Future of Communication 2020 - sbdi.co.kr

Future of Comm unication 2020Telco & OTT communication – Market forecastsRef: M12121 – January 2013

www.idate.org

• What will be the key trends in communication by2020? Will the total revenue pie of communicationshrink or grow?

• How are telco margins evolving for communication?Simple substitution from fixed to mobile or revenueloss?

• In terms of usages, how will communication servicesevolve until 2020? What about OTT VoIP & SMS?

• What are the impacts of new technologies such asWebRTC or RCSe?

• Can telcos recover their territory from OTT players?Moreover, how much territory are they really losing, ifany?

Innovation ReportMarket & Data

Communication beingubiquitious and IP-based

solutions taking increasingly a bigger part in it, this market still

remains essential despitedecreasing revenues.

This report provides analyses on quantitative changes until 2020, in terms of usages and

revenues. It also describes the latest trends, the re-positioning

of telcos in an OTT world.

Contents (Report – PDF )

1. Executive Summary1.1. The six key trends shaping the market1.2. Key developments in usage of

communications services1.3. The quantification of the

communication market

2. Methodology

3. Communication 2020 in figures3.1. Key usage developments by 20203.1.1. Mobile users still much more

dominant than OTT VoIP users• USA • EU5: France, Germany, Italy,

Spain, UK 3.1.2. Messaging users of both telcos and

OTTs expected to grow• USA • EU5: France, Germany, Italy,

Spain, UK 3.1.3. Number of SMS sent still set to

grow, but OTT messages are rapidly catching up

• USA • EU5: France, Germany, Italy,

Spain, UK

3.2. The quantification of communication revenue by 2020

3.2.1. Overall communications services market expected to see very slight decline over eight years from 2012 to 2020

3.2.2. Increase in mobile communication revenues cannot compensate for the decline in fixed communications revenues

3.2.3. Increase in telco messaging revenues cannot compensate for the decline in telco voice revenues

3.2.4. OTT communication revenues cannot compensate for decline in telco communication revenues

4. The 6 key trends in communication

4.1. The aggregation of communication types

4.1.1. Intro4.1.2. Facebook4.1.3. Google4.1.4. WhatsApp4.1.5. Apple4.1.6. Operators

4.2. Beyond traditional communication for telcos

4.2.1. Intro4.2.2. Operators providing their own OTT

services4.2.3. Partnerships between OTT and

operators4.2.4. Joyn (RCSe)

4.3. Voice and messaging becoming a telco commodity

4.3.1. Intro4.3.2. Mobile voice and messaging offered

in abundance4.3.3. Fixed voice and Internet access

also unlimited4.3.4. Bundling it all for an even cheaper

experience

4.4. Mobile data and Wi-Fi makes strong case for OTTs

4.4.1. Intro4.4.2. Unlimited mobile data still rare4.4.3. Wi-Fi over mobile allows unlimited

OTT communication including video

4.5. The rise of video communication4.5.1. Intro4.5.2. Telco video communications4.5.3. OTT video communications

4.6. Genuinely free OTT offers in exchange of user data

4.6.1. Intro4.6.2. Free or low cost OTT services4.6.3. Advertising and data usage

Deliverables• Report (PDF)• Slideshow (PDF)• Database

December 2012

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Other available reports:• Telcos Pricing

Strategies

• Strategies of Telecom Operators

• World Internet Markets

• Apps and the Mobile Internet

To be published:• Traffic Management• Future Telecom

Watch Services:• World Connected

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Future of Communication - Database

Share of messages sent forecast, EU5, 2012-2020

Total communication revenue forecast, USA 2012-2020

Source: IDATE

Future of Communication - ExcerptsNumber of messages sent by type, USA, 2012-2020

(million)

(million EUR)

Source: IDATE

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Telcos Pricing StrategiesBridging the gap between skyrocketing traffic and flat revenuesRef: M12313 - November 2012

www.idate.org

• In a context of relatively low prices and increasing traffic, what are the major trends in pricing?

• Are different pricing strategies being used for ultra-fast broadband (fiber and LTE)?

• Will operators have separate plans between the various telecommunication devices and services?

• What pricing strategies are operators using to counteract OTT services?

• For their part, are fixed network operators starting to limit the amount of data consumed?

• What forms of convergence are we seeing between fixed and mobile pricing?

• What multi-play strategies are operators adopting?

Innovation ReportInnovation

This report focuses on the major trends in pricing policy,

and highlights innovative strategies.

It analyses trends in the mobile market for voice and SMS services, and takes a

close look at mobile data services.

It also examines pricing strategies for the fixed

network market, as well as service bundles.

Pricing Strategies (Excerpts)

Slideshow (Synopsis – PDF)

The report ships with a slideshow providing the reader with a synopsis of the study’s essential points. It enables you:• to share the principal findings rapidly with your colleagues• to use the slides for your internal presentations• or to simply browse through the main thoughts of the market study at a glance

Operators covered

IDATE – CS 94167 – 34092 Montpellier Cedex 5Tel: +33 (0) 467 144 444 – Fax: +33 (0) 467 144 400 - [email protected] – www.idate.org

3 (IT) 3 (GB) AT&T (USA) Bouygues Telecom (FR) BT (GB) Comcast (USA) CSL (One2Free, SG) DT (DE) E-Plus (DE) Fastweb (IT) Free (FR) HKBN (HK) KT (KR)

• LG U+ (KR) • M1 (SG) • Metro PCS (USA) • NTT (JP) • O2 (DE) • O2 (GB) • Orange (FR) • Orange (GB) • SFR (FR) • Singtel (SG) • SK (KR) • Sprint Nextel (USA) • Swisscom (CH)

T-Mobile (USA) T-Mobile (GB) Telecom Italia (IT) Telefónica (ES) TeliaSonera (SE) TEO LT (LT) TimeWarner Cable (USA) Verizon (USA) Virgin Media (GB) Vodafone (DE) Vodafone (GB) Vodafone (ES) Vodafone (IT)

Contents (Report – PDF )

1. Executive Summary

2. Methodology

3. Pricing strategies for mobileservices

3.1. The trend toward an unlimited modelfor voice and SMS

3.1.1. Changes in traditional models for mobile voice pricing

3.1.2. The trend toward unlimited voice plans3.1.3. The trend toward unlimited plans is even

more pronounced for SMS3.1.4. Examples of innovative pricing

3.2. The trend toward convergence ofprepaid/postpaid plans

3.2.1. A general downward trend in prepaid plans3.2.2. Hybrid plans3.2.3. The new challenges facing prepaid services

3.3. Mobile data: the trend toward tieredpricing

3.3.1. Pricing factors3.3.2. Mobile data: the trend toward tiered pricing3.3.3. LTE pricing, an opportunity to increase

ARPU3.3.4. Innovative plans3.3.5. Prioritized offerings3.3.6. The need for educating consumers

3.4. Devices: the trend toward separationof telco devices and service offerings

3.4.1. A profusion of potentially connecteddevices

3.4.2. The issue of subsidizing3.4.3. The trend toward separation of telco

devices and services for postpaid?3.4.4. Maintaining subsidies for high-end devices

3.5. The trend toward multi-deviceshared plans

3.5.1. Plans for subscribers with multipledevices

3.5.2. Family plans3.5.3. All in one plans: data sharing plans3.5.4. Mobile access sharing

4. Pricing strategies for fixedservices

4.1. Introduction: a trend toward lowerprices

4.2. Segmentation by data speeds4.2.1. Pricing factors4.2.2. Segmentation by data speeds

4.3. The trend toward setting limits ondata usage

4.4. Minimal guarantees on the qualityof service

4.5. Two types of strategy for high-speed connection pricing: transition and value-creation

4.5.1. Replication of broadband pricing4.5.2. Two types of strategy for fiber

connection pricing

5. Service bundles5.1. Fixed-mobile services bundles5.1.1. Operator positioning in quadruple play

services5.1.2. Quadruple play still innovating

5.2. Service bundles with added value5.2.1. Content strategies5.2.2. Smart access

Deliverables• Report (PDF)• Slideshow (PDF)

