Content - CSP Newsletter

Unleashing the Power of SMS Sara Philpott, GBS Ireland

December 2009 Version 1.0

© 2009 IBM Corporation

Unleashing the Power of SMS Content

1. Current market trends 2. New Value and New Revenue 3. Opportunites for CSP's

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Current Market Trends VAS will continue to provide a profitable service for CSPs SMS/MMS and Other Mobile Data ($251.3b)

Profitability Profitability

60.0%

50.0%

EBIT (2011)

30.0%

0.0% 0.0%

B/band Access ($103.1b) Online Music ($7.7b) IT Services ($38.5b) 20.0%

IPTV and VoD($19.4b)

Mobile TV ($39.8b)

VoIP ($33.2b) 40.0%

60.0%

CAGR (2007-2011) 3

($14.2b)

Mobile B/band ($27.9b)

Online Gaming ($10.5b)

20.0%

PSTN Voice ($97.1b)

IPTV Advertising ($5.1b)

Mobile Music ($31.4b)

Mobile Voice ($697.5b)

10.0%

Mobile Advertising

Internet Advertising ($99.8b)

Ringtones40.0% ($5.6b)

-20.0%

VAS (SMS/MMS and other Mobile data services) continues to punch above its weight in terms of growth and profitability for service providers

The size of each bubble represents the 2011 market segment revenue which CSPs may capture Source - Garter Dataquest Insight: New Strategic Service Opportunities for Telecom Carriers WW 2011, Dec 2007.

80.0%

100.0%

120.0%

Growth Growth © 2009 IBM Corporation

Current Market Trends SMS will continue to dominate messaging platforms SMS usage is hitting critical mass usage Globally, MMS accounts for just over 1% of combined SMS and MMS Volumes in 2009 Camera enabled handset penetration is high however the average number of MMS sent per person per month is 1. High cost of MMS is inhibitive to growth, as is inter-operability

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Soruce :Mobile Messaging Trends, Nitesh Patel, Strategy Analysis, Nov 09


Current Market Trends Person to Person Messaging dominates Mobile Messaging Traffic Global mobile messaging volumes will grow from 2.6 Trillion in 2009 to 3.9 Trillion by 2013. Person to person SMS accounts for an overwhelming share (98%) of SMS Traffic and this will fall by just 1% by 2013 Application to Person and Person to Application volumes are expected to grow during this period

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Current Market Trends As average spend / SMS falls, messaging is becoming a commodity

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Standard Text Messaging rates have typically remained unchanged Competition is driving an increase in carrier bundling Bundling of Texts have boosted SMS volumes but is negatively impacting customer ARPU Used to stimulate the prepaid market in mature markets, whereby bonus SMS bundles used to drive regular prepaid charging



Current Market Trends Meanwhile in emerging markets….. Ovum predicts global penetration to rise above 80% by 2013 (of which 73% will be prepaid) Emerging markets are key to this continued growth. The ChinaIndia region (including Pakistan and Bangladesh) will continue to be the main connections growth engine, with a CAGR of 12% up to 2013. Asia-Pacific and Africa are expected to add a staggering number of connections, but while adoption in rural areas will continue, the penetration growth will naturally slow as fewer areas remain unconnected. Data revenues as a whole (including messaging) revenue are forecast to grow 79% globally over the coming 5 years. Mature markets will account for 53% of data revenues in 2013. But there will be a shift in the make up of data revenues, SMS pricing likely to be eroded and internet access gaining in importance. “We do not believe that many operators will be successful in providing content. Players from the internet domain will be better placed, so demand from the operator will be for access,” according to Ovum. Ovum do not believe internet players, such as Google and Apple, will be able to destroy the mobile operators. 7

