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The 2-Sided Telecoms Market Opportunity
STL Partners, March 2008, Pages: 241
Realising Growth from the 'Platform Play' – The new $125Bn Platform Services Opportunity
The traditional business models for fixed and mobile operators are under pressure in all core products – voice, messaging, broadband access – particularly in mature markets.
A new business model is described here: one where operators make money from new types of customers rather than exclusively from end-users – and the business opportunity is potentially very large - c$125Bn.
- 241 Pages of original research & analysis
- Covers 85 Companies including Apple & Amazon
- 9 detailed Case Studies including Google & Vodafone
- 30 Technologies & Applications including BSS-OSS, IPTV, Parlay-X and VOIP
- 100+ charts, 38 tables
- Proprietary industry research
First published in March 2008. From 6 Aug 2009, new buyers will also receive an update in Q4 2009
- Market opportunity & market size.
- Reviews opportunities and details market sizing by market sectors.
- Highlights priority sectors for development and investment.
- Defines 7 key applications (Identity and Authorisation / Advertising, Marketing Services & Business Intelligence / E-commerce sales / Online Order Fulfillment / Electronic Content Fulfillment / Billing & Payments / Customer Support)
- Details the capabilities and assets required and available to Telcos.
- Describes the opportunity to develop a coherent cross-market two-sided market play.
- Fit with existing retail/wholesale market and organisation structures.
- Key principles and strategies for success in addressing this opportunity for fixed and mobile operators.
- Recommends specific short, medium and long term actions for moving forward.
Who is this report for?
The report is a must-have for strategists, marketers, technologists, and strategic business development professionals in operators and vendors who seek to position their company to take advantage of this new opportunity.
- Fixed & Mobile Broadband Operators – to set and drive strategy.
- Vendors & Business Partners – to understand customer need and develop winning customer propositions.
- Regulators and Industry Standards Bodies – to inform policy making and strategy.
Strategists and CxOs in Media, “Upstream”, and Investment Companies may also find this report useful to understand the future landscape of the Telecoms and related industries, and to help to spot likely winning and losing investment and operational strategies in the market
Background Context – The need for profitable growth
Thus far, operators have looked to replicate this business model in adjacent markets. Fixed operators have moved into mobile markets; mobile and fixed operators have sought to make money in fixed broadband. Operators are also charging users for new services, such as content delivery, with the launch of IPTV and mobile TV. The larger players in mature markets are aggressively expanding into emerging markets, such as China and India, where subscriber growth is still available.
But, as was shown in the preceding report to this on “Future Broadband Business Models”, this activity is not enough. All mature markets are becoming more competitive and emerging market growth will slow in the next few years. A new business model is required: one where operators make money from new customers rather than exclusively from end-users.
Some operators have begun to look at one 2-sided market: advertising. Many, however, have concluded that on its own it is not big enough to provide substantial revenue growth (or indeed to fill the gap left by declining subscription revenues).
This report is designed to help readers understand the nature and size of this new business model opportunity in its entirety. It looks beyond the advertising opportunity to other areas where operators could provide value and generate revenue. It lays out the key principles and strategies for success for fixed and mobile operators and recommends specific actions for moving forward.
A New Generation of Telecoms Platform Services
It is believed that the total two-sided market opportunity is of huge strategic importance for operators. Advertising is only one step for operators to add value to upstream customers (government, advertisers, merchants, application developers, content owners etc.) and end users (businesses and consumers):
1. Identity, Authentication & Security: Management of user access to products and services.
2. Advertising, Marketing Services & Business Intelligence: Provide merchants and advertisers with customer profiling information and contextual/behavioural data to enable targeted advertising. Ad-serving capabilities. Performance metrics.
3. E-Commerce Sales: Managing of sales transaction.
4. Order Fulfilment – Off-line: Processing of order and logistic/delivery support.
5. Order Fulfilment – On-line: Electronic content delivery – games, music, TV, video, etc.
6. Billing & Payments: Billing for products and services and cash collection.
7. Customer Care: Remove friction & improve customer services by enabling other services to be better integrated with communication.
The report describes the common set of underlying enablers required to enable upstream players to interact effectively with downstream end-users, and shows how operators have the necessary assets and competencies to build such a platform.
It also explores the key lessons from other successful platform players (Akamai, Google, Amazon, Ebay, Monster, iTunes, The London Stock Exchange, Betfair, Maersk) and identifies a way forward for operators.
