Mavam Brasil inglés

MAVAMAcision Monitor for Mobile VAS

11TH EDITION

© Copyright Acision August 2013

Prepared by

BRASIL

MAVAM | Acision Monitor for Mobile VAS

The eleventh edition of MAVAM (Mobile Value Added Service Monitor) Brazil,launched by Acision, is specifically focused on Mobile Messaging and Value AddMobile Services, and strengthens its commitment to provide the industry and operatorswith the intelligence to understand market dynamics and launch/tailor mobile ValueAdded Services (VAS) for increased consumer uptake.

The rise in popularity of Smartphones is bringing the internet to more and more intousers' hands. With this, new ways for end user interaction and connectivity are beinglaunched over networks all the time, and today, SMS and chat-based over-the-top(OTT) and instant messaging services coexist with traditional voice services. Thisprovides consumers with a variety of new ways to communicate dependent on therecipient and user usage trends.

The report highlights that the number of mobile subscribers in Latin America continuesto grow, resulting in an increasing use of value-added services and total revenues. In Brazil, (VAS) accounted for 25% of operator’s sales, equivalent to R$ 3.57 billion(USD 1.72 billion) in the second quarter of 2013. This represented a 25.51% growthcompared to the same period in 2012.

Mobile Internet services generated $R 2.06 billion in the quarter, representing 58% oftotal VAS revenue in Brazil and a 35% increase when compared with the sameperiod 2012.

SMS keeps growing within the Brazilian market and operators agree that SMS is stillvery important, especially as SMS revenues reached $R 1.18 billion in sales in secondquarter, a 11% increase compared to the same period in 2012. This growth in Brazilis partly due to the operators introducing packaged pricing plans to include SMS andmobile data, with plans incorporating a large number of SMS to accommodate usage.

In addition, we are seeing a trend where today’s consumers are messaging more over anumber of different platforms and via multiple devices - a global phenomenon, whichwe have seen not only in our research but across other analyst and industry data points.Today, tech-savvy consumers want something ‘extra’ – a combination of universalreach, uncompromised reliability and enriched features – which can only be fulfilled byusing multiple services concurrently. Today there is no single application, that meets allconsumers messaging requirements which works across any platform, any device at anytime. But can operators fulfil a role by providing one single chat/messaging service inthe future?

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Editorial

Fatima Raimondi

Acision

President Latin America

MAVAM | 1. Acision Monitor for Mobile VAS

With chat OTT services now being incorporated into different platforms, such as socialnetworks, there are some moves towards consolidating platforms. However, mobileoperators globally are taking a number of approaches to address this trend, by eitherpartnering with OTT partners or launching their own Rich Messaging and RCS typeservices, which may one day provide one access point for all messaging. Whenquestioned about such as service in Brazil, referring to the GSMA’s RCS initiative, joyn,respondents showed a hypothetical acceptance with 27% of those questioned stating theywould surely use it.

In addition, operators are looking at ways to enrich messaging services, such asenhancing the traditional SMS experience. In this report we highlight some of theservices which operators can activate across their network and their appeal to consumers.When questioned about a range of services, these triggered some high interest, showingthat if operators were to launch some of this functionality it would fit with consumerexpectations, and enable new routes for service monetisation and incremental revenue.

We hope you find the report interesting reading, providing analyses on user preferencesin chat services; instant messaging, SMS and MMS, as well as the possibilities ofgenerating other revenues based services over SMS that empower the value addedbusiness and user engagement in Brazil.

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MAVAM | Acision Monitor for Mobile VAS

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Index

3 Editorial

6 1. Introduction 7 1.1. Value-Added Services in the World11 1.2. Value Added Services in Latin America14 1.3. Value Added Services in Brazil

17 2. MAVAM (Acision Monitor for Mobile VAS)

18 3. Messaging services (Special topic)20 3.1. SMS28 3.2. MMS30 3.3. Instant Messaging (IM)35 3.4. SMS vs IM39 3.5. Joyn

40 4. Mobile Internet40 4.1. Use of the Internet through Smartphones41 4.2. Plan Type41 4.3. Internet uses on the Smartphone42 4.4. Social Networks44 4.5. Mobile Banking44 4.6. Mobile Commerce45 4.7. Maps and location45 4.8. Marketing and Mobile Advertising

47 5. Conclutions

49 6. Glossary

52 7. Technical File

53 8. Team

The year 2013 has been focused on operators launching high speed, fixed (Fiber), as wellas mobile (LTE/4G) networks. In the United States, LTE launches are contributing tomarket growth, while Europe is a region still dominated by 3G. In Latin America, tworaces are taking place: one for 3G universalization, together with a decrease inSmartphone prices with Firefox supported web phone expectations, and the other, forLTE networks to launch which, as of the closure of this report, stood at 21.

In developed countries, handset-grant elimination models, device-to-device shared dataplans and operators' information systems redefinition are being tested, so as to offerintegrated services and customized options that will allow fostering consumption andincreasing the ARPU.

This global crisis and the market dynamics are generating a new merge and acquisitionprocess among operators as well as through the purchase of, or interest in, application

and content companies.

MAVAM | 1. Introduction

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Introduction1

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Graph 1.1

Analyzed Operators


1.1. Value-Added Services in the World

To understand the value added services (VAS) business worldwide, we analyzed VASevolution across the biggest mobile operators in various regions around the world. Wecompared the Q1 values for 2013 and the same period in 2012, except for China Mobile,which publishes annual data as of the closure of 2012 and is compared to 2011.

The companies evaluated are:

• América Móvil – Latin America• AT&T - United States• China Mobile• Orange (France Telecom) - France• NTT Docomo - Japan• Telecom Italy• Telefónica• Telefónica Spain• Telefónica O2 United Kingdom

• Telefónica O2 Germany• Telefónica O2 Ireland2

• Telefónica O2 Czech Republic• Telefónica Latin America

• Vodafone• Vodafone United Kingdom• Vodafone Germany• Vodafone India

1 As of the closure of this study, Telefónica

was in the process of selling this operation.2 In the sale process as of the closure of

this edition.

In most cases, these operators suffered decreases in their total ARPUs (Voice+VAS) indollars, some of which is due to the change in exchange rates.

Among the companies studied, ATT kept its ARPU stable and Vodafone Germanyincremented it. European suppliers register ARPU’s sharpest drops for different reasons;firstly, they cite that the economic crisis has been preventing greater consumption. Onthe other hand, some companies mention in their financial statements, that it ispredominantly due to the negative impact of EU Regulation 531, which by mid-2012,imposed control over retail prices of roaming services and a reduction in mobiletermination rates, among other regulating measures. And lastly, increased competition has pushed service prices downwards even more as operators fight to retain their customers.

In the case of Vodafone Germany, the drop in voice ARPU is compensated by VAS as aresult of the increase in Smartphone adoption and SMS, voice and data packages. As a

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Graph 1.2

Total ARPU Variation - Selected OperatorsIn USD - Q1 2012-2013

Source: Convergencia Research based onoperators' financial statements

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result, Vodafone‘s network plans are tailored to reflect this, which include SMS,unlimited calls, and a large capacity for data services for any Smartphone model, whichmay also be combined with fixed services, such as ADSL.

