A look at the disruption in the Telecommunications industry by multiple startups. Covering the conditions that created the opportunity for new entrants, their common traits, and the take aways for entrepreneurs.

1. STARTUP DISRUPTION IN
TELCO
JAMES PARTON, DIRECTOR OF TWILIO EUROPE
@JAMESPARTON
!

2. WHAT SPRINGS TO MIND WHEN YOU THINK OF YOUR MOBILE
PROVIDER?
IBEGYOURPARTON.COM @JAMESPARTON

3. A LITTLE ABOUT ME

4. INTERSECTION OF TELCO AND STARTUP
!
IBEGYOURPARTON.COM @JAMESPARTON

5. SO WHAT’S THE PROBLEM?

6. TELCO REVENUE DECLINING FOR FIRST TIME
UK 4G spectrum auction generated £2.3bn!
2000 UK 3G action made £22.5bn
IBEGYOURPARTON.COM @JAMESPARTON
Source: ETNO

7. THE TELCO BUSINESS MODEL IS BROKEN
“
Voice is God’s gift to humanity.
It’s what differentiates us from the
animals. And we position voice at
zero — you don’t have to pay for
voice. Voice is dead.
”
Hakam Kanafani!
Group CEO of Turk Telekom!
Mobile World Congress 2013
IBEGYOURPARTON.COM @JAMESPARTON

8. ..BUT TELCO’S REMAIN CASH GENERATION MACHINES
2012 Revenue (USD Billions)
$130
$98
$65
126.4
84.1
81.8
76.4
$33
$0
60.9
AT&T
China Mobile
Telefonica
Deutsche Telekom
59.3
Vodafone
FT
Source: Company websites
IBEGYOURPARTON.COM @JAMESPARTON

9. CROSS INDUSTRY COMPARISON
$180
2012 Revenue (USD Billions)
$135
$90
173.9
156.6
126.4
107
$45
79.1
67.4
58.3
48
24.1
$0
Samsung
Apple
AT&T
IBM
Sony
Unilever
Luxembourg Coca Cola
Nike
11.6
Heinz
Source: Company websites, Wikipedia, Business Week, BBC
IBEGYOURPARTON.COM @JAMESPARTON

10. OIL, FOOD, TRANSPORT, COMMUNICATION
2012 Revenue (USD Billions)
$500
$375
$250
482
443.9
$125
226
126.4
$0
Exxon Mobil
Wallmart
Toyota
AT&T
Source: Company websites, Wikipedia, Business Week, BBC
IBEGYOURPARTON.COM @JAMESPARTON

11. SO WHAT ABOUT THE DISRUPTORS...?
2012 Revenue (USD Billions)
$130
$98
$65
126.4
84.1
81.8
76.4
$33
$0
60.9
AT&T
China Mobile
Telefonica
Deutsche Telekom
59.3
Vodafone
FT
Source: Company websites
IBEGYOURPARTON.COM @JAMESPARTON

12. SO WHAT ABOUT THE DISRUPTORS....
2012 Revenue (USD Billions)
$140
$105
$70
126.4
84.1
81.8
$35
$0
76.4
60.9
59.3
50.1
5
AT&T
Telefonica
Vodafone
Google
0.7
0.3
Skype
Source: Company websites, insideris.com
IBEGYOURPARTON.COM @JAMESPARTON

13. SO WHAT ABOUT THE DISRUPTORS....
2012 Revenue (USD Billions)
$130
OTT 2016
$98
OTT 2013
$65
126.4
106
84.1
$33
$0
81.8
76.4
71
60.9
AT&T
OTT 2016
China Mobile
Telefonica Deutsche Telekom OTT 2013
59.3
Vodafone
FT
Source: Ovum, Company websites, insideris.com
IBEGYOURPARTON.COM @JAMESPARTON

14. THE DECLINE IS PREDICTED TO CONTINUE
Source: Telco 2.0
IBEGYOURPARTON.COM @JAMESPARTON

15. NEW KIDS ON THE BLOCK

16. THE RISE OF MESSAGING APPS
2005
280m active
2010
465m active
2011
236m active
Over 50 social messaging apps on Google Play have more than
1 million downloads
Source: Crunchbase, Wikipedia, mobilesquared , Ben Evans
IBEGYOURPARTON.COM @JAMESPARTON

17. NEW KIDS ON TH

18. CASE STUDY:
mobile picture messaging user experience done right...
Source: ReadWriteWeb
IBEGYOURPARTON.COM @JAMESPARTON

