© 2008 mBlox

Enablers: Telcos as a platform A two sided model?

Stephen Wood – Global Product DirectorStephen Wood – Global Product Director

mBlox LtdmBlox Ltd

stephen.wood@mblox.comstephen.wood@mblox.com

May 25, 2011May 25, 2011

© 2008 mBlox 2

mBlox – the world’s largest Mobile Transaction Network

A network connecting many Content/Service Providers to many Operators

The network for Enabling Services transactions worldwide

4 billion transactions worth $500m in 2010

We sell SMS and Premium SMS services. Delivery and ‘on carrier billing’.

© 2008 mBlox 3

Enablers, telcos and content providers- A possible future landscape discussion

Telcos have assets of great value to content providers

… we know content providers will pay for them, if truly valuable

… we know they could provide revenue for operators

… in a two sided model of retail and ‘wholesale’

BUT.. handset/OS providers may diminish the value of these assets

… by disintermediation of carriers; providing enablers directly

… however, can this be provided effectively to content providers?

… and does this model provide the ‘best hope’ for sustainable data revenue?

© 2008 mBlox 4

Separation of access and service- A trend accelerated by IP services

Customers want to buy service, not access. Visible in Mobile Content industry

When services were delivered inside the access network, the problem did not arise

Deregulation of voice services did not materially change this model

IP networks fully separate service and access - a new commercial challenge

‘Wholesale’ versus retail?

Access

Access

Terminal

Service

Terminal Service

Service Terminal

Terminal

© 2008 mBlox 5

What new business models will prevail?

Competing for the consumer, trading together

Will the mobile business model converge on the internet, or vice versa?

What are the other sources of revenue?

Content & service

Access

Consumerhardware

© 2008 mBlox 6

ContentOSS

BSS

ContentService

Marketing

Content services

KeyEnabler

Services ($€£) Network

OSS

BSS

CommsService

MarketingCore comms services($€£)

Enabler Services in Mobile ContentThe mobile operator as a 2-sided platform

Consumer relationships based on core, vertically integrated services…

…create valuable enabler services to third parties

© 2008 mBlox 7

Key enabler categoriesDelivery enablers

• Text messaging is established and mature• Sender-pays data is key• Quality of service will be vital

Billing enablers• Premium and WAP billing are established and mature• Refunds and credits need to come faster• More advanced ‘on carrier’ billing • Credit and debit card payments….?

Handset Context – the next frontier• Location lookup? • Roaming detection• Radio link quality lookup• Terminal capabilities and status lookup

Subscriber Insight – eventually?

Identity management• MSISDN or alias links device to person: identification and addressing

Handset enablers (possibly via the mobile cloud?)• Some complement: accelerometer• Some displace: GPS

© 2008 mBlox 8

How Mobile Has Worked pre App Store

Phone service relationship gives mobile operators control also over access

Mobile operators sell enabling services to content providers

Mobile operators provide payment means for service providers and so…

…Customers pay for content

Disrupted by App Stores -> Handset and OS providers build direct consumer charging relationships

Content & service

Access & Phone Service

Consumerhardware

Comms

Content services

Enabling services(billing, SMS,...)

© 2008 mBlox 9

Enabler Services in the Value Model

Tax

Carrier Payment Enabler Services

Other Net to CP

Carrier Delivery Enabler Services

Service Marketing

Content RightsCP Net Income

Enabler services earn carriers ~25% of gross customer spend

Scaleable, high margin revenue source, driven by numerous CPs and services

Standardized enabler services scale with the growth of content services

eg

© 2008 mBlox 10

The Coming Fight Over Enablers

Enabling services will be important to erect barriers to customer churn….

…and also important sources of revenue

Competition for control over consumer buying decision

Different attitude of players: e.g. Apple v. Google

Content & service

Access & Phone Service

Consumerhardware

Brand & Application Stores

Billing Transmission Network data Subscriber insight

Billing Handset control Network

visibility Screen layout Store placement

© 2008 mBlox 11

Service providers require a mixture of enablers

Network Enablers

Payment Enablers Handset Enablers

How will these get provided? Telcos, app stores, credit card services…?

Has much already been given away? Handset capability..?

How are they presented? Divergence a huge issue for content providers. An ecosystem exists…

Data, ‘Charge-to-bill’, IdentityData, ‘Charge-to-bill’, Identity

Location, Security, GUILocation, Security, GUI

Debit/Credit Card, Debit/Credit Card,

Paypal, App StorePaypal, App Store

© 2008 mBlox 12

Mobile Transaction Network – well placed to intermediate

Provide a sales and distribution channel to content providers

Provide focused service and support wrapper

Simplify for content providers (and Telcos)

Police and protect

Competition; better for all

© 2008 mBlox 13

The Next Challenge for Mobile

Mobile broadband is the most significant revenue driver for operators

Significant ARPU and low cost (no interconnection)

Increasing traffic will cause congestion, voice churn and heavy capex

How can operators tame this?

Incrementalcost

per GB traffic£3 - £100

© 2008 mBlox 14

The Impact of Video

TV and HD-quality Video-on-Demand is coming

Extra revenue/audience for owners of premium content libraries

A new broadcasting medium – but who pays?

Not just from

© 2008 mBlox 15

The Internet Faustian Pact

Consumers’ favourite services - email, information, shopping - are provided free

Access providers are able to extract consumer value from these services, effectively selling an infinite bundle of services

No commercial relationship need exist between service and access…

…as long as neither side breaks the unspoken deal

Content & service

Access & Phone Service

Free!

££

Consumerhardware

© 2008 mBlox 16

Solving the Data Issue in Mobile

Data-rich services presented a huge problem of cost and pricing transparency

Flat-rate data packages reach only a minority segment of the market

Solution is “Sender-Pays Data”, world-first innovation launched February 2009 in UK

Good approach for all– Consumer wins - from total pricing transparency

– Content provider wins - from totally transparent pricing model with 100% market reach

– Operators win - from more content revenue and scaleable, value-priced revenue model for data

Content & service

Access & Phone Service

Consumerhardware

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© 2008 mBlox 17

Enablers, telcos and content providers- What happens next?

Telcos have assets of great value to content providers

… will they provide them?

… will they be useful and can they be monetized?

… can the ecosystem make this consumable for content providers?

And/or

… will handset/OS providers diminish the value of telcos assets?

… by disintermediation of carriers; providing enablers directly?

And/or

… will Telcos embrace this model to aid the broadband business model…?