Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities

SAP Mobile Services

Mobile Operator Guide 2013
The Evolution of Mobile Services:
Challenges, Strategies, Opportunities

Mobile Operator Guide 2013
The Evolution of Mobile Services: Challenges, Strategies, Opportunities
Published by Sybase, an SAP Company
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Library of Congress Cataloging-in-Publication Data
SAP Mobile Services
Mobile Operator Guide 2013, The Evolution of Mobile Services: Challenges, Strategies, Opportunities
Edited by Peggy Anne Salz
p. cm.
ISBN 978-0-9885886-2-2
1.Mobile technology.
Library of Congress Control Number: # 2012953199
Printed in the United States of America
Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or
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Table of Contents

10 FOREWARD
By John Sims, President, SAP Mobile Services

13 PART 1: INTRODUCTION : A WEALTH OF OPPORTUNITIES
14 Mapping A New World For Mobile Operators

18 Driving Growth In The Digital Economy
By Stephan Gatien, Global Lead, Telecommunications Business Unit, SAP and
Jens Amail, Senior Vice President and General Manager for Services, SAP

25 PART 2: STRATEGIES FOR DRIVING REVENUE
26 Long Live SMS
Text messaging continues to grow from strength to strength as new services and
paradigms around mobile marketing and mobile apps drive volumes and usage.
By William Dudley, Group Director, Product Management, SAP Mobile Services

33 Moving To The SMS Hubbing Model
Operators are recognising that SMS hubbing is not just about connectivity; it can
ease the management burden around cross-border messaging traffic.
By Robert Rose, Senior Director, Global Operator Services, SAP Mobile Services

36 Latin America Offers Big SMS Opportunities
Personal Paraguay and Tigo Colombia discuss local market requirements and weigh
on the tremendous opportunities and innovation that are driving SMS growth.

Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities 3

43 Cybersafety: Everyone’s Responsibility
The Cyber Information Sharing and Protection Act addresses how information
should be shared between private companies and the government to catch malicious
actors breaching networks to steal information or sabotage systems.
By Steve Largent, President & CEO, CTIA-The Wireless Association

48 Does The Future Of Mobile Security Lie In The Past?
Text messages are a powerful vehicle for reaching people — but they are also
increasingly the starting point for malware attacks.
By Mary Landesman, Senior Security Researcher, Cloudmark

53 Mobile Number Portability: Increasing Competition And Driving Value
Mobile Number Portability has come a long way since it was implemented in the 1990s,
but it now confronts mobile operators with a variety of commercial challenges.
By Mitul Ruparelia, Director of Sales Engineering (EMEA and LATAM), SAP Mobile Services

58 Intelligent Hubbing: Easing International SMS Routing Complexity
A comprehensive checklist and solid advice aimed at helping operators remove
the complexity around establishing and managing SMS routing.
By Mark Weait, Vice President Sales, SAP Mobile Services

63 Orchestrating Capabilities Delivers High Performance
Bharti Airtel details the strategy that has allowed it to spread its wings across
the African continent, lay the groundwork for value-added services and deliver
high volume at low cost.
By N. Arjun, Chief of Projects & Transformation, Bharti Airtel

68 PART 3: IPX: INTERCONNECTING OPERATORS FOR UNLIMITED
OPPORTUNITIES
69 Bundling Services Makes Business Sense
Korea Telecom discusses the importance of Voice over IPX in its larger strategy to
future-proof its network, ensure end-to-end quality of service and grow its wholesale
business. Interview with Incheul Park, Head of Wholesale Team, Global Business Unit,
Korea Telecom

4

74 Expanding Voice Connectivity Via IPX: An Operator Perspective
In the Philippines Globe Telecom is embarking on an ambitious network change to
deliver customer benefit by making cross regional interconnectivity better and easier.
By Gil Genio, Head of International and Business Markets, Globe Telecom, Inc.

78 The Value Of A True IPX
Mobile Operators can best leverage the full benefits and economies of scale that
IPX provides if they look beyond just offering basic services, such as voice and data
roaming, and focus on delivering the services their customers will demand next.
By John Candish, Senior Director, IPX Business, SAP Mobile Services and
William Dudley, Group Director, Product Management, SAP Mobile Services

83 Nine Ways To Get More Value Out Of IPX
IPX offers tremendous value and here are 9 things operators need to do to ensure
they can reap and maximise the benefits.
By John Candish, Senior Director, IPX Business SAP Mobile Services

86 Making The Right Connections
SingTel recounts the lessons, learnings and results of its recent IPX trial, the first
step in a private international network connecting all the Group companies.
Interview with David Ng — Vice President, Regional Technical, of SingTel’s
International team in the Group Consumer organization

91 A Brave New All-IP World
When it comes to IPX, peering among IPX providers is an essential element because
it is the enabler of global reachability.
By Elena Sacco, Chairman of the IWG at the GSMA and Senior Interconnect Manager, TIM

94 Boosting Trust, Building Business
In countries like Africa IPX does more than provide interconnectivity; it also meets the
needs of local telecommunications authorities for transparency and accountability.
By Ranjeet Wilkhu, Director, Neucom Solutions

98 Voice: The IPX Killer App
A candid view of the many benefits IPX provides. While many focus on future
scenarios around LTE roaming, PCCW outlines how IPX can already enhance voice.
By Richard Midgett, Managing Director – Wireless Business, PCCW


104 PART 4: LTE: UNLEASHING INNOVATION TO DELIVER RESULTS
105 Enabling 4G LTE For ALL
MetroPCS discusses its early decision to deploy LTE and how this head start on
the competition has allowed the U.S. operator to scale its business and satisfy its
customers with value-driven services.
By Ed Chao, Senior Vice President, Engineering and Network Operations, MetroPCS

111 Fighting Smart To Win Big
A clever approach harnessing RCS will allow operators to compete with OTT players
with new services such as group instant messaging or chat, live video sharing and file
transfer across any device, on any network, with anyone in a mobile address book.
By Madan Jagernauth, Vice President, Marketing & Strategy, Mavenir Systems

117 Positioning LTE For Success
Research and insights brings clarity into the industry discussion about LTE, the
benefits it delivers and reasons why operators take the lead in educating consumers.
By Declan Lonergan, Research VP, Yankee Group

124 Breaking Down Borders: Getting The Most Out Of LTE Roaming
LTE is reaching a stage of maturity where technology is no longer a barrier to
deployment, so now it’s up to mobile operators to architect the strategies that
will leverage the complete range of benefits.
By James Middleton, Managing Editor, Telecoms.com

127 Video Communications: “A Perfect Storm”
Consumer use of video has entered a new phase of growth, driven by devices,
services and networks built to support it. But the wave of interest in mobile
video could overwhelm service providers.
By Ramsey Masri, Vice President, Sales & Alliances, Aylus Networks

