Optimizing Strategies to Stimulate Mobile VAS Usage and Maximize Operators’ Revenues

Optimizing Strategies to
Stimulate Mobile VAS Usage and
Maximize Operators’ Revenues
By ALI Saghaeian
Chief Analyst & Consultant
Telecoms, IT and Media
Ali.Saghaeian [at] gmail.com

Objectives
• Operators’ VAS Positioning for different Segments
• Current status of Operators' Next-Gen Initiatives
• Operators and Flexible Partnership Options
• How to Stimulate Awareness and Usage of VAS
• Optimizing Strategies for VAS Bundling
• Strategies to Conquer and Secure Customers and
Protect Margins

Agenda
• Future Telecom Service Business Models
• Classifications for Value added services
• Revenue-Generating VAS services
• Operators’ Positioning for New Segments
• Stimulating Mobile VAS usage via Sponsored Data
• Positioning strategies for bundled services
• Partnerships with VAS providers
• Applying Lessons Learnt from the US Market

Future Telecom Service Business Models
3 types of Revenue Categories in Communications
Service
Revenues Communication as a Platform
Communication as a Sales/Service Channel
Direct Service Revenue
Termination / Interconnect Revenue
3rd party VAS sales/rev share
Customer Data Utilization*
Wholesale Access
In-service product/feature upselling/crosselling
Marketing Products with Platform as Sales/Service Channel
Tariff Upsell
Premium for additional Value on top of Access
Opportunity Values
Business Case Values

Classifications for Value added services
• ”Value added services” have existed
in telecommunications for decades
– E.g. “Speaking clock” was
launched in France, February
14th, 1933
• Mobile VAS services built on SMS
and WAP carriers have long been in
decline in mature markets, replaced by
services based on mobile data
• Services can be further classified into
transactional services and subscription
based services
• For subscription services, several
business models exist regarding
service branding and billing
Operator own services
White label 3rd party services
3rd party branded services on operator invoice
Co-marketed OTT services
True OTT services

Revenues not keeping pace with Traffic
Growth
Improve
Revenues by
offering:
• VoLTE
• RCS
• and Video
VAS
Revenues
Traffic
Revenues & Traffic Gap W idening
Revenue vs. Traffic Growth
Voice Era
Data Era Ali.Saghaeian [at] gmail.com

The Rules of Value Added Service Game are
Changing!

Revenue-Generating VAS services
– Video Services with RCS
– Video Adverts and Ring-Back Tones
– Messaging (record and playback)
– Multimedia Conferencing
– And many more….
Source:
Seeing through the Cloud
Senza Fili Consutling

Various strategies to conquer and secure
customers and protect margins

Operators’ Positioning for different Segments
Proffesional
Premium
Phone Type & Features
SMS Usage
Social Presence
Household
OTT Partnership + Emulation
Increase data revenue
Data Cons.
OTT Usage
Bundling + Emulate
(Telco OTT + SMS pack)
Maintain SMS revenue
Neutralize
(Big SMS + MMS Bundles)
Maintain SMS revenue
High
Low
Moderate
Bundling
(Large voice & data & sms bundle packages )
Data & SMS revenues in control
Youth

Awareness and usage of VAS
- 26%* of customers not aware of VAS that came with
the core service
- 68%* have never used the service!!!!
*Source: Frontier Communications

Stimulating Mobile VAS usage via Sponsored
Data
Consumer Data Charges
 80% of mobile users surveyed avoided using an app due to data limit concerns1
 71% of men and 62% of women would use more mobile data if it was sponsored1
 AT&T’s sponsored data service charges data from eligible services to the sponsor2
 Possible uses for sponsored data:
 Promote movie trailers or games
 Encourage browsing mobile shopping sites
 Provide sponsored access to products and services2
56
58
60
62
64
66
68
70
72
Men
Women
Use Data on Mobile More if Data W as Sponsored?1

This is happening………
• Multi-play: many operators getting involved in multi-play
• Impact on churn

Bundling value added services can support
higher prices for superfast broadband
• Price is the most
important criteria for
consumers, followed
by speed
• Customers are
reluctant to pay
premium for faster
speeds; however
there is traction for
superfast
broadband if it
includes value-
added services
Category Product or service
Service add-ons International calls packages International roaming Speed boost, additional data
Content and services Offer-specific content (video, audio) Gaming Cloud storage Anti-virus
Home security
Extending connectivity Multi-device (e.g. tablets) or shared data Multi-screen access Wi-Fi out-of-home access