November 2012

EUR 3 500(1-5 user license)


Project ManagerSophie [email protected]: +33 (0)467 144 25

Other available reports:

• Multiplay: new supply-side strategies

• The World Telecom Services Market

• FTTx Services -Supply-side strategies: monetizing the networks

• Strategies of Telecom Operators

• Vertical markets

Upcoming reports:

• Future Telecom• LTE Telco Strategies

Watch Services:• FTTx Watch Service• LTE Watch Service


IDATE - CS 94167 – 34092 Montpellier Cedex 5Tel: +33 (0) 467 144 444 – Fax: +33 (0) 467 144 400 - [email protected] – www.idate.org

Telcos Pricing Strategies Bridging the gap between skyrocketing traffic and flat revenues M12313 – December 2012

This study includes: - a report - a slideshow

Copyright IDATE 2012, CS 94167, 34092 Montpellier Cedex 5, France All rights reserved. None of the contents of this publication may be reproduced, stored in a retrieval system or transmitted in any form, including electronically, without the prior written permission of IDATE. IDATE, DigiWorld, DigiWorld Institute and DigiWorld Yearbook are the international registered trademarks of IDATE.

IDATE creates the DigiWorld Institute

Founded in 1977, IDATE has gained a reputation as a leader in tracking telecom, Internet and media markets, thanks to the skills of its teams of specialized analysts. Now, with the support of close to 40 member companies – which include many of the digital economy’s most influential players – the newly rebranded DigiWorld Institute has entered into a new stage of its development, structured around three main areas of activity: IDATE Research, an independent observatory whose task is to keep a close and continual watch

on digital world industries, collect relevant data and provide benchmark analyses on market developments and innovations in the telecom, Internet and media sectors – through its comprehensive collection of market reports and market watch services.

IDATE Consulting, time-tested analysis and consultancy solutions: Our multi-disciplinary teams of economists and engineers established their credibility and independence through the hundreds of research and consulting assignments they perform every year on behalf of top industry players and public authorities.

DigiWorld Institute, a European forum open on the world: The DigiWorld Institute will take existing IDATE initiatives, such as the DigiWorld Summit, the DigiWorld Yearbook and the monthly clubs in Paris, London and Brussels, to the next level. Members have the opportunity to participate in think tanks on the core issues that will shape the industry’s future, drawing on the knowledge of outside experts and our own teams.

Contributors

> Sophie LUBRANO, Head of Usages Practice

A member of the IDATE team since November 2000, Sophie Pernet is specialised in demand analysis, particularly in the area of consumer applications. Sophie also contributes her expertise in supply analysis, notably companies’ Internet service strategies. Her assignments focus on various aspects of the telecom industry: Internet, media, landline and mobile telephony. Prior to joining IDATE, Sophie was an economic consultant for B.I.P.E., where she was in charge of telecom market monitoring. Ms. Pernet is an economist, with a post-graduate degree from ESLSCA (Ecole Supérieure Libre des Sciences Commerciales Appliquées). [email protected]

> Didier POUILLOT, Head of "Telecom Strategies" Business Unit

> Christoph PENNINGS, Head of Regulation Practice

ISBN 978-2-84822-304-9 ISSN 2109-6791

mailto:[email protected]

Telcos Pricing Strategies

www.idate.org © IDATE 2012 3

Contents

1. Executive summary ......................................................................................... 7

1.1. Context ................................................................................................................... 8

1.2. Pricing strategies for mobile services ..................................................................... 8 1.2.1. Major trends........................................................................................................... 8 1.2.2. Mobile data services .............................................................................................. 9 1.2.3. Multiple device mobile plans ................................................................................ 10

1.3. Pricing strategies for fixed services ...................................................................... 10 1.3.1. Major trends......................................................................................................... 10 1.3.2. Two types of strategy for fiber connection pricing................................................ 11

1.4. Bundles................................................................................................................. 11

2. Methodology .................................................................................................. 13

3. Introduction ................................................................................................... 14

3.1. Context ................................................................................................................. 14

3.2. Analysis scope ..................................................................................................... 15

3.3. The regulatory issues ........................................................................................... 15 3.3.1. Lower interconnection charges and local loop access rates ................................ 15 3.3.2. New regulations to combat bill shock .................................................................. 16

4. Mobile telco pricing ....................................................................................... 17

4.1. The trend toward an unlimited model for voice and SMS .................................... 17 4.1.1. Changes in traditional models for mobile voice pricing ........................................ 17 4.1.2. The trend toward unlimited voice plans ............................................................... 18 4.1.3. The trend toward unlimited plans is even more pronounced for SMS ................. 20 4.1.4. Examples of innovative pricing ............................................................................ 21

4.2. The trend toward convergence of prepaid/postpaid plans ................................... 23 4.2.1. Differences in national context............................................................................. 23 4.2.2. An overall downward trend in prepaid ................................................................. 23 4.2.3. Hybrid plans......................................................................................................... 24 4.2.4. The new challenges facing prepaid services ....................................................... 26

4.3. Mobile data: The trend toward tiered pricing ........................................................ 26 4.3.1. Pricing factors ...................................................................................................... 26 4.3.2. A trend toward tiered pricing ................................................................................ 27 4.3.3. LTE pricing, an opportunity to increase ARPU .................................................... 30 4.3.4. Innovative plans ................................................................................................... 32 4.3.5. Prioritization services ........................................................................................... 38 4.3.6. The need for educating consumers ..................................................................... 38 4.3.7. Summary ............................................................................................................. 40



4.4. Devices: Is there a trend toward separating telco devices from call plans? ........ 41 4.4.1. A profusion of potentially connected devices ....................................................... 41 4.4.2. The issue of subsidized devices .......................................................................... 42 4.4.3. Is there a trend toward separating handsets from call plans for postpaid? .......... 44 4.4.4. Maintaining subsidies for high-end devices ......................................................... 46

4.5. The trend toward shared plans across multiple devices ...................................... 46 4.5.1. Plans for subscribers with multiple devices: a way to stimulate the use of tablets

on cellular networks ............................................................................................. 47 4.5.2. Family plans ........................................................................................................ 50 4.5.3. All-in-one: Multi-user, multi-device data sharing plans ........................................ 51 4.5.4. Sharing access to mobile networks ..................................................................... 54 4.5.5. Summary ............................................................................................................. 58

5. Fixed broadband pricing ............................................................................... 59

5.1. Introduction ........................................................................................................... 59 5.1.1. Less complex than mobile pricing ........................................................................ 59 5.1.2. Flat ARPU with upgraded services driving price fall ............................................ 59

5.2. Tiered pricing by data speeds .............................................................................. 61 5.2.1. Pricing factors ...................................................................................................... 61 5.2.2. Tiered pricing plans by data speeds .................................................................... 61 5.2.3. Naked 'DSL' not generalized ............................................................................... 62

5.3. A trend toward capped traffic and traffic management ........................................ 63

5.4. Minimal guarantees on the quality of service ....................................................... 68

5.5. Two types of strategy for ultra-fast broadband pricing: continuity and valuation . 69 5.5.1. The challenges .................................................................................................... 69 5.5.2. Mirroring broadband pricing ................................................................................. 70 5.5.3. Two types of strategy for fiber pricing: Continuity with broadband or valuation of

ultra-fast broadband ............................................................................................ 71

5.6. Summary: Tiered pricing based on speed still predominates, traffic management is emerging ........................................................................................................... 77

6. Services bundles ........................................................................................... 78

6.1. Fixed-mobile services bundles ............................................................................. 78 6.1.1. Operator positioning in quadruple play services .................................................. 78 6.1.2. Quadruple play still in its infancy ......................................................................... 80