134 Enabling Roaming Across LTE Networks
LTE will enable new services, but it will also put high demands on the data roaming
backbone and require more bandwidth and resilient network connectivity.
By Matthew Tonkin, Global Head, IPX Business, SAP Mobile Services

6

138 LTE Roaming In Latin America: Conditions For Success
The deployment of LTE across Latin America brings with it a host of benefits and
equips operators to address the spectrum limitations facing their networks.
By Alejandro Martinez, Chairman, Billing & Roaming Working Group (BARG), GSMA LA

142 LTE: New Technology Boosts New Business
A review of the business models, approaches and services, such as mobile video
calling, that will allow operators to drive even more revenue out of their costly
LTE investments.
By Michel Van Veen, Group Manager, Product Management, SAP Mobile Services

147 PART 5: OTT: OPEN THREAT OR HIDDEN OPPORTUNITY
148 OTT Threat: Top Strategies To Fight Smart
Learn from real-life examples, including KPN and China Mobile, about the real impact of
OTT services on voice and messaging revenues and how mobile operators turn the tide.
By Pamela Clark Dickson, Senior Analyst, Mobile Content & Applications Intelligence
Center, Informa Telecoms & Media

156 Evaluating Strategies To Face OTT Providers
Operators need to be more digital. Does Telefónica Digital, a unit aimed at developing
new applications and business models for mobile technology show the way?
By Eusebio Felguera, Corporate Regulatory Manager, Telefónica

161 NUVOs: An Alternative To Disruptive OTT
Not all OTT apps threaten mobile operator revenues. Network Unaffiliated Virtual
Operators (NUVOs) actually benefit operators and boost their business.
By Austin Murray, Founder & President, textPlus

166 OTT Ecosystem: Paving The Way For Opportunity
The inevitable arrival of an all-IP world also reinforces the needs for deeper part-
nerships between operators and OTT players. MediaFriends discusses apps and
approaches showing the way.
By Gene Lew, CTO, MediaFriends


172 PART 6: UNLEASHING THE POWER OF MOBILE COMMERCE
173 Mobile Money For The Masses
Qtel has made its mark with its Mobile Money services and an innovative self-serve
approach that meets the needs of both migrant workers and affluent customers.
By Richard Morecroft, Assistant Director Mobile Money, Qtel

179 Driving Mobile Money Usage In Unbanked Regions
Driving customer adoption and increasing activation rates in mobile money is no
easy task. The key is proper audience segmentation and a sharp focus on customer
education.
By Yasmina McCarty, Senior Manager, GSMA MMU

184 Blueprint For A Successful Remittance Service
A review of the mobile remittance services available today reveals a variety of
different approaches to tackle the challenges of sign-up, cash-in and cash-out.
By Diarmuid Mallon, Head of Global Mobile Marketing Programs, Programs &
Demand Generation, SAP

190 Operators: Tap Your Strategic Assets
Mobile operators might only have scratched the surface when it comes to
understanding their true potential to accelerate and enhance the mobile
payments and commerce experience for consumers everywhere.
By Aditya Kurejkar, Co-Founder and Program Director, Money2020

194 Mobile Commerce Opportunities For Operators
Building and deploying a successful mobile payment service requires operators
to consider a wide range of variables, from business models to local telecom
and financial regulations.
By Matthew Talbot, Senior Vice President, Mobile Commerce, SAP

200 PART 7: LEVERAGING MOBILE TO ACHIEVE LASTING LOYALTY
201 Perception vs Reality: What’s Your Mobile Strategy?
The arrival of the empowered consumer turns up pressure on operators and
enterprises to create and implement a comprehensive mobile strategy that is
truly end-to-end, multi-channel and, more importantly, customer-centric.
By Howard Stevens, Senior Vice President, Global Messaging Solutions,
SAP Mobile Services

8

205 The Power Of Push
Push notifications also open up new opportunities around customer service
and marketing, allowing mobile operators to deliver simple alerts to the
customer — and trigger the customer to take action.
By Coleen Carey, Director of Product Marketing, Urban Airship

211 Harmonising Touch Points, Technology, Processes And People
Celcom details the milestones and motivations that have helped it evolve its view
of customer experience and sharpen its focus on encouraging lasting loyalty.
By Suresh Sidhu, Chief Corporate and Operations Officer, Celcom Axiata Berhad

215 Ask, Listen And Build Lasting Loyalty
Talk to your customers, and listen to what they say. A successful mCRM program
integrates social interaction, customer engagement and customer feedback.
By Sally Burley, Director, The 3rd Degree

220 Why Customer Engagement Campaigns Pay Dividends
An in-depth look at how mobile changes the rules of engagement, allowing mobile
operators, brands and businesses to maintain continuous customer touch and drive
deeper engagement.
By Gregory Dunn, Vice President, Product Management, SAP Mobile Services

228 Glossary Of Terms

234 Index Of Contributor Companies

240 Acknowledgements


FOREWORD

Mapping A New World For
Mobile Operators

IP is changing the game. Advanced The author in this case was referring to
mobile devices, new technologies, mobile video communications, where
growth is driven by devices, services and
increased competition and a
networks. But mobile video isn’t the only
shift in subscriber expectations market segment on the brink of the tipping
towards truly personal and point. This Guide shows that other services,
relevant interactions are coming such as SMS, LTE, mobile commerce and
mobile customer loyalty, are also entering a
together to cause disruption in the
new phase of growth and innovation.
telecom industry - for operators
and all the companies in their • SMS: While some analyst reports predict
business ecosystems. the decline of text messaging, SMS
continues to be the number one data
However, the same conditions also spell communications tool and the most
massive opportunities for companies effective direct marketing channel ever
prepared to take charge of change. As one created. In almost all emerging markets it
of the 40+ industry authorities who has remains the ubiquitous data service of
provided insights for this Guide, points out: choice. In developed markets, the
the rapid pace of change and the interplay explosion of mobile apps, a development
of supply and demand for services that are which many thought would mark the
aligned with customers’ requirements are death of SMS, has actually pushed
combining to generate the mobile industry’s application-to-person (A2P) traffic
own Perfect Storm. growth to a new level. This spells