Source: Emerging markets and data form silver lining, Telecoms.com Dec 08


Current Market Trends Similarly, SMS price wars in India signal boom in messaging... India has less than 60% market penetration, 60% adult literacy, 50% of handsets are low cost handsets with limited functionality. Music downloads, Ringtones and SMS are the main VAS and that is where most demand is expected in the future. •Approx 60% of mobile content downloaded in South India is in local languages •50% of all prepaid phones have < Rs. 40 balance at any point of time •Around 5% of Indian telecom revenue derives from SMS, with a realization rate of around INR0.5 per SMS SMS Costs Could Fall in India It is widely expected that plunging costs for sending SMS would lead to a huge spike in usage, much as happened in The Philippines, which has one of the highest usages of SMS in the mobile world. Such a move would also be a boon for SMSC vendors as the networks rush to upgrade their messaging capacity. India's Reliance Communications has launched a plan for short message services at INR0.01 per message, taking price wars in the industry from call rates to text messaging. "We want to make it attractive to lure these customers (who are heavy SMS users) from the existing GSM community of the country," Mahesh Prasad, Reliance

Bharti Airtel's chief executive SMS rates were already "affordable" in India. The comment was widely read as the company's intention to hold its SMS rates. 8

Source: M-VAS Emerging Trends, 2009, IBM Research, ABI Research Nov 09, Dow Jones Newswires, Nov 09


Current Market Trends And in South Africa SMS is used to distribute electricity tokens Sybase 365 says that it is providing the messaging platform for an SMS based electricity voucher scheme being rolled out in South Africa. The initial service provides real-time electricity pre-pay meter recharge for the South African electricity public utility and various municipalities using a mobile wallet developed by MoPay. A key element of the service is to facilitate the distribution of Free Basic Electricity tokens (tokens distributed by the government to low-income households), sent by SMS to registered meter owners. "It is very rewarding to be at the forefront of a project which can really make a profound difference to the lives of people in South Africa. So many people are faced with a half day round trip to reach services that they can now access using a network independent, ubiquitous mCommerce service. It would be difficult for a farmer to give up a day tending his farm to go to visit his bank," said Cobus Potgieter, CEO, MoPay. As well as providing this payment mechanism, MoPay also facilitates other services vital to thriving villages and communities, such as free communications, free SMS between schools and parents and free content for schools and students. Mobile operator mobile wallet person-to-person transfer services such as Zap, Orange Money, MTN Money and M-PESA (pan-Africa), Barclays Hello Money (Kenya), FinBank’s FlashmeCash (Nigeria), KCBConnect (Kenya) and Wizzit (SA) are also helping to fuel Africa’s m commerce revolution. 100’s of millions of Africans may be able to have access to full banking thanks to adoption and evolutions of mobile wallet facilities. 9

Source: Zain expands One network; Africa weighs on profits , Telecoms.com, Nov 09, ABI Research, Nov 09


Current Market Trends And other innovative applications of SMS continue to emerge.. Rocket Alerts by SMS Israel Defence Forces to install a text message rocket alert system. The rocket sensor will create a virtual ellipse [of the predicted impact zone], and all phones in that area will receive a warning Currently, air raid sirens are programmed to identify and alert cities that are at risk of rocket attacks following a hostile launch. SMS Novels hit best sellers list in Japan •More and more SMS-based novels, are being released in Japan. •Over the years, these SMS novels have been reaching the book stands in paper form. •To the critics’ surprise, they have been selling very well. •Book sales last year showed that five of the top ten sellers, in Japan, were mobile phone novels.

