Details of the STL Partners' Mobile Video Syndicated Research Study. The growth in mobile data, and in particular mobile video, is placing increasing strains on the cost structure of some mobile networks. Telco 2.0 is undertaking a syndicated study to define the general and market specific economic choke points, and propose alternate business model solutions.

1. Business Model Innovation for the Digital Economy
Mobile Video
Understanding the threat (and opportunity) of growth for
operators
Chris Barraclough
chris.barraclough@stlpartners.com
www.Telco2.com

2. Mobile video growth is placing the current business model under
considerable strain
Video traffic growth will far outstrip revenue ...resulting in margin squeeze and potential losses for
growth... mobile operators
4,500
4,000
3,500
Indexed to 2008 = 100
Revenues
3,000
Users
2,500 Costs
Traffic
£ Revenue
2,000
1,500
1,000
500
0
Time
2008 2009 2010 2011 2012 2013 2014 2015
Key question facing mobile operator management:
• How fast will this occur: when will the current broadband business model reach ‘end-of-life’?
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3. STL Partners’ study will answer the key operator question about the
sustainability of the current mobile broadband business model
Key Question: Answer provided for different market scenarios based on changes in:
• How long will it take for 1. Demand-side variables:
video-related costs to • End-user consumption profile
outstrip broadband
access revenues: 2. Supply-side variables:
• Network and device technology
• When will the current
mobile broadband • Video delivery method
business model reach
3. Market and business model variables:
‘end-of-life’?
• End user broadband pricing
• Operator network capacity profile (RAN, backhaul, core)
• Operator network cost profile (fixed, semi-variable, variable)
Clients will be able to select specific operators within (mature) markets and assess when video
growth is likely to be a ‘business-critical’ issue under 3-4 market scenarios.
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4. Methodology summary: developing a detailed mobile video economic
model
Macro Forecast Country Forecast Company Forecast
1. Demand
• Consumer use cases
• Video consumption by
delivery method
3. Video Traffic 6. Video Traffic 8. Operator P&L
• By delivery method, and Broadband • Revenue forecasts
device , network Revenue • Opex and Capex
• By region and major
• By country forecasts
2. Supply country
• Developments in
• Devices
• Networks
• Delivery methods
5. Pricing 7. Network costs
• Mobile broadband & capacities
access • RAN, backhaul, core
• 3-4 scenarios developed for video traffic growth: • Fixed, semi-variable,
• 3-4 different macro-trends variable
• Scenarios impact country trends (volume and
pricing) 4. Market
Dynamics
• Scenarios also affect network costs and • Market structure &
competition
ultimately individual operator P&L • Market shares
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5. The economic model will provide a number of valuable outputs
Macro Forecast Country Forecast Company Forecast
Revenue and cost forecasts for individual
operators’ broadband businesses in key markets
Scenario 1; Operator X, UK
Consensus on specific Costs Revenue
consumer use cases £
for mobile video Video volume and
revenue forecasts by
country Time
1. Demand
6. Video Traffic and 8. Operator Video
3. Video Traffic
Broadband Revenue P&L
2. Supply
7. Network costs &
5. Pricing
capacities
Per MB mobile
broadband access
4. Market Dynamics
price forecasts by
Consensus on supply-
country
side (technology)
developments
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6. Why a syndicated approach?
1. Garner input from multiple specialists:
• Chipset vendor
• Device manufacturer
• NEP
• IT vendor
• Content industry
• Operator
2. Reach consensus across the value chain on the business model issues associated with video
delivery
3. Spread cost of this significant project
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7. Next steps
• Please contact :
Chris Barraclough, MD STL Partners
chris.barraclough@stlpartners.com
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