Analysys mason the future of mobile 2012 To download it go here : http://www.analysysmason.com/Research/Content/Reports/The-future-of-mobile-Mobile-World-Congress-2012-edition/

1. THE FUTURE
OF MOBILE
MOBILE WORLD CONGRESS 2012
www.analysysmason.com

2. Copyright © 2012. The information contained herein is the property of Analysys Mason Limited and is provided
on condition that it will not be reproduced, copied, lent or disclosed, directly or indirectly, nor used for any
purpose other than that for which it was specifically furnished.
2

3. Contents
Introduction 5
Thinking and doing 6
Services and strategies
The collapse in the value of the mobile gigabyte: myth and reality – Rupert Wood 8
Service provider success with M2M: the five ‘Ps’ – Steve Hilton 10
The challenge of marketing 4G when 46% of iPhone 4 users think they already have it – 12
Martin Scott
The home will be the centre stage of mobile innovation in 2012 – Ronan de Renesse 14
Mobile loyalty schemes: much more than a good price – Helen Karapandžić 16
Focus should be the watchword for operator-provided consumer cloud services – Tom Rebbeck 18
Technology and software
RCS-e services are welcome, but not a panacea – Stephen Sale 20
Real-time charging for advanced services – Larry Goldman 22
Becoming more customer-focused with subscriber analytics – Justin van der Lande 24
How to make better use of UHF spectrum – Janette Stewart 26
Emerging markets
Multiple SIMs: advice for operators in emerging markets – Pankaj Agrawal 28
How pricing initiatives drive the adoption of 3G data services in emerging markets – Pankaj Agrawal 30
3

4. 4

5. WeLCoMe - to AnALYsYs MAson’s
VIeW oF tHe FUtURe oF MoBILe
Analysys Mason is proud to present our latest insights on the most
important trends driving the development of the mobile sector, for
Mobile World Congress 2012.
As consulting and research specialists with over 25 years of experience
in telecoms, media and technology, the Analysys Mason team offers
a winning combination of extensive industry knowledge, advisory
expertise and unique research methodologies. Our clients rely on us as
a trusted partner in developing strategies for success across the entire
mobile telecoms and media value chain.
Our expertise in mobile trends and topics is unsurpassed, drawing on the regulatory and strategic
expertise of our senior consultants, the recognised thought leadership of our team of specialist
mobile analysts, and a suite of in-depth research programmes covering mobile services, content,
technologies and forecasts.
To help you get the most out of Mobile World Congress 2012, members of our team have shared
their thoughts on some of the key issues that will be important to you during the next 12 months.
Themes of some of the key articles include:
• operator strategies for M2M success: the five ‘Ps’
• mobile data pricing and value: myths and realities
• driving mobile innovation in 2012: the increasing importance of home usage for the consumer
mobile market
• mobile subscriber analytics – operator approaches and revenue opportunities
• mobile loyalty schemes – case studies and recommendations
• multiple-SIM markets – best practice for maximising customer value and minimising churn
• white-space spectrum – making better use of UHF spectrum.
We hope you find these opinion pieces and expert commentaries of interest and value. We welcome
your feedback and encourage you to contact the authors directly if you would like to discuss
any of the points they have raised, or are looking to understand how a specific issue or trend will
affect your business. To find out more about our experience and services, please visit
www.analysysmason.com.
We look forward to working with you to support your success in the mobile market in 2012 and
beyond.
Kind regards,
Bram Moerman
Chief Executive Officer
Analysys Mason
5

6. tHInKIng And doIng
What we offer
Knowing what’s going on is one thing. Understanding how to take advantage
of events is quite another. Our ability to understand the complex
workings of telecoms, media and technology (TMT) industries and draw
practical conclusions, based on the specialist knowledge of our people,
is what sets Analysys Mason apart. We deliver our key services via two
channels: consulting and research.
Washington DC -5.00
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London 0.00
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THINKING MARKETS
THINKING MOBILE
THINKING SYSTEMS
THINKING TECHNICAL
6

