Telcos Strategic Positioning in the New World (Slovenia Telco Day 2013)

© 2013 IBM Corporation

IBM Institute for Business Value

Telco Day

Telco’s strategic positioning

in the new worldMobile, Cloud, Social and Big Data



Telecommunications is IBM’s #1 research focus

2

TSL North America (Austin, Texas)

Japan (Tokyo

Satellite TSL)

TSL Israel &

Research Lab

(Haifa Satellite TSL)

Research Lab(New Delhi)

TSL LATAM(Sao Paulo,

Brazil Satellite TSL)

TSL Europe(La Gaude &

Montpellier, France)

TSL Russia(Moscow Satellite TSL)

South Africa(Johannesburg, Satellite TSL)

ASEAN(Kuala Lumpur

Satellite TSL)

TSL India (Bangalore Satellite TSL)

TSL China &

Research Lab(Beijing)

Worldclass

Partner

Ecosystem

Institute for Business

Value

Industry

Solutions Labs

Research

Labs

Centers of

Excellence

Internet of Things Smarter Cities

Almaden c

Big Data & Analytics

Storage Nanotech

Healthcare

Watson Semiconductors Systems Software &

Services Big Data &

Analytics

c

Dublin

Smarter Cities

Web

Services



The IBM Institute for Business Value creates fact based thought

leadership that help clients realize business value

3

FutureAgendas

Value RealizationStudies

3 to 10 year industry outlook

with action oriented next steps

In-depth assessment of today’s

critical issues, opportunities, etc.

CXOSurveys

Chief Officiers studies – CEO,

CIO, CMO, CFO, CHRO, etc.



What will be the Telco’s role in the new world?

4

Your theory is crazy,

but it's not crazy

enough to be true.

― Niels Bohr

Prediction is very

difficult, especially if it's

about the future.

― Niels Bohr

Technological advances and mega’ market trends

are creating a very new world for consumers,

businesses and markets as a whole.

In this new world, Telco’s strategic positioning and

response relies on major growth plays



Four key Technologies will have big impact on telecommunications

55

Program Learn

Natural

Language

Analytics

DeepQA

Cognitive

Computing

“SyNAPSE”

Silicon

Devices

Nano

Scale

Workload

Optimised

Systems

Exascale

Software

Defined

Environments

1 Billion

Transistors

Data

1,000X

1 Trillion Devices

Nano

Systems

1,000,000X

1,000X

Big Data: Real-

time

Inference &

Knowable

Future



6

Economic

Regulatory

Market

ICT

IndustryTechnology

• Slow long term growth outlook,

shifting wealth and urbanisation

• Change in Global Hierarchy• Demographic shifts

Rise in power of the smarter

consumer

Social media explosion driving

new behaviours

Structural separation

continuing

Increasing roles of

regulators especially

in privacy

Going global for growth

Accelerated pressure on

revenue/costs

OTTs and new competitors

disintermediating

Network technology

investment and change

Mobile saturation extending to M2M

Big data and hyperdigitisation

The 3rd platform – Cloud Internet of Things

Mobile first as a design point

Mega market trends evident today are driving re-evaluation of

business strategy



Internet, the mobile and social media has led to an amazing

consumer revolution as profound as any seen before

7

Incre

asin

g p

ow

er

of th

e c

onsum

er/

Socia

l

Media And their use of

social media tools to shop, spend and

share insights is growing

Today, roughly 1/3 of world’s

population is on line

They are increasingly

accessing the Internet through mobile devices



Social Networking has become a key communication channel, in

particular among under 25s

8

Mobile Telephony

Email/IM/Chat

Social Networking

VoIP

Video Streaming

Fixed Voice

82%

84%

72%

42%

32%

58%

Daily

Usage

Mobile Telephony

Email/IM/Chat

Social Networking

VoIP

Video Streaming

Fixed Voice

80%

75%

47%

66%

17%

33%

2

1

5

3

4

6

1

2

3

4

5

6

±1/2 of consumers under 25

stream or download

video daily

2/3rdor more of consumers

under 25 use Social

Networks daily

COMMUNICATIONS

SERVICES USAGE

UDER 25s

Mature markets

Source: 2011 IBM Global Telecom Consumer Survey, 25 countries Global N= 13237 Mature Countries N=8866; Emerging Countries N=4372