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Source: Jurseleum Post, Nov 09 Swonged.com )*


Current Market Trends SMSC Vendors look set for bright future… Between 2008 and 2014, the total market for mobile messaging will grow at a CAGR of nearly 8%, increasing from $132 billion in 2008 to $208 billion by 2014. But steady growth in the broad mobile messaging market masks changes that are shaking up both messaging services and the ways mobile network operators deliver, support, and charge for those services. The business of providing Short Message Service Centers (SMSCs) - which manage SMS messaging operations - has long been one of recurring licensing and service support revenues. Operators have stayed with their legacy SMSC providers, avoiding updates to their infrastructure and opting instead to augment existing systems. Today, MNOs are increasingly investing in additional and replacement SMSC offerings. These hold out the promise of reduced operating costs and simpler equipment as well as a chance to rationalize operations that have grown in complexity over the years. New SMSCs also support a range of SMS services that deliver greater value and flexibility for users, and can cut the cost to MNOs. . 11

Source: ABI Research, Oct 09


New Value and New Revenue overshare (verb): to divulge excessive personal information, as in a blog or broadcast interview, prompting reactions ranging from alarmed discomfort to approval. Websters Word of the Year, 2008

For a generation of people, this is the way we communicate

“Of course, some people have always been more naturally inclined toward oversharing than others. Technology just enables us to overshare on a different scale.” New York Times 12


New Value and New Revenue Social Networks: Powered by the People Collaboration

Gated Communities

Shared Social Space SN active Members

Mobile social networking users

Communications pattern

2007-12

CAGR 64%

Traditional Communication

rk e a M

CAGR 20%

on i t c ire d t Open and Free IM accounts

2007-12

Mobile subs

2007-12

CAGR 6.8%

Fixed

300m users on Facebook: doubling every 6 months

2007-12

Skype

2007-12

CAGR 13%

CAGR 18.5%

2007-12

CAGR 3%

2 way conversation Provider controlled

Communications environment

Open Internet

•Traditional service models are slowly transforming for CSPs •New entrants and technologies are changing communication habits •A new digital era of users are driving explosive growth of social networking activities •CSPs are struggling for position between the ‘smart’ versus ‘dumb’ pipe spectrum 13

24m unique visitors in Sept 2009. Growth forecast 1bn by 2013

Source: IBM Institute of Business Value, Experian Hitwise, Social Media Predictions 2009

1.2bn videos viewed daily Apple App Stores: over 100,000 Apps. 1000 new apps each week Yahoo: ‘Health Bog’ returns 2bn results. Search Engines in US: 470million queries each day


New Value and New Revenue Social Network activities, so far, are complementary ….

• Operators like Vodafone, O2, Bharti Airtel, Starhub, and Orange forming partnerships with Twitter •Keep messaging on operator channel •Drive traffic and incremental revenue •Enable twitter usage across broad portfolio of handsets

•Operators like O2 UK, Telecom NZ, Vodafone NZ, 3 Ireland, Virgin Media UK, Bell Mobility, FIDO, Rogers, Virgin Mobile Canada partnering with Bebo •Drive traffic to own portal and create incremental messaging revenues •Further stimulation of SMS traffic as a result of this partnership 14



New Value and New Revenue Real time information is key to messaging’s continued success

INSTANT MESSAGING

Twitter has announced a collaboration with Microsoft’s Bing search engine, that will see the platform used to help it provide real time web indexing of the entire public Twitter feed. In addition, Google will also be including up to the minute Twitter updates in its own search results, which alongside Microsoft, appears to stress just how important real time information is in the battle for internet search ownership. In related news, Microsoft also appears to have scooped Google on a deal with Facebook, incorporating real time updates from the social networking site in Bing’s search results

Orange users will have the ability to upload and share photos with their Twitter followers via MMS in addition to SMS. Orange will explore ways of integrating Twitter into its IPTV platform to create interactive Twitter feeds that will run during and alongside programmes and will embed the service within Orange web portals from 2010. Twitter will be implemented across the rest of the Orange European footprint in 2010. The platform will be added to Orange’s social media aggregation service “Social Life” in the UK, “Mes communautés” in France or “My Social Place” in Spain, alongside Facebook, MySpace, Bebo and a range of other popular social sites

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Source: Techcrunch.com, Credit Suisse, Telecoms.com Oct 09. Telecoms.com Nov 09