10

opportunity for mobile operators and enhance mobile money and mobile
service providers to harness text banking services. Now it’s up to mobile
messaging to supercharge a variety of operators to map out comprehensive
services, ranging from mobile marketing strategies that cultivate partnerships
and mobile advertising, to mobile with key players, such as banks, and
commerce and mobile banking. adapt to local market conditions, such
as regulations, demographics, and the
• LTE: As mobile network operators move emergence of new remittance corridors.
towards 4G/LTE and an all-IP network,
many will cooperate to expand their • Mobile loyalty: Because mobile is a
network footprint and pave the way for fiercely personal device, it’s an ideal
compelling new services that will delight means to reach customers on every step
customers and drive positive results for of their daily journey to encourage inter-
everyone in the ecosystem. The advance action and deepen engagement. Whether
of LTE will also challenge operators to operators and marketers choose to
develop strategies to cooperate with and harness text messaging, new forms of
enable Over-the-Top players in a manner IP-based messaging, mobile web or
that benefits the ecosystem and wrings mobile apps (or all in combination) they
new revenues out of operator core capa- can clearly leverage mobile as a channel
bilities such as location information, to boost customer loyalty and recruit true
billing support and network management. brand advocates. However, just as in real-
life, building a relationship is about talking
• Mobile commerce: From researching and listening, and that’s why companies
products to making purchases, consum- must develop mobile loyalty programs
ers are increasingly reaching for their that effectively do both.
mobile devices as an essential shopping
companion. At the other end of the This inaugural edition of the Mobile
spectrum, and particularly in the under- Operator Guide features the insights of
banked regions of the world, consumers industry thought leaders and innovators to
are gravitating to services delivered by identify market trends, best practices and
mobile operators that have expertly key lessons learned in deploying mobile
leveraged their distribution channels, services. The purpose of this industry
retail presence and trust to expand and knowledge resource is to provide readers


clear direction and critical information,
equipping them to develop strategies to
drive messaging revenue, deploy cost saving
solutions, generate new revenue streams
from mobile commerce, build loyalty
through customer engagement programs,
plan for LTE roaming through IPX adoption
and maintain competitive advantage in an
IP-based world.

The onward march of next-generation
services into daily life has created a new
world order in the telecoms industry.
Think of this Guide as a starting point to a
roadmap, one that will allow you to plot the
transformational path your business needs
to follow to succeed in this exciting new
digital economy.

12

PART ONE: INTRODUCTION
A WEALTH OF OPPORTUNITIES

PART ONE: INTRODUCTION: A WEALTH OF OPPORTUNITIES

Mapping A New World For
Mobile Operators

What a difference a decade makes. product offerings were comparatively
You need only go back that far to straightforward, with “all-you-can-eat”
pricing plans the industry standard. It
find the “early days” of mobile
seems like a long time ago, but it was only
network operators’ journey with in 2001 that the first inter-operator SMS
mobile data, comparatively speak- messages were delivered in the U.S., with
ing, a world that hardly compares SAP Mobile Services launching the first
inter-operator SMS messaging hub in
to today’s landscape. Amid the
concert with AT&T Wireless. More signifi-
far-reaching changes that have cantly, during those formative years,
taken hold since then, the com- operators took a walled-garden approach
plexity that now distinguishes to mobile data, with services delivered
within a closed ecosystem – a far cry from
operator services brings with it
the interoperable, pan-operator network
a rich abundance of opportunities topology that has evolved since then.
to those who are forward-thinking
and adaptive in their strategies From that initial “closed system” approach,
rapidly advancing technology and the
and capabilities.
explosive growth of international travel by
A decade or so ago, an operator’s world globe-trotting executives and power users
revolved almost exclusively around voice. contributed to the dramatic changes we
In an environment of minimal competition, have seen take root since then. The eclipse

“ s the cost of spectrum and the pace at which
A
new network technologies needed to be deployed
rose, operators needed to consider cooperative
arrangements with their fellow operators,
something that would not have previously
been on the table.”

14

Table 1: Global mobile data growth today is similar to global internet growth
in the late 1990s

Global internet traffic growth (fixed) Global mobile data traffic growth

1997 178% 2009 140%

1998 124% 2010 159%

1999 128% 2011 133%

2000 195% 2012 (estimate) 110%

2001 133% 2013 (estimate) 90%

2002 103% 2014 (estimate) 78%

Figure 1: Based on data from Cisco. Cisco Visual Networking Index Mobile 2012

www.slideshare.net/CiscoSP360/cisco-visual-networking-index-vni-global-mobile-data-traffic-forecast-20112016

of voice by data, accompanied by the advent it was clear that mobile network operators
of successively more powerful generations could no longer dictate the user interface.
of network technology leading to 4G, an As the cost of spectrum and the pace at
all-IP environment, accompanied by today’s which new network technologies needed
open infrastructure, means operators must to be deployed rose, operators needed to
generate profits by significantly rethinking consider cooperative arrangements with
their business models. their fellow operators, something that
would not have previously been on the table.
Traditionally, mobile network operators have
owned and controlled everything, including In addition, in order to accelerate the adv-
physical equipment, radio networks, serv- ance of the network effect for new services,
ices infrastructure, devices and user inter- operators in some countries have come
faces. But amid their changing economics, together in joint ventures or cooperatives to
many have had to rethink this approach. lower their costs and seed the market with
With the rise of the smartphone, driven by new service technologies – for example, the
the iPhone and Android devices, Isis joint venture in the United States or the


proposed mobile payments venture among to fiercely defend their franchises against the
operators in the United Kingdom. threat from the Internet-based companies
or so-called Over-The-Top (OTT) players. As
To a certain degree this kind of thinking part of their strategy, operators will want to
has been accelerated by operators’ need not only create a strong domestic footprint;
to compete against Internet-based players, they will also look to extend this to a global
which have arrived in the mobile space as level, much as they have done over the past
creative and formidable competitors. It also decade or so with SMS.
marks a realisation by many mobile network
operators that their future success depends This is precisely where SAP Mobile Services
more upon the innovative services that they provides the most critical value. We are
offer subscribers than it does on the under- delivering the world-class interoperability
lying network technology – a substantial and reach that comes with our role as an
shift in emphasis. independent custodian residing between
and among operators. It is a role that
So, as mobile network operators move demands a truly holistic level of visibility –
towards 4G/LTE and an all-IP network, horizontally, across geographies spanning
many will cooperate to achieve a more rapid the Americas, Europe, the Middle East,
and ubiquitous network footprint that will Africa and Asia, and vertically, providing the
allow them to offer compelling new services technology and connectivity required to
that will capture the imagination of their ensure that today’s ever-expanding operator
subscribers. In doing so, they will compete ecosystem continues to flourish. Most
against other mobile network operators, importantly, SAP Mobile Services possesses
but they will also have to operate in a much the vision and resources to realise its custo-
faster cycle of innovation that will allow them dial role in every dimension.

“ he advent of a new world for operators follows
T
decades of incremental improvements
punctuated by breakthrough technologies.”

16

This inaugural edition of the Mobile The advent of a new world for operators
Operator Guide 2013, The Evolution of follows decades of incremental improv-
Mobile Services: Challenges, Strategies, ements punctuated by break-through
Opportunities provides a rich taste of the technologies. The result has been a new
bold new world that has materialised and paradigm for communication. All of us at
continues to take shape. Inside, our expert SAP Mobile Services are working with
stable of authors delve into the current state diligence and with our eyes on the future
of play and the most important emerging to enable all participants in the value chain
issues in operator services, including: to experience the unprecedented power,
ease and benefits of this new world of inter-
• Operator strategies for driving and operability, reach and global interaction.
optimising messaging revenue
• Roaming and interconnect issues,
including the interplay of LTE in an John Sims is President of SAP Mobile
Services, the recognised global leader in
IPX environment
mobile messaging and interconnect services.
• OTT Messaging, voice and video services, He has more than 20 years experience
including managing the challenges con- with companies supplying technology and
fronting operators in a BYOD (Bring Your solutions to mobile operators. Sims has
Own Device) world been recognised with the prestigious Ernst
Young Entrepreneur of the Year Award in
• Mobile commerce and the myriad of
the communications category. He is also a
opportunities for operators member of the Board of Directors of CTIA
• Customer engagement, including a and has been a speaker and panellist at
roadmap for building loyalty by numerous industry events.
empowering customers.


