Operator responses to the OTT voice and messaging threat

Transcription

1 Presentation Operator responses to the OTT voice and messaging threat October 2012 Stephen Sale

2 2 Contents Quantifying the impact of OTT services Operator responses Issues to consider when formulating a strategy

3 1Q Q Q Q Q Q Q Q Q Q 2012 Minutes per month SMS sent per month 3 Traditional services show signs of decline Average MoU in selected markets 250 Average SMS sent in selected markets AT BE DK FI FR DE IT AT BE DK FI FR DE IT 50 NL NO 50 NL NO 0 ES SE 0 ES SE UK UK

4 4 Factors behind the crisis in legacy services Voice and messaging services are mature; there are few growth opportunities remaining. The economic downturn is putting pressure on consumer spending. Alternative means of communication are substituting usage.

5 Voice and SMS spend as a percentage of total mobile handset spend 5 Exposure varies significantly by country Exposure varies by market. The key criteria are: smartphone penetration reliance on out-of-bundle revenue usage levels of traditional operator services level of tariff rebalancing. KPN s 2011 profit warning offers a cautionary tale. Its pricing structures left it exposed to OTT services as smartphone penetration increased. Relative exposure to SMS substitution 100% 98% 96% 94% 92% 90% 88% 86% 84% 82% PT GR DK SE FR IT BE IR FI UK AT NO DE CH NL Greater exposure to OTT ES 80% Retail revenue per SMS sent (EUR)

6 Percentage of panellists 6 and so does OTT adoption 100% 90% Penetration of communication services on smartphones, by country 80% 70% 60% 50% 40% 30% SMS Social networking IM/OTT VoIP 20% 10% 0% USA UK France Germany Spain Figure source: Analysys Mason and Arbitron Mobile, 2012

7 7 Contents Quantifying the impact of OTT services Operator responses Issues to consider when formulating a strategy

8 8 Examples of the different approaches Block OTT services Stimulate usage Partner with OTT providers Offer RCS Offer telco OTT

9 9 RCS is the collective industry response RCS-e services have now been launched: available in Spain and Germany. Currently available as a downloadable app for Android. Native support to follow. The main features are: integration with address book IM and group chat file-sharing/video-streaming. Data usage is typically zero-rated on specific tariff plans. Screenshot of joyn

10 10 Telefónica is leading the way in telco OTT TU Me was the first consumer launch from the Telefónica Digital unit. App available to any user irrespective of their network operator. Available for ios and Android. The main features are: a single interface for basic communications needs free calling and messaging cloud storage social customer care. Screenshot of Telefónica s TU Me service

11 11 and offering a telco OTT toolset to opcos TU Go is a communications app from Telefónica Digital that: builds on TU Me feature set, adding network selection and virtualisation of service across devices is preloaded onto handsets to provide a next-generation communications experience by default. Marketing and pricing of the service is implemented at country level. The first launch is expected to take place in the UK during the fourth quarter of It is expected to be available to prepaid and contract customers. Usage of TU Go services will be drawn down from customers prepaid credit or from bundles of minutes and messages.

12 12 Comparing RCS and telco OTT RCS Telco OTT Brand joyn Own brand Features supported Variations on core GSMA specifications Varies significantly Interface Enabled address book Typically standalone interface Partnership model Geography Client Nationwide co-operation among mobile operators; interoperable Roll out on a country-by-country basis Standardised, typically native Unilateral; closed user group Typically available globally, regardless of network provider Customised, downloadable

13 13 Contents Quantifying the impact of OTT services Operator responses Issues to consider when formulating a strategy

14 14 Timetable for innovation 10 billion per day One Voice/ VoLTE initiative VoLTE launch Will the market keep moving at the same speed? How innovative do operators need to be?

15 Number of customers 15 A realistic assessment of brand strength Telco x? Innovators Early adopters Early majority Late majority Laggards Can operators adjust to new forms of segmentation? How much can operators leverage their strengths? What balance between retail and wholesale/partners?

16 16 Pricing will always be critical Operators control the levers within which all services must function. Operators must work to deliver services within price structures that discourage churn to alternative services: must align pricing to perceived value of voice, messaging and connectivity. A rethink of established approaches is required. Pricing Features Application integration

17 17 Summary Smartphones are changing user behaviour. Exposure varies significantly between operators/countries. A number of initiatives are underway: RCS telco OTT partnerships Operators need to make a call on their role in the value chain. Pricing will be critical.