Incre

asin

g p

ow

er

of th

e c

onsum

er/

Socia

l

Media



Internet Search, Friends/Family and, in emerging countries, Social

Media have become the preferred sources of information

9

70%

64%

51%

45%

31%

22%

19%

17%

66%

51%

28%

35%

19%

13%

23%

8%

Internet search

Recommendations/ advice

Social media

Websites of communication providers

Traditional advertising

Emails/ promotional offers

Retail stores

Shopping portals/ auctions

Emerging countries

Mature countries

What are you preferred sources of information?

Incre

asin

g p

ow

er

of th

e c

onsum

er/

Socia

l

Media




Consumers now have unprecedented power to build & demolish

brand strength as they blog, text and comment via Social Media

10

Greetings,

I am disappointed to learn that Verizon Wireless

plans to institute a new $2 fee for paying bills

online…. Your company should not assume that

it can do anything to your customers and

that we will allow it to happen…

Within 24 hours, more than 100,000

people had signed a online petition:

12/30/11 Press Release:

“Verizon Wireless has decided it will not institute

the fee for online or telephone single payments that was announced earlier this week.

The company made the decision in response to

customer feedback about the plan…”

77%Tell friends/

family bout

their poor

experience

81%Avoid

Providers

with poor

experience

48%

9%

10%

44%

51%

56%

31%

7%

19%

23%

41%

45%

65%5%

16%

25% 56%

61%

Attempt to

redial/reconnect

Avoid providers with

whom friends had bad

experiences

Tell friends about my

poor experience

Contact customer

service

Switch providers, -

e.g. use a different SIM

My provider proactively

contact me

What happens when being disconnected?

AlwaysMost/sometimes Never

Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237

12/29/11 Press Release:“Starting January 15, a new $2 payment

convenience fee will be instituted for

customers who make single bill

payments online or by telephone”



Communications Service Providers (CSPs) have not kept pace with

all of the changes in today’s environment

11

Global outsourcing

Decreasing brand loyalty

Customer collaboration and influence

Growth of channel and device choices

Data explosion

Regulatory considerations

ROI accountability

Privacy considerations

Corporate transparency

Shifting consumer demographics

Social media

Financial constraints

Emerging market opportunities

Mean

5

6

7

8

9

10

11

12

13

1

2

3

4

11

50

60

70

40

20 40 600

Global CSP Marketing Priority Matrix

Factors impacting

marketingPercent of CMOs selecting

as ‘Top five factors’

UnderpreparednessPercent of CMOs reporting

underpreparedness

87

1112

6

3

7

6

1

24

5

109

Incre

asin

g p

ow

er

of th

e c

onsum

er/

Socia

l

Media



And as consumers encounter new products, services and experiences

on virtually a daily basis, they fell less loyalty towards CSP brands

12

18% 22% 60%

2011 Telecom Consumer Survey across

25 countries: Global average of advocacy

levels in Telecommunications industry

Advocates AntagonistsApathetics

Customer advocacy in Retail industry is close to twice that of the Telecommunications industry

Telecommunications

UK Germany Italy France Canada US Mexico Brazil

Retail

Industry

34% 33% 25% 26% 32% 39% 52% 51%

Telecom

Industry

20% 16% 17% 21% 13% 20% 24% 17%



The good news is that an increasing number of CSPs have started

using social media to ‘listen & engage’ with customers

13

Groups

Individuals

Reactive Proactive

Mine

Conversations

Crowdsource

Insights

Provide

Answers

Influence

Influencers

Applying social approaches to listen & engage customers

Today Next two years

Respond to

customer questions

Solicit customer

reviews and opinions

Capture

customer data

Identify and manage

key influencers

79%

59%

79%

47%

68%

47%

68%

35%

Source: Institute for Business Value, 2012 Business of Social Business Study (%

CSPs with customer-related social business activities)

Incre

asin

g p

ow

er

of th

e c

onsum

er/

Socia

l

Media



And many are planning to use social business to connect to

customers, employees and partners, and to spur innovation

14

A Social Business uses collaborative tools,

social media platforms and supporting

practices to engage Customers, Employees,

Business partners and other stakeholders in

an ongoing dialogue.