7. Consulting Research
Our skill set is broad. It has to be. Our clients Analysys Mason Research provides dedicated
in the telecoms, media and technology (TMT) coverage of developments in the TMT sectors, with
sectors operate in dynamic markets where change a range of research programmes covering different
is constant. We help shape their understanding of services and regions of the world.
the future so they can thrive in these demanding
conditions. To do that, we have developed rigorous The division consists of a specialised team of more than 50 analysts,
based in our 12 offices around the world, who provide dedicated
methodologies that deliver real results for clients coverage of TMT issues, trends and traits. Our seasoned analysts
around the world. understand not only the complexities of the TMT sectors, but the
unique challenges of companies, regulators and other stakeholders
operating in such a dynamic industry.
For over 25 years, our consultants have been bringing the benefits
of applied intelligence to enable clients to make the most of their Our 26 research programmes cover five key areas:
opportunities.
• consumer services
Unlike some consultancies, our focus is exclusively on TMT. We
• enterprise services
advise clients on regulatory matters, support multi-billion dollar
investments, advise on network performance, and recommend • network technologies
commercial partnering options and new business strategies. Such
projects result in a depth of knowledge and a range of expertise • telecoms software
that sets us apart. • regional markets.
Each programme provides a mixture of quantitative deliverables,
including access to over 3 million consumer and industry data points,
Regulation as well as research articles and reports on emerging trends drawn
from our library of past and present research and consulting work.
The research division works closely with our consulting practice,
next- providing data points and insights on existing markets, the
generation transaction development of future technologies and usage trends.
networks support
Unlike other analyst firms, our research specialises in niche markets
Telecoms, or subjects, offering clients unparalleled levels of expertise in a
Media and specific segment of the industry. Each of our 26 research
programmes is championed by a Principal Analyst with decades of
Technology experience in their relevant field.
(TMT)
strategy procurement
and and ICt
planning
Marketing
and
products
For more information:
We look beyond the obvious to understand a situation from a client’s www.analysysmason.com
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We help clients solve their most pressing problems, enabling them research@analysysmason.com
to go further, faster and achieve their commercial objectives.
7

8. seRVICes And stRAtegIes
The collapse in the value of the mobile gigabyte:
myth and reality
RUpeRt Wood
Principal Analyst
Fixed Networks research
programme
rupert.wood@analysysmason.com
Just over a year ago, Analysys Mason Research published a number of papers
suggesting that the mobile data explosion – at least in a European context – was a
“In November bit of a myth.1 In particular, we said two things:
2010, we estimated
European mobile • most mobile data growth forecasts are wildly exaggerated
data traffic was • a combination of demand trends and pricing could be enough to avoid the
growing at an ‘inevitable’ collision of surging demand and collapsing value of the gigabyte (GB).
annualised rate
of 35%.” These papers had a mixed reception. Some vendors Furthermore, we wrote the following in 2010:
were outraged, and others were incredulous at
Myth: The value of transporting a byte is collapsing
prognoses so out of kilter with received industry
opinion, in particular that of the de facto gold Reality: This was emphatically true up until the end
standard in this area, the Cisco Visual Networking of 2009, but the rate of decline has slowed recently. If
Index (VNI). However, some European mobile operators manage to preserve the premium for
operators privately told us we were more or small-screen data, the value of transporting a byte of
less right. data could actually rise as the mix of large-screen
and small-screen becomes more beneficial to the
So it is reassuring – for us at least – to hear that
operator.3
Vodafone confirmed those two points in December
2011.2 Vodafone stated that its annualised European In fact, we thought – perhaps a little cynically – that
revenue growth in data was 21% between July and MNOs’ sudden enthusiasm for tiered handset data
September 2011, whereas volume growth was just pricing in late 2010 had more to do with the desire to
19% in the same period (down from over 90% a year hang on to the handset data premium than with
previously). This means the value of a GB is actually networks falling over under the weight of data.
increasing. AT&T has more recently indicated that its
mobile data traffic growth rate had slowed sharply to Of course, Vodafone is just one case, and despite its
under 40%. size, is not generally the largest data carrier in its 13
European markets. But neither is it usually the
In November 2010, we estimated European mobile smallest, and it is far from alone in having modest,
data traffic was growing at an annualised rate of essentially controllable, growth in mobile data
35%. We subsequently revised this upwards, in part volumes; the steady trickle of information that comes
because we thought we had underestimated the back to us from the players that really matter in the
effects of seasonality on data consumption. industry, those at the ‘RAN-face’, has mostly – but
not universally – tended to confirm what we originally
At the second quarter of 2011, the volume of mobile
thought.
data traffic in individual European countries grew at
rates below 100% year-on-year, and in many cases So what are the main conclusions we can draw
below 50% (see Figure 1). The general trend in from this?
growth rates is down, but this has to be understood
in part as a natural statistical phenomenon: growth • The idea that mobile operators are the passive
rates of new services in early years will always look victims of some demand force of nature is just
very high. Note that these figures are year-on-year muddle-headed. Open-ended demand forecasts
whereas Vodafone’s are annualised. If, as expected, that do not take into account operators’ ability to
growth rates slow, current year-on-year growth rates finance data networks are meaningless – and so
will be higher than annualised rates. are forecasts that simply assume operators will
have to bow to consumer pressure for flat-rate
pricing. Pricing is actually a very effective lever.
8

