Defining the Telco 2.0 Ecosystems

Syndicated Research

Telco B2B2C VAS opportunity sizingBottom-up approach to ‘$125bn’ telecoms opportunity

Philip [email protected]

www.Telco2.com

- 6 -© STL Limited • Proprietary and Confidential

2009 Telco2.0 study provided top-down view of the VAS opportunity

Total Market: $125 Billion


There is a need for a syndicated study

• 2009 Telco2.0 study on The $125Bn „Two-Sided‟ Telecoms Market Opportunity provided a top-down

market sizing: Strong basis for supporting strategic decision-making

• Many operators are now looking to execute. For this, they need:

• Detailed business cases to justify investment

• Use cases, data model, processes and commercials required to engage upstream partners and internal functions

• Some B2B2C VAS could be made up of many simple transactions in the form: API x $/dip x usage

• Some B2B2C VAS could be a transaction commission only (with other APIs free)

• Some could be a service platform with any number pricing schemes (including charging a 4th party)

• Problem is complex, large, “wide-open” and requires building consensus on vision

• Multi-client study provides engagement and shares cost of the exercise

What will services look like and how will they be charged for?

http://www.stlpartners.com/telco2_2-sided-market/index.php




Bottom-up market sizing modelling

• Framing the opportunity – Vocabulary, syntax and grammar of B2B2C VAS business

• Defining 3 „typical‟ business models for each opportunity area

• Characterising and describing the key business model options and associated ecosystems

• “Work up” from specific opportunity areas (generally an intersection of horizontal and

vertical) and aggregate these up to 90% of the $125bn figure

• Partner strategy and business model

• API charges

• Platform access

• Transaction cost/share of revenue

• Volumes & pricing of transactions/usage


Structure

Advertising

Business

Model A

Business

Model B

Business

Model C

AdvertisingAdvertising





• North America and

Western Europe

• “Potential opportunity”

for 2017

• Business models will

not be strictly

comparable, as some

will create more value

than others

• Different models will

“co-exist” but have

different value for telco

and varying “share” of

opportunity


Opportunity areas – to be reviewed and finalised

1. Marketing & advertising: retail goods (consumer and SME)

2. Marketing & advertising: retail services (consumer and SME)

3. Identity, authentication & security: services and digital media

4. Identity, authentication & security: public sector (consumer and SME)

5. Sales and payments: services, public sector & digital media

6. Offline fulfilment: public sector

7. Customer care: retail goods

8. Business & market intelligence (aggregate data)

9. Public policy, safety & transport (aggregate data)

10. M2M VAS


Process overview

Project scope finalised

Opportunity areas refine definitions

Straw man business models

Upstream research &

sector interviews

Revised opportunity

areas

Business model refinement

Modelling (W.Europe & N.America)

Modelling, specific

geographies

Final report and model


Two main deliverables

• Full report with break-down of opportunity areas

• Opportunity sizing: implications for telco industry

• Review of each opportunity area:

• Findings and conclusions

• Description of 3 business models used: rationale, assumptions and supporting analysis

• Write-up of upstream research and interviews

• Spreadsheet for North America and Western Europe

• Sponsor-specific report (contents and index confidential)

• Broad implications and next steps for sponsor

• Specific location-single opportunity-business model run: Findings and implications for sponsor


Benefits to syndicated sponsorship

• Spread the cost of undertaking the study

• Have a direct say in the study scope and the format of output

• Ensure that forecasts are relevant and can be readily used for:

• Internal business cases

• Upstream partner discussions

• Participate directly (and anonymously) in contributing to the vocabulary and framework

adopted in the study


Timeline, costs & Next steps

• Scoping conversations with potential sponsors: Feb 2010

• Finalise scope and deliverables: March 2010

• Secure (between 4 and 7) sponsors: April 2010

• Undertake study: May-Sept 2010

• Estimated cost per sponsor = £40k

• Understand sponsors‟ objectives in more detail and align deliverables

• Finalise scope, cost and terms

* Final cost will depend on agreed scope and number of sponsors

Defining the Telco 2.0 Ecosystems

Technology

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