ATT maintained its ARPU as the drop in voice usage is compensated with VASgenerated by Smartphones as well as by the new users who choose a more economicaldata plan line.

NTT Docomo drops are partly explained by the yen devaluation compared to the dollar,which accumulated 12.8% in the last year.

In the case of Telefónica Latin America and América Móvil, the ARPU fall is mainlyexplained by the local currencies devaluation compared to the dollar (Brazil, Argentina,Venezuela, among others), which is not compensated by the appreciation of othercountries' currencies (Mexico, Colombia, Peru).

Graph 1.3

VAS Share / ARPU ServicesIn USD – Q1 2013

3 In the sale process as of the closure

of this edition

VAS ARPU continues increasing its share over the total revenue. NTT Docomo,Telefónica O2 United Kingdom, Telefónica O2 Ireland3, Orange (France Telecom), andVodafone United Kingdom, already obtain 50% or more of their value-added revenues.

Source: Convergencia Research based onoperators' financial statements


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Graph 1.4

Variation in revenue contribution for Voice services vs. total ARPU VASBetween Q1 2013 and same period in 2012

AT&T reports on SMS combined with voice rather than separately, so their VAS cannotbe compared exactly to the rest of the operators.

Although, VAS relevance grows, in absolute terms, some operators also suffered drops inVAS as well as Voice ARPU. Generally, they are European operators and this isexplained by the crisis and competition.

Source: Convergencia Research based on operators' financial statements


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1.2. Value Added Services in Latin America

In the second quarter of 2013, Latin America registered 687.354 million mobilesubscribers and 116% penetration. This year’s growth in the sector will be guided by a)increased Smartphone adoption and the potential positive effect of Webphones with aFirefox operating system that were launched in late June 2013, and to a lesser extent,tablets; b) LTE service evolution in Mexico, Colombia and Paraguay and LTE launchesin Brazil, Chile and other countries to follow later this year and c) development ofother value added services, such as mobile payments, content, operator OTT servicesand M2M.

Spectrum bids expected in different countries for the next year could bring incorporationof new players. As of the close of this report (June 2013) for instance, DirecTV hadobtained spectrum in Colombia. It is also possible that, as from this year, some mergersand acquisitions may take place.

Lines and revenue growth rates in Latin America, which are higher than those ofdeveloped markets, are strategic for operators groups. For example, in the case ofTelefónica, revenues generated in Latin America are already equivalent to 51% of thegroup's revenues, and in the case of América Móvil, Latin America's strength allowed it tostart, its expansion towards the European continent, between 2011 and 2012, with theacquisition of interests Dutch operator KPN, among other acquisitions.

Operators believe increasing the postpaid database due to the rise of Smartphones and, atthe same time, they restrict the accounting criteria of prepaid lines, so in some casesdecreases are observed in the number of lines.

Graph 1.5

Smartphones and mobilebroadband lines share

over the total linesQ2 2013

4 Excluding Nextel

Source: Convergencia Research


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In several countries, the ARPU is adversely impacted by a reduction in interconnectionrates. Voice traffic appears to grow although prices are reduced by the packetizing effect.

SMS and MMS service usage continues to grow but at lower rates than previous years.Latin America still isn’t showing a cannibalization effect from instant messaging (IM)and OTT platforms, such as in Europe. Meanwhile, SMS prices also suffer reductionsdue to packetizing.

Graph 1.6

Mobile telephony growth bytype of revenue

Q2 2013 variation vs.Q2 2012

variation in USD billions

Source: Convergencia Research

Graph 1.7

Mobile telephony sales bytype of revenue

Q2 2013 vs. Q2 2012 in USD billions


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During the first semester, some devaluations (Argentina, Venezuela and Brazil, amongothers) and local currencies appreciations occurred, and as a result, total revenuesmeasured in dollars were affected. Meanwhile, in the local currency, most countries sawan increase in their total sales.

Mobile broadband connections represent 20% of the lines, and Smartphones 18%, andboth of which push VAS share in total revenues.

Total revenues in the second quarter represented 25.29 billion dollars, growing 12%compared to the same period in 2012. Voice generated USD 13.96 billion and had a 1%drop in dollars. VAS increased 24% and generated USD 7.67 billion during the quarterand, as a logical consequence of the rise in Smartphones adoption, handset sales grew by61% compared to 2012 and added up to USD 3.64 billion during the quarter. Revenuegrowth is therefore driven primarily as a result of VAS and devices sales.

VAS represents 35% of Latin America operators' revenues. Mobile internet was the greatestrising VAS service(33%) and represents 50% of the total VAS market. SMS represents 41%of VAS and grew 17% in the second quarter 2013 compared to the same period of 2012.

Graph 1.8VAS sales shareQ2 2013 in USD billions

Graph 1.9 VAS ARPU share / ARPU ServicesQ2 2013 in USD


1.3. Value Added Services in BrazilThis MAVAM edition analyzes the operators' results in the second quarter of 2013although it is important to mention that as from late April this year, LTE services werefirst commercially launched in Brazil with high expectations regarding the impact thatthese networks would have on the use of mobile broadband and data devices. At the endof this study in July 2013, there were 257 thousand LTE connections.

The Brazilian market has been very dynamic with respect to the growth of 3G networkcoverage, overall infrastructure and service quality improvement There has been increasedcompetition with mobile packages and pricing plans including voice, data and SMS servicesfor prepaid and postpaid users, and new value-added services such as mobile paymentoptions (USSDD and NFC) have been pioneered among other applications and content.

As of the end of the second quarter of 2013, Brazil had 265.7 million5 mobile lines(excluding Nextel), equivalent to 134.4% penetration of the population. Growth for thesecond quarter of 2013 was 3.8%, compared with the same quarter of 2012.

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Graph 1.11 Market share by operatorIn thousands of lines for Q2 2013

Graph1.10 Mobile linesby operator2Q 2013 variation vs. 2Q 2012

Source: Operators' Balance sheets. Excluding Nextel.

Source: América Móvil and Telefónica balance sheets. Iusacell estimated. Excluding Nextel.

5 Calculation based on the Operators' balance

sheets; Oi data differs in 4 million subscribers

compared to the one registered by Tele Brazil

with 264 million total lines for Brazil's total as

of the closure of the first quarter. As of May

30, 2013, 265.52 million lines according to

Telecos' data. Operators' results had not been

published as of the closure of this study (first

week of July, 2013).

in t

hous

and

s


Operator financial statements show that their postpaid customer base increased (+16%year-on-year) as a result of a rapid Smartphones adoption and increases in this user basewith more mobile broadband plans sold. Additionally, the prepaid base (+0.9% year-on-year) has shown slower growth partly due to more restrictive criteria by operators whencounting active users. As a consequence, customer distribution in Brazil to June 30, 2013was 79.4% prepaid and 20.6% postpaid.