6.2. Integration of value-added services ..................................................................... 81 6.2.1. Content strategy .................................................................................................. 81 6.2.2. Smart access ....................................................................................................... 82



Tables Table 1: Benchmark of postpaid mobile voice plans ..................................................................... 18 Table 2: AT&T's range of national mobile voice plans .................................................................. 19 Table 3: Orange's Origami range of plans .................................................................................... 19 Table 4: Benchmark of SMS pricing in the United States and Europe .......................................... 20 Table 5: Change in AT&T's SMS offerings toward unlimited ........................................................ 21 Table 6: SFR's range of "blocked" packages ................................................................................ 24 Table 7: Orange's range of capped plans ..................................................................................... 25 Table 8: Factors in mobile data pricing ......................................................................................... 27 Table 9: Postpaid mobile data plans for smartphones .................................................................. 29 Table 10: Plan strategies for operators offering LTE (for postpaid smartphones) ........................... 30 Table 11: Vodafone Germany's 3G and LTE range of plans .......................................................... 31 Table 12: TeliaSonera Sweden's range of plans (postpaid) ............................................................ 33 Table 13: O2 Germany's range of prices ......................................................................................... 34 Table 14: The Swisscom Natel Infinity range of plans .................................................................... 34 Table 15: Sprint's range .................................................................................................................. 35 Table 16: T-Mobile USA's range of plans ....................................................................................... 35 Table 17: AT&T's shared voice minutes plans ................................................................................ 51 Table 18: Verizon's "Share Everything" plans for voice, SMS and data.......................................... 52 Table 19: Verizon's "Share Everything" plans for data only ............................................................ 53 Table 20: AT&T's data sharing prices ............................................................................................. 54 Table 21: 3 UK's MiFi plans ............................................................................................................ 56 Table 22: T-Mobile USA's plans ..................................................................................................... 57 Table 23: Speeds offered for Internet access (download speeds) .................................................. 61 Table 24: Time Warner Cable ......................................................................................................... 62 Table 25: "Naked DSL" availability of 1- & 2-play broadband plans ................................................ 63 Table 26: Capped broadband tariffs ............................................................................................... 65 Table 27: BT's fixed Internet access plans ..................................................................................... 66 Table 28: Virgin Media's plans ........................................................................................................ 66 Table 29: Traffic management for VM's basic plans ....................................................................... 67 Table 30: Traffic management for VM's mid-range/premium plans ................................................ 67 Table 31: Commercial plans for ultra-fast download speeds .......................................................... 70 Table 32: AT&T's plans: Comparison between broadband/fiber prices (USD) ............................... 71 Table 33: Orange's Internet access plans....................................................................................... 73 Table 34: Verizon's Internet access plans ...................................................................................... 73 Table 35: Telefónica's Internet access plans .................................................................................. 74 Table 36: Deutsche Telekom's Internet access plans ..................................................................... 75 Table 37: Difference between broadband and ultra-fast broadband pricing policies ...................... 76 Table 38: Internet access pricing strategies ................................................................................... 77 Table 39: Operator positioning in quadruple play services ............................................................. 79

***



Figures Figure 1: Proportion of postpaid subscribers in the subscriber base in 2011 ................................. 23 Figure 2: Change in the proportion of postpaid subscribers by country, 2003-2011 ...................... 24 Figure 3: SFR's range of capped plans .......................................................................................... 25 Figure 4: TIM's plan for subscribers or prepaid customers (Ricaricabili) linked to a credit card ..... 25 Figure 5: MetroPCS' pricing plans ................................................................................................. 26 Figure 6: Verizon Wireless' bandwidth consumption chart ............................................................. 39 Figure 7: Verizon Wireless' tool for calculating consumers' bandwidth requirements .................... 39 Figure 8: SingTel's data usage counters ........................................................................................ 40 Figure 9: Data plan strategies (postpaid plans for smartphones) ................................................... 40 Figure 10: The PS Vita console as marketed by Vodafone UK ........................................................ 41 Figure 11: Change in the smartphone installed base ....................................................................... 41 Figure 12: Growth in tablet installed base ........................................................................................ 42 Figure 13: SingTel's subsidized handset plans ................................................................................ 43 Figure 14: SFR's handset renewal offering ...................................................................................... 43 Figure 15: AT&T's trade-in program ................................................................................................. 44 Figure 16: Refurbished handset offerings from Verizon and AT&T .................................................. 44 Figure 17: Vodafone's offer of free financing ................................................................................... 45 Figure 18: Operators offering SIM-only plans .................................................................................. 45 Figure 19: Handsets available for purchase or lease by Free .......................................................... 46 Figure 20: SFR's range of postpaid plans ........................................................................................ 48 Figure 21: SFR's MultiSurf option: multi-SIM plan ........................................................................... 49 Figure 22: The mobile hotspot principle of operation ....................................................................... 55 Figure 23: 3's MiFi router ................................................................................................................. 56 Figure 24: Vodafone UK's Sharing Hub ........................................................................................... 57 Figure 25: Strategies for multi-device plans (postpaid plans for smartphones) ................................ 58 Figure 26: Changes in Deutsche Telekom's dual flat pricing and downstream speed ..................... 59 Figure 27: Changes in French broadband bundles and ARPU ........................................................ 60 Figure 28: TWC's decision-making tools .......................................................................................... 62 Figure 29: Usage distribution ........................................................................................................... 64 Figure 30: Home screen offering the priority pass ........................................................................... 68 Figure 31: FTTX coverage & uptake ................................................................................................ 69 Figure 32: Internet speeds offered by Free ...................................................................................... 72 Figure 33: Pricing policy comparison between broadband and ultra-fast broadband ....................... 75 Figure 34: Operators' positioning for ultra-fast broadband ............................................................... 76 Figure 35: Operator positioning in quadruple play services ............................................................. 80

Strategies of Telecom OperatorsHow to retain marginsRef: M12312 – June 2012

www.idate.org

Market maturity, increased and multi-faceted competition,

a difficult macroeconomic context and sustained

regulatory pressure have an impact on the margins of most

operators in advanced economies.

This study analyses the initiatives being taken by

telecom operators to contain their margins, such as:

keeping costs under control, choosing investments, winning over new customers, valuation

of assets, etc.

• Which avenues for reducing expenditure are worth exploring?

• Are customer management and segmenting offerskey measures?

• Is increasing customer numbers a real source of margin?

• Does increasing revenue per useralso have a positive impact on margins?

• Questions which are still open: subsidizing handsets , monetizing usage , the place ofcontent, …?

Innovation ReportInnovation

Contents (PDF report)


2. Methodology

3. Operators under increasingpressure

3.1. A generally deteriorating politico-economic context

3.2. Mature mobile markets3.3. Exploding usage3.4. Regulatory pressures still strong3.5. Increasing competition

4. A large range of actionsfor retaining margins

4.1. Tightening expenditure4.1.1. Organizational and financial

measures4.1.2. Operational and functional

measures4.1.3. General strategy measures4.1.4. Technical and technological

measures

4.2. Increasing the customer base4.2.1. Winning and segmenting

new customers on a given market4.2.2. Winning new geographical markets4.2.3. Improving customer relationships

and experience

4.3. Increasing revenue4.3.1. Fighting against cannibalization of

some revenues4.3.2. Quality of stock, valuation of

existing subscribers4.3.3. Innovation in the offer: bundles, up-

& cross-selling

4.3.4. Increasing mobile data tariffs4.3.5. Supplying and distributing

differentiating content4.3.6. Related activities

5. Measures which are effective to varying degrees

5.1. Tightening expenditure5.2. Increasing the customer base5.3. Increasing revenue

6. Challenges and open questions

6.1. Confirming the benefits ofsegmentation and family offers

6.2. Clarifying strategies concerning content

6.3. Activating converged access and offers for quadruple playoffers

6.4. Improving network resource management

6.5. Changing handset subsidies sustainably

6.6. Using identified growth avenues for margin vectors

6.7. Continuing to monetize usage

7. Telecom operator profiles• America Móvil• AT&T• China Mobile• Deutsche Telekom• France Telecom• KDDI• NTT• Telefónica• Verizon Communications• Vodafone

Deliverables:• Report (PDF)• Slideshow (PDF)

June 2012

EUR 3 500(1-5 user licence)


Project ManagerCarole [email protected]: +33 (0)467 144 428

Related reports avai lable:

• The World Telecom Services Market

• Multiplay: new supply-side strategies

• Telco TV Strategies

Upcoming reports:

• Future Telecom• Pricing Strategies• Vertical Markets• FTTx services



IDATE - BP 4167 – 34092 Montpellier Cedex 5

Tel: +33 (0) 467 144 444 – Fax: +33 (0) 467 144 400 - [email protected] – www.idate.org

Strategies of telecom operators (extracts)

Developing EBITDA margins (%)

Impact of the measures explored by telecom operators

March N to March N+1Source: IDATE – June 2012

Source: IDATE – June 2012

Strategies of telecom operatorsHow to retain margins?