9. “The structure of mobile data traffic in most European countries and on the majority The challenge for mobile
of European networks is so heavily weighted towards large-screen traffic that it is operators is to target the
softest, most profitable parts
unlikely that previous growth rates will ever be reached again unless LTE breathes of the fixed broadband
subscriber base as fixed
new life into fixed–mobile broadband substitution.” broadband operators slowly
renew their access networks.
The reward for success is
ARPU levels for mobile
broadband similar to those
• Fixed broadband soaks up a huge share of The structure of mobile data traffic in most European
of fixed double-plays.
small- and mid-screen wireless device data. Our countries and on the majority of European networks
own primary-research consumer surveys bear this is so heavily weighted towards large-screen traffic
out. In countries where fixed broadband is that it is unlikely that previous growth rates will ever
widespread, the reality is that smartphones and be reached again unless LTE breathes new life into
tablets are essentially fixed broadband devices fixed–mobile broadband substitution. In most
with additional mobile functionality. countries, small-screen traffic is still too small a
part of the overall total to drive these giddy growth
• Most mobile operators should be reasonably happy
rates. The challenge for mobile operators is to target
that fixed operators are bearing this excess traffic
the softest, most profitable parts of the fixed
for the time being.
broadband subscriber base as fixed broadband
• A genuinely compelling 4G fixed–mobile operators slowly renew their access networks. The
substitution (FMS) product priced at a similar but reward for success is ARPU levels for mobile
competitive level to basic fixed broadband broadband similar to those of fixed double-plays.
double-plays but with the added advantage of
untethered mobility is the compelling reason for
mobile operators to attempt to service this traffic.
This is at the core of Vodafone’s LTE strategy: not a
response to a capacity crunch that can be
managed by pricing and distribution over Wi-Fi,
but as a platform for next-generation
broadband services.
300%
Austria Apps
250%
Denmark
Growth rate (year-on-year)
Web
Finland
200% Email
Germany
Games
Hungary
150%
Italy Social networking
Lithuania Music
100% Netherlands
IM
Norway
50% Portugal Video
Sweden Business
0% UK
4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 0% 25%
2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 Percentage of responden
Figure 1: Year-on-year growth rate of volume of mobile data traffic, selected European countries,
4Q 2008–2Q 2011 [Source: Analysys Mason, national telecoms regulatory authorities, 2012]
Early adopters Mass market adoption Up-sell/cross-sell'
1 For more information, see Analysys Mason’s The mobile data explosion is a myth; The mobile data explosion: myths and reality; and New unlimited mobile
– premium pricing – pricing model innovation
data tariffs are exceptions, not an emerging trend. Available at www.analysysmason.com. – new revenue generating services
soft caps, based on data charge advice to prevent bill shock personalised value based pricing
2Presentation by Richard Feasey, Director of Public Policy at Vodafone Group, to the International Institute of Communications (IIC) conference, Washington,
consumption time-based usage for casual users and charging
December 2011. network congestion service pass ( Wi-Fi) shared data plans (3G and 4G,
management happy hour promotions devices, networks, users)
3 For more information, see Analysys Mason’s The mobile data explosion: myths and reality. Available at www.analysysmason.com. 9
ation within base
traffic shaping/prioritisation turbo boosts
zero rating applications (OTT)
personalisation
multi-service bundles
(+ dynamic session data)