Except for Vivo, this increased its ARPU by 4.1% in Reales, all the operators wentthrough decreases in their total local currency ARPU. Variations are incrementedmeasured in dollars due to the devaluation of the Real.

The mobile business net sales, including handsets in the second quarter of 2013, wereR$ 15.78 billion (USD 7.67 billion) and increased by 7.9% year-on-year in the localcurrency (5.81% in dollars due to the currency devaluation).

In the case of services6 the year-on-year variation was -0.77% (-2.69% in dollars)equivalent to R$ 14.17 billion (USD 6.84 billion) of liquid invoicing in the first threemonths of the year, while handsets sales added up to R$ 1.64 billion (USD 0.78 billion)and grew 46.3% in the local currency (43.52% in dollars).

Between April and June 2013, value-added services net sales reached R$ 3.57 billion, a25.51% increase compared to the same period in 2012. Value-added services are equivalentto 25% of the sales of mobile operators' services in Brazil.

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Graph1.12 Total ARPUmain operatorsIn R$ and in USD Q2 2013 vs. Q2 2012

In USD 2Q 2013 vs. Q2 2012

6 Services Revenue includes Voice and VAS

Graph 1.13 Mobile telephony business net sales In R$ and in USD billions Q2 2013 vs. Q2 2012

Source: Convergencia Research calculations based on operators' balance sheets. Excluding Nextel

Source: América Móvil and Telefónica balancesheets. Iusacell estimated. Excluding Nextel.

13,5 14

,2

10,7

10,6

2,9 3,6

1,1 1,6


Mobile internet is 58% of VAS, and in the second quarter it reached R$ 2.08 billion in netsales, an increase of 34.75% over the second quarter of 2012.

SMS and MMS sales in the second quarter were of R$ 1.18 billion, 10.9% more than in 2012.

Vivo continues being the operator with the highest VAS share over its revenues with a 32%share. TIM has a 22% ratio of the VAS revenues over services. The rest of the operators donot officially inform on this data and were estimated by Convergencia Research.

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Graph 1.14VAS sales by type of service

In R$ and in USD billions Q2 2013

Source: Convergencia Research estimations based on operators' balance sheets. Excluding Nextel

10.59 3.57

8.85%

33.28%

2.06

0.31

1,18

MAVAM | 2. MAVAM (Monitor Acision de Valor Agregado Móvil)

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MAVAM (Monitor Acision de Valor Agregado Móvil)2

The Acision MAVAM study's objective is to analyze the evolution of services in LatinAmerica. This has been carried out in Brazil since 2009 and in Mexico and Argentinasince 2010.

This Brazilian edition has a new content structure adapted to support the changes inthe market, analyzing new aspects of mobile value-added services.

This edition has the following characteristics:

1. 1300 internet surveys (CAWI) and 200 telephone surveys (CATI) were carried outto mobile telephone users.

2. The geographical area covered includes all Brazil. The sample was selectedrespecting the percentages of inhabitants per region, revenue levels, gender andcountry age.

3. This edition's special topic is messaging services, andspecial emphasis was placed on the analysis of Smartphone users.

4. Other topics analyzed in this edition include: Mobile Internet,social networks, mobile commerce, mobile banking, maps and

location, and marketing and mobile advertising.

MAVAM | 3. Messaging services (Special topic)

In December 2012, the first SMS turned 20 years old. Since then, short messages viamobile phone networks have turned into a pillar for mobile communications, due totheir massive nature as well as to the service profitability. SMS has won popularity inevery demographic strip due to its simplicity and reliability. In Latin America, with aprepaid base that may be around 80% and 90% of subscribers and an ARPU of aroundUSD 10, the price ration between the SMS and minute of voice was fundamental whenexpanding the frequency of use of text messages. In those countries where SMS wasintroduced with a unit value per message sent substantially lower than that of voiceminute, the frequency was higher7.

In 1996, ICQ was created, the first computer instant messaging system. Then, ICQ wassold and, as from 1999, Microsoft Messenger has turned into the number one desktopchat platform. Some years later, MSN changed its name for Windows Live Messengeruntil 2011, when Microsoft bought the IP voice system Skype and decided to integrate,under this latter brand and platform, instant messaging and IP voice services.

With Smartphones, instant messaging (IM) reached mobile phones and users adopted itat high speeds. In previous MAVAM editions, we could observe that, despite the manyentertainment options, the telephone's main function was stillcommunication with others: voice, SMS, e-mail, instantmessaging and social networks.

The instant messaging growth issuch that according to Informaconsulting firm, in 2012, for thefirst time, more chat messagesthan SMS messages wereinterchanged in the world.However, neither service is aperfect substitute: SMS may besent from, and received in, everyphone and from any operator inthe world, while instantmessaging systems are almostrestricted to smartphones andalso require data connection.

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Messaging services (Special topic)3

7 See MAVAM Brazil, Mexico, Argentina,

earlier editions

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Users' appetite for instant communication gives rise to new Chat companies with variedbusiness models. From the emblematic BlackBerry Messenger (BBM) linked to themanufacturer's operating system, to WhatsApp -which plans to start charging for itsservices at some point- to Line, which revenue comes from the sale of digital assets(stickers and games). Moreover, besides text chat, messaging platforms addfunctionalities such as sending photos, IP voice and other communication alternatives.

The number of IM ventures is giving rise to amerge and acquisition wave, where anymember of the telecommunications valuechain may be interested in acquiring or beingacquired by another one. For example,Facebook acquired Beluga, Deustche Telecombought Pinger, Yahoo acquired interest inKakao and Samsung has shown some interest inMessageMe and Viber, according to versionscirculating in different media.

Operators and even social networks try toincorporate chat for their customer communities.For example, in 2011, Facebook launched

Facebook Chat; in 2012, Telefónicalaunched its TuMe rich communicationsapplication. And it is precisely richcommunications that the market aims at.Even with initiatives like the Joynapplication, driven by operators andmanufacturers through the GSMAssociation.

All these transformations happen at recordspeeds, that is why the special topic of thisMAVAM edition is instant messaging.

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3.1. SMS92% of respondents used the text messaging service (SMS) during the last three months.The number of people that use SMS in Brazil has remained relatively constant at around90% since 2010. The percentage of people, who use SMS, in our sample, is higher amongthose who own Smartphones (95%) than among those who have Feature Phones (88%).

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Graph 3.1 Test message users (SMS)Sample: total sample (1500 cases- 1Q 2013)

Graph 3.2 SMS: Feature Phone Users vs.Smartphone UsersSample: Feature Phones 953 cases, Smartphones 547 cases (Q1 2013)

3.1.1. SMS frequency of useSome operators that were consulted by Convergencialatina* agreed that in Brazil the SMSgrows and no adverse effect has yet been observed in its use, just like in Europe.

Regarding Vivo, Alexander Fernandes (VAS Director) indicated that with VIVO On andVivo SMS they seek a bigger SMS use as from packetizing and expect people to sendmore SMS, and does not consider the service to be threatened under any parameter.