M12312 – August 2012

This study is composed of:

- a report

- a PowerPoint presentation

Copyright IDATE 2012, BP 4167, 34092 Montpellier Cedex 5, France All rights reserved – Reproduction, storage or distribution, even partial and in any format including electronic, may not be carried out without prior written from IDATE.

IDATE and DigiWorld are international trademarks registered by IDATE.


Founded in 1977, IDATE has gained a reputation as a leader in tracking telecom, Internet and media markets, thanks to the skills of its teams of specialized analysts. Now, with the support of close to 40 member companies – which include many of the digital economy’s most influential players – the newly rebranded DigiWorld Institute has entered into a new stage of its development, structured around three main areas of activity:

• IDATE Research, an independent observatory whose task is to keep a close and continual watch on digital world industries, collect relevant data and provide benchmark analyses on market developments and innovations in the telecom, Internet and media sectors – through its comprehensive collection of market reports and market watch services.

• IDATE Consulting, time-tested analysis and consultancy solutions: Our multi-disciplinary teams of economists and engineers established their credibility and independence through the hundreds of research and consulting assignments they perform every year on behalf of top industry players and public authorities.

• DigiWorld Institute, a European forum open on the world: The DigiWorld Institute will take existing IDATE initiatives, such as the DigiWorld Summit, the DigiWorld Yearbook and the monthly clubs in Paris, London and Brussels, to the next level. Members have the opportunity to participate in think tanks on the core issues that will shape the industry’s future, drawing on the knowledge of outside experts and our own teams.

Contributors

> Carole MANERO, Project leader, Director of Studies

An IDATE project leader since October 2000, Carole is in charge of monitoring the globe’s mobile markets, operator (networks, MVNO) and mobile services development. She has also become an expert in spectrum management issues. Before coming to IDATE, Carole worked for the COGEMA’s North American corporate strategy department, where she was involved in several acquisition operations in the nuclear sector. Ms. Manero is a graduate of the Ecole de Hautes Etudes Commerciales du Nord business school (1991), with a major in Marketing, and holds a Masters in Human Resources and Corporate Management from Paris’s Ecole Supérieure de Commerce (1992). [email protected]

> Christoph PENNINGS, Head of Regulation Practice

> Sophie LUBRANO, Head of Usages Practice

ISBN 978-2-84822-301-8

ISSN 2109-6783

Strategies of telecom operators for retaining margins


Contents

1. Executive Summary ........................................................................................ 7

1.1. Reducing expenditure ............................................................................................ 7

1.2. Boosting volume by increasing infrastructure ........................................................ 8

1.3. Boosting value by increasing revenue ................................................................... 8

1.4. Meeting challenges and answering pending questions ......................................... 9

2. Preamble ........................................................................................................ 11

3. Methodology .................................................................................................. 14

4. Operators under increasing pressure .......................................................... 16

4.1. A generally deteriorating politico-economic context ............................................. 16

4.2. Mature mobile markets ......................................................................................... 17

4.3. Exploding usage ................................................................................................... 17

4.4. Regulatory pressures still strong .......................................................................... 174.4.1. Mobile termination/data roaming ......................................................................... 18

4.4.2. Price of local loop unbundling .............................................................................. 19

4.4.3. Taxes on telecom operators ................................................................................ 20

4.4.4. Net neutrality ....................................................................................................... 20

4.4.5. Functional/structural separation........................................................................... 21

4.4.6. NGNA/N .............................................................................................................. 22

4.5. Increasing competition ......................................................................................... 224.5.1. In telecoms .......................................................................................................... 22

4.5.2. In related industries ............................................................................................. 23

5. A wide range of measures for maintaining margins ................................... 25

5.1. Reducing expenditure .......................................................................................... 275.1.1. Organizational and financial measures ................................................................ 28

5.1.2. Operational and functional measures .................................................................. 30

5.1.3. General strategy measures ................................................................................. 31

5.1.4. Technical and technological strategic measures ................................................. 38

5.2. Increasing the customer base .............................................................................. 445.2.1. Winning and segmenting new customers on a given market ............................... 44

5.2.2. Winning new geographical markets ..................................................................... 49

5.2.3. Improving customer relationships and experience ............................................... 49

5.3. Increasing revenue ............................................................................................... 505.3.1. Fighting against cannibalization of some revenues ............................................. 50

5.3.2. Quality of the customer base and increasing the value of existing subscribers ... 51

5.3.3. Innovation in the offer: bundles for up & cross selling ......................................... 52

5.3.4. Increasing mobile data tariffs ............................................................................... 56

5.3.5. Supplying and distributing differentiating content ................................................ 56

5.3.6. Related activities ................................................................................................. 59



6. Measures which are effective to varying degrees ....................................... 61

6.1. Reducing expenditure .......................................................................................... 636.1.1. Optimum ease and effectiveness ........................................................................ 63

6.1.2. Pitfalls to be avoided ........................................................................................... 65

6.2. Increasing the customer base .............................................................................. 656.2.1. Assessment of developing customer loyalty to be confirmed .............................. 65

6.2.2. Mixed performance in reducing handset subsidies .............................................. 66

6.2.3. Good performance of profitable asset purchases ................................................ 66

6.3. Increasing revenue ............................................................................................... 666.3.1. Mixed performance for bundles in terms of margin .............................................. 66

6.3.2. Good performance of tiered pricing ..................................................................... 68

6.3.3. Good performance of increasing prices ............................................................... 69

6.3.4. Mixed results for content delivery ........................................................................ 69

6.3.5. Limits to increasing the value of existing customers ............................................ 70

7. Challenges and unresolved questions ........................................................ 71

7.1. Confirming the benefits of segmentation and family offers .................................. 71

7.2. Clarifying strategies concerning content .............................................................. 71

7.3. Activating converged access and offers for quadruple play offers ...................... 71

7.4. Improving the management of network resources ............................................... 72

7.5. Changing handset subsidies sustainably ............................................................. 72

7.6. Using identified growth drivers as margin vectors ............................................... 73

7.7. Continuing to monetize usage .............................................................................. 747.7.1. Increasing mobile data tariffs in Europe .............................................................. 74

7.7.2. Discriminating customers and services ............................................................... 74

8. Annexes ......................................................................................................... 76

8.1. Simplified monographs ......................................................................................... 768.1.1. América Móvil ...................................................................................................... 76

8.1.2. AT&T ................................................................................................................... 78

8.1.3. China Mobile........................................................................................................ 79

8.1.4. Deutsche Telekom ............................................................................................... 81

8.1.5. France Telecom ................................................................................................... 83

8.1.6. KDDI .................................................................................................................... 85

8.1.7. NTT ..................................................................................................................... 86

8.1.8. Telefónica ............................................................................................................ 88