Create valued

customer

experiences

Drive

workforce

productivity and

effectiveness

Accelerate

innovation

Source: Institute for Business Value, 2012 Business of Social Business Study

Incre

asin

g p

ow

er

of th

e c

onsum

er/

Socia

l

Media



OTT providers – in particular the top 4 – are expanding their

dominant position in the communications landscape

15

= 1/2

The massive shift in value continues towards the OTTs as capital markets

prize the direct customer relationship and value provided by OTTs,

>>>>>>> reducing the CSP valuation back to utility status!

70% of market cap

Market Value

Market

Value of

Top 25drivers

of

Internet

traffic

Market

Value of

Top 150Telecom

Providers

Dis

ruptive

OT

T c

om

petito

rs



Consumer sentiment on future spending in Emerging Markets

exceeds Mature Markets by 26%

16

4%

-3%

-6%

-10%

-14%

-16%

-18%

-19%

-19%

-23%

-32%

-24%

Utilities

Food & drinks

Transportation

Mobile

broadband

Mobile Telepony

Pay television

Sports

Fixed Telephony

Clothing

Holiday/vacation

Electrical

appliances

Going out

Mobile Telephony

Mobile Broadband

Transportation

Pay television

Utilities

Elect. Appliances

Fixed Telephony

Holidays

Food & drinks

Clothing

Going out

Sports

40%

30%

22%

21%

16%

7%

6%

6%

3%

2%

-7%

-10%

Utilities

Food & drinks

Transportation

Mobile Telephony

Clothing

Holiday/vacation

Mobile Broadband

Pay television

Electrical appliances

Fixed Telephony

Going out

Sports

Mobile Telephony

Mobile Broadband

Transportation

Pay television

Utilities

Elect. Appliances

Fixed Telephony.

Net Increase/DecreaseNet Increase/Decrease

Holidays

Food & drinks

Clothing

Going out

Sports

Emerging Mature

Change in G

lobal H

iera

rchy




In emerging markets, people expect net increase in mobile

broadband spending

17

45%

35%31%

15%15%12%

8%6%5%

-3%-6%-6%-7%-7%

-9%-10%-12%-13%

-15%-16%-20%

-25%

-32%

-43%

-2%

Emerging

Markets

Mature Markets

Net Increase / Decrease Consumer spending MOBILE Broadband(2011 – 2014)

Sw

ed

en

UK

Gre

ece

Ita

ly

Port

ugal

Fra

nce

Neth

erlands

Spain

Cze

ch

R.

Belg

ium

Pola

nd

Ru

ssia

Ge

rma

ny

Ind

ia

Chin

a

Bra

zil

UA

E

Me

xic

o

Au

str

alia

US

A

Ja

pa

n

Ca

na

da

.

So

uth

Afr

ica

Kore

a

Q05 Compared to previous years, are you likely

to spend less, the same or more on the following

products / services in the next 2-3 years?

Cyp

rus

Change in G

lobal H

iera

rchy




Many CSPs have increased their footprints outside their home

markets by expanding to emerging markets

18

Emergence of multi-country Giants

15 multi-country (10 or more countries)

companies now control ± 3 billion subs

Challenges:

How can the multi-country

CSP leverage their scale and

identify the right synergy

potential for their company?

How can the single-country

CSP compete against global

CSPs in their own market?