PART ONE: INTRODUCTION: A WEALTH OF OPPORTUNITIES

Driving Growth In The
Digital Economy
By Stephan Gatien, Global Lead, Telecommunications Business Unit, SAP
and Jens Amail, Senior Vice President and General Manager for Services, SAP

In July 2012, just before the On one hand, the success of smartphones
London 2012 Olympics, no one has led to increased data activities, with
subscribers happily clocking time to play
could have imagined that one of
games, watch videos, post on social sites,
the first headlines in the main- tweet and send text messages. This phe-
stream press would be about the nomenon has contributed to the decline of
local mobile networks’ bandwidth revenues from voice services, once the cash
cow of the entire industry without really
problems. But this is precisely
offsetting it to date.
what happened shortly after the
Games opened. On the other hand, costs to provide
adequate network infrastructure to support
After having encouraged athletes and fans this explosion of data traffic are on the rise.
to tweet freely, Twitter was blamed for As the 2012 Olympic Games in London
disrupting the coverage of the cycling road showed, the infrastructure available still
race. Ironically, the sheer volume of mobile cannot always handle the load and meet
social traffic along the course was so over- expectations for connectivity and reliability.
whelming that it even interfered with the
GPS and telemetry updates from the race, Granted, network upgrade investments
which left those covering the games without represent a heavy financial burden for all
information on positions and timings. players in the ecosystem. However, these
network investments are essential building
This twist of fate was a perfect metaphor blocks for future services and business
for the dilemma and challenges faced by models. In fact, 2013 is widely expected to
communications service providers today. be a blockbuster year for infrastructure

2013 is widely expected to be a blockbuster year
for infrastructure spending, with a large number of
operators aggressively expanding their LTE networks.

18

London Olympics - UK SMS traffic
(Times are local to London - August 6 - 8)

+10%
+ 46% +18% +8%

August 8
August 7
August 6
1:30
2:30
3:30
4:30
5:30
6:30
7:30
8:30
9:30
10:30
11:30
12:30

21:30

23:30
0:30
13:30
14:30
15:30
16:30
17:30
18:30
19:30
20:30

22:30
Figure 1: Based on data from SAP.

(Times are local to London - August 1 - August 5)
+46% - 18:20:
+36% - 14:20: Men’s team cycling
UK’s Andy Murray sprint - UK wins gold
beats Roger Federer
for gold in tennis

August 3
August 4
August 2
August 1
August 5
1:30
2:30
3:30
4:30
5:30

6:30
7:30
8:30
9:30
10:30
11:30
12:30

22:30
13:30
14:30
15:30
16:30
17:30

18:30
19:30
20:30
21:30

23:30

0:30



(Times are local to London - July 27 - July 31)

+36%: 21:10:
USA wins gold
in Men’s 4 x 200m
freestyle relay (swimming)

July 27
July 28
July 29
July 30
July 31
1:30
2:30
3:30

4:30
5:30
6:30
7:30
8:30
9:30
10:30
11:30
12:30
13:30
14:30
15:30
16:30
17:30
18:30
19:30
20:30
21:30
22:30
23:30
0:30

spending, with a large number of operators Voice and Skype — allow messaging and
aggressively expanding their LTE networks. VoIP calls between users. While these
free services may have a strong appeal
to customers, they have a decidedly
Tough competition negative impact on operators’ bottom line.

But network upgrades aren’t the only item Analysts estimate OTT messaging revenues
on the business agenda. Operators also as much as $13.9b, or 9% of message
have to develop strategies and capabilities revenue, in 2011. This decline has led some
to compete against new rivals. to wonder whether most incumbent provid-
ers are not facing their “Kodak moment”. By
Increased penetration of smartphones has way of background, Kodak filed for bank-
opened the door to powerful and disruptive ruptcy protection in 2012 after recognizing
actors offering OTT services. These services its products were obsolete and the competi-
— which include Apple’s Facetime, Google tion was insurmountable. Similarly, mobile

20

UK Olympics - Opening Ceremonies
(UK SMS traffic - 27 July 2012 17:00 - 28 July 2012 03:00)
22:30 -22:40: +137%
Team Great Britain
enters the stadium
during Parade of Nations
21:10 +32%
Ceremony begins 23:50 +56% official
opening of games
Queen’s speech
21:40 +40% Rowan
00:20 +25% IOC
Atkinson “Plays” during
President speaks
Chariots of Fire
Opening
Pre-ceremony - Ceremony
up to 56% of normal Traffic
Normal
Traffic
17:30

18:00

18:30

19:00

19:30

20:00

20:30

21:00

21:30

22:00

22:30

23:00

23:30

0:00

0:30

1:00

1:30

2:00

2:30

3:00
21:40: +40% The Queen parachutes in 22:30-22:40 +137% Parade of Nations begins
23:50 +56% Team GB enters the stadium.


players are now struggling to compete position of strength and drive profitable
against more agile and innovative newcomer growth in this new era.
companies, as well as OTT providers.
First and foremost, operators — because they
are network operators — control the backbone
Operator assets of the Digital Economy: connectivity.

However, it would be a huge mistake to But owning the network is not enough. To
count operators out of the Digital Economy avoid being relegated to the role of a “dumb
race too soon. Operators own critical assets pipe,” operators must also be able to capitalise
they can leverage to build competitive on their successful track record of service
advantage, establish themselves in a delivery, including five 9s service availability.


Porter Telco 2.0 Nature of Characteristics
strategy strategy smartness

Cost leadership Happy Pipe Smart network Cost efficiency - minimal network,
IT and commerical costs. Simple
utility offering.

Differentiation Full-service Smart services Technical and commerical flexibility:
Telco 2.0 improve customer experience by
integrating network capabilities with
on and third-party services and
charging either end user or service
provider (or both).
Figure 5: Based on data from STL Partners. www.stlpartners.com/telco2_index.php

Operators also have proven security and data the conduit between these ‘upstream’
integrity capabilities that will increasingly partners and their traditional ‘downstream’
appeal to business customers as adoption of customer base, thus increasing their reach,
cloud- based models take off. presence and value-add.