8.1.9. Verizon Communications ..................................................................................... 90

8.1.10. Vodafone ............................................................................................................. 92



Tables

Table 1: ROCE trends .................................................................................................................. 13

Table 2: Exchange rates used ...................................................................................................... 15

Table 3: Development of global operators’ workforce in their domestic market* (2006-2011) ...... 28

Table 4: Selection of mobile network sharing agreements ........................................................... 36

Table 5: Types of network outsourcing contract ........................................................................... 39

Table 6: Major mobile network outsourcing agreements .............................................................. 40

Table 7: Telecom CDN initiatives .................................................................................................. 43

Table 8: Recent increases in mobile data tariffs in the United States ........................................... 56

Table 9: The position of some large telecom operators in the audiovisual value chain ................ 57

Table 10: Virgin Media’s ARPU, churn and EBITDA data ............................................................... 68

Table 11: Examples of SFR’s multiple line discounts ..................................................................... 68

Table 12: Growth in number of Virgin Media cable subscribers ...................................................... 70

***

List of illustrations

Figure 1: Operators’ approaches by objective ............................................................................... 10

Figure 2: Trends in net income ...................................................................................................... 12

Figure 3: Trends in EBITDA margins ............................................................................................. 12

Figure 4: Simplified diagram of the problems encountered by operators ....................................... 13

Figure 5: Simplified diagram of the events of spring 2011 ............................................................. 16

Figure 6: Vertical separation: case of BT Openreach and Telecom Italia ...................................... 21

Figure 7: Summary overview of the pressures exerted on telecom operators ............................... 24

Figure 8: Presentation of the 4 pillars in France Telecom’s "Conquests 2015" programme .......... 26

Figure 9: "Challenger strategy" for T-Mobile USA .......................................................................... 26

Figure 10: Presentation of France Telecom’s Chrysalid programme (2012) .................................... 28

Figure 11: Presentation of France Telecom’s asset disposals in 2011-2012 ................................... 32

Figure 12: Purchasing procedure of Deutsche Telekom/France Telecom ....................................... 34

Figure 13: Presentation of the objectives of Buyin, the joint venture of France Telecom and Deutsche Telekom .......................................................................................................... 34

Figure 14: Presentation of KPN’s All-IP project................................................................................ 38

Figure 15: Network layers can be outsourced .................................................................................. 39

Figure 16: Potential initiatives for operators to increase their customer bases ................................ 45

Figure 17: Bouygues Telecom’s 3 typical family package deals ...................................................... 46

Figure 18: Breakdown of subscriber acquisition costs (SAC) .......................................................... 47

Figure 19: Vodafone’s instant messaging project ............................................................................ 51

Figure 20: SFR’s quadruple play offer, called Multi-Packs, with an adjustable mobile offer ............ 54

Figure 21: AT&T’s quadruple play packages ................................................................................... 54

Figure 22: New price lists (2010) ..................................................................................................... 55

Figure 23: Impact of measures taken by operators .......................................................................... 62

Figure 24: Presentation of the results of France Telecom’s Chrysalid programme in 2011 ............. 63

Figure 25: Presentation of BT’s 21CN network ................................................................................ 64

Figure 26: Virgin Media’s churn rate ................................................................................................ 67

Figure 27: The mobile, a cross-sell opportunity for Virgin Media ..................................................... 67

Figure 28: Trend in AT&T’s churn rates (March 2009-December. 2011) ......................................... 69

Figure 29: Net neutrality regulation in The Netherlands ................................................................... 74



Figure 30: Virgin Media’s dedicated bandwidth offer ....................................................................... 75

Figure 31: Free Pass guaranteeing priority access .......................................................................... 75

Figure 32: Main financial data from América Móvil’s profit and loss account ................................... 77

Figure 33: Main financial data from América Móvil’s balance sheet and cash flow statement ......... 77

Figure 34: Main financial data from AT&T’s profit and loss account ................................................ 78

Figure 35: Main financial data from AT&T’s balance sheet and cash flow statement ...................... 79

Figure 36: Main financial data from China Mobile’s profit and loss account ..................................... 80

Figure 37: Main financial data from China Mobile’s balance sheet and cash flow statement ........... 80

Figure 38: Main financial data from Deutsche Telekom’s profit and loss account ............................ 82

Figure 39: Main financial data from Deutsche Telekom’s balance sheet and cash flow statement .. 82

Figure 40: Main financial data from France Telecom’s profit and loss account ................................ 84

Figure 41: Main financial data from France Telecom’s balance sheet and cash flow statement ...... 84

Figure 42: Main financial data from KDDI’s profit and loss account ................................................. 85

Figure 43: Main financial data from KDDI’s balance sheet and cash flow statement ....................... 86

Figure 44: Main financial data from NTT’s profit and loss account................................................... 87

Figure 45: Main financial data from NTT’s balance sheet and cash flow statement......................... 88

Figure 46: Main data from Telefónica’s profit and loss account ....................................................... 89

Figure 47: Main data from Telefónica’s balance sheet and cash flow statement ............................. 90

Figure 48: Main financial data from Verizon Communications’ profit and loss account.................... 91

Figure 49: Main financial data from Verizon Communications’ balance sheet and cash flow statement ........................................................................................................................ 91

Figure 50: Main financial data from Vodafone’s profit and loss account .......................................... 92

Figure 51: Main financial data from Vodafone’s balance sheet and cash flow statement ................ 93

World Internet Markets

Search ● Social Networking ● Video ● Mobile LBS E-commerce ● Mobile Apps ● Online advertising Fixed & Mobile Internet

Soichi NAKAJIMA Senior Consultant Tel: +33 (0)467 144 458 E-mail: [email protected]

M12101 – December 2012

Market & Data

This study includes: - A slideshow - An Excel database

Copyright © IDATE 2012

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Copyright IDATE 2012, BP 4167, 34092 Montpellier Cedex 5, France

2

Soichi joined IDATE as a senior consultant in January 2009. His main area of endeavour is the mobile Internet market, applications, contents and services, the analysis of strategies employed by the various players, scenario building and forecasts. He covers a wide range of topics on the Internet, from APIs to social networks to name but two. Before coming to IDATE, Soichi worked for NTT DoCoMo, Japan’s largest mobile network operator by subscriber numbers, where he played a leading role in the strategic planning of the roll-out of Japan’s first 3G M2M data-only tariffs. Soichi holds a Bachelor’s degree in mathematics, from the University of Nottingham in the UK.

˃ Soichi NAKAJIMA, Senior Consultant

Contributor


3

1. Key findings: the Internet economy 2. Worldwide Internet usage 2.1 Internet user growth expected to continue apace, especially on mobile 2.2. Evolution of popular applications 3. Key Internet players 4. Online search 4.1. Online search: usage 4.2. Online search: revenue 5. E-Commerce 5.1. Usage and revenue 5.2. Revenue per online shopper and m-commerce 6. Social Networks 6.1. Social networks: usage 6.2. Social networks: revenue 7. Online Video 7.1. Fixed OTT video: usage 7.2. Fixed OTT video: Revenue 8. Mobile apps and LBS 8.1. Mobile apps and LBS: usage 8.2. Mobile apps and LBS: revenue 9. Online advertising 9.1. Online advertising 9.2. Mobile advertising

This report provides data and forecasts on the Internet services Markets - uses and revenue, by country and region. What is the balance between the growth of

Internet usage and revenue generation? Is the imbalance widening or narrowing?

Which regions and countries dominate the Internet market today? Will Asia show the highest growth and eventually dominate the market?

Who benefits from the current growth? Are we moving towards an oligopoly?

How will the key uses of the Internet evolve? How is the mobile Internet market evolving?

What are the trends amongst the leading Internet markets: search engines, advertising, e-commerce, video, social networks and mobile applications and LBS?

How are the two main revenue generators for the Internet – advertising and direct paid revenue – shaping the market and how will they evolve?