Roberto Giemzbirger, Director of Products and Mobility with Oi, said that in Brazil,SMS messages grow steadily and that penetration has not reached 100%, so there is still

(*) see article: http://www.convergencialatina.com/noticia.php?id=133233


space for growth. In this sense, he considered that, so far, instant messaging and the SMSare supplementary. He also explained that the operators integration has enabled a 3.5times growth in two years.

As for TIM, for example, growth started with the launch of unlimited offers for a fixedprice, such as Infinity (R$ 0.50 in the prepaid modality) and Liberty Torpedo (R$ 19.90 amonth in the postpaid modality). The simplified rate structure enabled a 19% growth indays of use and 13% in number of users, the operator indicates in its latest balance sheet.

In MAVAM's survey, users send 94 SMS a month on average. This number, such as inprevious editions, reflects the trend, although it may not be extrapolated to Brazil's total,as the survey is done via internet.

Depending on the device, the frequency of use varies. Customers who own a FeaturePhone tend to have higher relative frequencies in the options of lower numbers of SMSsent per day. This behavior would be indicating that those who have a traditionaltelephone make a less intensive use of text messaging than those who own a Smartphone.

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Graph 3.3

Evolution of SMS sentover the first quarter

Sample: Q1 2013: SMS Users (1386 cases)

Graph 3.4

SMS (Text Messages)frequency of use

Sample: SMS Users (1386 cases)


3.1.2. Plans and rechargesIn MAVAM's sample, the preponderant hiring modality is prepaid, in the case ofSmartphones (65%), as well as in the case of Feature Phones (79%).

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Graph 3.5Hiring plans by device type

Basis: Feature Phones (547 cases) - Smartphones (953 cases)

Graph 3.6 SMS plans and recharges (Postpaid)Postpaid users: 432 cases

The 35% of those who have a postpaid plan say that it includes unlimited SMS; in thesecond place are those who pay per message (23%), and thirdly, those who do not knowhow the service is paid for. Regarding recharges, 54% do not need to make additionalrecharges to their plan.

People who told they had a prepaid plan were asked how many SMS the recharges theybought normally had: 43% were not able to specify this information, which could suggestthat there are opportunities to improve the way in which prepaid users are informed aboutoffers or SMS recharge alternatives, or that initial recharges are enough.

SmartphoneFeature Phone

SMS plans SMS recharge frequency 30% of those who have a prepaid plan answered that the most frequent recharge modality is the unlimited daily option, this is in line with the activity observed in Brazil for the last two years with respect to fostering payment of the unlimited daily use.


3.1.3. Difficulties in SMS use

Questions were made about the difficulties experienced regarding SMS and MMS use inSmartphones and Feature Phones.

Smartphone users pointed out that the delivery speed (37%) and the impossibility toknow if the person is available (36%) are the main barriers for SMS use (Graph 3.8).While for a 36% of those who have a Feature Phone none of the options mentioned is ahindrance, the messages delivery speed appears in second place (33%).

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Graph 3.7

SMS plans and recharges(Postpaid)Sample: Postpaid (1068 cases)

Graph 3.8 Difficulties in Smartphone SMS useSample: Smartphones - Multiple Choice

Speed stands out as an indispensable attribute for any messaging solution. Smartphoneusers surveyed on this occasion also said that speed may be a barrier when using instantmessaging applications, which shows a generalized demand level in the speed attribute.

The second barrier for Smartphones is a characteristic provided by IM platforms and notSMS. The same happens with the third limitation, which is not knowing if the person iswriting a message. Therefore, a guarantee of immediacy (knowing that the other person iswriting an answer) seems to be an attribute to add to SMS.


Also, in other answers the idea that people not only expect a reliable delivery from thecommunication is iterative, but also to know what the person who receives the message isdoing (if they are available, if they are writing, etc.). Therefore we may conclude thatcommunicating instantly is not enough anymore, now it is necessary to know what theother person is doing.

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Graph 3.9

Difficulties inFeature Phone SMS use

Smartphone users. Sample: 937 cases

Multiple Choice

3.1.4. SMS relevance

To know the relevance that the SMS service has for users, they were asked what they wouldfeel if operators eventually eliminated the service. The answers were concrete: 68%considered that the lack of SMS service would represent a nuisance.

This may lead to think that the level of substitution of SMS for IM is not total and that ithas certain characteristics that users value and believe, to begin with, they are irreplaceableby another service or that the substitution process is incipient between one modality andanother or that SMS is an intrinsically natural service to mobile telephones.

3.1.5. New SMS-based services

Due to the transformation time of the messaging business explained at the beginning of thischapter, it is interesting to analyze consumers' willingness in front of new functions thatcould be offered together with the SMS service.

Graph 3.10

(Detailed) Reaction in frontof an eventual eliminationof the SMS service.SMS users. Sample: 1386 cases


To find out about willingness, two questions were asked: one for users to indicate the appealof a service list and another one to indicate the appeal of a list of functions that could beoffered with the SMS.

3.1.5.1. Appeal according to the type of serviceThe respondents were asked how appealing the following services would be for them.

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A message service that would ensure immediate delivery of all messages. For example: if you sent a whatsapp message to

a friend but at that time your contact did not have access to internet, the messaging service would send a message via

sms, ensuring that your message is delivered immediately.

A message service through which you may send all your messages to all your contacts, friends and family without worrying

which means to use. Your message will be delivered regardless of the means that your contacts would rather use.

A message service through which you may reach everybody regardless of the means each of them is using at that time.

For example: you are sending a message to three friends. Two of them are using whatsapp and another one, sms. the

message will reach the three of them without your needing to shift from whatsapp to sms or viceversa.

A message service where you may receive all your messages regardless of the fact whether you are using a smartphone,

computer or tablet. for example: a friend of yours sends a message from his/her cell phone. Your smartphone is off and

you are using the computer at that moment. You will receive the message in your computer instantly.

An instant message service where you have a single history of all your conversations, regardless of the means used

(smartphone, tablet, notebook, desktop). For example: you and your friend are communicating via sms or facebook

messenger. You visualize all the messages in a single history.

To define the appeal of each of the functionalities, the respondents were asked to assign ascore from 1 to 5 according to how attractive they found them, 1 being “Not appealing atall” and 5, “Extremely appealing”.

Even though it may be observed that immediate delivery service is the one that has the highestaverage score, and that the single history service is the one with the lowest average score, after adetailed analysis of the data, we have concluded that with a 95% reliability we may be certainthat there are no statistically significant differences between these two averages8.

8 Multiple comparisons were carried

out through a free distribution method

(i.e., free from assumptions about the

distribution of these data).


From this similarity between the average scores, we infer that none of the proposed servicesgenerated enough impact on the respondents so as to "polarize" the answers.

3.1.5.2. Appeal of functions offered together with SMSTo this aim, respondents were asked how appealing they would find the functions listedbelow if they were offered together with the SMS service.

Generally, all the services evidenced a mild interest. Only the SMS delivery or readingnotice service stands out (with a 3.91 average).

