Mobile Operator Guide 2013 - Prepaid MVNO
Mobile Operator Guide 2013 - Prepaid MVNO
Mobile Operator Guide 2013 - Prepaid MVNO
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SAP <strong>Mobile</strong> Services<br />
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong><br />
The Evolution of <strong>Mobile</strong> Services:<br />
Challenges, Strategies, Opportunities
SAP <strong>Mobile</strong> Services<br />
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong><br />
The Evolution of <strong>Mobile</strong> Services:<br />
Challenges, Strategies, Opportunities
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong><br />
The Evolution of <strong>Mobile</strong> Services: Challenges, Strategies, Opportunities<br />
Published by Sybase, an SAP Company<br />
Sybase, One Sybase Drive, Dublin, CA 94568-7902, U.S.A.<br />
© <strong>2013</strong> SAP AG or an SAP affiliate company. All rights reserved.<br />
No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG.<br />
The information contained herein may be changed without prior notice.<br />
Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors.<br />
National product specifications may vary.<br />
These materials are provided by SAP AG and its affiliated companies ("SAP Group") for informational purposes only, without representation or<br />
warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group<br />
products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing<br />
herein should be construed as constituting an additional warranty.<br />
SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG<br />
in Germany and other countries. Please see http://www.sap.com/corporate-en/legal/copyright/index.epx#trademark for additional trademark<br />
information and notices.<br />
Library of Congress Cataloging-in-Publication Data<br />
SAP <strong>Mobile</strong> Services<br />
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong>, The Evolution of <strong>Mobile</strong> Services: Challenges, Strategies, Opportunities<br />
Edited by Peggy Anne Salz<br />
p. cm.<br />
ISBN 978-0-9885886-2-2<br />
1.<strong>Mobile</strong> technology.<br />
Library of Congress Control Number: # 2012953199<br />
Printed in the United States of America<br />
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<br />
by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.
Table of Contents<br />
10 FOREWARD<br />
By John Sims, President, SAP <strong>Mobile</strong> Services<br />
13 PART 1: INTRODUCTION : A WEALTH OF OPPORTUNITIES<br />
14 Mapping A New World For <strong>Mobile</strong> <strong>Operator</strong>s<br />
By John Sims, President, SAP <strong>Mobile</strong> Services<br />
18 Driving Growth In The Digital Economy<br />
By Stephan Gatien, Global Lead, Telecommunications Business Unit, SAP and<br />
Jens Amail, Senior Vice President and General Manager for Services, SAP<br />
25 PART 2: STRATEGIES FOR DRIVING REVENUE<br />
26 Long Live SMS<br />
Text messaging continues to grow from strength to strength as new services and<br />
paradigms around mobile marketing and mobile apps drive volumes and usage.<br />
By William Dudley, Group Director, Product Management, SAP <strong>Mobile</strong> Services<br />
33 Moving To The SMS Hubbing Model<br />
<strong>Operator</strong>s are recognising that SMS hubbing is not just about connectivity; it can<br />
ease the management burden around cross-border messaging traffic.<br />
By Robert Rose, Senior Director, Global <strong>Operator</strong> Services, SAP <strong>Mobile</strong> Services<br />
36 Latin America Offers Big SMS Opportunities<br />
Personal Paraguay and Tigo Colombia discuss local market requirements and weigh<br />
on the tremendous opportunities and innovation that are driving SMS growth.<br />
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43 Cybersafety: Everyone’s Responsibility<br />
The Cyber Information Sharing and Protection Act addresses how information<br />
should be shared between private companies and the government to catch malicious<br />
actors breaching networks to steal information or sabotage systems.<br />
By Steve Largent, President & CEO, CTIA-The Wireless Association<br />
48 Does The Future Of <strong>Mobile</strong> Security Lie In The Past?<br />
Text messages are a powerful vehicle for reaching people — but they are also<br />
increasingly the starting point for malware attacks.<br />
By Mary Landesman, Senior Security Researcher, Cloudmark<br />
53 <strong>Mobile</strong> Number Portability: Increasing Competition And Driving Value<br />
<strong>Mobile</strong> Number Portability has come a long way since it was implemented in the 1990s,<br />
but it now confronts mobile operators with a variety of commercial challenges.<br />
By Mitul Ruparelia, Director of Sales Engineering (EMEA and LATAM), SAP <strong>Mobile</strong> Services<br />
58 Intelligent Hubbing: Easing International SMS Routing Complexity<br />
A comprehensive checklist and solid advice aimed at helping operators remove<br />
the complexity around establishing and managing SMS routing.<br />
By Mark Weait, Vice President Sales, SAP <strong>Mobile</strong> Services<br />
63 Orchestrating Capabilities Delivers High Performance<br />
Bharti Airtel details the strategy that has allowed it to spread its wings across<br />
the African continent, lay the groundwork for value-added services and deliver<br />
high volume at low cost.<br />
By N. Arjun, Chief of Projects & Transformation, Bharti Airtel<br />
68 PART 3: IPX: INTERCONNECTING OPERATORS FOR UNLIMITED<br />
OPPORTUNITIES<br />
69 Bundling Services Makes Business Sense<br />
Korea Telecom discusses the importance of Voice over IPX in its larger strategy to<br />
future-proof its network, ensure end-to-end quality of service and grow its wholesale<br />
business. Interview with Incheul Park, Head of Wholesale Team, Global Business Unit,<br />
Korea Telecom<br />
4
74 Expanding Voice Connectivity Via IPX: An <strong>Operator</strong> Perspective<br />
In the Philippines Globe Telecom is embarking on an ambitious network change to<br />
deliver customer benefit by making cross regional interconnectivity better and easier.<br />
By Gil Genio, Head of International and Business Markets, Globe Telecom, Inc.<br />
78 The Value Of A True IPX<br />
<strong>Mobile</strong> <strong>Operator</strong>s can best leverage the full benefits and economies of scale that<br />
IPX provides if they look beyond just offering basic services, such as voice and data<br />
roaming, and focus on delivering the services their customers will demand next.<br />
By John Candish, Senior Director, IPX Business, SAP <strong>Mobile</strong> Services and<br />
William Dudley, Group Director, Product Management, SAP <strong>Mobile</strong> Services<br />
83 Nine Ways To Get More Value Out Of IPX<br />
IPX offers tremendous value and here are 9 things operators need to do to ensure<br />
they can reap and maximise the benefits.<br />
By John Candish, Senior Director, IPX Business SAP <strong>Mobile</strong> Services<br />
86 Making The Right Connections<br />
SingTel recounts the lessons, learnings and results of its recent IPX trial, the first<br />
step in a private international network connecting all the Group companies.<br />
Interview with David Ng — Vice President, Regional Technical, of SingTel’s<br />
International team in the Group Consumer organization<br />
91 A Brave New All-IP World<br />
When it comes to IPX, peering among IPX providers is an essential element because<br />
it is the enabler of global reachability.<br />
By Elena Sacco, Chairman of the IWG at the GSMA and Senior Interconnect Manager, TIM<br />
94 Boosting Trust, Building Business<br />
In countries like Africa IPX does more than provide interconnectivity; it also meets the<br />
needs of local telecommunications authorities for transparency and accountability.<br />
By Ranjeet Wilkhu, Director, Neucom Solutions<br />
98 Voice: The IPX Killer App<br />
A candid view of the many benefits IPX provides. While many focus on future<br />
scenarios around LTE roaming, PCCW outlines how IPX can already enhance voice.<br />
By Richard Midgett, Managing Director – Wireless Business, PCCW<br />
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104 PART 4: LTE: UNLEASHING INNOVATION TO DELIVER RESULTS<br />
105 Enabling 4G LTE For ALL<br />
MetroPCS discusses its early decision to deploy LTE and how this head start on<br />
the competition has allowed the U.S. operator to scale its business and satisfy its<br />
customers with value-driven services.<br />
By Ed Chao, Senior Vice President, Engineering and Network Operations, MetroPCS<br />
111 Fighting Smart To Win Big<br />
A clever approach harnessing RCS will allow operators to compete with OTT players<br />
with new services such as group instant messaging or chat, live video sharing and file<br />
transfer across any device, on any network, with anyone in a mobile address book.<br />
By Madan Jagernauth, Vice President, Marketing & Strategy, Mavenir Systems<br />
117 Positioning LTE For Success<br />
Research and insights brings clarity into the industry discussion about LTE, the<br />
benefits it delivers and reasons why operators take the lead in educating consumers.<br />
By Declan Lonergan, Research VP, Yankee Group<br />
124 Breaking Down Borders: Getting The Most Out Of LTE Roaming<br />
LTE is reaching a stage of maturity where technology is no longer a barrier to<br />
deployment, so now it’s up to mobile operators to architect the strategies that<br />
will leverage the complete range of benefits.<br />
By James Middleton, Managing Editor, Telecoms.com<br />
127 Video Communications: “A Perfect Storm”<br />
Consumer use of video has entered a new phase of growth, driven by devices,<br />
services and networks built to support it. But the wave of interest in mobile<br />
video could overwhelm service providers.<br />
By Ramsey Masri, Vice President, Sales & Alliances, Aylus Networks<br />
134 Enabling Roaming Across LTE Networks<br />
LTE will enable new services, but it will also put high demands on the data roaming<br />
backbone and require more bandwidth and resilient network connectivity.<br />
By Matthew Tonkin, Global Head, IPX Business, SAP <strong>Mobile</strong> Services<br />
6
138 LTE Roaming In Latin America: Conditions For Success<br />
The deployment of LTE across Latin America brings with it a host of benefits and<br />
equips operators to address the spectrum limitations facing their networks.<br />
By Alejandro Martinez, Chairman, Billing & Roaming Working Group (BARG), GSMA LA<br />
142 LTE: New Technology Boosts New Business<br />
A review of the business models, approaches and services, such as mobile video<br />
calling, that will allow operators to drive even more revenue out of their costly<br />
LTE investments.<br />
By Michel Van Veen, Group Manager, Product Management, SAP <strong>Mobile</strong> Services<br />
147 PART 5: OTT: OPEN THREAT OR HIDDEN OPPORTUNITY<br />
148 OTT Threat: Top Strategies To Fight Smart<br />
Learn from real-life examples, including KPN and China <strong>Mobile</strong>, about the real impact of<br />
OTT services on voice and messaging revenues and how mobile operators turn the tide.<br />
By Pamela Clark Dickson, Senior Analyst, <strong>Mobile</strong> Content & Applications Intelligence<br />
Center, Informa Telecoms & Media<br />
156 Evaluating Strategies To Face OTT Providers<br />
<strong>Operator</strong>s need to be more digital. Does Telefónica Digital, a unit aimed at developing<br />
new applications and business models for mobile technology show the way?<br />
By Eusebio Felguera, Corporate Regulatory Manager, Telefónica<br />
161 NUVOs: An Alternative To Disruptive OTT<br />
Not all OTT apps threaten mobile operator revenues. Network Unaffiliated Virtual<br />
<strong>Operator</strong>s (NUVOs) actually benefit operators and boost their business.<br />
By Austin Murray, Founder & President, textPlus<br />
166 OTT Ecosystem: Paving The Way For Opportunity<br />
The inevitable arrival of an all-IP world also reinforces the needs for deeper partnerships<br />
between operators and OTT players. MediaFriends discusses apps and<br />
approaches showing the way.<br />
By Gene Lew, CTO, MediaFriends<br />
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172 PART 6: UNLEASHING THE POWER OF MOBILE COMMERCE<br />
173 <strong>Mobile</strong> Money For The Masses<br />
Qtel has made its mark with its <strong>Mobile</strong> Money services and an innovative self-serve<br />
approach that meets the needs of both migrant workers and affluent customers.<br />
By Richard Morecroft, Assistant Director <strong>Mobile</strong> Money, Qtel<br />
179 Driving <strong>Mobile</strong> Money Usage In Unbanked Regions<br />
Driving customer adoption and increasing activation rates in mobile money is no<br />
easy task. The key is proper audience segmentation and a sharp focus on customer<br />
education.<br />
By Yasmina McCarty, Senior Manager, GSMA MMU<br />
184 Blueprint For A Successful Remittance Service<br />
A review of the mobile remittance services available today reveals a variety of<br />
different approaches to tackle the challenges of sign-up, cash-in and cash-out.<br />
By Diarmuid Mallon, Head of Global <strong>Mobile</strong> Marketing Programs, Programs &<br />
Demand Generation, SAP<br />
190 <strong>Operator</strong>s: Tap Your Strategic Assets<br />
<strong>Mobile</strong> operators might only have scratched the surface when it comes to<br />
understanding their true potential to accelerate and enhance the mobile<br />
payments and commerce experience for consumers everywhere.<br />
By Aditya Kurejkar, Co-Founder and Program Director, Money2020<br />
194 <strong>Mobile</strong> Commerce Opportunities For <strong>Operator</strong>s<br />
Building and deploying a successful mobile payment service requires operators<br />
to consider a wide range of variables, from business models to local telecom<br />
and financial regulations.<br />
By Matthew Talbot, Senior Vice President, <strong>Mobile</strong> Commerce, SAP<br />
200 PART 7: LEVERAGING MOBILE TO ACHIEVE LASTING LOYALTY<br />
201 Perception vs Reality: What’s Your <strong>Mobile</strong> Strategy?<br />
The arrival of the empowered consumer turns up pressure on operators and<br />
enterprises to create and implement a comprehensive mobile strategy that is<br />
truly end-to-end, multi-channel and, more importantly, customer-centric.<br />
By Howard Stevens, Senior Vice President, Global Messaging Solutions,<br />
SAP <strong>Mobile</strong> Services<br />
8
205 The Power Of Push<br />
Push notifications also open up new opportunities around customer service<br />
and marketing, allowing mobile operators to deliver simple alerts to the<br />
customer — and trigger the customer to take action.<br />
By Coleen Carey, Director of Product Marketing, Urban Airship<br />
211 Harmonising Touch Points, Technology, Processes And People<br />
Celcom details the milestones and motivations that have helped it evolve its view<br />
of customer experience and sharpen its focus on encouraging lasting loyalty.<br />
By Suresh Sidhu, Chief Corporate and Operations Officer, Celcom Axiata Berhad<br />
215 Ask, Listen And Build Lasting Loyalty<br />
Talk to your customers, and listen to what they say. A successful mCRM program<br />
integrates social interaction, customer engagement and customer feedback.<br />
By Sally Burley, Director, The 3rd Degree<br />
220 Why Customer Engagement Campaigns Pay Dividends<br />
An in-depth look at how mobile changes the rules of engagement, allowing mobile<br />
operators, brands and businesses to maintain continuous customer touch and drive<br />
deeper engagement.<br />
By Gregory Dunn, Vice President, Product Management, SAP <strong>Mobile</strong> Services<br />
228 Glossary Of Terms<br />
234 Index Of Contributor Companies<br />
240 Acknowledgements<br />
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong> The Evolution of <strong>Mobile</strong> Services: Challenges, Strategies, Opportunities<br />
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FOREWORD<br />
Mapping A New World For<br />
<strong>Mobile</strong> <strong>Operator</strong>s<br />
By John Sims, President, SAP <strong>Mobile</strong> Services<br />
IP is changing the game. Advanced<br />
mobile devices, new technologies,<br />
increased competition and a<br />
shift in subscriber expectations<br />
towards truly personal and<br />
relevant interactions are coming<br />
together to cause disruption in the<br />
telecom industry - for operators<br />
and all the companies in their<br />
business ecosystems.<br />
However, the same conditions also spell<br />
massive opportunities for companies<br />
prepared to take charge of change. As one<br />
of the 40+ industry authorities who has<br />
provided insights for this <strong>Guide</strong>, points out:<br />
the rapid pace of change and the interplay<br />
of supply and demand for services that are<br />
aligned with customers’ requirements are<br />
combining to generate the mobile industry’s<br />
own Perfect Storm.<br />
The author in this case was referring to<br />
mobile video communications, where<br />
growth is driven by devices, services and<br />
networks. But mobile video isn’t the only<br />
market segment on the brink of the tipping<br />
point. This <strong>Guide</strong> shows that other services,<br />
such as SMS, LTE, mobile commerce and<br />
mobile customer loyalty, are also entering a<br />
new phase of growth and innovation.<br />
• SMS: While some analyst reports predict<br />
the decline of text messaging, SMS<br />
continues to be the number one data<br />
communications tool and the most<br />
effective direct marketing channel ever<br />
created. In almost all emerging markets it<br />
remains the ubiquitous data service of<br />
choice. In developed markets, the<br />
explosion of mobile apps, a development<br />
which many thought would mark the<br />
death of SMS, has actually pushed<br />
application-to-person (A2P) traffic<br />
growth to a new level. This spells<br />
10
opportunity for mobile operators and<br />
service providers to harness text<br />
messaging to supercharge a variety of<br />
services, ranging from mobile marketing<br />
and mobile advertising, to mobile<br />
commerce and mobile banking.<br />
• LTE: As mobile network operators move<br />
towards 4G/LTE and an all-IP network,<br />
many will cooperate to expand their<br />
network footprint and pave the way for<br />
compelling new services that will delight<br />
customers and drive positive results for<br />
everyone in the ecosystem. The advance<br />
of LTE will also challenge operators to<br />
develop strategies to cooperate with and<br />
enable Over-the-Top players in a manner<br />
that benefits the ecosystem and wrings<br />
new revenues out of operator core capabilities<br />
such as location information,<br />
billing support and network management.<br />
• <strong>Mobile</strong> commerce: From researching<br />
products to making purchases, consumers<br />
are increasingly reaching for their<br />
mobile devices as an essential shopping<br />
companion. At the other end of the<br />
spectrum, and particularly in the underbanked<br />
regions of the world, consumers<br />
are gravitating to services delivered by<br />
mobile operators that have expertly<br />
leveraged their distribution channels,<br />
retail presence and trust to expand and<br />
enhance mobile money and mobile<br />
banking services. Now it’s up to mobile<br />
operators to map out comprehensive<br />
strategies that cultivate partnerships<br />
with key players, such as banks, and<br />
adapt to local market conditions, such<br />
as regulations, demographics, and the<br />
emergence of new remittance corridors.<br />
• <strong>Mobile</strong> loyalty: Because mobile is a<br />
fiercely personal device, it’s an ideal<br />
means to reach customers on every step<br />
of their daily journey to encourage interaction<br />
and deepen engagement. Whether<br />
operators and marketers choose to<br />
harness text messaging, new forms of<br />
IP-based messaging, mobile web or<br />
mobile apps (or all in combination) they<br />
can clearly leverage mobile as a channel<br />
to boost customer loyalty and recruit true<br />
brand advocates. However, just as in reallife,<br />
building a relationship is about talking<br />
and listening, and that’s why companies<br />
must develop mobile loyalty programs<br />
that effectively do both.<br />
This inaugural edition of the <strong>Mobile</strong><br />
<strong>Operator</strong> <strong>Guide</strong> features the insights of<br />
industry thought leaders and innovators to<br />
identify market trends, best practices and<br />
key lessons learned in deploying mobile<br />
services. The purpose of this industry<br />
knowledge resource is to provide readers<br />
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong> The Evolution of <strong>Mobile</strong> Services: Challenges, Strategies, Opportunities<br />
11
clear direction and critical information,<br />
equipping them to develop strategies to<br />
drive messaging revenue, deploy cost saving<br />
solutions, generate new revenue streams<br />
from mobile commerce, build loyalty<br />
through customer engagement programs,<br />
plan for LTE roaming through IPX adoption<br />
and maintain competitive advantage in an<br />
IP-based world.<br />
The onward march of next-generation<br />
services into daily life has created a new<br />
world order in the telecoms industry.<br />
Think of this <strong>Guide</strong> as a starting point to a<br />
roadmap, one that will allow you to plot the<br />
transformational path your business needs<br />
to follow to succeed in this exciting new<br />
digital economy.<br />
12
PART ONE: INTRODUCTION<br />
A WEALTH OF OPPORTUNITIES
PART ONE: INTRODUCTION: A WEALTH OF OPPORTUNITIES<br />
Mapping A New World For<br />
<strong>Mobile</strong> <strong>Operator</strong>s<br />
By John Sims, President, SAP <strong>Mobile</strong> Services<br />
What a difference a decade makes.<br />
You need only go back that far to<br />
find the “early days” of mobile<br />
network operators’ journey with<br />
mobile data, comparatively speaking,<br />
a world that hardly compares<br />
to today’s landscape. Amid the<br />
far-reaching changes that have<br />
taken hold since then, the complexity<br />
that now distinguishes<br />
operator services brings with it<br />
a rich abundance of opportunities<br />
to those who are forward-thinking<br />
and adaptive in their strategies<br />
and capabilities.<br />
A decade or so ago, an operator’s world<br />
revolved almost exclusively around voice.<br />
In an environment of minimal competition,<br />
product offerings were comparatively<br />
straightforward, with “all-you-can-eat”<br />
pricing plans the industry standard. It<br />
seems like a long time ago, but it was only<br />
in 2001 that the first inter-operator SMS<br />
messages were delivered in the U.S., with<br />
SAP <strong>Mobile</strong> Services launching the first<br />
inter-operator SMS messaging hub in<br />
concert with AT&T Wireless. More significantly,<br />
during those formative years,<br />
operators took a walled-garden approach<br />
to mobile data, with services delivered<br />
within a closed ecosystem – a far cry from<br />
the interoperable, pan-operator network<br />
topology that has evolved since then.<br />
From that initial “closed system” approach,<br />
rapidly advancing technology and the<br />
explosive growth of international travel by<br />
globe-trotting executives and power users<br />
contributed to the dramatic changes we<br />
have seen take root since then. The eclipse<br />
“ As the cost of spectrum and the pace at which<br />
new network technologies needed to be deployed<br />
rose, operators needed to consider cooperative<br />
arrangements with their fellow operators,<br />
something that would not have previously<br />
been on the table.”<br />
14
Table 1: Global mobile data growth today is similar to global internet growth<br />
in the late 1990s<br />
Global internet traffic growth (fixed)<br />
Global mobile data traffic growth<br />
1997 178% 2009 140%<br />
1998 124% 2010 159%<br />
1999 128% 2011 133%<br />
2000 195% 2012 (estimate) 110%<br />
2001 133% <strong>2013</strong> (estimate) 90%<br />
2002 103% 2014 (estimate) 78%<br />
Figure 1: Based on data from Cisco. Cisco Visual Networking Index <strong>Mobile</strong> 2012<br />
www.slideshare.net/CiscoSP360/cisco-visual-networking-index-vni-global-mobile-data-traffic-forecast-20112016<br />
of voice by data, accompanied by the advent<br />
of successively more powerful generations<br />
of network technology leading to 4G, an<br />
all-IP environment, accompanied by today’s<br />
open infrastructure, means operators must<br />
generate profits by significantly rethinking<br />
their business models.<br />
Traditionally, mobile network operators have<br />
owned and controlled everything, including<br />
physical equipment, radio networks, services<br />
infrastructure, devices and user interfaces.<br />
But amid their changing economics,<br />
many have had to rethink this approach.<br />
With the rise of the smartphone, driven by<br />
the iPhone and Android devices,<br />
it was clear that mobile network operators<br />
could no longer dictate the user interface.<br />
As the cost of spectrum and the pace at<br />
which new network technologies needed<br />
to be deployed rose, operators needed to<br />
consider cooperative arrangements with<br />
their fellow operators, something that<br />
would not have previously been on the table.<br />
In addition, in order to accelerate the advance<br />
of the network effect for new services,<br />
operators in some countries have come<br />
together in joint ventures or cooperatives to<br />
lower their costs and seed the market with<br />
new service technologies – for example, the<br />
Isis joint venture in the United States or the<br />
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong> The Evolution of <strong>Mobile</strong> Services: Challenges, Strategies, Opportunities<br />
15
proposed mobile payments venture among<br />
operators in the United Kingdom.<br />
To a certain degree this kind of thinking<br />
has been accelerated by operators’ need<br />
to compete against Internet-based players,<br />
which have arrived in the mobile space as<br />
creative and formidable competitors. It also<br />
marks a realisation by many mobile network<br />
operators that their future success depends<br />
more upon the innovative services that they<br />
offer subscribers than it does on the underlying<br />
network technology – a substantial<br />
shift in emphasis.<br />
So, as mobile network operators move<br />
towards 4G/LTE and an all-IP network,<br />
many will cooperate to achieve a more rapid<br />
and ubiquitous network footprint that will<br />
allow them to offer compelling new services<br />
that will capture the imagination of their<br />
subscribers. In doing so, they will compete<br />
against other mobile network operators,<br />
but they will also have to operate in a much<br />
faster cycle of innovation that will allow them<br />
to fiercely defend their franchises against the<br />
threat from the Internet-based companies<br />
or so-called Over-The-Top (OTT) players. As<br />
part of their strategy, operators will want to<br />
not only create a strong domestic footprint;<br />
they will also look to extend this to a global<br />
level, much as they have done over the past<br />
decade or so with SMS.<br />
This is precisely where SAP <strong>Mobile</strong> Services<br />
provides the most critical value. We are<br />
delivering the world-class interoperability<br />
and reach that comes with our role as an<br />
independent custodian residing between<br />
and among operators. It is a role that<br />
demands a truly holistic level of visibility –<br />
horizontally, across geographies spanning<br />
the Americas, Europe, the Middle East,<br />
Africa and Asia, and vertically, providing the<br />
technology and connectivity required to<br />
ensure that today’s ever-expanding operator<br />
ecosystem continues to flourish. Most<br />
importantly, SAP <strong>Mobile</strong> Services possesses<br />
the vision and resources to realise its custodial<br />
role in every dimension.<br />
“ The advent of a new world for operators follows<br />
decades of incremental improvements<br />
punctuated by breakthrough technologies.”<br />
16
This inaugural edition of the <strong>Mobile</strong><br />
<strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong>, The Evolution of<br />
<strong>Mobile</strong> Services: Challenges, Strategies,<br />
Opportunities provides a rich taste of the<br />
bold new world that has materialised and<br />
continues to take shape. Inside, our expert<br />
stable of authors delve into the current state<br />
of play and the most important emerging<br />
issues in operator services, including:<br />
• <strong>Operator</strong> strategies for driving and<br />
optimising messaging revenue<br />
• Roaming and interconnect issues,<br />
including the interplay of LTE in an<br />
IPX environment<br />
• OTT Messaging, voice and video services,<br />
including managing the challenges confronting<br />
operators in a BYOD (Bring Your<br />
Own Device) world<br />
• <strong>Mobile</strong> commerce and the myriad of<br />
opportunities for operators<br />
• Customer engagement, including a<br />
roadmap for building loyalty by<br />
empowering customers.<br />
The advent of a new world for operators<br />
follows decades of incremental improvements<br />
punctuated by break-through<br />
technologies. The result has been a new<br />
paradigm for communication. All of us at<br />
SAP <strong>Mobile</strong> Services are working with<br />
diligence and with our eyes on the future<br />
to enable all participants in the value chain<br />
to experience the unprecedented power,<br />
ease and benefits of this new world of interoperability,<br />
reach and global interaction.<br />
John Sims is President of SAP <strong>Mobile</strong><br />
Services, the recognised global leader in<br />
mobile messaging and interconnect services.<br />
He has more than 20 years experience<br />
with companies supplying technology and<br />
solutions to mobile operators. Sims has<br />
been recognised with the prestigious Ernst<br />
& Young Entrepreneur of the Year Award in<br />
the communications category. He is also a<br />
member of the Board of Directors of CTIA<br />
and has been a speaker and panellist at<br />
numerous industry events.<br />
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17
PART ONE: INTRODUCTION: A WEALTH OF OPPORTUNITIES<br />
Driving Growth In The<br />
Digital Economy<br />
By Stephan Gatien, Global Lead, Telecommunications Business Unit, SAP<br />
and Jens Amail, Senior Vice President and General Manager for Services, SAP<br />
In July 2012, just before the<br />
London 2012 Olympics, no one<br />
could have imagined that one of<br />
the first headlines in the mainstream<br />
press would be about the<br />
local mobile networks’ bandwidth<br />
problems. But this is precisely<br />
what happened shortly after the<br />
Games opened.<br />
After having encouraged athletes and fans<br />
to tweet freely, Twitter was blamed for<br />
disrupting the coverage of the cycling road<br />
race. Ironically, the sheer volume of mobile<br />
social traffic along the course was so overwhelming<br />
that it even interfered with the<br />
GPS and telemetry updates from the race,<br />
which left those covering the games without<br />
information on positions and timings.<br />
This twist of fate was a perfect metaphor<br />
for the dilemma and challenges faced by<br />
communications service providers today.<br />
On one hand, the success of smartphones<br />
has led to increased data activities, with<br />
subscribers happily clocking time to play<br />
games, watch videos, post on social sites,<br />
tweet and send text messages. This phenomenon<br />
has contributed to the decline of<br />
revenues from voice services, once the cash<br />
cow of the entire industry without really<br />
offsetting it to date.<br />
On the other hand, costs to provide<br />
adequate network infrastructure to support<br />
this explosion of data traffic are on the rise.<br />
As the 2012 Olympic Games in London<br />
showed, the infrastructure available still<br />
cannot always handle the load and meet<br />
expectations for connectivity and reliability.<br />
Granted, network upgrade investments<br />
represent a heavy financial burden for all<br />
players in the ecosystem. However, these<br />
network investments are essential building<br />
blocks for future services and business<br />
models. In fact, <strong>2013</strong> is widely expected to<br />
be a blockbuster year for infrastructure<br />
<strong>2013</strong> is widely expected to be a blockbuster year<br />
for infrastructure spending, with a large number of<br />
operators aggressively expanding their LTE networks.<br />
18
London Olympics - UK SMS traffic<br />
(Times are local to London - August 6 - 8)<br />
+18%<br />
+ 46% +8%<br />
+10%<br />
August 8<br />
August 7<br />
August 6<br />
Figure 1: Based on data from SAP.<br />
London Olympics - UK SMS traffic<br />
(Times are local to London - August 1 - August 5)<br />
+36% - 14:20:<br />
UK’s Andy Murray<br />
beats Roger Federer<br />
for gold in tennis<br />
+46% - 18:20:<br />
Men’s team cycling<br />
sprint - UK wins gold<br />
August 3<br />
August 4<br />
August 2<br />
August 1<br />
August 5<br />
1:30<br />
2:30<br />
3:30<br />
4:30<br />
5:30<br />
6:30<br />
7:30<br />
8:30<br />
9:30<br />
10:30<br />
11:30<br />
12:30<br />
13:30<br />
14:30<br />
15:30<br />
16:30<br />
17:30<br />
18:30<br />
19:30<br />
20:30<br />
21:30<br />
22:30<br />
23:30<br />
0:30<br />
1:30<br />
2:30<br />
3:30<br />
4:30<br />
5:30<br />
6:30<br />
7:30<br />
8:30<br />
9:30<br />
10:30<br />
11:30<br />
12:30<br />
13:30<br />
14:30<br />
15:30<br />
16:30<br />
17:30<br />
18:30<br />
19:30<br />
20:30<br />
21:30<br />
22:30<br />
23:30<br />
0:30<br />
Figure 2: Based on data from SAP.<br />
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19
London Olympics - UK SMS traffic<br />
(Times are local to London - July 27 - July 31)<br />
+36%: 21:10:<br />
USA wins gold<br />
in Men’s 4 x 200m<br />
freestyle relay (swimming)<br />
July 27<br />
July 28<br />
July 29<br />
July 30<br />
July 31<br />
1:30<br />
2:30<br />
3:30<br />
4:30<br />
5:30<br />
6:30<br />
7:30<br />
8:30<br />
9:30<br />
10:30<br />
11:30<br />
12:30<br />
13:30<br />
14:30<br />
15:30<br />
16:30<br />
17:30<br />
18:30<br />
19:30<br />
20:30<br />
21:30<br />
22:30<br />
23:30<br />
0:30<br />
Figure 3: Based on data from SAP.<br />
spending, with a large number of operators<br />
aggressively expanding their LTE networks.<br />
Tough competition<br />
Voice and Skype — allow messaging and<br />
VoIP calls between users. While these<br />
free services may have a strong appeal<br />
to customers, they have a decidedly<br />
negative impact on operators’ bottom line.<br />
But network upgrades aren’t the only item<br />
on the business agenda. <strong>Operator</strong>s also<br />
have to develop strategies and capabilities<br />
to compete against new rivals.<br />
Increased penetration of smartphones has<br />
opened the door to powerful and disruptive<br />
actors offering OTT services. These services<br />
— which include Apple’s Facetime, Google<br />
Analysts estimate OTT messaging revenues<br />
as much as $13.9b, or 9% of message<br />
revenue, in 2011. This decline has led some<br />
to wonder whether most incumbent providers<br />
are not facing their “Kodak moment”. By<br />
way of background, Kodak filed for bankruptcy<br />
protection in 2012 after recognizing<br />
its products were obsolete and the competition<br />
was insurmountable. Similarly, mobile<br />
20
UK Olympics - Opening Ceremonies<br />
(UK SMS traffic - 27 July 2012 17:00 - 28 July 2012 03:00)<br />
21:10 +32%<br />
Ceremony begins<br />
22:30 -22:40: +137%<br />
Team Great Britain<br />
enters the stadium<br />
during Parade of Nations<br />
23:50 +56% official<br />
opening of games<br />
Queen’s speech<br />
21:40 +40% Rowan<br />
Atkinson “Plays” during<br />
Chariots of Fire<br />
Pre-ceremony -<br />
up to 56% of normal<br />
00:20 +25% IOC<br />
President speaks<br />
Opening<br />
Ceremony<br />
Traffic<br />
Normal<br />
Traffic<br />
17:30<br />
18:00<br />
18:30<br />
19:00<br />
19:30<br />
20:00<br />
20:30<br />
21:00<br />
21:30<br />
22:00<br />
22:30<br />
23:00<br />
23:30<br />
0:00<br />
0:30<br />
1:00<br />
1:30<br />
2:00<br />
2:30<br />
3:00<br />
21:40: +40% The Queen parachutes in 22:30-22:40 +137% Parade of Nations begins<br />
23:50 +56% Team GB enters the stadium.<br />
Figure 4: Based on data from SAP.<br />
players are now struggling to compete<br />
against more agile and innovative newcomer<br />
companies, as well as OTT providers.<br />
<strong>Operator</strong> assets<br />
position of strength and drive profitable<br />
growth in this new era.<br />
First and foremost, operators — because they<br />
are network operators — control the backbone<br />
of the Digital Economy: connectivity.<br />
However, it would be a huge mistake to<br />
count operators out of the Digital Economy<br />
race too soon. <strong>Operator</strong>s own critical assets<br />
they can leverage to build competitive<br />
advantage, establish themselves in a<br />
But owning the network is not enough. To<br />
avoid being relegated to the role of a “dumb<br />
pipe,” operators must also be able to capitalise<br />
on their successful track record of service<br />
delivery, including five 9s service availability.<br />
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21
Porter<br />
strategy<br />
Telco 2.0<br />
strategy<br />
Nature of<br />
smartness<br />
Characteristics<br />
Cost leadership Happy Pipe Smart network Cost efficiency - minimal network,<br />
IT and commerical costs. Simple<br />
utility offering.<br />
Differentiation<br />
Full-service<br />
Telco 2.0<br />
Smart services<br />
Technical and commerical flexibility:<br />
improve customer experience by<br />
integrating network capabilities with<br />
on and third-party services and<br />
charging either end user or service<br />
provider (or both).<br />
Figure 5: Based on data from STL Partners. www.stlpartners.com/telco2_index.php<br />
<strong>Operator</strong>s also have proven security and data<br />
integrity capabilities that will increasingly<br />
appeal to business customers as adoption of<br />
cloud- based models take off.<br />
the conduit between these ‘upstream’<br />
partners and their traditional ‘downstream’<br />
customer base, thus increasing their reach,<br />
presence and value-add.<br />
What’s more, operators also have a long<br />
-standing relationship with their customer<br />
base. This puts them in a unique position to<br />
act as digital service brokers between this<br />
large audience and a multitude of partners<br />
that want to reach this audience with<br />
content, software or new services to offer<br />
via the mobile channel.<br />
Pursuing this model — often referred to as<br />
the Teleco 2.0 model (1) — would allow Communications<br />
Service Providers (CSPs) to be<br />
Finally, CSPs have insights into a vast<br />
quantity of data about their customers,<br />
such as service usage patterns, location<br />
-based activities, roaming history and<br />
on-device behaviour on a daily basis. This<br />
impressive store of customer information<br />
represents a largely untapped monetisation<br />
opportunity for operators in an increasingly<br />
data-centred economy.<br />
So, how do CSPs move forward to implement<br />
the right strategies and — ultimately<br />
FOOTNOTES<br />
1. As originally defined by STL Partners<br />
22
<strong>2013</strong> is widely expected to be a blockbuster year<br />
for infrastructure spending, with a large number of<br />
operators aggressively expanding their LTE networks.<br />
— succeed in the digital era? We believe<br />
they will need to focus on some key areas<br />
to drive profitable growth in the new<br />
Digital Economy.<br />
• CSPs should fully leverage their scale,<br />
superior reliability and service delivery<br />
capabilities, to invest in new business<br />
models in areas such as Cloud and Mobility.<br />
<strong>Operator</strong>s such as China Telecom or<br />
Telstra in Australia have already adopted<br />
this strategy with success. They offer<br />
on-demand business solutions to a<br />
variety of business customer segments,<br />
in particular targeting small and medium<br />
size businesses. Other mobile operators,<br />
such as Rogers Communications in<br />
Canada, are launching business-oriented<br />
mobile app stores. This is part of a larger<br />
effort to become a one-stop shop for<br />
business customers, providing everything<br />
mobility-related, including mobile app<br />
hosting and mobile device management.<br />
• Large providers should also think beyond<br />
connectivity. Telefónica and SingTel are<br />
perfect examples of what operators can<br />
achieve. They have transcended their<br />
traditional organisational boundaries, and<br />
created new digital divisions to seize new<br />
opportunities including mobile commerce<br />
and machine-to-machine communications<br />
(M2M) in order to generate incremental<br />
revenue beyond their traditional services.<br />
Telefónica’s direct to bill initiative is a striking<br />
example of how an operator can leverage<br />
its billing relationship with its mobile<br />
customers to increase sales of digital goods<br />
and services, while learning to partner —<br />
not compete — with OTT players.<br />
The monetisation of subscriber data, in<br />
accordance with privacy laws, is also<br />
emerging as a strong opportunity for CSPs<br />
to grow their revenues. By leveraging the<br />
vast amounts of customer data they own —<br />
in real-time and at scale — CSPs can gain<br />
advantage in two important ways. They can<br />
serve their existing customers more effectively,<br />
and they can also use the customer<br />
information to take advantage of opportunities<br />
in new markets — such as proximity<br />
marketing or mobile advertising — where<br />
customer data is key. To accomplish this<br />
CSPs will need to adopt a highly scalable<br />
foundation suited for the real-time world.<br />
An examination of the results achieved by<br />
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23
However, it would be a huge mistake to count<br />
operators out of the Digital Economy race<br />
too soon. <strong>Operator</strong>s own critical assets they<br />
can leverage to build competitive advantage,<br />
establish themselves in a position of strength<br />
and drive profitable growth in this new era.<br />
T-<strong>Mobile</strong> US, for example, confirms that<br />
an in-memory based platform is very well<br />
suited to provide such a foundation.<br />
Fortune smiles on the brave. It is time for<br />
CSPs to make bold moves to develop their<br />
growth strategy in the digital era. They have<br />
the necessary assets to create new growth<br />
engines and focus on the abundant opportunities<br />
in the Cloud and Mobility markets.<br />
Moreover, operators can innovate and invent<br />
new data-driven business models and<br />
services (such as proximity marketing).<br />
If operators can arm themselves with the<br />
correct capabilities and business models,<br />
they can seize these opportunities, create<br />
lucrative new revenue streams and prosper<br />
from the Digital Economy.<br />
Jens Amail is Senior Vice President and<br />
General Manager for Services Industries at<br />
SAP as well as the Business Unit for Billing,<br />
Revenue and Innovation Management. Prior<br />
to joining SAP in 2008, Jens was with Siemens<br />
Communications for 10+ years in a variety of<br />
Senior Executive and General Management<br />
roles both in Europe and the US. Jens has a<br />
broad cross-functional background in the<br />
Communications Industry with Executive<br />
assignments in Sales, Services, Marketing,<br />
Solution Management and Operations.<br />
Stephan Gatien is a Global Lead within the<br />
Telecommunications Business Unit at SAP<br />
focusing on Business Analytics and Database<br />
& Technology. In that capacity, he is responsible<br />
for the analytics and data platform<br />
strategy in the industry, including SAP HANA,<br />
oversees the related solution activities and<br />
leads the analytics and data platform goto-market<br />
activities globally Prior to joining<br />
SAP, Stephan was with Telus where he held a<br />
variety of management roles in the wireless<br />
division of this Canadian operator.<br />
24
PART TWO<br />
STRATEGIES FOR DRIVING REVENUE
PART TWO: STRATEGIES FOR DRIVING REVENUE<br />
Long Live sms<br />
By William Dudley, Group Director, Product Management, SAP <strong>Mobile</strong> Services<br />
<strong>Mobile</strong> industry watchers have<br />
been predicting the death of the<br />
humble text message for over<br />
a decade, but a raft of recent<br />
research confirms that SMS is<br />
very much alive and kicking.<br />
Marking the 20th anniversary of SMS, U.K.<br />
analyst firm Portio Research points out that<br />
SMS has been very successful, generating<br />
approximately $821 billion for operators<br />
worldwide since it was invented in 1992.<br />
(and do) use their mobile phones to send<br />
and receive text messages.<br />
Veteran mobile author and analyst Tomi<br />
Ahonen estimates people sent a whopping<br />
6.1 trillion text messages in 2011, up from<br />
1.8 trillion in 2007. Meanwhile Informa<br />
Telecoms & Media state that total SMS<br />
traffic will reach 8.7 trillion by 2015, up<br />
from over 5 trillion messages in 2010. In<br />
its newest forecast analyst firm Portio<br />
Research calculates that total traffic will<br />
reach nearly 10 trillion messages by 2015.<br />
Overall, worldwide mobile messaging was<br />
the highest earner in the industry, raking in<br />
$179.2 billion in 2010 alone. Portio Research<br />
forecasts that this total will increase to more<br />
than $280 billion in 2014, and exceed $300<br />
billion by 2016. Of this total, SMS alone will<br />
generate $155 billion worldwide in 2014, and<br />
"it promises to continue to play a significant<br />
role in revenue terms in the coming years,"<br />
the report said.<br />
Pervasive and personal<br />
It’s the simplicity, pervasiveness and sheer<br />
dominance of text messaging that has made<br />
it the world’s leading data communication<br />
tool. People everywhere on the planet can<br />
Clearly, SMS is THE most ubiquitous,<br />
non-verbal communications medium in the<br />
history of mankind. Today, SMS can reach<br />
over 5.4 billion people around the world —<br />
over 77 percent of the world’s population.<br />
In developing countries SMS plays a special<br />
role, transforming lives and economies at an<br />
amazing scale. Innovation in these regions<br />
also allows companies, organisations and<br />
governments to harness simple text messaging<br />
and achieve extraordinary results.<br />
From life-simplifying reminders to life-saving<br />
medical advice, text message services are<br />
changing the nature of commerce, banking,<br />
education, healthcare, news reporting and<br />
political participation.<br />
26
In developed markets SMS is by far the most<br />
effective way for people to communicate with<br />
each other — and connect with companies.<br />
Whether chatting with friends, or receiving<br />
alerts from banks and favourite brands, text<br />
is the primary communications tool.<br />
Continuing tide of text<br />
Significantly, even the advance of smartphones<br />
— chock-full of features, functionality<br />
and a wide variety of mobile applications<br />
— hasn’t changed consumers’ dependence<br />
on text messaging to connect with the world<br />
around them. In fact, a recent consumer<br />
study from Deloitte shows that SMS holds<br />
the lead. More consumers than ever preferring<br />
texting, and the vast majority (90<br />
percent) of smartphone users sending at<br />
least one text message per day.<br />
Another trend that shows no signs of slowing<br />
is text use among teenagers. In the U.S. this<br />
demographic relies on text more than any<br />
other customer segment. Research firm<br />
Nielsen, which bases its finding on a variety<br />
of data including monthly survey results from<br />
300,000 consumers, reports that texting has<br />
tripled, with teenage girls sending 40 percent<br />
more text messages than boys. That’s an<br />
average of 3,952 text messages per month.<br />
It’s a continuing tide of communication<br />
Nielsen calls a “mobile data tsunami.”<br />
In other countries text messaging continues<br />
to dominate. In Canada The Wireless<br />
Telecommunications Association reports<br />
the number of personal text messages sent<br />
every year has nearly quadrupled since<br />
2008 and hit a whopping 78 billion<br />
messages in 2011. In the U.K. the Ofcom<br />
Telecommunications Market Data Update<br />
Q1 2011 reports the total number of SMS<br />
and MMS messages sent in Q1 2011 was<br />
36.9 billion, up 22.7 percent over Q1 2010.<br />
The impact of OTT<br />
Amid this stellar growth, some analysts<br />
wonder if the text messaging trend could<br />
flip from growth to decline. New messaging<br />
capabilities bundled with iPhones and<br />
Android phones, as well as the advance of<br />
OTT messaging services and applications<br />
are among the root causes for the recent<br />
dip in SMS volumes in mature markets such<br />
as Philippines and Taiwan. News that OTT<br />
player WhatsApp reported hitting the milestone<br />
of ten billion messages a day further<br />
suggests operators could be vulnerable to<br />
this new competition.<br />
However, Analysts point out the race is far<br />
from run. It estimates that companies like<br />
WhatsApp and BlackBerry will generate 35<br />
percent of the total messaging traffic in<br />
2016, but only 8 percent of the revenues.<br />
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27
Average number of messages exchanged per month<br />
By age and gender, Q3, 2011<br />
604<br />
802<br />
3,417<br />
1,914<br />
928<br />
709<br />
434<br />
167<br />
64<br />
Male Female 13-17 18-24 25-34 35-44 44-54 55-64 65+<br />
Figure 1: Based on data from Nielsen.<br />
Moreover, SMS will continue to dominate<br />
messaging and revenues, generating 42<br />
percent of the traffic and some 65 percent<br />
of total income.<br />
Indeed, Informa is not convinced that OTT<br />
apps and services might undermine established<br />
text messaging habits. It argues that<br />
many factors — including mobile operator<br />
pricing strategies, the penetration of mobile<br />
broadband and customer requirements<br />
to more open communications — will<br />
“determine how quickly and to what extent<br />
substitution occurs.”<br />
Open rules<br />
People are empowered by SMS to communicate<br />
with anyone who has a mobile phone.<br />
However, alternative messaging apps are<br />
limiting, not liberating. Unlike text messaging,<br />
these OTT services operate in a vacuum.<br />
Instead of overarching communities that<br />
span the planet, they create isolated islands<br />
of users who are completely cut off from<br />
friends and family members on the basis<br />
of the handsets and software they use.<br />
28
A Facebook user and a person using iMessage<br />
may be good friends in real-life, but the fact<br />
they use different services prevents them<br />
sending and receiving messages.<br />
This flies in the face of what communications<br />
is all about, and presents opportunities<br />
for mobile operators to bridge the gap.<br />
There are exciting and lucrative options<br />
to consider. Some mobile operators will<br />
choose to work with OTT players, enabling<br />
them to achieve the integration of messaging<br />
communications. Others will follow the<br />
lead of operators like Telefónica, which<br />
recently launched a free mobile application<br />
that combines free text chat, voice calls,<br />
picture and location sharing between users.<br />
Interoperability will also be delivered by<br />
the GSM Association standard called<br />
Rich Communications Suite (RCS), which<br />
includes a next-gen, real-time, presenceenabled<br />
messaging component that also<br />
interworks with the existing SMS ecosystem.<br />
Indeed, many of the operators<br />
featured throughout this first edition of<br />
the <strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> are betting<br />
on RCS to drive an interoperable, backward<br />
compatible messaging medium for<br />
subscribers and — ultimately — pave<br />
the way for new and innovative services.<br />
No limits<br />
Technology advances like RCS will allow<br />
messaging — including text messaging —<br />
to evolve and continue to account for a significant<br />
share of operator revenues. The future<br />
for OTT providers, however, is not quite so<br />
positive. Spoiled by choice and delighted by<br />
the freedom to communicate with anyone<br />
(and not just people that use that the same<br />
application), consumers will no doubt vote<br />
with their feet. It’s clear that many of the OTT<br />
players will simply fade away.<br />
Unlike text messaging, these OTT services<br />
operate in a vacuum. Instead of overarching<br />
communities that span the planet, they create<br />
isolated islands of users who are completely<br />
cut off from friends and family members on the<br />
basis of the handsets and software they use.<br />
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29
It’s the simplicity, pervasiveness and sheer<br />
dominance of text messaging that has made it<br />
the world’s leading data communication tool.<br />
In the meantime, SMS-compatible 1 services<br />
from companies including textPlus will<br />
continue to flourish, offering customers<br />
more features and greater reach. But it’s<br />
not just person-to-person messaging that<br />
will increase. Growth will be also be driven<br />
by a desire from companies, businesses<br />
and brands to connect with their customers<br />
(and potential customers) via SMS.<br />
Research underlines the pivotal role of<br />
mobile in campaigns to engage with customers,<br />
encourage interaction and boost loyalty.<br />
From consumer facing brands that use text<br />
messaging to deliver brand messages and<br />
links to downloadable content and perks, to<br />
large retailers that cleverly use text messaging<br />
to deliver product vouchers and drive customer<br />
loyalty, the central role of SMS is<br />
clear. Perhaps the best confirmation comes<br />
from Coca-Cola, that declared that SMS is<br />
the “number one priority” in its comprehensive<br />
strategy to reach a global audience and<br />
increase customer engagement. Analysts<br />
termed it a “bombshell announcement”<br />
because other marketers quickly followed<br />
suit, launching strategies with mobile<br />
messaging at the center.<br />
Ironically, the rise of mobile apps, initially<br />
hailed as a new channel to the customer<br />
that could potentially dethrone SMS, has<br />
actually pushed text messaging growth<br />
to a new level.<br />
Brands and marketers, as well as application<br />
developers, are harnessing SMS to<br />
extend the life of their apps, keeping their<br />
users posted on updates, breaking news,<br />
location-based opportunities, campaign<br />
perks and other important information.<br />
More importantly, text messaging allows<br />
brands and marketers to re-connect with<br />
customers who haven’t used their apps<br />
recently — or even deleted it altogether. The<br />
result is a booming Application-to-Person<br />
(A2P) market Jupiter Research estimates<br />
will be worth $70.1 billion by 2016.<br />
Positive outlook<br />
Clearly, the next five years will see operators<br />
in many parts of the world leverage their<br />
all-IP networks, but even this progress will<br />
not shut the door to SMS. To the contrary,<br />
LTE networks using IMS infrastructure will<br />
lay the groundwork for messaging services<br />
Footnote:<br />
1. SMS-compatible services include some OTT service providers (also known as NUVOs or<br />
Network Unaffiliated Virtual <strong>Operator</strong>s that inter-work with the SMS ecosystem. This stands in<br />
strong contrast to other OTT providers, such as WhatsApp, that do not offer SMS interoperability.<br />
30
Global revenue from A2P SMS split by eight key regions 2016<br />
Latin America<br />
Indian Sub Continent<br />
Africa & Middle East<br />
Central & Eastern<br />
Europe<br />
North America<br />
Rest of Asia<br />
Pacific<br />
Far East<br />
& China<br />
Western Europe<br />
Figure 2: Source: Juniper Research. (1)<br />
that will remain interoperable with today’s<br />
text messaging. In other words, there will be<br />
no interruption in service, or even reach.<br />
The humble text message that just celebrated<br />
its 20th anniversary has seen a lot<br />
of changes since the first SMS was sent in<br />
1992 between Neil Papworth (of Sema<br />
Group Telecoms) and Richard Jarvis of<br />
Vodafone – the message read “Merry Christmas”.<br />
Today, SMS is the most widely used<br />
mobile data service, with two-thirds of<br />
the world’s population using the channel to<br />
connect and communicate. From a business<br />
FOOTNOTE:<br />
1. www.juniperresearch.com/reports/<strong>Mobile</strong>_Messaging_Markets<br />
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31
perspective, SMS is expected to remain<br />
a significant source of revenues and traffic<br />
for mobile operators on a global basis<br />
for years to come. The bottom line: the<br />
advance of an all-IP world will transform<br />
SMS, but text messaging will also continue<br />
to be alive and well.<br />
William Dudley has 25 years experience<br />
building and managing telecommunications<br />
network infrastructures. He leads SAP <strong>Mobile</strong><br />
Services Messaging Team, which focuses on<br />
solutions including inter-operator SMS and<br />
MMS products (P2P) and mobile messaging<br />
hubs and services (A2P SMS and MMS).<br />
Dudley also provides industry commentary<br />
to both internal and external mobile industry<br />
publications, through analyst and media<br />
interviews, and is active in several industry<br />
groups. http://scn.sap.com/people/william.<br />
dudley/content<br />
32
PART TWO: STRATEGIES FOR DRIVING REVENUE<br />
Moving To The sms<br />
Hubbing Model<br />
By Robert Rose, Senior Director, Global <strong>Operator</strong> Services, SAP <strong>Mobile</strong> Services<br />
SMS is ubiquitous, universal and<br />
widely regarded as the truly native<br />
language of mobile. However, this<br />
phenomenon, and the massive<br />
development of SMS since the last<br />
years of the 20 th century, has not<br />
been without its challenges around<br />
enabling — and guaranteeing —<br />
message delivery.<br />
Notably, there have been challenges in North<br />
America, where differences in technologies<br />
prevented the launch of off- net messaging<br />
for a few years. In contrast, almost the rest<br />
of the world was well progressed in its adoption<br />
of inter-operator SMS based largely on<br />
homogenous GSM standards.<br />
The solution to the technology differences<br />
in North America was provided by hubbing<br />
services dedicated to message protocol<br />
conversion. Having met the domestic<br />
challenges of the North American market,<br />
international messaging between non-<br />
GSM U.S./Canadian operators and their<br />
GSM counterparts worldwide soon also<br />
benefitted from the technology and<br />
connectivity offered by the hub solution.<br />
In developing countries, scarce human<br />
and technical resources within operators<br />
across these markets has accelerated the<br />
requirement for hubbing services. In the<br />
case of Tier 1 and 2 operators, for example,<br />
hubbing has tended to be a niche solution.<br />
In other words, the solution enabled “gapfilling”<br />
in a mobile operator’s footprint,<br />
thus satisfying subscriber demand for<br />
international SMS P2P connections when<br />
that operator’s own roaming agreements<br />
were not sufficient to provide the required<br />
messaging interconnects.<br />
In developing countries, scarce human and technical<br />
resources within operators across these markets has<br />
accelerated the requirement for hubbing services.<br />
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33
As a consequence, operators are recognising that a hub<br />
can enable them to outsource the management burden<br />
around some of their cross-border messaging traffic.<br />
Making the mainstream<br />
The situation began to change when the<br />
GSM Association launched the Open<br />
Connectivity project in 2005. By seeking<br />
to manage and regulate (in a light-touch<br />