Company (HQ)

Number

of

Countries

Subs

(mio)

2011

Rev $B

Market

Value $B

05/01/2012

France Telecom (France) 32 217 59.6 36

Telefonica (Spain) 25 238 84.8 63

Bharti (India) 21 243 11.9 22

MTN (South Africa) 21 165 15.8 33

Vodafone (UK) 20 439 76.1 144

Singtel (Singapore) 20 146 15.0 40

Telia Sonera (Sweden) 19 160 15.6 29

Vimpelcom (NL) 19 205 20.3 16

America Movil (Mexico) 18 236 52.9 104

Etisalat (UAE) 18 135 8.8 17

Deutsche Telekom (Germany) 17 128 77.7 48

Millicom (Luxembourg) 13 43 4.5 10

Tele2 (Sweden) 12 35 6.2 8

Telenor (Norway) 11 140 17.5 29

STC (KSA) 10 139 14.8 22

Axiata (Malaysia) 10 199 5.4 15

Goin

g G

lobal



The Cloud trend has now reached a tipping point where it can create

and deliver business value

19

Performing current businessmore efficiently and effectively

Creating new business

models for delivery of current

services

Creating entirely new

businesses

2015

Business Value can be

created in 3 main areas:

Clo

ud



CSPs clearly intend for Cloud to improve their business capabilities,

in addition to enhancing internal efficiencies

20

Internal EfficienciesBusiness Capabilities

How Important are the Following Objectives for Adopting Cloud?

(% of Telecom Respondents)

34%

31%

27%

26%

25%

22%

19%

39%

35%

35%

38%

32%

44%

29%

27%

34%

38%

36%

43%

34%

52%New/enhanced revenue streams

Competitive/cost advantages thru vertical integration

New delivery channels/markets

Competitive differentiation thru specialization

Increased collaboration with external partners

Flexible pricing models

Rebalanced mix of products/ services

Very Important Important Neutral to not important

New/Enhanced Revenue streams

Flexible pricing models

Rebalanced mix of products/services

Competitive differentiation thru specialization

Increased collaboration with external partners

New delivery channels/markets

Source: The IBM Institute for Business Value study: The natural fit of Cloud with Telecommunications, 2012 Survey selections

Clo

ud



CSPs can help cities use cloud to integrate data across city

operations enabling delivery of citizen services

21

Rio de Janeiro Cloud-based data solutionsemergency response system planning.

ibm-takes-smarter-cities-concept-to-rio-de-janeiro

Clo

ud

http://www.nytimes.com/2012/03/04/business/ibm-takes-smarter-cities-concept-to-rio-de-janeiro.html?pagewanted=all&_r=0



CSPs can spur the development of ‘smart home’ appliances using

Cloud technology

22

Vodafone and IBM team up on ‘smarter home’ initiative

Enabling consumers to use their smartphones in

a variety of remote activities including viewing

their home’s utility consumption; controlling

security, heating and lighting systems; and

activating home appliances.

Enables manufacturers and service

providers to collect data fro appliances

for product development and

maintenance, and to rapidly introduce

related new consumer services.

IBM and Vodafone Advance Smarter Home Initiative

Clo

ud

http://www-03.ibm.com/press/us/en/pressrelease/38652.wss



Much more than any other industry, CSPs define big data by the

capabilities needed to do analytics on information real-time

23Source: Analytics: The real-world use of big data, a collaborative research study by the IBM Institute for Business Value and the Saïd

Business School at the University of Oxford. © IBM 2012

40%

21%

11%

11%

9%

8%

0%

15%

13%

18%

8%

16%

13%

8%

Real-time information

Non-traditional sources of

information

A greater scope of information

The latest buzzword

New kinds of data and analysis

Data influx from new

technologies

Large volumes of data

CSP respondents All-Industry respondents

For CSPs the real time aspect is

extremely important as location-

based services, smarter network

operations, intelligent marketing

campaigns, next best actions,

and fraud detection require a

more contextual real-time view

of information.

Real-time information streaming• Digital feeds from smart devices,

sensors, social and syndicated data

• Instant awareness and accelerated

decision making

Defining big data

Big

Data



Two-thirds of CSP respondents identified customer-centric objectives

as their organization’s top priority

24

Big data objectives

66%

15%

11%

8%

0%

49%

14%

15%

18%

4%

Customer-

centric

objectives

New Business

Models

Risk/Financial

management

Operational

optimization

Employee

collaboration

CSP respondents

All-Industry respondents

Customer-centric outcomes Understanding behavior patterns

and preferences provides

organizations with new ways to

engage customers

Providing a greater customer

experience, every time, is vital for

limiting churn, building loyalty, and

for competing against over-

the-top players, including

Google, Apple, Facebook,

WhatsApp and Skype, companies

that have proven adept at

dreaming up compelling online

experiences for consumers.