Bundling & selling services with access
Positioning strategies for services bundled with access

Operators and Flexible Partnership Options
Operators in US are looking to adopt the "Freemium" model in their
markets defensively or partner to expand to new markets offensively

Partnerships with value added service
providers has shown effective
Partnering with value added service providers have been
successful way to promote uptake of LTE premium packages
Sample Entertainment package offerings
Operator
Value Added Offering
Operator
Value Added Offering
Vodafone Red 4G entertainment packs, Sky Sports 1 & 2, anywhere
VOD service where EE cover any mobile data you use to stream and download films
Vodafone is in the final stages of expanding its LTE offering to include Netflix
Premium LTE packages comes bundled with HBO & Spotify premium
O2 LTE subscribers can download exclusively games for free from Gameloft
6 month free access to premium package services

Operators are responding with a variety of
approaches
Strategy
Objectives
Examples
Block OTT services
Prevent OTT becoming mainstream
Potentially gain value from high-end bundles
Pakistan (Sindh province)
Stimulate usage
Defend legacy communication services
Buy time
SingTel
Launch ‘telco OTT’ services
Differentiate own services
‘Retain relevance’ as a communications provider
LG Uplus
Launch IMS-based services
Improve operator portfolio
‘Retain relevance’ as a communications provider
SK Telecom
Partner with OTT players
Appeal to attractive market segments
Support core data business with move to bundles
3 Hong Kong,
DiGi (Malaysia)
Globe Telecom

OTT and Operator Partnerships/Competition
Scenarios - UseCases Operators offering OTT Services Using Operator Key Assets to Support OTT Services
Partnership with Content providers (Music, TV and Movies
Sponsored data (Tollfree on Data)
Network selection for selected usage Direct Operator billing QoS for OTT
Telecom APIs

An example: OTT partnerships
Zero rating OTT video messaging
Monetization models
●“Try and buy” offers – upgrades or add-ons
●Sponsored data/revenue share
●VoLTE subscriber opts into 1-day free trial of OTT video messaging with HD quality
●Data usage is zero-rated for 24 hours, followed by add-on offer

Operator content and OTT partnerships

The current status of next-gen initiatives
varies considerably by region
29
Figure: Number of live next-generation communication service initiatives at June 2014, by region [Source: Analysys Mason, 2014] 0 10 20 30 40 50 Partnership Telco OTT RCS (IMS) VoLTE (IMS) Number of initiatives SSA MENA EMAP DVAP LATAM NA CEE WE

Collaboration between Telco and OTT
providers
More strategic collaboration and the movement from competing to new
market-creating business opportunities
of transformation
Revolutionary
Evolutionary
Tactical Area of Focus Strategic * Adapted from , N Venkataraman, Sloan Management
More strategic collaboration and the movement from competing to new market-creating business
opportunities

What are Operators doing on the App front?

Operators and OTT players can benefit in
many ways from each other and co-exist for
greater opportunities
31
Customer acquisition
Operator grade services
Operator billing
Local knowledge
Decreased churn
Customer acquisition
Revenue share
Consumer data
Benefits to OTT players
Benefits to operators

Applying Lessons Learnt from the Us Market
• Compelling content is the key differentiator
• Original series is the most credible way of building brand awareness and
differentiation
• Ability to secure long term exclusive deals on content is key to success
• Localization of product and delivery
• User friendly and robust multi lingual product interface
• Building content library keeping in mind the heterogeneity of markets
• Funding and capitalization
• Since the time taken to build the critical mass is long (as seen in Netflix and Hulu
Plus), there is need for stable funding
• Building partnerships
• Key to build scalable distribution network rather quickly
• Symbiotic relationship that can monetize the network by increased data usage &
spending
• Engaging and effective user experience
• Recommendation engine that facilitates content discovery and improves
engagement
• Data analytics
• Insights into usage habits and preferences of individuals, households, friends, and
consumer segments to tailor product design and offering
• Helps in personalization of service

Any Questions?

Optimizing Strategies to Stimulate Mobile VAS Usage and Maximize Operators’ Revenues

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Optimizing Strategies to Stimulate Mobile VAS Usage and Maximize Operators’ Revenues