manner) the development of peering hubs<br />
for person-to-person SMS the GSMA<br />
effectively endorsed the hubbing concept.<br />
This, in turn, ensured the adoption of<br />
hubbing as a mainstream business practice<br />
for the global operator community.<br />
operator can actually become a much<br />
more significant benefit.<br />
Good business sense<br />
Today, economic pressure on most operators<br />
is now driving even more traffic (and<br />
more revenue for the networks). Headcount<br />
cuts, affecting even the most-established<br />
operators, are reducing their ability to<br />
manage their interworking activity effectively.<br />
Since 2005 the major hub providers have<br />
seen a steady growth in demand for their<br />
services. This has resulted in the development<br />
of an abundant revenue stream based<br />
on the termination charges on inbound<br />
traffic delivered by hubs. The ability to drive<br />
new revenues from additional SMS traffic<br />
— possible because hub prov-iders have<br />
extesive global reach and the ability to<br />
provide two-way access to operators<br />
previously unreachable — has been an<br />
added attraction over and above the<br />
greater reach achieved.<br />
Since term fees are paid on a strictly permessage<br />
basis, this revenue source clearly<br />
increases in proportion to the organic as<br />
well as incremental growth in traffic. As a<br />
result, what might first appear to be a minor<br />
contributor to the Roaming Department<br />
P&L account belonging to a mobile<br />
As a consequence, operators are recognising<br />
that a hub can enable them to outsource<br />
the management burden around<br />
some of their cross-border messaging<br />
traffic. This approach also reduces the<br />
managerial overhead around areas such as<br />
the negotiation and maintenance of bilateral<br />
agreements with destination operators and,<br />
when traffic is flowing, the upkeep of various<br />
number ranges within the SMSC.<br />
Routing all traffic for a particular country to<br />
a hub mitigates number range management<br />
tasks and delivers business benefit. As<br />
operators come to embrace the idea of<br />
delegating responsibility for some crossborder<br />
SMS traffic, they also discover that<br />
the more routes they outsource to the hub<br />
provider, the more they can increase their<br />
revenue “take” from their inbound traffic.<br />
In the end, what started out as a simple<br />
34
exercise to offload a handful of “awkward”<br />
destinations soon becomes a full-scale<br />
outsourcing venture.<br />
Growing revenues<br />
The financial ecosystem surrounding<br />
cross-border P2P SMS is a complex matrix<br />
of MO charges and MT payments. For hub<br />
providers, managing this is well worth the<br />
effort as long as they can continue to make<br />
a margin on the connectivity services they<br />
provide. In view of this dynamic, traffic<br />
through hubs will continue to grow. Importantly,<br />
the opportunities for operators to<br />
cultivate a worthwhile revenue stream will<br />
also grow in parallel.<br />
However, it’s worth noting that outsourcing<br />
can impact the revenues operators potentially<br />
gain from their bulk messaging (or<br />
“enterprise messaging”) business. This is<br />
because outsourcing all messaging traffic<br />
means outsourcing bulk messaging as well.<br />
By way of background, this traffic would<br />
have been reliant on the prior, direct<br />
connect, bilateral routes. Obviously, in<br />
cases where these are replaced by a hub’s<br />
connections for P2P business, the non-P2P<br />
traffic needs to secure its own routing and,<br />
potentially, its own commercial agreements.<br />
Real-world examples of this problem<br />
are currently being addressed. Efforts to<br />
resolve this effectively will naturally require<br />
flexibility on behalf of both operators and<br />
hub providers.<br />
In summary, in just over ten years subscribers’<br />
need for global two-way communication<br />
via SMS has become the fundamental driver<br />
of mobile network data revenues. While<br />
domestic interworking is mainly addressed<br />
through bilateral relationships, cross-border<br />
traffic is increasingly being routed through<br />
the established, peered hubs. Though this<br />
trend is a consequence of the expedient and<br />
effective solution that a hub connection can<br />
provide, the opportunity to develop a new<br />
and worthwhile revenue stream is now —<br />
more than ever — an incentive for operators<br />
to subscribe to the hubbing model.<br />
A 20-year veteran of the information systems<br />
business (both fixed and mobile), Robert Rose<br />
began working in the mobile industry as a consultant<br />
to British Telecom’s mobile operations<br />
subsidiary Cellnet. Since 2004 Robert has<br />
guided SAP <strong>Mobile</strong> Services’s international<br />
development in P2P messaging services.<br />
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PART TWO: STRATEGIES FOR DRIVING REVENUE<br />
Latin America Offers Big<br />
sms Opportunites<br />
From the rural regions, where farmers<br />
and small businesses use mobile to<br />
manage their workday, to exciting city<br />
centres where youth — in particular—<br />
rely on mobile to connect with friends<br />
and family 24/7, Latin America is<br />
more connected than ever before.<br />
In fact, making or receiving a call or text<br />
message in Latin America has never been<br />
easier. A new report titled Maximising<br />
<strong>Mobile</strong>, the third in a series on Information<br />
and Communications for Development<br />
published by the World Bank, reveals that<br />
nearly 98 percent of the region’s population<br />
have mobile cell signal and 84 percent of<br />
households use a mobile service.<br />
On average 81 percent of subscriptions in<br />
Latin America are prepaid. Understandably,<br />
many in the region use mobile phones to<br />
make voice calls, averaging 141 minutes of<br />
talk-time a month. In most markets the vast<br />
majority of users (97 percent in Argentina, for<br />
example) regularly use SMS to communicate.<br />
SMS leads the pack<br />
Interestingly, this revolution also brings a<br />
boost to text messaging services. But it’s<br />
not just about operator services allowing<br />
people with ordinary feature phones to<br />
communicate. Analysts note that text<br />
messaging continues to provide a solid<br />
foundation for a wide range of services,<br />
from banking to basic education, to<br />
widening access to health information.<br />
Against this backdrop, it is clear markets<br />
like Latin America — not the more developed<br />
markets of Europe and North<br />
America — will lead messaging growth<br />
and innovation.<br />
Feature phones are the focus because Latin<br />
America’s smartphone market is still in its<br />
infancy. Research firm Pyramid Research<br />
reports that the smartphone segment in<br />
Latin America will grow to 48 million in 2014.<br />
This is a marked increase, but doesn’t<br />
negate the fact that Latin America continues<br />
to lag behind the rest of the world in smartphone<br />
adoption.<br />
Clearly, the level of growth in mobile usage<br />
will continue, expanding into ever more<br />
rural areas across Latin America. It marks<br />
what the report calls “the beginning of the<br />
mobile revolution.”<br />
But this gap also offers mobile operators<br />
a tremendous opportunity to wring more<br />
value out of text messaging. Ironically, it is<br />
also the low penetration of smartphones<br />
that has kept over-the-top (OTT) players<br />
36
Maximising mobile for development<br />
Growth of global mobile subscriptions<br />
World’s population with mobile cell signal<br />
71%<br />
29%<br />
23% 77%<br />
2000<br />
0.7 billion<br />
subscriptions<br />
High-income countries<br />
Rise of non-voice mobile usage<br />
% National population<br />
2010<br />
5.9 billion<br />
subscriptions<br />
Developing countries<br />
2003<br />
61%<br />
2010<br />
90%<br />
Over 6 billion<br />
mobile subscriptions<br />
worldwide<br />
75% of the World<br />
now has access to<br />
a mobile phone<br />
89<br />
96<br />
82<br />
49<br />
72<br />
72<br />
61<br />
58<br />
48<br />
31 29<br />
18<br />
26<br />
38<br />
22<br />
10<br />
15<br />
19<br />
KENYA MEXICO INDIA INDONESIA EGYPT UKRAINE<br />
(ARAB REP)<br />
Send text message Take pictures or video with mobile Use mobile internet<br />
Pace of mobile phones spread globally<br />
(billions)<br />
8<br />
6<br />
The number of mobile subscriptions will soon take over the world’s population<br />
2002 There are over 1 billion mobile subscriptions, passing fixed-line users<br />
1978 First commerical cellular mobile services established<br />
Fixed-line<br />
subscriptions<br />
Global<br />
population<br />
4<br />
2<br />
0<br />
1961 85 years later, fixed-line subscriptions<br />
reach 100 million<br />
1876 Alexander Graham Bell holds the first<br />
two-way telephone conversation<br />
1875 1900 1925 1950 1975 2000 2011 2015<br />
<strong>Mobile</strong><br />
subscriptions<br />
Figure 1: Based on data from Infodev. www.infodev.org/en/Document.1178.pdf<br />
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37
at bay. This, in turn, has slowed the advance<br />
of messaging apps that enable smartphone<br />
users to send unlimited free messages to<br />
their friends. These OTT messaging apps<br />
such as WhatsApp, Viber and Apple’s<br />
iMessage are cannibalising SMS revenue<br />
and changing the way mobile users communicate<br />
with their peers.<br />
This is not the case in Latin America,<br />
according to ABI Research, developed<br />
markets have experienced a marked<br />
decrease in SMS sent because of the rise<br />
of OTT alternatives, but the drop in regions<br />
such as Latin America and Africa is not<br />
as significant.<br />
International SMS requirements<br />
Clearly, feature phones have several<br />
more years to thrive in Latin America. This<br />
provides operators a window of opportunity<br />
to generate strong revenues from their<br />
domestic and international SMS offerings.<br />
The international SMS business, for example,<br />
provides operators with the potential to drive<br />
significant volume and earn hefty margins.<br />
Opening new international routes, securing<br />
two-way service for their customers and<br />
marketing attractive bundle packages are<br />
also part of a strategy that would certainly<br />
help improve the bottom line.<br />
Personal Paraguay, a leading mobile<br />
operator in Paraguay and part of Personal<br />
Telecom group, has extended its<br />
international SMS coverage to reap<br />
significant business benefits. “SMS is an<br />
important part of how our customers<br />
communicate,” notes Miguel Ruiz, Personal<br />
Paraguay Roaming Manager. “Our customers<br />
want to be in touch with friends,<br />
family and colleagues whether they are in<br />
the same neighborhood, or living in a<br />
different country.”<br />
More importantly, customers expect their<br />
text message communications to be<br />
dependable and robust. “To achieve these<br />
SMS connections is a huge task that<br />
requires negotiations with operators and<br />
technical tests to ensure SMS quality and<br />
reliability,” Ruiz explains. To streamline the<br />
process and deliver customers the service<br />
they expect, Personal Paraguay has teamed<br />
up with SAP <strong>Mobile</strong> Services. “The hub SMS<br />
service helps us to have complete coverage<br />
with all operators in North America, the U.S.,<br />
Canada and Mexico, as well as operators<br />
across LATAM, Europe, Asia and Africa.”<br />
SMS hubbing also allows Personal Paraguay<br />
the capabilities to cater to the portion of its<br />
customer base that are Paraguay citizens<br />
living and working in neighboring Argentina.<br />
“About 1.5 million Paraguayan people have<br />
38
Against this backdrop, it is clear markets like Latin<br />
America — not the more developed markets of<br />
Europe and North America — will lead messaging<br />
growth and innovation.<br />
emigrated to Argentina, and they want to<br />
be in contact with friends and family in an<br />
affordable way,” Ruiz says. The answer is<br />
International SMS, a popular service that<br />
also represents an important differentiator.<br />
In a nutshell, the service allows customers<br />
to send an SMS to a Telecom Personal<br />
Argentina customer and be charged the<br />
same rate as a local SMS. “There are a lot<br />
of opportunities to be gained by offering<br />
customers services that pair a simple way<br />
of communication with reasonable tariffs.”<br />
To take advantage of this robust growth<br />
in text messaging mobile operators are<br />
also migrating to more flexible pricing<br />
to encourage use and to appeal to new<br />
customer segments. A prime example is<br />
Tigo Colombia, a mobile operator that is<br />
developing a new approach to enable users<br />
to do what they want most: communicate<br />
with family and friends in other countries<br />
at affordable prices, observes Juan Felipe<br />
Velasquez, Latam International Roaming<br />
Coordinator at Tigo Colombia.<br />
Attractive pricing<br />
SMS is expected to continue accounting<br />
for a major proportion of value-added<br />
services revenue as services like banking,<br />
mobile money and M2M gain traction.<br />
Another driver is social media, the pastime<br />
and passion of nearly 100 percent of the<br />
Latin American population using mobile<br />
or Internet, according to comScore. While<br />
social media isn’t a new phenomenon, the<br />
growth is phenomenal.<br />
At a deeper level, Tigo Colombia’s business<br />
model is based on partnership to ensure<br />
access to key capabilities and technologies.<br />
According to Velasquez, the decision to<br />
cooperate with SAP <strong>Mobile</strong> Services is<br />
driven by the internal requirement to keep<br />
pace with innovation. “Many times we fail<br />
to seize opportunities because technology<br />
changes so fast and we sometimes<br />
neglect segments that do not have access<br />
to new technologies.”<br />
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Exciting opportunities ahead<br />
What are the highest areas of opportunity<br />
on the operator agenda?<br />
Personal Paraguay’s Ruiz is squarely<br />
focused on extracting more value out of<br />
offering a wide variety of packages with<br />
truly personal communications at the core.<br />
“Our slogan is ‘Cada Persona es un mundo<br />
— Each person is a world.’ This means<br />
delivering each customer the services and<br />
bundles that are in tune with their lives. They<br />
are at the center.” Looking ahead, Personal<br />
Paraguay is also planning to deploy LTE/4G<br />
“with IPX to support new services” that<br />
satisfy customer requirements for quality,<br />
coverage and convenience.<br />
Velasquez is also bullish about the outlook<br />
for value-added services that harness SMS<br />
in new ways. Chief among these is M2M. As<br />
he puts it: “I think that the next step in our<br />
industry is machine-to-machine, where we<br />
can connect all the machines with machines<br />
— and with the people managing them —<br />
around the world with simple SMS.”<br />
Whether it’s person-to-person or machineto-machine,<br />
it’s clear that messaging is king.<br />
A promising and fast-growing service that<br />
should not be ignored is A2P, or Application-<br />
To-Person messaging. In this scenario, software<br />
applications and organisations, such<br />
as enterprises and governments, establish<br />
a one or two-way communication channel<br />
with people using SMS.<br />
Tigo’s Velasquez says he is also looking<br />
to a future where continued cooperation<br />
between the stakeholders — operators,<br />
suppliers and users — creates a win-win<br />
for everyone. Additionally, it is important<br />
to add these services onto an IPX, where<br />
connectivity meets users’ needs for quality<br />
and desire to communicate on their terms.<br />
The revenue potential is significant. According<br />
to a study published by Portio Research<br />
Ltd, a research firm based in the U.K., for<br />
the period 2011-2016 worldwide A2P SMS<br />
revenue is expected to outpace Person-<br />
To-Person (P2P) SMS revenue and grow at<br />
a CAGR of 13.1 percent.<br />
Looking ahead, Personal Paraguay is also<br />
planning to deploy LTE/4G “with IPX to<br />
support new services” that satisfy customer<br />
requirements for quality, coverage and convenience.<br />
40
P2P & A2P SMS revenue – worldwide<br />
(in USD billions, 2009-2016F)<br />
SMS Revenue (in USD billions)<br />
73.4<br />
25.5<br />
83.9<br />
30.7<br />
89.5<br />
27.4<br />
93.6<br />
44.2<br />
95.5<br />
52.3<br />
94.2<br />
60.4<br />
85.7<br />
70.1<br />
78.5<br />
75.1<br />
A2P SMS<br />
Revenue<br />
P2P SMS<br />
Revenue<br />
2009 2010 2011F 2012F <strong>2013</strong>F 2014F 2015F 2016F<br />
Note: The sum of A2P and P2P SMS revenues may not add up to total SMS<br />
revenue because of rounding off errors.<br />
Figure 2: Based on data from Portio Research Ltd.<br />
As of end-2012, A2P traffic represented 23<br />
percent of total SMS traffic worlwide, and<br />
33 percent of SMS global revenues. In Latin<br />
America, A2P traffic accounted for 15.2<br />
percent of total SMS traffic, significantly<br />
lower compared with the U.S. and Canada.<br />
This would indicate there is a significant<br />
potential for A2P growth in the region in<br />
the years ahead.<br />
Indeed, the outlook for A2P SMS growth is<br />
positive. A key driver: the advance of more<br />
conversational commerce and advertising,<br />
requiring marketers and retailers to deliver<br />
campaigns, offers and brand messages via<br />
text messaging. Banks are also harnessing<br />
SMS to send transaction notifications to<br />
their clients, a convenient service that consumers<br />
have come to accept and appreciate.<br />
These examples show there is a lot of<br />
mileage — and value — left in text messaging.<br />
In Latin America, in particular, the<br />
growth of SMS shows no signs of slowing,<br />
a positive trend that benefits mobile operators<br />
that develop the mix of capabilities —<br />
billing, bundles and international coverage<br />
— their customers expect.<br />
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong> The Evolution of <strong>Mobile</strong> Services: Challenges, Strategies, Opportunities<br />
41
SMS traffic break-out-regional (in billions, 2009 – 2016F)<br />
Region 2009 2010 2011 2012F <strong>2013</strong>F 2014F 2015F 2016F<br />
Latin<br />
America<br />
P2P 203.4 285.3 341.7 381.6 417.6 443.7 460.5 478.3<br />
A2P 22.7 32.9 50.6 68.6 84.7 101.0 118.1 125.8<br />
Note: Sum of regional numbers may not equal total due to rounding off errors.<br />
Figure 3: Based on data from Portio Research Ltd.<br />
www.slideshare.net/CiscoSP360/cisco-visual-networking-index-vni-global-mobile-data-traffic-forecast-20112016<br />
Strong growth drives penetration, usage<br />
By 2015 Latin America is forecast to have<br />
more than 750 million mobile connections,<br />
with an average penetration rate of<br />
122 percent. According to the GSMA, the<br />
region is one of the world’s largest mobile<br />
markets by volume. With HSPA and LTE<br />
connections reaching more than 305<br />
million by 2015, mobile broadband will be<br />
a key driver of growth. It will also be the<br />
primary means of Internet access for<br />
people across the region.<br />
Sebastian Cabello, Director of Latin<br />
America, GSMA commented: “As well as<br />
being one of the<br />
largest, Latin<br />
America is also<br />
one of the world’s<br />
fastest-growing<br />
mobile markets.<br />
We have experienced<br />
13 percent growth per<br />
year for the past four years, driven<br />
by increasing accessibility, flexibility and<br />
affordability of mobile services, and<br />
boosted by the increasing affluence of<br />
the region and the relative shortage of<br />
the fixed line infrastructure.”<br />
42
PART TWO: STRATEGIES FOR DRIVING REVENUE<br />
Cybersafety: Everyone’s<br />
Responsibility<br />
By Steve Largent, President & CEO, CTIA-The Wireless Association<br />
Imagine identifying a cyberthreat<br />
such as a virus, worm or malicious<br />
code on your company’s communications<br />
network. You know how to<br />
remove it, but you also believe that<br />
your company isn’t the only one<br />
under attack. You tell your boss<br />
that others, including your competitors<br />
and military communication<br />
networks, might likewise<br />
be affected (but their IT experts<br />
might not have noticed the threat<br />
yet, or simply haven’t figured out<br />
how to stop it).<br />
As a courtesy, you’d like to alert these other<br />
parties and offer your assistance to help<br />
them protect their networks in anticipation of<br />
the virus, or help them remove it altogether.<br />
Unfortunately, if you did that, you would put<br />
your company and yourself in danger of<br />
lawsuits and in violation of antitrust laws, as<br />
well as many other significant problems. How<br />
can this possibly be considered efficient, effective<br />
or “good business”? It’s not.<br />
If you’re like the CTIA-The Wireless<br />
Association, and many of its members, then<br />
you already know that private sector networks<br />
are targeted every day by hackers,<br />
criminals and nation-state actors for cyber<br />
exploitation and theft. The scenario I described<br />
above, as well as the attacks that<br />
confront the private sector daily, are pivotal<br />
reasons why we support the Cyber Information<br />
Sharing and Protection Act [(CISPA)<br />
(H.R. 3523)].<br />
This legislation would pave the way for<br />
efficient and effective business practice,<br />
allowing our members to communicate<br />
with all the stakeholders — competitors,<br />
federal government agencies, IT directors,<br />
academia and experts — to identify<br />
potential issues and create solutions<br />
before, during and after the problem.<br />
CTIA and its members have already taken<br />
an active role in addressing cybersecurity,<br />
but time isn’t on our side because the hacker<br />
community is moving fast.<br />
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43
The cybersecurity ecosystem<br />
The CISPA’s sponsors, U.S. House of<br />
Representatives Permanent Select Committee<br />
on Intelligence Chairman Mike Rogers<br />
(R-AL-3) and Committee Ranking Member<br />
Dutch Ruppersberger (D-MD-2), recognise<br />
that cyberthreat intelligence sharing and<br />
providing clear authority for the private<br />
sector to defend its own networks is<br />
critically important in today’s world.<br />
up of more than the operators and their<br />
networks. It now encompasses several<br />
other players, including device manufacturers,<br />
mobile app and content creators,<br />
operating system developers and infrastructure<br />
producers. Quite simply, every<br />
single mobile user and company in the<br />
wireless ecosystem has an important role<br />
in ensuring cybersafety and protecting all<br />
of us from cyberthreats.<br />
When passed, CISPA, which has already<br />
been approved by the U.S. House of<br />
Representatives and is awaiting the U.S.<br />
Senate to vote, will carefully balance appropriate<br />
privacy protections with immunity<br />
from lawsuit protections so that private and<br />
public entities are genuinely incentivised to<br />
share cyberthreat information to help our<br />
nation get ahead of the challenge.<br />
While CISPA is vital, CTIA and its members<br />
also want to highlight the importance of<br />
other pieces in the cybersecurity puzzle.<br />
Of these two are our immediate focus areas.<br />
Work in progress<br />
In recognition of the vast and diverse<br />
wireless ecosystem and the need to bring<br />
all the stakeholders together to address<br />
cyberthreats, CTIA created a cybersecurity<br />
working group in March 2012.<br />
This group is comprised of our members,<br />
and maintains an ongoing dialogue with government<br />
agency representatives, researchers<br />
and experts from around the country to help<br />
protect the wireless industry — and our<br />
customers — against cyberthreats.<br />
First, is to educate policymakers and consumers<br />
about the role they play in fighting<br />
cyberthreats. Or, as we like to put it, the role<br />
these parties play in ensuring cybersafety.<br />
Second, is to remind people that the<br />
wireless industry’s ecosystem is made<br />
In particular, this group focuses on sharing:<br />
• Best practices and existing standards<br />
(including technical exchange)<br />
• Known vulnerabilities and<br />
countermeasures<br />
44
96% Agree that government should allow companies to exchange information<br />
to help identify vulnerabilities and protect users from hacking and cyberfraud<br />
Strongly disagree<br />
1.8%<br />
Somewhat disagree<br />
2.2%<br />
Strongly agree<br />
49.4%<br />
Somewhat agree<br />
46.6%<br />
Figure 1: Based on data from McLaughlin & Associates. National Survey of IT Decision Makers, July 27, 2012.<br />
• Suggestions and ideas on how the<br />
industry improves security while being<br />
technology agnostic and maintains the<br />
openness of the Internet<br />
The working group has a number of initiatives<br />
already in the works, but I can’t reveal them<br />
yet. However, I can share the new Cybersafety<br />
pamphlet, which was written in non-technical<br />
terms, and provides consumers with<br />
easy-to-understand tips on how to protect<br />
themselves, their wireless devices and<br />
their information.<br />
This is important since today’s smartphones<br />
and tablets have features and functions that<br />
have turned them into mini-computers.<br />
Because these mobile devices are also<br />
packed with personal information, such<br />
as banking and health records, consumers<br />
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong> The Evolution of <strong>Mobile</strong> Services: Challenges, Strategies, Opportunities<br />
45
How should industry and government proceed on cybersecurity?<br />
Industry should take the<br />
lead in defining standards.<br />
14.8%<br />
Government should take the<br />
lead in defining standards.<br />
4.0%<br />
Industry and government should share<br />
information on threats, and work<br />
collaboratively to define standards.<br />
68.0%<br />
Industry and government should<br />
share information on threats<br />
without defining standards.<br />
13.2%<br />
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0<br />
Figure 2: Based on data from McLaughlin & Associates. National Survey of IT Decision Makers, July 27, 2012.<br />
http://files.ctia.org/pdf/IT-Decisionmaker-Survey-FINAL.pdf<br />
need to take more responsibility for the protection<br />
of this sensitive data. Specifically,<br />
consumers need to actively protect themselves<br />
by following simple tips, such as<br />
using passwords and PINs. They can also<br />
back up their personal information on the<br />
cloud, or other external sources, and<br />
update the operating systems on their<br />
mobile devices.<br />
Collaboration is essential<br />
Education is key to ensuring cybersecurity<br />
for everyone, but there’s only so much<br />
the working group can do without CISPA.<br />
Right now, the working group may only<br />
share limited information, so it isn’t<br />
helping us to address the real issues<br />
at hand: the daily attacks that threaten<br />
industry and consumers.<br />
46
By enacting CISPA, the private sector will be<br />
able to better leverage its own cyberdefense<br />
efforts in a coordinated way with government<br />
entities through information sharing to<br />
protect the nation’s systems, networks and<br />
consumers. Additionally, by helping facilitate<br />
the creation of a more robust cybersecurity<br />
marketplace, CISPA will lead to expanded<br />
research, service offerings and more jobs<br />
for cybersecurity experts. Those are positive<br />
outcomes that will surely benefit our nation<br />
and our economy.<br />
CTIA and its members have already taken<br />
an active role in addressing cybersecurity,<br />
but time isn’t on our side because the<br />
hacker community is moving fast. Several<br />
independent reports have revealed up to 30<br />
percent growth in the instances malware.<br />
They also report rapid growth in spyware<br />
designed to steal sensitive personal, financial<br />
and work-related information from<br />
mobile devices. To counterbalance this<br />
significant threat, all of the players in the<br />
wireless industry ecosystem must be<br />
allowed to work collaboratively to stem<br />
the rising tide.<br />
For more information and to download the<br />
cybersafety brochure, please visit: www.ctia.<br />
org/cybersafety<br />
Steve Largent has served as President and<br />
CEO of CTIA-The Wireless Association® and<br />
President of The Wireless Foundation since<br />
November 2003. Previously, Largent represented<br />
Oklahoma’s First Congressional<br />
District in the U.S. House of Representatives<br />
from 1994 to 2001. During this time Largent<br />
was the Vice-Chairman of the Energy and<br />
Air Quality Subcommittee and also served<br />
on the Telecommunications Subcommittee,<br />
the Oversight and Investigations Subcommittee,<br />
and the Environment and Hazardous<br />
Materials Subcommittee.<br />
This legislation would pave the way for efficient<br />
and effective business practice, allowing our<br />
members to communicate with all the stakeholders<br />
— competitors, federal government<br />
agencies, IT directors, academia and experts —<br />
to identify potential issues and create solutions<br />
before, during and after the problem.<br />
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong> The Evolution of <strong>Mobile</strong> Services: Challenges, Strategies, Opportunities<br />
47
PART TWO: STRATEGIES FOR DRIVING REVENUE<br />
Does The Future of <strong>Mobile</strong><br />
Security Lie in the Past?<br />
By Mary Landesman, Senior Security Researcher, Cloudmark<br />
The nature of malware and the<br />
entire computer attack spectrum<br />
has changed dramatically over the<br />
past decade. Originally designed<br />
to be disruptive to the computer,<br />
today’s malware is no longer the<br />
end game, but rather a tool that<br />
serves as a means to a new end:<br />
criminal profiteering. With that<br />
evolution, social manipulation<br />
has become a key facilitator in<br />
modern attacks, and messaging<br />
is the obvious medium through<br />
which it is affected.<br />
Social engineering entices potential victims<br />
into taking some action that will prove<br />
harmful to themselves and/or the device<br />
they are using. Social engineering is platform-agnostic,<br />
cannot be patched, and<br />
has a seemingly infinite number of angles<br />
through which susceptible victims can<br />
be manipulated. Further, there are no<br />
development costs associated with social<br />
engineering, no concerns of cross-platform<br />
compatibility issues, and is completely<br />
disposable without penalty – if one social<br />
campaign fails, the attackers can quickly<br />
and cost effectively move on to the next.<br />
Open for attack<br />
The always-on/always-carried nature of<br />
mobile devices enhances the potential for<br />
social manipulation. Many social engineering<br />
attacks succeed because they foster<br />
some sense of urgency. <strong>Mobile</strong> device users<br />
may be more distracted while checking or<br />
receiving messages (whether via email or<br />
SMS). This is because they are encountering<br />
these messages during the normal<br />
course of their day, rather than specifically<br />
setting aside dedicated time to check<br />
messages at their PC. Being distracted a<br />
recipient may act more hastily and open<br />
messages on their mobile device without<br />
thinking about the risk first. Further,<br />
people’s inherent trust in their mobile<br />
devices and the messages received on<br />
those devices, can exacerbate the situation.<br />
In concert with evolutionary changes on the<br />
malware front, smartphone, tablet and<br />
general mobile adoption rates are quickly<br />
48
outpacing traditional computers. In developing<br />
nations users are bypassing traditional<br />
computer adoption altogether and moving<br />
directly into smartphone and tablet adoption.<br />
This leapfrogging to mobile makes<br />
perfect sense; mobile devices are generally<br />
less expensive than traditional computers<br />
and are highly transportable, a distinct<br />
advantage in countries where Internet<br />
cafes are the norm.<br />
The combination of digital criminal profiteering<br />
and mobile adoption may well be the<br />
perfect storm. Not only does widespread<br />
mobile adoption provide a steady and<br />
increasing supply of potential new victims;<br />
mobile devices are also proving to be costeffective<br />
attack tools. Indeed, the ease with<br />
which mobile devices can be obtained<br />
(either through purchase or theft) significantly<br />
lowers the barrier to entry for<br />
would-be attackers.<br />
Short of having a crystal ball, it’s not entirely<br />
possible to determine the exact nature of<br />
the future threat for mobile devices. Regardless,<br />
there are tell-tale signs that mobile<br />
threats are following a similar – yet greatly<br />
accelerated – track first witnessed with<br />
traditional computer threats.<br />
For example, there is currently a thriving<br />
gray-hat market for Android users engaged<br />
in click fraud and other forms of advertising<br />
manipulation. This closely parallels the<br />
computer scene in the early 2000s, when<br />
Web 2.0 first provided the opportunity for<br />
affiliate marketing relationships. A subset<br />
of those affiliates quickly realised they<br />
could increase their revenue potential by<br />
incorporating unethical (and sometimes<br />
illegal) means of generating clicks for profit.<br />
Instead of taking several years to crossover,<br />
this practice has already materialised in the<br />
mobile arena.<br />
Likewise, traditional spam – problematic<br />
since the beginning of email – received a<br />
tremendous boost in 2003 through illicit<br />
spam proxies distributed by the SoBig<br />
worm. This shift has already occurred on<br />
smartphones, with a wide range of bulk<br />
mail and proxy tools available to would-be<br />
spammers who want to use mobile as the<br />
The always-on/always-carried nature of mobile<br />
devices enhances the potential for social manipulation.<br />
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49
sending device. In early 2011 the first<br />
observed spam attack originating from<br />
Android devices occurred. This culminated<br />
in a mass spam campaign in mid-2012, thus<br />
demonstrating mobile’s suitability for use<br />
as a spam tool.<br />
Spam goes mobile<br />
The nature of spam attacks targeting<br />
mobile users has also adapted to the new<br />
ecosystem. Attackers do not necessarily<br />
need to rely on installation of malware or<br />
covert phishing attacks to profit. Instead, a<br />
mobile attack may simply trick the recipient<br />
into agreeing to send premium rate SMS<br />
messages. This results in expensive and<br />
unexpected charges to the victim, allowing<br />
the attacker to profit.<br />
Indeed, the majority of SMS spam falls into<br />
the category of scam or fraud, which is<br />
defined as a campaign to entice the recipient<br />
into taking some action that unwittingly<br />
results in information disclosure or<br />
financial loss. Recent estimates suggest that<br />
up to 70 percent of unwanted text messages<br />
are attempts at financial fraud.<br />
Social engineering factors heavily in scam<br />
and fraud campaigns and, as a result, the<br />
exact pitch, or hook, used by the scammer<br />
varies by geographical region. Scams<br />
offering free Wal-Mart or Best Buy gift<br />
cards abound in the U.S., a country where<br />
the Wal-Mart and Best Buy chains are<br />
well known. In the U.K. scams use PPI<br />
compensation or accident claims as the<br />
primary hook.<br />
Text messages are a powerful vehicle for<br />
reaching people. Currently, SMS marketers<br />
claim SMS message open rates are higher<br />
than 90 percent and opened within 15<br />
minutes of receipt. By regionalising topics<br />
to the victim’s locale, attackers are simply<br />
ensuring a higher open and reaction rate for<br />
these text messages in an environment that<br />
already fosters a high open/reaction rate.<br />
(Traditional email, by contrast, has an open<br />
rate of only 20-25 percent within 24 hours<br />
of receipt).<br />
Attackers do not necessarily need to rely on<br />
installation of malware or covert phishing attacks<br />
to profit. Instead, a mobile attack may simply trick<br />
the recipient into agreeing to send premium rate<br />
SMS messages.<br />
50
Exacerbating the problem, the typical<br />
SMS text scam is seldom single-purposed;<br />
rather each click through or response from<br />
the recipient leads to another possible<br />
angle to the scam. For example, a free gift<br />
card spam may begin with ‘just’ a survey.<br />
However, not only is personal information<br />
collected (and sold in aggregate), but the<br />
often obscured terms of service for the<br />
survey spell out insidious actions such as<br />
the inability to cancel the account or the<br />
unwitting agreement to send SMS texts to<br />
premium rate numbers.<br />
naturally hamper law enforcement efforts<br />
and make it more difficult to thwart attacks.<br />
Hopefully, we can all learn from past mistakes.<br />
Central to the success of traditional<br />
computer attacks was a failure to recognise<br />
or act on early indications that malware had<br />
turned to profit. Criminal attacks on mobile<br />
devices are following an accelerated path<br />
leading in the same direction. Let’s hope<br />
that we will act as quickly and adopt the<br />
appropriate counter - measures before the<br />
tipping point is reached.<br />
Also, a ‘free’ offer often requires the participant<br />
to pay various fees in order to continue<br />
progressing towards the final giveaway. This<br />
can progress to the point that, even if actual<br />
merchandise is ever ‘won’, the participant<br />
has spent more in up-front fees and unanticipated<br />
SMS charges than the actual<br />
merchandise is worth.<br />
Fighting back<br />
<strong>Mobile</strong> devices have already proven to be<br />
favourable and cost effective, both as an<br />
attack tool and as an attack target, with<br />
social manipulation playing a key role.<br />
Further, the ease of disposal and/or<br />
replacement of mobile devices will<br />
Mary Landesman has over 20 years experience<br />
in the security industry and is a widely<br />
cited expert in the field of antivirus, malware<br />
and computer security trends. Apollo<br />
Research named her the top spokesperson<br />
for both malware and phishing, the third for<br />
DLP (data loss prevention) and the third<br />
most quoted security spokesperson overall.<br />
Additionally, she was recently named one of<br />
the top 10 women in information security by<br />
eWeek. Since 2007, Landesman has also<br />
been an annual recipient of a Microsoft MVP<br />
award for her work in consumer security.<br />
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51
The growing threat of smartphone hackers.<br />
<strong>Mobile</strong> malware and what you need to know<br />
Do you think it’s safe to access sensitive data on your mobile phone?<br />
Perhaps you should think again. With malicious programs designed to<br />
target cell phones skyrocketing, it’s becoming increasingly dangerous<br />
to use your phone without the necessary precautions. Here’s how to<br />
prevent malware from taking over your phone... and your life.<br />
What is mobile malware<br />
Malware is software with a malicious purpose. It may be designed to<br />
disable your phone, remotely control your device, or steal valuable<br />
information. <strong>Mobile</strong> malware uses the same techniques as PC<br />
malware to infect mobile devices.<br />
The growth of malware<br />
Number of mobile malware<br />
2,500<br />
853<br />
52 119<br />
229<br />
437<br />
2005<br />
2006<br />
2007<br />
2008<br />
2009<br />
2010<br />
The real dangers of malware<br />
• Bank account passwords are stolen<br />
• Private information is captured<br />
• The phone is forced to send messages to premium numbers<br />
• Phone data is deleted<br />
• Device is “bricked” and needs replacing<br />
• Malware-infected devices can be used by botnet owners to launch<br />
attacks on digital targets.<br />
Figure 1: Based on data from Bullguard.<br />
52
PART TWO: STRATEGIES FOR DRIVING REVENUE<br />
<strong>Mobile</strong> Number Portability:<br />
Increasing Competition And<br />
Driving Value<br />
9<br />
By Mitul Ruparelia, Director of Sales Engineering, SAP <strong>Mobile</strong> Services<br />
24 1<br />
<strong>Mobile</strong> operators are understandably<br />
concerned about subscriber<br />
churn and constantly on the watch<br />
for ways to prevent it. But this task<br />
has become more difficult since<br />
the advent of <strong>Mobile</strong> Number Portability<br />
(MNP), also known as Wireless<br />
Number Portability (WNP),<br />
which allows subscribers to vote<br />
with their feet when services are<br />
not satisfactory. This is because<br />
MNP allows the subscriber to take<br />
their phone number with them —<br />
even when they switch to another<br />
operator in the same country.<br />
In principle, MNP simply allows subscribers<br />
to retain their phone number. However, the<br />
process of porting a number from one mobile<br />
operator to the other can be complicated.<br />
It involves a number of steps including the<br />
initiation of the port from the subscriber,<br />
which is the request to the donor network<br />
that starts off the handover. It also involves<br />
an exchange of porting information among<br />
the mobile operators, and results in an<br />
update to the network routing scheme and<br />
internal home location registry databases.<br />
The turnaround time for this process<br />
depends on the country where this takes<br />
place because it is dictated by the<br />
technology and regulation present in the<br />
country in question.<br />
MNP advances<br />
MNP was first implemented in the late<br />
1990s in mature European markets such as<br />
the U.K. and the Netherlands. The objective<br />
was to enable mobile operators to compete<br />
for customers on other networks.<br />
To date 70 countries worldwide have implemented<br />
MNP, and this number continues<br />
to increase as new markets and regions<br />
advance. Predictably, we see it’s the<br />
dominant mobile operators with stronger<br />
market share that are less likely to support<br />
the implementation of MNP. This is because<br />
they perceive it as a scheme that will likely<br />
increase the chances that they will lose<br />
— not gain — subscribers.<br />
Indeed, this is a realistic scenario, and one<br />
that has effectively motivated mobile operators<br />
to innovate and deliver value-added<br />
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53
services to delight and retain their customers.<br />
They have also introduced lower pricing<br />
and exclusive packages with unique handsets<br />
in order to meet consumer requirements<br />
for services and — ultimately — grow<br />
their subscriber base.<br />
A prime example of this approach is how<br />
mobile operators marketed the Apple<br />
iPhone to attract customers to their brand.<br />
In the U.K. Apple awarded Telefónica UK<br />
(O2 UK) a two-year exclusivity on the<br />
handset, making it the only network supporting<br />
the iconic device. This gave<br />
Telefónica UK a significant advantage,<br />
allowing it to report the lowest churn rate<br />
in the country. Churn stood at a mere 1.1<br />
percent in both 2009 and 2010.<br />
During the same period other U.K. operators<br />
lost a significant number of their subscribers<br />
to Telefónica U.K. — no doubt attracted<br />
by the Apple iPhone package. In fact our<br />
figures for 2009 show that 15 percent<br />
of subscribers in the U.K. ported their<br />
number from one network to another.<br />
Fierce competition<br />
Since the economic slowdown that marked<br />
2008 and 2009, mobile operators across<br />
the globe have become more cost conscious<br />
than ever before. This shift in mindset is also<br />
a reaction to fierce competition and mounting<br />
pressure from regional bodies and institutions<br />
to accept MNP. This has combined<br />
to result in a significant decline in operator<br />
ARPU. Another outcome of this is the<br />
impact on OPEX and CAPEX budgets,<br />
limiting the investments operators can<br />
make in key technologies such as LTE/4G.<br />
Regulators and government institutions<br />
have moved forward with plans to liberalise<br />
markets by mandating the implementation<br />
of MNP. This is also the focus in the more<br />
mature and saturated markets, where<br />
penetration is near 100-percent and thus<br />
Investment in MNP solutions is critical to the<br />
capabilities of any telecommunications company<br />
to satisfy and retain their customers, as well as<br />
successfully complete calls and messages routed<br />
via their network.<br />
54
UK contract churn (%)<br />
by operator 2005-2010 (annual average)<br />
3.5<br />
3.0<br />
2.5<br />
2.0<br />
(Hutchinson)*<br />
1.5<br />
1.0<br />
T-<strong>Mobile</strong><br />
Orange<br />
Vodafone<br />
02 (Teléfonica)<br />
Everything everywhere<br />
0.5<br />
0<br />
2005<br />
2006 2007 2008 2009 2010<br />
Figure 1: Based on data from Wireless Intelligence.<br />
https://wirelessintelligence.com/analysis/2011/04/o2-records-lowest-churn-rates-in-uk/<br />
limits the number of new customers/nonsubscribers<br />
that can be won by mobile<br />
operators in those countries.<br />
MNP clearly benefits subscribers by offering<br />
lower tariffs and the freedom to switch.<br />
But it also creates commercial and technical<br />
challenges for mobile operators across the<br />
board. Chief among these is the lack of a<br />
standard process that allows operators in<br />
all countries, including those where MNP<br />
is not the accepted procedure, to know<br />
when subscribers who have chosen to<br />
retain their number and to route messages<br />
and voice calls to them. This confusion<br />
exists because mobile operators, as a<br />
default, will typically route voice calls<br />
and messages to a subscriber based on<br />
pre-allocated number ranges.<br />
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong> The Evolution of <strong>Mobile</strong> Services: Challenges, Strategies, Opportunities<br />
55
Regulators and government institutions have<br />
moved forward with plans to liberalise markets<br />
by mandating the implementation of MNP. This<br />
is also the focus in the more mature and<br />
saturated markets.<br />
In cases where MNP has been implemented<br />
by the destination country, the originating<br />
mobile operator is dependent on either<br />
direct GSM connectivity (GSM Forwarding/<br />
Onward Routing) with all of the operators in<br />
the country to route calls and messages, or<br />
they rely on a service provider — such as a<br />
voice operator or a SMS hub — to handle<br />
both the MNP and delivery.<br />
Choosing not to adopt one of these two<br />
options can have a negative impact on the<br />
call and message success rate. This was<br />
precisely the outcome in January 2011, the<br />
year MNP was introduced in India. Two operators<br />
in the Middle East region were proactively<br />
measuring KPIs at the time. They saw<br />
a 12 percent increase in failed SMS in the<br />
first quarter alone, which is quite significant<br />
given the tremendous volume of traffic<br />
exchanged between the Middle East and<br />
Asian operators.<br />
Critical capability<br />
As this example clearly shows, investment in<br />
MNP solutions is critical to the capabilities<br />
of any telecommunications company to<br />
satisfy and retain their customers, as well as<br />
successfully complete calls and messages<br />
routed via their network.<br />
Clearly, MNP is a good news story for subscribers,<br />
because it allows them to switch<br />
operators and retain their phone numbers.<br />
However, it also confronts mobile operators<br />
with a variety of commercial challenges.<br />
To delight and retain their subscribers and<br />
stand up to formidable competition in the<br />
marketplace mobile operators must be<br />
innovative and agile. To accomplish this<br />
operators are well advised to create services<br />
to offer more value to their customers and<br />
begin — through outsourcing and partnership<br />
— to build the capabilities to ensure<br />
the successful delivery of all messaging,<br />
voice and data.<br />
56
Mitul Ruparelia joined SAP <strong>Mobile</strong> Services<br />
in 2007 as a Pre-Sales Engineer after<br />
graduating with a first-class honours<br />
degree in Computer Information Systems.<br />
In 2010, he was named the design authority<br />
for the Intelligent Hubbing solution, which<br />
is a unique, patent-pending technology,<br />
allowing mobile operators to increase<br />
revenues, reduce operational costs and<br />
improve customer experience.<br />
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong> The Evolution of <strong>Mobile</strong> Services: Challenges, Strategies, Opportunities<br />
57
PART TWO: STRATEGIES FOR DRIVING REVENUE<br />
Intelligent Hubbing:<br />
Easing International sms<br />
Routing Complexity<br />
By Mark Weait, Vice President Sales (EMEA & LATAM), SAP <strong>Mobile</strong> Services<br />
At a high level, most <strong>Mobile</strong> <strong>Operator</strong>s<br />
roaming teams are focused on<br />
achieving two key objectives:<br />
achieving the best possible Quality<br />
of Service for subscribers, and<br />
optimising the associated retail<br />
and wholesale revenues.<br />
How does an operator achieve<br />
these aims?<br />
First, operators must ensure they have the<br />
network connectivity in place to deliver their<br />
subscribers’ text messages to their destination.<br />
Of course, operators must also enable<br />
a reply path to guarantee the delivery of the<br />
SMS response.<br />
Second, operators need to have the commercial<br />
mechanisms in place to monetise<br />
the message flow.<br />
Sounds simple, right? Well, it isn’t!<br />
Today operators that want to enable this<br />
are confronted by a variety of hurdles. To<br />
complicate matters, operators’ operating<br />
margins are coming under increasing<br />
pressure, a situation that can limit the available<br />
resources operators can direct toward<br />
enabling and monetising the message flow<br />
in the first place. What’s more, operators<br />
must cope with the advance of <strong>Mobile</strong><br />
Number Portability (MNP), a development<br />
that has made the messaging landscape<br />
even more complex.<br />
This approach has enabled operators<br />
to dramatically increase the number of<br />
messages they have successfully delivered<br />
on behalf of their subscribers. This, in turn,<br />
has sharply increased retail revenues and<br />
customer satisfaction.<br />
58
The outcome: many operators today struggle<br />
to meet the increasing demands of their<br />
customers messaging requirements.<br />
operator would need to invest resources and<br />
effort to ensure the following conditions are<br />
met. Specifically, an operator must have:<br />
Failing to satisfy the consumers messaging<br />
requirements can lead to customer churn<br />
as well as revenue and margin leakage. Due<br />
to the increasing pervasiveness of OTT<br />
players in the market, this has become even<br />
more of an issue.<br />
Against this backdrop, many operators are<br />
striving to maximize revenues and customer<br />
satisfaction by pursuing strategies to increase<br />
their SMS delivery footprint. It’s<br />
a smart decision, but operators also face<br />
some challenges along the way.<br />
Ensuring SMS delivery<br />
An operator at the receiving end that has<br />
the desire — and the time — to negotiate<br />
and conclude an agreement<br />
A clearing and settlement provider<br />
in place to manage the commercial<br />
settlement<br />
Relevant SPAM controls and filters in place<br />
to protect the network and subscribers<br />
Resources available to manage the legal,<br />
technical routing, provisioning and<br />
testing requirements of a new AA19, a<br />
lengthy process that can take up to 6<br />
months per connection<br />
Clearly, there are three ways to enable<br />
2-way SMS delivery. <strong>Operator</strong>s can use<br />
an SMS hub; they can set up a direct AA19;<br />
or they can utilise existing roaming agreements.<br />
If the operator is focused on<br />
ensuring wholesale revenue generation,<br />
then the last option offers little value.<br />
Therefore, lets focus on the first two<br />
options, highlighting the steps operators<br />
must take to realise benefits.<br />
Imagine an operator has opted to set up<br />
and manage an AA19 base. In this case the<br />
Access to the resources necessary to<br />
manage the on-going IR21 provisioning<br />
needs, a task that — in a country with MNP<br />
present — often involves monthly activity<br />
The SS7 controls and monitoring in place<br />
to provide end-to-end SMS visibility in<br />
case of subscriber complaints<br />
If MNP is present in the country where<br />
the operator operates, then that operator<br />
must either have an MNP feed, or an SS7<br />
connection in place with all the other<br />
operators in that country<br />
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong> The Evolution of <strong>Mobile</strong> Services: Challenges, Strategies, Opportunities<br />
59
OTT players will have a major impact on the telco business model<br />
Total projected 3-5 year impact on core services<br />
Data carriage costs<br />
g<br />
g<br />
<strong>Mobile</strong> data sales<br />
g<br />
g<br />
g<br />
Google<br />
Apple<br />
Facebook<br />
Messaging revenues<br />
g g<br />
Skype/<br />
Microsoft<br />
Skype/Amazon<br />
Voice revenues<br />
g g<br />
-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%<br />
NB These projections are based on the sum of a weighted average of respondents’ votes. We regard<br />
them as indicative of the overall market effect and relative impact of the players on different areas<br />
rather than an absolute measure.<br />
Figure 1: Based on data from Telco2Research.com. Telco 2.0 Survey, September 2011, 301 Respondents.<br />
www.telco2research.com/articles/SR_google-apple-facebook-microsoft-skype-amazon-disruption-telco2_Summary<br />
A review of this detailed list confirms that<br />
this is not a simple undertaking. In many<br />
African countries, for example, an operator’s<br />
AA19 footprint would seldom exceed 50<br />
contracts. However, operators must also<br />
reach over 900 operators globally. To<br />
complicate matters, MNP will shortly be<br />
present in 90 countries, representing over<br />
one fourth of all the countries an operator<br />
would need to reach.<br />
Connecting for<br />
competitive advantage<br />
Against this backdrop, many operators<br />
are turning to SMS hubs to provide<br />
holistic connectivity.<br />
<strong>Operator</strong>s are making this move because<br />
by connecting to an SMS hub, they can<br />
immediately gain access to an existing<br />
interconnected ecosystem.<br />
60
Mostly because, by connecting to an SMS<br />
hub, the operator can immediately gain<br />
access to an already existing interconnected<br />
operator ecosystem. Hubs can offer value<br />
added services, such as MNP solutions.<br />
In practice connecting to an SMS hub allows<br />
operators to access :<br />
• A connectivity footprint far greater than<br />
their own, and one that is continually<br />
increasing<br />
• Clearing and settlement from day one<br />
to ensure wholesale revenues are<br />
maximised<br />
• Global MNP solutions that help maximise<br />
message delivery success rates and<br />
eliminate the management overhead<br />
for the operator<br />
• Constantly evolving SPAM and spoofing<br />
filtering solutions<br />
• R21 provisioning and associated number<br />
range management services<br />
• Local support resource with access to<br />
end-to-end SS7 visibility (where this is<br />
offered)<br />
Such standard hubbing services go a long<br />
way to addressing the SMS requirement of<br />
today’s operators, but SAP <strong>Mobile</strong> Services<br />
believes that this is not the whole answer,<br />
and has therefore evolved its standard<br />
market offering to deliver greater value to<br />
the operator.<br />
‘Hybrid-solution’ path<br />
Many operators have invested significant<br />
resources and money into building their<br />
own bilateral footprints for SMS exchange.<br />
In Western Europe, for example, many large<br />
operators have over 250 direct bilateral<br />
agreements already in place, and a number<br />
of those are managed AA19 agreements.<br />
Clearly, it’s not an investment in capabilities<br />
that operators will want to abandon.<br />
What are the other options open to operators?<br />
Often operators are advised to go<br />
down a ‘hybrid-solution’ path. In this<br />
scenario operators maintain their AA19 base<br />
and work with an SMS hub provider. Despite<br />
obvious benefits, this path also presents<br />
challenges, particularly in countries where<br />
MNP is present.<br />
So, how does an operator manage to<br />
successfully route to AA19 connected<br />
operators in a given country, as well as via<br />
the SMS hub to another operator in that<br />
same country, whilst in parallel supporting<br />
MNP requirements?<br />
Ironically, the traditional approach to streamline<br />
this generally creates more complexity.<br />
What’s more, it often forces operators to<br />
manage additional and unwanted overhead.<br />
This is because the traditional approach<br />
requires the operator to manage the routing<br />
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong> The Evolution of <strong>Mobile</strong> Services: Challenges, Strategies, Opportunities<br />
61
Many operators are striving to maximise revenues<br />
and customer satisfaction by pursuing strategies<br />
to increase their SMS delivery footprint. It’s a<br />
smart decision, but operators also face some<br />
challenges along the way.<br />
down to the operator level, as opposed to<br />
the country level. Due to routing table<br />
restrictions, operators determined to take<br />
this path are also confronted by added technical<br />
difficulties.<br />
Providing an intelligent approach<br />
The challenge now is for hubs to provide<br />
more functionality, so that operators can<br />
remove the complexity associated with<br />
routing international SMS from their<br />
network to their hub provider. The ideal<br />
solution is one that routes each SMS along<br />
the optimal route – whether that is via an<br />
existing bilateral connection or through the<br />
hub providers’ network – all whilst dealing<br />
with the challenges MNP introduces.<br />
Taking this approach has enabled operators<br />
to dramatically increase the number of<br />
messages they have successfully delivered<br />
on behalf of their subscribers. This, in turn,<br />
sharply increased retail revenues and<br />
customer satisfaction. It also drives an<br />
increase of return traffic delivered via the<br />
hub and in turn an increase in wholesale<br />
revenue with the added comfort of knowing<br />
those MT payments are guaranteed.<br />
There are additional benefits to this<br />
approach, such as reducing the complexity<br />
involved with managing SMS routing and<br />
MNP management. But it’s not just about<br />
delivering an operator immediate business<br />
benefits. This approach also frees up the<br />
Roaming team, enabling them to focus more<br />
time and effort in reducing revenue leakage,<br />
managing traffic imbalances, preventing<br />
spam abuses and — ultimately — building<br />
sustainable advantage.<br />
Mark Weait runs the commercial<br />
department of SAP <strong>Mobile</strong> Services across<br />
EMEA and LATAM that provides and sells<br />
solutions into businesses across all market<br />
segments, including telecoms, financial<br />
services, FMCG, manufacturing, logistics<br />
and many others.<br />
62
PART TWO: STRATEGIES FOR DRIVING REVENUE<br />
Orchestrating Capabilities<br />
Delivers High Performance<br />
