1 / 24

From 2G to 3G

From 2G to 3G. Bjørn Erik Reinseth CEO 19 March 2002. Agenda. Operator options Business models Players Services Culture. 2G characteristica. No value chain – operators in full vertical control Limited service development – services specified by ETSI Low financial risk

trang
Download Presentation

From 2G to 3G

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. From 2G to 3G Bjørn Erik Reinseth CEO 19 March 2002

  2. Agenda • Operator options • Business models • Players • Services • Culture

  3. 2G characteristica • No value chain – operators in full vertical control • Limited service development – services specified by ETSI • Low financial risk • Creativity focused around network roll-out • Extended lifetime – likely throughout 2012 => cash cow! • Traffic generated by customer produced content (voice) • Growth assured by increasing subscriber penetration

  4. 3G characteristica • Operator control limited to customer administration & screening, billing and basic (carrier) services • Traffic generated by third party content services as well as person-to-person communication • Larger financial risks, especially with high licence fees • No ”proof” yet of a working business model • Growth must come from increased usage, which will be revenue streams from other business areas • Increased ARPU, but reduced margins

  5. The operator options • Network competition alone will not develop the mobile market according the stated objectives • Most consumer experienced development are results of service developments rather than network developments • A broad range of operator categories (SP, MVNO, MNO) is the only way of creating the wanted dynamic market

  6. The operator options Investments Margin MNO MVNO MVNO ESP ESP SP SP Time

  7. NO UMTS NO GSM 1800 + roaming + VAS D UMTS MVNO UMTS GSM B GSM SP or MVNO & VAS UMTS SP C GSM SP A SP Vertical options from 2G to 3G

  8. International calls Calls to other operators International calls Calls to other operators Voice Mail Telenor/ NetCom core network Sense core network SMS-C Telenor/NetCom radio network Telenor/NetCom Voice Mail, SMS-C,... Sense Billing and Customer Administration Service Provider or MVNO

  9. MVNO vs Service Provider

  10. A business for (fixed) content? • Fixed line internet provides no business model for content services (charging for traffic only) • Content providers are (desperately, but in vain) seeking to get shares of traffic revenues • Fixed internet users are spoilt with free of charge content services • Paper media with decreasing popularity cannot in the long run finance internet services albeit increasing popularity • Two main challenges: • Willingness from media players to limit distribution • Simple and working debiting principles

  11. What happened to e-business? • Internet as a channel was no more than advanced mail order • Type of business was secondary to channel of distribution • Focus was on atoms and not bits • Bits: Pictures, video clips, music, tickets, etc. • Atoms: Physical items • No business model for trading of bits (credit cards most suitable for atoms) • Sense will focus on trading bits!

  12. What about mobile content? • There is a willingness to pay for mobile content (ref. premium rate SMS) • There is limted content avable for free (WAP only), hence users are not too spoilt with free content. • There is a business model for mobile content services (ref. premium rate SMS) • SMS is slowly becoming a general currency despite shortcommings like: • Expensive for credited part • Hesitance by operators to boost phone bill excessively • A model similar to premium rate SMS must be the governing business model for 3G mobile content services

  13. Mobile content services • Two regimes so far: • Premium rate SMS • WAP (circuit switched) • Why was WAP (to date) a flop and premium rate SMS a success?

  14. WAP vs Premium rate SMS * will be overcome with WAP over GPRS

  15. Players in the 3G value chain • Mobile operator (SP, MVNO or MNO; delivers and charges for mobile content services) • Content Provider: • Content Facilitators (prepares chargeable content for mobile devices and performs IPR management) • Content Producers (e.g. Disney, CNN, NRK, Scanpix, National Library) • Media Partners (e.g. magazines, newspapers, tv-channels, radio-stations)

  16. 3G (SMS, GPRS, UMTS) 2G (voice) ”Gross” Margin ”Gross” Margin Content Facilitator Content Cost Media Partner Network Cost Content Production Network Cost Inter- connect Cost Inter- connect Cost Revenue breakdown (seen from MNOs)

  17. Standardised interface; technically and comercially Sense content & services station Content provider Network operator 2G, 2.5G or 3G networks Content provider Content provider @ (www) Mobile content services (SMS, GPRS, 3G) Sense will provide flexible billing solutions for content Content providers control own pricing and branding

  18. MNO – Content Provider relationship • The conseption of MNO purchased or controlled content will never be accepted by Content Providers • Content Providers will never accept a limited distribution of their content (i.e. through selected operators only). Exclusive content deals will be time limited only. • The operator must accept Content Providers right to own: • Branding • Pricing • Editorial freedom

  19. 3G services • The mobile business will never re-experience a killer application like mobile voice • There is no 3G killer application, so stop looking! • Three main driving 3G services (other than voice): • Internet surfing • MMS (third party content) • MMS (point-to-point) ”2G is a self playing piano. In 3G you must compose the music and play it yourself” Unknown wise guy

  20. Monthly ARPU/mobile penetration (%) Mobile penetration Market development - voice/non-voice (2G/3G) soaring ARPU, plunging margins Voice never dies Source: Lehman Brothers Research, 2000

  21. 3rd party content charged through credit cards, accounts etc. 3rd party content (charged by operator) Operator produced VAS Traffic Subscription/availability 3G pricing structures • Two main changes: • Towards fixed monthly price for (non-voice) traffic • Content charged per attributes, i.e. not for size or time • Traffic will be; voice, MMS, internet surfing, content download

  22. Cultural changes • Operators’ 2G experience and success is a big threat to the 3G development. • Looking for a 3G business model with a 2G business model in mind will fail • Organisations require different mindset, skills and attitude in a 3G world. This transitions will be an enormous challenge to organisations which have always experienced growth

  23. Cultural changes • The engineers’ dominance in the mobile business must cease. • Must threat mobiles more like FMCG, but remember • get to know every customer, not only the sum of customers • Mobile content is definitely like FMCG 2G is about doing things right, whereas 3G is about doing the right things!

  24. Summary – transition from 2G to 3G • Desperate need of a sustainable business model • Large changes in organisational culture required • Operators will play a less significant role • Growth must come from increased usage

More Related