New Value and New Revenue A new wave of Information Population: Instant Techcrunch, Nov 09

Google Wave Reinventing email? . Speed, accessibility and the ability to interact are key to Instant Messaging Services

16 Source:10Instant Messaging Apps for the iPhone, AppleBlog, July 09

..thanks to Twitter, thousands of people had access to this information about 45 minutes before it appeared on CNN or ESPN, the “worldwide leaders” in news in their respective fields. Anyone who doesn’t understand Twitter should look no further than situations like this. Which has been very clear for a long time.. From earthquakes, to the massive fires in San Diego (in 2007), to the Mumbai shootings, to the situation in Iran, this is the future of information population, like it or not.


New Value and New Revenue And internet players are going mobile New players now offering VAS services using new technologies Google acquires GIzmo5 and Grand Central to offer VAS Gizmo5 develops internet telephony software for mobile devices and PCs. GrandCentral Communications offers users a single, lifetime phone number that can be linked to any number of up to six phones or accounts, allowing users to select which callers go to which phone - work, home, mobile It provides a central mailbox for all services, which is available to access online. Different voicemail greetings can be set for different callers. Under the moniker of Google Voice, GrandCentral also offers features including voicemail transcripts; personalised greetings; receive voicemails via email or SMS.

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Telecoms.Com November 2009


New Value and New Revenue Social network aggregation is on the rise Orange Social Life brings together activity on Facebook, MySpace and Bebo in one central interface, with one single login, accessible via the Orange World portal. Users can upload photos, update their status, keep track of friends’ status updates, view notifications, messages, events, pokes and friend requests, and send and receive messages. Social Life also integrates SMS capabilities, allowing users to send and receive updates by text. Orange reported number of unique users to social networking sites jumped 48% quarter on quarter in the three months to the end of February, to 946,564, while monthly page impressions climbed 129%. The average number of social networking pages per user per month hit 397, indicating some heavy usage.

In reality though, there are not that many people who want – let alone need – continuous access to multiple social networking services, and even if they do, how many people (outside of the tech industry) do you know who are genuinely waiting for an extra third-party that helps them manage all their online personas?

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Techcrunch, July 09

Source: Orange, Vodafone push further into social networking August 19, 2009 Written by James Middleton © 2009 IBM Corporation

New Value and New Revenue Access to information on any device, anytime, any where.. Vodafone 360 allows integration with Facebook, Twitter, Flickr, YouTube, Bebo, and GTalk

Pieter Knook, Vodafone Group

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Vodafone understands that the core of any customer’s personal and business network is the set of contacts they hold on their mobile phone. Consumers want to send messages and images from their PC to multiple mobile devices in their mobile community, as well as taking advantage of the functionality of an instant messaging service.

SingTel has demonstrated it’s focus on the social media with the INQ1 and the Chat 3G, known as the ‘Facebook Phone’and the ‘Twitter Phone’ One click access to popular social networking applications such as Facebook and Twitter, as well as SingTel’s own music service and instant messaging tools. Strategy of integration of applications and an easy to use interface means that consumers using an entry level handset, often on a prepay tariff, are keen to access data services at levels typically reserved for much more expensive smartphones. For Singtel this means higher margins and ARPU because it is paired with lower subsidy and network load costs. Source: INQ brings social networking phone to Singapore © 2009 IBM Corporation September 16, 2009 Written by James Middleton

New Value and New Revenue SMS Applications expand as messaging becomes commoditised One key area for market growth over the next five years will be application to peer messaging, ABI Research, October 2009

Gaming

SMS Money Transfer

Location Services

Taxi

Limitless opportunities to promote further interaction, derive service and enterprise efficiencies: Application to peer messaging is ripe for wide scale adoption. According to Informa Telecoms & Media, the revenue from standard and premium rated SMS messaging was $82 billion in 2008. This mobile messaging revenue is forecasted to grow and reach $110 billion by 2013.

