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The ‘Two-Sided’ Business Model Use Case Project: Introduction

• ‘Two-sided’ platform-based business models’ have the potential to open up new market opportunities for telcos

• They create significant value for multiple stakeholders in the ‘digital economy’ by addressing everyday business process problems

• The concept is increasingly established and now needs additional support through practical worked examples and actual cases

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The ‘Two-Sided’ Telecoms Business Model - Overview

• A ‘two-sided’ operator :• Provides services to

‘upstream’ service providers and ‘downstream’ end-users by enabling them to interact via a Telco platform• Collects revenue from either

or both sides• Note: Downstream customers are both

consumers (B2C play) and businesses (B2B play)

Telco

Developers

Retailers

Government

Media Companies

ASPs

Telco – Retail

$ $

Side 1:

Upstream Customers

Side 2:

Downstream Customers

Millions of Customers

Thousands of Segments

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3.

2.

1.

A new ‘two-sided’ operator has 3 revenue streams

End-User Service Business

1. Voice, messaging, media and data delivered to and paid for by end users – as now.

A Distribution Platform Business

2. Allows third-party service providers to distribute voice, content & data services as part of their proposition to end users across multiple distribution systems: internet, broadcast, multicast, SMS, circuit voice etc.

A VAS Platform Business

Allows third-party service providers to better interact with downstream customers by providing enabling services

Side 1:

Upstream Customers

Side 2:

Downstream Customers

Millions of Customers

Thousands of Segments

New B2B Platform Services

$$

$$

$$

End-User Services

Developers

Retailers

Government

Media

Advertisers

Utilities

Financial Services

Distribution Platform

VAS Platform

1.

2.

3.

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Potential Growth Opportunity: up to $375 billion p.a.

2007 2017

$666 $855

$20

$250

$3

$125

Western Europe and North America Telco Revenues, 2007 Ac-tual and 2017 Potential, $ Billions

VAS Platform

Distribution Platform

Telco Retail Platform (& existing Wholesale)

Source: STL Partners/Telco 2.0 Analysis, ‘Two-Sided Telecoms Platform Sizing’; ‘Future Broadband Business Models’

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Distribution Platform - six main product areas

Total

Messaging

Voice

Data services (exc. SMS/MMS)

TV

Mobile access

Fixed access

$250

$1

$27

$89

$58

$36

$39

Telco Distribution Platform: Potential Revenue for North Amer-ica & Western Europe in 2017 by core Telco product, $ Billions

Source: STL Partners/Telco 2.0 Analysis, ‘Two-Sided Telecoms Platform Sizing’; ‘Future Broadband Business Models’

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VAS Platform - seven service capabilities

Total

Care & Support

Billing & Payments

Order Fulfilment – Online (E-content)

Order Fulfilment – Offline

E-Commerce Sales

Advertising, Marketing Services & Biz Intelligence

Identity, Authentication & Security

$125

$26

$26

$3

$9

$9

$37

$15

Value Added Service Platform: Potential Revenue in Europe and US in 2017 by Service Capability, $ Billions

Source: STL Partners/Telco 2.0 Analysis, ‘Two-Sided Telecoms Platform Sizing’

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Senior Telco execs appreciate the need for new business models

“I don’t like the word ‘carrier’. We operate customer platforms, billing systems and so on. A carrier is not what Vodafone wants to be…We

need to find the right models for all the new content and applications.”Vittorio Colao, CEO, Vodafone, 2009

“We have to find a way for applications to work across devices, platforms and operating systems…I think we should use standard

APIs... that would allow developers to access platforms worldwide.”Ralph de la Vega, CEO, AT&T, 2009

“The challenge is not the technology. The challenge is not the applications. The challenge is the business model.”

Chairman Wang Jianzhou, China Mobile

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What next?

• The need for, and theory and concept of, the ‘two-sided’ business models are now understood and accepted by many senior strategy executives in Telcos...

• ...but a deeper, practical understanding is required.

• The Telco 2.0 ‘Two-Sided’ Business Model Use Case Project will provide detailed examples of specific actual and potential examples of the practical application of the theory.

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The Use Cases provide:

• A detailed and workable illustration of the new business model in operation• Insight on how existing ‘best practice’ can be enhanced• Direction to investment prioritisation

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To be published in a new Telco 2.0TM Strategy Report and presented at the Telco 2.0TM Executive Brainstorm Events (see http://www.telco2.net/event/).

The 5 ‘Two-Sided’ Business Model Use Cases

Telco 2.0 ‘Use cases’ are detailed “business level” descriptions of illustrative commercial models for new Telco 2.0 B2B platform services across the most accessible opportunity areas:

1. Marketing and Advertising 2.0: Exploiting Telco data

2. Mobile Broadband 2.0: Managed data offload service

3. Digital Money 2.0: Mobile Banking for the unbanked in mature markets

4. Digital Utilities 2.0: Smart Grid

5. Voice and Messaging 2.0: SME productivity platform