1. 5 years – An Internet eternity,
a mobile operator “soon”
Lessons learned from more than ten years of struggle
1 November 2007
Daytona Sessions, Stockholm
Johan Ragnevad

2. inCode Strategy & Technology Group provides Telecoms and Media industry
clients with a complete range of business consulting services
License bid strategy and bid preparation
Market analysis and
Market analysis and Market research, competitor analysis and strategy options
business strategy
business strategy Trial and launch plan development and management
Business demand modeling
Business case and pro forma financials
Supply chain and
Supply chain and Procurement and Strategic Sourcing: RFPs, vendor selection and management
financial analysis
financial analysis
Customer loyalty and churn management
Spectrum strategies and usages
Architecture roadmap options
Technology strategy
Technology strategy
Technology and vendor evaluations
Operational requirements: OSS, BSS, CRM
Business opportunity assessments
Financial analysis
Investment support
Investment support
Technical and Market due diligence
Operational strategies
...to customers from BBC, Microsoft, Nokia and Ericsson, to NTT DoCoMo, Sprint, 3, Verizon and Xfera
© 2007 inCode. Proprietary and Confidential. All Rights Reserved Page 1

3. Five years on...
Has our message changed?
The 3G Business Case
-
”Bitpipe is not an ugly word”
Northstream report, Autumn 2001
Bid Book vs Reality
”Enable horizontally layered
service network capabilities”
© 2007 inCode. Proprietary and Confidential. All Rights Reserved Page 2

4. The mobile phone changed a multi-decade old stable growth curve
GSM
Source: Gapminder
© 2007 inCode. Proprietary and Confidential. All Rights Reserved Page 3

5. Internet has moved from niche to everybody’s content &
communication platform in 15 years
PC Subsidies
Source: Gapminder
© 2007 inCode. Proprietary and Confidential. All Rights Reserved Page 4

6. While the Telecom world focussed on carrier-grade quality and
features, the market chose the good-enough and coolest
GPRS
WAP 3G
X.400 ISDN digitel
MMS
© 2007 inCode. Proprietary and Confidential. All Rights Reserved Page 5

7. One ecosystem works... (finn fem fel)
Third parties
$$
$ $ $
$
© 2007 inCode. Proprietary and Confidential. All Rights Reserved Page 6

8. Separation of access from content has not materialised in the
mobile world
Internet
Access
Application
Internet Service
Service End users
Providers
Providers
Applications/
Services
”Mobile Internet”
Access
Application
Service Operators End users
Developers
Applications/
Services
© 2007 inCode. Proprietary and Confidential. All Rights Reserved Page 7

9. Something has happened...
Mobile Data Traffic
Flat fee
HSPA/3G
(EDGE)
2006 2007
© 2007 inCode. Proprietary and Confidential. All Rights Reserved Page 8

10. © 2007 inCode. Proprietary and Confidential. All Rights Reserved Page 9

11. Mobile operators still(!) can enable key capabilities addressing
Internet limitations
More than
Identify!
Alert!
2.8 Billion
Pay!
mobile phones
© 2007 inCode. Proprietary and Confidential. All Rights Reserved Page 10

12. So, when? Soon??
Not if done the old-fashioned telecoms way...
MMS development in networks
Approximate timeline Standards National
bodies 3GPP MMS interworking
and 3GPP2 service common in
cooperate to launched by Europe, but
MMS Several MMS try and enable nearly all globally, still Inter-working MMS traffic is growing,
standardized by infrastructure MMS operators in on the drawing established in especially in Europe and
3GPP contracts signed interworking Europe* board US North America
1990s 2000 2001 2002 2003 2004 2005 2006 2007
* Informa, ”Mobile Communications”, 18 March 2003
© 2007 inCode. Proprietary and Confidential. All Rights Reserved Page 11

13. Vodafone live! is dead,
Long live the mobile Internet!
© 2007 inCode. Proprietary and Confidential. All Rights Reserved Page 12

14. A range of approaches will continue to be seen for a couple of years…
Web-based Proxy-based Mobile operator Bespoke handset
mobile services mobile browser WAP portal centric solutions
Choice of content
Operator service
creation involvement
Dedicated server No Yes Yes Yes
# of supporting
handsets
Service examples
© 2007 inCode. Proprietary and Confidential. All Rights Reserved Page 13

15. Opening up network capabilities in a web-centric manner is a logical
step in the evolution of the network operator business
Required level
of operator Incremental
involvement service
in service revenues
creation Core operator revenues
Voice, data, SMS, voice mail
A web-centric approach can
High lead to cost benefits in the High
VAS revenue segment, and
open up the new “long tail”
revenue segment
VAS revenues
Examples: Premium SMS, MMS, mobile
portal services, Blackberry, mobile TV,
Medium navigation, etc. Medium
“Long tail” revenues
Operator “capability retailing”:
Services created by SME, SOHO, individual
Low developers or private individuals Low
Number of
services
© 2007 inCode. Proprietary and Confidential. All Rights Reserved Page 14

16. Aiming at “long tail” revenues in a web-centric model can be a way
for operators to foster and benefit from innovation
A: “Bit-pipe” scenario: Device vendors and Internet companies aiming at increasing their share
A: “Bit-pipe” scenario: Device vendors and Internet companies aiming at increasing their share
of customer ownership
of customer ownership
Example initiatives: End-to-end services:
• Nokia Ovi • Media downloads
• Apple iTunes Data flat rate plans • Content sharing
• Samsung FunClub • Communities
Operator network
• Yahoo Go • Navigation (GPS)
• “Google phone” • Messaging
B: “Web-centric” scenario: Operators positioning themselves as innovation enablers
B: “Web-centric” scenario: Operators positioning themselves as innovation enablers
Operator offering: New revenues from:
• Open API access Technology and business • 3rd parties and
enablers for “capability private persons
• Sample apps, SDKs creating services
retailing”
retailing”
• Simple pricing
• Transforming selected
• Nationwide operator Operator network ideas into own-
access branded services
© 2007 inCode. Proprietary and Confidential. All Rights Reserved Page 15

17. There is no five-year plan for the Internet, but a manifest and
predictions can still be used to enable ”mobile internet”
– an eternity on the Internet: –”soon” in the telecoms world:
iTunes: Four years to 3 billion songs sold MMS: Five years from first device to
today’s usage
Youtube: 18 months from launch to acquisition for
USD 1.65 billion 3G: Five years to reach 150 million
devices
Facebook: 3.5 years to become the 7th most visited
website in the world
”It’s the value pipe, stupid”
Mobile operators will
- Embrace the dominating end-user business model of separating access from content
- Acknowledge that a free market approach with creative chaos is more likely to increase mobile internet
user value
- Aim at free distribution to build user base and subsequently capture long tail & advertising revenues
- Excel at access
- Enable continued Internet innovation towards mobile, identifiable, immediately reachable and paying-
capable users
© 2007 inCode. Proprietary and Confidential. All Rights Reserved Page 16