Ticketing

Social Networks

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Information Services

Banking

Health Appointments

NGN Messaging Experiences

Source: SMS messaging has a bright future, Information Policy, Aug 09

Customer Services


New Value and New Revenue And social networking growth is inspiring new business models Giffgaff (O2 UK MVNO) harnesses the collective efforts of its customer base With Giff Gaff’s network, people promote the network in exchange for free minutes, texts and data. Users are rewarded for working on behalf of the company itself; a form of crowd sourcing. Subscribers can earn airtime credits for bringing in new subscribers, for contributing to the firm’s marketing strategy and for responding to other subscribers’ customer service queries—something that was part of the Blyk operation as well Operational costs for marketing and customer acquisition are therefore substantially reduced for the MVNO. Mike Fairman CEO of O2 UK subsidiary GiffGaff 21

We were looking at things like Wikipedia, where people get together and do things for themselves and do a very good job—sometimes better than commercial organisations would do. There are also examples where companies are using customer input to help run the business and we were wondering why that wasn’t happening in the mobile market. That was the germ of the idea.” Source: Telecoms.com, Nov 09


New Value and New Revenue With networks powered by people and advertising Blyk was the first free mobile network in the UK funded by advertising, and was targeted exclusively for 16-24 year olds. Users signing up to the network received advertising messages on their mobiles and in return were given a monthly allowance worth £15. The model however was unsustainable as the company ran out of advertisers and shut down its UK operations in August 09 suffering from the fact that those unwilling to pay for services tend to be less interesting to advertisers The Blyk premise was to fund the whole operation from advertising to its customers, giving away telecommunications in exchange for targeting advertising delivered over MMS. According to the Yankee Group however, the Blyk model works and that Blyk has succeeded in uniting advertisers and 16-24 year olds through this highly personal medium. The audience was engaged and satisfied and advertisers were engaged and satisfied. Blyk has proven that mobile is an effective platform for one-to-one customer engagement, particularly when the target audience is well defined and amenable to new and innovative use of wireless technologies. Blyk continues to operate in the Netherlands Vodafone with plans to expand into Germany, Spain and Belgium. Source: Blyk’s Priceless Lessons in Mobile Advertising: Yankee Group Analysis, Sept 09 22

Source: www.theregister.co.uk


New Value and New Revenue While Google are looming over the mobile advertising space… Google estimate 55% of mobile advertising budgets in 2009 will be spent on SMS advertising, compared to 25% on applications and web site advertising, and 20% on mobile search. Google’s top 5 major players in the SMS advertising market:

Google has acquired AdMob to provide application and mobile web site advertising, which means that the above players could conceivably be regarded as acquisition targets for Google. HipCricket, iLoop Mobile and VeriSign Messaging could be regarded as full-service mobile marketing companies, while Cellfire specializes in mobile coupons. All of these companies would, however, use SMS as a delivery channel for mobile marketing campaigns that, for example, include a text-to-win component or an SMS coupon. If Google continues to focus purely on mobile advertising, then 4INFO is probably the best suited, since it has a lengthy history in inserting advertisements in the unused characters of SMS messages. 23

Source: Google’s wake-up call: We don’t have SMS advertising capability. Nov 09


New Value and New Revenue And revenue uptake is still quite modest…… Syniverse snaps up VeriSign messaging business Mobile messaging firm Syniverse this week announced plans to acquire the messaging unit of US tech and security company VeriSign for $175m in cash. The Content and Messaging division of VeriSign features SMS, MSS and mobile content platforms focusing on mobile operators, content providers via premium messaging, WAP portals and enterprise services.

•Mobile-message advertising is expected to reach $2.4 billion by 2009, up 62% from last year, according to research firm eMarketer. •Spending on mobile-message advertising now accounts for about 85% of the total $2.8 billion spent on mobile ads, which also includes search ads and display ads as well as mobile Web advertising

"We've seen an increase in usage of mobile browsing and SMS, a decrease in paying for content and an increase in ad-supported models, …Will carriers in the U.S. just provide bandwidth or will they become media companies selling content or getting ad revenue?” Evan Neufeld, vice president of comScore Brand Metrix.