Big

Data



25

Customers

Operations

Sales

Markets and competitors

Human resources

Risk management

Financials

Supply chain

83%

55%

67%

47%

39%

32%

25%

40%

Draw Insight

from dataAcces to data

Translate Insight

into Decisions

Telecom Industry CEOs identify customer insights as the most critical investment

area (Global CEO Study 2012)

In which areas do you plan to improve your ability to draw

meaningful and executable insights from available information?”

Advanced analytics will help CSPs to gain customer insight from the

Big Data in their network, social media and other customer information

Big

Data



Celcom Axiata Berhad uses cognitive (Watson) technology to

transform customer care experience

26

Cognitive technology to help contact

center representatives provide faster,

accurate, and consistent responses

to customer questions and requests.

Eventually give customers direct

access to the system for text-based

chats whereever and whenever from

their smartphones, tablets or

computers. For trouble-shooting and

support through business processes

like account opening, review, or

changing plan features.

Celcom, part of the Axiata group of companies, the oldest mobile telecommunications

company in Malaysia. Throughout the evolution of their business, the company has

adapted to changing technologies and standards. It’s Celcom’s top priority to use

outstanding customer service as a differentiating factor in its drive to market leadership.

Resolve customer issues

during their first contact

with customer care, in this

way reducing churn

Support customer agents

in responding to queries

on Smartphones as well

as in recommending data

plans, given the

complexity and frequent

device refresh cycles.

Celcom’s aim is to provide consistent, high-quality support to

customers across channels and agents to deliver richer customer

experiences across all touch pointsSource: Forbes,May 2013 X

Challenges Digitization

Big

Data

http://www.forbes.com/sites/bruceupbin/2013/05/21/ibms-watson-now-a-customer-service-agent-coming-to-smartphones-soon/



There are many possibilities how CSPs can partner with other parties

in the area of big data

27

New technologies like big data, sensors, mobile, smart grids are

changing the way cities operate. Big data can help finding parking

spaces, avoid traffic jams, get instant help when emergencies happen.

Megacity Rio de Janeiro is already using this technology by

participating with IBM and Brazilian CSP Oi, among others.

Tomorrow's motor vehicles will communicate with each other, with their

drivers, their manufacturers, their surroundings, and with a variety of

service providers. Data volumes related to vehicle usage are

skyrocketing. Several German automakers have teamed up with

Deutsche Telecom to find a solution in big data analytics.

French CSP Orange recently participated in Traffic Zen with highway

operator Autoroutes du Sud de la France to create traffic forecasts.

Orange brings the quality and robustness of its mobile network to

inform citizens and decision-makers, enhance information broadcasts,

reduce CO2 emissions, and more.

Sm

art

er

citie

sS

mart

er

cars

Sm

art

er

traffic

Big

Data

SMARTER CITIES

SMARTER CARS

SMARTER TRAFFIC

http://www.youtube.com/watch?v=1BWxO9nqABo



CSPs can be a key enabler of the new economy, but must embrace

the digital opportunity or risk becoming utility providers of bandwidth

28

ContextualNew contextual services

to improve lives

Everything ConnectedInternet of Things, Multiple

devices controlling multiple

devices (TV, heating, car

kids, etc.)

PersonalizedCreate own service

portfolio according to their

own needs, sourced from

multiple providers

SocialSocial media, social business – all

the time, respond, solicit, collaborate

Continued virtualizationFunctions, services, enterprises

Perfect experienceAll the time – know,

connect, serve

Alternative meExtensive use of avatars,

concierge services, virtual

interfaces

Behavioral profilingContinuously providing insights

and recommendation to the

consumer to improve their

lives, experiences and well

being

The

New

World



CSPs have a key opportunity to play a central role in the new world

29

Government Healthcare

Natural

Resources CPG Transportation Retail

Finance Cities IT Education Energy Traffic

Telecom?

