR)•Corporate Compliance (SOX)

Multi-Industry Convergence

• Multi-Service• Multi-Technology• Multi-Partner• New Business Models

CSP Industry Maturation

Technology Infrastructure

• IP expansion from network core access plane (fixed and mobile)

• Cloud Convergence (IaaS, PaaS)• LTE, HSPA, SDP, IMS, SOA, ITIL. …

+IP

PSTN

Mobile

User Device Evolution

Consumer Electronics+

Telecommunications

• Multi-function & Multi-purpose

• Portable and Individualized



Key Business Drivers for the Communications Marketplace Today (2 of 2)

Mobile Security

• BYOD• User Access (Email, Social)• Data Usage (Time, Location)• Encryption and Backup

NFC and mCommerce

• Transaction Accountability• Security and Governance• Customer Acceptance• Banking Regulatory

Real-Time Analytics

• Usage Analysis for Personal Pricing Offers

• Customer Behavior Analysis• Resource Planning

New Business Models

• B2B and B2C Together• Monetize Cloud Services• Mobility in Everything• Cross-Industry 2.0

Machine-to-Machine

• Customer Solutions• Multi-Layer M2M Services• “Everything as a Service”

HealthcareTransport Logistics

Insurance Low TechRetail

Cloud Services

• E2E Customer Solutions• Business Virtualization• SaaS, PaaS, IaaS• Data Storage

Social Networking

• Virtual Presence• Small Office / Home Office• Consumer / Business Circles• Online Substitution



Game Changers for the Communications Industry

1. Smartphones and Tablets

2. Fast Mobile Networks (4G LTE)

3. Social Networking

4. Healthcare Industry Adoption of Smartphones

5. Cross Industry Interaction

6. Business Solutions with M2M

7. Mobile Retail and Customer Payments

8. Multi-Sided Business Models: B2B2…2C

9. Mobility Services Within Other Industries

10.Augmented Reality



37.4347.79

26.9126.03

35.0637.04

17.0720.34

18.6516.24

14.18.48.758.74

7.375.21

3.794.36

6.890.72

1.72.32

1.190.27

0 10 20 30 40 50

Q2 2013

Q4 2012

Q2 2012

Q4 2011

Q2 2011

Q4 2010

Q2 2010

Q4 2009

Q2 2009

Q4 2008

Q2 2008

Q4 2007

Game Changer #1 – User Device Evolution , an Improved Experience

January 9, 2007January 9, 2007

June 29, 2007June 29, 2007

Announced:Announced:

First Available:First Available:

iPhoneiPhone356 million sold to date!!

(Mar 2013)356 million sold to date!!

(Mar 2013)

Worldwide iPhone Sales by Apple Fiscal Quarter(Q2 2013 = Jan – Mar 2013)

Worldwide iPhone Sales by Apple Fiscal Quarter(Q2 2013 = Jan – Mar 2013)



19.48

22.86

14.04

17.04

11.8

15.43

11.12

9.25

4.69

7.33

4.19

3.27

0 5 10 15 20 25

Q2 2013

Q1 2013

Q4 2012

Q3 2012

Q2 2012

Q1 2012

Q4 2011

Q3 2011

Q2 2011

Q1 2011

Q4 2010

Q3 2010

Game Changer #1 – User Device Evolution, an Improved Experience

January 27, 2010January 27, 2010

April 30, 2010April 30, 2010First Available:First Available:

Announced:Announced:

140+ million sold to date!!(Mar 2013)

140+ million sold to date!!(Mar 2013)

Worldwide iPad Sales by Apple Fiscal Quarter(Q2 2013 = Jan – Mar 2013)

Worldwide iPad Sales by Apple Fiscal Quarter(Q2 2013 = Jan – Mar 2013)

iPadiPad



Impacts of Touch-Screen Technology on CSP Business Operations

How Do Touch Screen User Devices:

• Change the Meaning of Real-Time Support?

• Billing Mediation?

• Convergent Charging?

• Of Service Quality?

• Tiered Pricing Plans?

• Network Capacity Planning? …

3G Smartphones generate 50 times and tablets generate 120 times more data traffic than a regular feature phone. In addition, 4G LTE networks generate at a minimum, 10 times more data traffic than 3G networks.

3G Smartphones generate 50 times and tablets generate 120 times more data traffic than a regular feature phone. In addition, 4G LTE networks generate at a minimum, 10 times more data traffic than 3G networks.



Game Changer #2 – 4G LTE Technology is Now Mainstream

Network operators have invested in 4G LTE in 124 countries

Networks commercially launched through April 7, 2013

4G LTE service is now available in 37 more countries than a year ago

4G LTE is the Fastest Developing Mobile Technology Ever4G LTE is the Fastest Developing Mobile Technology Ever

415415

163163

3737

4G LTE Network Launches

Source: Global Mobile Suppliers Association (GSA)Source: Global Mobile Suppliers Association (GSA)



Game Changer #4 – Healthcare Adoption of Smartphone Technology

Digitizing a human being is:• “… remotely and continuously monitor

each heart beat, moment-to-moment blood pressure readings, the rate and depth of breathing, body temperature, oxygen concentration in the blood, glucose, brain waves, activity, mood…

• “… image any part of the body and do a 3D reconstruction, eventually leading to the capability of printing an organ.

• “assembling all of this information about an individual from wireless biosensors …”

“Medicine is about to go through its biggest shakeup in history!”Dr. Eric Topol, Cardiologist

“Medicine is about to go through its biggest shakeup in history!”Dr. Eric Topol, Cardiologist



Game Changer #8 – Multi-Sided Business Models: B2B2C

The monetization function, isn’t just about end-user customers. It must include all concerns with suppliers, distribution channels, and resellers, as applicable The monetization function, isn’t just about end-user customers. It must include all concerns with suppliers, distribution channels, and resellers, as applicable

Source: MetraTechSource: MetraTech



Agenda

Where Are We Today?


Conclusion



CSP Community is at a Crossroads – Now More Than Ever Before

“If I Had Asked My Customers What They Needed, They would Have Told Me a Faster Horse.”

– Quote Often Attributed to Henry Ford

“If I Had Asked My Customers What They Needed, They would Have Told Me a Faster Horse.”

– Quote Often Attributed to Henry Ford



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For Additional Information

Mireya EspinozaCorporate CommunicationsInformation & Communication Technologies(210) [email protected]

Karl M. WhitelockDirector Global OSS BSS StrategyStratecast | Frost & [email protected]

Mike SubyVice President of ResearchStratecast(720) [email protected]

Perry SomersDirector of Business DevelopmentStratecast(360) [email protected]