10. seRVICes And stRAtegIes
Service provider success with M2M: the five ‘Ps’
steVe HILton
Principal Analyst
Enterprise research programme
and Small and Medium-sized
Enterprise Strategies research
programme Service providers that prioritise opportunities, place their teams properly, participate
steve.hilton@analysysmason.com knowledgeably in the supply chain, form partnerships effectively and establish credible
personae are bound for success in the machine-to-machine (M2M) services market.
“We asked 12 We refer to these five concepts – prioritisation, placement, participation, partnerships
leading service and persona – as the five ‘Ps’ of M2M (see Figure 2). Service providers that address the
providers about all five Ps of M2M will better align their growing M2M business units with the demands
aspects of their of the market.
M2M businesses.”
We glean many of our findings from our M2M Placement of teams
scorecard for communications service providers:
The decision whether or not to centralise M2M
2011.1 This is based on the responses of 12 service
human resources is a critical driver of M2M success.
providers – AT&T, Deutsche Telekom, Everything
No doubt certain resources – including R&D,
Everywhere, KPN, Sprint, Telekom Austria Group,
partnership management and OSS/BSS support –
Telefónica, Telenor Connexion, TeliaSonera, Telstra,
should be centralised. However, there are nuances
Verizon Wireless and Vodafone – to a 33-question
associated with organisational design that are
survey of their M2M strategy, size of business, R&D
unique to M2M. For example, where should technical
commitment, partnerships, platform insights and
pre- and post-sales resources be placed?
network insights.
Centralised in a corporate role or in a local field role?
the five ps in more detail And what should be the relative size or head count of
each M2M functional area?
Prioritisation
Participation
Service providers have myriad opportunities in M2M,
but only careful prioritisation of these opportunities There are three distinct routes to market for service
will yield healthy, profitable businesses. Analysys providers offering M2M solutions: co-selling
Mason has found that some of the M2M applications partners’ solutions, selling or reselling their own
generating the highest revenue can be relatively solutions and acquiring solutions. We believe that
unprofitable for service providers. Opportunities service providers should form partnerships to
abound in sectors such as automotive and transport, provide M2M hardware (modems and modules, and
energy and utility, security, government, retail and equipment) and that they should sell or resell their
industrial. There are opportunities for wireless, own connectivity, platform and integration services.
satellite and fixed-line service providers to profit The application layer presents the greatest
from these, but profitability metrics will vary conundrum in a service provider’s route-to-market
according to the M2M application, the country of strategy: successful service providers will conduct a
operation and the cost characteristics of each service thorough analysis of their application capabilities
provider. before determining their best route to market for this
challenging aspect of the supply chain.
10

11. Service providers that
“Service providers that address the five Ps of M2M will better align their growing prioritise opportunities,
place their teams properly,
M2M business units with the demands of the market.” participate knowledgeably
in the supply chain, form
partnerships effectively and
establish credible personae
are bound for success in
the machine-to-machine
Partnerships Persona (M2M) services market.
Partners are necessary for service providers’ M2M A service provider must establish an identity or
go-to-market approaches. Service providers must image of itself in the M2M market that must be
review the partnership landscape systematically, by credible in light of its existing brand and of
geography and application, in order to find those best awareness of its services in the enterprise market. A
suited to their needs. It is important to keep in mind service provider can use its existing brand to build its
that the best partners in providing M2M services to M2M marketing image. We suggest that they engage
the utility and energy sector may be different from in market research in order to determine
the best partners in offering services to the enterprises’ perceptions of their M2M and other
healthcare sector. To complicate matters further, the enterprise technology capabilities.
best partners can often vary by the region of the
world or country.
On which M2M opportunities
should a provider focus, based
on revenue and profitability?
Prioritisation
What should a provider
Placement What is the best M2M
use to create an M2M Persona
of teams organisational structure?
e marketing identity?
Partnerships Participation
Who are the top M2M What role should a
partners and how should provider play in the
providers choose them? complex supply chain?
Figure 2: The five ‘Ps’ of M2M
[Source: Analysys Mason, 2012]
Under-optimised 1800MHz network
• Indoor coverage issues/call drops
Growth and
profitability
challenges
1 See Analysys Mason’s M2M scorecard for communicationsbehaviour
Sales force service providers: 2011. Available at www.analysysmason.com. 11
• Month-/quarter-end effort to Pantone 274 Pantone 293 Pantone Process
Personnel opex meet sales targets
twork investments • Pushing for network coverage RGB 34/31/114 RGB 0/103/177 RGB 0/174/239
Increasing capacity expansion and discounted
Network opex