By N. Arjun, Chief of Projects & Transformation, Bharti Airtel<br />
Indian telecom giant Bharti Airtel<br />
has spread its wings across the<br />
African continent to reach nearly<br />
60 million customers in 17<br />
countries including Nigeria,<br />
Burkina Faso, Chad, Congo<br />
Brazzaville, Democratic Republic<br />
of Congo, Gabon, Madagascar,<br />
Niger, Ghana, Kenya, Malawi,<br />
Seychelles, Sierra Leone, Tanzania,<br />
Uganda and Zambia.<br />
The strategy paving the way for this expansion<br />
— and success — is sharply focused on<br />
bridging the digital divide with affordable<br />
telecom services. Airtel in Africa has<br />
adapted the low-cost, high-volume model<br />
— which was employed in the home market<br />
of India — to serve the African market and<br />
provide customers world-class and innovative<br />
voice and data services to add value<br />
to their daily lives.<br />
Meeting local needs<br />
Analysts note that Africa has many market<br />
conditions that make it a booming market<br />
for telecom services. First, there is the<br />
potential for growth. Africa is home to over<br />
1 billion people and has the world’s youngest<br />
population. People under 25 account for 60<br />
percent of the total population, compared<br />
with around 30 percent in developed countries.<br />
In addition, apart from China and India,<br />
most of the world’s fastest growing economies<br />
are in Africa, according to the IMF’s<br />
World Economic Outlook.<br />
When Airtel entered the African market in<br />
2010 it realised that customer demand for<br />
connectivity and coverage, as well as customer<br />
service, would need to be addressed.<br />
First, coverage was boosted by adding more<br />
sites. Then customer experience and service<br />
was improved by offering new and innovative<br />
services at an affordable price.<br />
SMS services were a big part of this because<br />
African youth are more mobile savvy and prefer<br />
to do text messaging. Airtel responded by creating<br />
and promoting bundles that includes SMS as part<br />
of the package.<br />
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong> The Evolution of <strong>Mobile</strong> Services: Challenges, Strategies, Opportunities<br />
63
The African mobile market is thriving, reaching over 642 billion<br />
connections in 2011 – after exceeding 65% penetration in 2011.<br />
Total African mobile connections, penetration rate and growth drive<br />
(millions, % penetration)<br />
Penetration<br />
Connections<br />
+30%<br />
1000<br />
85%<br />
82%<br />
90%<br />
Connections (millions)<br />
900<br />
800<br />
700<br />
600<br />
500<br />
400<br />
300<br />
200<br />
78%<br />
73%<br />
807<br />
65%<br />
735<br />
57%<br />
642<br />
48%<br />
552<br />
40%<br />
458<br />
31%<br />
379<br />
22%<br />
283<br />
15%<br />
201<br />
860<br />
910<br />
80%<br />
70%<br />
60%<br />
50%<br />
40%<br />
30%<br />
20%<br />
Penetration rate (%)<br />
100<br />
0<br />
2%<br />
17<br />
3%<br />
26<br />
4%<br />
37<br />
6%<br />
53<br />
9%<br />
83<br />
136<br />
10%<br />
0%<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
2008<br />
2009<br />
2010<br />
2011<br />
2012F<br />
<strong>2013</strong>F<br />
2014F<br />
2015F<br />
Economic development in the region<br />
Success of cost-effective pre-paid services<br />
(96% of total) and significant price reductions<br />
Introduction of low-cost handsets<br />
Ambitious rollout of mobile network<br />
infrastructure –fast expansion of mobile<br />
coverage<br />
Figure 1: Based on data from Wireless Intelligence. Excludes M2M connections.<br />
A.T. Kearney 28/02 2012 MWC<br />
www.gsma.com/publicpolicy/wp-content/uploads/2012/03/mea12atkearneyafricapresentation.pdf<br />
64
This approach — built on collaboration with<br />
strong partners — lays the groundwork for a<br />
sustainable model that also equips Airtel to<br />
introduce the latest technology and offer<br />
competitive services.<br />
SMS services were a big part of this<br />
because African youth are more mobile<br />
savvy and prefer to communicate via text<br />
messaging. Airtel responded by creating<br />
and promoting bundles that includes SMS<br />
as part of the package.<br />
Today Airtel is focusing efforts on three<br />
areas. These are 2G, which is about delivering<br />
voice services; 3G, which supports data<br />
services; and mobile money and mobile<br />
commerce services. The latter is all about<br />
building relationships and serving the<br />
under-banked.<br />
Tapping talent to achieve<br />
excellence<br />
How does an operator deliver high volume<br />
at low cost? Across its markets in Asia and<br />
Africa Bharti Airtel has successfully driven<br />
down costs and ensured quality by partnering<br />
with key companies to manage all<br />
non-core operations — including network<br />
management and IT hardware and software<br />
needs. Put simply, we tap into the talents<br />
and capabilities of partners in all areas<br />
where we at Airtel feel we do not have a<br />
core competency.<br />
To date Airtel offers mobile commerce<br />
services in 15 of the 17 African countries<br />
in which it operates. The aim is to build an<br />
ecosystem that ensures money stays within<br />
the customer’s wallet. In other words, they<br />
can do everything without having to use<br />
cash, or go to the bank.<br />
This approach — built on collaboration with<br />
strong partners — lays the groundwork for<br />
a sustainable model that also equips Airtel<br />
to introduce the latest technology and offer<br />
competitive services. Additionally, Airtel<br />
maintains a sharp focus on core areas<br />
within the business — and a core competency<br />
is understanding customers.<br />
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong> The Evolution of <strong>Mobile</strong> Services: Challenges, Strategies, Opportunities<br />
65
Over the next 5 years Africa will be the second fastest growing region in total<br />
connections and the fastest growing in subscribers<br />
Global mobile connections by regions<br />
(millions)<br />
CAGR<br />
9082<br />
11-15<br />
8484<br />
894<br />
7840<br />
7%<br />
845<br />
7194<br />
790<br />
6524<br />
734<br />
5835<br />
680<br />
4424<br />
627<br />
4154<br />
8%<br />
3861<br />
3548<br />
2823<br />
3200<br />
709<br />
13%<br />
631<br />
555<br />
492<br />
440<br />
947<br />
1015<br />
7%<br />
389<br />
766<br />
819<br />
876<br />
722<br />
7%<br />
465<br />
510<br />
555<br />
607<br />
656<br />
424<br />
5%<br />
5%<br />
5%<br />
5%<br />
5%<br />
5% 9%<br />
333<br />
361<br />
388<br />
413<br />
434<br />
229<br />
552 9% 642 10% 731 10% 815 10% 887 10%<br />
949<br />
10% 10%<br />
2010 2011 2012F <strong>2013</strong>F 2014F 2015F<br />
ME EEA APAC Africa Others NA LATAM<br />
1)Includes M2M and mobile connections<br />
Figure 2: Based on data from Wireless Intelligence.<br />
A.T. Kearney 28/02 2012 MWC<br />
www.gsma.com/publicpolicy/wp-content/uploads/2012/03/mea12atkearneyafricapresentation.pdf<br />
Airtel has chosen to harness the SMS<br />
hubbing capabilities of SAP <strong>Mobile</strong> Services<br />
for two reasons. At a basic level, there are<br />
partners that understand the SMS business<br />
better than we do. At a more complex level,<br />
it’s about having the capabilities to offer the<br />
widest coverage to our customers in the<br />
shortest possible time. In fact, it is the<br />
approach that allows Airtel to provide SMS<br />
across our African markets as quickly as<br />
possible, and at the best quality possible.<br />
This approach also delivers significant<br />
business benefit. At Airtel we measure<br />
success in two ways: in terms of how many<br />
complaints we have received from customers<br />
that their messages have not been delivered;<br />
and the overall impact on revenues.<br />
66
Over the last 12 months the number of SMS<br />
messages both in and out has increased by<br />
12 percent. We have also seen a significant<br />
reduction in the time taken to resolve a<br />
customer complaint.<br />
Moving forward, the focus is to build on this<br />
foundation to increase the percentage of<br />
value-added services in the mix, and SMS<br />
is one of those services. Airtel will offer<br />
more bundles to encourage customers to<br />
use text to send out messages on special<br />
occasions, for example. It’s all about<br />
creating specific packages for specific<br />
customer segments. Airtel will also offer<br />
special rates for communities of interest,<br />
where we know these communities exist.<br />
This approach allows us to increase and<br />
improve the traffic between the various<br />
communities of interest across the globe.<br />
Orchestrating capabilities<br />
Harnessing the talents and capabilities of<br />
partners has allowed Airtel to export its high<br />
volume/low cost business model to Africa.<br />
It has also helped Airtel overcome many<br />
local market challenges and close network<br />
and services gaps.<br />
To be effective — and successful — this<br />
approach requires a constant exchange of<br />
information. Dialogue with partners has to<br />
be open and ongoing, and a key learning has<br />
been that there is always room for improvement<br />
in this exchange.<br />
Achieving business objectives is not about<br />
owning the capabilities; it’s about orchestrating<br />
the capabilities of partners. This way<br />
the model itself becomes the way to achieve<br />
high performance, maintain growth and<br />
deliver customers innovative — and affordable<br />
— voice and data services. Airtel follows this<br />
model to innovate and delight the customer.<br />
However, there will always be certain technological<br />
innovations, which will come from<br />
partners that we will need to marry with our<br />
deep knowledge of the customer. This way<br />
Airtel ensures that we offer what the<br />
consumer wants on time, every time.<br />
N. Arjun is responsible for strategy, planning<br />
and rollout of all new projects in Africa,<br />
including projects focused on mCommerce<br />
and international voice and data. Prior to<br />
this Arjun held the position of Integrations<br />
Director and was responsible for the<br />
successful integration of operations,<br />
spanning 15 countries, belonging to the<br />
African operator Zain Telecom. Bharti Airtel<br />
completed the acquisition of the African<br />
operations in 2011.<br />
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong> The Evolution of <strong>Mobile</strong> Services: Challenges, Strategies, Opportunities<br />
67
PART THREE<br />
IPX: CONNECTING OPERATORS<br />
TO REAP BENEFITS
PART THREE: IPX: CONNECTING OPERATORS TO REAP BENEFITS<br />
Bundling Services<br />
Makes Business Sense<br />
In many ways Korea Telecom (KT)<br />
mirrors the history — and the<br />
future — of telecommunications.<br />
KT was established in 1981, when<br />
it was spun off from the state-run<br />
Ministry of Telecommunications.<br />
First on the agenda, KT worked to<br />
make voice telephony services<br />
universal and available to every<br />
citizen. It has since engaged in the<br />
development of advanced communications<br />
services, helping to make<br />
the country a leader in communications<br />
and prepare for a world where<br />
voice and data, fixed and mobile,<br />
and communication and broadcasting<br />
services are converged. To<br />
ensure quality of service and<br />
capture new efficiencies, KT is<br />
directing voice and mobile data<br />
services traffic over its IP Exchange<br />
(IPX). Incheul Park — Head of the<br />
Wholesale Team, Global Business<br />
Unit, within KT —discusses the<br />
central importance of Voice over<br />
IPX in KT’s larger strategy to futureproof<br />
its network, ensure end-to-end<br />
quality of service and grow its wholesale<br />
business.<br />
Your strategy — which is sharply focused<br />
on wringing more value and revenues out<br />
of voice — has its roots in your company<br />
history. Please explain the connection.<br />
KT started out as the incumbent operator in<br />
Korea, so we cover the range from fixed to<br />
mobile, data, Internet, IPTV — the works. As<br />
you know the technology trend is moving to<br />
IP. In the market, we are also seeing a shift<br />
IPX is clearly a way to reduce costs and increase<br />
efficiency because it’s all about delivering<br />
services over a single network. At KT we are<br />
interconnecting with IPX providers and we are<br />
trying to find out which model is more efficient.<br />
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from fixed to mobile. As a result, KT has<br />
seen a drop in revenue it generates from<br />
offering fixed services, voice as well as basic<br />
data services. Like every other operator,<br />
we face the same difficulties and must make<br />
up for the decreased revenue with a new<br />
revenue business model.<br />
How does the focus on improving voice<br />
services allow you to meet the local<br />
needs of your customers?<br />
Of course, it all depends on the customer<br />
segment. Retail customers always ask for<br />
a good price and a good connection. And<br />
we can deliver this. General wholesale<br />
customers are more focused on quality.<br />
They require end-to-end quality as a basis<br />
for international roaming services. This is<br />
particularly important when we look at the<br />
number of inbound roamers from neighboring<br />
countries like China. Indeed, there are many<br />
tourists and business professionals in transit<br />
in Korea — and this number continues to<br />
grow. Therefore, roaming is naturally one<br />
of the services we are focused on.<br />
There is increasing demand for quality<br />
roaming services. At the same time, you<br />
are witnessing a decline in overall voice<br />
revenues. What are your objectives and<br />
your strategy to meet and satisfy the<br />
demands of both the marketplace and<br />
your customers?<br />
I always get that question! Frankly speaking,<br />
there is no right answer right now. Every<br />
operator has difficulties dealing with the<br />
decrease in revenues. In our case, we are<br />
working to reduce costs and also generate<br />
revenues based on volume — from buying<br />
power and bundling services, for example.<br />
KT provides a roaming service and offers<br />
international voice services for our operator<br />
customers. Additionally, we have a voice<br />
hopping service, so we can increase the<br />
volume of calls while helping our partners<br />
to reduce their costs. In this way we use<br />
the volume generated to develop new direct<br />
interconnections with the new operators.<br />
Put another way, one of our strategic aims<br />
is to bundle services and get more volume.<br />
That enables us to achieve economies of<br />
scale. In the case of data services, we are<br />
also bundling in voice and IP. This way we<br />
can offer customers a bundled solution,<br />
and we can benefit from some synergies.<br />
So, this is our strategy to recover revenue<br />
and recapture customers in the market.<br />
An increasing number of operators<br />
in your region recognise the value of<br />
delivering multiple services through<br />
a single, secure IPX connection. This<br />
is also a capability that lies at the core<br />
of your company’s strategy?<br />
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Correct, KT is actively involved in IPX. The<br />
trend is moving traffic from TDM to IPX.<br />
Ultimately, IPX is all about enabling end-toend<br />
traffic delivery and quality of service over<br />
a single IP network. That is the concept, but<br />
each operator has a different view of what IPX<br />
can provide — and many have different<br />
approaches to reach their objective.<br />
IPX is clearly a way to reduce costs and<br />
increase efficiency because it’s all about<br />
delivering services over a single network.<br />
At KT we are interconnecting with IPX<br />
providers and we are trying to find out<br />
which model is more efficient. Put simply,<br />
the focus is on interconnecting to gain more<br />
experience with the technology and what it<br />
delivers. IPX is the correct direction for KT.<br />
As I mentioned, we also have a voice<br />
wholesale business. If it turns out that it is<br />
easy to move from the existing voice<br />
network to IPX, then we can very simply<br />
jumpstart our IPX business with operator<br />
customers. On top of this, we can add in<br />
services like signaling and GRX. That is the<br />
starting point for IPX here at KT.<br />
Moving to an IPX network is exciting.<br />
But the shift can also have its challenges.<br />
What can you tell me about your experiences<br />
and your key learnings so far?<br />
I myself do not have a technical background,<br />
but when I talk with our network engineers,<br />
they tell me the technology itself is not an<br />
issue. In fact, it’s not that different between<br />
operators when we interconnect with<br />
several IPX providers. Also, the technical<br />
spend out is almost the same because the<br />
industry standard is there to follow. These<br />
guidelines and standards ensure that every<br />
vendor in the world is providing a high<br />
standard for IPX. If there is a barrier to<br />
interconnection via IPX, then it’s the cost<br />
for interconnection.<br />
One driver behind the shift to IPX is the<br />
argument that it provides a proven and<br />
simple route to 4G, or LTE, and will be<br />
required to support LTE roaming. What<br />
are your views?<br />
For LTE roaming we will need more bandwidth<br />
to support data roaming. So — yes — I see<br />
this as one of the key drivers to encourage<br />
IPX connectivity within operators.<br />
What is the impact of free phone call<br />
services such as KakaoTalk on South<br />
Korean telecommunications companies<br />
and giants such as KT? In your view, how<br />
should operators react to maintain, even<br />
build, competitive advantage?<br />
The free phone services may be good from<br />
the perspective of the consumer, but it’s a<br />
real headache for the service providers like<br />
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In the case of data services, we are also bundling<br />
in voice and IP. This way we can offer customers<br />
a bundled solution, and we can benefit from<br />
some synergies.<br />
KT. KakaoTalk offers free services, and to<br />
do this they are using our existing network<br />
without any settlement or pay. What’s more,<br />
these services raise some issues with the<br />
customer. The customers say they already<br />
paid for unlimited data service, and this<br />
gives them the right to use a service like<br />
KakaoTalk. However, this usage requires<br />
bandwidth and this is a heavy burden on<br />
the network. There is also the worry that<br />
services will collapse altogether if there is<br />
not enough bandwidth, and then there will<br />
really be problems.<br />
Going to an all IP-network means we will be<br />
able to make an offer that reduces cost and<br />
creates more competitiveness. Another<br />
approach, as I mentioned, is to use IPX to<br />
bundle services, thus providing services in a<br />
way that allows us to compete head-on with<br />
free phone call services and the providers<br />
delivering them.<br />
And you have to keep in mind the<br />
competition is more than just KakaoTalk.<br />
Other service providers will introduce their<br />
own service. Think of Skype, Google and<br />
iPhone. All these offers compete with the<br />
traditional mobile operators and major<br />
network operators. But when we compare<br />
ourselves against these OTT players, we as<br />
operators should not compete only on price.<br />
For example, we could differentiate by<br />
offering value-added services to enhance<br />
security. Leveraging on our service portfolios,<br />
we could also bundle various services<br />
together, tailored to the customer that also<br />
allow us to compete<br />
How do you plan to encourage your<br />
customers to increase their use of your<br />
services, to balance out the drop in call<br />
revenues?<br />
For the domestic service, it may be that<br />
we can provide the customer with a more<br />
flexible service or bundled service,this can<br />
also include security. On the wholesale side,<br />
using IPX interconnection will allow us to<br />
offer good quality and maintain competitive<br />
72
advantage on routes like Philippines<br />
or Vietnam, for example.<br />
We are also trying to expand our market<br />
areas, and this is where IPX can also come<br />
in. In Asia KT is very strong in the wholesale<br />
business, but this isn’t the case in the<br />
Middle East and Africa. So, we are trying<br />
to expand our network and also offer<br />
customer coverage in Western Africa and<br />
to do more interconnection with those<br />
operators. If IPX can help us to interconnect<br />
with them easily, it will be also good<br />
advantage for us to be using IPX.<br />
Incheul Park has over 15 years experience<br />
in the international telecoms industry. He<br />
heads the Wholesale Team within KT’s Global<br />
Business Unit, where he is focused on supporting<br />
the international voice business,<br />
which includes bilateral, hubbing and IP<br />
based services. Park was also responsible for<br />
driving the new interconnection and business<br />
development globally on behalf of KT.<br />
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PART THREE: IPX: CONNECTING OPERATORS TO REAP BENEFITS<br />
Expanding Voice Connectivity<br />
Via IPX: An <strong>Operator</strong>'s<br />
Perspective<br />
By Gil Genio, Head of International and Business Markets, Globe Telecom, Inc.<br />
For Globe, the capability to support<br />
customers calling across borders<br />
today — and cope with the massive<br />
increase in mobile data use — will<br />
depend on our ability to leverage<br />
new ways of connecting and<br />
managing operator partnerships.<br />
IPX is a natural path.<br />
The concept of IPX is particularly<br />
relevant to the Philippines, a country<br />
where Globe is also a leading<br />
mobile operator, for many critical<br />
reasons. These are linked to the<br />
makeup and requirements of our<br />
local customer base.<br />
First, a sizable portion of the population<br />
lives overseas, a separation that sometimes<br />
spans several generations. Social media<br />
is one way families keep in touch over the<br />
distance, and one of the reasons why the<br />
Philippines ranks very high in the use and<br />
consumption of social media.<br />
At the other end of the spectrum, the<br />
Philippines is also a top destination for<br />
business travelers and vacationers. Many<br />
tourists visit to enjoy the many scenic<br />
spots across the country’s 7,000+ islands.<br />
Obviously, people and businesses need to<br />
stay connected across boundaries. That’s<br />
where IPX comes in. It promises to make<br />
this connectivity easier for both operators<br />
and their customers.<br />
<strong>Operator</strong>s must be able to establish direct<br />
commercial and technical interconnect with<br />
each other, specifically for cross regional<br />
connectivity. This is why our future<br />
infrastructure plans include IPX.<br />
74
Ratio of international trips to population %, 2011<br />
65% 35%<br />
10%<br />
Europe<br />
North America<br />
Asia Pacific<br />
Figure 1: Based on data from GSMA.<br />
Voice on the rise<br />
Globally, international voice traffic has been<br />
stagnant for some time now. This is because<br />
customers are choosing alternative ways to<br />
stay connected. At Globe, however, this is<br />
not the case. We continue to see increased<br />
voice traffic, even though customers can<br />
also communicate using alternatives including<br />
social media, VoIP and text messaging.<br />
enabling Globe to exchange international<br />
calls directly with other mobile operators.<br />
This has become a key driver for Globe’s<br />
initial IPX efforts. Additionally, operators<br />
around the world — Globe included — are<br />
moving to an all-IP infrastructure. It’s a shift<br />
that can’t be ignored.<br />
The data challenge<br />
Because of this trend, Globe clearly needed<br />
to build the capabilities to support the<br />
growth in voice traffic in a more costeffective<br />
manner. It was also important for<br />
Globe to make it easier for many operator<br />
partners to send their similar traffic to our<br />
network. This is where IPX plays a role,<br />
At Globe we also have to adapt to the shift<br />
in customer requirements.<br />
Customers are exploring alternative ways<br />
of staying connected, and we at Globe have<br />
to support this through investments in data<br />
connectivity. Unfortunately, most operators<br />
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Overview of international roaming technology and operations<br />
Initiated call<br />
Received call<br />
Visited<br />
<strong>Operator</strong><br />
International<br />
transit<br />
services<br />
Home<br />
operator<br />
Receiver’s<br />
home<br />
operator<br />
Figure 2: Based on data from GSMA.<br />
did not respond quickly enough. The existence<br />
of complicated, unpredictable and<br />
high priced services, together with bill shock<br />
issues, has somewhat stunted traditional<br />
voice roaming traffic. In other words, it<br />
simply hasn’t grown as quickly — or as<br />
much — as expected.<br />
user experience at home and abroad. In<br />
other words, the quality of the experience<br />
for the roaming customer should be<br />
consistent and high quality.<br />
Quality control<br />
On the other hand, mobile data use by<br />
business travelers and roaming customer<br />
is increasing exponentially. This growth is<br />
driven by the increased penetration of<br />
smartphones, people’s love of social<br />
media and the constant need of users<br />
to be connected.<br />
This boom in mobile data use presents<br />
operators with a new challenge. They<br />
must work with the visited operators to<br />
ensure roaming customers enjoy a good<br />
Globe is well aware of this challenge, and<br />
has therefore taken steps to make it easier<br />
for travelers and roamers to use data. To this<br />
end we at Globe have made the customer<br />
experience a central focus of all we do.<br />
In the Philippines Globe is embarking on an<br />
ambitious network change that will result in<br />
a pervasive HSPA+ footprint and the deployment<br />
of tens of thousands of kilometers of<br />
fiber to support mobile data. And we are<br />
preparing to launch an LTE network. To close<br />
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This boom in mobile data use presents operators with a new challenge.<br />
They must work with the visited operators to ensure roaming<br />
customers enjoy a good user experience at home and abroad.<br />
the loop with a superior customer experience<br />
Globe is also moving to a real- time<br />
convergent billing and customer care<br />
platform, and making additional investments<br />
in analytics and other back-end systems.<br />
These are measures that will deliver customer<br />
benefit. However, Globe customers<br />
who travel overseas, or people who come to<br />
the Philippines for business or pleasure, will<br />
not experience these advantages unless we<br />
at Globe work to make interconnect better<br />
and easier. In other words, operators must<br />
be able to establish direct commercial and<br />
technical interconnect with each other,<br />
specifically for cross regional connectivity.<br />
This is why our future infrastructure<br />
plans include IPX.<br />
Globe believes that — in the long run — IPX<br />
provides the best path to easier connectivity.<br />
It also delivers a lower cost structure,<br />
savings Globe can pass on to customers.<br />
Clearly, IPX offers many benefits to<br />
operators and their customers. Today the<br />
path to IPX implementation is not an easy<br />
one. But the effort is well worth it. It is<br />
important to keep an eye on the prize, and<br />
focus on the many advantages IPX delivers.<br />
Chief among these are: a better experience<br />
for customers, a lower long run cost structure<br />
for operators and the capability to<br />
manage current and future voice and data<br />
traffic. Keep this top of mind and mobile<br />
operators, like the pioneers of the past, will<br />
enjoy the first fruits. Personally, I am looking<br />
forward to an IPX-enabled future.<br />
IPX is inevitable<br />
IPX today is a given for two reasons. For<br />
customers, it’s all about being able to<br />
experience the same quality overseas that<br />
they have come to expect in their home<br />
network. What’s more, the exponential<br />
increase in data use demands the infrastructure<br />
can grow to adapt to what<br />
customers need now and in the future.<br />
For operators, IPX is an easy path to interconnectivity.<br />
More importantly, operators<br />
are moving to all-IP networks. Bottom line:<br />
Gil Genio is head of Corporate Strategy and<br />
Business Development at Globe Telecom.<br />
He is also the head of International and<br />
Business Markets, which are the groups<br />
responsible for sales, relationships, marketing,<br />
products and support for Globe’s<br />
overseas Filipino and service provider customers,<br />
and for business customers from<br />
SMEs to the largest enterprises. He also<br />
serves as CEO of Innove Communications<br />
and GTI Business Holdings, subsidiaries<br />
belonging to Globe Telecom. He is also the<br />
Vice Chairman of GSMA AP.<br />
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PART THREE: IPX: CONNECTING OPERATORS TO REAP BENEFITS<br />
The Value Of A True IPX<br />
by William Dudley, Group Director, Product Management, SAP <strong>Mobile</strong><br />
Services & John Candish, Senior Director, IPX Business, SAP <strong>Mobile</strong> Services<br />
IPX is fundamentally about building<br />
a connected community of telecom<br />
operators, services and applications.<br />
It serves to enable the customers of<br />
mobile operators in this community<br />
to connect to one another, as well as<br />
access a wide variety of applications<br />
and services. Being able to guarantee<br />
quality of experience and keep<br />
costs under control are key requirements<br />
for the mobile operators.<br />
An IPX needs to deliver the full range of<br />
services, ranging from the basics that<br />
include data roaming, messaging and<br />
voice, to LTE-based multimedia services,<br />
to applications such as OTT services. Once<br />
operators are able to offer the full range of<br />
services through an IPX, they can leverage<br />
the benefits and economies of scale that<br />
IPX delivers.<br />
Strong and capable<br />
To deliver a full range of services at the<br />
highest quality the mobile operator must<br />
choose its IPX partners. Additionally, an IPX<br />
should be strong in all areas, not just basic<br />
services like voice or 3G data roaming.<br />
The concept of IPX evolved from GRX, a<br />
community of mobile operators formed to<br />
exchange roaming data. While the underlying<br />
network quality is clearly key to an IPX,<br />
the services provided are no less significant.<br />
Data Roaming<br />
The quality data roaming (specifically,<br />
3G roaming or GRX) depends on the<br />
community of mobile operators connected<br />
to an IPX. This is not just about the number<br />
of mobile operators connected to an IPX.<br />
It’s about which mobile operators are<br />
With IPX there will be no need to set up<br />
dedicated connections and policies for each<br />
service, nor will it be necessary to manage<br />
the capacity of each separately.<br />
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connected. If you take the strategy of connecting<br />
key Tier 1 operators within a region to<br />
an IPX, your ensure the majority of a mobile<br />
operator’s traffic can be delivered on-net<br />
and managed directly end-to-end.<br />
Messaging<br />
Most mobile operators are considering or<br />
have already engaged with one or more IPX<br />
service providers. Consequently, the ability<br />
to leverage the benefits of an IPX to route<br />
SMS (and MMS) messaging traffic to their<br />
hubs is becoming paramount.<br />
calls end-to-end, whilst also achieving<br />
full transparency between the partners<br />
regarding transit and termination charges.<br />
IPX voice interconnectivity guarantees<br />
delivery Calling Line Identification (CLI) for<br />
mobile destinations, as well as assured<br />
quality based on predefined Answer Seizure<br />
Ratio (ASR) and Network Efficiency Ratio<br />
(NER) benchmarks at the destination level.<br />
Another benefit of IPX Voice is the significantly<br />
reduced Post Dial Delay— that is, the time<br />
interval between dialling completion and the<br />
ringing tone to indicate reception of the<br />
recipient network response.<br />
SMS traffic, for example, may use the IPX<br />
as a transport for SMPP or for GSM MAP<br />
over IP (SIGTran). The resiliency of an<br />
underlying MPLS network provides multiple<br />
benefits over VPNs (for SMPP) and direct<br />
SS7-cloud reach. For instance, with SIGTran<br />
the MNO no longer has to incur MSU fees<br />
just to reach their preferred messaging hub.<br />
Instead, the messages reach the Messaging<br />
hub via SIGTran, where they are delivered to<br />
the end destinations.<br />
Voice interconnectivity<br />
Customers and providers are connected to<br />
create an on-net community of IPX Voice.<br />
This allows for all parties to maintain full<br />
control over the quality and routing of voice<br />
Of course, voice destinations may now<br />
include VoIP or OTT Voice providers, as well<br />
as fixed networks. IPX Voice is by no means<br />
just limited to mobile operators.<br />
LTE<br />
The success of 3G roaming services (GRX)<br />
has set a high standard. When LTE services<br />
are deployed customers will expect the<br />
ability to roam to other LTE networks to be<br />
supported from day one. IPX can deliver a<br />
one-stop solution for LTE services, managing<br />
end-to-end connectivity and quality. The<br />
Diameter protocol is essential to roaming in<br />
the LTE world. It manages the authentication,<br />
access and accounting associated with<br />
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Once operators are able to offer the full range<br />
of services through an IPX, they can leverage<br />
the benefits and economies of scale that IPX<br />
delivers.<br />
roaming users. By leveraging an IPX<br />
Diameter hubbing service, operators can<br />
rapidly achieve roaming relationships for<br />
LTE data services and mobile broadband.<br />
For LTE services such as Voice, the ability<br />
of the IPX network to differentiate and<br />
manage the various traffic types appropriately<br />
is key; especially as LTE IMS multimedia<br />
services are deployed including VoLTE<br />
(native LTE based voice).<br />
The IPX enables connectivity between LTE<br />
networks, delivering subscribers virtually<br />
the same services and quality of service<br />
while they are roaming that they know from<br />
their home network. This is critical when the<br />
roaming customer is using services such as<br />
Voice over LTE (or VoLTE). With high-bandwidth<br />
services such as voice and video<br />
calling, the IP latency and jitter must be<br />
extremely low from end-to-end to deliver<br />
customers a good experience. Certainly,<br />
the LTE (E-UTRAN) radio network will<br />
provide low-latency and high bandwidth<br />
between the device and the towers, but<br />
operators must also require QoS solutions<br />
for backhaul (the network connecting all of<br />
the cell-site locations together), as well as<br />
within the Evolved Packet Core (or EPC)<br />
and, finally, between networks (the IPX).<br />
Additionally, LTE Roaming will support the<br />
concept of 3G fallback. This usually occurs<br />
when the visited network does not support<br />
LTE or does support it, but at incompatible<br />
frequencies. In that case, the device will<br />
connect to the UTRAN (or 3G radio network),<br />
if it supports such frequency bands.<br />
Most LTE devices support both 3G and LTE<br />
frequency bands.<br />
Applications and OTT Services<br />
IPX can also reduce the complexity of connecting<br />
third-party services and OTT providers<br />
to a mobile network. With IPX there will<br />
be no need to set up dedicated connections<br />
and policies for each service, nor will it be<br />
necessary to manage the capacity of each<br />
separately. A good example of this is the<br />
inclusion of BlackBerry connectivity. This<br />
service enables mobile operators to connect<br />
to BlackBerry cloud services without the<br />
need to install and manage separate<br />
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Intelligent Services<br />
IPX<br />
Fixed Line<br />
Service Provider<br />
3G<br />
Service Provider<br />
LTE<br />
Service Provider<br />
LTE<br />
Service Provider<br />
Internet<br />
Figure 1: Based on data from SAP <strong>Mobile</strong> Services.<br />
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dedicated connectivity — all enabled<br />
securely and over a resilient MPLS network.<br />
Other Cloud/OTT services may leverage the<br />
IPX by using an approach that is similar to<br />
the BlackBerry model for connection via<br />
IPX. This enables mobile subscribers easy<br />
reach to the OTT or Cloud services because<br />
operators have created dedicated connectivity<br />
to the service. Going forward, these<br />
services will likely include other advanced<br />
mobile capabilities that leverage existing<br />
models like voice connectivity or interworking<br />
(such as Diameter or Messaging),<br />
and for services including — but not limited<br />
to — RCS and IMS.<br />
SAP <strong>Mobile</strong> Services believes that by<br />
combining this breadth of services that<br />
the full benefit of IPX can be achieved. For<br />
mobile operators, the choice of IPX provider<br />
should not just be decided with a view to<br />
the handful of services they are required<br />
to deliver today. It should be based on an<br />
understanding of their long-term needs. A<br />
future IPX provider will need to be able to<br />
deliver capacity and network quality, along<br />
with the full range of services, to deliver the<br />
full potential of IPX.<br />
William Dudley has 25 years experience<br />
building and managing telecommunications<br />
network infrastructures. He leads SAP<br />
<strong>Mobile</strong> Services Product Management for<br />
P2P and A2P Messaging. Dudley also<br />
provides industry commentary to both<br />
internal and external mobile industry<br />
publications, through analyst and media<br />
interviews, and is active in several industry<br />
groups. blogs. http://scn.sap.com/people/<br />
william.dudley/content<br />
John Candish is responsible for driving the<br />
company’s IPX business globally. Prior to<br />
this Candish held positions within Cable &<br />
Wireless, where he was responsible for the<br />
development of the GRX and messaging<br />
Services, subsequently leading the integration<br />
of the GRX & MMX services into the<br />
SAP <strong>Mobile</strong> Services portfolio.<br />
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PART THREE: IPX: CONNECTING OPERATORS TO REAP BENEFITS<br />
Nine Ways To Get More<br />
Value Out Of IPX<br />
By John Candish, Senior Director, IPX Business, SAP <strong>Mobile</strong> Services<br />
IPX can reduce connectivity costs,<br />
boost service quality and improve<br />
the time to implement new services<br />
and roaming destinations. Clearly,<br />
IPX should have a central role in<br />
operators’ strategies to develop<br />
and deliver future services. Here<br />
are 9 key lessons to guide operators<br />
along the path to IPX and equip<br />
them to maximise the benefits.<br />
1 Chose a quality network. An IPX is<br />
about far more than simply roaming data.<br />
A whole range of services from messaging<br />
through to real time voice and video now<br />
flow over IPX. It is therefore critical that<br />
operators chose an IPX capable of both<br />
providing the network service levels and<br />
resilience to deliver these services, as well<br />
as proactively managing the different<br />
traffic types.<br />
2 Plan for future capacity. The growth<br />
of roaming data volumes between mobile<br />
operators has been considerable over the<br />
last few years. Add to that voice, messaging<br />
and LTE-based services and the need<br />
to plan ahead when deploying IPX is clear.<br />
A 10 M, 30 M or 100 M connection may<br />
look adequate this year, but will it continue<br />
to meet demand in 18 months time?<br />
Putting in the right long-term infrastructure<br />
now will enable the operators to soft<br />
upgrade connections rapidly to meet<br />
demand in the future.<br />
3 Involve vendors early. Once an operator<br />
has connected and tested a service over<br />
IPX, whether that be voice, video, messaging<br />
or another application, they are able<br />
to access the entire community for that<br />
service on the IPX. The initial testing<br />
process is fundamental to success and<br />
enabling infrastructure vendors early is<br />
key to this. Even different releases of a<br />
platform from the same vendor can result<br />
in quite different results. Ensuring equipment<br />
vendors are closely involved in the<br />
process of IPX testing from an early stage<br />
significantly reduces project timelines<br />
and will enable full service launch sooner.<br />
4 Recognise the value of community.<br />
An IPX is about connecting operators<br />
together with each other and with services<br />
and applications. When choosing an IPX,<br />
an operator should consider both the<br />
range of services provided and the community<br />
of operators connected. Right now,<br />
operators may be connecting with each<br />
other to enable just one or two particular<br />
services, but in the longer term they are<br />
likely to want more.<br />
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5 Plan roaming connectivity at the same<br />
time as domestic role out. The success<br />
of roaming has set a high bar. Users increasingly<br />
expect all home services to be<br />
available when roaming, not six months or<br />
a year after launch. Although the initial<br />
focus may be on the domestic launch of<br />
new services such as LTE, consideration<br />
should be given to roaming of those<br />
services early on. IPX can enable rapid roll<br />
out of roaming connectivity. Provided<br />
operators build IPX connectivity into the<br />
deployment plans for new services early<br />
on, roaming revenues can be rapidly<br />
achieved for new services.<br />
6 Ensure the IPX service can translate<br />
between systems. IPX is about enabling<br />
connectivity and with the rapid roll out<br />
of new services this increasingly requires<br />
the ability to bring differing implementations<br />
of the same service together. For<br />
example, two operators may have<br />
deployed different voice switches with<br />
different SIP-I implementations. An IPX<br />
should be able to translate between these<br />
switches, ironing out the differences and<br />
enabling seamless communication<br />
7 Chose an IPX with strong Policy and<br />
Access control. IPX is about enabling<br />
connectivity, but for operators to be able<br />
to leverage this, it is vital that they remain<br />
in control of who can access services and<br />
what policies are applied to that access.<br />
It is therefore essential that an IPX<br />
provides clear control of services and<br />
does not merely function as a ‘dumb’ pipe<br />
connecting the various parties. An IPX<br />
that provides the ‘hubbing’ of services<br />
such as voice is not only able to increase<br />
the interoperability of services through its<br />
ability to ‘translate’ between systems (as<br />
described in #6). It is also able to control<br />
which partners are able to access services<br />
and which originators may connect, as<br />
well as applying the required policies to<br />
such traffic. As the telecom world moves<br />
to LTE and multimedia, services such as<br />
access and policy management will<br />
become even more critical.<br />
8 Select an IPX with strong accounting<br />
capability. Clearly, IPX must enable<br />
connectivity of services. But it must also<br />
ensure that the revenue streams follow<br />
services. Whether connecting data, messaging,<br />
voice or other applications, IPX<br />
has a key role to play in accounting functions<br />
ensuring payment follows the traffic.<br />
9 Consider the commercial relationships<br />
as well as the connectivity. When<br />
testing IPX connectivity it’s important<br />
to plan ahead and select the priority<br />
roaming destinations for a service.<br />
84
This enables an IPX to be working on the<br />
roll out of an operator’s roaming footprint<br />
ahead of the initial connection being<br />
deployed and tested. This significantly<br />
shortens the time between the IPX<br />
connectivity being completed and the<br />
revenues and service benefits delivered.<br />
By following this advice you will have what<br />
you need to make the most out of your IPX<br />
deployment. Having an IPX that is truly<br />
multi-service, thus supporting both existing<br />
services and services on your roadmap,<br />
operators will be able to realise full costsavings<br />
and competitive advantage, rather<br />
than have to make additional investments<br />
simply to keep step with the pace of change.<br />
John Candish is responsible for driving the<br />
company’s IPX business globally. Prior to<br />
this Candish held positions within Cable &<br />
Wireless, where he was responsible for the<br />
development of the GRX and messaging<br />
Services, subsequently leading the integration<br />
of the GRX & MMX services into the<br />
SAP <strong>Mobile</strong> Services portfolio.<br />
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PART THREE: IPX: CONNECTING OPERATORS TO REAP BENEFITS<br />
Making The Right<br />
Connections<br />
With major investments in<br />
Singapore, Australia, Africa,<br />
India, Indonesia, the Philippines,<br />
Thailand, Pakistan and Bangladesh,<br />
SingTel is Asia’s largest multimarket<br />
mobile operator. In July<br />
2011 the company embarked<br />
on a trial of IPX, the first step in<br />
exploring the establishment of<br />
a private international network<br />
connecting all the Group<br />
companies starting with SingTel<br />
<strong>Mobile</strong> (Singapore), Globe Telecom<br />
(Philippines) and AIS (Thailand).<br />
SingTel — determined to grow the<br />
business by leveraging scale, reach<br />
and service innovation — used<br />
the trial to better understand the<br />
technology and benefits it delivers.<br />
Chief among these is connectivity<br />
to deliver international mobile<br />
data roaming and voice traffic.<br />
However, an international private<br />
network also allows the rapid<br />
deployment of new applications<br />
and services, shortening the<br />
time to market and potentially<br />
increasing competitive advantage.<br />
David Ng — Vice President, Regional<br />
Technical, of SingTel’s International team<br />
in the Group Consumer organization<br />
discusses the trial, results and overall<br />
outlook for IPX in the Asia Pacific region.<br />
SingTel has recently concluded its trial<br />
of IPX. Please share the rationale behind<br />
your decision to test this technology.<br />
Moving forward, IPX would offer a flatter IP<br />
network architecture, enabling Voice over LTE<br />
services and supporting new services like<br />
RCSe. This is an important consideration<br />
since OTT players are also moving in the<br />
direction of Voice over IP services.<br />
86
In my position, it is part of my responsibility<br />
to look at technology on the horizon and<br />
understand what it provides in terms of both<br />
service capabilities and competitive advantage<br />
to the business we are operate in. In<br />
the case of IPX, we wanted to see how we<br />
can best manage our mobile data roaming<br />
costs. We identified IPX as a good platform<br />
to achieve this and looking again to the<br />
horizon, LTE is also emerging strongly and<br />
steadily in the market landscape. And this<br />
also plays a role in our thinking. Moving<br />
forward, IPX would offer a flatter IP network<br />
architecture, enabling Voice over LTE<br />
services and supporting new services like<br />
RCSe. This is an important consideration<br />
since OTT players are also moving in the<br />
direction of Voice over IP services.<br />
For these reasons, we thought IPX would<br />
be a good platform. It addresses the mobile<br />
data roaming problem we originally set out<br />
to solve and, looking ahead, it might also<br />
deliver us an advantage when LTE is rolled<br />
out aggressively across the region. At that<br />
point, LTE roaming will need to be enabled,<br />
and IPX is certainly the right platform to<br />
facilitate LTE roaming. What’s more, IPX<br />
allows the ability to do a local breakout,<br />
which naturally provides a better customer<br />
experience to the roamer.<br />
So, before we jump onto the IPX platform,<br />
we conducted this trial to understand its<br />
capabilities, performance and deployment<br />
challenges. That is, what kind of quality IPX<br />
enables when we carry voice and how<br />
it performs when it carries this traffic<br />
between two geographical territories.<br />
Let’s discuss the IPX trial. Where are<br />
you in the process and what have you<br />
achieved?<br />
Originally, we picked three operations<br />
in three locations — SingTel <strong>Mobile</strong> in<br />
Singapore, Globe in the Philippines and<br />
AIS in Thailand where each operator<br />
connected to a private international IP<br />
network provided by SAP <strong>Mobile</strong> Services<br />
IPX via the respective local points of<br />
presence. To date, we have concluded the<br />
IPX validation test on delivering mobile data<br />
roaming, mobile voice roaming and<br />
international IDD voice amongst the three<br />
operators over the IPX connection. The<br />
validation test covered a good mix of test<br />
cases based on SIP-I interconnect (for<br />
mobile voice roaming and international IDD<br />
voice), GSMA IR87 (for inter-operator SIP-I<br />
inter-working) and GSMA IR35 (for mobile<br />
data roaming). I am pleased to share that<br />
the test results were positive.<br />
The IPX trial successfully demonstrated<br />
the reliability of IPX as a managed private<br />
IP network that can transport multiple<br />
services within a single IP connection across<br />
different geographies. What I can also share<br />
with you is that — internally — we are<br />
brainstorming and discussing how to<br />
take IPX forward.<br />
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87
Global mobile data traffic growth/regions<br />
MEA has the highest growth rate (104%) from 2011-2016<br />
APAC* will generate 40% of all mobile data traffic by 2016<br />
Exabytes per month<br />
12<br />
10<br />
8<br />
6<br />
4<br />
2<br />
78% CAGR<br />
2011-2016<br />
5.88%<br />
6.54%<br />
6.83%<br />
18.18%<br />
22.56%<br />
40.01%<br />
0<br />
2011<br />
2012 <strong>2013</strong><br />
2014 2015 2016<br />
*Includes<br />
Japan<br />
Middle East and Africa (MEA) Central and Eastern Europe (CEE) Latin America (LATAM)<br />
North America (NA) Western Europe (WE) Asia Pacific (APAC)<br />
Figure 1: Based on data from Cisco Visual Networking Index. Global <strong>Mobile</strong> Data Traffic Forecast, 2011-2016.<br />
www.slideshare.net/CiscoSP360/cisco-visual-networking-index-vni-global-mobile-data-traffic-forecast-20112016<br />
SingTel clearly has an understanding of<br />
the benefits of IPX. Interestingly, Asia<br />
Pacific leads in awareness of IPX overall.<br />
Why do you think this is?<br />
As we all know, this region is seeing a shift<br />
in the market landscape due to the rise of<br />
OTT players. According to the Cisco Visual<br />
Networking Index <strong>Mobile</strong> 2012, Asia Pacific<br />
is expected to account for up to 40 percent<br />
of global mobile data traffic by 2016. As a<br />
result, many — if not all — operators are<br />
facing margin squeeze due to the scissoreffect<br />
of diverging mobile data traffic and<br />
revenues. This forces them to think about<br />
ways to generate revenues and identify<br />
new services they can offer to customers.<br />
At the same time, it’s very important for us<br />
as operators to manage our bottom line.<br />
Against this backdrop, cost management<br />
becomes a key issue. If the IPX platform<br />
performs and delivers its promises, then it<br />
will allow us as operators to consolidate and<br />
88
optimise our IP interconnect for delivering<br />
packetised traffic outside our network.<br />
For example, if IPX does indeed allow us<br />
to consolidate and deliver mobile data<br />
roaming, BlackBerry and tele-presence via a<br />
single IP pipe, then it is clearly more efficient<br />
and cost effective. This is why I believe<br />
many operators in the region are looking<br />
into exploring IPX. IPX is also seen as a way<br />
to ‘future-proof’ the networks and support<br />
future IP services such as HD services like<br />
HD voice and HD video.<br />
We have discussed the business benefits<br />
of IPX — what are the benefits to the<br />
customer?<br />
Take the case of customers who are accessing<br />
data while roaming. Their Internet traffic<br />
when they are abroad is actually routed all<br />
the way back to their home network first. In<br />
other words, the signalling and payload part<br />
of the data session is passed to the local<br />
operator’s network and then back to the<br />
customer’s home network.<br />
This presents two challenges. For the<br />
operator: it’s about how to maintain cost<br />
effectiveness. For the customer it’s about<br />
quality of service and the requirement for<br />
a consistent and good experience no<br />
matter where they are.<br />
If you go through IPX, then you can solve<br />
these issues because you have the control<br />
and can deliver a desired quality of service<br />
— a level of service that also delivers a user<br />
experience the customer will enjoy. And this<br />
is where the local breakout capability I mentioned<br />
before comes into play. With IPX if<br />
you can do a local breakout, which means<br />
the roamer will be able to enjoy the same<br />
level of quality as the local customer does.<br />
It’s a better experience all round.<br />
Your trial focuses on using IPX to connect<br />
operations within the group company.<br />
What is it about IPX that makes good<br />
business sense in this scenario?<br />
I think if you take the perspective of a group<br />
company, a company where it has many<br />
operations across different countries, then<br />
there is an incentive to find a way to better<br />
interconnect the operations with each other.<br />
At the least it’s about making sure that the<br />
mutual customer, who roams between the<br />
If you go through IPX, then you can solve these issues<br />
because you have the control and can deliver a desired<br />
quality of service — a level of service that also<br />
delivers a user experience the customer will enjoy.<br />
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different countries that are interconnected<br />
via IPX, will have a more consistent quality<br />
service experience.<br />
Looking back at your recent IPX trial,<br />
what can you share in the way of key<br />
learnings, impressions or surprises?<br />
The findings are positive. Aside from the<br />
technology, we also learned more about the<br />
talents and the skills set that we would need<br />
in a service team in order to offer IPX and to<br />
support it. The service team plays a very<br />
important role in delivering the service in<br />
a timely manner.<br />
As you pointed out, IPX allows operators<br />
to control and deliver quality services to<br />
roaming customers, for example. Looking<br />
at the range of what an IPX network<br />
can support — new multimedia services<br />
or even provisioning services into cars<br />
— what excites you most?<br />
Without divulging too much of our internal<br />
strategy, I would say the type of services we<br />
are going to offer are likely to be more IP<br />
oriented. There is a very good match between<br />
what we can use IPX for and how it can<br />
benefit us at SingTel as a group operator, as<br />
well how IPX can benefit our customers.<br />
The multimedia services are also interesting.<br />
If the analysts are correct, IPX will drive<br />
more video, more social sharing and more<br />
visual content to our phones. Therefore,<br />
the high quality of voice and the ability to<br />
exchange video or other visual content<br />
are turning phones into a medium that is<br />
more about seeing content and seeing<br />
people than necessarily just speaking.<br />
Overall, where do over-the-top service<br />
providers fit into the IPX landscape?<br />
Are they a threat, an opportunity or<br />
something else?<br />
My personal philosophy is that there is no<br />
‘forever enemy’. We can compete on one<br />
hand, but we can also be allies on the other.<br />
So, yes IPX may play a role in bringing OTT<br />
players and telecom players together to<br />
cooperate in a slightly more meaningful way,<br />
which will also benefit the mutual customer.<br />
In my view, there are similarities here to<br />
Open Innovation, an approach and a mindset<br />
that is all about finding ways to collaborate<br />
for mutual benefit.<br />
David Ng is the Vice President (Regional<br />
Technical) within the International arm of<br />
Group Consumer at SingTel. In this role he<br />
drives the regional network initiatives and<br />
strategies within SingTel to shape technology<br />
strategy and achieve synergies across the<br />
SingTel Group. Prior to this Ng was Director<br />
of Operations at Telkomsel, a SingTel joint<br />
venture company in Indonesia, where he<br />
was in charge of network design and<br />
operational management.<br />
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PART THREE: IPX: CONNECTING OPERATORS TO REAP BENEFITS<br />
A Brave, New, All-IP World<br />
by Elena Sacco, Chairman, The Interconnection Working Group (IWG),<br />
GSMA & Senior Interconnect Manager, TIM<br />
An open and flexible model for<br />
service exchange will be part of the<br />
critical path the industry will travel<br />
in order to implement Voice over<br />
IP (VoIP).<br />
IP eXchange, or IPX, is the industry standard<br />
solution to solve the interconnect problem<br />
by setting out common specifications for<br />
end-to-end IP traffic delivery and quality of<br />
service. On the market there is a high level of<br />
awareness and interest in IPX. This is linked<br />
to the fact that the industry is moving to an<br />
all-IP environment, which creates the need<br />
for an interconnection enabler over a private<br />
secure network, at an affordable price and<br />
with the guarantee of the required QoS.<br />
the market and the economy have had<br />
some impact on contingency plans,<br />
operator targets and —ultimately — the<br />
pace of progress.<br />
Dramatic dynamics<br />
At first glance, it may seem that IPX is a<br />
chicken-and-egg situation. But that will<br />
change dramatically as more operators<br />
launch IP services.<br />
To understand the hold-up, it’s important<br />
to understand the dynamics at play here.<br />
For mobile operators, moving to an all-IP<br />
environment means a revolution in communications,<br />
and this implies high investments.<br />
Clearly, there are benefits to IPX, but there<br />
is currently a low level of demand for IPX<br />
services due to the low number of IP interconnections<br />
between operators on the<br />
market. This is because mobile operators<br />
are not yet launching IP data services on<br />
a large scale.<br />
However, this is changing. There is strong<br />
evidence of a shift right now as the market<br />
moves toward an all-IP world. But, of course,<br />
VoIP services are expected to drive the<br />
move to an all-IP environment that will<br />
stimulate the use of IPX.<br />
Nonetheless, several factors, such as<br />
the existence of VoIP services offered by<br />
non-telecom players, solutions such as<br />
Circuit Switch (CS) Fallback, the high cost<br />
of LTE implementation and the availability<br />
of LTE devices, are slowing down the<br />
advance of VoLTE. These same factors are<br />
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also slowing the evolutionary path of<br />
mobile operators towards offering VoIP<br />