What’s more, operators also have a long Finally, CSPs have insights into a vast
-standing relationship with their customer quantity of data about their customers,
base. This puts them in a unique position to such as service usage patterns, location
act as digital service brokers between this -based activities, roaming history and
large audience and a multitude of partners on-device behaviour on a daily basis. This
that want to reach this audience with impressive store of customer information
content, software or new services to offer represents a largely untapped monetisation
via the mobile channel. opportunity for operators in an increasingly
data-centred economy.
Pursuing this model — often referred to as
the Teleco 2.0 model (1) — would allow Com- So, how do CSPs move forward to imple-
munications Service Providers (CSPs) to be ment the right strategies and — ultimately

FOOTNOTES

1. As originally defined by STL Partners

22

2013 is widely expected to be a blockbuster year
for infrastructure spending, with a large number of
operators aggressively expanding their LTE networks.

— succeed in the digital era? We believe created new digital divisions to seize new
they will need to focus on some key areas opportunities including mobile commerce
to drive profitable growth in the new and machine-to-machine communications
Digital Economy. (M2M) in order to generate incremental
revenue beyond their traditional services.
• CSPs should fully leverage their scale, Telefónica’s direct to bill initiative is a strik-
superior reliability and service delivery ing example of how an operator can lever-
capabilities, to invest in new business age its billing relationship with its mobile
models in areas such as Cloud and Mob- customers to increase sales of digital goods
ility. Operators such as China Telecom or and services, while learning to partner —
Telstra in Australia have already adopted not compete — with OTT players.
this strategy with success. They offer
on-demand business solutions to a The monetisation of subscriber data, in
variety of business customer segments, accordance with privacy laws, is also
in particular targeting small and medium emerging as a strong opportunity for CSPs
size businesses. Other mobile operators, to grow their revenues. By leveraging the
such as Rogers Communications in vast amounts of customer data they own —
Canada, are launching business-oriented in real-time and at scale — CSPs can gain
mobile app stores. This is part of a larger advantage in two important ways. They can
effort to become a one-stop shop for serve their existing customers more effec-
business customers, providing everything tively, and they can also use the customer
mobility-related, including mobile app information to take advantage of opportuni-
hosting and mobile device management. ties in new markets — such as proximity
• Large providers should also think beyond marketing or mobile advertising — where
connectivity. Telefónica and SingTel are customer data is key. To accomplish this
perfect examples of what operators can CSPs will need to adopt a highly scalable
achieve. They have transcended their foundation suited for the real-time world.
traditional organisational boundaries, and An examination of the results achieved by


However, it would be a huge mistake to count
operators out of the Digital Economy race
too soon. Operators own critical assets they
can leverage to build competitive advantage,
establish themselves in a position of strength
and drive profitable growth in this new era.

T-Mobile US, for example, confirms that
an in-memory based platform is very well Jens Amail is Senior Vice President and
General Manager for Services Industries at
suited to provide such a foundation.
SAP as well as the Business Unit for Billing,
Revenue and Innovation Management. Prior
Fortune smiles on the brave. It is time for to joining SAP in 2008, Jens was with Siemens
CSPs to make bold moves to develop their Communications for 10+ years in a variety of
growth strategy in the digital era. They have Senior Executive and General Management
roles both in Europe and the US. Jens has a
the necessary assets to create new growth
broad cross-functional background in the
engines and focus on the abundant oppor- Communications Industry with Executive
tunities in the Cloud and Mobility markets. assignments in Sales, Services, Marketing,
Moreover, operators can innovate and invent Solution Management and Operations.
new data-driven business models and
services (such as proximity marketing). Stephan Gatien is a Global Lead within the
Telecommunications Business Unit at SAP
If operators can arm themselves with the
focusing on Business Analytics and Database
correct capabilities and business models, Technology. In that capacity, he is respon-
they can seize these opportunities, create sible for the analytics and data platform
lucrative new revenue streams and prosper strategy in the industry, including SAP HANA,
from the Digital Economy. oversees the related solution activities and
leads the analytics and data platform go-
to-market activities globally Prior to joining
SAP, Stephan was with Telus where he held a
variety of management roles in the wireless
division of this Canadian operator.

24

PART TWO
STRATEGIES FOR DRIVING REVENUE

PART TWO: STRATEGIES FOR DRIVING REVENUE

Long Live sms
By William Dudley, Group Director, Product Management, SAP Mobile Services

Mobile industry watchers have (and do) use their mobile phones to send
been predicting the death of the and receive text messages.

humble text message for over
Veteran mobile author and analyst Tomi
a decade, but a raft of recent Ahonen estimates people sent a whopping
research confirms that SMS is 6.1 trillion text messages in 2011, up from
very much alive and kicking. 1.8 trillion in 2007. Meanwhile Informa
Telecoms Media state that total SMS
Marking the 20th anniversary of SMS, U.K. traffic will reach 8.7 trillion by 2015, up
analyst firm Portio Research points out that from over 5 trillion messages in 2010. In
SMS has been very successful, generating its newest forecast analyst firm Portio
approximately $821 billion for operators Research calculates that total traffic will
worldwide since it was invented in 1992. reach nearly 10 trillion messages by 2015.

Overall, worldwide mobile messaging was Clearly, SMS is THE most ubiquitous,
the highest earner in the industry, raking in non-verbal communications medium in the
$179.2 billion in 2010 alone. Portio Research history of mankind. Today, SMS can reach
forecasts that this total will increase to more over 5.4 billion people around the world —
than $280 billion in 2014, and exceed $300 over 77 percent of the world’s population.
billion by 2016. Of this total, SMS alone will
generate $155 billion worldwide in 2014, and In developing countries SMS plays a special
it promises to continue to play a significant role, transforming lives and economies at an
role in revenue terms in the coming years, amazing scale. Innovation in these regions
the report said. also allows companies, organisations and
governments to harness simple text mes-
saging and achieve extraordinary results.
Pervasive and personal From life-simplifying reminders to life-saving
medical advice, text message services are
It’s the simplicity, pervasiveness and sheer changing the nature of commerce, banking,
dominance of text messaging that has made education, healthcare, news reporting and
it the world’s leading data communication political participation.
tool. People everywhere on the planet can