Re Ke y issues port content

Table of contents


Methodology

4

5

List of indicators by region and by country

The "World Internet Markets" report consists of this PDF report and a detailed dataset containing the following indicators


6

Sources

Historical data are established based on the following information sources: - primary data obtained from one-on-one interviews with the sector’s decision-makers - secondary data which are established by cross-referencing public sources and external databases These various sources have been compared and completed whenever necessary by estimates from our experts. Figures from previous editions of this report have also been revised thanks to newly available information, corrections and adjusted national data.

Our forecasts are based on hypotheses of the expected growth of penetration rates for the different distribution networks (% of the population) in the different markets, and of how ARPU will evolve. The hypotheses depend on several factors: - current level of market development - market potential gauged by the current state of development in the economy as a whole - state of the national industry – e.g. upcoming launch of new products/services - changes in consumer behaviour.

Regarding currency and GDP data:

- National market data are presented in the national currency and converted to euros. The conversion rate used (IMF average for 2011) can be found at the top of each tab.

- Background data and forecasts for national and regional GDP (based on IMF data from 2012) are converted into EUR.


Apps and the Mobile InternetThe battle of the platforms: both nativeand Web apps4th Edition Ref: M11117- Janvuary 2012

Mobile Internet is here and geared for growth, despite

the global recession.

For 2016 the worldwide penetration rate of Mobile Internet will reach 34.7%

- or 2.89 billion users -generating service revenues

(apps and advertising) of43.3 billion EUR.

This report provides detailed information about market's structure, data & forecasts

2008-2016, player profiles and strategies. It also spotlights

the current and upcoming trends and the different kinds

of mobile Internet usages.

• What are the key figures in the main European, American and Asian markets for mobile Internet?

• Which of the device or content will be more important for platformplayers?

• Who will control the user data? What conflicts betweeninteroperating platforms can be observed?

• What role for HTML5? Can it be an attractive alternative to thenative apps and are there already hybrid solutions?

• Which will be the main revenue source for mobile Internet?

• What are the key drivers for this market?

>This report ships with a database• Market data & Forecasts 2008-2016 by zone & by country• Market volume & market value

Market & Data

Contents (Report-PDF)


2. Methodology

3. Market structure & key factors3.1. Market overview3.1.1. Market segmentation 3.1.2. Product/service trends3.2. Current market estimates 3.2.1. Shipments & subscription numbers

of smartphones 3.2.2.Shipments and subscriber numbers

of tablets3.2.3. Mobile Internet penetration3.2.4. Mobile Internet advertising revenues3.2.5. Mobile app revenues3.3. Key drivers

4. Market structure and playerstrategies

4.1. Industry structure and value chain4.2. Competition structure/landscape/

environment 4.2.1. The mobile devices market4.2.2. The tablet market4.2.3. Mobile OS and ecosystems4.2.4. Mobile app storefront strategies4.3. The developer perspective4.3.1. Origins of developers4.3.2. Developers must get their

satisfaction4.3.3. Future direction for developers4.4. Business models4.4.1. Mobile advertising4.4.2. Revenues from app sales4.4.3. M-commerce4.5. Company profiles4.5.1. Device vendors4.5.2. Internet giants4.5.3. Mobile network operators

4.6.Strategic analysis4.6.1. The dust settles on the mobile

OS battlefield4.6.2. The reality of app stores and the

developer perspective4.6.3. The way forward for mobile

operators4.6.4. Native apps, Web apps and

hybrids will and already co-exist4.6.5. Platforms to fight for data

control over mobile Internet

5. Markets and forecasts5.1. Market development factors5.1.1. Mobile assets5.1.2. Analysis of growth drivers5.1.3. Forecast hypotheses5.2. Market forecasts5.2.1. Smartphone shipments and

subscribers5.2.2. Shipments and sub numbers

for tablets5.2.3. Mobile Internet penetration5.2.4. Mobile Internet advertising

revenues5.2.5. Mobile apps

Database (Excel)• Markets 2008-2011

Forecasts 2012-2016• Market value and volume .• Worldwide coverage

See next page for details

Slideshow (PDF)Synthesis of the report’s key issues(Powerpoint format)

Deliverables:• Report (pdf)• Database(Excel)• Slideshow (pdf)

Publication date:January 2012

1-5 users licence:EUR 3 500

Sales contact:Isabel [email protected]. : +33 (0)467 144 404

Project Manager

Soichi NAKAJIMA

[email protected]

Tel: +33 (0)467 144 458

Other available reports:• Worl d Internet Usages

& Markets• Mobile VoIP• Mobile Video• Online Video• eBooks

Upcoming reports:• Mobile devices• Cloud-Focus datacenter• LBS• NFC Mobile payments• Offloading mobile

networks – Femtocells

Annual service:• LTE Watch Service

- Half-yearly updateddatabase

- Monthly Insights- Analyst access

More information atwww.idate.org

IDATE - BP 4167 – 34092 Montpellier Cedex 5Tel : +33 (0) 467 144 444 – Fax : +33 (0) 467 144 400 - [email protected] – www.idate.org

IDATE - BP 4167 – 34092 Montpellier Cedex 5Tel : +33 (0) 467 144 444 – Fax : +33 (0) 467 144 400 - [email protected] – www.idate.org

• Number of subscribers of smartphones

• Share of smartphones in shipments

• Shipment of tablets• Number of subscribers of tablets

• Number of mobile Internet users

• Mobile Internet penetration

• Number of mobile subscriptions

• Number of 3G subscriptions

• Share of 3G subscriptions• Shipment of mobile phones• Number of subscribers of mobile phones

• Shipments of smartphones

Market Value• Mobile Internet service revenues• Mobile Internet advertising revenues• Mobile apps revenues• Total mobile Internet service revenue

Zones• Asia Pacific• Europe-27• Europe-5• World

Database – Markets 2008-2011 & Forecasts 2012-2016 (Excel)

Market Volume

Source: IDATE

Countries- China- South Korea- France- Germany - Italy- Japan- Spain- The UK- The United States

Mobile app revenues by country (abstracts)

Apps and the Mobile Internet The battle of the platforms: both native and Web apps

Internet Services

Market & Data

Report

M11117 – January 2012

Contr ibutors

► Soichi NAKAJIMA, Head of Project, Senior Consultant

Soichi joined IDATE as a senior consultant in January 2009.

His main area of endeavour is the mobile communications market, such as the mobile Internet, applications, contents and services, the analysis of strategies employed by the various players, scenario building and forecasts. He also works on other business potentials for the mobile Internet, such as smart grids and VoIP.

Before coming to IDATE, Soichi worked for NTT DoCoMo, Japan’s largest mobile network operator by subscriber numbers, where he played a leading role in the strategic planning of the roll-out of Japan’s first 3G M2M data-only tariffs.

Soichi holds a Bachelors degree in mathematics, from the University of Nottingham in the UK.

[email protected]

Copyright IDATE 2012, BP 4167, 34092 Montpellier Cedex 5, France

Tous droits réservés – Toute reproduction, stockage ou diffusion, même partiel et par tous moyens, y compris électroniques, ne peut être effectué sans accord écrit préalable de l'IDATE.

All rights reserved. None of the contents of this publication may be reproduced, stored in a retrieval system or transmitted in any form, including electronically, without the prior written permission of IDATE.

ISBN 978-2-84822-281-3 ISSN 2109-6783

Apps and the Mobile Internet

www.idate-research.com © IDATE 2012 3

Content

This report is part of a study also including an Excel database and a PowerPoint presentation.