services in general.<br />
Driving demand<br />
However, if VoIP services may not be<br />
considered the imminent driver of IPX deployment<br />
on a large scale, data services requiring<br />
a guaranteed QoS might serve to<br />
stimulate market demand for IPX services.<br />
Peering matters<br />
When it comes to IPX, peering among IPX<br />
providers is an essential element because<br />
it enables global reachability. Without full<br />
peering among IPX providers on the market<br />
there is the risk that IPX services will be<br />
developed as ‘silo’ solutions. This certainly<br />
doesn’t serve the better interests of mobile<br />
operators, or their customers. Solutions<br />
cannot be offered as ‘islands’, so this is<br />
exactly what operators must avoid.<br />
LTE Roaming is the perfect example. With<br />
the high-speed data transmission enabled<br />
by LTE, it might be risky to keep on applying<br />
data pricing plans for roaming traffic based<br />
on volume or usage per month. Such pricing<br />
models may, in fact, impact consumers negatively<br />
as faster data speed will significantly<br />
increase data consumption.<br />
New pricing schemes, where charging is<br />
more in line with the transmission opportunities<br />
enabled by LTE, may be based, for<br />
example, on different guaranteed QoS levels<br />
per different services (and also per application,<br />
as it may happen in the case of cloud<br />
services). In this case IPX would be the<br />
essential enabler, being the only current<br />
solution for a QoS guaranteed IP interconnection<br />
able to ensure proper traffic<br />
exchange between different players on<br />
the market.<br />
Peering enables general interoperability<br />
of services on IPX between operators and<br />
multiple connections and global reachability<br />
via one-stop connectivity. In other words<br />
when full peering among IPX providers is a<br />
reality on the market, operators, through just<br />
one contract with IPX providers, can update<br />
connections to hundreds of operators and<br />
third-party players around the world.<br />
Peering also enables the offering of data<br />
services on IPX at a high QoS and, above<br />
all, the migration of voice services over IP.<br />
Indeed, with the migration of voice services<br />
on IP there is clearly the need to ensure crossborder<br />
interconnection on a global level.<br />
Equally important is the guarantee of a level of<br />
quality related to these voice services, which<br />
can be applied globally and which is comparable<br />
to the high level of QoS end-users<br />
already experience. Worldwide peering makes<br />
IPX the key enabler of such a migration.<br />
92
Cooperate and interconnect<br />
The move to an all-IP world doesn’t only<br />
present operators with a world of opportunities.<br />
There is also the increased competition<br />
from alternative service providers<br />
offering services to subscribers, creating<br />
the need for operators to interconnect with<br />
these players.<br />
Clearly, the big question is how to implement<br />
a proper interconnection with these<br />
parties and find a model that properly compensates<br />
all the players in the value chain.<br />
Elena Sacco works within the Industry<br />
Relations & Roaming Division of Telecom<br />
Italia, where her areas of expertise include<br />
business development, Interconnection and<br />
Roaming with a strong focus on the evolution<br />
of mobile TLC services. Sacco also<br />
chairs the Interconnection Working Group<br />
(IWG), one of the eight permanent Working<br />
Groups under the GSM Association (GSMA)<br />
IWG brings together more than 350<br />
members including mobile operators,<br />
international carriers, hubbing providers<br />
and equipment providers.<br />
There will be many approaches — but one<br />
common objective. The operator’s task here<br />
is to find a model of co-existence and<br />
cooperation that allows them —and other<br />
players — to achieve their objectives and<br />
stay relevant. In this case, the IPX network,<br />
because of all the characteristics highlighted<br />
above, will be the key solution to support the<br />
market’s interconnect objectives.<br />
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PART THREE: IPX: CONNECTING OPERATORS TO REAP BENEFITS<br />
Boosting Trust,<br />
Building Business<br />
By Ranjeet Wilkhu, Director, Neucom Solutions<br />
In some African and the Middle<br />
Eastern countries, the practise<br />
of outsourcing international traffic<br />
management is seen by regulators<br />
and Ministries of Communications<br />
(MoCs) as a means to get their<br />
fair share of revenues from local<br />
operators. The outsourcing model<br />
is considered by MoCs as a way<br />
round the notion that operators<br />
declare lower levels of international<br />
traffic than they actually handle,<br />
resulting in lower payments to<br />
the local MoC.<br />
While outsourcing may be a way to collect<br />
‘true’ revenues, MoCs and regulators have<br />
to balance between enforcing license<br />
conditions without damaging competition<br />
at the consumer level and having a negative<br />
impact on quality of service (QoS). The two<br />
operating models gaining traction with<br />
MoCs are monitoring operator traffic<br />
streams and outsourcing international<br />
traffic management to third parties.<br />
Mixed results<br />
The first model centers on new controls and<br />
visibility. Some MoCs have empowered the<br />
regulator to have access to near real-time<br />
data for all international traffic — voice,<br />
SMS, MMS — managed by the local operators.<br />
To gain visibility into this data within<br />
the operator network the regulator invests<br />
in traffic monitoring systems. The information<br />
gathered by such a system allows the<br />
MoC to calculate and collect correct amount<br />
of levy from the operators. A number of<br />
traffic management and monitoring systems<br />
tailored to a specific regulator’s<br />
requirements are available on the market<br />
to make this an easy task.<br />
The other business model being adopted is<br />
around third-party management. According to<br />
this model the MoC outsources international<br />
traffic management to an independent third<br />
party or to an international Wholesale<br />
<strong>Operator</strong>. All domestic operators in a given<br />
country are then required to send and receive<br />
international calls through single or multiple<br />
international gateways (switches) managed<br />
by the third party.<br />
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Some MoCs have even gone so far as to<br />
outsource financial settlements between<br />
local operators and international operators,<br />
making the third party responsible for<br />
billing, collections and payments. In this<br />
scenario the third party may also earn<br />
revenue from the financial transaction. In<br />
addition, the third party may be entitled to<br />
a percentage of revenue, or be permitted to<br />
charge a fixed fee plus a share of revenues,<br />
or gross margin. The third party is also<br />
responsible for all operator activity, including<br />
negotiation of operator interconnects<br />
and traffic routing.<br />
Under the latter model local operators are<br />
concerned that their interests and the interests<br />
of the third party — the company to<br />
which traffic management has been outsourced<br />
—are not aligned. Put another way,<br />
operators believe the third party may be<br />
more focused on maximising profit for<br />
themselves than on reducing termination<br />
cost for the operator, or delivering QoS<br />
for the customer.<br />
Clearly, this would have obvious and<br />
negative repercussions for the operator.<br />
At one level, an operator suffers a loss in<br />
revenues. At the other end of the spectrum,<br />
the perceived lack of attention for QoS could<br />
result in an increased number of customer<br />
complaints and an increased burden on<br />
customer care services.<br />
IPX solves issues<br />
When it comes to connectivity across the<br />
region and with the rest of the world, the<br />
advance of IPX provides interesting options<br />
and opportunities. By way of background,<br />
provisioning connectivity for operators in<br />
Africa and Middle East can be an expensive<br />
and a lengthy process.<br />
The high cost of provisioning connectivity,<br />
be it via cable or satellite circuits, is driven<br />
by scarce capacity. At present a large proportion<br />
of voice and SMS traffic is carried<br />
<strong>Operator</strong>s believe the third party may be more<br />
focused on maximising profit for themselves than<br />
on reducing termination cost for the operator, or<br />
delivering QoS for the customer.<br />
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Providers deliver guaranteed QoS and gain a share of the revenue stream<br />
$ $ $<br />
SP A<br />
IP Network<br />
IPX 1 IPX 2<br />
IP Network<br />
MNOs<br />
SLA<br />
SLA<br />
SLA<br />
MNOs<br />
Figure 1: Based on data from GSMA.<br />
over expensive TDM networks to and from<br />
these regions to manage and maintain QoS.<br />
Connecting to IPX reduces this cost since the<br />
operator does not have to procure individual<br />
TDM circuits for each operator interconnection.<br />
Additional savings are gained from not<br />
having to send traffic destined for a neighbouring<br />
country via Europe or the U.S. For<br />
example, telephony traffic from Iran to Iraq<br />
is directed to Europe/U.S. first, and then<br />
delivered to the final destination, Iraq. Therefore,<br />
two separate expensive TDM circuits are<br />
used to transport a single call. On IPX, both<br />
operators may be connected to the same<br />
IPX, which means the traffic will not<br />
trombone. Instead, it will be completed<br />
using single hop.<br />
Once IPX reaches maturity and creates<br />
adequate connected communities, then<br />
an operator connecting to IPX will not need<br />
multiple connections to multiple operators<br />
for multiple products. A single connection<br />
to an IPX will do the job. This is because<br />
voice calls, SMS, MMS and other traffic<br />
are carried on the same, single and secure<br />
network connected point-to-point, thus<br />
ensuring optimal routing, an improved QoS<br />
and excellent customer experience.<br />
96
The needs of MoCs for transparency and<br />
accountability are also addressed. In other<br />
words, IPX would provide MoCs or regulators<br />
access to traffic reporting and monitoring,<br />
giving them visibility into near real-time<br />
traffic data. Such information, obtained<br />
through an operator-independent source,<br />
would further give MoCs and regulators<br />
confidence that they are paid their share<br />
of dues for international traffic. This, in turn,<br />
would build trust in the system, and remove<br />
the need to invest in expensive monitoring<br />
systems, or outsourcing international traffic<br />
management to third parties.<br />
and out of the country - visibility that builds<br />
trust and — ultimately — puts operators<br />
back in charge.<br />
Ranjeet Wilkhu is a Director with Neucom<br />
Solutions, an independent telecoms consulting<br />
company. His efforts to forge relationships<br />
with telecom businesses globally allowed him<br />
to make a major contribution to the successful<br />
implementation of a program under the<br />
Iraqi Ministry Of Communications titled<br />
“International Marketing and Management<br />
of Voice, SMS and MMS Traffic.”<br />
In Africa and the Middle East IPX is in an early<br />
roll out phase. One hold up is the further<br />
work needed to establish standards and<br />
encourage acceptance within the operators<br />
and mobile network operator community. I<br />
do not expect to see a huge uptake of IPX<br />
interconnects in Europe or the U.S. in the<br />
near future. In Asia, the Middle East and<br />
Africa IPX offers a viable option for managing<br />
multiple interconnects with a single IP<br />
connection. This has a number of advantages.<br />
Chief among these: it would allow<br />
domestic operators the flexibility to negotiate<br />
their own termination rates with other<br />
operators connected to IPX, while maintaining<br />
QoS. At the other end of the spectrum,<br />
MoCs and regulators would have access to<br />
accurate information about traffic flows in<br />
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PART THREE: IPX: CONNECTING OPERATORS TO REAP BENEFITS<br />
Voice: The Ipx Killer App<br />
By Richard Midgett, Managing Director, Wireless Business,<br />
PCCW Limited<br />
Hong Kong is a vibrant telecommunications<br />
market where customers<br />
have come to expect — even demand<br />
— high-speed, high quality service offerings<br />
through fixed-line and mobile<br />
services. Naturally, operators, including<br />
PCCW, have responded with<br />
triple-play and even quadruple<br />
play services. Now, as the region’s<br />
mobile industry shifts from being<br />
voice-centric to data-centric, LTE<br />
has emerged as the foundation of<br />
operators’ future business. What<br />
motivated PCCW to launch LTE in<br />
April, and what services will drive<br />
adoption? How can LTE both boost<br />
domestic service and support<br />
international roaming? To what<br />
extent is IPX an essential route to<br />
4G and next-generation services?<br />
Richard Midgett provides us a<br />
candid and first-hand perspective.<br />
PCCW is the largest and most comprehensive<br />
provider of communications services<br />
in Hong Kong, where it meets the needs of<br />
consumer customers and enterprises —<br />
both local and international — with a wide<br />
range of services, including 4G/3G/2G<br />
mobile and public Wi-Fi wireless services,<br />
traditional and next-generation fixed line<br />
services, Internet access and broadband<br />
pay-TV, a wide array of business services,<br />
as well as large-scale IT solutions.<br />
Trace the history of PCCW and there is a<br />
keen and consistent focus on delivering<br />
value-add to fixed-line and mobile services.<br />
This approach has allowed PCCW to evolve<br />
from a franchised monopoly fixed operator<br />
to become the provider of Hong Kong’s first<br />
quadruple-play experience. In addition to<br />
offering local services, PCCW operates international<br />
carrier services under PCCW Global<br />
and has recently launched an LTE network<br />
in the U.K. via its UK Broadband subsidiary.<br />
Hong Kong is a crowded and competitive<br />
market where customers have developed a<br />
tremendous appetite for — and appreciation<br />
of — data services. Even before PCCW<br />
launched LTE in April 2012 the residents of<br />
Hong Kong were long accustomed to having<br />
the highest quality of coverage and<br />
extremely fast data connections. At home,<br />
a majority of the population has access to<br />
the Internet at speeds up to 1 Gbps via fibre<br />
services. In fact, the typical offering now is<br />
considered to be 100 Mbps. On the move,<br />
98
high-speed access is everywhere, even<br />
in unusual indoor areas: parking garages,<br />
elevators, subways — the works!<br />
Put another way, the Hong Kong consumer<br />
is accustomed to high fixed-line speeds that<br />
are widely available. Against this backdrop,<br />
mobile is not typically a substitute where<br />
fixed-line access is not available. Instead,<br />
mobile functions as an extension of the<br />
high-speed access consumers have come<br />
to expect in their daily lives. Spoiled by highspeed<br />
access at home, these consumers<br />
demand this when they step out of their<br />
home, and across a variety of devices.<br />
Highly motivated<br />
Asia-Pacific, as a whole, is poised to become<br />
the largest LTE market in the world by 2015.<br />
Accordingly, Hong Kong is seeing an exponential<br />
growth in data adoption and in the<br />
volume of data consumption on the mobile<br />
networks. Naturally, this creates concerns<br />
about the availability of adequate spectrum.<br />
As a rule, more customers on a mobile<br />
network will cause each user’s speed to<br />
drop because everyone on that network<br />
shares it. Keeping pace with this dynamic<br />
requires operators to increase the capacity<br />
of the network. At PCCW, acquiring new<br />
capacity was one of the drivers behind the<br />
decision to launch LTE.<br />
Of course, investments in this new infrastructure<br />
should also deliver the best<br />
performance possible for our customers.<br />
LTE is an obvious choice for technology,<br />
but an adequate supply of handsets that<br />
make use of that technology in the relevant<br />
spectrum is also critical. This point cannot<br />
be overstated.<br />
Look back to the introduction of 2G (GSM)<br />
technologies. <strong>Operator</strong>s built the networks,<br />
but customer adoption lagged behind<br />
because the handsets failed to deliver the<br />
quality and performance they wanted. They<br />
were big, clunky and battery-life was limited.<br />
It was only after new and improved handsets<br />
hit the market that we saw a significant<br />
increase in customer adoption of 2G. The<br />
launch of 3G followed a similar pattern.<br />
Although the 3G networks were operational,<br />
the mass-market move to 3G didn’t happen<br />
until the handsets were mature.<br />
And it’s the same with LTE, which is why<br />
PCCW purposely launched in April with<br />
a suite of handset products that meet<br />
customer requirements. Specifically, PCCW<br />
started offering LTE handsets, tablets and<br />
dongles from major brands like Samsung,<br />
HTC, LG and Huawei in the run-up to the full<br />
commercial launch of its 4G network. Even<br />
so, LTE handsets are currently a two-chipset<br />
solution, which means they have the existing<br />
chipset that is used in 3G phones plus an<br />
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additional chipset to extend that capability<br />
to 4G. The downside: they use more battery<br />
to power the two chipsets, which either<br />
impacts the performance or increases<br />
the size and weight of the handsets.<br />
Nonetheless in relative terms these<br />
handsets perform better than priorgeneration<br />
predecessors, are improving<br />
rapidly, and are expected to become fully<br />
optimised by 1Q <strong>2013</strong>.<br />
frequency band for LTE, which could hold<br />
great promise for roaming in the future.<br />
Most handset manufacturers will find it<br />
impractical to support all the frequency<br />
bands being used globally for LTE, so it<br />
will be important to identify the key bands<br />
which represent the greatest common<br />
denominator for travelers. In view of this,<br />
I think it’s no mistake that the 1800 band<br />
is already supported in many handsets.<br />
LTE Business benefits<br />
At PCCW our core strength is providing the<br />
highest quality networks which enable customers<br />
to communicate with each other<br />
and with services on the Internet. To this<br />
end we have built — and continue to build —<br />
network capability that meets customers’<br />
needs for coverage and speed. This is where<br />
LTE comes in — PCCW made the decision to<br />
launch LTE to continuing delivering on these<br />
objectives. Of course, LTE roaming also<br />
plays a role, but there are challenges.<br />
It’s still early days for LTE and for those<br />
customers who are enjoying LTE in their<br />
domestic markets. So, when these early<br />
adopters travel out of their domestic<br />
market, their roaming service will probably<br />
fall back to 3G networks. But there is no<br />
ignoring the fact that LTE has already<br />
created the customer expectation for higher<br />
quality service — at home and abroad. At<br />
PCCW it will be a challenge for us to keep<br />
our customers satisfied because they<br />
already expect to enjoy the same services<br />
when roaming that they have at home, and<br />
that will soon include LTE data speeds.<br />
Currently, there is a great disparity in terms<br />
of what frequency bands are being identified<br />
and made available for LTE globally. While<br />
the 2600 frequency band is broadly adopted<br />
as a primary band it is not available<br />
everywhere. Some markets, including Hong<br />
Kong, are actively re-farming the 1800<br />
IPX underpins data<br />
At PCCW we view IPX as a managed IP<br />
network, one that provides a reliable quality<br />
of service and enables operators to connect<br />
to one another and offer a managed quality<br />
100
of service to their customers. That is a given.<br />
It’s what operators deliver over IPX in the way<br />
of services that becomes the real question.<br />
At PCCW the first service to be embraced,<br />
under what was called GRX, was all about<br />
the capability to have our roaming customers’<br />
data traffic routed back to us. This<br />
arrangement has been essential in<br />
determining how, and how well, we serve<br />
our customers. More recently there is<br />
discussion about local breakout and the<br />
benefits it delivers. We may indeed see<br />
arrangements move in this direction,<br />
but not until the service management<br />
capabilities are in place to enable operators<br />
to have their own policy controls. This is<br />
essential because operators need to have<br />
‘remote control’ to ensure visibility,<br />
enforcement of policies and the ability<br />
to manage service quality.<br />
But it’s not just about maintaining control<br />
of the service; it’s also about avoiding<br />
unfortunate outcomes for the customer.<br />
Take the example of ‘bill shock’. Customers,<br />
and some regulators, have called for<br />
operators to inform roaming customers<br />
of the amount of data they use — and the<br />
precise cost — when they are abroad. There<br />
is also the expectation that operators will<br />
enforce limits to protect the customer from<br />
bill shock by suspending data services<br />
altogether when usage exceeds a predetermined<br />
threshold. In many cases,<br />
PCCW being one, this emphasis on<br />
protecting customer interest is now in place.<br />
Accordingly, until ‘remote controls’ can be<br />
put into place, there will continue to be a<br />
demand for the GRX model of data traffic,<br />
with the traffic being routed back to the home<br />
networks, where operators have visibility<br />
and control. Therefore, IPX is part of an<br />
on-going business plan for GRX traffic. This<br />
will certainly be the case for the near-term,<br />
and will continue until the systems to enable<br />
local breakout materialise and are tested.<br />
Voice gets a boost<br />
But this scenario is not just about the<br />
benefits to roaming customers using<br />
data services. There is also an opportunity<br />
around voice.<br />
Awareness of the main benefits which<br />
IPX provides are currently focused on<br />
future scenarios for LTE roaming customers.<br />
In other words, the use cases around LTE<br />
roaming and — later— VoLTE immediately<br />
come to mind. However, there is a much<br />
more immediate opportunity to consider:<br />
how IPX can already enhance today’s<br />
3G/2G voice roaming.<br />
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Consider when a PCCW customer roaming<br />
overseas receives an incoming call. Today<br />
this call is rerouted to the visited network<br />
via a traditional IDD operator. In other<br />
words, PCCW passes that call to the IDD<br />
operator, and it is delivered via an uncertain<br />
number of network connections, albeit<br />
hopefully with the CLI — or calling line<br />
identity— so the PCCW roaming customer<br />
can see who is calling in the first place.<br />
With an IPX it is possible to redirect this IDD<br />
traffic and deliver added value. In practice<br />
the IPX provider can deliver a guaranteed<br />
quality of service between mobile operators.<br />
Furthermore, the IPX provider can ensure<br />
the call-control signaling is reliably exchanged<br />
between home and visited networks to<br />
facilitate enhanced home- network control if<br />
the call is unanswered. Because of this<br />
benefit, IPX also becomes the obvious first<br />
choice path for an operator to route voice<br />
traffic to a roaming customer.<br />
Put simply, this approach provides the<br />
operator important visibility into what is<br />
happening on the other end. Is the subscriber<br />
busy on the phone? Is the subscriber<br />
offline? Knowing this for sure equips the<br />
operator to manage the call, rather than<br />
just blindly sending it to the IDD operator<br />
with hopes for the best.<br />
right now. First, there is more controlled<br />
routing. As a result, there is also a higher<br />
quality of service. Second, the operator<br />
can determine what to do when a call is not<br />
answered. Should it be connected to voice<br />
mail, or some other answering services?<br />
The operator can decide and take specific<br />
action. With this comes the opportunity for<br />
operators to offer value-added services to<br />
roaming customers to manage those calls<br />
in new and innovative ways. Perhaps the<br />
roamer would like calls routed to a service<br />
that records the message and delivers it,<br />
similar to Bubble Talk. This is the type of<br />
service travelers could find useful, and<br />
one that operators cannot deliver so<br />
easily today.<br />
Three IPX scenarios<br />
Broadly speaking, there are three key<br />
scenarios around IPX involving mobileoriginated<br />
voice traffic, which offer a varying<br />
degree of benefit to the home operator.<br />
Imagine first a scenario where the roaming<br />
customer makes a local call in the local<br />
country. If you are the home operator you<br />
still have to rely on the visited network to<br />
deliver the call. In other words, IPX doesn’t<br />
deliver notable benefit. This is not the case<br />
in the next scenario.<br />
Thus, IPX enables a number of advantages<br />
for the operator and the roaming customer<br />
Imagine, however, that a roamer wants to<br />
call a number in their home country. In this<br />
102
scenario there is the potential for the<br />
visited network to route that call back<br />
through the IPX to the roamer’s specific<br />
home network operator, not just back to<br />
the roamer’s home country. In this way,<br />
the home network operator is not only<br />
delivering the call, it is controlling how<br />
the call is delivered. IPX equips the home<br />
network operator to manage that call in<br />
new and innovative ways.<br />
The final scenario is an IDD call to a third<br />
country, where the home network operator<br />
and the visited network operator are dependent<br />
on other operators to manage and<br />
terminate the call. Whether or not IPX is<br />
used in this scenario would be subject to<br />
an agreement between the operators on<br />
how to manage such calls. Nonetheless, a<br />
benefit for that traffic to be routed back to<br />
the home network, where it can be<br />
managed, potentially still exists.<br />
The second scenario, in particular, illustrates<br />
how IPX delivers benefits to the<br />
customer by enabling the home network<br />
operator to enhance quality of service and<br />
— if they choose —deliver additional value<br />
-add on top of the service. But it doesn’t stop<br />
there. There are likely to be cost —or cost<br />
management — benefits, which the home<br />
operator can pass along to its customers.<br />
Clearly, IPX services can take all the guesswork<br />
out of call delivery control for the<br />
home network. There are benefits for mobile<br />
operators and their roaming customers, as<br />
well as the IDD operators. For IDD operators<br />
it means modifying their current business<br />
model to become IPX providers. Underlining<br />
this shift is the recognition that IPX will be<br />
the medium for voice communications in<br />
the future. Granted the IPX business model<br />
is built around the potential of mobile-tomobile<br />
data connectivity, but IPX is also at<br />
the core of the more traditional killer<br />
app: voice.<br />
Richard Midgett has over 30 years experience<br />
in the telecommunications industry. He began<br />
his career with Cable & Wireless USA, where<br />
he served in a range of technical management<br />
roles. After joining Hong Kong Telecom’s CSL<br />
mobile team in 1989, he served in a variety of<br />
areas spanning business and product development,<br />
government policy and regulation,<br />
and overseeing the commercial business for<br />
roaming, international operator, and wholesale<br />
services before moving to PCCW. Mr.<br />
Midgett has also held active positions in a<br />
number of industry organisations including<br />
most notably serving as chairman of the<br />
GSM Association, chairman of GSM Asia-<br />
Pacific, and as a member of the board of<br />
governors of the Universal Wireless<br />
Communications Consortium.<br />
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PART FOUR<br />
LTE: UNLEASHING INNVOVATION<br />
TO DELIVER RESULTS
PART FOUR: LTE: UNLEASHING INNVOVATION TO DELIVER RESULTS<br />
Enabling 4G LTE For All<br />
By Ed Chao, Senior Vice President, Engineering and<br />
Network Operations, MetroPCS<br />
MetroPCS Communications, Inc. —<br />
the fifth largest U.S. facilities-based<br />
wireless carrier operating on its own<br />
network — reached a milestone in<br />
August 2012, becoming the first<br />
operator globally to launch Voice<br />
over LTE (VoLTE) services. The rollout<br />
of these services marks a win<br />
in the international race to provide<br />
next-generation mobile voice and<br />
paves the way for MetroPCS to<br />
achieve significant spectral<br />
efficiencies and enhance the 4G<br />
LTE experience for customers.<br />
Innovation and first-mover advantage are<br />
part of the corporate DNA at MetroPCS<br />
that has allowed the company to be a<br />
pioneer and become the U.S. leader in<br />
no-annual-contract mobile service with<br />
approximately 9 million customers. In September<br />
2010, MetroPCS was the first U.S.<br />
operator to deploy a commercial 4G LTE<br />
network, a network that today covers the<br />
majority of the Company’s CDMA footprint.<br />
MetroPCS began operations just over a<br />
decade ago. Since then the operator has<br />
focused on deploying technology that equips<br />
it to scale its business and satisfy its customers<br />
with reliable, robust and value-driven<br />
services. Naturally, the decision to deploy<br />
LTE also had its roots in that strategy.<br />
Extracting value<br />
We at MetroPCS knew we needed to build<br />
our future on a technology that would deliver<br />
long-lasting capability and competitive edge.<br />
With three key benefits in mind, MetroPCS<br />
started down the path to LTE.<br />
Soon customers will feel limited by these vertically<br />
integrated application ecosystems and content<br />
ecosystems. That’s when MetroPCS will leverage<br />
rich communication services (RCS) to provide<br />
customers with a unified experience that cannot be<br />
achieved with today’s OTT services.<br />
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First, LTE is a global standard within<br />
the 3GPP ecosystem. Therefore, it would<br />
allow MetroPCS to benefit from economies<br />
of scale. It would also ensure access to a<br />
large supply of smartphones at attractive<br />
and affordable prices, meeting the unique<br />
requirements of our customers and<br />
increasingly important demand of value<br />
-conscious consumers.<br />
Second, LTE can squeeze more capacity<br />
out of spectrum. In the case of MetroPCS,<br />
this would support our own aim to refarm<br />
spectrum and achieve efficiencies. LTE will<br />
allow the company to convert 2G airwaves<br />
to 4G, opening capacity for new customers<br />
and new services.<br />
Finally, it was clear that LTE would enable<br />
MetroPCS to send voice calls and provide<br />
better voice quality in the process.<br />
After carefully weighing available options ,<br />
we decided that LTE was the technology<br />
that would best complement our capabilities,<br />
equip us to serve our customer base,<br />
and ultimately, allow us to be the 'David'<br />
among the four other ‘Goliaths’ in<br />
the U.S. 4G mobile market.<br />
Delivering value-driven services<br />
LTE provides MetroPCS with the capabilities<br />
to stand up against the competition while<br />
also allowing us to be agile and deliver on our<br />
chief value proposition: to deliver service that<br />
is predictable, simple and affordable. This<br />
proposition resonates with our customers'<br />
desire for easy to use, value- driven services<br />
and a better mobile experience.<br />
MetroPCS’ key theme began as delivering<br />
“Wireless for All,” reinforcing our aim to<br />
provide our customers with predictability<br />
and simplicity when it came to their<br />
wireless service. We achieved this<br />
through offering complete transparency<br />
by including taxes and regulatory fees for<br />
unlimited voice, text and data packages.<br />
It also gave customers a comfort level<br />
because they could be certain there would<br />
be no surprises in their monthly bill.<br />
In 2011, in line with the rollout of LTE,<br />
MetroPCS took this theme and campaign<br />
to the next level and launched the second<br />
chapter of its Wireless for All strategy –,<br />
aptly called “Android for All,” which was also a<br />
world-first. Android for All aimed at providing<br />
our no-contract customer base an Android<br />
phone and a great smartphone experience<br />
at an affordable price — namely, under $100.<br />
106
throughout our major markets, which<br />
comprise 11,000 cities and towns.<br />
Figure 1: Based on data from MetroPCS.<br />
LTE (and more) for all<br />
Fast forward to mid-2012, when MetroPCS<br />
marked a new and successful chapter in its<br />
evolution. Specifically, MetroPCS launched<br />
“4G LTE for All,” a campaign to promote the<br />
U.S. debut of an unlimited 4G LTE data plan<br />
that bundled unlimited voice, text and data,<br />
for just $55 per month. The offer is coupled<br />
with the lowest priced 4G LTE smartphone<br />
ever launched at $129.<br />
With these services, 'David' once again has<br />
a leg up on the 'Goliaths' in the marketplace.<br />
MetroPCS is able to maintain a competitive<br />
edge by offering 4G LTE for All because of<br />
the early decision to make the move from<br />
CDMA to LTE. To date, MetroPCS has<br />
completed 97 percent of its LTE coverage<br />
The beauty of this rollout was the alignment<br />
between strategy and tactics, and how<br />
industry forces are converging to deliver<br />
significant business benefits. In addition<br />
to being first to offer 4G LTE at unmatched<br />
affordability, MetroPCS was also the first in<br />
the world to launch a commercial voiceover-LTE<br />
(VoLTE) service. This is significant<br />
for several reasons. First, by converting<br />
voice to data, VoLTE makes better use of<br />
our radio spectrum. Second, it allows for<br />
better voice quality for our customers.<br />
Finally, VoLTE is a technology that will<br />
also provide the basis for future RCS (Rich<br />
Communication Services) offerings later on.<br />
Rich services, just in time<br />
MetroPCS has worked hard to provide<br />
customers 4G LTE technology and enable<br />
a great user experience that incorporates<br />
fast speeds, affordable phones and the<br />
latest technology. We are focused on what<br />
we do best, namely offering communications.<br />
That said, it is difficult for a smaller<br />
operator like MetroPCS to provide everything<br />
a customer wants. To ensure that<br />
we meet our customers’ needs, we want<br />
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We decided that LTE was the technology that<br />
would complement our capabilities, equip us to<br />
serve our customer base and ultimately, allow us<br />
to be the ‘David’ among the four other Goliaths<br />
in the U.S. 4G mobile market.<br />
to make it possible for our customers to<br />
get content, apps and services that we are<br />
not able to offer, and this is where Android<br />
comes in to provide customers with a wide<br />
choice of apps and content they can access<br />
and enjoy on their smartphones.<br />
The same approach applies to communications.<br />
Customers should be able to choose<br />
and to use the services they want. It's up to<br />
them whether they use Skype, Google Voice<br />
or Facebook. MetroPCS supports this<br />
variety of Over the Top (OTT) services to<br />
drive a desire among customers for the<br />
interoperability of these services.<br />
Imagine a customer on Facebook, who has<br />
a good friend on Google+. The two friends<br />
can't communicate freely using those platforms<br />
because they don't use the same<br />
application. Soon customers will feel limited<br />
by these vertically integrated application<br />
ecosystems and content ecosystems, and<br />
MetroPCS will leverage rich communication<br />
services (RCS) to provide customers with a<br />
unified experience that cannot be achieved<br />
with today’s OTT services.<br />
Customers will be free to communicate with<br />
anyone they want, regardless of the application<br />
they use. RCS will bridge this divide<br />
between applications and extend the user<br />
experience customers have with MetroPCS<br />
on voice and text to the next generation of<br />
communications services.<br />
In a way, it's almost as if history repeats<br />
itself and takes us back to the early 2000s<br />
when there was no SMS interoperability<br />
because operators wanted to make sure<br />
they could differentiate their services.<br />
As we now know, SMS interoperability<br />
unleashed a lot of value for operators and<br />
their customers. And we see the same<br />
potential with RCS.<br />
108
Unleashing value<br />
Back to the future<br />
Against this backdrop, the goal at MetroPCS<br />
is to rollout RCS to its markets and educate<br />
our consumers so that we can deliver a<br />
great user experience. MetroPCS also wants<br />
to work with partners — and competitors —<br />
to drive more rich communication services<br />
across the ecosystem. To this end,<br />
MetroPCS plans to launch an initial set of<br />
RCS services later this year and then move<br />
rapidly to RCS 5.<br />
One other important part of MetroPCS’<br />
plans going forward is 4G LTE roaming.<br />
There are some challenges around the<br />
establishment of agreements that must be<br />
overcome in order for MetroPCS and other<br />
operators to move forward. However, this<br />
situation will change the next 12 – 18<br />
months once agreements are in place. When<br />
these issues are resolved, and operators<br />
have a common foundation on which to<br />
enable LTE roaming across the ecosystem,<br />
we will have a clear path to deliver additional<br />
value for our customers. It's here that IPX<br />
provides the necessary foundational<br />
element to this strategy, allowing MetroPCS<br />
to connect with roaming partners, both<br />
domestically and internationally and scale<br />
up quickly. Another benefit of IPX is the<br />
interoperability it facilitates.<br />
The pace of change is only accelerating,<br />
and the impact on mobile is profound and<br />
often unpredictable. Just five years ago it<br />
seemed the appeal of smartphones would<br />
surely be limited to an audience of affluent<br />
early-adopters willing to spend $500 on<br />
a device and $200 a month on limited<br />
rate plans.<br />
Today, smartphone penetration in the U.S.<br />
market has passed the 50 percent milestone<br />
(with total mobile device saturation at<br />
more than 105 percent) — and that doesn’t<br />
count the increase in tablet shipments and<br />
usage. What's more, it is now typical for<br />
people to have multiple devices. As a result,<br />
mobile operators have introduced shared<br />
data plans and packages that allow people<br />
to have and use a multitude of connected<br />
devices on their terms.<br />
What will happen another five years from<br />
now? There's no way of knowing. But it's<br />
important to prepare now, which is why<br />
MetroPCS has consciously and consistently<br />
made technology decisions and investments<br />
that allow us to be agile and flexible.<br />
MetroPCS built the foundation for our future<br />
when it made the early decision to move to<br />
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4G LTE. Today, we’re beyond the heavy<br />
lifting, and from here it's about adding<br />
capacity so we can continue to evolve<br />
LTE. This is where policy control becomes<br />
essential to guarantee our customers have<br />
a certain level of quality of experience,<br />
regardless of the application they may<br />
be using.<br />
Clearly, MetroPCS is delivering on our 4G<br />
LTE vision that is built on the decision to<br />
deploy LTE. The capabilities are in place<br />
to serve and retain our customers, remain<br />
relevant and stand up to the 'Goliaths'<br />
for years to come.<br />
Mr. Chao joined MetroPCS as Senior Vice<br />
President Engineering & Network Operations<br />
in September 2008. Prior to joining<br />
the company, Mr. Chao served as Vice President<br />
Product Management at Alcatel-<br />
Lucent in the CDMA Networks Business<br />
Division. He held a variety of other positions<br />
at Alcatel-Lucent, including Business Development<br />
and Strategic Planning, as well as<br />
conducting research on wireless applications<br />
in Bell Labs. Prior to Alcatel-Lucent,<br />
Mr. Chao worked with Nortel/ BNR where he<br />
was primarily involved in defining front-end<br />
requirements and standards in support of<br />
the company’s entry into CDMA. Mr. Chao<br />
holds a MBA from Columbia University, a<br />
MS in Electrical Engineering from Georgia<br />
Tech, and a BS in Electrical Engineering<br />
from Rutgers University.<br />
110
PART FOUR: LTE: UNLEASHING INNVOVATION TO DELIVER RESULTS<br />
Fighting Smart To Win Big<br />
By Madan Jagernauth, Vice President, Marketing & Strategy,<br />
Mavenir Systems<br />
In the mobile industry nothing<br />
excites analysts and investors as<br />
much as disruptive technology that<br />
can potentially change all the rules.<br />
They are in awe of technology that<br />
can be labeled as a “game-changer,”<br />
or can be seen to “re-write the<br />
rules” that came before. Disruptive<br />
technology spells opportunity and<br />
paves the way for new players.<br />
But not all players welcome the<br />
tremendous change it brings.<br />
Network operators, for example,<br />
would rather see disruptive technology<br />
integrate smoothly, and<br />
offer up business opportunities,<br />
not problems.<br />
The Apple iPhone, the smartphones from<br />
other manufacturers that followed, and the<br />
app store model that swept in behind are all<br />
developments that can certainly be classified<br />
as disruptive. Granted these innovations<br />
were quickly absorbed into the overall<br />
mobile ecosystem, laying the groundwork<br />
for a new phase of growth and innovation<br />
around smartphones, mobile apps and an<br />
ever-growing array of connected devices.<br />
But the impact of these disruptive technologies<br />
on the operator business models was<br />
profound. The space was shaken to its core<br />
before anyone in the industry could react.<br />
In fact, the advance of smartphones paved<br />
the way for the most potentially disruptive<br />
development of all: a whole raft of new,<br />
so-called Over the Top (OTT) competitors<br />
and services that could marginalise<br />
operators in the revenue chain.<br />
It [RCS] capitalises on the operators’ core<br />
proposition of ubiquity, reliability and reach,<br />
providing a common approach to a set of new<br />
value-added services that operators can offer<br />
on existing 3G infrastructure, as well as future<br />
LTE networks.<br />
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Number of mobile VoIP users (millions) 2010-2012 by eight key regions<br />
120<br />
Africa & Middle East<br />
Rest of Asia Pacific<br />
Indian Sub Continent<br />
Far East & China<br />
Central & Eastern Europe<br />
Western Europe<br />
Latin America<br />
0<br />
2010<br />
2012<br />
2012<br />
North America<br />
Figure 1: Source: Juniper Research. (1)<br />
Connect the dots, and the swift advance of<br />
smartphones, mobile apps and new services<br />
have changed the rules of the game forever.<br />
in the game doesn’t require massive investment<br />
in long-term infrastructure overhaul.<br />
The good news: the game just started. The<br />
same disruptive technology — and the new<br />
business models it enables — offers operators<br />
a way to get back in the game. And if<br />
they develop and deploy the right strategies<br />
they can even move back up to the top of<br />
the revenue chain. Better still for an industry<br />
that was created through the vision of<br />
worldwide standards, this disruptive technology<br />
has created a new space that is big<br />
enough for everyone. What’s more, getting<br />
Get rich quick<br />
Over the past years, the GSMA has invested<br />
time and resources to enhance its Rich<br />
Communication Suite (RCS) concept, aimed<br />
at allowing mobile operators to offer innovative<br />
and competitive services. RCS builds on<br />
the universal success of the GSM standard<br />
and is an opportunity for operators to reinvigorate<br />
and expand their product and<br />
service portfolios. It capitalises on the oper-<br />
Footnote<br />
1. www.juniperresearch.com/reports/mobile_voice_strategies<br />
112
This cloud-based approach to delivering<br />
Voice, regardless of data path, will enable<br />
operators to jumpstart deployment of<br />
enhanced services.<br />
ators’ core proposition of ubiquity, reliability<br />
and reach, providing a common approach to<br />
a set of new value-added services that operators<br />
can offer on existing 3G infrastructure,<br />
as well as future LTE networks.<br />
RCS will allow operators to fight back<br />
against OTT players by enabling them to<br />
move beyond traditional voice, text and<br />
data services to offer new services such as<br />
group instant messaging or chat, live video<br />
sharing and file transfer across any device,<br />
on any network, with anyone in a mobile<br />
address book. RCS will enable operators to<br />
provide services that meet the increasing<br />
requirements of today’s hyper-connected<br />
consumer because they are completely in<br />
sync with how people share their content —<br />
and their lives — with each other via laptops,<br />
tablets and smartphones.<br />
For operators, and their customers, RCS<br />
is a compelling proposition. RCS also enjoys<br />
the support of the several mobile ecosystem<br />
players. It has the global support of the<br />
operator community and it is also embraced<br />
by many of the major handset vendors,<br />
companies that have committed to the<br />
project and are embedding RCS services<br />
onto their latest handset models.<br />
Fast track<br />
Before operators can launch RCS services<br />
and reap the benefits, they will need to<br />
implement some changes within their<br />
network. One key change will be the implementation<br />
of IMS but not all operators are<br />
ready to move forward on this.<br />
Clearly, there are RCS services whose<br />
deployment is dependent upon the roll-out<br />
of LTE networks. Fortunately, the advent of<br />
cloud-based solutions offers operators a<br />
short-cut, allowing them to offer RCS-like<br />
services starting today, without IMS.<br />
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Take the case of operators looking at<br />
Voice over LTE as a way to compete against<br />
services offered by the VoIP players such as<br />
Skype and Viber. Rather than wait for the<br />
roll-out of their LTE networks (necessary for<br />
VoLTE), these operators can start fighting<br />
back now by migrating to Voice over Wi-Fi<br />
(VoWi-Fi) using the same voice (and video)<br />
call control infrastructure that is needed for<br />
VoLTE and incidentally, the same infrastructure<br />
that supports Voice over HSPA<br />
(VoHSPA) in the future.<br />
This cloud-based approach to delivering<br />
Voice, regardless of data path, will enable<br />
operators to jumpstart deployment of<br />
enhanced services. In fact, the cloud can<br />
become a fast-route-to-market service<br />
delivery platform for a host of operatorprovided<br />
fully integrated RCS style services,<br />
including messaging.<br />
And there are other advantages to consider.<br />
Group messaging services like Viber not<br />
only overtake the operator network, they<br />
also access information stored in the address<br />
book on the device, and use this to<br />
show users who else among their contacts<br />
has Viber and can make a call using the app.<br />
This integration plays in favor of OTT<br />
players, making it easy to find and call<br />
contacts using the same software. On some<br />
smartphones this has been automated so<br />
that the simple act of making a call triggers<br />
the question: “Do you want to use Skype,<br />
Viber or the Phone?”<br />
However, operators shouldn’t only be concerned<br />
about the loss of the connection<br />
with the customer, or the impact on their<br />
position as the go-to trusted supplier of<br />
voice services.<br />
Research shows that OTT-provided VoIP<br />
services hardly use bandwidth effectively.<br />
In fact, they typically occupy about 25<br />
percent more bandwidth to handle traffic<br />
than operators could achieve using<br />
VoWiFi or VoLTE.<br />
There is no shortage of sources that use<br />
significant amounts of bandwidth. Given<br />
the demands on mobile data networks, the<br />
pressure is on operators to find ways to save<br />
capacity and avoid a bandwidth crunch. Put<br />
another way, operators must find ways to<br />
free up capacity, and opting to deliver<br />
messaging service using VoMBB is clearly<br />
a path operators should seriously consider.<br />
In exploring the many compelling reasons<br />
why operators should explore the RCS-style<br />
services they can deliver now by using a<br />
cloud-based service delivery model, let’s not<br />
forget the key competitive advantage these<br />
services can deliver. Indeed, a prime driver<br />
114
This cloud-based approach to delivering<br />
Voice, regardless of data path, will enable<br />
operators to jumpstart deployment of<br />
enhanced services.<br />
and benefit of RCS is the level playing field<br />
it can create. This is a positive outcome<br />
because RCS effectively equips operators<br />
to stand up to the OTT players.<br />
The benefits of this approach can already be<br />
seen in countries such as Spain. <strong>Operator</strong>s<br />
there jointly launched RCS services under<br />
joyn, a new consumer-facing brand<br />
developed by the GSMA for RCS.<br />
Smooth moves<br />
The GSMA is taking a market-by-market<br />
approach to enable a smooth launch of RCS.<br />
In practice this means working with a group<br />
of operators to ensure the full ecosystem<br />
— including the necessary network infrastructure<br />
and handsets — is in place<br />
across each market.<br />
As a result, all operators in a particular<br />
market can be positioned to launch<br />
RCS services at the same time. More<br />
importantly, the RCS promise of crosshandset<br />
and cross-network compatibility<br />
can be supported.<br />
While RCS has created a level playing field,<br />
it has not changed the business dynamics<br />
that separate the market-leaders from the<br />
also-rans. The task now for those operators<br />
is to market and deliver joyn services, a<br />
goal that forces them to compete headon<br />
against both the OTT players and each<br />
other. Significantly, the transition from<br />
working together to speed market implementation<br />
to competing against each other<br />
for market success has been virtually an<br />
overnight process.<br />
Against this backdrop, we believe operators<br />
can benefit from disruptive technology —<br />
and beat the competition at their own game<br />
— provided they make the right choices.<br />
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But they shouldn’t wait to innovate.<br />
<strong>Operator</strong>s that make the move to deliver<br />
RCS-style services now by using a cloudbased<br />
platform over their existing infrastructure<br />
will have a head start in the<br />
marketplace. But it’s not just about<br />
introducing RCS services first, operators<br />
will also gain valuable and practical<br />
experience that will help them maintain<br />
their competitive edge against both OTT<br />
players and local market rivals.<br />
Madan Jagernauth has 20 years experience<br />
in the wireless industry. As a mobile broadband<br />
pioneer, Madan managed wireless<br />
access products from GSM/GPRS to WiMAX<br />
and LTE. Prior to joining Mavenir, Madan was<br />
with Huawei for four years where he held<br />
responsibility for wireless marketing and<br />
product management, and mobile broadband<br />
solutions, with Nortel Networks for 21<br />
years and Honeywell for 9 years.<br />
116
PART FOUR: LTE: UNLEASHING INNVOVATION TO DELIVER RESULTS<br />
Positioning LTE For Success<br />
By Declan Lonergan, Research VP, Yankee Group<br />
Research underlines the pivotal<br />
importance of LTE. But success<br />
with LTE is not dependent upon<br />
how operators implement the technology.<br />
They must also succeed in<br />
how they launch and communicate<br />
their offer in the marketplace. To<br />
guide operators as they define their<br />
approaches we have identified six<br />
ways to position LTE in today’s<br />
data-centric world. Whilst this<br />
is not an exhaustive list, it does<br />
introduce needed clarity into the<br />
increasingly murky discussion<br />
about this technology and the<br />
benefits it delivers.<br />
No. 1 for Tablet Users<br />
Pitch LTE as the preferred connectivity<br />
solution for tablet owners who want more<br />
than patchy Wi-Fi service. Keep in mind that<br />
tablet owners differ — both in demographics<br />
and behavior — from non-owners. Understanding<br />
these differences allows operators<br />
to cater their LTE packages to tablet-owners,<br />
a demographic that clearly sees the<br />
value in robust and reliable connectivity.<br />
Who are the tablet-owners? Our research<br />
shows they are:<br />
Younger. In fact, tablet owners today are<br />
more than 10 years younger on average<br />
than non-owners.<br />
More affluent. The average tablet owner<br />
earns $70,000 per year and has an annual<br />
household income of $87,000. The average<br />
non-owner earns $56,000 per year and has<br />
an annual household income of $66,000.<br />
Smartphone-enthusiast. Respondents<br />
who own a tablet are 31 percent more likely<br />
to own a smartphone than people who<br />
don’t yet own a tablet.<br />
In our view, tablets plus LTE is a match<br />
made in heaven. Against this backdrop,<br />
operators that position LTE as the ideal<br />
connectivity solution for tablets are on the<br />
right track. Additionally, operators have the<br />
opportunity to establish their company (and<br />
their brand) as THE number one choice for<br />
this discriminating demographic.<br />
And let’s not forget the chance to attract<br />
customers who are migrating their PC<br />
behavior to tablets and therefore need<br />
to get online using their tablets. Connect<br />
the dots, and a market leadership position<br />
awaits smart operators that grab hold of<br />
this opportunity and make it a central part<br />
of their marketing and communications.<br />
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No. 1 for Cord-Cutters<br />
No. 1 for Families<br />
Establish LTE as the answer for customers<br />
looking to discontinue their land-line<br />
conn-ections and move to a mobile-only<br />
lifestyle. As we know, 3G-based mobile<br />
broadband may have been positioned as<br />
a viable alternative to land-line services,<br />
however, its performance is hardly on a par<br />
with fixed broadband. LTE changes all the<br />
rules, allowing operators to provide customers<br />
the promises of an untethered lifestyle<br />
and position themselves as the go-to<br />
company for cord-cutters in the process.<br />
The timing is perfect as consumers are<br />
already begin-ning to substitute mobile for<br />
fixed broad-band, even in 3G scenarios. A<br />
2011 survey commissioned by U.K. communications<br />
industry regulator Ofcom, for<br />
example, revealed that 44 percent of U.K.<br />
households with a mobile broadband<br />
service had discontinued their land-line<br />
broadband connection. Significantly, the<br />
highest instance of mobile-only broadband<br />
was among households at the lower end of<br />
the socio-economic scale. This sends a<br />
clear message to operators that LTE pricing<br />
must be suitable to the needs of these<br />
price-conscious customers. <strong>Prepaid</strong> plans<br />
and price-transparency are important, and<br />
— if operators get the pricing and packages<br />
right — then they can count on attracting<br />
cust-omers eager to cut their cords and<br />
control their costs.<br />
Focus on presenting the family unit — or<br />
similar groups — with a subscription offer<br />
they can share. The concept of offering<br />
multi-user or multi-device price plans has<br />
gained significant traction and attention<br />
during the first half of 2012. This trend is<br />
pronounced in markets such as the U.S.,<br />
where the state of LTE services is relatively<br />
advanced. This is not yet the case in Europe,<br />
where operators plan their LTE launches<br />
for later in 2012 or <strong>2013</strong>. Clearly, it makes<br />
good business sense for European operators<br />
to follow the U.S. example and make<br />
multi-device plans a core part of their offers.<br />
The result is a proposition that covers the<br />
bases to deliver households improved<br />
price-certainty, thus enabling operators to<br />
differentiate their LTE offers from existing<br />
3G services. Granted mobile services have<br />
traditionally been purchased and consumed<br />
by individuals, but this is changing. The convenience<br />
and cost advantages of sharing<br />
data allowances across multiple devices will<br />
no doubt encourage more Europeans to<br />
explore family plans. <strong>Operator</strong>s should get<br />
ahead of this potential demand, and<br />
promote their family-friendly LTE services<br />
from day one.<br />
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No. 1 for <strong>Prepaid</strong><br />
No. 1 for Roaming<br />
Adapt your offer to the shift in prepaid —<br />
fast. While the lion’s share (62 percent) of<br />
all mobile lines in Europe are prepaid, these<br />
services are under pressure. In fact, the<br />
erosion of the prepaid base is particularly<br />
noticeable in markets like the U.K., where<br />
prepaid services accounted for only 50<br />
percent of all mobile lines at the end of 2011,<br />
down from 65 percent in 2007. Naturally,<br />
mobile operators prefer to deliver postpaid<br />
services, catering to a customer segment<br />
that guarantees steady ARPU and lower<br />
churn rates since customers are locked into<br />
a contract. But mobile operators can’t take<br />
the easy way out. When it comes to LTE, our<br />
advice to operators is simple: ignore prepaid<br />
at your peril. <strong>Prepaid</strong> has an important role<br />
to play in LTE, especially as consumers<br />
move from having just one mobile phone to<br />
adding connected devices such as laptops,<br />
tablets and games consoles. For costconscious<br />
customers who need more than<br />
Wi-Fi connectivity for this array of devices<br />
prepaid LTE fits the bill nicely. To take full<br />
advantage of this opportunity operators<br />
should partner with device manufacturers<br />
to offer products with embedded LTE and<br />
the option to connect via prepaid. A good<br />
example is Lenovo, which recently introduced<br />
a 3G version of its ThinkPad laptops.<br />
Such offers are precursors to what we can<br />
expect with LTE. Smart operators will recognise<br />
the opportunity here to establish themselves<br />
as the No. 1 choice for prepaid LTE.<br />
Cash in on the confusion around data<br />
roaming. Consumers’ continued uncertainty<br />
about data roaming charges, as well<br />
as recent initiatives by European regulatory<br />
authorities to reduce roaming fees are<br />
shining a spotlight once again on the data<br />
roaming issue. The public discussion<br />
presents operators with an opportunity to<br />