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Source: Syniverse snaps up VeriSign messaging business, Telecoms.com, Aug 09. Wall Street Journal, Jan 09, www.mobilemarketer.com, March 09


New Value and New Revenue But what is happening to Operator brand positioning? The Technology top 10 listed brands are: Google, Microsoft, IBM, Apple, Nokia, BlackBerry, HP, SAP, Intel, Oracle. The mobile operator category, however, ranks number one in brand value growth among all categories surveyed by Millward Brown, with an increase of 28%. AT&T’s brand value improved by 67% year-onyear, moving the U.S. company in category ranking to number 3.” “Despite the tough economic environment many brands are not just retaining but growing their value. The mobile sector is a great example of a innovation in products and services as well as great marketing. Brand is more important than ever because it can help to sustain companies in tough times.." Peter Walshe, Millward Brown

Mobile operators are attempting to proactively counter handset vendor and Web services either by introducing their own services or becoming smart pipes: service enablers for third parties where the operator has complete control over the service delivery and management process and demands a revenue share from all sales that take place over the mobile network. 25

Source: Top 100 Most Valuable Brand Value Ranking Report, Millward Brown Optimor, May 09 Source: Mobile Network API Market Status and Outlook, Sept 09

Top 10 Ten Mobile Brands, ranked by MBO 1 China Mobile 2 Vodafone 3 AT&T 4 Verizon Wireless 5 NTT DoCoMo 6 Orange 7 Movistar 8 T-Mobile 9 MTS 10 Beeline 11 O2 © 2009 IBM Corporation

New Value and New Revenue So how are Enterprises capitalising on mass appeal of messaging? Growth expected in Application to Person (A2P) and Person to Application (P2A) messaging: As SMS hits mass market and becomes commoditised, businesses look to SMS to reduce costs and obtain operational efficiencies, for example Ticket Sales. •Airlines: Vodafone and Spanair introduce MMS boarding pass (Sept 2009), •Live Events: Major League Baseball providing tickets via SMS, Ticketmaster has deployed mobile tickets at certain events •Cinemas: Some experimentation from smaller cinema chains aiming to cut costs and differentiate 26



New Value and New Revenue Considerable cost savings from Application to Person messaging Application to Person services are proving very cost effective because of critical mass of SMS usage: Health care services need a cost-effective and universal communication channel to alert patients about appointments as well as to monitor medication and treatment. This process is highly improved through SMS, as it is cheaper than telephone calls and can be sent to several people at the same time, saving time and money in communication with patients. Text messaging is also used as an internal communication with health staff for emergency situations. Missed appointment saving: Health care industry in UK have reported significant savings Certain 44% on missed appointment costs In the airline industry SMS is being used in the operational field to alert crews about flight delays, incidents and to update scheduling data. Internal communication to identify the crew for a flight, for example, can also be done via SMS. 10% of SAS customers check in via SMS. British Airways posts tweets on Twitter to announce special offers on flights, such as a one-day discount on business-class tickets, and includes a website address to click on for the booking. BA also uses SMS in several operational applications. For example, in the event of incidents it is essential that messages are guaranteed to be delivered to a complex chain of recipients. 27


Soruce :Mobile Messaging Trends, Nitesh Patel, Strategy Analysis, Nov 09, Enterprise Messaging: SMS evolving from P2P to B2B , Oct 09

New Value and New Revenue As SMS is now seen as reliable delivery of mission critical information 40% of Swedish railways are delivered by SMS, 20,000 customers every day and the number is increasing. . Around 97% of the Swedish population has a cell phone, 95% of whom use it privately. In 2009, every tenth person sends on average more than 10 SMS per day. Every third person aged 16–20 send on average more than 20 SMS per day. (In Sweden, SMS also used for tax returns)