12. seRVICes And stRAtegIes
The challenge of marketing 4G when 46% of iPhone 4
users think they already have it
MARtIn sCott
Principal Analyst
Fixed Broadband research
programme
martin.scott@analysysmason.com
Informing consumers of the benefits of LTE, HSPA+ or any mobile data service that
might be promoted as ‘4G’ may be a challenge. This is partly the result of misleading
“About 28% of iPhone marketing as to what exactly constitutes 4G. More than 6% of mobile users believe
users believe that that they already have a 4G handset, according to the results of our latest Connected
they already have a Consumer Survey, conducted across six European countries and the USA. More
4G-capable handset.” than half of consumers do not understand mobile network generations or are
unsure of the connectivity generation of their phone (see Figure 3).
Apple’s numbering of iPhone models (and occasional • Support for bandwidth-heavy services: LTE will
use of ‘G’ as an abbreviation for ‘generation’ – at also significantly reduce the latency of mobile data
least for its iPod products) has also confused connections, which will improve online gaming
consumers. About 28% of iPhone users believe that capabilities and video communications in
they already have a 4G-capable handset. This figure particular, as well as the mobile browsing
rises to more than 46% for iPhone 4 users. experience in general. Apple has made a
significant impact on the mass-market penetration
As a result, operators will face a significant
of video calling through the introduction of
challenge when it comes to marketing and selling
FaceTime. LTE will increase the reliability of such
handset-based 4G services to consumers. To educate
services over the cellular network. Furthermore,
users about the benefits of LTE and 4G, service
games for mobile devices will increasingly include
providers will need to focus on the differentiating
an online element, as they have for consoles and
factors of the new access technology from an
PCs. 4G data services will reduce latency to
enablement point of view, rather than solely from a
near-wireline levels for such games, significantly
technical one. The following two key benefits
improving playability.
immediately spring to mind.
However, the risk is that operators may turn the
• Convenience: LTE enables consumers to use
battle for market share entirely into an exercise in
mobile data services with a much higher degree of
rhetoric – something that operators that have not
reliability than previous-generation data networks
invested heavily in LTE yet, or lack the required
– particularly deeper into buildings and while on
spectrum, are banking on. For example, when US
the move – and at higher data rates. Many users
operator T-Mobile failed to acquire spectrum for LTE
abandon efforts to load a photo on their phone or
in the 700MHz spectrum auctions, it invested in
look up an entry on Wikipedia because the loading
backhaul to improve average throughput. The
time is too long. These consumers would usually
operator then began to market its enhanced 3G
then either wait until they had a more reliable
services not just as 4G-like, but actually as 4G
connection (for example, over Wi-Fi) or, more
services. “When consumers look at 4G ... if you ask
often, would simply not make the page request
nine of ten, they’ll say it’s about the speed,” explained
again, in which case an instance of revenue-
a spokesperson from T-Mobile.1
generating data usage has been lost. More-
advanced mobile data services – particularly LTE
– will reduce the number of such lost opportunities
considerably, by providing better throughput-per-
user on congested cells and better performance
for users when they are on the move.
12

13. “Games for mobile devices will increasingly include an online element, as they have Accordingly, articulating the
technical aspects of new
for consoles and PCs. 4G data services will reduce latency to near-wireline levels for mobile data services is also
important. In the example
such games, significantly improving playability.” given, rival operators were
quick to criticise T-Mobile’s
approach, but may have
been wary of emphasising
the technical superiority of
their own networks
Accordingly, articulating the technical aspects of new Analysys Mason’s report, The Connected Consumer
because they were also
mobile data services is also important. In the Survey 2012, provides highlights from our using the ‘4G’ badge for
example given, rival operators were quick to criticise 7500-respondent consumer survey across Europe services that fell short of
T-Mobile’s approach, but may have been wary of and the USA.2 the ITU definition.
emphasising the technical superiority of their own
networks because they were also using the ‘4G’
badge for services that fell short of the ITU definition.
100%
90%
Percentage of respondents
Pantone 274 Pant
80% RGB 34/31/114 RGB
70%
4G
60%
3G
50%
2G
40% Unsure
30%
20%
10% Pantone 518 Pant
RGB 90/33/73 RGB
0%
All iPhone 4
Question “Which of the following personal devices do you own or use > mobile phone > network generation”; n = 7140.
Figure 3: Handset owners’ understanding of their mobile network generation, by handset type
[Source: Analysys Mason’s Connected Consumer survey, 2012]2
IANA Regional address administration
RIRS (x5) Global responsibility for address management
Pantone 711
RGB 231/25/57
ISPs Address allocation for their customers
1 TheHuffingtonPost.com (Herndon, VA, 2010), T-Mobile Renames Upgraded 3G Network ‘4G’. Available at http://www.huffingtonpost.com/2010/11/03/t-mobile
-4g-network_n_778518.html.
2 For more information, see Analysys Mason’s The Connected Consumer Survey 2012. Available at www.analysysmason.com. 13