aggressively pursue a market leadership<br />
position. But to get there from here operators<br />
must first equip themselves to deliver<br />
fair and transparent data roaming pricing.<br />
They must also ensure customers have<br />
access to all the service features they enjoy<br />
on their home networks, including Quality<br />
of Service and class-of-service parameters.<br />
What’s more, the rapid migr-ation to all-IP<br />
traffic in domestic mobile networks will<br />
make IP eXchange (IPX) a natural choice for<br />
LTE operators as they work to ensure their<br />
customers’ experiences remain consistent<br />
— even when customers travel beyond their<br />
home networks.<br />
Lessons Learned From 3G<br />
Whether operators pursue one (or more)<br />
of the approaches we have presented—<br />
or come up with their own strategy — the<br />
end-game is all about successfully positioning<br />
LTE for the future without repeating the<br />
mistakes that marked the past.<br />
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<strong>Prepaid</strong> was essential to early 3G success<br />
6.0%<br />
3 Italia<br />
5.0%<br />
3 U.K.<br />
Share of national<br />
mobile customers<br />
4.0%<br />
3.0%<br />
2.0%<br />
Feb 2004: U.K. prepaid<br />
3G service launched<br />
Aug 2004: 36% of U.K.<br />
3G users were prepaid<br />
1.0%<br />
0.0%<br />
1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05<br />
Figure 1: Source: Yankee Group, 2005.<br />
The technology won’t sell itself. An LTE<br />
badge won’t mean a lot to consumers. They<br />
didn’t care much about 3G until they could<br />
understand how it improved their connected<br />
experiences. <strong>Operator</strong>s should therefore sell<br />
the benefits of LTE (or 4G), not the acronym.<br />
Expect the unexpected. While most<br />
expected the promise of video telephony<br />
to move 3G devices off the shelves, it was<br />
really the lure of better mobile access to<br />
Facebook, YouTube and other Web 2.0<br />
content that drove the move to 3G. LTE is<br />
sure to produce a similar surprise motivator.<br />
<strong>Prepaid</strong> is essential. 3G adoption was<br />
severely hindered in the early stages due to<br />
limited availability of prepaid (see Figure 1).<br />
When it comes to LTE, prepaid should not<br />
be an afterthought.<br />
Handsets matter. Once operators<br />
improved the quality and choice in their 3G<br />
handset portfolios, they saw a dramatic<br />
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Many US consumers still don’t understand what 4G is<br />
Yankee Group's US <strong>Mobile</strong> Broadband Survey, April 2012.<br />
Are you aware of, and do you have a basic<br />
understanding of 4G? (n=601)<br />
I have never heard of the term 4G<br />
9%<br />
I have heard of the term 4G<br />
but I don’t understand it<br />
35%<br />
I have heard of the term 4G and I<br />
understand what it means<br />
38%<br />
I am anxiously awaiting 4G products<br />
8%<br />
I am already using 4G<br />
10%<br />
Figure 2: Source: Yankee Group.<br />
increase in 3G adoption rates. It’s the same<br />
for LTE. From day one, operators must<br />
ensure a good supply of desirable LTE<br />
phones for the mass market.<br />
Roaming must be addressed.<br />
Frequent instances of bill-shock, caused<br />
by customers’ unintended use of 3G-based<br />
data services while traveling abroad, created<br />
negative headlines and disgruntled customers.<br />
<strong>Operator</strong>s must do a better job with 4G<br />
roaming by proactively helping customers<br />
to manage their consumption and spending.<br />
Clarity Is the Key to Success<br />
The approaches we outline here are really<br />
only a sample of the options available to<br />
operators seeking to position LTE in a way<br />
that both benefits customers and their<br />
company bottom line.<br />
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Tablet owners and non-owners have different profiles<br />
Tablet owner<br />
Tablet non-owner<br />
Demographics 22%<br />
78%<br />
Average age<br />
34<br />
45<br />
Gender<br />
Male 56%<br />
Female 44%<br />
Male 49%<br />
Female 51%<br />
Average age by gender<br />
36 32<br />
M F<br />
43 46<br />
M F<br />
Minutes per day spent<br />
on mobile internet<br />
22<br />
19<br />
Minutes per day spent<br />
in mobile apps<br />
24<br />
22<br />
Mean personal income<br />
$70 000<br />
$56 000<br />
Mean household income<br />
$87 000<br />
$66 000<br />
Smartphone owners<br />
81%<br />
50%<br />
Figure 3: Based on data from Yankee Group. Consumer Survey, 2012.<br />
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No matter how operators choose to market<br />
their offers, success depends on their ability<br />
to position LTE (and the benefits it delivers)<br />
clearly and consistently in the minds of their<br />
customer base. This is a tall order since<br />
research shows many consumers simply<br />
don’t know what LTE (4G) is, let alone the<br />
services it supports. (see Figure 2).<br />
Read between the lines, and boosting<br />
awareness (not use) is the chief challenge<br />
operators face. The pressure is on<br />
operators to take the lead in educating<br />
consumers about the real-life benefits<br />
of LTE and show how LTE is superior to<br />
existing 3G services without losing the key<br />
message in a sea of confusing acronyms<br />
and technology-speak. <strong>Operator</strong>s cannot<br />
afford to fail in this basic task.<br />
Declan Lonergan is a vice president of<br />
Yankee Group’s research team and<br />
produces and manages research that<br />
improves service providers’ and technology<br />
vendors’ business results. Lonergan has 20<br />
years of experience in the communications<br />
industry. He spent several years with BT,<br />
where he held management positions in<br />
radio systems procurement and access<br />
network planning.<br />
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PART FOUR: LTE: UNLEASHING INNVOVATION TO DELIVER RESULTS<br />
Breaking Down Borders:<br />
Getting The Most From<br />
LTE Roaming<br />
By James Middleton, Managing Editor, Telecoms.com<br />
Against the backdrop of the economic<br />
slowdown and its debilitating<br />
effect on the global roaming<br />
market, the advent of Voice over<br />
IP (VoIP), which marks the end of<br />
an era for circuit-switched voice,<br />
represents the most significant<br />
industry shift to date.<br />
Whilst the majority of voice traffic today is<br />
still generated by legacy circuit-switched<br />
networks, packetised voice will eventually<br />
become the norm, driven by the transition<br />
to LTE. Shifting TDM traffic to packetised<br />
networks opens up opportunities to extend<br />
communities and services between the<br />
wired and wireless worlds, but this is not<br />
without its challenges. Without automated<br />
end-to-end monitoring in place and a proper<br />
understanding of the teething problems still<br />
present in the nascent area of LTE roaming,<br />
operators might underestimate the<br />
challenges they need to address.<br />
In the early days of mobile roaming operators<br />
would strike bilateral agreements between<br />
their networks to cater to the needs of their<br />
roaming customers. But this approach had<br />
its limits. To meet customer demand and<br />
increase efficiency specialist providers set<br />
up roaming hubs to ease the burden on the<br />
operators and improve scalability.<br />
The trend now is to look at GRX as part of<br />
the IPX (IP eXchange) offering. In this<br />
scenario mobile operators use a specialist<br />
supplier that manages the hub to which the<br />
operator community connects. The hub<br />
solution is a remedy for roaming issues<br />
going forward, particularly as the barriers<br />
between roaming and interconnect blur with<br />
the introduction of LTE and the flexibility<br />
that it introduces.<br />
<strong>Operator</strong>s are switching their traffic to the hub<br />
because it’s more efficient and provides them<br />
with greater control over the management and<br />
outsourcing of interconnects into the hub.<br />
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Breakthrough progress<br />
The first hubbing deployments broke significant<br />
ground by paving the way for a more<br />
connected global mobile industry. The IPX<br />
extends this concept by enabling deeper<br />
connectivity for fixed, wireless and internet-based<br />
service providers in a much more<br />
open and flexible environment.<br />
Today these hubs allow networks to extend<br />
their footprint and services to countries<br />
where they do not have bilateral deals in<br />
place, but it’s not just about reach. <strong>Operator</strong>s<br />
are switching their traffic to the hub because<br />
it’s more efficient and provides them with<br />
greater control over the management and<br />
outsourcing of interconnects into the hub.<br />
In terms of interconnect, third-party supplied<br />
voice and messaging services will be available<br />
from day one on LTE networks. These<br />
services could also potentially show improved<br />
QoS compared to 2G and 3G, whilst benefiting<br />
from lower regulated data charges.<br />
On one hand, the traditional operator menu<br />
of services — which includes voice, SMS<br />
and data roaming — are necessary to avoid<br />
a massive shift of traffic to third parties,<br />
including OTT service providers. On the<br />
other hand, inter-working with OTT service<br />
providers introduces a wealth of commercial<br />
opportunity for mobile operators. Rather<br />
than seeing these new entrants as a<br />
competitive threat, many mobile operators<br />
are beginning to understand that they can<br />
benefit from carefully structured and<br />
managed partnerships with OTT players.<br />
The key for mobile operators is to offer<br />
connectivity to these rival providers without<br />
giving away control of their network assets.<br />
Fortunately, operators can leverage their<br />
fixed and mobile network assets through<br />
IPX, so successful interaction with OTT<br />
players is just a case of finding the right<br />
business model.<br />
As Michel Van Veen, Group Manager,<br />
Product Management, at SAP <strong>Mobile</strong><br />
Services, observes: “If an LTE operator<br />
starts to offer LTE roaming to customers,<br />
the only way to establish a short time to<br />
market is to use a hubbing solution.” Thus,<br />
if operators were to only establish roaming<br />
agreements with a small number of trusted<br />
roaming partners, then they wouldn’t necessarily<br />
use a Diameter hub in the middle. But,<br />
he stresses, “in reality operators need to<br />
establish roaming agreements with<br />
hundreds of their peers and hubbing is the<br />
only way to scale up quickly and efficiently.”<br />
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Rather than seeing these new entrants as a<br />
competitive threat, many mobile operators are<br />
beginning to understand that they can benefit<br />
from carefully structured and managed<br />
partnerships with OTT players.<br />
Overcoming obstacles<br />
Some operators may think they can control<br />
their network end-to-end and beyond, thus<br />
satisfying the needs of their roaming customers.<br />
However, this is a mammoth effort<br />
that can be fraught with challenges and<br />
commercial headaches. If the operators<br />
insist on running this in-house, then the<br />
requirement for a fully managed, specialist<br />
service to share the burden becomes all the<br />
more pronounced. After all, failing to offer<br />
a high quality of service in global roaming<br />
services, results in a drop in roaming usage,<br />
and a loss of roaming revenue. Another<br />
outcome is unhappy customers, which<br />
results in churn and higher customer<br />
service costs.<br />
The first successful deployments of LTE are<br />
in place and rollouts are growing at a rapid<br />
pace. Clearly, LTE is reaching a stage of<br />
maturity where technical challenges of<br />
deploying LTE are no longer a barrier. Now<br />
it’s up to the operator community to overcome<br />
the last hurdle and develop a commercial<br />
strategy that wrings value out of<br />
LTE to enable roaming services that benefit<br />
customers and drive positive results for<br />
everyone in the ecosystem.<br />
James Middleton has over 12 years’ experience<br />
of writing and reporting on the telecoms<br />
and tech sectors. Middleton has also<br />
helped to build and launch several successful<br />
websites with a keen focus on content<br />
management and community building.<br />
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PART FOUR: LTE: UNLEASHING INNOVATION TO DELIVER RESULTS<br />
Video Communications:<br />
“A Perfect Storm”<br />
By Ramsey Masri, Vice President, Sales & Alliances, Aylus Networks<br />
“You’re headed right for the middle<br />
of the monster.” These were the<br />
words of Linda Greenlaw, the boat<br />
captain in The Perfect Storm, a<br />
gripping film released in 2000.<br />
The true-life drama recounted the<br />
tragic fate of the fishing vessel<br />
Andrea Gail in 1991, when weather<br />
conditions combined to form a killer<br />
storm in the North Atlantic. The<br />
details of this unusually intense<br />
storm pattern were captured in<br />
computer-generated graphics,<br />
detailing the relentless power of<br />
a perfect storm and what happens<br />
when seemingly routine shifts in<br />
wind and temperature come<br />
together to produce a monster.<br />
Today, we are seeing a similar alignment of<br />
key conditions in the video communications<br />
landscape, where the rapid pace of change<br />
and the interplay of supply and demand are<br />
combining to generate the mobile industry’s<br />
own Perfect Storm.<br />
In the last few years we have seen a seismic<br />
shift in consumer acceptance and use of<br />
mobile video. Smartphones and tablets<br />
— popular devices equipped with video<br />
cameras — have reached the mass-market<br />
tipping point.<br />
We have also seen a dramatic change in how<br />
consumers use Skype to do more than just<br />
make voice calls. In fact, Skype now reports<br />
that over half of all Skype calls now progress<br />
to video. Likewise, we have seen a slew of<br />
communications services, including Apple’s<br />
Facetime, Facebook’s video calling and<br />
Google’s Hangouts, embrace and offer video.<br />
At the same time we are witnessing the<br />
advance of mobile broadband networks<br />
designed to support video communications.<br />
In fact, video is widely promoted as the flagship<br />
service that can be supported by LTE.<br />
Connect the dots, and we have a series<br />
of separate and significant events that<br />
are combining to have a massive impact<br />
on the industry.<br />
Clearly, consumer use of video has entered<br />
a new phase of growth, driven by devices,<br />
For long-term viability, video calling must<br />
generate its own revenue.<br />
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Annual global IP traffic will surpass the zettabyte threshold<br />
2015 The annual run rate of total IP traffic reaches the zettabyte<br />
threshold. Internet traffic from wireless devices exceeds internet<br />
traffic from wired devices. The number of network devices is double<br />
the size of the entire global population<br />
90<br />
80<br />
2014 1/5 of consumer internet video<br />
now originates from non-PC devices<br />
70<br />
60<br />
2012 Internet video reaches 50% consumer internet<br />
traffic. The number of households generating >1 TB<br />
per month hits the million mark<br />
2011 The screen surface area of all consumer devices<br />
reaches 1 sq. foot per capita. The number of networked<br />
devices equals the size of the entire global population<br />
2010 Internet video surpasses P2P as the<br />
largest consumer internet video traffic category<br />
50<br />
40<br />
30<br />
20<br />
Exabytes per month<br />
2000 Consumer internet<br />
surpasses business internet<br />
10<br />
2000<br />
2005<br />
2010<br />
2015<br />
0<br />
Figure 1: Based on data from Cisco, 2011.<br />
www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/VNI_Hyperconnectivity_WP.html<br />
128
services and networks built from the ground<br />
up to make this experience easy and enjoyable.<br />
The result is a wave of excitement<br />
around video that could overwhelm service<br />
providers gearing up to deliver video communications<br />
right now. In my view, these<br />
service providers are headed right into a<br />
monster of a storm.<br />
in how they communicate and with whom.<br />
These Islands have been created by a<br />
variety of companies that include Over-the-<br />
Top (OTT) video networks (example: Skype,<br />
Apple’s Facetime); Social Networks<br />
(example: Google+, Facebook) and network<br />
operators (example: Verizon Wireless and<br />
Japan’s DoCoMo).<br />
Prepare for impact<br />
To complicate matters video communication<br />
is not the same as voice communication.<br />
Make a voice call and you can expect to<br />
“connect” with anyone you wish because the<br />
operators themselves are also connected.<br />
The glue that holds it together, and makes it<br />
possible to contact people we want, is the<br />
humble telephone number. These digits,<br />
coupled with all the dialing codes that we<br />
(mostly) love and cherish, provide the basis<br />
for a unique and universal address system<br />
that allows us to ring anyone.<br />
In practice, Skype users can video call their<br />
Skype friends; Facebook users can conduct<br />
video calls with their Facebook friends on<br />
Facebook; and Google+ users can employ<br />
‘Hangout’ on a video chat with friends in<br />
their Google+ circles. As a result, users exist<br />
in Islands, and they cannot reach out and<br />
connect with their wider communities.<br />
The different services don’t talk together<br />
— full stop. This is because each video communications<br />
service uses different addressing<br />
capabilities, different client software<br />
and makes use of different video formats<br />
that exist in the industry.<br />
IPX networks connect data networks in the<br />
same way, but there is a catch. Video communications<br />
(carried over IP) is predominantly<br />
peer-to-peer, which means users are<br />
only able to reach people on the same video<br />
service using the same calling software.<br />
The upshot: Users sit on different video<br />
service “Islands” where they are limited<br />
Mind the gap<br />
Clearly, the emergence of these video<br />
service Islands effectively limits users,<br />
barring them from connecting with all their<br />
contacts regardless of the video call service<br />
they choose to use. However, this issue has<br />
neither hampered the growth in OTT video<br />
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Average mobile user, traffic per month<br />
Figure 2: Based on data from Cisco.<br />
www.slideshare.net/CiscoSP360/cisco-visual-networking-index-vni-global-mobile-data-traffic-forecast-20112016<br />
communications, nor has it harmed the<br />
brand appeal of the players that offer them.<br />
To the contrary, Google, Apple, Facebook<br />
and Skype all now manage powerful brands,<br />
offering a free service model largely at<br />
the expense of the operators who have<br />
invested in the networks to make video<br />
communications possible.<br />
For the moment, the storm rages on. How<br />
long will it last, and what will be the impact?<br />
Tough questions, but one thing is for sure:<br />
the OTT model has serious shortcomings.<br />
For one, there is a huge question mark<br />
over the scalability and sustainability of<br />
a model that effectively isolates users<br />
on service Islands.<br />
Indeed, a video calling service that only<br />
per mits users to communicate with their<br />
friends who use the same service may<br />
be deemed acceptable among the Digerati<br />
and the Facebook masses, but it is an<br />
alien concept to everyone else out in the<br />
wider ocean.<br />
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In the last few years we have seen a seismic shift<br />
in consumer acceptance and use of mobile video.<br />
Smartphones and tablets — popular devices<br />
equipped with video cameras — have reached<br />
the mass-market tipping point.<br />
Accustomed to the simplicity and<br />
seamlessness of voice communications<br />
users expect — and demand — universal<br />
connectivity that allows them to connect<br />
with anyone they please.<br />
Naturally, users will require the same freedom<br />
and flexibility when they make a video<br />
call. However, for this to happen, there will<br />
need to be companies that have the capabilities<br />
to bridge the service Islands. Put<br />
another way, the door is wide open for<br />
service providers to step up to the helm and<br />
use their networks to connect the Islands,<br />
even better if they can address all the<br />
incompatibilities that currently exist<br />
between different video call services.<br />
Providing universal connectivity is<br />
necessary if video is to reach its full market<br />
potential. This capability comes at a cost<br />
— but there is also a significant benefit<br />
to the providers equipped for the job.<br />
Come together<br />
Service providers are presented with both<br />
a problem and a golden opportunity.<br />
The problem is how to wring more value out<br />
of today’s IPX networks. The solution can be<br />
found in an approach where these networks<br />
are used as smart inter-operator video hubs.<br />
In this scenario the hubs connect incompatible<br />
video services and apply transcoding<br />
and transrating policies to ensure video<br />
call service quality and consistency.<br />
The opportunity lies in the ways providers<br />
can make money by charging for interoperator<br />
video connectivity on their IPX<br />
networks. And no worry that the space will<br />
crowd too quickly when word of this massive<br />
opportunity spreads. Video is inherently<br />
more complex than voice, a factor that<br />
creates a significant barrier to entry for any<br />
service providers who simply want to jump<br />
on the bandwagon.<br />
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Properly implemented, universal video connectivity<br />
should ‘just work.’ And, because<br />
they combine universal addressing with<br />
smart video hubs, they should operate in the<br />
background making sure users don’t experience<br />
or realise the incompatibilities between<br />
services and devices. What’s more, video<br />
should also be a simple upgrade option to an<br />
existing voice call. Finally, this connectivity<br />
and convenience should come at a price.<br />
In fact, there is no reason why it shouldn’t<br />
command premium interconnection fees.<br />
Connectivity is baked into IPX networks.<br />
Therefore, connecting video service Islands<br />
should be seen as a logical and natural next<br />
step and an extension of the IPX network<br />
core business model.<br />
The remaining question, therefore, centers<br />
on the economics.<br />
Video calling occupies a significant amount<br />
of bandwidth, which is quite costly. For longterm<br />
viability, video calling must generate<br />
its own revenue. Only in this way will the<br />
broadest range of operators be able to participate<br />
and provide a truly universal service.<br />
This is a challenge since video calling is<br />
already a free service within service Islands<br />
such as Skype. It’s difficult to see how there<br />
can be any going back on this one.<br />
Will users pay for the interexchange that<br />
bridges the service Islands, allowing them<br />
to make video calls to anyone they choose?<br />
The evidence that consumers will buy in to<br />
this proposition is overwhelmingly positive.<br />
Today users already accept the concept<br />
of a call plan bundle that permits them to<br />
call family and friends at a reduced rate and<br />
charges separately for calls they make to<br />
numbers that are not part of their call plan.<br />
This suggests users will see the value of<br />
being able to connect with their friends<br />
and family, and thus agree to pay for<br />
interexchange video traffic.<br />
Clearly, video calling is a service that will pay<br />
its way. But developing the pricing and packages<br />
will hardly be this simple. Driven by the<br />
widespread adoption of LTE, 2-way video<br />
calling is just one of a whole spectrum of<br />
video communications services that will<br />
soon reach the mainstream. Already value<br />
-added video services such as video voicemail,<br />
multi-way video calling, 1-way live video<br />
sharing and HD video are gaining traction.<br />
In time we can expect to see many more<br />
bundles and offers hit the marketplace,<br />
choice that we enjoy (or suffer!) today,<br />
with value-added premium services<br />
charged separately.<br />
132
As the storm clouds gather we can ask what<br />
lies beyond the horizon.<br />
Expect operators to make significant investments<br />
to launch video communications that<br />
provide universal connectivity, with the<br />
aim of charging for interconnect to other<br />
service providers. Equally, you can expect<br />
interexchange operators to invest in video<br />
interconnect hubs to join up and monetise<br />
the video world.<br />
Ramsey Masri has over 17 years experience<br />
in the mobile applications and infrastructure<br />
space. After starting his career at Oracle,<br />
Ramsey went on to become what has been<br />
defined as a turnaround specialist, helping<br />
three companies transition to profitability<br />
and success. In his role with Aylus Networks,<br />
he created the go-to-market strategy that<br />
led to the successful partnership with<br />
SAP/Sybase.<br />
It’s a huge task that lies ahead, and one the<br />
industry must face. As Billy Tyne, captain of<br />
the Andrea Gail in The Perfect Storm, put<br />
it: “There is no rest for the weary.” But the<br />
determination of the industry is necessary<br />
to embrace — and benefit from — this<br />
opportunity. To borrow from the words of<br />
crewman Bobby Shatford: “I’m out here<br />
because I need the money.”<br />
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PART FOUR: LTE: UNLEASHING INNVOVATION TO DELIVER RESULTS<br />
Enabling Roaming Across<br />
LTE Networks<br />
By Matthew Tonkin, Global Head, IPX Business, SAP <strong>Mobile</strong> Services<br />
Once again the mobile industry<br />
is entering a new phase of<br />
technological change. With the<br />
proliferation of data services and<br />
smartphones, the mobile operator<br />
community is working to address<br />
the increasing need for bandwidth<br />
with the rollout of next generation<br />
4G networks, known as LTE<br />
networks. This development<br />
will pave the way to full IP<br />
convergence, enabling mobile<br />
operators to accelerate the timeto-market<br />
for new services that<br />
drive customer satisfaction and<br />
generate new revenues.<br />
As operators launch LTE services in their<br />
home markets, consumers will naturally<br />
expect the same quality experience everywhere<br />
— especially when they are abroad.<br />
In view of this requirement mobile operators<br />
that deploy LTE networks in their domestic<br />
markets are starting to review options available<br />
to ensure LTE services allow seamless<br />
roaming overseas. The first users of LTE will<br />
typically be VIP customers or key corporate<br />
accounts, a segment made up of high-end<br />
users and frequent travelers. To serve these<br />
premium customers operators will need to<br />
address LTE Roaming requirements sooner,<br />
rather than later.<br />
Prepare for roaming<br />
LTE will enable new services such as video<br />
streaming, HD voice and Voice over LTE applications.<br />
However, these services will also<br />
put high demands on the data roaming<br />
backbone and require much more bandwidth<br />
and resilient network connectivity. As mobile<br />
operators review their LTE Roaming connectivity<br />
options, they will need to consider the<br />
following business and technical factors in<br />
preparation to enable LTE Roaming:<br />
As operators launch LTE networks over the<br />
coming years, new roaming connectivity will<br />
be required with each new operator. Effectively,<br />
the work performed over the last 10 years<br />
will need to be repeated.<br />
134
1 Diameter Signaling<br />
The build out of high-speed LTE networks<br />
is different from the technologies that<br />
preceded it. LTE requires a completely<br />
new signaling protocol. Put another way,<br />
SS7 MAP— which has been the rule for<br />
2G / 3G mobile networks — is no longer<br />
needed. A new signaling protocol has<br />
been introduced, called Diameter.<br />
2 New Roaming Connectivity<br />
In a roaming environment, the existence<br />
of this new protocol will require mobile<br />
operators to establish new roaming connections.<br />
As operators launch LTE networks<br />
over the coming years, new<br />
roaming connectivity will be required with<br />
each new operator. Effectively, the work<br />
performed over the last 10 years will need<br />
to be repeated.<br />
3 Diameter Relay Agent<br />
To enable this connectivity, operators<br />
will require a Diameter Relay Agent (DRA).<br />
In the initial build out of LTE networks, the<br />
majority of mobile operators have not<br />
deployed a DRA into their networks. <strong>Operator</strong>s<br />
are facing challenges of the immediate<br />
business requirements to enable LTE<br />
Roaming versus the need to obtain<br />
CAPEX budget approvals to acquire the<br />
required DRA equipment.<br />
4 An IPX Provider<br />
It is widely accepted that LTE Roaming<br />
with Diameter signaling will be connected<br />
across IPX networks. As LTE Roaming<br />
proliferates, there will be a need for<br />
IPX providers to enable peering both at<br />
the data level and at the signaling level.<br />
Consideration will also be needed to<br />
ensure Quality of Service (QoS) SLAs<br />
re implemented.<br />
Important choices<br />
In the new LTE world, mobile operators<br />
will have a choice: they can work with LTE<br />
Roaming hubs, or they can directly connect<br />
with mobile operators.<br />
The hubbing concept is not new to the<br />
industry. There is a wide variety of these —<br />
including iSMS hubs, iMMS hubs, roaming<br />
hubs and clearing hubs — and all fulfill a<br />
similar role. Depending on the operator<br />
requirements, hubbing allows them to reach<br />
operators with one-to-many connectivity,<br />
reduce efforts and testing time, accelerate<br />
time-to-market for services and facilitate<br />
transaction settlements between operators.<br />
In the LTE Roaming environment, mobile<br />
operators can connect to an LTE Roaming<br />
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135
hub, a hub that will also facilitate connectivity<br />
to the wider operator community made<br />
up of operators that also connected to<br />
the same hub.<br />
To facilitate active deployment for mobile<br />
operators, the LTE Roaming hub will also<br />
need to provide an outsourced DRA capability<br />
running on the hub itself. <strong>Operator</strong>s have<br />
the option to utilise this outsourced DRA<br />
capability immediately to connect to<br />
roaming partners.<br />
This may sound easy, but, as the industry<br />
has experienced through operator trials,<br />
interworking with suppliers’ DRA equipment<br />
can be challenging. Whilst specifications are<br />
defined for the Diameter protocol, unique<br />
supplier variations are evident and require<br />
mapping to enable seamless interworking.<br />
In the initial stages of LTE Roaming<br />
deployments, it is likely operators will use<br />
their connection to an LTE Roaming hub<br />
to facilitate LTE Roaming. The business<br />
benefits delivered by this approach<br />
are as follows:<br />
5 Immediate time-to-market.<br />
This equips operators to deliver an immediate<br />
service to their high-value customers.<br />
6 Cost effectiveness.<br />
Whilst LTE roaming capability will be key,<br />
network rollouts will take time and the<br />
number of roaming users to start will be<br />
low. <strong>Mobile</strong> operators can monetise their<br />
initial rollouts through an LTE Roaming Hub.<br />
7 Technical readiness.<br />
Many operators are missing a key technological<br />
component, the Diameter Relay<br />
Agent. An LTE Roaming hub — which<br />
offers an outsourced DRA capability —<br />
will enable operators to move forward<br />
with an LTE roaming solution.<br />
As the market matures, LTE revenues<br />
proliferate, and the necessary network<br />
equipment is deployed, mobile operators<br />
will also have the option to connect directly<br />
with each other. As in today’s hub environments,<br />
it’s likely that mobile operators will<br />
connect directly to key operator partners<br />
and roaming destinations. Other operators<br />
will pursue a dual strategy for LTE Roaming.<br />
<strong>Mobile</strong> operators can monetise their initial<br />
rollouts through an LTE Roaming Hub.<br />
136
Connecting directly to key roaming<br />
partners, and also work with LTE Roaming<br />
hubs to access the community. No doubt<br />
there will also be some operator groups that<br />
operate their own hub, with a lead operator<br />
sponsoring the hubbing capability and<br />
enabling connectivity across the group.<br />
Incorporating the roaming hub principles,<br />
an LTE Roaming hub running over the IPX<br />
network will enable and ensure the rapid<br />
rollout of LTE Roaming for the operator<br />
community. The IPX network will also deliver<br />
the bandwidth and network resiliency<br />
demanded by consumers.<br />
Matthew Tonkin oversees SAP <strong>Mobile</strong><br />
Services’s global GRX/IPX/LTE Roaming<br />
business. In addition Tonkin is responsible<br />
for managing and driving the company’s<br />
growth and market leadership in both Enterprise<br />
Services and <strong>Mobile</strong> <strong>Operator</strong> Services<br />
businesses across the AsiaPac region,<br />
through a combination of direct sales and<br />
a partner & alliances sales network.<br />
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PART FOUR: LTE: UNLEASHING INNVOVATION TO DELIVER RESULTS<br />
Lte Roaming In Latin America:<br />
Conditions For Success<br />
By Alejandro Martinez, Chairman, Billing and Roaming Working Group<br />
(BARG), GSMA LA<br />
Despite numerous announcements<br />
by Latin American mobile<br />
operators to deploy LTE as early<br />
as 2012, it’s clear the shift will not<br />
happen overnight. However, as<br />
with 3G, the move to LTE will have<br />
a significant impact on each<br />
market in the region.<br />
In view of this development the GSMA Latin<br />
America BARG Working Group has been<br />
working to encourage discussion of the migration<br />
to LTE, as well as the opportunities<br />
and implications for operators. A chief focus<br />
of this exchange has been the technical and<br />
commercial impact on international<br />
roaming services.<br />
Clearly, LTE will equip mobile operators<br />
to increase revenues by delivering new<br />
services and improving their current<br />
offering. But it’s not only about providing<br />
customers with high-speed and high<br />
quality data and voice services. LTE will<br />
also address the spectrum limitations<br />
facing many Latin American operators.<br />
To this end it will allow greater spectral<br />
efficiency, and thus boost the amount<br />
of spectrum available.<br />
In fact, this is one of the conclusions of<br />
GSMA Latin America BARG Working Group.<br />
Our discussions determined that LTE will<br />
have an immediate and significant impact<br />
at the Access level, and not so much at the<br />
Core level. We expect this to be the case for<br />
the next few years.<br />
Spectrum benefits<br />
Hurdles to overcome<br />
The deployment of LTE across Latin<br />
America brings with it a host of benefits.<br />
Predictably, the barriers to LTE deployment<br />
in Latin America will be similar to those that<br />
The advance of LTE will create the need for new<br />
billing models that allow customers more control<br />
of their services consumption.<br />
138
Although still embryonic, MBB is expected to become a<br />
significant driver for the mobile industry in Latin America.<br />
Number of mobile broadband connections and expected usage<br />
<strong>Mobile</strong> Broadband Connections<br />
(millions) 1<br />
<strong>Mobile</strong> data traffic in LatAm and per capita,<br />
(petabytes per month)<br />
22MB per<br />
capita in 2010<br />
850MB per<br />
capita in 2015<br />
+566%<br />
344<br />
+3,967%<br />
488<br />
257<br />
52<br />
72<br />
12 26<br />
60<br />
127<br />
2010<br />
2011 2012F<br />
<strong>2013</strong>F 2014F<br />
2015F<br />
2010<br />
2011 2012F<br />
<strong>2013</strong>F 2014F 2015F<br />
2010 saw 35 LTE commitments, 7 trials and 4 commerical launches.<br />
The number of LTE connections is expected to reach 15 million by 2015<br />
Figure 1: Based on data from GSMA. The GSMA Latin American <strong>Mobile</strong> Observatory 2011.<br />
A.T. Kearney 12/13557<br />
www.gsma.com/publicpolicy/wp-content/uploads/2012/03/latam12presentationatkearneythestatusofthemobileindustryinlatammobileobservatory.pdf<br />
marked the introduction of 3G and previous<br />
technological evolutions.<br />
The difficulty to reach economies of scale<br />
in the region is combined with problems<br />
around disparities in the current assignment<br />
of frequencies and overall shortage of<br />
spectrum. These factors will cause higher<br />
terminal and dongle prices. Since the<br />
current level of subsidies is already high, this<br />
development will mean higher CAPEX costs<br />
for mobile operators across the region.<br />
Footnote<br />
1. Numbers have been updated after the publication of the Latin America <strong>Mobile</strong> Observatory.<br />
Q4 each year based on technology: # of subscribers to CDMA 2000 fxEV-DO (Rev. A and Rev. B<br />
also), WCDMA HSPA and LTE. Source: The GSMA Latin American <strong>Mobile</strong> Observatory 2011.<br />
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If no new spectrum is made available in suitable<br />
bands, then it will be difficult for operators to evolve —<br />
and migrate their customer base — from 3G to LTE.<br />
On the other hand, investment in the network<br />
elements will be significant given the<br />
geographical extension of the majority of<br />
the territories in the region.<br />
In view of these costs and obstacles, there<br />
is a trend among Latin American operators<br />
to share networks and the infrastructure<br />
required for LTE. However, experience with<br />
network sharing in other regions shows<br />
this option is not free from major difficulties<br />
and limitations.<br />
Gradual shift<br />
delays. A prime example is Argentina, there<br />
the cap per operator is only 50MHz, and<br />
even that frequency is not fully allocated.<br />
What’s more, the auction for AWS spectrum<br />
has no certain schedule at this time.<br />
To date the spectrum currently available<br />
is fully utilised by GSM/3G. If no new<br />
spectrum is made available in suitable<br />
bands, then it will be difficult for operators<br />
to evolve — and migrate their customer<br />
base — from 3G to LTE. Put another way,<br />
the shift from 3G to LTE will be gradual, and<br />
there will need to be a coexistence of these<br />
technologies for a while to come.<br />
For operators to capitalise on the benefits<br />
of LTE, a spectrum band of at least 20 MHz<br />
must be available. While it is possible to<br />
deliver services using a smaller allocation<br />
of spectrum, the experience delivered at<br />
this suboptimal speed will not be much<br />
faster than what we know from 3G.<br />
In Latin America spectrum caps are very<br />
low in comparison to other regions. To<br />
further complicate matters, several of the<br />
spectrum auctions that were announced<br />
have not yet taken place due to repeated<br />
Roaming and rewards<br />
No doubt there will be some cases where<br />
operators will launch LTE networks focused<br />
entirely on offering high-speed data<br />
services. But it is likely that operators will<br />
eventually decide to extend their offer and<br />
provide voice services for two reasons.<br />
First, voice is essential to complete a solid<br />
commercial offering. Second, the access<br />
resources that voice services require in<br />
comparison to data are reduced.<br />
140
To date the provision of voice services under<br />
LTE is held back by the lack of standards<br />
and the strong convenience of fall back<br />
capacity to legacy networks.<br />
In terms of Roaming Service, LTE will inherit<br />
the difficulties of the disparity of frequencies.<br />
Terminals should be multiband, further<br />
increasing its cost, in order to work in different<br />
countries. Fallback capacity to legacy<br />
networks will be necessary in order to<br />
provide a good footprint from the beginning.<br />
At wholesale billing level, it will be necessary<br />
to migrate to TAP 3.12 version and make<br />
adjustments throughout the supply chain<br />
and service assurance. The traffic generated<br />
by roamers from LTE home networks<br />
will be a source of revenues for Latin<br />
American operators.<br />
In recognition of this requirement the BARG<br />
of GSMA Latin America has fostered debate<br />
between operators and vendors to promote<br />
progress toward these new billing models at<br />
a regional level. As a result, several operators<br />
have launched commercial services<br />
that include billing caps for periods of time.<br />
Clearly, LTE will drive benefits for operators<br />
and their customers. But the path to LTE<br />
will be gradual. Indeed, the pace of massmarket<br />
deployment will be subject to a<br />
variety of factors, including the allocation of<br />
additional spectrum and the availability of<br />
handsets and dongles at a reasonable price<br />
customers are willing to pay. LTE paves the<br />
way for new and better value-added<br />
services provided operators succeed in<br />
finding business models and approaches<br />
that allow reasonable profitability.<br />
In time an extra advantage of LTE — similar<br />
to 3G —will be the possibility of roaming<br />
between networks that were previously<br />
not interoperable. This benefit opens up<br />
business opportunities in both directions.<br />
The advance of LTE will create the need for<br />
new billing models that allow customers<br />
more control of their services consumption.<br />
<strong>Operator</strong>s will therefore need to adjust their<br />
offering to match customer needs for more<br />
transparency. What’s more, operators will<br />
need to be sure these models and offers<br />
also support a sustainable business.<br />
Alejandro Martinez is the Corporate & B2B<br />
Marketing Manager at Telecom Personal<br />
Argentina. He has more than 12 years<br />
experience in the retail, product, technical,<br />
and wholesale mobile business, and is the<br />
current Chairman of the BARG Group<br />
of GSM LA.<br />
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PART FOUR: LTE: UNLEASHING INNVOVATION TO DELIVER RESULTS<br />
LTE: New Technology<br />
Boosts New Business<br />
By Michel Van Veen, Group Manager, Product Management,<br />
SAP <strong>Mobile</strong> Services<br />
About 10 years ago, operators<br />
offering IP-based VPN services to<br />
companies introduced Classes of<br />
Service (or CoS) to enable more<br />
efficient use of bandwidth. The<br />
principle is simple: assign a high<br />
CoS to a quality-sensitive application,<br />
like video calling, to make<br />
sure IP packets associated with<br />
that application get a higher<br />
priority on the backbone than<br />
packets associated with less<br />
critical applications, such as<br />
email and web browsing. This<br />
helps guarantee the performance<br />
of more demanding services in<br />
situations where a connection to<br />
an IP-VPN has limited capacity,<br />
and bandwidth upgrades are costly.<br />
The cost of fixed bandwidth may have<br />
declined in the last decade. But this is<br />
not the case for mobile networks. Radio<br />
networks are generally costly to build out<br />
and maintain. In view of this many <strong>Mobile</strong><br />
Service Providers have become increasingly<br />
creative in improving the return on their<br />
investment. One way they have achieved<br />
this is by pursuing strategies around sharing<br />
radio network infrastructure with <strong>Mobile</strong><br />
Virtual Network <strong>Operator</strong>s.<br />
However, the advance of LTE puts the topic<br />
of how to balance high costs associated<br />
with radio network capacity back on the<br />
agenda. In many countries LTE will use<br />
higher frequencies than 3G, thus requiring<br />
the deployment of even more antennas in<br />
metropolitan areas, and further adding to<br />
the cost and the challenge.<br />
It therefore comes as no surprise that CoS<br />
has been built in to the 3GPP standards for<br />
The roll-out of LTE networks and the growing<br />
penetration of smartphones and tablets are finally<br />
making the mobile Internet a reality. As a result,<br />
mobile video calling is getting a second chance.<br />
142
Huge increases in mobile data capacity demand threaten to outstrip mobile<br />
network capacity supply<br />
Demand risks<br />
outstripping supply<br />
3G<br />
Capacity demand<br />
4G<br />
Capacity supply<br />
Demand<br />
2G<br />
Data becomes primary<br />
demand driver<br />
Mass market adoption<br />
of mobile voice<br />
Time<br />
Figure 1: Based on data from HSBC .<br />
www.hsbcnet.com/gbm/about-us/global-research.html<br />
LTE, thus providing operators a way to deal<br />
with bandwidth limitations in a smart way.<br />
But how smart is this really? CoS is normally<br />
viewed as just a technical tool to guarantee<br />
the quality of a service, particularly in<br />
situations where bandwidth is limited.<br />
But the creative <strong>Mobile</strong> Service Provider<br />
will see a revenue-generating opportunity<br />
here as well. Let’s look at some examples<br />
of how these companies can wring more<br />
value out of CoS.<br />
Premium quality for<br />
premium customers<br />
One of the services sure to take off on LTE<br />
networks is mobile video calling. IP-based<br />
video calling has been available on the<br />
Internet for many years now, provided by<br />
Over-the-Top (OTT) providers like Skype and<br />
Google. Video conferencing on traditional<br />
telephone networks has been around for<br />
even longer.<br />
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HD Voice trials or network deployments<br />
(copyright GSA- May 21, 2012)<br />
TMN, Portugal<br />
Du, UAE<br />
AT7T, USA<br />
Sasktel, Canada<br />
Sprint, USA<br />
Trialling HD Voice in 3G network<br />
Trialled HD Voice in 3G network<br />
VoLTE planned in LTE network<br />
VoLTE planned in LTE network<br />
Deploying VoLTE in LTE network<br />
Verizon Wireless, USA<br />
Deploying VoLTE in LTE network<br />
LG U Plus, South Korea<br />
Deploying VoLTE in LTE network<br />
KT, South Korea<br />
Deploying VoLTE in LTE network<br />
StarHub, Singapore VoLTE trial planned by end of 2012<br />
Figure 2: Based on data from Gsacom. www.gsacom.com/gsm_3g/info_papers.php4<br />
Early attempts by <strong>Mobile</strong> Service Providers<br />
to launch mobile video calling on 3G<br />
networks have failed. This was not just<br />
because 3G handsets have the camera on<br />
the opposite side of the display. The<br />
deciding factor was the call quality, which<br />
was quite disappointing. To complicate<br />
matters video calling was often only<br />
possible between compatible handsets.<br />
But now all that has changed. The roll-out<br />
of LTE networks and the growing penetration<br />
of smartphones and tablets are finally<br />
making the mobile Internet a reality. As a<br />
result, mobile video calling is getting a<br />
second chance.<br />
marginalised and relegated to the role of<br />
basic ISPs is obviously there. And this is all<br />
the more painful if we consider the costs of<br />
licenses and the investments <strong>Mobile</strong> Service<br />
Providers have made to build their business.<br />
This is the risk, but the reality looks quite<br />
different. Customers are accustomed to<br />
the high bandwidth — and high quality of<br />
service — delivered via fixed-line Internet<br />
access. The limitations on radio bandwidth —<br />
even on LTE networks — means customers<br />
cannot always get the quality they expect.<br />
This is where <strong>Mobile</strong> Service Providers have<br />
a great opportunity. After all, they control<br />
the LTE network.<br />
This development puts the OTT providers in<br />
an ideal position to strengthen their hold on<br />
customers and to grow their business. The<br />
risk that <strong>Mobile</strong> Service Providers might be<br />
By cleverly applying CoS, <strong>Mobile</strong> Service<br />
Providers can control the quality of service<br />
that is delivered to individual customers,<br />
even by application. What’s more, <strong>Mobile</strong><br />
144
Collaboration with OTT providers makes sense. However,<br />
it should at least result in seamless interoperability<br />
between the services provided by both parties.<br />
Service Providers can now launch their own<br />
OTT-like communication services with guaranteed<br />
performance down to the mobile<br />
device. This is something OTT providers<br />
cannot do. And it may be easier for <strong>Mobile</strong><br />
Service Providers to offer these services<br />
than one might expect, particularly now that<br />
standards for the Rich Communication<br />
Suite (RCS) have matured and many<br />
vendors are offering compliant solutions.<br />
This benefits customers, who now have a<br />
choice between the “best-effort” type OTT<br />
services and premium-charged quality<br />
services offered by their <strong>Mobile</strong> Service<br />
Provider. And, as the successful launch and<br />
take up of HD Voice on 3G networks in some<br />
markets clearly shows, there is a significant<br />
segment of customers willing to pay for<br />
premium services.<br />
to get that content streamed flawlessly<br />
to your brand new HD tablet ?<br />
In other words, wouldn’t it be great if you<br />
could get access to premium bandwidth<br />
at a one-off charge, and just when you<br />
need it? Absolutely.<br />
This idea — sometimes referred to as the<br />
slot machine model (“throw in a quarter<br />
and get 15 minutes worth of bandwidth”)<br />
— can become a reality with LTE. In this<br />
same scenario managing CoS is only one<br />
part of the challenge. CRM systems and<br />
billing systems will also need to be fully<br />
integrated with the core network. So, even<br />
though the slot machine proposition has<br />
as much potential as prepaid cards, the<br />
general expectation is that we will need<br />
to be patient.<br />
Slot machine<br />
Collaborative models<br />
Granted, many consumers will not be prepared<br />
to sign up for premium services. But<br />
there will also be moments when these consumers<br />
will wish they had.<br />
A video call from your friends showing the<br />
litter of newborn puppies is certainly no<br />
fun when the image freezes all the time.<br />
And what about that movie trailer you<br />
have been waiting so impatiently to see?<br />
Wouldn’t it be a much better experience<br />
The more adventurous <strong>Mobile</strong> Service<br />
Providers will not stop there. They will<br />
certainly look for collaborative business<br />
models to drive even more revenue out<br />
of their costly LTE investments.<br />
Collaboration with OTT providers makes<br />
sense. However, it should at least result<br />
in seamless interoperability between the<br />
services provided by both parties –<br />
including a translation between mobile<br />
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phone numbers on one side, and user IDs,<br />
such as Skype handles, on the other. But<br />
it is also conceivable that <strong>Mobile</strong> Service<br />
Providers could offer access to their LTE<br />
networks under some wholesale arrangement<br />
– either by choice or because they<br />
are forced to do so by regulating bodies.<br />
Collaboration with content providers, not<br />
a new phenomenon in itself, could be taken<br />
to the next level once LTE technology makes<br />
it possible to tailor services down to the<br />
individual customer.<br />
Before <strong>Mobile</strong> Service Providers can tap into<br />
any of these new revenue streams, they will<br />
need to get very familiar with this new LTE<br />
technology. Controlling a high-performing<br />
radio network is key, but being able to<br />
manage the core network and have it fully<br />
integrated with IMS platforms, as well as<br />
CRM and billing systems, is crucial.<br />
Michel Van Veen is responsible for managing<br />
and driving the GPRS Roaming Exchange<br />
(GRX)/ IP eXchange (IPX) product line for<br />
SAP <strong>Mobile</strong> Services. He began his career<br />
at KPN Telecom where he worked on major<br />
projects including international standardisation<br />
of ISDN and Fiber-to-the-Home<br />
systems, and establishment of an operational<br />
management center for the first GSM<br />
network in The Netherlands. Van Veen is<br />
also the current Deputy Chairman of the<br />
GRXIPX Working Group, which is a subworking<br />
group under GSMA’s IREG<br />
(Inter-Working Roaming, Expert Group).<br />
And let’s not forget the other challenge that<br />
makes the mobile Internet so different from<br />
the fixed Internet: roaming. The first question<br />
that immediately comes to mind is: how<br />
can the operator guarantee — and deliver<br />
— a roaming customer the same quality of<br />
service they enjoy in the home network?<br />
Tough question, indeed! But I will leave that<br />
discussion for some other time.<br />
146
PART FIVE<br />
OTT: OPEN THREAT OR<br />
HIDDEN OPPORTUNITY
PART FIVE: OTT: OPEN THREAT OR HIDDEN OPPORTUNITY<br />
OTT Threat: Top Strategies<br />
To Fight Smart<br />
By Pamela Clark-Dickson, Senior Analyst, <strong>Mobile</strong> Content<br />
& Applications Intelligence Center, Informa Telecoms & Media<br />
The rise of Over-the-Top providers<br />
(OTTs) of mobile VoIP (mVoIP) and<br />
IP-based messaging is significantly<br />
altering the dynamics of the mobile<br />
services market.<br />
receive messages for “free” that are also<br />
posing a very real threat to mobile operators’<br />
voice and messaging revenues.<br />
The “KPN effect”<br />
The growing penetration of smartphones<br />
and mobile broadband, combined with the<br />
availability of open application programming<br />
interfaces (APIs) for handsets, has created<br />
an environment where third-party application<br />
and service providers can more easily<br />
develop and distribute mobile applications,<br />
including mobile voice-over-IP (mVoIP) and<br />
IP-based messaging applications. In this<br />
environment, mobile operators risk being<br />
relegated to becoming providers of network<br />
access only.<br />
Significantly, it’s the third-party applications<br />
and services from OTTs that enable subscribers<br />
to make voice calls and send and<br />
In May 2011 KPN became the first mobile<br />
operator to report that subscriber use of<br />
OTT voice and messaging applications – in<br />
particular, WhatsApp – had caused a decline<br />
in voice and messaging traffic and revenues.<br />
Initially, what became known in the wider<br />
industry as “the KPN effect” was confined<br />
to KPN’s “Hi” brand. The operator found that<br />
85 percent of its Hi subscribers were using<br />
WhatsApp, usage that resulted in a year-on<br />
-year decline of 24 percent in outgoing SMS<br />
traffic by 3Q 2011. The effect quickly spread<br />
to the operator’s mainstream brand, KPN,<br />
causing outgoing SMS per customer to<br />
decline 5 percent year-on-year by 3Q 2011.<br />
Significantly, it’s the third-party applications and<br />
services from OTTs that enable subscribers to make<br />
voice calls and send and receive messages for “free”<br />
that are also posing a very real threat to mobile<br />
operators’ voice and messaging revenues.<br />
148
KPN <strong>Mobile</strong>, Netherlands, SMS per subscriber, 1Q2010-2Q2012<br />
60<br />
55<br />
SMS per subscriber<br />
50<br />
45<br />
40<br />
35<br />
30<br />
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12<br />
Figure. 1: Source: KPN<br />
Despite KPN’s attempts to stem its declining<br />
SMS traffic and revenues through the<br />
introduction of integrated tariffs — which<br />
included a mixture of voice minutes, SMS<br />
and mobile data — the year-on-year decline<br />
in SMS traffic among KPN’s overall consumer<br />
mobile customer base accelerated<br />
from 19.6 percent in 3Q 2011 to 32.7 percent<br />
by 2Q 2012 (see figure. 1).<br />
OTT impact spreads<br />
Vodafone Group has also experienced a<br />
decline in its SMS traffic and revenues,<br />
partly because its subscribers preferred<br />
to use OTT alternatives. The operator’s 1Q<br />
<strong>2013</strong> financial results paints a fairly grim<br />
picture, showing a decline in messaging<br />
revenues across most of its operating<br />
divisions (see figures. 2, 3).<br />
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Vodafone Group, messaging revenues by division, 1Q2012 and 1Q<strong>2013</strong><br />
7<br />
Revenues (£ billions)<br />
6<br />
5<br />
4<br />
3<br />
Group<br />
Europe<br />
2<br />
Africa, Middle<br />
East & Asia<br />
1<br />
0<br />
1Q12<br />
1Q13<br />
Notes: £:1=US$1.62 *Ends June 30,2012<br />
Figure. 2: Source: Vodafone.<br />
The impact of OTT services was not limited<br />
to Europe. China <strong>Mobile</strong> stated in its 1H<br />
2012 financial report that competition in the<br />
Chinese mobile services market was intensifying.<br />
The operator stressed that revenues<br />
from traditional voice and messaging<br />
services were under pressure from mobile<br />
operator rivals and “new technologies and<br />
services that are replacing traditional communications<br />
services.”<br />
As a result of this competition, China<br />
<strong>Mobile</strong>’s SMS and MMS revenues declined<br />
2.6 percent year-on-year (see figure. 4).<br />
Despite this drop, China <strong>Mobile</strong> is still the<br />
largest in the world in terms of SMS traffic.<br />
According to Informa Telecoms & Media’s<br />
World Cellular Data Metrics, China <strong>Mobile</strong>’s<br />
624 million subscribers sent a total of 736<br />
billion text messages in 2011.<br />
150
Vodafone Group, messaging revenues by country, 1Q2012 and 1Q<strong>2013</strong><br />
350<br />
300<br />
UK<br />
Revenues (£ billions)<br />
250<br />
200<br />
150<br />
Germany<br />
Italy<br />
100<br />
Vodafone (South Africa)<br />
50 Spain<br />
India<br />
0<br />
1Q12<br />
1Q13<br />
Notes: £:1=US$1.62 *Ends June 30,2012<br />
Figure 3: Source: Vodafone.<br />
Formidable competition<br />
Key OTT providers range from nimble newcomers<br />
to established handset manufacturers.<br />
Their ranks include: start-up companies<br />
such as WhatsApp, KakaoTalk, Viber Media<br />
and Line; handset vendors such as RIM<br />
(BlackBerry Messenger) and Apple<br />
(iMessage); and South Africa’s MXit, a<br />
combination mobile instant messenger<br />
and social network. (see figure. 5).<br />
In August 2012 WhatsApp announced<br />
that its daily traffic hit a record 10 billion<br />
messages. This represents a five-fold<br />
increase in the six months since March<br />
2012, when WhatsApp’s average daily<br />
traffic was 2 billion messages.<br />
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China <strong>Mobile</strong>, wireless data services revenues 1H2011 and 1H2012<br />
Revenues (CNY trillions)<br />
30<br />
25<br />
20<br />
15<br />
10<br />
Wireless data traffic<br />
Applications &<br />
information services<br />
SMS & MMS<br />
5<br />
0<br />
1H11<br />
1H12<br />
Notes: CNY1=US$0.15<br />
Figure. 4: Source: China <strong>Mobile</strong><br />
Other OTT providers gained similar traction.<br />
Apple announced in June 2012 that users<br />
of iMessage had sent 150 billion messages<br />
since the service’s launch in October 2011.<br />
Meanwhile, South Korea’s KakaoTalk<br />
managed to significantly reduce SK Telecom’s<br />
SMS traffic. To avert a similar decline<br />
in voice traffic from KakaoTalk’s recent<br />
launch of its mVoIP capability in South<br />