26

In developed markets SMS is by far the most In other countries text messaging continues
effective way for people to communicate with to dominate. In Canada The Wireless
each other — and connect with companies. Telecommunications Association reports
Whether chatting with friends, or receiving the number of personal text messages sent
alerts from banks and favourite brands, text every year has nearly quadrupled since
is the primary communications tool. 2008 and hit a whopping 78 billion
messages in 2011. In the U.K. the Ofcom
Telecommunications Market Data Update
Continuing tide of text Q1 2011 reports the total number of SMS
and MMS messages sent in Q1 2011 was
Significantly, even the advance of smart- 36.9 billion, up 22.7 percent over Q1 2010.
phones — chock-full of features, functional-
ity and a wide variety of mobile applications
— hasn’t changed consumers’ dependence The impact of OTT
on text messaging to connect with the world
around them. In fact, a recent consumer Amid this stellar growth, some analysts
study from Deloitte shows that SMS holds wonder if the text messaging trend could
the lead. More consumers than ever prefer- flip from growth to decline. New messaging
ring texting, and the vast majority (90 capabilities bundled with iPhones and
percent) of smartphone users sending at Android phones, as well as the advance of
least one text message per day. OTT messaging services and applications
are among the root causes for the recent
Another trend that shows no signs of slowing dip in SMS volumes in mature markets such
is text use among teenagers. In the U.S. this as Philippines and Taiwan. News that OTT
demographic relies on text more than any player WhatsApp reported hitting the mile-
other customer segment. Research firm stone of ten billion messages a day further
Nielsen, which bases its finding on a variety suggests operators could be vulnerable to
of data including monthly survey results from this new competition.
300,000 consumers, reports that texting has
tripled, with teenage girls sending 40 percent However, Analysts point out the race is far
more text messages than boys. That’s an from run. It estimates that companies like
average of 3,952 text messages per month. WhatsApp and BlackBerry will generate 35
It’s a continuing tide of communication percent of the total messaging traffic in
Nielsen calls a “mobile data tsunami.” 2016, but only 8 percent of the revenues.


Average number of messages exchanged per month
By age and gender, Q3, 2011

604 802

3,417

1,914

928
709
434
167 64

Male Female 13-17 18-24 25-34 35-44 44-54 55-64 65+

Figure 1: Based on data from Nielsen.

Moreover, SMS will continue to dominate Open rules
messaging and revenues, generating 42
percent of the traffic and some 65 percent People are empowered by SMS to commu-
of total income. nicate with anyone who has a mobile phone.
However, alternative messaging apps are
Indeed, Informa is not convinced that OTT limiting, not liberating. Unlike text messag-
apps and services might undermine estab- ing, these OTT services operate in a vacuum.
lished text messaging habits. It argues that
many factors — including mobile operator Instead of overarching communities that
pricing strategies, the penetration of mobile span the planet, they create isolated islands
broadband and customer requirements of users who are completely cut off from
to more open communications — will friends and family members on the basis
“determine how quickly and to what extent of the handsets and software they use.
substitution occurs.”

28

A Facebook user and a person using iMessage interworks with the existing SMS eco-
may be good friends in real-life, but the fact system. Indeed, many of the operators
they use different services prevents them featured throughout this first edition of
sending and receiving messages. the Mobile Operator Guide are betting
on RCS to drive an interoperable, back-
This flies in the face of what communica- ward compatible messaging medium for
tions is all about, and presents opportunities subscribers and — ultimately — pave
for mobile operators to bridge the gap. the way for new and innovative services.
There are exciting and lucrative options
to consider. Some mobile operators will
choose to work with OTT players, enabling No limits
them to achieve the integration of messag-
ing communications. Others will follow the Technology advances like RCS will allow
lead of operators like Telefónica, which messaging — including text messaging —
recently launched a free mobile application to evolve and continue to account for a signi-
that combines free text chat, voice calls, ficant share of operator revenues. The future
picture and location sharing between users. for OTT providers, however, is not quite so
positive. Spoiled by choice and delighted by
Interoperability will also be delivered by the freedom to communicate with anyone
the GSM Association standard called (and not just people that use that the same
Rich Communications Suite (RCS), which application), consumers will no doubt vote
includes a next-gen, real-time, presence- with their feet. It’s clear that many of the OTT
enabled messaging component that also players will simply fade away.

Unlike text messaging, these OTT services
operate in a vacuum. Instead of overarching
communities that span the planet, they create
isolated islands of users who are completely
cut off from friends and family members on the
basis of the handsets and software they use.


It’s the simplicity, pervasiveness and sheer
dominance of text messaging that has made it
the world’s leading data communication tool.

In the meantime, SMS-compatible1 services Ironically, the rise of mobile apps, initially
from companies including textPlus will hailed as a new channel to the customer
continue to flourish, offering customers that could potentially dethrone SMS, has
more features and greater reach. But it’s actually pushed text messaging growth
not just person-to-person messaging that to a new level.
will increase. Growth will be also be driven
by a desire from companies, businesses Brands and marketers, as well as applica-
and brands to connect with their customers tion developers, are harnessing SMS to
(and potential customers) via SMS. extend the life of their apps, keeping their
users posted on updates, breaking news,
Research underlines the pivotal role of location-based opportunities, campaign
mobile in campaigns to engage with custom- perks and other important information.
ers, encourage interaction and boost loyalty. More importantly, text messaging allows
From consumer facing brands that use text brands and marketers to re-connect with
messaging to deliver brand messages and customers who haven’t used their apps
links to downloadable content and perks, to recently — or even deleted it altogether. The
large retailers that cleverly use text messaging result is a booming Application-to-Person
to deliver product vouchers and drive cus- (A2P) market Jupiter Research estimates
tomer loyalty, the central role of SMS is will be worth $70.1 billion by 2016.
clear. Perhaps the best confirmation comes
from Coca-Cola, that declared that SMS is
the “number one priority” in its comprehen- Positive outlook
sive strategy to reach a global audience and
increase customer engagement. Analysts Clearly, the next five years will see operators
termed it a “bombshell announcement” in many parts of the world leverage their
because other marketers quickly followed all-IP networks, but even this progress will
suit, launching strategies with mobile not shut the door to SMS. To the contrary,
messaging at the center. LTE networks using IMS infrastructure will
lay the groundwork for messaging services

Footnote:

1. SMS-compatible services include some OTT service providers (also known as NUVOs or
Network Unaffiliated Virtual Operators that inter-work with the SMS ecosystem. This stands in
strong contrast to other OTT providers, such as WhatsApp, that do not offer SMS interoperability.

30

Global revenue from A2P SMS split by eight key regions 2016

Latin America

Indian Sub Continent

Africa Middle East

Central Eastern North America
Europe

Rest of Asia
Pacific

Western Europe
Far East
China

Figure 2: Source: Juniper Research. (1)

that will remain interoperable with today’s 1992 between Neil Papworth (of Sema
text messaging. In other words, there will be Group Telecoms) and Richard Jarvis of
no interruption in service, or even reach. Vodafone – the message read “Merry Christ-
mas”. Today, SMS is the most widely used
The humble text message that just cele- mobile data service, with two-thirds of
brated its 20th anniversary has seen a lot the world’s population using the channel to
of changes since the first SMS was sent in connect and communicate. From a business

FOOTNOTE:

1. www.juniperresearch.com/reports/Mobile_Messaging_Markets


perspective, SMS is expected to remain
a significant source of revenues and traffic
for mobile operators on a global basis
for years to come. The bottom line: the
advance of an all-IP world will transform
SMS, but text messaging will also continue
to be alive and well.