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Graph 3.11New services appeal

Sample: SMS and IM Users - 937 cases

1. Presence: it shows whether your Smartphone is connected.

2. Message notice: an indication of when an SMS was delivered/opened

3. Black List: blocking people who you do not wish to receive messages from

4. White List: presetting the people that you wish to receive SMS from

5. Automatic answer: Similar to the e-mail out of office function

6. Automatic subject: Similar to the e-mail automatic subject

7. A copy of the messages: all your SMS messages are sent (as a copy) to your e-mail

8. Collect SMS: when the addressee is the one who pays for the SMS if, for example, the

SMS issuer had no prepaid credit.

9. Prepaid SMS: for when you want to give courtesy credit, a text message for the person

to be able to answer your message without paying for it.

10. Forward messages: when you ask for an SMS to be sent to a tablet or notebook that

you preset.

Qualification

0 1 2 3 4 5

3,59

3,99

3,89

3,88

4,04

You have a single history of all your conversationsregardless of the means used

You can send all your messages withoutworrying about the means

That guarantees immediate deliveryof all messages

You can reach everyone regardless of themeans being used

You can receive all your messages no matterfrom what device


To define the appeal of each of the functionalities, the respondents were asked to assign ascore from 1 to 5 according to how appealing they found them, 1 being not appealing atall and 5, extremely appealing.

Bearing in mind that the immediate delivery service and the delivery notice function were the

ones which reported the highest average, we could conclude that there is a special interest ineverything that provides a certain "guarantee" that the communication has been completed.

Automatic subject, copy of messages and collect SMS present a bigger variation in thescores obtained (some give very high and others, very low scores); i.e., there is noconsensus among the respondents. When analyzing the percentage of people that scoredthese functions with 4 o 5 points by age group, we can observe a slight trend to giving ahigher score as the age gets older. This would indicate that these functions appeal to acertain target. Nevertheless, to obtain more information on the potential of these ideas,complementary research is necessary.

The rest of the functions may be considered of a mild appeal given that, regardless of theaverage obtained having a lesser variation in scores; they would be indicating that there ismore consensus in the respondents regarding appeal.

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Graph 3.12

Appealing additionalfunctions

Sample: SMS and IM Users - 937 cases


3.2. MMS

A 25% of respondents used the MMSservice at least once during the last threemonths. The figure is 10 points higherthan the one obtained in the lastMAVAM (fourth quarter of 2011). Justlike text messages, the use of multimediamessaging is higher among Smartphoneusers (30%) than among Feature Phoneusers (16%).

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Graph 3.13 MMS use in the last three monthsSample: 1500 cases

Graph 3.14 Reasons for increasing MMS frequency of useSample: Smartphone users who increased the use of MMS - 134 cases - Multiple choice

53% of those who use MMS and have a Smartphone expressed that during the last year theyhad increased the use of multimedia messaging. When they were asked about the reasons forthis increase, the ones that stood out were "Because their friends and contacts also increasedtheir use of MMS" (40%) and "Because the mobile phone camera is better" (30%).


They were also asked about the situations when they use MMS, related to the fact thatrespondents indicated that the most frequent situation was "Special or funny moments"(64%). In MAVAM's previous edition, the most frequent mention was related to"Holidays". The answers may suggest that sending images is related to leisure time.

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Graph 3.15

MMS usage situationsSmartphone & MMS users

Sample: 283 cases

Graph 3.16

MMS use barriersSmartphone & MMS users

Sample: 283 cases

3.2.1. Barriers and motivations for MMS use

The main barrier for MMS use is that the service is expensive (51%). The same barrier was

identified in previous MAVAM editions. On this occasion, however, the percentage ofanswers related to the certainty that everyone can receive the message (48%) and that themessage has been successfully sent (48%) increased.


In concordance with the option mostly mentioned in the use barriers is the fact that 63%considered that a price reduction could motivate a higher use of MMS. The positiveimpact on the demand of a price reduction would not only imply a challenge to find thereduction value to attract the highest number of customers, but also it will relate to itsrelative value concerning other communication services. Additionally, as Smartphonesexpand, MMS may be substituted by the delivery of images through IM platforms.

The motivation that the service will be part of the hired pack ranks second (41%).

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Graph 3.17

Motivation to increaseMMS use

Sample: Smartphone users that use MMS -

283 cases - Multiple choice

3.3. Instant Messaging (IM)

In this MAVAM edition, we asked about the use of instant messaging only among thosewho have a Smartphone, which in the case of MAVAM's sample it represents 68% of therespondents. This percentage is higher than the one estimated for Brazil, whereapproximately 20% of mobile lines correspond to Smartphones.

A 98% of Smartphone users in MAVAM's survey use at least one instant messagingapplication.

Facebook Messenger is the most frequently used application (69%), followed by WhatsApp(35%) and Twitter (27%). These three messaging applications differ from one another:Facebook Messenger is a functionality within a social network, WhatsApp is an instant


messaging application by definition and Twitter is a microblogging platform. This could indicate that chat applications respond to different communication needs orinteraction preferences.

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The use of instant messaging decreases as users are of an older age. Drops are bigger in thecase of Facebook, where it has an 81% penetration among users younger than 24 years ofage, and the 64% of the 25-34 year-old group uses the service while people over 45 only

use it in 48% of the cases. Regarding Google Talk and Skype Messenger, we cannot say ifthere is a remarkable trend related to age.

Graph 3.18

Instant Messaging (IM) useSample: Smartphone users -


Graph 3.19

Use of Instant Messaging (IM)by age group

Sample: Smartphone users -



63% of the people use more than one instant messaging application. Applicationcombinations that are jointly installed are WhatsApp and Facebook (29%), Facebook andTwitter (24%), Facebook and Skype (19%), and Facebook and Google Talk (18%). Thisevidences that different applications may coexist, and this coexistence is possible given thespecialization of every platform: each platform has some distinct strength and, in this way,they compensate each other to cover a wide range of the users' communication demands.

3.3.1. Behavior and Attitude

88% of those who own a Smartphone use more than one application at the same time and75% of them, this simultaneous use is common. These values could be reasserting the ideathat instant messaging platforms coexist.

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Graph 3.20

Simultaneous use ofSmartphone messageapplicationsSample: Users of multiple Smartphone

IM applications - 937 cases

Graph 3.21

Attitude before the simultaneous use of Smartphone message applicationsSample: Users of multiple Smartphone IM applications - 937 cases

3.3.2. Frequency of use

We asked about the number of messages they send on average per day using theapplications installed in their phones. We have observed that those who use WhatsAppsend 35 messages a day on average, while Facebook Messenger users said they send around29 messages a day via this platform. Based on this, we concluded that although FacebookMessenger is the mostly used service regarding penetration, the use of WhatsApp issomewhat more intensive.


3.3.3. Contacts

Respondents were asked to indicate howmany contacts they communicated viaevery application and we could observe

that Facebook and Twitter are the mostfrequently used options to communicatewith more contacts, with averages ofalmost 14 and 13 contacts respectively. Itis not a minor detail that these twoplatforms come from social networks.Considering that Facebook is the socialnetwork with the highest penetration, it isonly natural for a person to have a biggernumber of contacts on this platform andto feel more encouraged to use thisapplication. As for Twitter, as it is amicroblogging network, the same valueproposal (followers and following) drives acontact increase.