Korea, the South Korean mobile operator<br />
SK Telecom teamed up with rival operators<br />
KTF and LGT to lobby the Korean Communications<br />
Commission for permission to block<br />
their subscribers’ use of KakaoTalk’s mVoIP<br />
capability on their networks.<br />
Five key strategies<br />
How can mobile operators turn the tide and<br />
compete with OTT providers on their turf?<br />
Fortunately, mobile operators do have a number<br />
of competitive capabilities they can use<br />
to provide subscribers an OTT-like service,<br />
one that could potentially be far richer than<br />
the services provided by the OTTs.<br />
It seems mobile operators need little convincing<br />
of the merits of this approach. In fact,<br />
Informa has identified service emulation as<br />
one of the five key strategies mobile operators<br />
are pursuing in answer to the threat<br />
posed by OTTs.<br />
152
Key over the top mobile VoIP and IP-based messaging providers<br />
OTT<br />
providers<br />
Services No. users Messaging traffic Voice<br />
traffic<br />
Apple iMessage 140 million<br />
(June 2012)<br />
150 billion messages<br />
since launch in<br />
October 2011;<br />
1 billion messages<br />
a day (June 2012)<br />
n/a<br />
Kakao Talk Kakao Talk 45.2 million registered:<br />
36 million local,<br />
9.2 million international<br />
(June 2012)<br />
1.2 billion<br />
messages a day<br />
(February 2012)<br />
n/a<br />
Line Line 40 million registered:<br />
22 million local,<br />
9.2 million international,<br />
18 million local<br />
(June 2012)<br />
Not disclosed<br />
Not disclosed<br />
Mxit Mxit 12.5 million<br />
(February 2012)<br />
750 million<br />
messages a day<br />
(February 2012)<br />
n/a<br />
RIM BlackBerry 55 million<br />
(May 2012)<br />
100 million messages<br />
a month(May 2011)<br />
n/a<br />
Viber<br />
Media<br />
Viber<br />
100 million<br />
registered users<br />
(September 2012)<br />
6 billion messages<br />
a month<br />
2 billion<br />
minutes a<br />
month<br />
WhatsApp WhatsApp Not disclosed 10 billion messages<br />
a day (peak traffic,<br />
August 2012)<br />
n/a<br />
Figure. 5: Source: Informa Telecoms & Media<br />
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<strong>Mobile</strong> operators own and control the billing<br />
relationship, assets that position it to charge<br />
subscribers for the use of OTT-like services,<br />
either through a monthly subscription or on<br />
a per-event basis.<br />
Specifically, Informa regards service emulation<br />
and partnership with an OTT as the two<br />
strategies that are most sustainable for<br />
mobile operators.<br />
The remaining three strategies operators<br />
can adopt include: 1) doing nothing, or<br />
embracing OTTs as the driver of data traffic<br />
on operator networks, 2) blocking access<br />
to OTT services on their networks; and 3)<br />
trying to neutralise the impact of OTT<br />
services by restructuring of their price<br />
plans to be more competitive.<br />
<strong>Operator</strong> assets<br />
<strong>Operator</strong>s also have competitive capabilities<br />
and assets that give them the edge over<br />
OTT players. Put simply, the operators alone<br />
own and control their existing network<br />
assets. <strong>Operator</strong>s also own and control<br />
their subscriber base because of the longstanding<br />
billing relationship they have with<br />
their customers.<br />
<strong>Operator</strong>s can also play a central role enabling<br />
new ecosystems and new innovation. This<br />
is possible because network infrastructure<br />
vendors are exposing application programming<br />
interfaces (APIs) associated with their<br />
equipment. The aim here is to open these<br />
platforms, thus enabling operators and third<br />
parties to quickly develop and launch services<br />
on the mobile operator networks.<br />
The result is new and innovative services<br />
that could conceivably connect into multiple<br />
network assets, including voice, voice-mail<br />
and messaging infrastructure. This would<br />
also position mobile operators to provide a<br />
network- or application-based converged<br />
communications service, as well as a range<br />
of value-added services around communications.<br />
These services may either be<br />
proprietary to the operator that offers them,<br />
or they may be based on Rich Communications<br />
Suite (RCS) or RCS Enhanced<br />
(RCSe) standards issued by the GSMA.<br />
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Ownership matters<br />
Because the mobile operator owns and<br />
controls the network, it alone can ensure<br />
service reliability and quality for subscribers.<br />
OTTs, on the other hand, can exercise<br />
relatively little control over reliability and<br />
quality of service. Put another way, their<br />
sphere of influence is limited to the infrastructure<br />
and apps they use to deliver and<br />
support their services.<br />
could act as a catalyst for operators<br />
to compete by creating far richer<br />
OTT-like services that bind subscribers<br />
to their networks.<br />
As always, execution will be key. <strong>Mobile</strong><br />
operators do have significant advantages<br />
over the OTTs, but it’s up to the operators<br />
to ensure that they can transform these<br />
advantages into revenue-generating services.<br />
What’s more, mobile operators own and<br />
control the billing relationship, assets that<br />
position it to charge subscribers for the<br />
use of OTT-like services, either through a<br />
monthly subscription or on a per-event<br />
basis. Alternatively, the operator could<br />
also include free access to these OTT-like<br />
services as part of an existing, or new price<br />
plan, that may also include voice minutes,<br />
SMS and/or data. Adopting the latter<br />
approach may well help the mobile operator<br />
to minimise the rate at which its subscribers<br />
churn to the networks of other operators,<br />
or to OTT services.<br />
As the examples outlined here show, subscribers’<br />
use of OTT services has proven<br />
to have a negative impact the traffic and<br />
revenues many mobile operators generate<br />
from their traditional communications<br />
services. However, it is possible that OTTs<br />
Pamela Clark-Dickson is a senior analyst<br />
at Informa Telecoms & Media with over 16<br />
years experience in the field. She focuses<br />
on mobile messaging and produces<br />
analysis of the global messaging market<br />
for the <strong>Mobile</strong> Content and Applications<br />
Intelligence Centre. Her areas of expertise<br />
cover all aspects of mobile messaging in<br />
the consumer, enterprise and marketing<br />
industry sectors globally, including<br />
SMS, MMS, mobile e-mail, mobile instant<br />
messaging and rich communications. She<br />
also co-edits <strong>Mobile</strong> Media and Messaging,<br />
a continuous research service published<br />
by Informa.<br />
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PART FIVE: OTT: OPEN THREAT OR HIDDEN OPPORTUNITY<br />
Evaluating Strategies To Face<br />
OTT Providers<br />
By Eusebio Felguera, Corporate Regulatory Manager, Telefónica<br />
No one doubts the Internet has<br />
become an integral part of our<br />
lives. Likewise, no one doubts the<br />
Internet ecosystem will be<br />
different in the next 3-7 years.<br />
The evolution of the Internet is marked by a<br />
series of developments that have decoupled<br />
the networks from the services they offer.<br />
This has opened the door to third parties<br />
and over-the-top players (OTT), allowing<br />
them to provide services over the top of the<br />
operator network. This, in turn, has led to a<br />
greater level of service flexibility and innovation.<br />
Thus, a departure from the vertical<br />
integration of services that operators<br />
provide has paved the way for new services.<br />
But that isn’t the only outcome.<br />
The advance of OTT players means it’s time<br />
for operators to reinvent themselves. But<br />
it’s not about pursuing strategies to become<br />
the new Google or Facebook. Any initiative<br />
to copy these companies will simply fail.<br />
This is about developing new and different<br />
services that complement and compete<br />
with the services these OTT players offer to<br />
users, while building strength in the services<br />
operators have traditionally offered.<br />
In other words, it’s about focusing on what<br />
operators do best. <strong>Operator</strong>s have always<br />
been successful in creating services to meet<br />
specific customer needs and they should<br />
continue to focus on this core capability. A<br />
customer-first focus has allowed operators<br />
to prosper, and this approach will also be<br />
key to their future growth.<br />
<strong>Operator</strong>s are also innovative in offering<br />
services where vertical integration is a must,<br />
a strategy that plays in their favour.<br />
Significantly, OTT players cannot reach this<br />
level of vertical integration by themselves.<br />
They need operators — and these operators<br />
must offer much more than just connectivity<br />
by leveraging their network assets. Why?<br />
Because OTT players need much more. For<br />
operators this means offering services that<br />
demand expertise and experience in areas<br />
including Customer Relationship Management<br />
(CRM), billing and customer service<br />
and support.<br />
Fortunately, these capabilities are built into<br />
the competitive DNA of operators. Another<br />
advantage operators have is a trusted<br />
relationship with their customers. This<br />
is a relationship that operators have built<br />
up over years. These trust assets are key<br />
and operators can benefit from their<br />
unique position.<br />
156
A world of opportunity<br />
What are the vertical services that<br />
should be high on operators’ agendas?<br />
Opportunities will come from services<br />
(mobile, fixed and WiFi) and verticals<br />
including finance, government, health,<br />
security, advertising, digital content<br />
distribution and M2M (machine-tomachine)<br />
communications. There are<br />
also opportunities for operators around<br />
the Cloud and the delivery of cloud-based<br />
services. And no doubt there are many<br />
more services — and growth opportunities<br />
— still to come.<br />
Interestingly, these services also build<br />
on the close relationship operators<br />
already enjoy with their customers.<br />
More importantly, these services are not<br />
just plug ‘n play. This is key since it’s the<br />
close relationship the operator has with the<br />
customer that also allows them access to<br />
the customer’s home or business to install<br />
the equipment that makes these services<br />
possible in the first place.<br />
Another area of opportunity is banking.<br />
A huge number of people in developing<br />
markets worldwide — and particularly in<br />
Latin America — do not have bank<br />
accounts. But they do have a pre-paid<br />
mobile phone. This is a vertical where<br />
operators clearly have a role to play in<br />
the delivery of mobile banking and<br />
mobile money services. In developed<br />
markets operators can also benefit<br />
from the advance of NFC, which lays the<br />
groundwork for mobile payment services.<br />
And let’s not forget the huge market<br />
opportunity in providing M2M<br />
communication and services, enabling<br />
machines to talk to each other and the<br />
people managing them. The overall M2M<br />
market encompasses an extraordinarily<br />
broad range of applications, including<br />
automotive telematics, smart metering<br />
and smart cities. In these smart cities<br />
sensors, networks and intelligent systems<br />
help authorities manage water, gas,<br />
electricity, waste, transportation, fuel use<br />
and provide urban dwellers an improved<br />
quality of life.<br />
A prime example is healthcare, which<br />
requires the installation of expensive and<br />
complex monitoring tools, tools that also<br />
need to be connected and maintained.<br />
Healthcare is an increasingly important<br />
services offer in Western countries,<br />
where there is an ageing population.<br />
Finally, there is video. This is an area of<br />
opportunity many consider to be the next<br />
“killer app” and a space where operators are<br />
well positioned to capture value. Since many<br />
industry reports forecast rapid growth in<br />
mobile video content and communications,<br />
there is no doubt the space will become<br />
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crowded and competition will be fierce.<br />
But operators should play in that space.<br />
capabilities to offer value in key areas, such as<br />
billing, connectivity and services innovation.<br />
Rethink and react<br />
The growth opportunities are there, but<br />
operators must first change their mindset.<br />
We cannot react as traditional telecom<br />
operators; we must evolve to be more<br />
flexible and cut time-to-market. In other<br />
words, operators need to be more digital.<br />
This is precisely our approach at Telefónica.<br />
We started out in 2009 by creating a new<br />
structure within Telefónica focused on<br />
the development of new IP services. The<br />
outcome is Telefónica Digital, a specially<br />
created unit established in 2011 to develop<br />
new applications and business models for<br />
IP technology. This new unit recently had its<br />
first ‘investors day’ in London, an event that<br />
gave the new unit the opportunity to share<br />
recent developments in this field. Telefónica<br />
Digital now has more than 2,500 employees<br />
working on new and innovative ‘Over the<br />
Telco’ services, and is always thinking outside<br />
of the box.<br />
What have we learned? It’s important that<br />
operators learn from OTT players. But this<br />
isn’t about merely borrowing from their<br />
approaches. <strong>Operator</strong>s must wield their<br />
This is precisely our model at Telefónica<br />
Digital, where we have launched TUENTI —<br />
a social communications platform — to<br />
compete with other social networks. We<br />
achieve this by leveraging in our key asset:<br />
mobile network access. And we add value<br />
by offering users confidentiality, something<br />
no other social network can provide.<br />
We have also launched To Me, a free mobile<br />
application that combines free text chat,<br />
voice calls and picture and location sharing<br />
between users. To Me is part of the larger<br />
Tu family of services, which will come to<br />
include other services such as Tu Go. Due<br />
out later this year, Tu Go allows customers<br />
to use their voice minutes and SMS packages<br />
on any device or platform, not<br />
just their phone.<br />
Collaborating for<br />
competitive edge<br />
I’ve outlined the B2C opportunities operators<br />
can — and should — take advantage<br />
of today. But we should also be aware of the<br />
opportunities around B2B2C.<br />
158
Once again, delivering these new services<br />
will require more vertical integration than<br />
OTT players can provide. Indeed, we can<br />
conclude that there is an enormous opportunity<br />
for operators that have expertise and<br />
trust assets to provide new services to this<br />
customer segment — one that OTT players<br />
cannot serve on their own. This is also where<br />
collaboration between operators and OTT<br />
players is essential and will open the door to<br />
a wide range of opportunities and innovation.<br />
<strong>Operator</strong>s should offer OTT players attractive<br />
ways to leverage all their assets — not<br />
just network connectivity. This approach will<br />
lay the groundwork for win-win relationships<br />
that will drive a new stage of growth and<br />
innovation in Internet services.<br />
Clearly, operators must work with OTT<br />
players to achieve mutual benefit and<br />
market advantage. But it’s not just about<br />
partnerships that pair one operator with<br />
one OTT player. Telefónica believes that —<br />
in order to be attractive for an OTT player—<br />
an operator must have extensive coverage.<br />
Since no single operator can provide this<br />
connectivity alone, it makes sense for the<br />
operator to work with other operators.<br />
Through agreements and partnerships<br />
operators can provide a full footprint to<br />
deliver services on a global scale. Partnership<br />
also makes it possible for operators<br />
to fill the gaps in local services, where<br />
access is mainly via fixed networks and<br />
mobile connectivity is a must.<br />
To this end operators have to create a new<br />
family of horizontal services that will exist<br />
right below the OTT layer of services. These<br />
services include: Managed Connectivity,<br />
Data Collection & Analysis, <strong>Operator</strong> Billing<br />
and Device Installation & Management.<br />
Cooperation between OTT players and<br />
operators will allow both providers to create<br />
services customers will be willing to pay for.<br />
This collaboration will also pave the way for<br />
mobile commerce, mobile advertising and<br />
other services that provide sustainability<br />
for all the players in the value chain.<br />
To offer all these services operators must<br />
have a reliable platform that allows them to<br />
provide these capabilities to OTT players in<br />
a seamless way. Fortunately, that platform<br />
exists today: it is IPX.<br />
Telefónica is leading this (r)evolution by harnessing<br />
this platform and by creating strong<br />
partnerships with OTT players. This provides<br />
OTT players a single point of entry, allowing<br />
them to benefit from vast coverage on a<br />
reliable network. This also deliversenormous<br />
opportunity and benefits to both parties.<br />
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In summary, should operators compete with<br />
OTT players? Yes, they should — by doing it<br />
better. Should they collaborate? Yes. I have<br />
shown how OTT players and operators can<br />
work together to win big. Should operators<br />
try to be like OTT players? Again, the answer<br />
is a resounding “yes, they should.”<br />
Despite the advances of OTT players, operators<br />
can do and achieve a lot to maintain<br />
their competitive advantage. In all cases, the<br />
key to success is to take action, rather than<br />
not doing anything.<br />
Eusebio Felguera manages the regulatory<br />
and public policy strategy of Telefónica. He<br />
has over 23 years experience in the mobile<br />
industry, where he is an expert in the areas<br />
of Interconnect and Roaming. Felguera also<br />
represents Telefónica in the GSMA with<br />
regard to interconnection issues and serves<br />
as the IMQ subgroup chair.<br />
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PART FIVE: OTT: OPEN THREAT OR HIDDEN OPPORTUNITY<br />
Nuvos: An Alternative<br />
To Disruptive OTT<br />
By Austin Murray, Founder and President, textPlus Inc.<br />
The iPhone launched a revolution<br />
that is changing the face of mobile<br />
telecommunications. As a result,<br />
millions of applications are now<br />
delivered “over the top” of mobile<br />
network operators (MNOs) to apphappy<br />
consumers. Some MNOs,<br />
however, are not quite so pleased.<br />
This is because most over-thetop<br />
(OTT) communications<br />
applications use IP to reach their<br />
customers, effectively bypassing<br />
the networks owned and managed<br />
by MNOs., and disrupting MNO<br />
business models.<br />
But there is one kind of OTT app that supports<br />
MNO business models. This particular<br />
kind of app — often called a Network Unaffiliated<br />
Virtual <strong>Operator</strong> (NUVO) – benefits<br />
MNOs by interconnecting with them and the<br />
broader telecom ecosystem via telephone<br />
numbers. The result is a win-win for<br />
NUVOs and MNOs that both satisfies<br />
consumer demand and drives innovation.<br />
IM: Closed and fragmented<br />
Before we discuss how NUVOs benefit<br />
MNOs, it is important to understand the<br />
current landscape and the challenges<br />
posed by OTT apps such as Facebook<br />
Messenger, WhatsApp, Viber, and TuMe.<br />
These OTT apps operate like desktop<br />
Instant Messaging (IM) clients, requiring<br />
both senders and recipients of messages<br />
or voice calls to use the app. As a result,<br />
these OTT apps bypass other networks,<br />
like the Public Switched Telephone Network<br />
(PSTN), and do not require users to use<br />
existing address mechanisms like telephone<br />
numbers. Put another way, these OTT<br />
apps use the Internet to route around the<br />
traditional mobile telecom networks to<br />
service their customers.<br />
The result is a win-win for NUVOs and MNOs<br />
that both satisfies consumer demand and<br />
drives innovation.<br />
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Industry research shows the rise of OTT<br />
messaging and calling apps is already having<br />
a tremendous effect on MNOs. Industry<br />
Analysts estimate that MNO messaging<br />
revenue declined by $13.9 billion in 2011.<br />
What’s more, consumers are increasingly<br />
choosing OTT messaging apps over SMS<br />
because they provide enhanced features at<br />
an improved price point. But the advance<br />
of OTT apps is not just displacing MNO text<br />
messaging revenues. The rise of alternative<br />
OTT voice solutions such as Skype and<br />
Viber is also negatively impacting core MNO<br />
voice usage and revenues.<br />
Clearly, these increasingly popular applications<br />
are poised to threaten the long-term<br />
viability of current MNO business models.<br />
How can MNOs compete?<br />
Fortunately, there is a solution that provides<br />
users a better alternative to the disruptive<br />
OTT apps, while at the same time driving<br />
MNO voice, messaging and data traffic<br />
and revenues. Moreover, this solution<br />
enables connected, non-telephonic devices<br />
to be addressable by MNO services via<br />
telephone numbers. NUVOs bring these<br />
MNO benefits and more to the smartphone<br />
app ecosystem.<br />
NUVOs increase reach, revenues<br />
NUVOs like textPlus and Google Voice allow<br />
users to communicate with anyone — not<br />
just other people who use the app — by<br />
interconnecting with the PSTN and its 8<br />
billion telephone numbers.<br />
By assigning telephone numbers to users,<br />
NUVOs may transmit messages (via SMS)<br />
and voice calls (via SIP/RTP) to anyone with<br />
a telephone number. This is important<br />
because it allows an app user to communicate<br />
with anyone simply by dialing a phone<br />
number – just as they normally do with any<br />
garden-variety telephone – rather than<br />
limiting their communications to other<br />
app users, as most OTT apps do.<br />
This convenience benefits customers and<br />
MNOs alike. It is estimated that five billion<br />
SMS messages a month in the U.S. alone<br />
are sent by people using textPlus and other<br />
NUVOs. In addition to providing services on<br />
MNO handsets, NUVOs also turn connected,<br />
non-telephonic devices – including iPod<br />
touch, iPad and tablets – into functional<br />
mobile phones that can send real SMS and<br />
make phone calls. Connect the dots, and<br />
this means a significant increase in the<br />
market of devices addressable to core<br />
MNO services.<br />
162
Like other OTT services,<br />
NUVOs connect app users<br />
Unlike most OTT, NUVOs<br />
also reach phone numbers<br />
text+<br />
text+<br />
Figure 1: Based on data from textPlus.<br />
Lessons learned<br />
The 1990s saw the rapid consumer uptake<br />
of PC-based Instant Messaging services.<br />
ICQ was the first to gain traction, but AOL’s<br />
AIM, Microsoft’s Windows Messenger,<br />
Yahoo’s Y! Messenger, and Google’s Gchat<br />
closed the gap quickly, becoming the leading<br />
players in the fast-moving IM space.<br />
Unfortunately, there was no underlying<br />
standard at the time — like SMTP (email)<br />
or E.164 (telephone numbers) — to unite<br />
these closed networks. For a long time they<br />
were islands unto themselves, unable to<br />
communicate with each other directly.<br />
This fragmented and closed approach did<br />
not help when the world made the leap to<br />
smartphones. Instead, desktop IM quickly<br />
lost mobile market share to new, native<br />
mobile OTT apps like WhatsApp and Viber,<br />
apps that are likewise closed networks.<br />
WhatsApp, Viber, Facebook Messenger —<br />
each requires users to be on the same app<br />
in order to communicate. It’s up to users<br />
to make sure all their friends and family<br />
members have also downloaded the app<br />
— and understand how to use it — before<br />
they can send a message or make a call,<br />
not exactly the best user experience.<br />
Despite their shortcomings, these OTT apps<br />
— and the closed networks they support —<br />
count a significant number of users. There<br />
are two market conditions that have allowed<br />
these apps to grow their reach.<br />
First, the app distribution model is frictionless<br />
and efficient, allowing users to download<br />
these apps quickly and easily to their<br />
smartphones. Second, consumers have<br />
come to demand more choice than MNOs<br />
and their OEM partners currently provide.<br />
Users want it all: group messaging, walkietalkie,<br />
rich picture messaging and sharing,<br />
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video calling, social networking, and more,<br />
all in one convenient place. And they want<br />
these features at a lower price point than<br />
their MNOs provide.<br />
The good news: Consumers have a healthy<br />
appetite for OTT apps. The better news: not<br />
all OTT apps bypass MNOs and disrupt their<br />
business models. NUVOs like textPlus cover<br />
the bases to meet consumer demand for<br />
better features, thus pushing the boundaries<br />
of what is possible in communications, while<br />
maintaining MNOs’ traditional central role<br />
in the communications ecosystem.<br />
One of the immutable laws of telecommunications<br />
is “just interconnect.” This is where<br />
the PSTN with its 8 billion E.164-standard<br />
telephone numbers enables everyone to<br />
connect with everyone else. It’s ubiquitous<br />
— and it’s easy. Everyone knows how to use<br />
a telephone number, and no one needs to be<br />
invited or read the FAQs to use it. It just works.<br />
Granted, these new, closed IM/OTT<br />
networks may continue to gain traction,<br />
but their reach and communities will likely<br />
remain significantly smaller than the<br />
PSTN. This difference translates into less<br />
utility for IM/OTT users and more opportunity<br />
for NUVOs and the ecosystem they<br />
enable together with MNOs.<br />
NUVOs like textPlus enable all the fantastic<br />
features one expects from a smartphone<br />
app — and more. In addition to connecting<br />
its users to MNOs and the broader telecom<br />
ecosystem via real telephone numbers,<br />
NUVOs provide the following benefits:<br />
• Enabling communication with the PSTN<br />
and its 8 billion telephone numbers - the<br />
largest social network in the world<br />
• Turning connected, non-telephonic<br />
devices – like iPod touch, iPad and<br />
tablets – into functional phones by<br />
giving them a real telephone number<br />
• Driving traditional SMS and voice<br />
traffic volumes, as well as data<br />
• Leveraging the common, wellunderstood<br />
user behavior of dialing<br />
telephone numbers to make ubiquitous<br />
communications possible via<br />
smartphone applications<br />
• Providing a better<br />
alternative to all-IP<br />
OTT apps, thus keeping<br />
MNO voice/SMS/data<br />
services central to the<br />
mobile Internet<br />
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The good news: Consumers have a healthy<br />
appetite for OTT apps. The better news: not<br />
all OTT apps bypass MNOs and disrupt their<br />
business models.<br />
Austin Murray is Founder and President<br />
of textPlus, Inc., a leading mobile communication<br />
destination. Prior to textPlus, Murray<br />
co-founded wireless entertainment publisher<br />
JAMDAT <strong>Mobile</strong>, and held positions at<br />
a variety of digital content companies.<br />
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PART FIVE: OTT: OPEN THREAT OR HIDDEN OPPORTUNITY<br />
OTT Ecosystem: Paving The<br />
Way For Opportunity<br />
By Gene Lew, CTO, MediaFriends, Inc.<br />
The mobile app market is more<br />
than a new distribution channel<br />
for applications and software.<br />
It ushers in a new business paradigm.<br />
As a result, companies and<br />
individual developers can market<br />
and monetise their mobile apps<br />
supported by an ecosystem where<br />
mobile operators no longer have<br />
complete control.<br />
As of June 2012 the app stores combined<br />
offered 500,000+ mobile applications.<br />
Many of these apps rely on a freemium<br />
business model to generate revenues and<br />
reach customers. In practice this model<br />
allows various monetisation approaches.<br />
For example, advertisers or other third<br />
parties can sponsor the app, thus subsidising<br />
the cost of providing the services and<br />
functions delivered by the app. This model<br />
is similar to the one that defined the<br />
‘dotcom’ era. But there is a difference<br />
because investors have learned from the<br />
dotcom bust that a business built on<br />
‘eyeballs’ alone — without a path toward a<br />
sound business model — is fatally flawed.<br />
Freemium models also centre on charging<br />
one-time fees for downloading the app,<br />
or collecting ongoing monthly/annual fees.<br />
Finally, freemium models also support a<br />
pay-as-you-go approach.<br />
Are these the only monetisation models?<br />
It’s hard to say. The avalanche of apps<br />
— from games and entertainment, to social<br />
networking and business productivity —<br />
would indicate that the app market is just<br />
beginning. There is much to come and there<br />
is no telling what monetisation models will<br />
emerge to enable this new economy.<br />
After all, billing is not the business of OTT players.<br />
They are focused on innovation and delivering<br />
apps their users will appreciate.<br />
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Figure1: Based on data from MediaFriends.<br />
The rise of the OTT<br />
A popular app category is communications.<br />
These apps provide services — such as<br />
voice, SMS, MMS and video, but they do<br />
this without using the mobile networks<br />
owned and managed by mobile operators.<br />
Instead, they perform all the functions<br />
within an all-IP realm, and only ‘gateway’<br />
into the SS7 world when necessary. These<br />
apps allow communications over the top<br />
of operator networks — which why they<br />
are known as OTT.<br />
A prime example of an early OTT app is<br />
Skype. It started on the PC and migrated to<br />
smartphone platforms. Based entirely on IP,<br />
this app offers voice, video and data services.<br />
These are the same services — voice, SMS/<br />
MMS and data — supported by feature<br />
phones and delivered by mobile operators.<br />
Another example is Apple’s iMessage.<br />
This OTT app provides the native SMS/MMS<br />
functionality as well as other capabilities<br />
and services (only available via IP). But<br />
there’s a catch, Apple’s iMessage only<br />
works with other Apple devices. If the user<br />
is sending a message to a non-Apple device,<br />
or an Apple device that does not have IP<br />
connectivity, the app falls back on SS7, the<br />
default transport of the operator’s SMS.<br />
Because Apple’s iMessage is IP-based, it<br />
also allows additional functionality, such as<br />
SMS, that is not supported by SS7 services.<br />
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<strong>Mobile</strong> Device<br />
<strong>Mobile</strong> Device<br />
Applications<br />
IP<br />
IP<br />
Applications<br />
Apple iOS<br />
IP<br />
Apple<br />
iMessage<br />
IP<br />
Apple iOS<br />
Carrier<br />
SS7<br />
SS7<br />
Carrier<br />
Figure 2: Based on data from MediaFriends.<br />
Apple’s iMessage also provides presence<br />
and real-time notifications, features that<br />
SMS doesn’t support.<br />
agnostic and uses IP — a default for every<br />
network and one that works anywhere in the<br />
world and is not limited or constrained by<br />
geography, operator or technology.<br />
More functionality<br />
OTT apps are IP-based, which means they<br />
are not limited by SS7. In fact, just the<br />
opposite is true. This opens the door to a<br />
variety of ways to enhance communications<br />
and deliver a good user experience.<br />
The OTT app HeyWire, offered by<br />
MediaFriends, — is a good example. It<br />
provides real SMS text messaging. But it<br />
also allows Twitter and Facebook messaging,<br />
as well as a plethora of other services<br />
that only an IP-based platform can deliver<br />
such as cloud-based storage and multidevice<br />
honing. Finally, the app is network<br />
The MediaFriends, product BNDWGN is a<br />
prime example an OTT service that is not a<br />
replication of a legacy operator or SS7<br />
based function (voice, SMS, etc.). Instead,<br />
BNDWGN is a completely “new” app that<br />
is specifically designed for mobile use.<br />
The OTT app BNDWGN enables users to<br />
combine and share social media in private<br />
groups, and message one another about<br />
common social media interests. This is<br />
done using graphics, video, text (not SMS),<br />
Twitter, Facebook, Pinterest, and many other<br />
popular social media content sources.<br />
168
Figure 3: Based on data from MediaFriends.<br />
Cooperation breeds success<br />
The rise of OTT players and apps has<br />
created conflict between multiple players<br />
in the ecosystem. Some operators believe,<br />
rightly or wrongly, that OTT players are<br />
getting a free ride over their infrastructure.<br />
At the other end of the spectrum, some<br />
OTT players feel they are unjustly restricted<br />
by rules and models dating back to an era<br />
when operators were in control.<br />
The conflict isn’t new. <strong>Operator</strong>s and<br />
OTT players have competed head-on since<br />
Skype launched in the 1990s. As more OTT<br />
players entered the market, the conflict<br />
grew. Today WhatsApp, a private messaging<br />
product, dominates in several markets<br />
around the world. Other ‘not so good’ OTT<br />
players have been banned by government<br />
regulators, or blocked by operators.<br />
But there’s no reason to generalise and<br />
declare that OTT apps, as a category, pose<br />
a threat to operators. In many ways these<br />
players — the operator and the OTT provider<br />
— need one another.<br />
Cooperation between operators and OTT<br />
players can yield a richer, more diverse and<br />
robust ecosystem. This positive outcome<br />
is similar to the Internet, which has evolved<br />
by meshing proprietary, isolated environments<br />
into an open and collaborative<br />
market. The outcome is an open Internet<br />
and one that has indisputably generated<br />
more benefits and opportunity than all of its<br />
proprietary predecessors.<br />
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Figure 4: Based on data from MediaFriends.<br />
More is better<br />
On one hand, the operators provide the<br />
underlying infrastructure of mobile technology,<br />
facilitating the complex management of<br />
the network and the services it delivers. In<br />
other words, it is the operator that ensures<br />
the core foundation of the OTT app. This is<br />
significant since operators ensure that the<br />
IP transport and the associated technology<br />
surrounding it are robust, reliable and fast.<br />
On the other hand, the OTT players have<br />
the flexibility and innovation to deliver<br />
the functions and apps that address the<br />
ever-evolving needs of customers on an<br />
international scale.<br />
Cooperation and partnerships between<br />
operators and OTT players is essential and<br />
mutually beneficial. In the past, operators’<br />
reach was often limited by geography. Today<br />
operators can forge partnerships to give<br />
them international customer reach instantly,<br />
and without huge investments of capital<br />
and resources.<br />
Taking billing, for example. A partnership<br />
with operators would allow OTT players<br />
access to operator billing capabilities. And<br />
it doesn’t stop there. <strong>Operator</strong>s can also<br />
build a business offering OTT players access<br />
to technology unique to mobile operators,<br />
such as geo-location, as well as the databases<br />
operators manage to resolve<br />
payments and allow financial reconciliation.<br />
170
But there’s no reason to generalise and declare that<br />
OTT apps, as a category, pose a threat to operators.<br />
In many ways these players — the operator and the<br />
OTT provider — need one another.<br />
This is critical since the monetisation<br />
models for apps are still evolving. Clearly,<br />
freemium and paid models dictate how<br />
companies currently monetise their apps,<br />
but this could change.<br />
For this reason, it would be mutually<br />
beneficial for both parties if OTT players<br />
had the billing capabilities —provided by<br />
the operator — to invoice users on a<br />
recurring basis. After all, billing is not the<br />
business of OTT players. They are focused<br />
on innovation and deliv ering apps their<br />
users will appreciate. Even the app stores<br />
offered by Apple, Google and Microsoft are<br />
limited in their ability to do recurring billing<br />
on regular cycles. Moreover, custom service<br />
billing is a difficult, if not impossible, task.<br />
It’s a given that the ecosystem will eventually<br />
become an all IP-based environment.<br />
It’s just a matter of time.<br />
The inevitable arrival of an all-IP world<br />
also reinforces the needs for deeper partnerships<br />
between operators and OTT<br />
players. After all, OTT apps play an important<br />
role in helping to shape and drive the<br />
demand for services that require an all-IP<br />
ecosystem. It is therefore critical that<br />
operators and OTT players work together<br />
to determine what an all-IP ecosystem<br />
will look like and deliver. In this new environment<br />
the winners will be the players that<br />
work together to innovate and adapt to the<br />
lesson of the Internet: open is better.<br />
Gene Lew has more than 25 years of<br />
technology management and engineering<br />
experience in the Internet, mobile, telecom,<br />
cable, and multimedia industries. He has<br />
worked with some of the world’s largest<br />
operators and involved in the development<br />
of key IP communications technologies,<br />
including broadband, FTTH and messaging<br />
services. Before joining MediaFriends, Lew<br />
served as VP of IP Advanced Technology<br />
for NeuStar; CTO for PAIX/Switch and Data;<br />
VP Advanced Technology for RoadRunner<br />
of TimeWarnerCable; VP Advanced Technology<br />
for Verizon and began his career with<br />
MCI focusing on IP technology before “IP<br />
was cool”.<br />
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172<br />
PART SIX<br />
UNLEASHING THE POWER<br />
OF MOBILE COMMERCE
PART SIX: UNLEASHING THE POWER OF MOBILE COMMERCE<br />
<strong>Mobile</strong> Money For The Masses<br />
By Richard Morecroft, Assistant Director <strong>Mobile</strong> Money, Qtel<br />
Qatar Telecom (Qtel) has built its<br />
<strong>Mobile</strong> Money service from the<br />
ground up to satisfy the needs of<br />
two different customer segments.<br />
On one level, average Qatari<br />
residents rely on the <strong>Mobile</strong> Money<br />
service to pay their monthly mobile<br />
phone bills — and will soon be able<br />
to make merchant payments and<br />
purchases using their Qtel mWallet.<br />
At the other end of the spectrum,<br />
migrant workers without bank<br />
accounts use the Qtel <strong>Mobile</strong><br />
Money service to send money<br />
back home, add airtime to their<br />
pre-paid account and send airtime<br />
as a gift to family and friends.<br />
To date Qtel counts around 2.38 million<br />
customers, a significant proportion of whom<br />
are migrant workers who traditionally work<br />
in the construction sector. They come from<br />
countries across the South Asian continent,<br />
including Nepal, India, Bangladesh, and<br />
Sri Lanka. These workers generally earn<br />
between $150 and $500 a month, and they<br />
demand a service that allows them to remit<br />
most of their monthly salary to their families<br />
in their home countries.<br />
Of course, the Qtel <strong>Mobile</strong> Money service<br />
caters to this demographic, making sure<br />
that the service works on all mobile phone<br />
makes and models, including low-end<br />
feature phones. But we have also taken this<br />
approach one giant step further, making it<br />
possible for the <strong>Mobile</strong> Money customers<br />
to use Qtel’s own network of Self-Service<br />
Machines, or SSMs.<br />
Like ATMs, the SSMs allow customers 24/7<br />
access to deposit their money (in cash) and<br />
conduct transactions. Customer can also<br />
use these machines to top up their pre-paid<br />
cards and pay their phone bill. We have<br />
deployed more than 200 of these SSMs<br />
across the country.<br />
These locations — together with a network<br />
of more than 20 retail shops — strengthen<br />
Moving forward, we are considering plans to expand<br />
the service to offer additional financial services such<br />
as insurance and micro-loans.<br />
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Qtel’s market presence. They also lay the<br />
groundwork for an innovative strategy that<br />
will extend Qtel’s influence and offer far<br />
beyond what mobile money and banking<br />
services deliver today.<br />
network of SSMs and ATMs when they<br />
want to make a cash withdrawal. It’s simple<br />
and it’s secure.<br />
Mutual benefit<br />
Easy does it<br />
Take remittance for example. We know it<br />
is possible to transfer money using mobile<br />
phones and text message services that<br />
automatically updates the mobile wallet,<br />
but is it really convenient for customers?<br />
At Qtel we think there must be an easier<br />
way. Specifically, we envision that this can<br />
be done as a wallet-to-wallet transaction.<br />
Moreover, we believe the service must be<br />
extended into ATMs. This is why we have<br />
released cardless cash in and out, a service<br />
that harnesses the network of ATM’s by<br />
enabling customers to deposit and withdraw<br />
money by entering a secure code received<br />
by SMS without the need for an ATM card. In<br />
practice, this new service allows customers<br />
the flexibility to put their money into their<br />
mobile wallet through Qtel’s self-service<br />
machines. Likewise, they can also withdraw<br />
their money in cash by using the ATMs<br />
managed by Qtel’s partner bank Qatar<br />
National Bank (QNB). In other words,<br />
customers can use their mobile for mobile<br />
banking, and they can access the vast<br />
The <strong>Mobile</strong> Money service is also frictionless<br />
because we have a forged a solid partnership<br />
with a leading bank, thus overcoming<br />
the tensions that traditionally exists<br />
between banks and mobile operators to<br />
focus the efforts on achieving a common<br />
objective. It’s all about serving the customer<br />
and building the customer base.<br />
Why does the relationship work? You need<br />
to look at the region, Qatar is a developing<br />
market, which means that a significant percentage<br />
of the population is under-banked.<br />
In Qatar arguably up to 75 percent of the<br />
country does not have access to financial<br />
services, but they do have mobile phones.<br />
Put another way, the under-banked are more<br />
likely to have established relationships with<br />
mobile operators. What’s more, operators<br />
are in a prime position to encourage their<br />
customers to use mobile banking services.<br />
Not so for the banks. They don’t have this<br />
long-standing relationship with the lowerincome<br />
customer because these customers<br />
don’t have bank accounts. To complicate<br />
174
Total mobile payment market ($ millions) split by eight key regions, 2012-2017<br />
Africa & Middle East<br />
$1,400,000<br />
Rest of Asia Pacific<br />
Indian Subcontinent<br />
Far East & China<br />
Central & Eastern Europe<br />
Western Europe<br />
Latin America<br />
North America<br />
$0<br />
2012<br />
2017F<br />
Figure 1. Source: Juniper Research. (1)<br />
matters, the effort to reach out to this<br />
customer segment would require banks to<br />
invest in a complex and expensive network<br />
of bank offices. It’s what they want to avoid,<br />
so they partner with mobile operators to<br />
reach these customers.<br />
It’s a completely different picture in developed<br />
markets such as Europe and North<br />
America. In these countries customers are<br />
not under-banked, nor are they underserved<br />
by the banks operating in these countries.<br />
This has a huge impact of how banks and<br />
mobile operators can work together.<br />
Footnote<br />
1. www.juniperresearch.com/reports.php?id=446<br />
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Instead of cooperating and collaborating<br />
to increase reach and grow their customer<br />
base, banks and mobile operators in developed<br />
markets are competing head-on for<br />
the same customers. Little wonder industry<br />
observers warn mobile operators and all the<br />
other companies in the emerging mobile<br />
money ecosystem — banks, credit card<br />
companies and payments providers —<br />
are heading for a showdown.<br />
Another point in our favor is regulation. The<br />
regulatory environment in Qatar is different<br />
from other regions, allowing us to partner<br />
with the QNB. The agreement, under the<br />
guidance of the Central Bank, allows us to<br />
take deposits and deposit these into a bank<br />
account. Of course, financial regulation does<br />
limit the amount of money that can be transferred<br />
and these limits need to be clearly<br />
explained and indicated to customers.<br />
Gaining serious traction<br />
The Qtel <strong>Mobile</strong> Money service targets the<br />
under-banked, providing them a service that<br />
allows money to be paid into their mWallet.<br />
Moving forward, we are considering plans<br />
to expand the service to offer additional<br />
financial services such as insurance and<br />
micro-loans.<br />
But it’s not limited to making banking<br />
simple and convenient for the underbanked.<br />
Our <strong>Mobile</strong> Money service also<br />
benefits the country’s wealthy, providing<br />
them a secure and simple way to do their<br />
banking. In many cases, this affluent<br />
customer segment employs staff — maids,<br />
gardeners, cooks — who don’t have bank<br />
accounts. With our <strong>Mobile</strong> Money service<br />
it is possible to pay staff directly and<br />
electronically, rather than cash.<br />
There are also plans to enable merchants<br />
to accept electronic payments from<br />
customers. They can then either withdraw<br />
the money from their mWallet, or move<br />
the money to a bank account at their<br />
convenience. In this sense, we’re actually<br />
replacing the electronic point-of-sale.<br />
We’re also looking at delivering services<br />
aimed at allowing customers to pay their<br />
monthly utility and water bills. Beyond the<br />
obvious benefits around security and<br />
convenience, enabling these payments<br />
would also provide customers another<br />
reason to have an mWallet.<br />
Powerful assets<br />
<strong>Mobile</strong> Money services have gained traction<br />
since we took the wraps off the first offer in<br />
November 2011. The next phase of growth<br />
176
Instead of cooperating and collaborating to<br />
increase reach and grow their customer<br />
base, banks and mobile operators in<br />
developed markets are competing head-on<br />
for the same customers.<br />
and opportunity is on the horizon, and it<br />
will be about convenience and enabling<br />
everyone to pay for goods and products<br />
electronically at retail.<br />
How do we get there from here? The good<br />
news: mobile operators already have a deep<br />
relationship with their customers based on<br />
trust. Our own research shows that our<br />
customers are very comfortable with Qtel,<br />
a mobile operator, handling their money.<br />
The even better news: technology is not an<br />
issue. In fact, it’s easy to imagine a scenario<br />
where I buy goods in a supermarket using<br />
my <strong>Mobile</strong> Money service.<br />
would receive a text message on my<br />
phone confirming my purchase.<br />
All that is possible right now.<br />
But it becomes tricky in a scenario where we<br />
want to enable this seamlessly on a larger<br />
scale. For example, what happens if I want to<br />
a shop at a supermarket where the partner<br />
bank for the <strong>Mobile</strong> Money service — in this<br />
case, QNB — isn’t the acquirer bank for the<br />
supermarket? It’s a tough question.<br />
NFC challenge<br />
In practice, this is how it would work. I would<br />
make my decision to pay for my groceries<br />
using <strong>Mobile</strong> Money, then I would be directed<br />
to the terminal. There I would pay by<br />
simply inputting my number and the fourdigit<br />
PIN that I was provided for authentication<br />
when I signed up for the <strong>Mobile</strong> Money<br />
service in the first place. To close the loop, I<br />
Interestingly, this is where NFC may provide<br />
an answer. NFC provides the second level of<br />
authentication that banks require because it<br />
enables secure communication between the<br />
phone and the terminal.<br />
The big question is: is NFC coming fast<br />
enough? In my view, it will likely be 3 to 5<br />
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five years before<br />
NFC becomes<br />
mainstream.<br />
Why? Because<br />
smartphone<br />
penetration has<br />
changed all the<br />
rules.<br />
Put another way,<br />
smartphones<br />
— which are<br />
mini-computers<br />
— have a longer<br />
shelf life than<br />
Figure 2: Based on data from QTel. low-end feature<br />
phones. These<br />
devices are also<br />
more expensive than feature phones, which<br />
mean they require longer contracts. The<br />
result is a slowdown in the handset replacement<br />
cycle — and that presents the industry<br />
with a huge challenge. After all, NFC take up<br />
and use depends on consumers having NFCenabled<br />
devices.<br />
What can be done in the interim? It’s a<br />
tough one to call, but it’s also clear that<br />
we in the industry can’t be spectators.<br />
In Qatar our partner bank QNB has begun<br />
rolling out contactless payment terminals.<br />
At Qtel we have also collaborated with QNB<br />
and MasterCard to deliver an NFC solution<br />
to market that caters to these bank customers.<br />
In summary, we have an NFC solution in<br />
the market right now, but it’s not targeted at<br />
our <strong>Mobile</strong> Money customers — yet.<br />
Clearly, the industry is only on the cusp of<br />
realising the full potential of mobile money<br />
and mobile banking services. At Qtel we<br />
have made our mark with the <strong>Mobile</strong><br />
Money services, services we can — and<br />
will — expand and enhance to serve the<br />
two distinct customer segments: migrant<br />
workers and affluent residents. Our experience<br />
has shown that technology is a factor,<br />
but it’s the ability to satisfy increasing<br />
customer demands for convenience and<br />
security that is at the core of lasting success.<br />
Richard Morecroft has over 25 years experience<br />
in telecommunications. He spent the<br />
first 11 years serving in the U.K. armed<br />
forces in locations all over the world. Since<br />
leaving he has led projects and businesses<br />
that have transformed the consumer telecommunications<br />
space including building<br />
AOL’s UK internet access platform and<br />
launching the U.K.’s first “Free” broadband<br />
business at TalkTalk. Morecroft joined Qtel<br />
in 2008 to lead the new and emerging<br />
business team.<br />
178
PART SIX: UNLEASHING THE POWER OF MOBILE COMMERCE<br />
Driving <strong>Mobile</strong> Money Usage<br />
In Unbanked Regions<br />
By M. Yasmina McCarty, Senior Manager, GSMA MMU<br />
(<strong>Mobile</strong> Money for the Unbanked)<br />
The mobile money industry is<br />
growing fast. Today there are over<br />
130 live mobile money deployments,<br />
up from the approximately<br />
20 at the beginning of 2009. There<br />
is also a significant increase in the<br />
number of registered users. The<br />
GSMA Global <strong>Mobile</strong> Money<br />
Adoption Survey counted over 60<br />
million registered mobile money<br />
customers as of June 2011 and<br />
found a 49 percent growth rate<br />
in the number of subscribers<br />
from 2010 to 2011.<br />
The top line growth has been impressive,<br />
but customer activation rates lag behind.<br />
Excluding the active mobile money customers<br />
of Safaricom’s M-PESA and Smart, there<br />
were just six million active mobile money<br />
customers as of June 2011. Activity rates<br />
across deployments also varied quite<br />
significantly with some mobile money<br />
deployments having just 0.2 percent of their<br />
registered customers’ active, while others<br />
boasted an 80 percent active customer rate.<br />
The <strong>Mobile</strong> Money<br />
customer journey<br />
Customer activation has shown to be a<br />
significant hurdle and a number of mobile<br />
money services find themselves facing<br />
these common challenges:<br />
• Customers are aware of the mobile<br />
money service, but do not understand<br />
how it could be beneficial to them<br />
• Customers get bogged down in the registration<br />
process and never try the product<br />
The trick is to identify which marketing<br />
mechanisms are effective at each stage in the<br />
customer journey and which elements of the<br />
marketing toolbox are simply not effective<br />
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Number of registered customer accounts by service, June 2011<br />
millions<br />
16<br />
14<br />
49%<br />
CAGR<br />
Increase in the number of<br />
mobile money customers<br />
in the second half of 2011<br />
12<br />
10<br />
8<br />
6<br />
4<br />
2<br />
0<br />
Between 31 December 2010 and 30 June 2011, the number of registered mobile money<br />
customers of the services in our sample-excluding Safaricom, SMART, and Globe-grew<br />
at an annualised rate of 49%<br />
Figure 1: Based on data from GSMA.<br />
www.gsma.com/mobilefordevelopment/wp-content/uploads/2012/05/MMU_State_of_industry_AW_Latest.pdf<br />
180
Unaware<br />
Awareness Understanding Knowledge Trial<br />
Regular Use<br />
Customer<br />
has never<br />
heard of<br />
mobile<br />
money<br />
Customer has<br />
heard of<br />
mobile money<br />
and knows<br />
what it is<br />
Customer<br />
understands<br />
how mobile<br />
money could<br />
be useful to<br />
them<br />
Customer<br />
knows the<br />
steps<br />
necessary to<br />
transact<br />
Customer<br />
tries the<br />
service<br />
Customer<br />
habitually<br />
uses the<br />
mobile<br />
money<br />
service<br />
Figure 2: Based on data from GSMA.<br />
• Customers don’t understand the<br />
mechanics of performing transactions<br />
and are hesitant to try something as<br />
novel as mobile money<br />
• Customers don’t trust the operator’s<br />
brand or network and are hesitant to<br />
conduct financial transactions<br />
Understanding the mobile money customer<br />
journey can shed light on the issues which<br />
lead to customer inactivity. The customer<br />
journey, as shown below, is comprised of<br />
6 stages: (1) unaware, (2) awareness, (3)<br />
understanding, (4) knowledge, (5) trial,<br />
and (6) regular use.<br />
• Awareness & Understanding: At the<br />
start of the customer’s journey, customers<br />
become aware of the existence of a<br />
mobile money service. But it’s not enough<br />
to simply know the name of the mobile<br />
money service or even what the mobile<br />
money service is. Rather, mobile money<br />
services must also build understanding<br />
to help users see how this new service is<br />
both relevant and beneficial to them.<br />
• Knowledge: Once the customer understands<br />
what mobile money is, what it<br />
does and how it could be useful to them,<br />
the customer needs to learn how to<br />
transact. This customer education<br />
typically requires the assistance of<br />
mobile money agents, or a friend and/<br />
or family member.<br />
• Trial & Regular Use: Once a customer is<br />
aware of the mobile money service, knows<br />
what it is, is convinced that it can be<br />
useful for them, and understands the processes<br />
for performing transactions, then<br />
they are ready for to try the service. After<br />
a number of positive transaction experiences,<br />
users can become regular users.<br />
Whilst not listed as a separate step in the<br />
customer journey, the customer registration<br />
process is an important consideration.<br />
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<strong>Mobile</strong> money services that can be accessed<br />
over-the-counter, allow customers to<br />
become regular users before they register,<br />
and therefore make the registration step a<br />
non-issue. However wallet based services<br />
typically insist on some type of registration.<br />
In situations where customers struggle to<br />
meet KYC requirements, the registration<br />
process becomes so onerous, that customers<br />
would rather not enrol in the service.<br />
Effective approaches for<br />
driving usage<br />
Financial services are more complex than<br />
mobile value-added services because they<br />
must meet a wide variety of customer needs<br />
and requirements. For this reason, market<br />
segmentation is essential to develop a comprehensive<br />
marketing strategy.<br />
Need-based segmentation can be a useful<br />
first step, quantifying the customer segments<br />
which have frequent need to make<br />
high volumes of remote payments. It is<br />
important to have a reasonably large initial<br />
target market in mobile money for two<br />
reasons: 1) because of the strong economies<br />
of scale present at both the platform<br />
and the agent level, and 2) because transfer-oriented<br />
mobile money services benefit<br />
from strong network effects.<br />
Equally important as the size of a segment<br />
is the intensity of the demand. To put this<br />
more strongly, operators can focus on the<br />
segment of customers that is suffering from<br />
the most acute ‘pain points’ that mobile<br />
money might solve.<br />
With the target market selected, mobile<br />
money marketing is the process of<br />
persuading potential customers to become<br />
regular users. <strong>Operator</strong>s have a range of<br />
marketing tools that they can use to help<br />
customers along this journey. The trick here<br />
is to identify which marketing mechanisms<br />
are effective at each stage in the customer<br />
journey and which elements of the marketing<br />
toolbox are simply not effective.<br />
Awareness-building campaigns, typically<br />
done through mass media advertising<br />
campaigns, help customers learn what<br />
mobile money is and how mobile money<br />
might be useful to them. Beyond these ATL<br />
campaigns, however, a significant amount of<br />
work remains to be done to compel users to<br />
actually try the service. Customer education<br />
typically requires a more personal approach.<br />
As such, operators should leverage transactional<br />
agents, field agents, and/or current<br />
users to guide potential customers from<br />
awareness to use.<br />
182
Market segmentation is essential to develop<br />
a comprehensive marketing strategy.<br />
To leverage mobile money agents for<br />
effective BTL customer activation, there<br />
are three important considerations:<br />
1 Training: Well-trained agents are proven<br />
to be effective in driving customer<br />
activation<br />
technological platform, well designed<br />
products, and an enabling regulatory environment.<br />
But, if customers do not see the<br />
value in the service, or do not know how to<br />
use a product, then the success of the<br />
business can be severely hindered.<br />
2 Incentives: It is important that agents<br />
have been incentivised properly for<br />
both registration and usage, and for<br />