1 Executive Summary .......................................................................................................... 8

2 Methodology .................................................................................................................... 12

3 Market structure and key factors .................................................................................. 14

3.1 Market overview ........................................................................................................ 14

3.1.1 Market segmentation ................................................................................................... 14

3.1.2 Product / service trends ............................................................................................... 18

3.2 Current market estimates .......................................................................................... 21

3.2.1 Shipments and subscription numbers of smartphones ................................................ 21

3.2.2 Shipments and subscriber numbers of tablets ............................................................. 22

3.2.3 Mobile Internet penetration .......................................................................................... 24

3.2.4 Mobile Internet advertising revenues ........................................................................... 25

3.2.5 Mobile app revenues .................................................................................................... 26

3.3 Key drivers ................................................................................................................. 27

3.3.1 Network technologies ................................................................................................... 27

3.3.2 Smartphone and tablet technologies ............................................................................ 30

3.3.3 Web apps and native apps: the HTML5 debate ........................................................... 34

3.3.4 NFC, Open data, LBS and Cloud services ................................................................... 36

3.3.5 Traffic management and Net Neutrality ....................................................................... 40

3.3.6 Mobile Internet usage trends........................................................................................ 45

3.3.7 Major categories of services ........................................................................................ 49

4 Market structure and player strategies ......................................................................... 54

4.1 Industry structure and Value chain ............................................................................ 54

4.2 Competition structure / landscape / environment ...................................................... 60

4.2.1 The mobile devices market .......................................................................................... 60

4.2.2 The tablet market ......................................................................................................... 65

4.2.3 Mobile OS and ecosystems ......................................................................................... 66

4.2.4 Mobile app storefront strategies ................................................................................... 69

4.3 The developer perspective ........................................................................................ 75

4.3.1 Origins of developers ................................................................................................... 75

4.3.2 Developers must get their satisfaction ......................................................................... 76

4.3.3 Future direction for developers .................................................................................... 81

4.4 Business models ....................................................................................................... 83

4.4.1 Mobile advertising ........................................................................................................ 83

4.4.2 Revenues from app sales ............................................................................................ 91

4.4.3 M-commerce ................................................................................................................ 98



4.5 Company profiles ..................................................................................................... 104

4.5.1 Device vendors .......................................................................................................... 104

4.5.2 Internet giants ............................................................................................................ 108

4.5.3 Mobile network operators ........................................................................................... 112

4.6 Strategic analysis .................................................................................................... 115

4.6.1 The dust settles on the mobile OS battlefield ............................................................. 115

4.6.2 The reality of app stores and the developer perspective ............................................ 115

4.6.3 The way forward for mobile operators ........................................................................ 116

4.6.4 Native apps, Web apps and hybrids will and already co-exist ................................... 116

4.6.5 Platforms to fight for data control over mobile Internet ............................................... 118

5 Markets and forecasts .................................................................................................. 121

5.1 Market development factors .................................................................................... 121

5.1.1 Mobile assets ............................................................................................................. 121

5.1.2 Analysis of growth drivers .......................................................................................... 121

5.1.3 Forecast hypotheses .................................................................................................. 122

5.2 Market forecasts ...................................................................................................... 123

5.2.1 Smartphone shipments and subscribers, in numbers ................................................ 123

5.2.2 Shipments and sub numbers for tablets ..................................................................... 125

5.2.3 Mobile Internet penetration ........................................................................................ 126

5.2.4 Mobile Internet advertising revenues ......................................................................... 127

5.2.5 Mobile apps ................................................................................................................ 128



Tables

Table 1: Trends with mobile Internet services compared to fixed services ................................... 15

Table 2: Type of services .............................................................................................................. 17

Table 3: LTE deployments worldwide ........................................................................................... 27

Table 4: LTE devices shipments forecast (thousands) ................................................................. 29

Table 5: Verizon Wireless tariffs ................................................................................................... 29

Table 6: Examples of LBS apps for mobile handsets ................................................................... 39

Table 7: Traffic management by MNOs in various countries ........................................................ 41

Table 8: Consultations and regulation status regarding traffic management ................................ 44

Table 9: Preferred device (Mobile, PC or Tablet) in terms of activities, by world areas ................ 45

Table 10: Mobile Web service usage in terms of reach in the EU5 ................................................ 48

Table 11: App storefronts segmentation ......................................................................................... 70

Table 12: Comparison of major app storefront features .................................................................. 70

Table 13: Detailed examples of mobile network operator app storefronts ...................................... 71

Table 14: Platform hardware and software fragmentation .............................................................. 78

Table 15: App storefront payment methods .................................................................................... 80

Table 16: Gross CPM rates of banners on the Orange Mobile portal ............................................. 86

Table 17: Examples of mobile apps offering location-based services............................................. 90

Table 18: Support for in-app purchase ........................................................................................... 93

Table 19: Comparison of air travel apps by Mobiata....................................................................... 97

Table 20: Commonly-used mobile payment solutions by transaction type ................................... 102

Table 21: Estimated transaction costs .......................................................................................... 103

***



Figures

Figure 1: User data and revenue flow between Apple and Le Monde............................................ 11

Figure 2: Type of services .............................................................................................................. 17

Figure 3: Cloud computing ............................................................................................................. 18

Figure 4: Share of smartphones in mobile shipments, 2009 – 2011 .............................................. 21

Figure 5: Number of subscribers of smartphones, 2009 – 2011 .................................................... 22

Figure 6: Number of tablets shipments, 2009 – 2011 .................................................................... 22

Figure 7: Number of subscribers of tablets shipments, 2009 – 2011 ............................................. 23

Figure 8: Mobile Internet penetration, 2009-2011 .......................................................................... 24

Figure 9: Mobile Internet advertising revenues for the EU5 countries, 2009-2011 ........................ 25

Figure 10: Mobile Internet advertising revenues for USA, Japan, South Korea, EU27 and China, 2009-2011 ....................................................................................................................... 25

Figure 11: Mobile app revenues for USA, Asia-Pacific and EU27, 2009-2011 ................................ 26

Figure 12: Mobile app revenues by zone, 2009-2011 ...................................................................... 26

Figure 13: The future of the mobile devices: How it will look in five years from now ........................ 30

Figure 14: Software layers in mobile phones ................................................................................... 35

Figure 15: Using a NFC phone for a mobile transaction .................................................................. 37

Figure 16: VoIP access prohibited in a Orange UK data browsing offer .......................................... 42

Figure 17: Free Skype-to-Skype calls authorised on the « 3 » UK network - advertisement ........... 42

Figure 18: Year on growth of global mobile Internet activities, 2010 vs. 2011 ................................. 46

Figure 19: Download rate of most popular apps, by category, in the USA ....................................... 47

Figure 20: Percentage of users preferring browser or app ............................................................... 47

Figure 21: Frequency of recalling seeing a Web/app Ad ................................................................. 49

Figure 22: Age of mobile owners who recall seeing a Web/app ad ................................................. 49

Figure 23: The mobile Internet value chain ...................................................................................... 57

Figure 24: Smartphone market shares ............................................................................................. 61

Figure 25: Mobile handset market shares by vendor in volume, 2007- 2011 ................................... 64

Figure 26: Worldwide tablet sales ('000) .......................................................................................... 65

Figure 27: Smartphone OS market share as of the first three quarters of 2011 ............................... 66

Figure 28: App Distribution Business Model .................................................................................... 72

Figure 29: iPhone developer's heritage, all App categories ............................................................. 75

Figure 30: The path to concentration ............................................................................................... 76

Figure 31: Comparison of number of devices installed base and number of apps available, as of end Q1 2011 .......................................................................................................... 77

Figure 32: Rate of developers planning to abandon a given platform as of June 2011.................... 78

Figure 33: Payment methods supported by app stores.................................................................... 80

Figure 34: Percentage of developers using mobile platforms .......................................................... 81

Figure 35: Cross-platform revenue comparison: iOS vs Android ..................................................... 81

Figure 36: Examples of mobile advertising ...................................................................................... 84

Figure 37: Different banner formats advertised by Orange mobile portal ......................................... 86

Figure 38: Google AdWords sponsored links ................................................................................... 87