Africa money transfer and mobile banking active users*

* Not including basic SMS notification services Source: Pyramid Research, Mobile Financial Services in Africa

Financial institutions are now able to distribute account information such as balance statements, overdraft alerts and transaction notifications. SMS technology is advancing and is now able to provide authentication information for services such as online banking, being a second layer of security in mobile transactions. The advent of reliable and secure services, assuring customers’ confidentiality and high speed in the delivery of messages, is creating new possibilities regions like South Africa. SMS is also being used to scrutinize mission-critical elements of some core business processes. From the monitoring of temperature critical environments to alerting people on system crashes, SMS enhances crisis management and provides immediate response to urgent situations.

Soruce :Mobile Messaging Trends, Nitesh Patel, Strategy Analysis, Nov 09, Soruce: Enterprise Messaging: SMS evolving from P2P to B2B , Oct 09 28 Source: Survey by the Swedish Post and Telecom Agency (PTS), November 2009


New Value and New Revenue Operators can assist businesses improve margins and efficiencies “In our current economic climate, businesses looking to send bulk SMS messages using an application service provider have much to gain in quickly getting their message out to targeted contacts and saving on their telephone bill. And with SMS messaging still on the up there is much room for businesses to grow their use of this omnipresent communications channel”,

Pieter Streicher, managing director of BulkSMS.com

Taxi Bookings Recent research shows that for many taxi companies over 50% of their customers make

bookings via a mobile phone call. A text-connect number allows customers to order a taxi with a text message, ideal when in a noisy bar or club. The customer gets a SMS reply back from the taxi company confirming the booking along with the estimated arrival time, place and vehicle details.

Driving Schools -benefits from more enquiries and fewer 'lost' calls due answer phone 'put downs' -

Research by a new entrant in to the driving school market has shown that more than then 75% of callers hang up when they reach an answer phone.

Restaurants Speeds up the bookings processing enhancing customer service During our research for this market around 50% of the restaurants called during a weekday lunchtime were engaged.

Doctors and Dentist surgeries Patients could text you their 'Repeat Prescription' - because you can

reconcile the incoming mobile phone number to a specific patient you can be sure they are making the request and should they need a review appointment details can be texted back. If not a collection date can be confirmed. For busy working people this could be invaluable, particularly for medication where running out is especially troublesome.

Sandwich shops With only limited period for lunch many workers would rather not queue at their favourite sandwich shop.

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Source: text-connect.co.uk


New Value and New Revenue Marketing budget significantly reduced? About 45% of 2,000 U.S. small businesses surveyed said they have a presence or profiles on Facebook and Twitter to promote their businesses

Business is finally getting to grips with SMS Consumers want it Messaging is an opportunity for enterprises Saadi Hussain, BT Global Services July 09

•A recent survey of 500 executives running small businesses, reported 76% of them found sites like Facebook, Twitter, and LinkedIn to be of little help in finding new business leads. Further, 86% have not used social-networking sites to look for business advice or information. •Small-business owners are still feeling their way into social media, particularly when it comes to using these tools to grow their businesses. •Of those surveyed, 41% of respondents said Twitter delivers "great value" to their company, ranking it ahead of LinkedIn and Facebook. •Much like Facebook, Twitter is now moving into the business mainstream.