the balance between those incentives<br />
to be right<br />
3 Oversight: Agents can be a powerful<br />
force for driving customer adoption.<br />
Unfortunately, if unsupervised, these<br />
agents can just as easily drive<br />
customers away.<br />
Driving customer adoption and increasing<br />
activation rates in mobile money is no easy<br />
task. But understanding the customer<br />
journey, segmenting and prioritising the<br />
target market and identifying the best<br />
suited marketing tactics to move the user<br />
through each stage of that journey, can<br />
help mobile money services achieve high<br />
customer usage rates.<br />
In her role as Senior Manager at GSMA’s<br />
<strong>Mobile</strong> Money for the Unbanked programme<br />
M. Yasmina McCarty works with <strong>Mobile</strong><br />
Network <strong>Operator</strong>s in emerging markets<br />
on their mobile money services. Prior to<br />
joining the GSMA, she co-founded and led<br />
GreenMango in India and held positions at<br />
Women’s World Banking, working in microfinance<br />
in LAC, Africa and South Asia, and at<br />
Goodby Silverstein & Partners, working on<br />
marketing and advertising. To read the full<br />
version of this article, visit mmublog.org .<br />
A mobile money deployment can have all<br />
the right conditions in place such as a<br />
ubiquitous and liquid agent network, reliable<br />
<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong> The Evolution of <strong>Mobile</strong> Services: Challenges, Strategies, Opportunities<br />
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PART SIX: UNLEASHING THE POWER OF MOBILE COMMERCE<br />
Blueprint For A Successful<br />
Remittance Service<br />
By Diarmuid Mallon, Head of Global <strong>Mobile</strong> Marketing Programs,<br />
Programs & Demand Generation, SAP<br />
Without a doubt the single most<br />
successful mobile payment service<br />
for operators has been person<br />
-to-person (P2P) payments.<br />
Safaricom, a mobile operator<br />
in Kenya, led the way with their<br />
groundbreaking M-PESA service.<br />
Since then many other operators<br />
have launched mobile payments<br />
on the back of that success.<br />
But winning is not about being a first-mover<br />
or a fast-follower. Market conditions are<br />
decisive here. For an operator-led P2P<br />
payments scheme to succeed within a<br />
country there must be some very specific<br />
market conditions. Chief among these: a<br />
single operator must have the dominant<br />
market share. In other words, there is no<br />
room for market rivalry when the goal is to<br />
deliver a successful P2P payments service<br />
like M-PESA. This explains why P2P is<br />
not the killer app for most operators.<br />
Beyond that initial hurdle, operators face<br />
two other challenges. First, frequency, that<br />
is, how often consumers would use such a<br />
service. After all, buying a coffee is something<br />
people do every day, buying a concert<br />
ticket, on the other hand, is a service most<br />
people might only use once a year.<br />
Second, interoperability with other payment<br />
services. The cash in your pocket works for<br />
any proximity payment, and the credit card<br />
in your wallet works in many remote and<br />
proximity payment scenarios. For an<br />
operator considering offering a new payment<br />
method, it clearly either needs to work<br />
in wide range of scenarios, or offer clear<br />
benefits over existing payment methods.<br />
How do people use these services? And<br />
how often do they really need them? Our<br />
Our experience is that the more steps there are to<br />
sign-up, and the longer the wait from initial sign-up<br />
to the service being active, the lower the success<br />
rate for enrolling consumers.<br />
184
Total value of international mobile money transactions sent p.a ($ billions)<br />
Split by eight key regions 2011-2016<br />
$60<br />
Africa & Middle East<br />
Rest of Asia Pacific<br />
Indian Subcontinent<br />
Far East & China<br />
Central &<br />
Eastern Europe<br />
Western Europe<br />
Latin America<br />
North America<br />
$0<br />
2011 2016<br />
Figure 1. Source: Juniper Research (1)<br />
Footnote<br />
1. www.juniperresearch.com/reports/mobile_money_transfer_and_remittances<br />
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185
own daily routines provide some clues. Ask<br />
yourself: How often do you need to give<br />
money to any other person, and in what circumstances?<br />
Sure, you might loan someone<br />
some cash for lunch, but it is not something<br />
people do regularly. In reality, many P2P<br />
mobile payment services are not focused<br />
on this scenario. First and fore-most, they<br />
enable people to send money back home.<br />
Now let’s consider the few occasions when I<br />
want to send money to a friend or colleague.<br />
Are they on the same mobile network? If<br />
not, then how do I send funds from one<br />
mobile wallet to another? Clearly, interoperability<br />
is critical to make these services work<br />
end-to-end. Currently, only a few operators<br />
are working on interoperable wallet solutions.<br />
Among these Telefónica, Qtel and<br />
the Axiata Group are notable examples of<br />
interoperable schemes.<br />
P2P playbook<br />
The real opportunity for P2P payments is<br />
remittances. A remittance is a lot like a P2P<br />
money transfer, except the amount transferred<br />
leaves the country.<br />
But don’t break out the champagne just yet.<br />
Like P2P payments there are a number of<br />
challenges to overcome before remittance<br />
services really deliver. These are: the initial<br />
Sign-up, the KYC (know your customer) processes,<br />
and details around how consumers<br />
get cash-in and cash-out of the service.<br />
Before customers can use a remittance<br />
service they must first be enrolled. Ideally,<br />
the registration process should be fast and<br />
straightforward. After all, keeping it simple is<br />
the best way to ensure maximum take-up of<br />
the service. Our experience is that the more<br />
steps there are to sign-up, and the longer<br />
the wait from initial sign-up to the service<br />
being active, the lower the success rate for<br />
enrolling consumers.<br />
Keeping enrolment quick and simple<br />
needs to be balanced with additional KYC<br />
requirements that are core to a remittance<br />
service. Many mobile remittance services<br />
accomplish this by making use of the<br />
existing operator retail store networks. The<br />
benefit to the operators is that they can use<br />
their staff, IT systems and much of their<br />
existing business process when on-boarding<br />
new users of the service.<br />
Research firm Juniper Research estimates<br />
the total value of mobile remittance worldwide<br />
will be nearly $55 billion by 2016. This<br />
underlines the real potential of this market.<br />
In Malaysia Celcom has gone one step<br />
further. It allows new customers to enroll<br />
for the remittance service direct from their<br />
mobile phone. The final stage of the KYC<br />
186
However, if you must enable customers to<br />
send funds that be withdrawn as cash, then<br />
you can’t go it alone.<br />
process is completed when these customers<br />
enter a Celcom store to deposit or<br />
withdraw funds.<br />
local operator store, then there is no clear<br />
benefit for the consumer. And there is absolutely<br />
no reason to use a mobile phone to<br />
make the transfer.<br />
Successful approaches<br />
If the concept of on-device sign-up for a<br />
remittance service seems daunting, then<br />
there are other blueprints you can follow.<br />
It’s worth looking at how banks handle this<br />
task. South Africa’s Standard Bank, for<br />
example, has not stopped at streamlining<br />
the sign-up service. It allows people to open<br />
up a full service bank account using only<br />
their mobile device.<br />
Cash-in is another area to address. The<br />
value proposition behind remittance services<br />
is centered on convenience. In other<br />
words, it must be simple and easy for customers<br />
to use these services. In the real<br />
world migrant workers already line up at<br />
money transfer stores on payday to send<br />
money home. If all a remittance service<br />
does is swap the line they would stand in at<br />
the money transfer store for a line at the<br />
This is why Qtel in Qatar has come up with<br />
an entirely new approach that joins our<br />
mobile and physical worlds. The mobile<br />
operator has launched a remittance service<br />
that is also supported by a network of<br />
self-service machines, or SSMs.<br />
After the initial sign-up in the operator retail<br />
store, users of their remittance service can<br />
use these SSMs to add funds into their<br />
mobile wallets. Once the funds are loaded,<br />
the consumer can make the money transfer<br />
using their mobile phone at a time that suits<br />
them. Another plus: these SSMs, which are<br />
located in shopping malls, are convenient to<br />
access, so users can easily use one without<br />
taking a detour from their usual routine.<br />
Finally, there are a variety of challenges that<br />
complicate cash-out, the last stage of the<br />
remittance transaction. While there is no one<br />
solution, there are several options to consider.<br />
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One option is to not send cash at all.<br />
Instead, create a service that allows people<br />
to transfer airtime, rather than cash, from<br />
their mobile wallet. This is what Celcom<br />
does to enable airtime remittance. This<br />
enables consumers to remotely transfer<br />
airtime credit instead of money as an international<br />
remittance. Since the transfer<br />
involves airtime the rules governing the<br />
remittance are much simpler than they<br />
would be if the pay-out was cash. With<br />
fewer regulatory hurdles to negotiate, the<br />
service is also much quicker to implement.<br />
Building an ecosystem<br />
However, if you must enable customers<br />
to send funds that be withdrawn as cash,<br />
then you can’t go it alone.<br />
You will need to form a partnership with a<br />
local entity on the receiving side of the<br />
remittance transaction. Some operators<br />
partner with existing money transfer networks.<br />
In practice, this enables the receiver<br />
to collect the sent funds via agent networks<br />
of these services.<br />
Other operators work with local banks. This<br />
has advantages because it allows the receiver<br />
to use bank branches or even ATMs to<br />
withdraw funds. Against this backdrop, we<br />
are starting to see Wallet-to-Wallet transfers,<br />
where both sending and receiving sides<br />
have mobile wallets.<br />
Once you have a wallet funded remittance<br />
service in place, there are two ways to grow<br />
the service. First, add more remittance<br />
routes. What corridors should be included?<br />
This decision will be driven by demographics,<br />
and the requirement of specific<br />
customer segments — such as migrant<br />
workers — to use your service to send<br />
money back home. It’s also a good idea to<br />
look at your international P2P SMS traffic<br />
for clues to help identify potential new<br />
remittance corridors.<br />
Second, you can grow the service by adding<br />
more services to the Wallet. The lead<br />
services for this are prepay top-up and bill<br />
pay. In Qatar Qtel has boosted its mobile<br />
wallet service with salary disbursements for<br />
small business. This allows small business<br />
owners to pay their workers direct to their<br />
mobile wallet. To enable cash-out Qtel has<br />
also partnered with a local bank to tap into<br />
the bank’s network of ATMs.<br />
A review of the mobile remittance services<br />
available today reveals a variety of different<br />
approaches to tackle the challenges of<br />
sign-up, cash-in and cash-out. Clearly, operators<br />
interested in launching their own<br />
remittance service need to identify an<br />
approach that best matches their local<br />
188
market conditions and customer needs since<br />
no one approach is universally applicable.<br />
The different challenges — when addressing<br />
both the needs of the sending side and the<br />
receiving side of the transaction — require<br />
a considered approach to service design.<br />
Once the initial remittance corridor/service<br />
is successful, and the service expands with<br />
the addition of new remittance routes, new<br />
challenges will surely arise because each<br />
country has its own financial and mobile<br />
operator requirements and regulations<br />
regarding money transfers. The wide range<br />
of potential solutions means you need to<br />
ensure you have the flexibility within your<br />
solution that will enable you to expand<br />
to new markets and match those local<br />
market requirements.<br />
Diarmuid Mallon is Head of Global <strong>Mobile</strong><br />
Marketing Programs for SAP, which includes<br />
the SAP <strong>Mobile</strong> Services division and SAP<br />
<strong>Mobile</strong> Commerce solutions. Before joining<br />
SAP, Diarmuid was Product Manager of<br />
Logica's Wireless Networks division. He has<br />
worked in mobile messaging since 1996,<br />
holding a wide variety of range of roles and<br />
titles ranging from Business Development<br />
to Product Evangelism. Follow him on<br />
twitter @diarmuidmallon and read his blog<br />
at http://scn.sap.com/community/mobile.<br />
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PART SIX: UNLEASHING THE POWER OF MOBILE COMMERCE<br />
<strong>Operator</strong>s: Tap Your Strategic Assets<br />
By Aditya Khurjekar, Co-Founder and Program Director, Money2020<br />
Mobility — like transportation<br />
and electricity — is an increasingly<br />
powerful enabler for many other<br />
industry sectors. A prime example<br />
is banking and financial services.<br />
This is a space that benefits greatly<br />
from advances in mobile technologies,<br />
open platforms, and efforts to<br />
deliver engaging user experiences.<br />
While mobile wallets and digital<br />
currencies are the center of attention<br />
in the market and the press,<br />
we see the potential for some key<br />
infrastructure innovations to<br />
surface at this fascinating intersection<br />
of multiple industries. <strong>Mobile</strong><br />
operators bring many core assets<br />
to this emerging ecosystem.<br />
Whilst mobile operators are uniquely<br />
positioned to bring these core capabilities<br />
to the table, they are probably not leveraged<br />
to their full potential due to the historical<br />
relationships — and tensions — in the<br />
financial services value chain. Moreover,<br />
all services related to money are heavily<br />
regulated. For sustainable and at-scale<br />
innovation in mobile payments and<br />
commerce, existing mobile-unique<br />
capabilities must be brought to bear<br />
in the infrastructure layer of payments<br />
and commerce, not just in the end<br />
user experience.<br />
<strong>Mobile</strong> enables many consumer-facing<br />
technologies, especially on the handset,<br />
that provide better interactivity, richer<br />
experiences, and choice in how customers<br />
consume financial services innovations<br />
offered to them by service providers using<br />
the mobile channel. Against this backdrop,<br />
there are several operator-owned assets<br />
that are not fully appreciated. But it is<br />
precisely these operator assets that can<br />
provide valuable enabling capabilities,<br />
skills that are beneficial and essential to<br />
creating compelling user experiences.<br />
In this article, I outline three unique and<br />
strategic operator-owned assets that can<br />
be leveraged to deliver superior mobile<br />
payments and commerce propositions.<br />
It is here that mobile operators excel; they<br />
have continuously launched new products<br />
and services successfully for decades.<br />
190
1 <strong>Operator</strong>-Grade Billing Systems<br />
<strong>Mobile</strong> <strong>Operator</strong>s, cable companies and<br />
Internet Service Providers serve tens of<br />
millions of customers. Larger companies<br />
serve a hundred million subscribers and<br />
more. Their mission-critical billing and<br />
rating systems support their subscribers<br />
during every transaction and at every<br />
billing cycle. These capabilities also allow<br />
these companies to maintain critical<br />
subscriber information — such as name,<br />
address, and personal data — and, in<br />
some cases, even payment credentials.<br />
More importantly, for post-paid subscribers,<br />
operators can build bill payment<br />
histories. Such rich information, both<br />
the static identification data as well as<br />
dynamic/cumulative data, is extremely<br />
valuable to a financial institution or<br />
online merchant for a variety of reasons.<br />
Specifically, financial institutions and<br />
merchants can use this operatormanaged<br />
subscriber data to establish<br />
the identity of their customers, assess<br />
the credit worthiness of customers<br />
when assigning a risk profile, or simply<br />
complete a checkout with minimal user<br />
intervention on a connected device.<br />
the operator with their personal information<br />
and volunteer it freely to receive<br />
and benefit from services provided by<br />
the operator. If the operator enters into<br />
an agreement with a company in the<br />
financial services sector, and agrees to<br />
share subscriber or billing data, then it is<br />
the respons-ibility of the operator to be<br />
transparent about this and obtain clear<br />
consent from the subscriber.<br />
2 Highly Efficient Distribution Channels<br />
& Customer Service<br />
In many countries, it’s the mobile<br />
operator — not a department store chain<br />
— that runs the largest retail operations.<br />
<strong>Mobile</strong> operators sell cutting-edge technology<br />
with many diverse propositions<br />
that change every few months. They<br />
source products from multiple global<br />
vendors and operate extremely efficient<br />
supply chains. They also serve an<br />
amazing number of individual customers<br />
and customer segments. Indeed, no two<br />
customers are ever identical and operators<br />
must manage innumerable combinations<br />
of handset brands, operating<br />
systems, preloaded applications, pricing<br />
plans and account hierarchies.<br />
Of course, privacy and confidentiality<br />
considerations, as well as country-specific<br />
regulations regarding subscriber<br />
data, are paramount. Subscribers trust<br />
Despite this complexity, most mobile<br />
operators excel at the point of sale in<br />
stores or online. They also get high marks<br />
in customer service, a key area of exper-<br />
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In many countries, it’s the mobile operator<br />
— not a department store chain — that runs<br />
the largest retail operations.<br />
tise that can make or break the business<br />
in this age of openness and consumer<br />
choice. This is important when it comes<br />
to offering a new mobile-eabled financial<br />
product or service. Delivering financial<br />
services requires a high degree of sophistication,<br />
both in selling and servicing the<br />
customer, especially if the customer is<br />
not educated about the value the new<br />
service delivers. It is here that mobile<br />
operators excel; they have continuously<br />
launched new products and services<br />
successfully for decades.<br />
Offering financial products and services<br />
would normally be a burden on the sales<br />
and service teams of any company. However,<br />
mobile operators are well-equipped<br />
to meet the challenge, this because operators,<br />
as a rule, manage a well-oiled<br />
system of distribution and employ the<br />
trained staff to support it. There is really<br />
no substitute for this high-touch engagement<br />
at the customer touch-points — a<br />
capability mobile operators own and<br />
which is critical to the successful marketing<br />
of financial products and services.<br />
3 Globally Interoperable Authentication<br />
& Provisioning Protocols<br />
Whenever a mobile subscriber buys a<br />
new handset, replaces a SIM card, or<br />
roams into a new coverage area — in<br />
another area or even on a different<br />
continent — the operators’ provisioning<br />
and authentication protocols are at work<br />
behind the scenes to allow for seamless<br />
communications. These same capabilities<br />
also allow a trusted reconciliation<br />
of the revenues that are shared between<br />
the operators and other players in<br />
the value chain.<br />
As long as a customer has sufficient<br />
coverage and enough money on their<br />
account, they have what they need to<br />
make a phone call or conduct a transaction.<br />
But it’s more than that: customers<br />
benefit from a seamless and simple<br />
experience, one that transcends the<br />
boundaries of both countries and technology.<br />
The customer doesn’t need to<br />
know what device the other party has,<br />
or worry about network protocol, it just<br />
works. This same seamless and border-<br />
192
less experience is desirable in mobile<br />
commerce and payments as well. In the<br />
in-store payments world, this is conceptually<br />
similar to the ease with which consumers<br />
can also pay for goods and<br />
services using a mag-stripe card. In<br />
practice, a mag-stripe card with a global<br />
payment mark/scheme, such as<br />
a credit card, is honored as tender by all<br />
merchants and banks worldwide that<br />
accept that particular card as payment.<br />
Commerce transactions on any connected<br />
device, especially if they are<br />
conducted via a consumer mobile device,<br />
should also be as seamless and simple.<br />
Specifically, they should be able to<br />
benefit from a globally interoperable<br />
protocol that enhances the user experience<br />
by leveraging the connectivity and<br />
intelligence of the device and the mobile<br />
network. This is essential to remove<br />
unnecessary steps and friction from<br />
a shopper’s mobile commerce and<br />
payments experience.<br />
surface when it comes to understanding<br />
their true potential in this space and<br />
offering the mobile-specific enablers<br />
to accelerate and enhance the mobile<br />
payments and commerce experience for<br />
consumers everywhere.<br />
Aditya Khurjekar is Co-Founder and<br />
Program Director of Money2020 Expo, a<br />
new conference that attracts a community<br />
of thought leaders in emerging payments<br />
and financial services, bringing together<br />
innovators from financial institutions,<br />
mobile, retail and advertising to discuss<br />
key issues and the consumer experience.<br />
His independent consulting practice, TNBT<br />
Global, advises companies on optimising<br />
their next-generation mobile money strategies,<br />
especially around mobile payments.<br />
Prior to this, Khurjekar was responsible for<br />
Verizon’s strategy and partnerships in<br />
commerce and payments and managed<br />
it’s investments in its NFC venture Isis.<br />
As I have shown, mobile operators have<br />
the capabilities mix to play a defining and<br />
leading role in mobile commerce. I have<br />
identified the three most obvious ones here.<br />
However, time will tell if there are additional<br />
assets mobile operators can leverage to<br />
improve and innovate mobile commerce<br />
and mobile payments. Indeed, mobile<br />
operators might only have scratched the<br />
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PART SIX: UNLEASHING THE POWER OF MOBILE COMMERCE<br />
<strong>Mobile</strong> Commerce Opportunities<br />
For <strong>Operator</strong>s<br />
By Matthew Talbot, Senior Vice President, mCommerce, SAP<br />
<strong>Mobile</strong> commerce has a track<br />
record dating back to the late<br />
1990s. In the last few years the<br />
types of services mobile commerce<br />
makes possible have significantly<br />
changed. So, if you are looking to<br />
launch a mobile commerce service,<br />
what should you consider?<br />
Arguably, the first mobile commerce<br />
services centered on enabling payments<br />
for early digital content such as ringtones,<br />
wallpapers and operator logos. In 1998<br />
Nokia introduced a mobile phone that<br />
supported a customisable ringtone and<br />
operator logo graphic, which were delivered<br />
over the air via SMS.<br />
The advance of digital content allowing<br />
users to personalise their mobile phones<br />
was quickly commercialised by operators<br />
with the introduction of premium SMS<br />
(PSMS). PSMS enabled the cost of the<br />
content to be charged directly to the<br />
customer’s monthly mobile phone bill. And,<br />
while there have been several refinements<br />
to this model (such as WAP Billing), this<br />
model has remained the dominant charging<br />
method for digital content.<br />
In the last few years we have seen more<br />
operators move past this payment mechanism<br />
to offer more flexible mobile payment<br />
services to their customers. The biggest<br />
benefit of PSMS for payments — similar to<br />
SMS — was its ubiquity. However, the many<br />
limitations around the PSMS charging<br />
model (high costs, charging not linked<br />
to delivery of goods, and poor roll-back<br />
mechanisms) made it best suited for the<br />
purchase of low-value digital goods.<br />
Once you have chosen your approach, you will<br />
need to decide between the payments services.<br />
Most mobile operators start this journey by moving<br />
existing airtime top-up services for their prepaid<br />
customers to mobile payments.<br />
194
The payments landscape<br />
While PSMS works today as a payment<br />
method for digital goods and services, it<br />
doesn’t allow the purchase of real-world<br />
goods and services, nor does it enable<br />
person-to-person payments. For that a<br />
new payment mechanism is needed.<br />
These new payment services are centred<br />
on mobile wallets and stored value accounts<br />
(SVA), with financial models much closer<br />
to that of credit card interchange than the<br />
revenue-share models of PSMS. Funding<br />
moved away from charging via the SMSC,<br />
and to either debiting the SVA or charging<br />
via the mobile wallet (which is funded by<br />
credit, debit, bank account and phone bill).<br />
Unlike the early years of mobile commerce,<br />
there is no single business model for mobile<br />
commerce. Instead, operators have adopted<br />
a variety of models that reflect local market<br />
needs and regulatory constraints.<br />
Overall, payment services can be divided<br />
into five broad categories.<br />
Each of these approaches has both clear<br />
benefits and challenges. The Global<br />
approach offers the greatest potential<br />
rewards, however, developing a solution that<br />
can span developed and developing markets<br />
is not a simple task. Beyond the technical<br />
challenges, there are wide range of business<br />
models and local regulations. But the advantages<br />
of a global approach are clear, after all,<br />
the bigger the ecosystem for payments,<br />
the greater the chance of success.<br />
Once you have chosen your approach, you<br />
will need to decide between the payments<br />
services. Most mobile operators start this<br />
journey by moving existing airtime top-up<br />
services for their prepaid customers to<br />
mobile payments. This approach offers<br />
obvious cost-saving benefits over traditional<br />
top-up mechanisms. More importantly,<br />
these benefits are clear and easy for customers<br />
to understand.<br />
In developing markets, top-up services<br />
are often followed by P2P payments and<br />
remittance services. The lack of other<br />
remote payment mechanisms in these<br />
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Payment services can be divided into five broad categories<br />
Type Description Advantages Challenges<br />
Solo<br />
••<br />
Single operator<br />
scheme<br />
••<br />
Service is only<br />
available to<br />
the operator’s<br />
customers<br />
••<br />
Quickest to<br />
implement<br />
••<br />
Lack of<br />
interoperability<br />
••<br />
Difficult to scale<br />
Cross<br />
<strong>Operator</strong><br />
••<br />
Single country<br />
scheme<br />
••<br />
Service is run as<br />
a joint venture<br />
between multiple<br />
operators.<br />
••<br />
Instant scale<br />
••<br />
Increased reach<br />
through partners<br />
(and their<br />
customers and<br />
merchants)<br />
••<br />
Additional<br />
complexity that<br />
comes from<br />
running a multipleparty<br />
payment<br />
scheme,<br />
Joint<br />
Ventures<br />
••<br />
<strong>Mobile</strong> payment<br />
schemes that<br />
include partners<br />
from the wider<br />
payments ecosystem<br />
••<br />
Can include<br />
credit card<br />
companies and<br />
money transfer<br />
companies<br />
••<br />
Credit card<br />
companies bring<br />
interoperability<br />
with their payment<br />
network and<br />
merchants<br />
••<br />
Money transfer<br />
companies can<br />
provide cash-in/<br />
cash-out locations<br />
••<br />
Need to integrate<br />
multiple payment<br />
networks and<br />
interfaces in a<br />
single solution<br />
markets makes these services very attractive<br />
to consumers. This is because many of<br />
these consumers are among the unbanked<br />
and will have limited or no access to payment<br />
mechanisms other than cash. <strong>Mobile</strong><br />
P2P and remittance services also have the<br />
potential to be more affordable than<br />
existing mobile transfer services.<br />
Developed markets are a different story.<br />
Their customers’ needs are served by a<br />
variety of existing payment mechanisms,<br />
196
Payment services can be divided into five broad categories (cont)<br />
Type Description Advantages Challenges<br />
Group<br />
••<br />
<strong>Operator</strong> group<br />
mobile wallet<br />
••<br />
Local wallets that<br />
are interoperable<br />
May include mobile<br />
wallet hub<br />
••<br />
Potential for scale,<br />
with tens of millions<br />
of users.<br />
••<br />
Interoperability for<br />
roaming customers<br />
••<br />
Hub based approach<br />
speeds deployment<br />
of remittance<br />
services<br />
••<br />
Services must<br />
reflect each market<br />
••<br />
Platform needs to<br />
comply with multiple<br />
financial regulations<br />
Global<br />
••<br />
Global play to<br />
launch global<br />
mobile wallet<br />
services<br />
••<br />
Group based<br />
approach that<br />
spans continents<br />
••<br />
Likely to include<br />
other partners such<br />
as card networks<br />
••<br />
••<br />
••<br />
••<br />
Figure 1: Based on data from SAP <strong>Mobile</strong> Services.<br />
••<br />
Huge potential for<br />
scale, with hundreds<br />
of millions of users<br />
••<br />
Interoperability for<br />
roaming customers<br />
••<br />
Services must<br />
reflect each market<br />
••<br />
Platform needs to<br />
comply with multiple<br />
financial regulations<br />
••<br />
Need to support<br />
developed and<br />
emerging market<br />
business models<br />
such as credit cards, debit cards, cheques<br />
and even inter-account transfer via online<br />
banking. In a market with so many options<br />
it’s clear that P2P can only be a feature<br />
of the payments service, not a lead<br />
service in itself.<br />
In these developed markets, services<br />
focused on convenience feature highly.<br />
A great example is paybox in Austria, a<br />
cross-operator service that allows users<br />
to pay their car parking via mobile. The<br />
service also warns users when the parking<br />
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When mobile NFC arrives full force it will provide<br />
the basis for additional payment use cases and<br />
significantly improve existing services such as<br />
mobile ticketing for transport by speeding up<br />
transaction times.<br />
period is about to expire and offers the<br />
option to top-up the meter remotely.<br />
Built to last<br />
If your focus is emerging markets, then you<br />
should also consider adding a SVA (stored<br />
value account) to your service. This enables<br />
your customers to load cash in to the<br />
mobile wallet that can then be used to pay<br />
merchants and bills.<br />
Adding partners to the mobile wallet service<br />
helps grow the ecosystem the mobile wallet<br />
supports. For example, adding a credit card<br />
company or money transfer network will<br />
provide valuable interoperability to the<br />
service, which will help it to grow and scale.<br />
Finally, you need to factor in the impact of<br />
new technologies such as mobile NFC on<br />
your payments services. While these new<br />
technologies are still not mainstream, they<br />
are picking up momentum in some more<br />
developed markets. When mobile NFC<br />
arrives full force it will provide the basis<br />
for additional payment use cases and<br />
significantly improve existing services<br />
such as mobile ticketing for transport by<br />
speeding up transaction times.<br />
With so many variables to consider — the<br />
choice of business models, the array of<br />
potential services and local telecom and<br />
financial regulations — there is no one way<br />
to build a successful mobile payment<br />
service. In addition, any service created still<br />
needs to be aligned with the local market<br />
conditions and customer demographics.<br />
No matter the model you choose,<br />
be prepared to adapt it over time<br />
As the service is rolled out there will come a<br />
time to add functionality, build partnerships<br />
and scale the service. And, as new<br />
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technologies become mainstream, there will<br />
be the need to incorporate these into the<br />
service as well. No matter what the initial<br />
service design, the requirements will<br />
change. <strong>Operator</strong>s determined to build a<br />
successful mobile payment service need to<br />
build in flexibility.<br />
Over a decade ago, when operators first<br />
rolled out Premium SMS services to enable<br />
teenagers to customise the ringtone on<br />
their mobile phones, one could not foresee<br />
how mobile commerce services would<br />
evolve. The idea that migrant workers in<br />
Qatar would use automated self-service<br />
kiosks to load their mobile wallet and remit<br />
money home to friends and family was<br />
beyond imagination. This progress in a short<br />
span of time teaches an important lesson:<br />
no matter what the initial launch requirements<br />
are, if the service is success-ful, it will<br />
very quickly outgrow them.<br />
Matthew Talbot is senior vice president of<br />
SAP <strong>Mobile</strong> Commerce division. Prior to<br />
this, he was vice president of SAP in Asia.<br />
Before joining SAP, Talbot was the CEO of<br />
<strong>Mobile</strong> Internet Group (MIG), a leading<br />
wireless application service provider and<br />
co-publisher with offices in Beijing,<br />
Shanghai, Hong Kong, London, Sydney,<br />
and the U.S. Read his blog at: http://scn.sap.<br />
com/people/matthew.talbot/activity<br />
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200<br />
PART SEVEN<br />
LEVERAGING MOBILE<br />
TO ACHIEVE LASTING LOYALTY
PART SEVEN: LEVERAGING MOBILE TO ACHIEVE LASTING LOYALTY<br />
Perception vs Reality: What’s Your<br />
<strong>Mobile</strong> Strategy?<br />
By Howard Stevens, Senior Vice President, Global Messaging Solutions,<br />
SAP <strong>Mobile</strong> Services<br />
The enormous success of<br />
smartphones generally, and of<br />
Apple’s iPhone and the Android<br />
operating system in particular,<br />
have elevated the ‘mobile app’ to<br />
a status shared by few peers in the<br />
hallowed halls of tech history. So<br />
it’s no surprise that many mobile<br />
network operators and enterprises<br />
find them-selves over-allocating<br />
time, money and resources toward<br />
an app-centric view of their<br />
customers rather than taking a<br />
more holistic view. Even more<br />
disconcerting is the number of<br />
enterprises that have yet to<br />
embrace a substantive mobile<br />
strategy at all, despite the presence<br />
of competitors that have done so.<br />
There is enormous pressure today to<br />
emphasise certain popular services at the<br />
expense of those deemed “legacy.” However,<br />
forward-thinking enterprises in today’s<br />
world need to get past “perception,” looking<br />
beyond the latest trends in mobile apps,<br />
for example (without overlooking them, of<br />
course). They must start thinking about the<br />
realities of how they can help their customers<br />
fulfill a robust mobile strategy, one that<br />
is truly end-to-end, multi-channel and,<br />
perhaps most important, customer-centric.<br />
Multi-Channel, Customer-Centric<br />
The importance of having a real mobile<br />
strategy, while obvious to some organisations,<br />
is by no means a foregone conclusion<br />
for many others. Many are in “consideration”<br />
mode, while others have taken some<br />
initial steps. Few enterprises, however, have<br />
implemented a genuine mobile strategy.<br />
Moreover, they have yet to regard mobile as<br />
a rich, multi-channel platform through<br />
which consumers and others are interacting,<br />
often on a 24/7 basis. Answering the<br />
question, “What is your mobile strategy?”<br />
Marshalling the complete arsenal of tools in your<br />
mobile strategy will enable you to look at your<br />
customers in materially new ways.<br />
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egins with close consideration of how<br />
end users behave in the mobile realm, what<br />
they’re looking for, then determining how<br />
best to package that solution.<br />
For example, in the unrelenting spotlight<br />
of the media, all we seemingly hear about<br />
is apps. Meanwhile, feature phones still<br />
account for roughly 70 to 80 percent of the<br />
global customer base with SMS and MMS<br />
being the only viable non-voice channels to<br />
these customers. In fact, both of these<br />
channels need to be synchronised as part of<br />
a full complement of value-added, strategic<br />
offerings necessary to engender loyalty,<br />
retention, as well as acquisition in order to<br />
realise a comprehensive mobile strategy.<br />
tactics that enable enterprises to learn and<br />
understand consumer behaviors and in turn<br />
shape consumer experiences. At the heart<br />
of this eco-system is a commitment to<br />
multi-channel, multi-faceted mobile marketing<br />
capable of becoming a game-changer<br />
for an enterprise.<br />
The ‘Rite’ stuff<br />
That said, virtually any of the particular<br />
channels mentioned above can constitute<br />
one of many roads to Rome. One prime<br />
example of how SMS, for example, can serve<br />
as a gateway to richer services can be seen<br />
with Rite Aid.<br />
Indeed, an effective mobile strategy is one<br />
that builds on a foundation of multi-channel<br />
options (e.g., SMS, MMS, apps, mobile<br />
browser) to support longer-range customer<br />
engagement strategies. Marshalling the<br />
complete arsenal of tools in your mobile<br />
strategy will enable you to look at your<br />
customers in materially new ways. The<br />
dividends such a strategy bestows upon<br />
enterprises are numerous, including breakthrough<br />
techniques to build awareness with<br />
consumers, enabling them to transact easily<br />
through those multiple channels. The<br />
eventual outcome is a virtuous circle<br />
constituting a continuous engagement<br />
cycle, leveraging loyalty, coupons and other<br />
When this national brand set out to increase<br />
customer convenience and maintain prescription<br />
compliance, it chose to implement<br />
a strategy that employed customers’<br />
preferred communication methods. In this<br />
case, Rite Aid provided a service allowing<br />
patients to be notified when the prescriptions<br />
are ready by opting in to pharmacy<br />
alerts. In addition to notification by conventional<br />
mail, the alerts are delivered, based<br />
on customer preference, via email, phone<br />
or text message. Patients who opt in are<br />
automatically enrolled in the free Wellness+<br />
loyalty program, which includes a monthly<br />
newsletter and weekly special offers.<br />
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Until organisations overcome these and other<br />
hurdles, they will continue to miss out on the<br />
holy grail of a continuous engagement cycle that<br />
rewards customers for their loyalty by allowing<br />
them to transact easily through multiple channels,<br />
when and how they wish to.<br />
The results include heightened brand<br />
loyalty and increased in-store foot traffic.<br />
Importantly, Rite Aid is looking at ways to<br />
incorporate mobile vouchers as part of the<br />
loyalty mix to drive traffic between different<br />
parts of its stores. All of which began by<br />
offering a service based on the most<br />
widely used mobile channels, SMS.<br />
The Next Leap<br />
These and other issues impede organisations<br />
from doing the real work of redefining<br />
the way they look at their customers, which<br />
in turn influences the nature of their awareness<br />
strategies. Until organisations overcome<br />
these and other hurdles, they will<br />
continue to miss out on the holy grail of a<br />
continuous engagement cycle that rewards<br />
customers for their loyalty by allowing them<br />
to transact easily through multiple channels,<br />
when and how they wish to.<br />
What’s holding enterprises back from<br />
seizing a sustainable competitive advantage<br />
through a robust mobile strategy? Surprisingly,<br />
there is still a fundamental need for<br />
greater realisation by enterprises with<br />
regard to what consumers are doing, how<br />
they’re behaving on mobile channels, and<br />
what they want. Generational issues at<br />
some organisations have inhibited pursuing<br />
more than a cursory mobile-aware approach.<br />
At the same time, technological leaps have<br />
delivered the operator community from<br />
person-to-person and person-to-machine<br />
communications to an era of machine-tomachine<br />
communications. This has also<br />
helped drive a need for discrete, segmented<br />
services, delivered under a usage-based<br />
pricing model, that are far more differentiated<br />
than so-called commodities such as<br />
voice service, for example. The features that<br />
are being ushered in by 4G and continuing<br />
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LTE deployments, for example, have led<br />
mobile network operators to compete<br />
as they move to generate new revenues<br />
and profits while managing costs more<br />
carefully than ever.<br />
The progression of mobility has taken us<br />
from a sharply defined, voice-driven model<br />
to a dramatically dynamic model of remarkable<br />
reach and power. At each step along<br />
the way, we have seen the extraordinary<br />
become ordinary. Along with these advances<br />
has come an ever-widening grid of<br />
interoperability, complexity, intelligence and<br />
analytics. It is in the midst of this trajectory<br />
that enterprises and mobile network operators<br />
need to be thinking pro-actively about<br />
what their customers and their subscriber<br />
base need in order to succeed in the longer<br />
term, in ways that remain customer-centric.<br />
Customers will soon begin to pose the<br />
question themselves: How do I reach you<br />
through my mobile? At which point some<br />
very clear answers will be needed.<br />
Howard Stevens is responsible for the<br />
continued profitable growth of SAP <strong>Mobile</strong><br />
Services’s global messaging revenues<br />
across the telecommunications community<br />
and all other market verticals. Stevens has<br />
driven the overall go-to-market plan and<br />
overseen targeted M&A activity to help<br />
augment the overall SAP offering. Prior to<br />
joining SAP, Stevens ran global sales teams<br />
for ADC Metrica and First Hop.<br />
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PART SEVEN: LEVERAGING MOBILE TO ACHIEVE LASTING LOYALTY<br />
The Power of Push<br />
By Coleen Carey, Director of Product Marketing, Urban Airship<br />
Smartphones are with us in every<br />
situation — every day, all day.<br />
They’re the medium that allows<br />
us to record our daily routines, stay<br />
up to date, manage our social and<br />
business lives, and figure out what<br />
to do next and where. As a result,<br />
people are increasingly moving<br />
away from personal computers<br />
and using their smartphones to<br />
conduct business and make daily<br />
decisions. Significantly, people<br />
also rely on their mobile phones<br />
at every stage of the consumer<br />
journey. From researching products,<br />
to shopping, to sharing a<br />
product review with their social<br />
network, people reach to their<br />
smartphones.<br />
Ironically, smartphones aren’t really smart.<br />
It’s the mobile apps that have given these<br />
devices the information and authority to<br />
play a major role in their daily lives. Put<br />
another way, it’s all about communication.<br />
The rise of third-party apps has created the<br />
What is the size of the mobile market of the world's 4 billion mobile<br />
phones in use?<br />
1.08 billion are smartphones<br />
27%<br />
25%<br />
3.05 billion are<br />
SMS enabled<br />
(950 million are<br />
not SMS enabled)<br />
75%<br />
Figure 1: Based on data from Urban Airship.<br />
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Push messaging is critical for app engagement<br />
Engagement % of total app opens<br />
67%<br />
74%<br />
81%<br />
4x<br />
increase in app<br />
engagement<br />
Push<br />
No Push<br />
33%<br />
26%<br />
19%<br />
1 2 3 Months<br />
Important<br />
67% of app usage<br />
Essential<br />
74% of app usage<br />
Critical<br />
81% of app usage<br />
Figure 2: Based on data from Urban Airship. Good Push Index, July 2012.<br />
need for a new kind of conversation, one<br />
that allows developers to connect with the<br />
people who use their apps and communicate<br />
helpful and relevant information.<br />
This is where push notifications come in.<br />
Push notifications are messages sent from<br />
the app directly to the devices’ home screen<br />
or to the notification center. Contrary to<br />
SMS messages, push notifications are sent<br />
over the data network, which means no<br />
relationship with the operator is required.<br />
Push messaging allows businesses to send<br />
targeted messages that bring users back to<br />
the app and build loyalty.<br />
In fact, a recent Urban Airship study found<br />
that many customers who implement push<br />
notifications have seen increases in app<br />
206
engagement of up to 4 times within the<br />
first three months of sending notifications.<br />
Without push notifications, an application is<br />
‘just another app’. It is relegated to the ranks<br />
of the other 45-60 apps people download to<br />
their smartphones, only to use them sporadically.<br />
In worst case, these apps are ignored<br />
and abandoned completely within a month.<br />
Deep(er) insights<br />
provided to customers, a mobile operator<br />
is well- equipped to deliver highly effective<br />
programs that drive results.<br />
Wielding hard data and deep insights mobile<br />
operators can improve their services — including<br />
their own marketing efforts — to create<br />
new revenue streams that, in turn, result in<br />
ARPU uplifts for data and voice packages. This<br />
ultimately helps offset the cannibalisation of<br />
SMS revenue, improve customer satisfaction<br />
and reduce customer churn.<br />
Clearly, push notifications are a bonus for<br />
developers because they boost customer<br />
engagement and extend the life of the app.<br />
But mobile operators can also reap huge<br />
benefits from enabling this ongoing exchange.<br />
What’s at stake if mobile operators fail to<br />
see the benefits of encouraging user<br />
engagement with apps on their smartphones?<br />
It’s a risky business, to say the<br />
least, for the following reasons:<br />
Indeed, operators are in a unique position to<br />
be the organisation that best understands<br />
the customer, based on insights into all<br />
aspects of the user’s relationship with the<br />
most intimate device they own, their mobile<br />
phone. How is this possible? By combining<br />
Urban Airship’s highly scalable Push Notifications<br />
with analytics reporting capabilities<br />
1 The lack of a ‘conversation’ between app<br />
developers and their customers means<br />
lower overall data usage. This is an<br />
outcome operators certainly want to<br />
avoid as they move their business model<br />
from one that is voice centered to one<br />
that is data centered.<br />
By participating in this exchange operators can<br />
build loyalty, increase the value of the device they<br />
offer and — ultimately — reduce churn.<br />
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Push notifications also open up new<br />
opportunities around advertising and<br />
marketing, allowing mobile operators to<br />
better understand and service their<br />
customers.<br />
2 Failing to encourage customers to engage<br />
with their apps might actually backfire<br />
and increase customer churn.<br />
3 By making it difficult for users to realise<br />
— let alone experience — everything apps<br />
can deliver; users may fail to see the value<br />
in owning a smartphone and reject the<br />
additional costs of owning a smartphone.<br />
By embracing and using push notifications<br />
effectively operators can avoid these negative<br />
scenarios and outcomes.<br />
Push pays dividends<br />
The customer service benefits around push<br />
notifications are huge. While apps create an<br />
opportunity to build a relationship with a<br />
customer, push notifications can take it<br />
to the next level. Push notifications allow<br />
operators to deliver simple alerts to the<br />
customer — and trigger the customer to<br />
take action.<br />
Push notifications also open up new opportunities<br />
around advertising and marketing,<br />
allowing mobile operators to better understand<br />
and service their customers, both<br />
with integrated customer lifecycle messaging<br />
and with an operator-controlled opt-in<br />
advertising/deal network.<br />
The potential customer service benefits<br />
enabled by push notifications are very<br />
powerful. <strong>Operator</strong>s have an additional<br />
channel to the customer, one that allows<br />
them to quickly and effectively provide<br />
their customers relevant information<br />
around upgrade eligibility, international<br />
data package availability, network upgrades<br />
and a wide range of service offers.<br />
Good push notification messages give the<br />
app a voice, allowing them to communicate<br />
with the customer and deliver a superior<br />
customer service experience. This lays a<br />
solid groundwork for an ongoing conversation.<br />
By participating in this exchange<br />
operators can build loyalty, increase the<br />
value of the device they offer and —<br />
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ultimately — reduce churn. <strong>Operator</strong>s are<br />
in a thought leadership position to encourage<br />
the practice of sending relevant push<br />
messages to the developer community.<br />
The Importance of Good Push<br />
Push notifications represent a new communications<br />
channel and a new way to connect<br />
with the customer. Little wonder that<br />
people are experimenting with different<br />
ways of using it. By providing the customer<br />
the ability to choose when, how, and what<br />
information they receive, you put the<br />
customer in control and reduce the risk that<br />
they will grow tired of your app and delete it.<br />
The process is permission based, which<br />
means the user must opt in to push and<br />
be open to receiving notifications. Beyond<br />
that, its important users get the right<br />
message at the right time. Anything else<br />
might be dismissed as annoying spam.<br />
Without careful consideration of the end<br />
user’s reaction to the message, the communication<br />
will be wasted leaving a negative<br />
impression of the app on the user. By<br />
pursuing a careful approach aimed at<br />
getting the right message to the right<br />
person at the right time, operators have<br />
unlimited opportunities to lead the way in<br />
an emerging — and exciting — market.<br />
The 7 Rules of Good Push.<br />
For more information go to http://urbanairship.com/goodpush/<br />
1. Give the customer control over when they receive messages.<br />
2. Engage customers with relevant messages.<br />
3. Allow customers to personalise their experience.<br />
4. Stay consistent with your brand.<br />
5. Deliver an engaging experience.<br />
6. Make messages better over time by analysing customer engagement.<br />
7. Adapt messages to your users' ever changing locations and situations.<br />
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Our high performance push messaging platform<br />
Enable your team to:<br />
• Target the right audience<br />
Optimise<br />
Target<br />
• Maximise messaging reach & speed<br />
Urban Airship<br />
• Enhance conversion Opportunities<br />
Convert<br />
• Evaluate success to optimise<br />
Message<br />
Figure 2: Based on data from Urban Airship.<br />
Coleen Carey brings over 20 years of<br />
technology and consumer packaged goods<br />
experience to Urban Airship. As Director<br />
of product and partner marketing, she<br />
leads the charge in bringing Urban Airship’s<br />
industry-leading push messaging platform<br />
to market aligned with key strategic partners.<br />
She has held leadership positions at<br />
Kimberly-Clark, Keebler, NEC, 3Com and<br />
WebTrends.<br />
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PART SEVEN: LEVERAGING MOBILE TO ACHIEVE LASTING LOYALTY<br />
Harmonising Touch Points,<br />
Technology, Processes And People<br />
By Suresh Sidhu, Chief Corporate & Operations Officer,<br />
Celcom Axiata Berhad<br />
Thanks to the proliferation of<br />
connected devices —mobile<br />
phones, smartphones and tablets<br />
— consumers across all demographics<br />
now share a common<br />
trait: they are empowered. They<br />
have the freedom to choose how<br />
they interact with companies and<br />
each other.<br />
They also demand flexible services that<br />
truly match their personal profiles and<br />
needs, and they want these services anytime,<br />
anywhere. While this is an exciting<br />
prospect for consumers, it represents a<br />
profound challenge to the traditional<br />
telecom business model. <strong>Operator</strong>s have<br />
been used to a mass model of provisioning<br />
and deployment, with customer interaction<br />
happening through a few formal channels.<br />
In order to harness the opportunity, operators<br />
need to embrace a more holistic<br />
approach to customer experience.<br />
While a customer-centric approach has<br />
always been at the core of our strategy<br />
at Celcom, there is a greater understanding<br />
now that telecommunications is not solely<br />
about technology. Put another way, technology<br />
must adapt to customer needs, not<br />
the other way around. The shift from a “walk<br />
and talk” mobility approach to a “sit and<br />
play” one requires mobile operators to<br />
rethink experience.<br />
The traditional telecom approach of improving<br />
call success rates, reducing dropped<br />
calls and providing VIP service is still applicable.<br />
However, the “data anywhere” needs<br />
of today’s consumers are changing the landscape.<br />
A tweed-jacketed banker just may be<br />
a secret mobile gamer, while low voice ARPU<br />
elderly ladies may also be high consumers<br />
of Bollywood content. Customers have<br />
From sales to service, from voice to surfing,<br />
customers now look for very different support<br />
from their operator.<br />
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many facets. This challenges the customer<br />
segmentation approach, often based on<br />
usage or demographics that operators have<br />
assumed and applied.<br />
Celcom has taken specific steps to evolve<br />
its view of customer experience to match<br />
how people have made mobility an integral<br />
part of their daily routine. The approach that<br />
works is to design services that encompass<br />
all the stages of daily life. These are: Rest,<br />
which is about how customers enjoy<br />
mobility at home; Work, which is about how<br />
users harness mobile in the office or to<br />
perform their job; and Play, which is about<br />
how customers use the mobile device to<br />
enhance their leisure or travel time. Today,<br />
the key to customer satisfaction comes<br />
from harnessing four key pillars – touch<br />
points, technology, process and people.<br />
In Celcom’s bid to win back share it had<br />
lost, it followed exactly this approach. We<br />
embarked on a program to “fix the basics”<br />
by solving billing issues, reducing the time<br />
needed by call centre agents to respond<br />
to customer calls and streamlining how<br />
customers sign up for a service plan.<br />
Besides internal improvements, the program<br />
also enabled customers everywhere<br />
in Malaysia to reach Celcom by dialing a<br />
single number (1111).<br />
However, the increasing growth of data on<br />
networks has challenged this approach. It’s<br />
no longer enough to focus on voice quality<br />
or even connectivity assurance. From sales<br />
to service, from voice to surfing, customers<br />
now look for very different support from<br />
their operator. Some examples of these<br />
customer needs are:<br />
Time for a rethink<br />
Many of the approaches to customer<br />
experience stem from the days when the<br />
network was largely about delivering voice.<br />
Even with the advent of 3G, the demands<br />
were often still focused on voice quality<br />
and the traditional elements of customer<br />
service – call centre response, complaint<br />
management and differentiated service<br />
for premium customers.<br />
• Always having the latest devices available<br />
in well designed retail stores<br />
• Staff that is knowledgeable about mobile,<br />
including the differences between devices<br />
and versions of Android, and can provide<br />
help with trouble shooting<br />
• Single sign on across a range of services,<br />
from mobile to Wi-Fi<br />
• High-speed access everywhere in urban<br />
centres<br />
• High quality connectivity in rural locations<br />
• Easy to understand pricing and transparent<br />
billing<br />
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Put another way, technology must adapt to<br />
customer needs, not the other way around.<br />
• Convenient self-service channels,<br />
integrated with physical ones<br />
This is a daunting list, and by no means<br />
exhaustive. The operator that rises to this<br />
challenge, and executes well, is likely to<br />
reap significant rewards.<br />
The Four Pillars<br />
Our approach at Celcom to this challenge<br />
has been to ensure everything we do is integrated<br />
across the four pillars of Customer<br />
Experience – Touch Points, Technology,<br />
Process and People. We would be the first to<br />
admit that we have a long way to go. We are<br />
very much in the early phase of the change,<br />
with significant investments committed. But<br />
many projects are still in its implementation<br />
phase. There are also other valid approaches<br />
– but these are the ones we feel suit our<br />
customers’ needs best.<br />
To provide an illustration of what we aim to<br />
achieve, I have outlined some of the investments<br />
we are making and the aspirations<br />
we have when the work is completed.<br />
• Touch Points: We are transforming our<br />
stores from branches to real retail stores.<br />
Device sales are central to this vision.<br />
Equally important, staff is equipped with<br />
tablets and a sound knowledge of our<br />
products so that they are able to provide<br />
expert advice and comparisons while<br />
customers shop. This year, we will launch<br />
our flagship store and even roll-out stores<br />
focused entirely on offering Apple devices.<br />
• Technology: We are focusing not just<br />
on our IT capabilities, but also on our<br />
network. In IT, we have a major programme<br />
to upgrade our end-to-end<br />
capabilities with a brand new Business<br />
Support Systems and analytics capability.<br />