The DATA CSPs own enables them to add context

and meaning to the data they deliver

CSPs carry all the SOCIAL traffic

As providers of connecting networks, CSPs are

uniquely positioned in the CLOUD marketplace

CSPs owns the MOBILE networks



The emerging ‘two sided’ business model becomes the majority

service delivery vehicle; this is a key opportunity for CSPs

30

Developers

ISVs

Banking

Consultants/

SIs

Healthcare

Media

Social

business

Personal

comms

Security

Policy

Analytics

M2M

Etc… Etc…

Managed

customer

interface,

services,

platforms

and networks

Service providers

and partnersCSP solutions

Consumers Business

In 2020 up to 60% of today’s ICT market

is addressable through this delivery model

Example Players in the services economy today

$1.5B revenue of10K+

Affiliates

Expecting $10B

transactions on mobile

in 2012

40% total units sold by

outside sellers

40% new business

comes from non-CRM

offerings

API only company

reaches 150,000

developers and 1.5M

calls a day

4.5M API invocations

per month

Promotions and

loyalty programs



Telco’s must align growth initiatives to new strategic beliefs, incorporating

emerging trends, new technology & the two sided business model

31

Strategic beliefs

• Move the source of

value

• Deliver integration

and innovation to

clients

• Dramatic

simplification

• Take ‘stop’ decisions

early

Evolving beliefs

• Accelerate shift to higher

value

• Lead in the new era

services ecosystem

• Imperative to create and

acquire IP

• Customer experience

excellence

Growth initiatives

Strategic Operational

Play

Be brilliant at the core

Strategic Growth Play

-Create Smarter ecosystem

-Build Integrated ICT

engine of scale

Expand

internationally

1

2

3

Current trends

Future

uncertainties

Critical success

attributes

New technology



The telco must first perfect its strategic operational plays: “be brilliant

at the core”

32

1

Optimised heterogeneous network

Low cost operating model

Virtual channels

Customer intimacy

Strategic Operational Plays

Dramatic simplification

Intense personalization

Emotional connection

Examples in other industries – all (except

cablescos) with NPS > 60%



Telco’s must create a smarter ecosystem, and put themselves in the

centre of the ecosystem

33

CSP to create a

‘two sided’

business and

operating

model and

partner

ecosystem to

power business,

government and

consumer

services

2a

Developers

ISVs

Banking

Consultants

/SIs

Healthcare

Media

Social

business

Personal

comms

Security

Policy

Analytics

M2M

Etc… Etc…

Managed

customer

interface,

service

creation,

Open

APIs.

utilities

Service

providers and

partnersCSP

solutions

Consumers Business

Managed

infrastructur

e platforms,

Core

network

Smarter Ecosystem core

IP creation and

exploitation

Clean business

model

Partners in

control of own

destiny

CSP excels at

horizontal

Secure, open,

standardised

Specialist skill

sets

Sales

partners

Solution

partners

Component

partners

DeliverySales Sales

Smarter

ecosystem core



The integrated ICT engine of scale underpins this ecosystem

34

CSP to build

underlying

capabilities of

scale to power

business,

government

and consumer

ICT needs

2b

Developers

ISVs

Banking

Consultants

/SIs

Healthcare

Media

Social

business

Personal

comms

Security

Policy

Analytics

M2M

Etc… Etc…

Managed

customer

interface,

service

creation,

Open APIs.

utilities

Consumers Business

Managed

infrastructure

platforms,

Core

network/

virtualisation

ICT engine core

Large scale,

Low cost

Integrated IP

comms

services

Partners

‘inside’

Simplified

technology

platforms

Secure, open,

standardised

Specialist skill

sets

Delivery

Smarter

ecosystem core

Service

providers and

partnersCSP

solutions



35

Thank you

Rob van den Dam

Global Telecom Industry Leader


[email protected]

www.ibm.com/iibv