William Dudley has 25 years experience
building and managing telecommunications
network infrastructures. He leads SAP Mobile
Services Messaging Team, which focuses on
solutions including inter-operator SMS and
MMS products (P2P) and mobile messaging
hubs and services (A2P SMS and MMS).
Dudley also provides industry commentary
to both internal and external mobile industry
publications, through analyst and media
interviews, and is active in several industry
groups. http://scn.sap.com/people/william.
dudley/content

32


Moving To The sms
Hubbing Model
By Robert Rose, Senior Director, Global Operator Services, SAP Mobile Services

SMS is ubiquitous, universal and services dedicated to message protocol
widely regarded as the truly native conversion. Having met the domestic
challenges of the North American market,
language of mobile. However, this
international messaging between non-
phenomenon, and the massive GSM U.S./Canadian operators and their
development of SMS since the last GSM counterparts worldwide soon also
years of the 20th century, has not benefitted from the technology and
connectivity offered by the hub solution.
been without its challenges around
enabling — and guaranteeing — In developing countries, scarce human
message delivery. and technical resources within operators
across these markets has accelerated the
Notably, there have been challenges in North requirement for hubbing services. In the
America, where differences in technologies case of Tier 1 and 2 operators, for example,
prevented the launch of off- net messaging hubbing has tended to be a niche solution.
for a few years. In contrast, almost the rest In other words, the solution enabled “gap-
of the world was well progressed in its adopt- filling” in a mobile operator’s footprint,
ion of inter-operator SMS based largely on thus satisfying subscriber demand for
homogenous GSM standards. international SMS P2P connections when
that operator’s own roaming agreements
The solution to the technology differences were not sufficient to provide the required
in North America was provided by hubbing messaging interconnects.

In developing countries, scarce human and technical
resources within operators across these markets has
accelerated the requirement for hubbing services.


As a consequence, operators are recognising that a hub
can enable them to outsource the management burden
around some of their cross-border messaging traffic.

Making the mainstream operator can actually become a much
more significant benefit.
The situation began to change when the
GSM Association launched the Open
Connectivity project in 2005. By seeking Good business sense
to manage and regulate (in a light-touch
manner) the development of peering hubs Today, economic pressure on most oper-
for person-to-person SMS the GSMA ators is now driving even more traffic (and
effectively endorsed the hubbing concept. more revenue for the networks). Headcount
This, in turn, ensured the adoption of cuts, affecting even the most-established
hubbing as a mainstream business practice operators, are reducing their ability to
for the global operator community. manage their interworking activity effectively.

Since 2005 the major hub providers have As a consequence, operators are recogn-
seen a steady growth in demand for their ising that a hub can enable them to out-
services. This has resulted in the develop- source the management burden around
ment of an abundant revenue stream based some of their cross-border messaging
on the termination charges on inbound traffic. This approach also reduces the
traffic delivered by hubs. The ability to drive managerial overhead around areas such as
new revenues from additional SMS traffic the negotiation and maintenance of bilateral
— possible because hub prov-iders have agreements with destination operators and,
extesive global reach and the ability to when traffic is flowing, the upkeep of various
provide two-way access to operators number ranges within the SMSC.
previously unreachable — has been an
added attraction over and above the Routing all traffic for a particular country to
greater reach achieved. a hub mitigates number range management
tasks and delivers business benefit. As
Since term fees are paid on a strictly per- operators come to embrace the idea of
message basis, this revenue source clearly delegating responsibility for some cross-
increases in proportion to the organic as border SMS traffic, they also discover that
well as incremental growth in traffic. As a the more routes they outsource to the hub
result, what might first appear to be a minor provider, the more they can increase their
contributor to the Roaming Department revenue “take” from their inbound traffic.
PL account belonging to a mobile In the end, what started out as a simple

34

exercise to offload a handful of “awkward” Real-world examples of this problem
destinations soon becomes a full-scale are currently being addressed. Efforts to
outsourcing venture. resolve this effectively will naturally require
flexibility on behalf of both operators and
hub providers.
Growing revenues
In summary, in just over ten years subscrib-
The financial ecosystem surrounding ers’ need for global two-way communication
cross-border P2P SMS is a complex matrix via SMS has become the fundamental driver
of MO charges and MT payments. For hub of mobile network data revenues. While
providers, managing this is well worth the domestic interworking is mainly addressed
effort as long as they can continue to make through bilateral relationships, cross-border
a margin on the connectivity services they traffic is increasingly being routed through
provide. In view of this dynamic, traffic the established, peered hubs. Though this
through hubs will continue to grow. Impor- trend is a consequence of the expedient and
tantly, the opportunities for operators to effective solution that a hub connection can
cultivate a worthwhile revenue stream will provide, the opportunity to develop a new
also grow in parallel. and worthwhile revenue stream is now —
more than ever — an incentive for operators
However, it’s worth noting that outsourcing to subscribe to the hubbing model.
can impact the revenues operators poten-
tially gain from their bulk messaging (or
“enterprise messaging”) business. This is A 20-year veteran of the information systems
business (both fixed and mobile), Robert Rose
because outsourcing all messaging traffic
began working in the mobile industry as a con-
means outsourcing bulk messaging as well. sultant to British Telecom’s mobile operations
subsidiary Cellnet. Since 2004 Robert has
By way of background, this traffic would guided SAP Mobile Services’s international
have been reliant on the prior, direct development in P2P messaging services.
connect, bilateral routes. Obviously, in
cases where these are replaced by a hub’s
connections for P2P business, the non-P2P
traffic needs to secure its own routing and,
potentially, its own commercial agreements.



Latin America Offers Big
sms Opportunites

From the rural regions, where farmers SMS leads the pack
and small businesses use mobile to
Interestingly, this revolution also brings a
manage their workday, to exciting city
boost to text messaging services. But it’s
centres where youth — in particular— not just about operator services allowing
rely on mobile to connect with friends people with ordinary feature phones to
and family 24/7, Latin America is communicate. Analysts note that text
messaging continues to provide a solid
more connected than ever before.
foundation for a wide range of services,
In fact, making or receiving a call or text from banking to basic education, to
message in Latin America has never been widening access to health information.
easier. A new report titled Maximising Against this backdrop, it is clear markets
Mobile, the third in a series on Information like Latin America — not the more devel-
and Communications for Development oped markets of Europe and North
published by the World Bank, reveals that America — will lead messaging growth
nearly 98 percent of the region’s population and innovation.
have mobile cell signal and 84 percent of
households use a mobile service. Feature phones are the focus because Latin
America’s smartphone market is still in its
On average 81 percent of subscriptions in infancy. Research firm Pyramid Research
Latin America are prepaid. Understandably, reports that the smartphone segment in
many in the region use mobile phones to Latin America will grow to 48 million in 2014.
make voice calls, averaging 141 minutes of This is a marked increase, but doesn’t
talk-time a month. In most markets the vast negate the fact that Latin America continues
majority of users (97 percent in Argentina, for to lag behind the rest of the world in smart-
example) regularly use SMS to communicate. phone adoption.