At the heart of this approach is the single<br />
screen for customer service, so that time<br />
spent with customers is maximised and<br />
personalised. On the network side,<br />
Celcom is investing in its next-generation<br />
network and upgrading to an intelligent<br />
packet core that is standards-based and<br />
supports rich features and functionality.<br />
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This simplified but flexible architecture<br />
will enable seamless movement between<br />
services, allowing Celcom to deliver on its<br />
customer experience with features like<br />
single sign on and integrated policy<br />
management.<br />
• Process: A key part of our process work<br />
is to embed “The Celcom Way” into<br />
product and service design. We have<br />
developed a ‘moment of truth’ approach<br />
that we use to ensure a new service, or<br />
even an existing one, has the customer<br />
experience built into our design.<br />
• People: People are always part of the<br />
equation of a unique customer experience.<br />
Our approach is aimed at ensuring<br />
that the store experience is more like<br />
Starbucks, than a traditional telecom<br />
store. Naturally, this culture change<br />
doesn’t happen overnight, so it’s here that<br />
we are also currently focusing the most<br />
time and effort.<br />
Next-gen customer experience<br />
The transformation into a true service experience<br />
is still at an early stage. However,<br />
Celcom aspires to be at the forefront of<br />
what it calls the “Next Generation Customer<br />
Experience.” Whilst our approaches have<br />
had their fair share of successes and challenges,<br />
we have learnt that persistence<br />
and consistency are the keys to success.<br />
The future data-centric world will challenge<br />
operators in ways we may not be able to<br />
imagine today. The major risk is that of disintermediation,<br />
that operators will become<br />
nothing more than a pipe for customers to<br />
reach Facebook, Google, or OTT messaging<br />
services such as WhatsApp. To rise to this<br />
challenge operators will need to deploy<br />
many different strategies from pricing to<br />
new businesses. However, Celcom is convinced<br />
customers will stay loyal provided<br />
they are provided with the right experience.<br />
Suresh Narain Singh Sidhu is responsible<br />
for technology operations across Network<br />
and IT, Strategy and Regulatory affairs as<br />
well as the end to end business transformation<br />
of Celcom. Prior Sidhu was at Dialog<br />
Telekom PLC in Sri Lanka where he held the<br />
role of Group Chief Officer – Enterprise and<br />
Global at Dialog Telekom PLC. He also<br />
helped create two new ventures for Dialog -<br />
a branded Overseas Foreign Workers<br />
partnership in the UK, Dialog Vizz, and a<br />
joint venture in the Business Process<br />
Outsourcing space with First Source<br />
Solutions of India.<br />
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PART SEVEN: LEVERAGING MOBILE TO ACHIEVE LASTING LOYALTY<br />
Ask, Listen And Build<br />
Lasting Loyalty<br />
By Sally Burley, Co-founder & Director, The 3rd Degree<br />
We live our lives on mobile. Our<br />
devices are never more than three<br />
feet away. What’s more, we look at<br />
our mobile phone displays at least<br />
150 times a day, that’s roughly<br />
every 5 minutes! <strong>Mobile</strong> also plays<br />
a central role in our daily routines.<br />
We reach to mobile devices to<br />
liberate our work lives, organise<br />
our home lives and strengthen<br />
our social lives.<br />
<strong>Mobile</strong> is also our primary communications<br />
tool. Two-thirds of the human race rely on<br />
text messaging to connect with a growing<br />
network of family, friends, businesses,<br />
organisations — even governments. Little<br />
wonder that SMS is the most widely used<br />
data application on the planet.<br />
<strong>Mobile</strong> is the most potent form of media in<br />
the history of mankind. In fact, Tomi Ahonen<br />
— independent consultant and author of<br />
several industry best-selling argues that<br />
mobile is a new mass media. Following print<br />
from the 1500s, recording from the 1900s,<br />
cinema from the 1910s, radio from the<br />
1920s TV from the 1950s and Internet<br />
from the 1990s, mobile is the mass<br />
media where “all forms of content and<br />
communications converge.”<br />
Real relationships<br />
Connect the dots, and it is the<br />
pervasiveness and sheer dominance<br />
of mobile devices that have given them<br />
a central position in our daily lives. But<br />
mobile is also a fiercely personal device,<br />
which makes it ideal mass media for<br />
interaction and engagement. This is<br />
why mobile can also improve customer<br />
relationship management.<br />
Finding out why a customer is unhappy, and<br />
working to fix it straight away with customer care<br />
follow up, can turn a potential defector into a<br />
powerful advocate.<br />
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The combination of the two — referred to<br />
as <strong>Mobile</strong> CRM (mCRM) — offers a way for<br />
companies to build lasting relationships with<br />
their customers by harnessing the unique<br />
bond we all have with our mobile devices to<br />
connect with us in a way we appreciate. But<br />
it’s not just about deepening ties with the<br />
customers; mCRM also allows companies<br />
to gain instant insight and feedback about<br />
how their audience thinks, feels and acts.<br />
<strong>Operator</strong>s sit in a unique position to use<br />
mCRM in its most capable and potent form<br />
to create and maintain a 360-degree view<br />
of their customers. This is possible because<br />
operators own the customer billing relationship<br />
and important data including usage<br />
levels, personal preferences and purchasing<br />
patterns. Access to this powerful combination<br />
of insights and information puts operators<br />
in a strong position to benefit from<br />
deep and ongoing mobile engagement.<br />
Another factor in favor of operators is<br />
their ability — powered by customer data<br />
— to satisfy our growing requirement for<br />
personal and relevant information and<br />
communications. This is imperative on a<br />
mobile device, where we have created a<br />
highly intimate space and expect companies<br />
and businesses to respect the rules of<br />
engagement. Put another way, relevance<br />
and personalisation are the key elements<br />
of a successful ongoing dialogue.<br />
Fortunately, for both the operator and<br />
other players in the business ecosystem,<br />
the information necessary to deliver personalised<br />
and targeted communications<br />
— communications that is therefore aligned<br />
with our personal preferences and requirements<br />
— is baked into the relationship<br />
operators have with their customers. This<br />
long-standing and intimate relationship<br />
ensures that first communications between<br />
companies and consumers are<br />
engaging and relevant.<br />
Two-way communication<br />
Just as in real-life, building relationship<br />
is about talking and listening. A successful<br />
mCRM program integrates social interaction,<br />
customer engagement and customer<br />
feedback. It also uses the conversations it<br />
enables between customers and businesses<br />
to support and assist buying decisions, drive<br />
loyalty and encourage brand advocacy.<br />
At the same time, the program gathers<br />
insights and customer data that will help<br />
ensure the relationship remains healthy,<br />
ongoing and relevant.<br />
Clearly, the customer relationship is built<br />
on engagement and a successful program<br />
seeks ways to deepen that engagement.<br />
This is where mCRM comes in to extend and<br />
enhance the relationship every step of the<br />
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<strong>Operator</strong>s sit in a unique position to use mCRM<br />
in its most capable and potent form to create<br />
and maintain a 360-degree view of their<br />
customers.<br />
customer journey. But it’s not just about<br />
enabling interaction between companies<br />
and their customers.<br />
An mCRM platform should also enable<br />
a two-way conversation using SMS, and<br />
harness all the other channels — mobile<br />
web, apps and social media — to ensure<br />
the exchange is deep and ongoing.<br />
Following this approach allows companies<br />
to create engagement, build loyalty, gain<br />
customer insights and gather customer<br />
data. It also lays the groundwork for a<br />
successful strategy to achieve a deeper,<br />
more valuable relationship with customers.<br />
Below I outline the specific benefits and<br />
use cases that underline the growing<br />
requirement for mCRM.<br />
Customer acquisition<br />
<strong>Mobile</strong> is the smartest and fastest way to<br />
build a bond with your audience. But it is<br />
also an excellent way to deliver<br />
customer service.<br />
A whopping 5.6 billion people use mobile<br />
phones. In addition, 1.8 billion people access<br />
the Internet via their mobile devices — that’s<br />
more than the total number of PC-based<br />
Internet users worldwide. Clearly, mobile<br />
plays a key role in developed markets and it<br />
has become the first and only screen for<br />
people in developing markets.<br />
Ensuring that existing and potential<br />
customers can rely on their mobile devices<br />
to ‘self-serve’ quickly and easily is key to<br />
customer acquisition in the mobile space.<br />
Enabling customers to perform a simple<br />
task on their own — like requesting a SIM<br />
card via text, for example — can take<br />
pressure off operator call centers and<br />
walk-in retail stores. What’s more, it goes<br />
a long way toward removing the barriers<br />
and friction new customers can encounter.<br />
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Loyalty and advocacy<br />
Loyalty ensures that customers become<br />
fans and brand advocates. The process<br />
usually starts when people make a<br />
purchase. After that the pressure is on the<br />
brand to deliver on its promise— which, in<br />
many cases, spans the lifetime of the<br />
product or service. For operators this can<br />
be an even bigger task. After all, we rely on<br />
our mobile devices every step of our daily<br />
routine. If our operators fail to deliver the<br />
services and support we need, then it’s a<br />
speedy decline to customer dissatisfaction.<br />
But it doesn’t have to end that way. <strong>Mobile</strong><br />
allows operators to create and deliver<br />
campaigns that talk directly to customers,<br />
to nip problems in the bud. With mobile and<br />
a comprehensive mCRM program operators<br />
can ask questions, gauge reactions, gather<br />
feedback and grow their relationship with<br />
individual customers. Get it right and operators<br />
can not only reduce churn; they can<br />
also boost loyalty and use of their services.<br />
The goal is to build a loyal legion of<br />
brand advocates. These are fans that<br />
have engaged with a brand and enjoyed the<br />
results. Based on this good customer experience,<br />
these fans pass the good word on.<br />
It’s word-of-mouth advertising, but mobile<br />
increases its reach and effectiveness. In<br />
this scenario mCRM can nurture brand<br />
advocacy by encouraging loyal customers<br />
to recruit new customers using a variety<br />
of channels including text messaging<br />
and social media.<br />
Feedback loop<br />
<strong>Mobile</strong> lets companies begin the conversation,<br />
but it’s also important to listen to what<br />
customers have to say. It’s easier to serve —<br />
and consistently delight — a customer once<br />
you get to know them. To accomplish this<br />
companies need a deep understanding of<br />
the customer. And it helps to be able to ask<br />
— and find out —their interests, personal<br />
preferences and motivations. This information<br />
allows companies to refine and improve<br />
their customer segmentation and targeting,<br />
ensuring the delivery of personal and<br />
relevant information and communications<br />
that are essential to boost customer loyalty.<br />
This approach also provides the basis for<br />
all communications with the customer.<br />
Using mobile as a tool to conduct research<br />
is approach that delivers dividends. This<br />
proactive outreach allows companies to<br />
monitor customer satisfaction and sentiment.<br />
These are important indicators that<br />
allow companies to achieve two key objectives:<br />
get to know their customers better, and<br />
detect situations quickly that — unattended<br />
— could cause customers to switch.<br />
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Finding out why a customer is unhappy, and<br />
working to fix it straight away with customer<br />
care follow up, can turn a potential defector<br />
into a powerful advocate. With mCRM this<br />
research and feedback process can be<br />
ongoing and automatic. A prime example is<br />
how SMS can be used to survey customers.<br />
Integrating this in mCRM shows your customers<br />
that you care — interaction that can<br />
increase overall satisfaction levels — and<br />
provides the organisation instant and<br />
actionable insights. Significantly, this information<br />
can be immediately accessible to<br />
customer care centres, and even the board<br />
can be monitoring this data in real-time.<br />
Customers are empowered to request —<br />
even demand — products and services on<br />
their terms. Against this backdrop, it’s never<br />
been more important for companies to<br />
know and understand their customers. It<br />
is essential to create a 360-degree view of<br />
your customers based on details about their<br />
preferences, personal tastes and how they<br />
are using their mobile devices, but this<br />
information is just part of the equation.<br />
Companies and mobile operators should<br />
also harness mobile to ask questions and<br />
listen to the answers. Enable an ongoing<br />
conversation and you can build the capabilities<br />
mix to satisfy the customer, reduce<br />
churn and maximise revenue opportunities.<br />
Good listener<br />
We are mobile. Therefore it is critical to<br />
make sure that mobile communication<br />
channels are leading the way in the conversation<br />
between you and your customer.<br />
An mCRM platform is essential to ensure<br />
the exchange delivers value to both parties.<br />
This can be achieved in two ways: mCRM<br />
can be used as a tactical tool to enable and<br />
deepen the mobile relationship, or it can be<br />
integrated — as needed — to support your<br />
strategic CRM capability to empower the<br />
ongoing mobile relationship.<br />
Sally Burley is Co-founder and Director of<br />
The 3rd Degree. Burley began her career as<br />
a cognitive scientist working with artificial<br />
intelligence systems before specialising in<br />
SaaS applications and GUI design. She has<br />
worked with mobile technology since 1999.<br />
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PART SEVEN: LEVERAGING MOBILE TO ACHIEVE LASTING LOYALTY<br />
Why Customer Engagement<br />
Campaigns Pay Dividends<br />
By Gregory Dunn, Vice President, Product Strategy and Solutions,<br />
SAP <strong>Mobile</strong> Services<br />
<strong>Mobile</strong> has come to represent<br />
the most pervasive channel of<br />
communications and targeted<br />
engagement on the planet. What’s<br />
more, the immediacy, convenience<br />
and personal attachment around<br />
our connected devices makes<br />
mobile an ideal mass media and<br />
means of delivering relevant<br />
marketing messages and application<br />
interaction to a global<br />
customer base.<br />
Portio Research projects over 7 billion<br />
mobile subscribers globally by end-<strong>2013</strong><br />
and annual handset shipments of over 2.15<br />
billion by 2016. While smartphones already<br />
account for a significant number of handset<br />
shipped, a mega-trends presentation compiled<br />
by the venture capital firm Kleiner<br />
Perkins Caufield & Byers (KPCB), shows<br />
that feature phone users still outnumber<br />
smartphone users by a ratio of nearly<br />
six-to-one.<br />
Overall, mobile phone users vastly outnumber<br />
PC Internet users by a ratio of more<br />
than four to one. According to the global<br />
research firm Gartner, there are roughly one<br />
billion PCs installed worldwide, and the<br />
number of users connecting to the Internet<br />
via their PCs is estimated at 1.7 billion. This<br />
pales in comparison to the number of<br />
mobile Internet users, which is pegged at 6<br />
billion-plus. Of that total, a whopping 80<br />
percent send and receive text messages,<br />
making SMS the most widely used data<br />
application in the world.<br />
In fact, worldwide SMS traffic reached 8.6<br />
billion messages in 2012, a number expected<br />
to exceed 9.5 trillion by 2015, according<br />
to Portio Research.<br />
From researching products, to conducting<br />
transactions, to sharing a product review with their<br />
social network, people rely on their mobile devices<br />
to access advice and make the right decisions.<br />
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Despite tremendous ramp so far, smartphones usage still has huge upside.<br />
Global smartphones vs. mobile phone subscribers, 2011E<br />
6,000<br />
5.6B <strong>Mobile</strong><br />
phone subscribers<br />
Global users (millions)<br />
5,000<br />
4,000<br />
3,000<br />
2,000<br />
1,000<br />
835MM<br />
Smartphone<br />
subscribers<br />
0<br />
Smartphones<br />
users<br />
<strong>Mobile</strong> phone<br />
users<br />
Note: While there are 936MM global 3G subscribers as of Q2: 11, not all of them were smartphone users.<br />
One may have multiple mobile subscriptions, therefore actual users #s may be lower than subscriber #s.<br />
Figure 1: Based on data from KPCB. Smartphone subscriber estimates per Morgan Stanely Research; <strong>Mobile</strong> phone<br />
subscribers per Informa (as of Q2: 11).<br />
http://kpcb.com/insights/2012-internet-trends<br />
Creating a conversation<br />
<strong>Mobile</strong> changes the rules of engagement,<br />
impacting how people communicate with<br />
each other and how they choose to connect<br />
with brands and businesses. Reams of<br />
consumer research support the existence<br />
of a seismic shift in human behavior and<br />
show the boundary between mobile and<br />
social is blurring.<br />
The marketing firm Ruder Finn, for example,<br />
reports that 91 percent of mobile phone<br />
users reach to their devices to connect with<br />
their social networks and keep up-to-date<br />
with their communities. <strong>Mobile</strong> and social<br />
are morphing, and the impact on business<br />
is profound.<br />
Indeed, mobile has empowered people<br />
to expect (even demand) marketers to<br />
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Vertical explosion<br />
Year over year spend growth -2011/2010<br />
Verticals<br />
Growth<br />
Technology 698%<br />
Finance 314%<br />
Health:Fitness & Wellness 229%<br />
CPG/FMCG 199%<br />
Retail & Restaurants 193%<br />
Automative 185%<br />
Pharmaceuticals 159%<br />
Entertainment 133%<br />
Education 122%<br />
Figure 2: Based on data from Millennial Media. www.millennialmedia.com/mobile-intelligence/<br />
conduct conversations with them on their<br />
devices and — more importantly — listen to<br />
their responses. More importantly, because<br />
this interaction takes place on their personal<br />
mobile phones, marketing messages must<br />
also match the context of what matters<br />
most to these always-on individuals: their<br />
preferences, interests and daily experiences.<br />
Research reveals that nearly half (44<br />
percent) of consumers say they would<br />
rather receive product information and<br />
marketing messages through SMS campaigns<br />
than any other channel.<br />
But the applications of SMS are not just<br />
limited to enabling personalised, two-way<br />
dialog around marketing and advertising<br />
messages. Analysts report that nearly 80<br />
percent of best-in-class call centers are<br />
already leveraging SMS to increase efficiency<br />
and support customers who prefer<br />
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the convenience of self-service to the hassle<br />
of waiting for a live call center agent to<br />
answer their query.<br />
<strong>Mobile</strong> at the center<br />
<strong>Mobile</strong> as a marketing channel has tremendous<br />
potential. Google — in its research<br />
aptly titled “The new Multi-screen World:<br />
Understanding Cross-platform Consumer<br />
Behavior"— shows that mobile has become<br />
our constant companion. In partnership with<br />
Sterling Brands and Ipsos Google surveyed<br />
1,611 consumers in the U.S. to determine<br />
their media interactions and behaviors.<br />
People have become what Google terms<br />
‘multi-screeners,’ choosing their screen<br />
(mobile, tablet, PC or TV) depending on<br />
their context and what they want to accomplish.<br />
Against this backdrop, mobile phones<br />
have become “the backbone of our daily<br />
media interactions.” Smartphones, in particular,<br />
have the highest number of user interactions<br />
per day and serve as the starting<br />
point for activities across multiple screens.<br />
<strong>Mobile</strong> clearly plays a central role in our<br />
daily lives. The impact on retail, for example,<br />
is well documented. Market research firm<br />
comScore finds that mobile reaches and<br />
influences people throughout the purchase<br />
funnel (awareness, consideration, engagement,<br />
conversion and loyalty). In short,<br />
people are relying on their mobile phones<br />
at every stage of the consumer journey.<br />
From researching products, to conducting<br />
transactions, to sharing a product review<br />
with their social network, people rely on<br />
their mobile devices to access advice and<br />
make the right decisions.<br />
Engaging at every stage<br />
Our increasing dependence on mobile<br />
devices for assistance and advice paves the<br />
way for marketers to harness mobile as part<br />
of an ongoing strategy to engage customers<br />
at every stage of the purchase process, from<br />
building awareness all the way through to<br />
boosting loyalty.<br />
It’s a huge opportunity that brands around<br />
the world are grasping with both hands.<br />
The result is what mobile ad and platform<br />
company Millennial Media calls a “vertical<br />
explosion” and one that has seen triple digit<br />
growth or greater in mobile advertising<br />
spend. From Technology to Entertainment ,<br />
and from Automotive to Education, a wide<br />
variety of brands are using mobile to reach<br />
and engage their customers.<br />
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<strong>Mobile</strong> operators that break down messaging silos<br />
and build the capabilities to complement their<br />
regular text communications with related marketing<br />
messages that show a deep understanding of the<br />
individual user can position themselves to make their<br />
subscribers an offer they will find hard to refuse.<br />
But it’s also an area of opportunity where<br />
mobile operators can — and must —<br />
become more active.<br />
New mandate<br />
Faced with the decline in the ‘average<br />
revenue per user’ (ARPU) mobile<br />
operators have two options: they can<br />
attract more customers from rival<br />
operators, or they can wring more<br />
value from their existing customers.<br />
Success is all about learning how to sell<br />
more services to more customers better.<br />
Fortunately, mobile operators are already<br />
extremely well equipped to achieve this<br />
goal. Several factors provide them<br />
competitive advantage.<br />
First, mobile operators own the network.<br />
This control allows them to connect with<br />
their audience and deliver targeted marketing<br />
messages about services, tariffs and<br />
special offers. Second, mobile operators<br />
own the customer relationship. This allows<br />
them visibility into key subscriber information,<br />
including service usage, personal<br />
preferences and purchase patterns.<br />
These insights are essential and enable the<br />
mobile operator to deliver marketing their<br />
subscribers will genuinely appreciate.<br />
Put another way, mobile operators are in<br />
the enviable position to deliver personal,<br />
relevant and valuable marketing messages<br />
from the get-go because these communications<br />
are completely aligned with the<br />
customer data the mobile operator<br />
already owns.<br />
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Deep trust<br />
Best of all, surveys show consumers trust<br />
their operators to deliver useful marketing.<br />
It’s a close relationship the mobile operator<br />
enjoys and can deepen through targeted<br />
SMS communications.<br />
respondents would welcome mobile<br />
marketing messages as part of top-up<br />
confirmations (9 percent), missed call<br />
and voicemail alerts (8 percent), balance<br />
updates (7 percent) and roaming<br />
notifications (7 percent).<br />
A recent Upstream <strong>Mobile</strong> Marketing<br />
Consumer Attitudes Report confirms the<br />
close (and untapped) relationship mobile<br />
operators have with their subscribers.<br />
Based on a survey of 2,198 U.K. adults the<br />
report reveals that over half (59 percent)<br />
of consumers are happy to be contacted by<br />
their operator with relevant offers. Notably,<br />
15 percent of respondents said they would<br />
welcome personalised suggestions for plan<br />
upgrades, and 13 percent would like to<br />
receive advertising about discounts aligned<br />
with their actual usage and requirements.<br />
How do consumers want to be contacted<br />
by mobile operators? Again the Upstream<br />
survey offers some key insights.<br />
The most popular format was text message<br />
(61 percent), and 51 percent said that they<br />
would like to be informed about new offers<br />
and services within the normal flow of SMS<br />
messages that they already receive from<br />
their mobile operators. Specifically,<br />
Lasting loyalty<br />
Imagine the effectiveness of a personalised<br />
and targeted marketing message that pairs<br />
an account balance notification with an offer<br />
based on the subscriber’s own unique usage<br />
and requirements.<br />
<strong>Mobile</strong> operators that break down messaging<br />
silos and build the capabilities to<br />
complement their regular text communications<br />
with related marketing messages<br />
that show a deep understanding of the<br />
individual user can position themselves to<br />
make their subscribers an offer they will<br />
find hard to refuse.<br />
But it’s not just about wielding the power<br />
of mobile to cross-sell and up-sell<br />
subscribers based on their profiles and<br />
preferences. <strong>Mobile</strong> also enables mobile<br />
operators —and the marketers that<br />
partner with them — to super-charge<br />
their CRM strategies.<br />
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Put another way, the optimised use of the<br />
mobile channel allows mobile operators<br />
to maintain continuous customer touch,<br />
enabling them to deliver sustained support<br />
and service and participate in two-way<br />
conversations with their subscribers.<br />
The result is an approach that rewards<br />
both stakeholders.<br />
Subscribers are encouraged to engage in<br />
‘conversations’ on their terms, interactions<br />
that boost loyalty and build intimacy. <strong>Mobile</strong><br />
operators gain greater insights into what<br />
their subscribers want and appreciate,<br />
data that also helps operators refine<br />
their services and —ultimately — ensure<br />
customer loyalty is deep and long-lasting.<br />
<strong>Mobile</strong> can also extend the impact and value<br />
of advertising. Case in point: point-of-sale<br />
displays where mobile allows marketers to<br />
gauge response in real-time and track the<br />
degree to which that particular advertising<br />
is attracting the attention of consumers<br />
and prompting them to interact using their<br />
mobile device. It’s a similar story in print<br />
media, where innovations such as 2D<br />
barcodes make it possible for consumers<br />
to access more information using their<br />
mobile phones.<br />
Clearly, mobile complements all marketing<br />
and messaging channels. As an effective<br />
mass media on its own or well integrated<br />
into a comprehensive digital strategy,<br />
mobile has vast potential to create business<br />
value, improve process efficiency, trigger<br />
product consumption and use, and increase<br />
customer feedback. Executed correctly,<br />
mobile doesn’t simply clinch the one-off<br />
deal. It furthers loyalty, cements relationships<br />
and improves CRM.<br />
Gregory Dunn manages the global product<br />
management group within SAP <strong>Mobile</strong><br />
Services. Dunn has over 28 years of telecommunications<br />
experience, with primary<br />
focus in the wireless industry. He started his<br />
career at the divestiture of AT&T, spending<br />
time at Pacific Telesis, where he held senior<br />
management positions of increasing responsibility,<br />
with a core milestone achievement of<br />
launching the first statewide 900mhz messaging<br />
system in the US.<br />
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APPENDIX<br />
Glossary Of Terms<br />
A2P (Application to Person) - This is<br />
typically a human communicating with<br />
an application via messaging.<br />
ARPU (Average Revenue Per User) - This<br />
is usually abbreviated to ARPU is a measure<br />
used primarily by consumer communications<br />
and networking companies, defined<br />
as the total revenue divided by the number<br />
of subscribers.<br />
ASR (Answer Seizure Ratio) - In Voice<br />
telecommunications, this is a measure of<br />
network quality defined as the number of<br />
successfully answered calls divided by the<br />
total number of calls. Defined by ITU E.411<br />
specifications.<br />
BARG (GSMA's Billing and Accounting<br />
Roaming Group) - This is a working group<br />
that manages the various standards and<br />
procedures for GMS billing and roaming.<br />
Various regional and international BARG<br />
groups meet at various times through<br />
the year.<br />
BYOD - Bring Your Own Device<br />
BYON - Bring Your Own Number<br />
CAPEX (Capital Expenditure) - A capital<br />
expenditure is incurred when a business<br />
spends money either to buy fixed assets or<br />
to add to the value of an existing fixed asset<br />
with a useful life extending beyond the<br />
taxable year.<br />
CISPA - Cyber Information Sharing and<br />
Protection Act [(CISPA) (H.R. 3523)] -<br />
CISPA addresses how information would<br />
be shared between private companies and<br />
the government to catch malicious actors<br />
breaching networks to steal information or<br />
sabotaging systems.<br />
CoS - Classes of Service<br />
CSP - Communications Service Providers<br />
DRA - Diameter Relay Agent<br />
DSC - Diameter Signalling Controller<br />
Diameter - An Authentication, Authorization,<br />
and Accounting (AAA) protocol<br />
for computer and telecommunications<br />
networks. It is the successor to the Radius<br />
Protocol. In LTE networks, used to<br />
authenticate subscribers on networks<br />
(home or visited).<br />
Dongle - This is a small piece of hardware<br />
that plugs into an electrical connector on a<br />
computer and serves as an electronic "key"<br />
for a piece of software; the program will run<br />
only when the dongle is plugged in. The term<br />
"dongle" was originally used to refer only<br />
to software-protection dongles; however,<br />
currently "dongle" is often used to refer to<br />
any small piece of hardware that plugs into<br />
a computer.<br />
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E.164 - The ITU standard for defining telephone<br />
numbers. Consists of a country code<br />
+ local dialing digits. All Telephone Numbers<br />
should comply with E.164.<br />
E-UTRAN - Evolved Universal Terrestrial<br />
Radio Access Network - the LTE radio/air<br />
interface.<br />
Fallback [Capacity] - The ability for an LTE<br />
subscriber to connect to the 3G (non-LTE)<br />
infrastructure while roaming.<br />
Five 9s service availability - Also written<br />
as 99.999%. This is used in Service Level<br />
Agreements (SLAs) that indicate that a<br />
service should be available 99.999% of<br />
the time (or greater).<br />
GNU - GNU is not Unix. A Unix-like<br />
computer operating system developed by<br />
the GNU Project, ultimately aiming to be<br />
a "complete Unix-compatible software<br />
system" comp-osed wholly of free software.<br />
GPRS (General packet radio service) -<br />
A packet oriented mobile data service on the<br />
2G and 3G cellular communication system's<br />
global system for mobile communications.<br />
GRX (GPRS Roaming Exchange) - A hub<br />
for GPRS connections from roaming users,<br />
removing the need for a dedicated link<br />
between each GPRS service provider.<br />
GSMA (GSM Association) - An association<br />
of mobile operators and related companies<br />
to manage standardization, deployment and<br />
promotion of the GSM-based mobile telephone<br />
system.<br />
GSMA AA.19 - A GSMA document used to<br />
exchange SMS parameters and termination<br />
fees for bi-lateral interworking.<br />
GMSA IR.21 - A GSMA document that is<br />
used to define the protocols and information<br />
regarding roaming procedures as well<br />
as messaging parameters between mobile<br />
operators.<br />
GSMA IR.35 -A GSMA document describing<br />
"End-to-End Functional Capability Test Specification<br />
for Inter-PLMN GPRS Roaming".<br />
HPLMN (Home Public Land <strong>Mobile</strong><br />
Network) - A subscriber's home network<br />
in a roaming scenario.<br />
HSS (Home Subscriber Servicer) - Think<br />
of this as a net-gen HLR (Home Location<br />
Register). The HSS is used in LTE networks.<br />
HSPA (High Speed Packet Access) -<br />
A combination of two mobile packet protocols:<br />
High Speed Downlink Packet Access<br />
(HSDPA) and High Speed Uplink Packet<br />
Access (HSUPA) to extend and improve 3G<br />
networks using the WCDMA protocols.<br />
Some call this 3.5G (a marketing term only).<br />
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HSPA+ - Evolved HSPA - Extends HSPA to<br />
higher speeds. Some networks' marketing<br />
groups refer to this as "4G."<br />
IDD (International Direct Dial) -<br />
A telecommunications system that enables<br />
callers to dial direct an international telephone<br />
number for a voice call.<br />
IP-VPN - IP - based Virtual Private Network<br />
M2M - Machine to Machine<br />
MDN (<strong>Mobile</strong> Directory Number) -<br />
An alternative (mostly CDMA based) nomenclature<br />
for a subscriber's telephone number.<br />
MMS (Multimedia Messaging Service) -<br />
A messaging service that enables users to<br />
send/receive rich content (images, audio,<br />
and video clips).<br />
IPX - IP eXchange - A global extremely<br />
high speed, high quality of service network<br />
backbone used to provide interworking of<br />
mobile and fixed operator services such<br />
as voice, messaging, data roaming, video,<br />
RCS and more.<br />
ISP - Internet Service Providers<br />
Joyn - The GSMA brand name of the RCSe<br />
implementation for many operators in<br />
Europe. Joyn was rolled out in 2012.<br />
MNO (<strong>Mobile</strong> Network <strong>Operator</strong>) -<br />
Also known as a "mobile carrier." A<br />
service provider that provides mobile<br />
services (voice, messaging, network<br />
access) to subscribers.<br />
MNP (<strong>Mobile</strong> Number Portability) -<br />
Enables mobile telephone users to retain<br />
their mobile telephone numbers when<br />
changing from one mobile network operator<br />
to another, also known as Wireless Number<br />
Portability (WNP).<br />
Local breakout - The ability for a roaming<br />
subscriber to reach the Internet cloud<br />
through the visited network instead of all IP<br />
data being routed (via GRX) back to the<br />
home network.<br />
LTE (Long Term Evolution) - Standard for<br />
wireless communication of high-speed data<br />
for mobile phones and data terminals. Many<br />
times LTE is referred to as "4G."<br />
MO (<strong>Mobile</strong> Originated) - Traffic<br />
originating from a mobile or user device<br />
MSISDN (<strong>Mobile</strong> Station International<br />
Subscriber Directory Number) -<br />
A subscriber's telephone number on a GSM<br />
or UMTS network.<br />
MT (<strong>Mobile</strong> Terminated) - Traffic received<br />
on a mobile or user device.<br />
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NER (Network Efficiency Ratio) -<br />
A measure of network quality defined as:<br />
Answers + User Busy + Ring No Answer<br />
_ Terminal Rejects / Total call attempts<br />
(seizures). Defined as an addition to<br />
ITU E.411.<br />
NFC (Near Field Communication) - A set<br />
of mobile device standards to establish a<br />
close-proximity radio connection.<br />
P2P - Person to Person (or human to human<br />
via telecommunications devices)<br />
PLMN (Public Land <strong>Mobile</strong> Network) -<br />
A <strong>Mobile</strong> network<br />
PSMS - Premium SMS (PSMS).<br />
PSTN (Public Switched Telephone<br />
Network) - The legacy telephone network<br />
NGN (Next Generation Network) -<br />
A broad term used to describe key architectural<br />
evolutions in telecommunication core<br />
and access networks.<br />
QoS (Quality of Service) - Refers to<br />
several related aspects of telephony and<br />
computer networks that allow the transport<br />
of traffic with special requirements.<br />
NUVO (Network Unaffiliated Virtual<br />
<strong>Operator</strong>) - A service provider that assigns<br />
alternate telephone numbers to provide<br />
Messaging and/or Voice services with<br />
interoperability to legacy Messaging & Voice<br />
networks (e.g. Mediafriends, Pinger, etc).<br />
OPEX (Operational Expenditure) -<br />
An ongoing cost for running a product,<br />
business, or system.<br />
OTT (Over The Top) - In the fields of broadcasting<br />
and content delivery, over-the-top<br />
content (OTT) means on-line delivery of<br />
video and audio without the Internet service<br />
provider(Comcast, Verizon, etc.) being<br />
involved in the control or distribution of the<br />
content itself.<br />
RCS (Rich Communications System) -<br />
RCS is a GSMA initiative to support next<br />
generation messaging, voice calls with<br />
advanced capabilities including presence,<br />
video, real-time messaging with inter-working<br />
and compatibility with legacy voice &<br />
messaging services.<br />
RCSe - Defines a subset of the full RCS<br />
standard. RCSe is being established in<br />
Europe at several operators in 2012, using<br />
the "Joyn" brand.<br />
SIGTran - GSM MAP (or SS7) over IP<br />
SIP (Session Initiation Protocol) -<br />
The Session Initiation Protocol (SIP) is an<br />
IETF-defined signalling protocol widely used<br />
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for controlling communication sessions<br />
such as voice and video calls over Internet<br />
Protocol (IP).<br />
SMS (Short Message Service) - A text<br />
messaging service component of phone,<br />
web, or mobile communication systems,<br />
using standardized communications<br />
protocols that allow the exchange of short<br />
text messages between fixed line or mobile<br />
phone devices.<br />
Social Engineering - Social engineering<br />
entices potential victims into taking some<br />
action that will prove harmful to themselves<br />
and/or the device they are using.<br />
SS7 (Signalling System No 7) - A set of<br />
telephony signalling protocols which are<br />
used to set up most of the world's public<br />
switched telephone network telephone calls.<br />
SSM - Self-Service Machines<br />
SVA - Stored Value Accounts<br />
SAP <strong>Mobile</strong> Services Number Resolution<br />
System - A globally distributed database of<br />
numbering plans and number portability<br />
information for countries around the world.<br />
NRS is continually updated (real-time for<br />
some countries) with the latest number<br />
portability and number range data.<br />
TAP (Transferred Account Procedure) -<br />
This is the process and document formats<br />
that allow a visited network operator to send<br />
billing records of roaming subscriberrs to<br />
their respecitive home network operators.<br />
The latest version of the standard is TAP 3.<br />
TAP 3.12 - A GSMA specification, released<br />
in GSMA document TD.57 v30.1 on May 1,<br />
2012. New functionality includes LTE<br />
Service support for voice and SMA as well<br />
as charging flexibility and validation<br />
improvements among other chagnes.<br />
TDM (Time-Division Multiplexing) - A type<br />
of digital multiplexing in which two or more<br />
bit streams or signals are transferred apparently<br />
simultaneously as sub-channels in one<br />
communication channel, but are physically<br />
taking turns on the channel.<br />
Transrating - Transrating means changing<br />
the bitrate (bandwidth) of a stream by<br />
means of processing. For instance, processing<br />
an input video stream of 1Mbps so that<br />
the output stream is 256Kbps only. Transrating<br />
can increase or decrease the bitrate,<br />
and usually involves changing the encoding<br />
parameters.<br />
Transcoding - A two-step process in which<br />
the original data/file is decoded to an intermediate<br />
uncompressed format, which is<br />
then encoded into the target format.<br />
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TN - Telephone Number<br />
VPLMN (Visited Public Land <strong>Mobile</strong><br />
Network) - In a roaming scenario, the<br />
network that the subscriber is currently<br />
connected to.<br />
VoHSPA - Voice over HSPA<br />
VoLTE - Voice over LTE<br />
VoIP (Voice over Internet Protocol) -<br />
Commonly refers to the communication<br />
protocols, technologies, methodologies,<br />
and transmission techniques involved in the<br />
delivery of voice communications and multimedia<br />
sessions over Internet Protocol (IP)<br />
networks, such as the Internet.<br />
VoWIFI - Voice-over-Wi-Fi<br />
WAP Billing - This is a capability for mobile<br />
subscribers to buy content from Wireless<br />
Application Protocol sites (or mobile sites)<br />
and have the purchases charged directly<br />
to their mobile phone bills from their<br />
mobile operator.<br />
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APPENDIX<br />
Index Of Contributor Companies<br />
Aylus Networks<br />
Aylus Networks, helps mobile operators and<br />
communications service providers deliver<br />
live video services for consumers and enterprises.<br />
Solutions range from live video<br />
sharing, including social networks and RCS/<br />
RCSe devices, to multi-party video calling on<br />
mobile networks. Aylus’ innovative, IP-based<br />
core infrastructure platform is unique in its<br />
ability to serve as a video calling interexchange,<br />
enabling mobile service providers<br />
to optimise video communications among<br />
different networks (3G/4G/Wi-Fi) regardless<br />
of the endpoints, build new revenue<br />
streams through QoS/QoE, and drive<br />
mass-market adoption of mobile video<br />
services based on existing voice calling<br />
offerings. Visit www.aylus.com<br />
Bharti Airtel<br />
Bharti Airtel is a leading integrated telecommunications<br />
company with operations in 20<br />
countries across Asia and Africa. Headquartered<br />
in New Delhi, India the company ranks<br />
amongst the top 5 mobile service providers<br />
globally in terms of subscribers. In India, the<br />
company’s product offerings include 2G, 3G<br />
and 4G services, fixed line, high speed<br />
broadband through DSL, IPTV, DTH, enterprise<br />
services including national and international<br />
long distance services to operators.<br />
In the rest of the geographies, it offers<br />
2G, 3G mobile services. Bharti Airtel had<br />
over 246 million customers across its<br />
operations at the end of February 2012.<br />
Visit www.airtel.in<br />
CTIA – The Wireless Association ®<br />
CTIA is an international non-profit membership<br />
organisation that has represented the<br />
wireless communications industry since<br />
1984. Membership in the association<br />
includes wireless operators and their<br />
suppliers, as well as providers and manufacturers<br />
of wireless data services and<br />
products. The association advocates on<br />
behalf of its members at all levels of government.<br />
CTIA also coordinates the industry’s<br />
voluntary efforts to provide consumers<br />
with a variety of choices and information<br />
regarding their wireless products and<br />
services. This includes the voluntary<br />
industry guidelines; programs that promote<br />
mobile device recycling and reusing; and<br />
wireless accessibility for individuals with<br />
disabilities. Visit www.ctia.org<br />
Celcom Axiata<br />
Celcom is Malaysia’s leading mobile telecommunications<br />
provider with over 12<br />
million customers. Established in 1988, it<br />
has the widest national 2G and 3G networks,<br />
covering over 98 percent of the population.<br />
Celcom, that is also the country’s number<br />
one mobile broadband provider, is moving<br />
towards offering integrated multi-access<br />
and multimedia services that are aligned<br />
with consumer behaviour and demand.<br />
Celcom is part of the Axiata Group of Companies,<br />
one of the world’s largest telecommunications<br />
companies, with more than 180<br />
million customers across 10 Asian markets.<br />
Visit: www.celcom.com.my.<br />
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Cloudmark<br />
Cloudmark is the global leader in messaging<br />
security solutions, delivering the industry’s<br />
fastest and most effective protection<br />
against the widest range of messaging<br />
threats to mobile operators, Internet Service<br />
Providers and social networks. Cloudmark<br />
simplifies and advances the management<br />
of messaging abuse, thereby increasing<br />
network utilisation and reducing infrastructure<br />
costs. Protecting 1.8 billion subscribers<br />
for the world’s largest carrier networks,<br />
including AT&T, Verizon, T-<strong>Mobile</strong>, Comcast,<br />
MySpace, NTT, Swisscom and Time Warner-<br />
Cable, Cloudmark currently scans 15<br />
percent of the world’s mobile network traffic,<br />
15 percent of the world’s Internet traffic and<br />
50 percent of the world’s social networking<br />
traffic. Visit: www.cloudmark.com<br />
Globe Telecom<br />
Globe Telecom is a full-service telecommunications<br />
provider in the Philippines, with its<br />
own international gateways, cable landing<br />
stations, domestic fibre backhaul and a<br />
national access network (data, fibre, 3G/<br />
HSDPA). It offers a range of wireless and<br />
wireline voice and data services (including<br />
<strong>Mobile</strong> GSM/ 3G/ HSDPA, broadband, PSTN<br />
Fixed lines, IDD, NDD, Corporate Data, IPLC<br />
and Internet). Globe offers the most comprehensive<br />
coverage for international roaming,<br />
with more than 600 partner networks<br />
worldwide. Visit: www.globe.com.ph<br />
GSMA LA<br />
GSMA Latin America (GSMA LA) has four<br />
<strong>Operator</strong> Expert Working Groups covering<br />
Billing and Roaming (BARG), Regulatory<br />
(REGU), Technical and Terminals (TECT),<br />
and Security and Fraud (SEGF) issues in the<br />
region. GSMA LA hosts two key plenaries a<br />
year, featuring working group sessions plus<br />
workshops and seminars on other key<br />
GSMA initiatives. In Latin America, the<br />
GSMA member companies serve over<br />
630 million connections, accounting for<br />
95% of the total mobile region’s connections.<br />
Visit: www.gsma.com/latinamerica<br />
GSMA MMU<br />
GSMA’s <strong>Mobile</strong> Money for the Unbanked<br />
Programme help mobile operators and<br />
the financial industry collaborate to deliver<br />
affordable financial services that provide<br />
safety, security and convenience to millions<br />
of previously unbanked customers. Since<br />
the <strong>Mobile</strong> Money for the Unbanked<br />
programme was founded, the industry has<br />
increased in size five-fold, with over 100<br />
mobile money deployments active in the<br />
world today – 80% of which are in developing<br />
markets. The GSMA represents the<br />
interests of mobile operators worldwide,spanning<br />
more than 220 countries,<br />
and uniting nearly 800 of the world’s mobile<br />
operators, as well as more than 200<br />
companies in the broader mobile ecosystem,<br />
including handset makers, software<br />
companies, equipment providers, Internet<br />
companies, and media and entertainment<br />
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organisations. Visit: www.gsma.com.<br />
To learn more about the <strong>Mobile</strong> Money<br />
for the Unbanked Programme Visit<br />
www.mmublog.org<br />
Informa Telecoms & Media<br />
Informa delivers strategic insight, key market<br />
data and forecasts to help clients make<br />
better business decisions for more than 25<br />
years. It counts 65 analysts in nine research<br />
offices offering pragmatic advice to the<br />
leading global operators and builders of communications<br />
infrastructure. Its chief objective<br />
is to be accessible, responsive and connected<br />
both to the markets it serves and the clients<br />
it assists. Visit: www.informatandm.com<br />
Korea Telecom<br />
KT provides telecommunication services<br />
including local, long distance, and international<br />
calling, satellite communication,<br />
data transmission, and wireless telephone<br />
services in South Korea. The company also<br />
offers network portal and high-speed<br />
Internet access, and has the largest share<br />
of the South Korean local telephone and<br />
high-speed Internet business. KT is using its<br />
broad capabilities to lead the global market<br />
in an era of convergence that sees the<br />
boundaries blur between voice and data,<br />
wired and wireless, and broadcasting and<br />
telecommunications. Visit: www.kt.com<br />
Mavenir Systems<br />
Mavenir delivers Converged Voice, Video<br />
and Messaging solutions, based on the<br />
mOne Convergence Platform, to wireless<br />
operators globally. Mavenir’s value-added<br />
IMS and cloud-based solutions enable the<br />
transformation of legacy core networks by<br />
offering compelling new services such as<br />
VoLTE and RCS, and by providing uniquely<br />
innovative solutions to address the<br />
challenge of migrating subscribers and<br />
services to 4G. These solutions are deployed<br />
by customers in both North America and<br />
Europe. Visit: www.mavenir.com<br />
MediaFriends<br />
MediaFriends enables the world to<br />
communicate more freely by breaking<br />
down barriers of device compatibility<br />
through its patent pending <strong>Mobile</strong>-to-IP<br />
and Multi-Screen Messaging technology.<br />
HeyWire, the company’s real-time social<br />
messaging hub, empowers consumers<br />
worldwide to connect with each other in<br />
better ways using mobile messaging (SMS<br />
& MMS), IM, Facebook and Twitter on<br />
virtually any Internet enabled device.<br />
Visit: www.mediafriendsinc.com<br />
Metros PCS<br />
Dallas-based MetroPCS Communications,<br />
Inc. (NYSE: PCS) is a provider of no annual<br />
contract, unlimited wireless communications<br />
service for a flat rate. MetroPCS is the<br />
fifth largest facilities-based wireless carrier<br />
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in the United States based on number<br />
of subscribers served. With Metro USA(SM),<br />
MetroPCS customers can use their service<br />
in areas throughout the United States<br />
covering a population of over 280 million<br />
people. As of September 30, 2012,<br />
MetroPCS had approximately 9.0 million<br />
subscribers. For more information please<br />
visit www.metropcs.com.<br />
Money2020<br />
Money2020 Expo is a new conference<br />
focused on emerging payments and next<br />
generation financial services that brings<br />
together innovators from financial<br />
institutions, mobile, retail and advertising<br />
to discuss issues around mobile money<br />
and the customer experience. Money2020<br />
was co-founded by industry veterans in<br />
payments and mobile to bring together all<br />
stakeholders. Visit: www.money2020.com<br />
Neucom Solutions<br />
Neucom Solutions provides consulting<br />
services to the telecom sector focusing<br />
on areas including: business planning,<br />
commercial management, partnering,<br />
change management, business<br />
transformation and new market entry<br />
strategy. Visit: www.neucom.eu.com<br />
PCCW<br />
PCCW is the largest and most comprehensive<br />
provider of communications services in<br />
Hong Kong, offering award-winning innovation<br />
especially in Next Generation fixed line<br />
services, broadband pay-TV and Internet<br />
access, IP-based business services, 3G & 2G<br />
mobile and public Wi-Fi services, and largescale<br />
IT solutions. Visit: www.pccw.com<br />
Qatar Telecom<br />
Qtel provides a full range of telecommunications<br />
services in Qatar and across its<br />
presence in 17 countries. The company<br />
offers leading-edge products and services,<br />
and enjoys partnerships with many of the<br />
world’s leading telecommunications players.<br />
Qtel has invested over US$3.2 billion in<br />
Qatar’s technology infrastructure and has<br />
developed leading-edge Fibre and 4G<br />
Solutions, as well as an exciting portfolio<br />
of mobile, fixed-line and entertainment<br />
services. Qtel is part of the Qtel Group,<br />
a leading international communications<br />
company, with a significant presence in<br />
the MENA region and Southeast Asia, and<br />
a consolidated customer base of 83.7<br />
million as of June 2012. Its companies<br />
include Indosat, Asiacell, Wataniya, Nawras,<br />
Nedjma and Tunisiana. Visit: www.qtel.qa<br />
SAP<br />
As the market leader in enterprise application<br />
software, SAP (NYSE: SAP) helps companies<br />
of all sizes and industries run better.<br />
From back office to boardroom, warehouse<br />
to storefront, desktop to mobile device, SAP<br />
empowers people and organisations to work<br />
together more efficiently and use business<br />
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insight more effectively to stay ahead of the<br />
competition. SAP applications and services<br />
enable more than 195,000 customers to<br />
operate profitably, adapt continuously, and<br />
grow sustainably. Visit www.sap.com.<br />
SAP <strong>Mobile</strong> Services<br />
SAP <strong>Mobile</strong> Services is the global leader, in<br />
enabling mobile information services for<br />
mobile operators, financial institutions and<br />
enterprises. It provides customers the<br />
widest offering in SMS, MMS, GRX, IPX<br />
Interoperability and innovative mobile consumer<br />
engagement services. SAP <strong>Mobile</strong><br />
Services processes more than 1.8 billion<br />
messages per day reaching 900 operations<br />
and 5.5 billion connections around the world<br />
visit www.SAP.com<br />
Singtel<br />
The SingTel Group is Asia’s leading communications<br />
group, providing a wide spectrum<br />
of multimedia and infocoms technology<br />
(ICT) solutions, including voice, data and<br />
video services over fixed and wireless platforms.<br />
Headquartered in Singapore, SingTel<br />
has more than 130 years of operating experience<br />
and has played a pivotal role in the<br />
country’s development as a major communications<br />
hub. As at 30 June 2012, the<br />
Group serves 462 million mobile customers<br />
around the world. The Group is structured<br />
along three key businesses: Group<br />
Consumer, Group Digital L!fe and Group ICT.<br />
Group Consumer brings together the<br />
Group’s consumer-related functions and<br />
focuses on setting new benchmarks in<br />
customer experience. Visit www.singtel.com<br />
Telecoms.com<br />
Telecoms.com is the go-to website for anyone<br />
and everyone in the global telecommunications<br />
industry. Visit. www.telecoms.com<br />
Telefónica<br />
Telefónica has one of the broadest geographic<br />
footprints of any operator. It is<br />
present in 25 countries and provides telecommunications<br />
services to over 300<br />
million customers in Europe and Latin<br />
America. In addition, through its industrial<br />
alliances, which are unique in the sector, it<br />
shares a joint customer base of more than<br />
700 million, 10 percent of the world’s population.<br />
Telefónica operates with four brands:<br />
Telefónica, Movistar, O2 and Vivo. Visit:<br />
www.telefonica.com<br />
textPlus<br />
textPlus is the world’s leading mobile communication<br />
destination. It’s where the world<br />
goes to say hello - anytime, anywhere,<br />
anyplace. Over 35 million people worldwide<br />
use textPlus to text and talk for free or<br />
extremely low cost. textPlus works on<br />
multiple platforms and devices including<br />
iOS, Android, Symbian and Windows<br />
Phones. The company was founded in 2007<br />
and backed by leading VC firms Matrix<br />
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Partners, GRP Partners, and Kleiner Perkins<br />
Caufield & Byers. Visit: www.textplus.com.<br />
TIM<br />
The Telecom Italia Group is Italy’s leading<br />
ICT enterprise, active in fixed-line and<br />
mobile telecommunications, the Internet<br />
and media, office and system solutions,<br />
research and development. The Group<br />
also has a significant presence in Latin<br />
America. Group growth is driven by<br />
providing leading-edge infrastructure,<br />
the latest technology, a customer centric<br />
organisational model and the capabilities<br />
to cater to the needs of each customer<br />
cluster. Visit: www.tim.it<br />
The 3rd Degree<br />
The 3rd Degree was founded in 2001 to<br />
bring enterprise class, real-time research<br />
capabilities to the mobile platform. The<br />
platform quickly extended to become a<br />
full mobile CRM solution delivering highly<br />
scalable, secure, reliable mobile services<br />
including mobile research, marketing,<br />
loyalty, mobile web site builder and language<br />
analysis. Today Synapta mCRM offers a<br />
unified mobile platform utilised by mobile<br />
operators, FMCG companies, research<br />
agencies, the government, banks and<br />
retail environments worldwide. Visit:<br />
www.the3rddegree.co.uk<br />
Urban Airship<br />
Urban Airship is the unrivalled leader in<br />
push messaging, delivering billions of<br />
messages per month with unparalleled<br />
speed and scale for leading brands such as<br />
CBS Interactive, Groupon, Soundtracking,<br />
Walgreens and Warner Bros. Urban Airship<br />
enables these brands and 65,000 other customers<br />
to engage consumers directly on<br />
their mobile device home screens with precision-targeted<br />
mobile messaging. Complete<br />
mobile engagement suites offer easy<br />
and effective end-to-end management of<br />
the push messaging process from customer<br />
and location targeting, to automation and<br />
delivery including message composition,<br />
instant in-app landing page creation and<br />
analytics to optimise effectiveness. Visit<br />
www.urbanairship.com<br />
Yankee Group<br />
Yankee is the preeminent research and<br />
advisory firm equipping companies to profit<br />
in a mobile world. The core of its content is<br />
proprietary research and analytics on the<br />
attitudes, behaviours and usage patterns of<br />
mobile users. Based on this research, the firm<br />
provides a range of actionable data, insights<br />
and advice. Visit: www.yankeegroup.com<br />
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<strong>Mobile</strong> <strong>Operator</strong> <strong>Guide</strong> <strong>2013</strong><br />
Editorial Direction<br />
Carmel Coscia<br />
Diarmuid Mallon<br />
Project Managers<br />
Shahzia Banth<br />
Jean Loh<br />
Matthew Sims<br />
Design<br />
Boing Design Paris<br />
BoingDesignParis@yahoo.co.uk<br />
Developed and produced<br />
Peggy Anne Salz,<br />
Publisher & Chief Analyst<br />
<strong>Mobile</strong>Groove<br />
www.mobilegroove.com<br />
peggy@mobilegroove.com<br />
Amanda Roulstone<br />
Assistant to Peggy Anne Salz<br />
www.dragonvirtualassistants.co.uk<br />
Amanda@dragonvirtualassistants.<br />
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