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Graph 3.22

Average of messages sentper day via the three main IM

applications in Brazil Sample: Users of multiple Smartphone


Graph 3.23 Average of contacts by IM application in BrazilSample: Users of multiple Smartphone IM applications - 937 cases


3.3.4. Difficulties in IM use

Respondents were asked about which had been the situations that stopped them fromusing instant messaging applications. The option most frequently mentioned was"Because I don't have WiFi access" (25%), which indicates that there are Smartphoneusers who try to leave the mobile network as much as possible or who do not use themobile network for data service. The second option was "Speed: Sometimes the messagetakes too long to arrive" (24%). This attribute appears recurrently in many answers inthis study and from this derives that, like for SMS, delivery speed is one of the mostimportant attributes for users.

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Graph 3.24

Reasons that hinder IM useSample: Users of multiple Smartphone


3.3.5. IM Relevance

Respondents were asked how they would feel in front of an eventual elimination of the IMservice. The answers were concrete: 70% considered that the lack of the service would be anuisance. 42% considered that even with SMS, they would need the messaging service.

In a comparison with what was stated for the SMS hypothetical elimination, we canobserve that the answers are very similar, so we deduce that IM, as well as SMS, areindispensable for users.

Graph 3.25

(Detailed) Reaction in front ofan eventual IM eliminationSample: Users of multiple Smartphone



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3.4. SMS vs. Instant Messaging (IM)

To understand the SMS and instant messaging services coexistence, the preferences of oneover the other under different circumstances were analyzed.

3.4.1. Superioridad

Respondents were asked if any of the two services was superior to the other one inrelation to reliability, delivery speed, cost/price and quality.

Regarding reliability and quality, there is not enough evidence to prove there is some kindof tendency. However, based on the data collected, we may say that, with 95% ofreliability, IM services are perceived as superior regarding delivery speed and cost/price.This consumers' perception concerning delivery speed may be due to the fact thatinstantaneity is part of the value proposal intrinsic to IM applications, and in the case ofprice/cost, because the messaging application does not have a unit cost, such as the SMS,but its cost is indirectly absorbed by the data plan.

Graph 3.26

SMS and IM serviceassessment

Smartphone, IM & SMS users

Sample: 937 cases

3.4.2. Service preference according to addressee

To know how SMS and IM applications coexist, respondents were asked which service theywould choose in the face of different situations. From the data presented in Graph 3.27, weconclude that IM use is perceived as more appropriate to communicate with people they knowin social networks, and SMS is used for work matters9. For the rest of the analyzed options,both services are similarly appropriate.

9 With a 95% reliability, we may say that the

distribution of percentages on which these

statements are based are significantly

different from 33%-33%-33%.


3.4.3. Reasons

Smartphone users were asked what the reasons were for which they would rather use IMinstead of SMS. The two reasons most frequently mentioned were the cost (47%) and thepossibility of knowing if the person to be contacted is available (39%).

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Graph 3.27

Selecting the mostappropriate servicefor each occasion

Sample: IM and SMS Smartphone users

937 cases

Graph 3.28 Reasons for using IM instead of SMSSample: IM and SMS Smartphone users - 937 cases


Also, an inverse question was asked so as to learn the circumstances in which they wouldprefer using SMS instead of IM. What stood out in relation to this question is that SMS aremore frequently used to communicate more important messages (42%).

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Graph 3.29 Reasons for using SMS instead of IMSample: Smartphone users that use IM and SMS - 937 cases

3.4.4. IM and SMS combinations

Given that instant messaging and SMS coexist as communication options, it is interestingto ask about the SMS frequency of use against the highest penetration chat platforms(Facebook and WhatsApp).

3.4.4.1. Facebook + SMS97% of those who use Facebook Messenger also use SMS, which shows that although thesocial network messaging application is used, this does not override the SMS use, partlybecause the latter is of a universal nature. Graph 3.30 shows that Facebook Messenger isused more intensely than SMS. The average number of messages sent by this group viaFacebook Messenger is 29, and the average number of SMS is 22 a day.

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3.4.4.2 WhatsApp + SMS96% of the respondents that use WhatsApp also use SMS. When comparing the number ofmessages sent via WhatsApp and SMS, we may observe a higher intensity in the chat platform.The number of daily messages sent, on average, by this group via WhatsApp is 29, and theaverage number of SMS is 22 a day.

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Graph 3.30

Average messages sentper day Facebook Messenger

vs. SMSSample: Smartphones using Facebook

Messenger and SMS - 639 cases

Graph 3.31

Average messages sentper day Facebook

Messenger vs. SMSWhatsApp and SMS smartphones users

Sample: 323 cases


3.5. Joyn

Joyn is an application driven by the GSM Association (GSMA), which combines voicecommunication, chat with one or multiple persons at the same time and also allowssharing videos, photos and files. This application enables contacting users who do not havethe SMS or mail application.

In general, it is a free-of-charge application with flat rate or prepaid plans within theterritory of a certain country.

World operators are cooperating in the initiative for the platform to have interoperability,that is, for it to "simply be on the phone and work". Movistar, Orange and Vodafone havealready launched this service in some countries.

Handset manufacturers10 are driving this platform and, in some models, it is alreadypreloaded. It may also be downloaded for iPhone and Android platforms.

3.5.1. Awareness

The 7% of respondents stated having heard about Joyn. This figure seems to be a bit highas the service has not been launched in any country of the region yet.

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3.5.2. Willingness

All users were explained what Joyn consists ofand then they were asked if they would use itor not. The willingness showed was important:27% answered that they would surely use it,29% would use it if it was part of a packageand 23% if it was free of charge. Virtually,there are no opinion differences betweenFeature Phone users and Smartphone users.

From these answers, we may conclude thatfor users to adopt Joyn, the platform shouldbe free of charge and perceived as such.

Graph 3.33 Possible reception of JoynSample: Total 1500 cases

Graph 3.32

Joyn awarenessSample: Total 1500 cases

10 Some Smartphone models by Huawei, HTC,

LG Electronics, Motorola Mobility, Nokia,

RIM, Samsung, Sony, ZTE.

MAVAM | 4. Mobile Internet

In the second quarter of 2013, in Brazil there were 59.9 million 3G11 phones, equivalent toalmost 22% of mobile subscriptions.

In the sample selected for MAVAM, survey made to internet users, the ratio of smartphonesclimbs to 68%. As explained in previous editions, in general, the respondent’s profilethrough the Internet is more familiar with technology and usually has either more intensiveuses of the services or more innovative devices.

Given these characteristics, usage patterns are representative of Smartphone users and shouldnot be construed as being extrapolated to the entire population of Brazil.

4.1. Use of the Internet through Smartphones90% of those who have a Smartphone accessed the Internet over the last three months. Andan 86% of those who have a Smartphone access the Internet daily. The highest frequency ofuse is several times a day (59%).