Clearly, the level of growth in mobile usage But this gap also offers mobile operators
will continue, expanding into ever more a tremendous opportunity to wring more
rural areas across Latin America. It marks value out of text messaging. Ironically, it is
what the report calls “the beginning of the also the low penetration of smartphones
mobile revolution.” that has kept over-the-top (OTT) players

36

Maximising mobile for development

Growth of global mobile subscriptions World’s population with mobile cell signal

2000 Over 6 billion
71% 29% 0.7 billion 2003
61% mobile subscriptions
subscriptions worldwide
2010
23% 77% 5.9 billion
2010 75% of the World
subscriptions now has access to
90%
High-income countries Developing countries a mobile phone

Rise of non-voice mobile usage
% National population
96
89
82 49
72 72
61 58
48
38
31 29 26
18 22 19
10 15
KENYA MEXICO INDIA INDONESIA EGYPT UKRAINE
(ARAB REP)
Send text message Take pictures or video with mobile Use mobile internet

Pace of mobile phones spread globally
(billions)
The number of mobile subscriptions will soon take over the world’s population
Fixed-line
8 subscriptions
2002 There are over 1 billion mobile subscriptions, passing fixed-line users Global
population
6
1978 First commerical cellular mobile services established

4
1961 85 years later, fixed-line subscriptions
reach 100 million
2
1876 Alexander Graham Bell holds the first Mobile
two-way telephone conversation subscriptions
0
1875 1900 1925 1950 1975 2000 2011 2015
Figure 1: Based on data from Infodev. www.infodev.org/en/Document.1178.pdf


at bay. This, in turn, has slowed the advance Personal Paraguay, a leading mobile
of messaging apps that enable smartphone operator in Paraguay and part of Personal
users to send unlimited free messages to Telecom group, has extended its
their friends. These OTT messaging apps international SMS coverage to reap
such as WhatsApp, Viber and Apple’s significant business benefits. “SMS is an
iMessage are cannibalising SMS revenue important part of how our customers
and changing the way mobile users comm- communicate,” notes Miguel Ruiz, Personal
unicate with their peers. Paraguay Roaming Manager. “Our cust-
omers want to be in touch with friends,
This is not the case in Latin America, family and colleagues whether they are in
according to ABI Research, developed the same neighborhood, or living in a
markets have experienced a marked different country.”
decrease in SMS sent because of the rise
of OTT alternatives, but the drop in regions More importantly, customers expect their
such as Latin America and Africa is not text message communications to be
as significant. dependable and robust. “To achieve these
SMS connections is a huge task that
requires negotiations with operators and
International SMS requirements technical tests to ensure SMS quality and
reliability,” Ruiz explains. To streamline the
Clearly, feature phones have several process and deliver customers the service
more years to thrive in Latin America. This they expect, Personal Paraguay has teamed
provides operators a window of opportunity up with SAP Mobile Services. “The hub SMS
to generate strong revenues from their service helps us to have complete coverage
domestic and international SMS offerings. with all operators in North America, the U.S.,
The international SMS business, for example, Canada and Mexico, as well as operators
provides operators with the potential to drive across LATAM, Europe, Asia and Africa.”
significant volume and earn hefty margins.
Opening new international routes, securing SMS hubbing also allows Personal Paraguay
two-way service for their customers and the capabilities to cater to the portion of its
marketing attractive bundle packages are customer base that are Paraguay citizens
also part of a strategy that would certainly living and working in neighboring Argentina.
help improve the bottom line. “About 1.5 million Paraguayan people have

38

Against this backdrop, it is clear markets like Latin
America — not the more developed markets of
Europe and North America — will lead messaging
growth and innovation.

emigrated to Argentina, and they want to To take advantage of this robust growth
be in contact with friends and family in an in text messaging mobile operators are
affordable way,” Ruiz says. The answer is also migrating to more flexible pricing
International SMS, a popular service that to encourage use and to appeal to new
also represents an important differentiator. customer segments. A prime example is
In a nutshell, the service allows customers Tigo Colombia, a mobile operator that is
to send an SMS to a Telecom Personal developing a new approach to enable users
Argentina customer and be charged the to do what they want most: communicate
same rate as a local SMS. “There are a lot with family and friends in other countries
of opportunities to be gained by offering at affordable prices, observes Juan Felipe
customers services that pair a simple way Velasquez, Latam International Roaming
of communication with reasonable tariffs.” Coordinator at Tigo Colombia.

At a deeper level, Tigo Colombia’s business
Attractive pricing model is based on partnership to ensure
access to key capabilities and technologies.
SMS is expected to continue accounting According to Velasquez, the decision to
for a major proportion of value-added cooperate with SAP Mobile Services is
services revenue as services like banking, driven by the internal requirement to keep
mobile money and M2M gain traction. pace with innovation. “Many times we fail
Another driver is social media, the pastime to seize opportunities because technology
and passion of nearly 100 percent of the changes so fast and we sometimes
Latin American population using mobile neglect segments that do not have access
or Internet, according to comScore. While to new technologies.”
social media isn’t a new phenomenon, the
growth is phenomenal.


Exciting opportunities ahead Velasquez is also bullish about the outlook
for value-added services that harness SMS
What are the highest areas of opportunity in new ways. Chief among these is M2M. As
on the operator agenda? he puts it: “I think that the next step in our
industry is machine-to-machine, where we
Personal Paraguay’s Ruiz is squarely can connect all the machines with machines
focused on extracting more value out of — and with the people managing them —
offering a wide variety of packages with around the world with simple SMS.”
truly personal communications at the core.
Whether it’s person-to-person or machine-
“Our slogan is ‘Cada Persona es un mundo to-machine, it’s clear that messaging is king.
— Each person is a world.’ This means
delivering each customer the services and A promising and fast-growing service that
bundles that are in tune with their lives. They should not be ignored is A2P, or Application-
are at the center.” Looking ahead, Personal To-Person messaging. In this scenario, soft-
Paraguay is also planning to deploy LTE/4G ware applications and organisations, such
“with IPX to support new services” that as enterprises and governments, establish
satisfy customer requirements for quality, a one or two-way communication channel
coverage and convenience. with people using SMS.

Tigo’s Velasquez says he is also looking The revenue potential is significant. Accord-
to a future where continued cooperation ing to a study published by Portio Research
between the stakeholders — operators, Ltd, a research firm based in the U.K., for
suppliers and users — creates a win-win the period 2011-2016 worldwide A2P SMS
for everyone. Additionally, it is important revenue is expected to outpace Person-
to add these services onto an IPX, where To-Person (P2P) SMS revenue and grow at
connectivity meets users’ needs for quality a CAGR of 13.1 percent.
and desire to communicate on their terms.

Looking ahead, Personal Paraguay is also
planning to deploy LTE/4G “with IPX to
support new services” that satisfy customer
requirements for quality, coverage and convenience.

40

Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities

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Mobile Operator Guide 2013 The Evolution of Mobile Services: Challenges, Strategies, Opportunities