14. seRVICes And stRAtegIes
The home will be the centre stage of mobile innovation
in 2012
RonAn de Renesse
Principal Analyst
Mobile Broadband research
programme and Mobile Content
and Applications research
programme Usage of mobile devices in the home increased significantly last year – partly
ronan.derenesse@analysysmason.com because of the launch of tablets, but also because of improvements to the user
experience of browsing, social networking and email delivered over smartphones.
“ Smartphones will Analysys Mason’s Connected Consumer Survey indicates that mobile users claim to
continue to replace be using web, email and social networking services nearly twice as much on
the PC as a means of smartphones as the average for all handsets.1 About 93% of smartphone owners use
checking emails and their smartphones while at home, according to a study from Google.2
social networking in
the home.” This trend is set to continue throughout 2012, and mobile/home interaction paradigm is set to bring a
will spark the following strategic changes in the new innovation platform to the application space.
mobile industry. For instance, several companies have found a way
to synchronise TV sets and smartphones such that
• Smartphones will continue to replace the PC as a
the smartphone is aware of what is being watched
means of checking emails and social networking
on TV. This could have many applications –
in the home. A report released in August 2011 by
especially around advertising.
Ofcom, the UK’s telecoms regulator, indicated that
15% of adult smartphone users claimed to be • Leading smartphone OS companies that also have
using a computer less since having a smartphone.3 strong interests in the TV industry, such as Apple,
This cannibalisation also happens outside the Google and Microsoft, will find a new
home, where smartphones can easily replace battleground in the home in 2012. Apple is
mobile broadband for emails and web browsing. expected to launch a TV set in 2012, Google
For example, the growth rate for the number of announced several partnerships with TV
active mobile broadband SIMs was 2.6% on manufacturers and Microsoft is already present in
average among European countries in the third this market thanks to the Xbox. Apple and Google
quarter of 2011, down from approximately 12% are set to transform the TV industry in the same
two years earlier.4 Service providers should way they revolutionised the mobile market,
accommodate this shift among their users by primarily via software differentiation. The parallels
offering products tailored to smartphones. It is that will run between the TV and mobile industry
critical for all the top Internet destinations to are set to emphasise interactivity between the two
provide an excellent user experience on mobile, platforms. The impact and opportunities created
particularly on high-end smartphones. by this small revolution will extend beyond the
device space into the networks. Integrated
• Smartphones will interact with other home
operators will use the resulting new features as a
devices, such as the TV or Hi-Fi system, in a
differentiator or as an incentive to take up their
better, more-integrated manner. The social
top-tier packages.
aspect of consuming content will drive most of the
interaction. Start-up companies such as
AdaptiveBlue (with its GetGlue service), Miso and
zeebox, all of which provide mobile-based
comment sharing platforms focusing on TV shows
or films, will grow significantly. For example,
BSkyB invested in a 10% equity stake in zeebox, in
a deal worth GBP10 million (USD15 million). The
14

15. “Leading smartphone OS companies that also have strong interests in the TV Smartphones will interact
industry, such as Apple, Google and Microsoft, will find a new battleground in the with other home devices,
such as the TV or Hi-Fi
home in 2012.” system, in a better,
more-integrated manner.
Apps
Web
Email
What should a provider
iPhone use to create an M2M Per
Games
Smartphone marketing identity?
Social networking
All
Music
ds
IM Pa
Video Who are the top M2M
partners and how should
Business providers choose them?
0% 25% 50% 75%
Percentage of respondents that use service or app
Question “Which of the following services or devices do you currently use on a regular basis on a mobile phone (at least once within the past 3 months)?”; all respondents; n = 6803.
Figure 4: Mobile users’ usage of services and apps, by handset type
[Source: Analysys Mason, 2012]1
Under-optimised 1800MHz network
• Indoor coverage issues/call drops
Growth and
profitability
challenges
Sales
• Mo
Personnel opex m
Network opex
Network investments • Pu
• Increasing capacity ex
Asset utilisation Network opex
• Increasing coverage pla
Retail
Call centre opex S&D opex • Op
1 See Analysys Mason’s Report The Connected Consumer Survey 2012. Available at www.analysysmason.com. Service issues • SIM
% first-call resolution • Increased number in-bound % inactive user
2Google (Mountain View, California, 2011), The Mobile Movement: Understanding Smartphone Users. Available at http://www.thinkwithgoogle.com/insights/
calls per customer
uploads/23600.pdf. • Poor complaint resolution rate
3 Ofcom (London, UK, 2011), Communications Market Report: UK. Available at http://stakeholders.ofcom.org.uk/binaries/research/cmr/cmr11/UK_CMR_2011_
FINAL.pdf.
4 % churn
See Analysys Mason’s Comment Mobile broadband connections in Europe: tablets have yet to make a noticeable impact. Available at www.analysysmason.com. 15
Consumer behaviour
• SIM use and throw away
% inactive • Secondary SIM