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Mobile Internet 4Graph 4.1Internet users throughSmartphonesSmartphone users - Sample: 953 cases

Graph 4.2Internet access frequency through SmartphonesSmartphone users who access to mobile internet. Sample: 854 cases

11 Source: Anatel, Telebrasil, Teleco

Among the 10% of those who despite not having a Smartphone do not use the Internet, themain reason (42%) is that the browsing speed is very low or slow. Secondly (28%) there isthe fact that they consider they do not need to access the Internet on the phone. Responsesmaintain MAVAM prior trends.


4.2. Type of plan hired

The 45% of users hire a postpaid subscription plan and in most cases, they do not know

how many megabytes are included in their plan. 32% do not know and 17% don’t know,but the service is included in their plan. 14% of users hire unlimited plans.

46% of cases, the limit of megabytes hired is not exceeded.

4.3. Uses of the Internet on the Smartphone

The two most frequently mentioned activities when using the Internet on the Smartphoneare access to social networks (77%) and e-mails consultation (76%). The 59% of thoseusing the e-mail consult it more than twice a day.

A second group is made up of searches (68%), use of instant messaging (66%) and newsreading (61%). The most frequently mentioned news site is Globo.com (71%) followedby UOL (56%).

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Graph 4.3

Reasons not to access the Internet on the Smartphone Smartphone users who do not access to mobile internet - Sample: 99 cases

Graph 4.4

Amount of megabytes hiredSmartphone and postpaid users

Sample: 462 cases


4.4. Social Networks

Among users who have a Smartphone and accessed social networks over the cell phone (77%/657 cases), 98% has an active profile in Facebook (98%), 51% in Twitter and 45% in Google +.

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Graph 4.5

Activities performedwhen using the Internet

on the SmartphoneSmartphone users who access internet

through the mobile - Sample: 854

Graph 4.6

Active profiles insocial networks

Smartphone users with active profiles in

social networks - Sample: 657 cases


Facebook (71%) and Instagram (48%) have the highest ratio of daily usage frequency,although the latter has a much smaller customer base (35% have an active profile onInstagram vs. 98% on Facebook).

Orkut, as observed in MAVAM’s previous editions, although still having a large member’sbase, said members have a marginal activity; the majority (49%) though having an activeprofile has not consulted it over the last three months.

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Graph 4.7

Access frequency tosocial networks

Sample: It varies depending

on the social network

Facebook main activities are the relationship with friends through messaging (92%),photos and moments (80%), search for people and relatives (74%) and knowing people’sprofile (69%).

Graph 4.8

Facebook usesSmartphone users with active profiles in

Facebook - Sample: 643 cases


4.5. Mobile Banking

37% of Smartphone users make queries or access banking information. The main activityis making balance queries, which generates an average of 10 visits per month. The second activity is making credit card balance queries, with an average of 6 interactions per month.

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Graph 4.9

Use frequency of mobilebanking services.

Smartphone users who use mobile

banking services - Base: 315 cases

4.6. Mobile Commerce

27% of people having Smartphones searched for products and services over the last threemonths, but only 42% made a purchase. While another 27% say to have made purchasesthrough the Smartphone but not over the last three months.

The top three reasons cited for not making a purchase using the Smartphone are thepreference to buy through the computer (64%), that shopping sites do not fit theSmartphone (34%) and that it is difficult to make payment through the mobile device(23%).

The top-five categories of products purchased through the Smartphone are: books (44%),footwear (39%), home appliances (33%), electronics (33%), clothing (32%).

Purchase frequency is at least once a month (87%) and the main means of payment iscredit card (80%).

Graph 4.10

Products search andshopping through theSmartphoneSmartphone users. Sample: 230 cases

Search

Shopping


4.7. Maps and location

57% of those having a Smartphone use map services. 62% consult the map for gettingoriented, and 46% mentioned that after consulting the map, they generally visit the siteor store consulted.

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4.8. Marketing and mobile advertising

Respondents were asked how much they agreed with receiving relevant messages fromoperators and other companies on the cell phone. The results do not allow to state if, in

statistical terms, there is more agreement than disagreement.

Activity %I was just using it to get directions 64%I went to the shop/store/facilities 46%I just wanted to see what the store looked like 29%I searched for the site of the shop/store/facilities 22%

I went to the store/facilities and I did shopping 22%

I went to the store/shop and I used the services thereof 21%

I phoned the shop/store/premises 13%I recommended the shop/store/premises 9%

I made an online purchase in the shop/store/facilities 8%

Other 0%

Graph 4.11

Activity performed afterconsulting maps

Smartphone users who used the maps

Base: 494 cases

However, when asked about the preferredcommunication means when receivingmessages from operators or companies onthe cell phone, 62% opted for the SMS.Secondly, but very distant, are those forwhich any of the proposed options (SMS,IM, MMS, Facebook, Other application)are the same for them, with 14% ofresponses. And Facebook ranks third(12%).

SMS is the preferred medium both forFeature Phone and for Smartphone users.

Graph 4.12

Preferred medium to receive advertisementSample: Total 1500 cases


Note: 41% of those who have a Smartphone, pay attention always (20%) or often (21%)to advertising messages both in this device and on the computer.

Search sites (65%) and shopping sites (53%) are the places with the highest number ofmentions on display of advertising messages.

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Graph 4.13

Places mentioned to havedisplayed an advertisement Smartphone and feature phone users

Base: 467 cases

MAVAM | 5. Conclusions

Value Added Services in Brazil generated overall sales amounting to R$3.54 billionduring the second quarter of 2013 which represents a total of 25% of mobile operatorservice revenue.

Mobile Internet represents the 58% of VAS in Brazil (R$2.08 billion in the second quarter).SMS have 33% share of value added revenue and the remaining 9% corresponds toVAS services.

Both mobile internet and SMS are growing in Brazil. The first one as a result of theincreased Smartphones base and the second one as a result of simplified unlimitedpricing plans for one day and unlimited mobile service plans that include SMS, data and voice bundles.

Smartphones growth while expanding the adoption of instant messaging applications(IM) has not lead to a decline in text messaging as 92% of people still use SMS , but has

had an impact on the frequency of use. Ingeneral, users send more messages in OTTChat applications (29per day) than SMS (22messages per day).

Coexistence of services. The 88% of thoseSmartphone owners use more than one instantmessaging application and generally considerthe use of more than one messaging platformas normal (73%). This indicates that whilechat applications are popular and usage is onthe increase, they do not provide the fullfunctionality need to enable interoperabilityacross all messaging services, as they as used inislands and communities, and users still haveto full back to SMS. Today there is no singleapplication, that meets all consumers

messaging requirements across cost, rich featuresand service quality which works across any platform, anydevice at any time. Moreover, for both services, users claimthat if a hypothetical case of termination of either SMS or IM,they could not be easily replaced with other alternatives. Bothof them are necessary.