19. CASE STUDY: PHOTO MESSAGING
Source: OnDevice
IBEGYOURPARTON.COM @JAMESPARTON

20. CASE STUDY: RISE OF
Source: TeleGeography
IBEGYOURPARTON.COM @JAMESPARTON

21. SPEED AND AGILITY

22. RADICAL INNOVATION IN COMMUNICATIONS
~4,800 years
~3,000 BC
IBEGYOURPARTON.COM @JAMESPARTON
38 years
1838
108 years
1876
1984

23. SOFTWARE TIMESCALES
3G Launch
3 years
2003
2006
IBEGYOURPARTON.COM @JAMESPARTON
1 year
2007
1 year
1 year
2008
2009

24. DNA

25. SOFTWARE IS EATING TELCO
•
Marc Andreessen was right about software
eating the world, especially when it comes to
Telecommunications...
-
The innovation void is being filled by
software people, not Telco’s
-
Software people think web first. This style
of thinking is inherently open
-
Software people think collaboratively APIs, collaborative working, open source
-
Software people think about building
communities & ecosystems
Why software is eating the world: http://parton.ly/17u5g5z
Andreessen photo: http://www.flickr.com/photos/36521958135@N01/2443764501
IBEGYOURPARTON.COM @JAMESPARTON

26. Innovation
WWW
INTERNET
Switching
Copper

27. TELECOM
Switching
Copper

28. CONTROL = #FAIL

29. YE OLDE MOBILE INTERNET
IBEGYOURPARTON.COM @JAMESPARTON

30. CASE STUDY: INTERNATIONAL CALLING
Avg. cost of a 3 minute transatlantic
call:
!
1927: $75 (today’s equivalent $1,000)
1964: $12 (today’s equivalent $90)
2010: $0.21
!
Volume of transatlantic call minutes:
!
1964: 20 million
2010: 114 billion
!
!
Source: TeleGeography
IBEGYOURPARTON.COM @JAMESPARTON

31. CHANGING USER BEHAVIOUR
!
Weekly mobile activity by 12-15s in UK with a smartphone, 2013!
400
300
311
200
192
100
0
27
Phone Calls
SMS
App Messages
Per Week
Source: Ofcom
IBEGYOURPARTON.COM @JAMESPARTON

32. NO BUSINESS HAS A DIVINE RIGHT TO SURVIVE
“The fact is time is racing on: the
economy is declining, technology is
moving ahead and so are other parts of
the world. The telecoms sector hasn’t
had its ‘Lehman’ moment yet. But with
declining revenues, rising debt and
dated business models, I worry about
that happening,”
IBEGYOURPARTON.COM @JAMESPARTON
European Commission
Vice President !
Neelie Kroes

33. SO WHAT CAN WE
LEARN?

34. TAKE AWAYS
• Search for complacent industries with high margins
and poor user experiences!
• Don’t just talk to your customers, implement what
they tell you!
• Watch trends in your direct and indirect markets!
• Ensure your business model is multi faceted!
• Think about your DNA - create and integrate into
ecosystems, become de facto.!
• Have a Plan B, anticipate change
IBEGYOURPARTON.COM @JAMESPARTON

35. PAYOFF IS HUGE
2005 & 2011
2008
$2.6bn & $8.5bn
$105m
eBay & Microsoft
BT
2009
2012
$207m
$1.1bn
O2
Facebook
2014
2014
$900m
$19bn
Rakuten
Facebook
IBEGYOURPARTON.COM @JAMESPARTON

36. CASE STUDY:
M&A
• Think about what we have covered today!
• Despite being the clear number 1, Zuckerberg is
not making the same mistakes!
• Facebook is under performing in Youth segments,
Emerging Markets, and Mobile!
• Decision making at software speed, whilst resisting
the temptation to build in house!
• He wants the next Facebook to be Facebook
IBEGYOURPARTON.COM @JAMESPARTON

37. FURTHER READING
Alan Quayle!
http://www.alanquayle.com/blog
!
Tomi Ahonen!
http://communities-dominate.blogs.com/brands/
!
Disruptive Wireless!
http://disruptivewireless.blogspot.co.uk/
!
Martin Geddes!
http://www.martingeddes.com/
!
Benedict Evans!
http://ben-evans.com
!
Telco 2.0!
http://www.telco2.net/blog/
IBEGYOURPARTON.COM @JAMESPARTON

38. THANK YOU.
@JAMESPARTON
IBEGYOURPARTON.COM
SCOOP.IT/T/SOFTWAREANDTELCO
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