16. seRVICes And stRAtegIes
Mobile loyalty schemes: much more than a good price
HeLen KARApAndžIC
Lead Consultant
Custom Research
helen.karapandžic@analysysmason.com
In the face of flat subscriber growth in mature markets, more operators are turning
“Well-targeted to loyalty programmes as a way of maintaining subscribers. A recent benchmark
schemes can engage study conducted by Analysys Mason suggests that more than 90% of mobile
those segments of operators in Europe offer one or more such programmes.
the customer base
that have a higher Our work with mobile operators has found that in Analysys Mason has previously categorised loyalty
order to build a successful loyalty scheme, the schemes into three broad types (see Figure 5). The
propensity to churn.” following points need to be taken into consideration: programmes offered are very varied in terms of the
type of scheme, the target customer, the costs
• Loyalty is not just about specific programmes, but
involved in delivering the scheme, and the benefits
also about basic ‘hygiene factors’. Loyalty
provided, both to the customer and the operator. The
programmes are not a panacea for reducing
success of loyalty schemes also varies significantly.
churn: operators need to make sure the basics,
like customer satisfaction and pricing, are right Mobile loyalty schemes are becoming increasingly
before loyalty programmes will have an impact. We varied and innovative as operators seek to
believe that there are many short-term measures differentiate their offerings. Indeed, some operators
that operators can still take to improve these now offer multiple schemes within their respective
hygiene factors, such as making sure offers are markets. As an example, GLOBUL in Bulgaria offers
clear and transparent. a number of loyalty schemes as part of its ZAEDNO
(‘together’) programme, each with its own package of
• A different approach is required for different
benefits and conditions. These include:
customer segments and, crucially, for customers
at different stages of their life cycle. For example, • Loyalty discounts and preferential tariffs for
different rewards will appeal to new customers contract customers who have been with GLOBUL
and to customers who have been with their for over a year.
operator for many years: the latter may want a
• The GLOBUL UBB MasterCard, which offers
simple thank-you for their long tenure. Initiatives
customers a discount on their monthly phone bill
to promote loyalty should reflect this.
equivalent to 2% of the amount they spent on their
• Loyalty is not only about providing a good price. GLOBUL credit card in the previous month, up to
Pricing is likely to become more stable in a mature the value of BGN60 (USD42.68).
market, and loyalty becomes less about functional
• Shell Smart, a points-based reward scheme
or transaction items such as cheaper services or
offered in collaboration with Shell, which rewards
discounts on handsets, and more about
users with points which can be redeemed at Shell
psychological or emotional factors, including
petrol stations against products and services in a
brand image and customer perception.
catalogue, as well as seasonal promotions
• Key lessons can be learned from case studies (depending on subscribers’ monthly mobile spend).
showing international best practice. Despite the
For telecoms operators, the benefits of mobile loyalty
widespread deployment of mobile loyalty schemes,
schemes vary depending on the type of scheme
their success has been variable. International
offered and the extent to which they respond to the
benchmarking can help avoid these pitfalls, as
target customers’ attitudes and emotions. Get it
well as identifying best-practice features that an
right, and loyalty schemes can encourage tenure,
operator can transfer to its own practices in order
spend and/or promotions: well-targeted schemes
to improve performance.
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17. “Analysys Mason has previously categorised loyalty schemes into three broad types
Mobile loyalty schemes are
The programmes offered are very varied in terms of the type of scheme, the target becoming increasingly varied
and innovative as operators
customer, the costs involved in delivering the scheme, and the benefits provided, both seek to differentiate their
to the customer and the operator.” offerings. Indeed, some
operators now offer multiple
schemes within their
respective markets.
can engage those segments of the customer base Analysys Mason provides independent advice to
that have a higher propensity to churn (the ‘right’ assist mobile operators in the design and
customers). Get it wrong, and the scheme may end implementation of successful loyalty programmes.
up rewarding existing behaviour (thereby decreasing To learn more about our services in this area,
revenue to potentially no benefit), alienating including market assessments, customer surveys
certain customer segments for whom the scheme and workshops, contact us by phone at +44 845 600
is poorly targeted, or turning out to be costly or 5244 or by email at enquiries@analysysmason.com.
complex to administer.
type of description examples
scheme
Points Customers collect points T-Mobile Austria’s Flamingo scheme is a points-
based on spend/tenure, which based loyalty programme open to both prepaid and
can be redeemed for contract subscribers. It offers both telecoms
telecoms rewards (for benefits – including airtime and handset discounts
example, a new handset) or (depending on mobile spend) – and non-telecoms
non-telecoms rewards (for benefits through a partner programme
example, a leather wallet)
Aircel India’s Advantage is an exclusive points-
based scheme for contract customers who have
spent INR400 (USD7.98) or more each month for a
year. Customers are rewarded with special offers on
telecoms goods and non-telecoms services (such as
a 20% discount on a pizza, invitations to events)
Event Customers are rewarded with Telefónica UK (O2) has tied itself to music through
something special – typically venue sponsorship and the Priority programme,
access to events which offers all O2 customers access to tickets 48
hours before general sale