By 2011 you won’t be able to interact with businesses without coming Matt Granfield, DPDiaglogue.com into contact with their Twitter feed. 30

Source: www.internetnews.com Oct 09, Business Day, Nov 09, Survey: Do small businesses use social networking?, Cnet News, Oct 09


Key Priorities for CSPs So, messaging traffic is booming

Messaging is still mainly Person to Person however now the environment is ripe for a new type of adoption. Reaching over 80% of active users, SMS now has a substantial level of mass market exposure Messaging is more affordable for consumers and is a channel to complement other services, leading to fierce competition and commoditisation Revenues therefore have not grown with messaging boom

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Key Priorities for CSPs However, margin pressure is a major issue for CSPs Fierce competition between operators with lack of differentiation resulting in more and more generous bundles of messages Bundles make it easier for teenagers and early adopters to use the service without fear of a bill shock at the end of the month However, they are also adopted by enterprises and heavy users as a cost reduction or cost control mechanism Resulting in predictability, which is good for Operators in terms of revenue income however the usage growth is not generating any additional revenues. As a result, margin pressure is the single biggest issue for CSPs today Traffic Growth as commoditisation leads to ARPU decline

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Source: Securing a Place in the Changing Messaging Ecosystem, Gabriel Racha, Comverse, GSMA Chart Nov 2009


Key Priorities for CSPs And brand erosion may also become a serious issue… Telecom is not closed any more – applications provided by mainstream companies, smaller operators and a direct and immediate threat (maybe not on the revenues) but on CSPs brand and positioning CSPs are facing new entrants in the form of internet players, like google, microsoft, SN like facebook, small start ups – facing a new generation of services that are competing for users attention. Users are receiving services not by their CSPs but from the internet like iloop So far, these services are complementary and so far, are not a threat to VAS services – as they are facilitating the adoption of mobile data services….. But they are changing how users are regarding their CSPs leading to an erosion of the CSPs positioning and brand, facilitated by cheap data rates and open and flexible smartphones

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Key Priorities for CSPs Examining the application portfolio To create new value and revenue we need to examine the broad portfolio of applications available today 1. Core applications (voice, call completion, SMS, MMS, mobile data - the bread and butter services of the CSPs – lack of flexibility due to carrier grade quality required and complexity of integration) 2. Extended Services – enhanced CSP assets – deliver the flexibility while maintaining the robustness of the core application services 3. 3rd Party applications – the long tail of services residing in the ‘cloud’, sometimes on the devices and do not require a whole lot from the CSPs (“off-deck” applications) – not creating revenue for the CSPs but are eroding the CSPs positioning and brand CSP Value

Core Services

(inc. SMS, MMS, Mobile Data)

Extended Services

3rd Party Applications

(enhanced CSP assets)

New Value and revenue

The long tail of Applications 34



Key Priorities for Operators What value can Operators bring to extended services? Operators can achieve cost effective innovation by tapping into new usage sources and applications reusing existing core network technologies Using their customer BI knowledge and sophisticated billing systems Operators can provide to offer a better service to customers (including targeted advertising, mobile banking/commerce, location based services, enterprise services) Operators can manage and monetize 3rd party innovation; open APIs make it easier for developers to develop for mobiles and web – long tail of applications and mass market reach –A2P and P2A volume and revenue potential for carriers to drive new ARPU. Open messaging platforms bring new scalability and to have the ability to integrate with the tightest part of the network systems (like billing), to deliver a secure and reliable applications efficiently and cost effectively Next Generation Messaging is all about convergence with integration of web messaging, laptops, personal devices, widgets – to have access to all your messages on the most convenience platform that you have at your disposal - messages are available in blended, conversational easy to use experience Security: The proliferation of applications and messaging heightens dramatically the importance of security and policy management. Securing consumers (and children) from unwanted messaging is vital, in addition the messaging channel for fraud and spam and revenue leakage. Operators have a key role to play in providing this security.

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Key Priorities for CSPs Recommendations for CSPs . Operators must stimulate messaging beyond mobile to mobile communications – and develop strategies to grow A2P and P2A traffic and revenues Tap into knowledge of network systems (billing/customer data) to provide a better user experience Policy management can offer real value to end users and 3rd party applications Access to instant information is key to this generation – Operators should focus on strategies that deliver on this capability

Next Generation Communication…

any content, any network, any device, anywhere…

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Source: IBM Institute of Business Value