This report uniquely answers 5 key questions:
1. How big is the two-sided business model opportunity for operators?
2. Which are the priority markets/industries where they should look to compete?
3. Is each market discrete, requiring a separate strategic approach, or is there an opportunity to develop a coherent cross-market two-sided market play?
4. How should operators go about realising the opportunity?
5. How does the two-sided model fit with existing retail/wholesale market and organisation structures?
In addition, the report seeks to help operators and vendors maximise future opportunities from operator services by answering the following questions:
- What is driving pressure on operators’ current business model?
- How quickly will this become a significant problem?
- Why are current strategies inadequate?
- How big is the future opportunity?
- How much investment should operators make in the two-sided opportunity?
- Which market should operators develop first?
- What should be the strategy for further successes?
- What assets are required for success?
- Which do operators currently possess and how should others be gained – organic development vs. acquisition vs. partnership?
- Who should operators partner with?
- What can be learned from the successes and failures of other platform players?
- What is the real threat or opportunity offered by Google and Microsoft?
- How should operators move forward?
- What role needs to be played by individual operators, partners and industry bodies?
- What are the regulatory implications and issues presented by this new strategy?
Case Studies, Companies and Services, and Technologies & Applications Covered:
Detailed Case Studies: Akamai, Amazon, AP Moller-Maersk, Betfair, Blyk, BT, Google, Monster, Vodafone.
Other Companies and Services Covered: Agriculturaljobs.net, Amazon, Amazon Kindle, Apple, Apple TV, Babelgum, Bank of America, BBC, BBC iPlayer, Bebo, Betavine, Betfair, Blyk, BT 21CN, BT Click & Buy, BT Counterpane, BT Fresca, BT Tradespace, BT Vision, Channel 4, China Mobile, Cyworld, Ebay, Equifax, Expedia, Experian, Fed Ex, Flickr, France Telecom, Genie, Google, GSMA, iTunes, ITV, Jajah, Joost, Kelkoo, Lastminute.com, London Stock Exchange, Mac OS, Maersk Logistics, Microsoft, MMA, Monster, MSN, Napster, Nextag, Nike, Nokia, O2, Opodo, Orange, Payforit, Paypal, Phorm, Pioneer Massive, Playstation, Price Runner, Prime Location, Real Networks, Rolls-Royce, Screen Tonic, Second Life, SK Telecom, Sky, Skype, Teddy Bear Search Engine, Telefonica, Tesco, The Cloud, The Ladders, Tivo, T-Mobile, Truphone, UPS, Verisign, Virgin USA, Visa, Vista, Vizzavi, Vodafone, Vodafone, Windows Software Developers Kit, Yahoo!, YouTube.
Technologies & Applications Covered: ATM, Bluetooth, BSS-OSS, Carrier Voice, DIAMETER, DRM, Enhanced Carrier Voice, IM, IPTV, Java MIDP, Linux, Mobile, Mobile Payments, NGN, Open ID, Parlay-X, PSTN, RADIUS, SIM, SIP, SMS, Softsim, SS-7, SXIP, USIM, Voice, VOIP, WAP Gateway, Windows Cardspace, XMPP.
- Fixed & Mobile Platform Services, VAS, Distribution, New TelcoWholesale – to 2017.
- 7 key capabilities by industry verticals. (1.Identity, Authentication & Security. 2. Advertising, Marketing Services & Business Intelligence. 3.E-Commerce Sales. 4. Order Fulfilment – Off-line. 5. Order Fulfilment – On-line. 6.Billing & Payments. 7. Customer Care)
- VAS Platform Europe & US: Top 10 Verticals x 7 Capabilities.
- 7 key capabilities x Industry sectors, Europe & US.
- Top 4 Industry Verticals in depth by capability.
1. Executive Summary
3. Telco Two-Sided Business Model Options – Scope to Grow & Grow
4. Sizing the Platform Opportunity – United we Stand; Divided we Fall
- Sizing the 7 Horizontal Capabilities
- Sizing the Top 4 Verticals
- Every Day Business Process Examples from Other Industries
- Sizing the Every Day Business Process Market
- Fit with Existing Telco Skills and Assets
5. Case Studies – Telecoms is lagging other Industries
6. Conclusions & Recommendations
8. Glossary & Appendix