France Telecom’s Orange has a long-running
cinema promotion, which offers all customers two
tickets for the price of one on Wednesdays
Top-up Customers receive rewards Proximus Belgium offers a top-up rewards scheme for
each time they top up. Prizes prepaid customers called Play&Gold, which is
can be telecoms (for example, designed to look like a game. Entry to the game, which
free SMS) or non-telecoms is played online, is obtained by topping up at least
(such as a holiday) rewards EUR15 (USD20.87). Participants receive a guaranteed
telecoms prize (such as a five-minute call) and a
chance to win a big prize (for example, a world trip)
Figure 5: Overview of types of loyalty scheme
[Source: Analysys Mason, 2012]
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18. seRVICes And stRAtegIes
Focus should be the watchword for operator-provided
consumer cloud services
toM ReBBeCK
Head of Custom Research
tom.rebbeck@analysysmason.com
“Telecoms operators Improved connectivity, the launch of high-profile services such as Apple’s iCloud
have a poor record and the search for new revenue streams have inevitably caused mobile operators to
for developing new consider launching consumer cloud services. However, we believe that the
services.” potential revenue upside from most consumer cloud services (with the possible
exception of cloud-based gaming) is limited for operators.
Rather than trying to generate revenue by competing it is becoming easier for start-up companies to
directly with the range of cloud services, operators launch services. As an example, Outside.in, a
would do better to focus on a narrower set of provider of local information, started with a few
services (see Figure 6) and consider how they could hundred thousand US dollars in 2006. Its founder,
protect existing revenue. Steven Johnson, has estimated that, if the company
had started five years before, it would have required
Mobile operators need to establish partnerships
USD50 million to launch the same service.1 The
when trying to offer consumer cloud services
venture capitalist Fred Wilson has made similar
Telecoms operators have a poor record for claims in his blog. An operator’s cloud services
developing new services. Telecoms operators are would compete with a few large, extremely well-
essentially conservative – they make a huge amount funded companies as well as hundreds of small
of revenue from a stable set of products (voice, start-ups. Operators need to consider how to use
messaging and data). New cloud services are their advantages, such as large customer bases and
unlikely to get the same focus or budget as other existing products, to differentiate their services.
divisions. Even where a budget is made available, it
Start-ups are experimenting with a variety of
may be vulnerable to being withdrawn if the new
business models and are often content with low
cloud service does not show early success. Mobile
revenue. The business models used can involve a mix
operators need quick wins to help build momentum
of advertising, subscriptions, one-off fees, premium
in the cloud space. Partnering, rather than internal
features and so on. Some companies (such as Viber)
development, may be the quicker route to market.
do not appear to generate revenue at all, but are
Unsuccessful services could damage an operator’s concentrating on building a user base, as Facebook,
brand. Any security breaches related to customer Google and Twitter all did before. Operators will need
data, or poor user experiences, will undermine to be flexible in developing business models for their
consumer trust in, and reliance upon, the service services and may have to accept low or zero revenue
provider. For operators, a subscriber’s lack of trust while building a user base.
could spread beyond the cloud services and put the
Large companies that offer cloud services are often
entire subscription at risk. Partnerships may help to
doing so in spite of generating zero revenue. Apple,
limit this risk.
Google and Microsoft all have offerings that could be
Operators also face stiff competition from other classed as consumer cloud services. However, many
companies in the cloud space of these services support the core businesses of
these companies and do not generate revenue
The supply side of the cloud services market is directly. For example, iCloud is offered without
hugely fragmented. As barriers to entry come down,
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19. “Large companies that offer cloud services are often doing so in spite of generating Given this competitive
zero revenue. Apple, Google and Microsoft all have offerings that could be classed as environment, operators
cannot expect to generate
consumer cloud services. However, many of these services support the core businesses high levels of direct revenue
of these companies and do not generate revenue directly.” from consumer cloud
services. Instead, they
should focus on
opportunities that reinforce
their core services and
charge (for up to 5GB of storage) as a way of helping Given this competitive environment, operators cannot increase loyalty, partnering
sell more Apple devices, and Google services create expect to generate high levels of direct revenue from wherever possible.
more advertising space. Where operators compete consumer cloud services. Instead, they should focus
with large, extremely well-funded companies, these on opportunities that reinforce their core services
competitors may be using their extensive financial and increase loyalty, partnering wherever possible.
resources unconcerned by the lack of significant
direct revenue.
services example opportunity and
advantage for
Remote control and monitoring XFINITY Home Security (Comcast) High
Cloud-based gaming OnLive High
Standalone cloud video Netflix, iPlayer (BBC) Medium
Synching iCloud (Apple) Medium
Back-up and locker Dropbox Medium
Streaming music Spotify Medium
Music locker My Music Anywhere (The Carphone Warehouse) Low
Consumer web Google Docs Low
Figure 6: Assessment of the potential for selected consumer cloud services
[Source: Analysys Mason, 2012]
1 Jarvis, J., What Would Google Do?, HarperCollins (New York, 2009), p. 192. 19