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Conclusions5

MAVAM | 5. Conclusions

Difference. The fact that there are differentapplications does not limit the penetration of otherservice, as long as each platform provides adifferentiated experience. For example, the threemost used messenger applications in Brazil are:Facebook Messenger (69%), WhatsApp (35%), andTwitter (27%). These three messaging applicationsare different: Facebook Messenger is another featurein a social network, WhatsApp is an instantmessaging application by definition and Twitter is a

micro-blogging platform.Guarantee. Among the services that might be added to SMS,

the one that evoked the most interest was immediate deliveryguarantee of all messages regardless of the application or the user’s

type of device.

And among a list of 10 functions that could be offered along with the SMS, the one mostvalued by users was a service which enabled notification of delivery receipt and SMSreading, when an SMS is sent.

Condition. The speed of message delivery becomes a critical feature for any messagingsolution to be launched into the market. Immediacy also appears as a priority. In several ofthe issues addressed in the survey, there appears to be the need to be certain that the otherperson is available and to know if the message is being delivered.

Opportunity. Among Smartphone users, on comparing IM and SMS, the IM is perceivedas superior with regards to speed of delivery and cost. In terms of reliability and quality,there is not enough statistical proof in favour of one or the other, but there is a clearopportunity for a messaging service with both the reliability of SMS and richcommunications of IM.

Joyn. Before the possible launch of a service like Joyn (the GSMA’s RCS initiative) inBrazil, respondents showed a hypothetical acceptance of such a service, with 27% wouldsurely use it, 29% would use it if it were in the package, 23% would use it if it were free.From these responses, it can be concluded that in order for users to adopt Joyn, it will beimportant to position the service to offer the attributes and differentiation needed toconvince the undecided, and with those determined, the service should be free orperceived as such.

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MAVAM | 6. Glossary

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The description of the services presented in this report is presented in the following sections.

Messages The services in this category can be defined as:

SMS (Short Message Services): sends short text messages.

MMS (Multimedia Message Service): sends short text messages with image, photo,or video.

E-mail: receives or sends emails via cell phone. Receiving or sending can be donemanually, in other words by user’s initiative, or can be activated through the pushmechanism, which periodically and automatically receives and sends mail.

Instant Messages: service which permits access to instant messaging systems like MSNor Yahoo.

Answering Machine or Voice Messaging: gives access to the automatic messagesrecording service offered by the carrier, in case of receiving calls that can’t be answered.

Entertainment The services in this category can be defined as:

Music: service which provides the download of songs to be played in the cell phone. Thehandset must be able to play several music formats such as MP3, AAC, MP4, WAV,among others.

Ringtone: service which provides the download of ringtones to be used in the handset.The cell phone must be able to play multiple formats of ringtones, such as MIDI, AAC,MP3, MP4, WAV, among others.

Images: service which provides the download of images and photos to be displayed onthe cell phone. The handset must be able to display several formats of pictures and imagessuch as JPEG, GIF, among others.

Games: service which provides the download of games to be played on the cell phone,individually, or through internet or Bluetooth connections, in groups. The cell phone must

Glossary6

MAVAM | 6. Glossary

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be able to run the games available in the device and also the downloaded ones, and additionallyprovide Bluetooth or data connectivity for internet access (eg.: EDGE, EVDO, or 3G).

Video: service which provides the download of videos or video streaming to be played oncell phone. The handset must be able to play downloaded videos or received video streaming.The cell phone must be able to play videos in 3GP, MP4, WMV, AVI, among others.

Open TV: This feature is present in some cell phones and permits user to watch free TVprograms with the handset acting as an analogue or digital TV receptor and capturingcontents through the same signals (frequencies) received by traditional TV’s at home.

Internet and Location The services in this category can be defined as:

Internet Access: service which provides broadband access to the Internet via cell phoneor modem. In both cases users must have a data plan contract with the mobile operator.

This service has the following characteristics:

Cell phone: the internet access from cell phone can be done in thefollowing ways: 1. Using a browser to access the same websites accessed by fixed

internet through a computer. Examples of browsers: the ones offeredby the cell phone or smartphone (Internet Explorer Mobile, forWindows Mobile), or alternative browsers such as Skyfire orOpera. 2. Accessing the WAP websites inside the Carrier network throughWAP browser.

3. Through specific programs installed in the handset (Widget, Web-App) provided bycompanies like Yahoo Mobile.

Modem: devices which can be connected to desktop computers or notebooks. ProvidesInternet broadband connection using a computer browser (Internet Explorer, Firefox,and others).

Social Networks: service which includes all the necessary elements to provide access tosocial networks such as Orkut, Twitter, Facebook, and others. This access can be done

MAVAM | 6. Glossary

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through browser and internet access, both present on cell phones, or through a specificapplication provided by mobile operators or other companies.

Payments and Banking: usually offered by banks or other credit institutions, whichallows the access to users accounts in these institutions. These services can range fromsimple balance consults to the payment of bills or conclusion of investment transactions.

Location Based Services: service which provides users’ geographic location. Theseservices have the following characteristics:

Location: can be provided as the following: 1. Through a process of triangulation using information from cell sites and applicationsystems provided by the operator for this purpose; 2. Through the GPS installed in the cell phone.

Offered Services: 1. Location: service usually offered by the mobile operator which allows informing thegeographic location of a particular subscriber. Eg.: service hired by parents to monitortheir children’s habits, or with the purpose of promoting safety. 2. Maps: service offered by other companies providing maps on cell phones, usually to locateaddresses, and also permits to locate users in the map if their handsets have a built-in GPS. 3. Contextual Filter: permits the mobile operator, or other service providers, to offeraddresses or other types of promotions at stores, restaurants, movies, among others, basedon the instant location of users.

Mobile MarketingThe services in this category can be defined as:

Mobile Marketing: these services are implemented by mobile operators, to advertise theoperator itself or other companies for the subscriber base. Usually these ads are sent viaSMS. The advertisements can also be sent directly by competitor carriers or othercompanies, again using SMS messages.

Mobile Advertising: similar to Mobile Marketing, Mobile Advertising is also anadvertising service implemented by mobile operators or other companies. If the subscribersagree to receive it they can participate of promotions such as free minutes, free SMSpackages, and others, as a reward for receiving advertisements.

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MAVAM | 7. Technical File

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Scope Mobile phone users

Technique CAWI (Computer-Assisted Web Interviewing)Method 12/15-minute surveySample 1500 casesMarket MexicoSurvey date May 29 - June 3 2013

Sex Sample

Male 750 50%Female 750 50%

Age Sample

18-24 years old 409 27%25-34 years old 541 36%35-44 years old 309 21%45 o more 241 16%

Location Sample

North 45 3%Northeaast 275 18%Southern 820 55%South 240 16%Center-West 120 8%

Nivel Socio Económico Sample

A 159 11%B1 329 22%B2 499 33%Cd 513 34%

Operador Sample

Claro 325 22%Oi 345 23%Tim 453 30%Vivo 351 23%CTBC 2 0%Nextel 14 1%Sercomtel 10 1%

Plan contratado Sample

Prepaid (Rechargeable card) 540 67,8 %Pospaid (Monthly billed - without limit of use) 79 9,9 %Pospaid + control 178 22,3 %(A monthly bill, with limit of use.Once limit is reached, I can make a recharge and continue using it)˙

Technical File7

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