The biggest opportunities for Telco

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Telco Opportunity : Data & DVAs“The single largest revenue opportunity for mobile operators today1”

1. Mobidata Smartphone use is transforming with the rise of 4G & WiFi – Mobidia White Paper 20142. Mobidata – understanding today’s smartphone user

• Rising smartphone penetration rates and the successful attachment of data plans to those devices will grow … revenue to operators to more than $230 bn US in ‘16.1

• ‘The singe largest revenue opportunity for mobile operators today.’

• The total aggregated demand for data consumption on smartphones is vast and the potential market for operators is bigger than previously estimated.

“4G is arguably the most successful technology in the history of the mobile phone industry based on its record pace in moving from technology standard to mass market service availability.”

“4G smartphone users have dramatically higher monthly data use than 3G smartphone users and the gap is increasing over

time, proving the value of 4G service.”

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The advent of 4G Coinciding with smartphones

Are causing an increase in data usage How can we commercialise this trend ?4

Cellular Network data “…expected to grow 12 times between 2012 and 2018, driven mainly by video1.”

I think we’d probably all agree on this. However, are telcos set up to make the most of itand executing on a plan to sell

as much data as theycan ? I’d argue not.

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The key opportunity for telco is in selling more data. Customer’s cellular data use is doubling every year. It’s mostly You Tube.

1. Erricsson : http://arstechnica.com/business/2013/02/cellular-data-traffic-keeps-doubling-every-year2. http://www.ericsson.com/news/16595973. https://gsmaintelligence.com/analysis/2014/01/4g-driving-data-usage-but-not-all-markets-reaping-the-rewards/412/4. Mobile Web watch – 2014 – the new persuaders - accenture

Smartphones are encouraging data usage which Digital should assist in exploiting.

• Telecommunication service providers are operating on a new frontier.4

• A voracious subscriber appetite for data is rapidly replacing voice traffic and connectivity is becoming commoditised despite innovation.

• Demand for data services is exploding thanks to the growing popularity of smartphones and the larger footprint of mobile internet services .

• A focus on customer ownership requires a keen knowledge of customer segments and targeted ability to reach those customers with the services most relevant to them.

Below – Erricsson – Networked Cellular Data Traffic Is Doubling Every Year

Below – Erricsson – And voice ( Orange ) is not changing much

LEFT : From other research

Data

Voice Is this the effect of Digital pervading people’s consumer lives ? Does it mean people are connected to the internet more and more at every stage of their day

– including while they’re away from home / work ?

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Are phone companies making the most of the opportunity ?

• Average data usage in 2013 was approx. 500 MB.

• So, by 2018, it could be 6 GB per person.

• Unrealistic ? SK telecom’s ( South Korea, full 4G coverage ) average usage is already 2.1 GB 3

• SK Telecom’s 4G ARPU in Q3 2013 was around 32% higher than its blended ARPU, with the operator noting that more than 70% of new and upgrading 4G customers were opting for its higher-priced tariffs.

• However, it’s possible that each telco could be doing more to maximise the sale of data bundles. ( See chart to the left. )

• Data ARPU is not rising as a proportion of all ARPU.

2. MOBIDATA SMARTPHONE USE IS TRANSFORMING WITH THE RISE OF 4G & WIFI – MOBIDIA WHITE PAPER 20143. MOBIDATA – UNDERSTANDING TODAY’S SMARTPHONE USER

This is an example telcos data over the last few years. It seems unrealistic that data revenue will keep doubling every year for

ever. However, 10 years ago, I was the BlackBerry Product manager and average usage was 1MB per month. At that time,

the idea of using 1GB per month was literally unbelievable. And it has been straight line doubling growth every year to a GB now. Even if we can’t agree it will double, we can probably

agree that people will use a lot more data and not a lot more voice. That means the strategy is the same.