Figure 39: Google AdWords targeting and tracking options ............................................................. 87

Figure 40: Details of Qype premium SEO ........................................................................................ 88

Figure 41: Optimisation of iPhone technical features for Nissan ad campaign ................................ 89

Figure 42: Google AdWords click-to-call function ............................................................................ 89

Figure 43: Mobile coupon combined with geolocation ..................................................................... 90

Figure 44: Guitar Hero paid app for iPhone and iPod Touch ........................................................... 92



Figure 45: The 10 most downloaded paid apps on the App Store in April 2011 (USD).................... 93

Figure 46: Free Adventure Bay app, published by Ngmoco ............................................................. 94

Figure 47: iCoyote subscription-based app ...................................................................................... 95

Figure 48 : Netflix app suggesting to the user to sign up on its Website ........................................... 95

Figure 49 : Amazon Kindle app maintaining direct access to the Kindle Store online ....................... 95

Figure 50: Free app of the Pays de Fougères tourist office ............................................................. 96

Figure 51: Free application from Société Générale.......................................................................... 97

Figure 52: Revenues of m-commerce, 2010 and 2015 .................................................................... 98

Figure 53: Share of m-commerce revenues in total online sales by country, 2010 and 2015 .......... 99

Figure 54: Example of mobile payments via NFC technology ........................................................ 100

Figure 55: Starbucks Card Mobile App .......................................................................................... 101

Figure 56: Cityzi Orange promotion ............................................................................................... 102

Figure 57: Orange multimedia ....................................................................................................... 113

Figure 58: The Financial Times Web app, encouraging users to switch from the native app ........ 119

Figure 59: Share of smartphones in mobile shipments, 2011-2016 forecast ................................. 123

Figure 60: Number of subscribers of smartphones, 2011-2016 forecast ....................................... 124

Figure 61: Number of tablets shipments, 2011-2016 forecast ....................................................... 125

Figure 62: Number of subscribers of tablets, 2011-2016 forecast.................................................. 125

Figure 63: Mobile Internet penetration, 2011-2016 forecasts ......................................................... 126

Figure 64: Mobile Internet advertising revenues for EU27, Asia-Pacific, USA, Japan and China, 2011-2016 forecasts ..................................................................................................... 127

Figure 65: Mobile Internet advertising revenues for EU5, South Korea and China, 2011-2016 forecasts ....................................................................................................................... 127

Figure 66: Mobile app revenues by zone, 2011-2016 .................................................................... 128

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3 pivotal collections for an easy navigation between the different reports and services:

IDATE presents its Market Reports Programme for 2012 which constitutes a natural extension of the work performed by our teams of analysts, as well as our ongoing investments in information and monitoring systems for player strategies and markets.

More than just a catalogue of publications, this constitutes a concrete manifestation of our drive to create a unique tool geared towards understanding and monitoring the Telecom, Internet and Media sectors.

2012 Research Catalogue

> More details online - Contents, Methodologies, Summaries on www.idate.org

Contact us: Isabel Jimenez - [email protected] - Tel: +33 467 144 404

Ref Market intelligence reports Themes Publication Deliverables Price

Media Series in Euro

Market & Data reports - full report, database & slideshowM10118 Online Video TV & Digital Content Oct. 11 3 3 500

M11216 Digital Home & Connected Devices Consumer Electronics Oct. 11 3 3 500

M11116 eBooks Digital Content Oct. 11 3 3 500

M12200 World Television Markets TV observatory Jul. 12 / Dec. 12 6 3 500

M12201 World Video Game Markets Video Game observatory Nov. 12 6 3 500

M12214 DTT: The economics of the digital terrestrial transition Netw orks May 12 3 3 500

M12212 Next Gen TV - Scenarios 2020 Prospective June 12 3 4 500

M12218 Cloud Gaming Digital Entertainment Aug. 12 3 3 500

Innovation reports - full report & slideshowM10214 TV Groups' Quadruple-Screen Strategies TV & Digital Content Nov. 10 2 3 500

M11211 Satellite TV in Europe - Will the future of satellite be guided by 3D? Netw orks April 11 2 3 500

M11215 Hybrid TV Prospects - What impact on Connected TV? Netw orks Dec. 11 2 3 500

M11214 Telcos TV Strategies - From a strategy of differentiation to one of innovation Telecom Strategies Dec. 11 2 3 500

M11213 Serious Games Digital Entertainment Dec. 11 2 3 500

M12210 Connected TV - Services & Interfaces, Strategies, Players, Forecasts TV & Digital Content March 12 2 3 500

M12215 Cable & IPTV face to cord-cutting Netw orks Nov. 12 2 3 500

Ref Market intelligence reports Themes Publication Deliverables Price

Telecom Series in Euro

Market & Data reports - full report, database & slideshowM11411 SME Equipment - B2B Survey in France: Telecom, IT, Internet Survey Aug. 11 3 8 500

M11312 Trends in Telco Capex - Down, but not out Telecom Strategies Nov. 11 3 3 500

M11316 Ultrafast-Broadband - B2C Survey in France, Japan, Sweden, UK, USA Survey Nov. 11 3 8 500

M12310 Satellite Ultra-Broadband Satellite June 11 / Oct. 12 3 3 500

M11301 World Telecom Services Markets Telecom Strategies Jan. 12 3 3 500

M12314 Radio Spectrum Mobile Oct. 12 3 3 500

M12315 Satellite M2M Satellite March 12 3 3 500

M12306 Next Gen Mobile Devices Mobile May 12 3 3 500

M12412 Smartphones in Business - B2B/B2C: Equipment & usage, including BYOD Survey July 12 3 8 500

M12311 Future Telecom - Scenarios 2020 Prospective Dec. 12 3 4 500

Innovation reports - full report & slideshowM10304 Services over FTTH/B Broadband Jan. 11 2 3 500

M10312 Satellite Markets - New Growth Engines Satellite July 11 2 3 500

M11319 Mobile Backhaul Strategies Netw orks Aug. 11 2 3 500

M11317 VDSL2 Vectoring Broadband Dec. 11 2 3 500

M11307 LTE Telcos Strategies Mobile Dec. 11 / Nov. 12 2 3 500

M12413 Smart Cities Netw orks July 12 2 3 500

M12312 Strategies of Telecom Operators - How to retain margins Telecom Strategies June 12 2 3 500

M12308 Multi play - new supply side strategies Telecom Strategies June 12 2 3 500

M12320 FTTx Services - Supply-side strategies: monetizing the networks Broadband Sept. 12 2 3 500

M12304 Next Gen Access deployment costs Netw orks Sept. 12 2 3 500

M12319 Vertical Markets Telecom Strategies Sept. 12 2 3 500

M12313 Telcos Pricing Strategies Telecom Strategies Nov. 12 2 3 500

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• IDATE Consulting, time-tested analysis and consultancy solutions: Our multi-disciplinary teams of economists and engineers established their credibility and independence through the hundreds of research and consulting assignments they perform every year on behalf of top industry players and public authorities.

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Please contact :

Isabel Jimenez [email protected] Tel: +33 467 144 404

IDATE - BP 4167 - 34092 Montpellier Cedex 5 Tel: +33(0)467 144 444 - Fax: +33(0)467 144 400 [email protected] - www.idate.org

Founded in 1977, IDATE has gained a reputation as a leader in tracking telecom, Internet and media markets, thanks to the skills of its teams of specialized analysts. Now, with the support of close to 40 member companies – which include many of the digital economy’s most influential players – the newly rebranded DigiWorld Institute has entered into a new stage of its development, structured around three main areas of activity: • IDATE Research, an independent observatory whose task is to keep a close and

continual watch on digital world industries, collect relevant data and provide benchmark analyses on market developments and innovations in the telecom, Internet and media sectors – through its comprehensive collection of market reports and market watch services.

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Future of Communication 2020 - sbdi.co.kr

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