MOBILE MARKETING: Scan for Your Future

BARCELONA!

INSIGHT REPORT The mobile operator journey MOBILE from advertising to marketing, and EUROPE how to navigate it.

EUROPE’S WIRELESS MAGAZINE S issue no. 217 S August/September 2011 S www.mobileeurope.co.uk ALSO INSIDE:

ROAMING STRUCTURES TO CHANGE > Rival telcos to be allowed to bid for separate roaming contracts.

P09

POLICY CONTROL > Find the money How mobile operators are using policy control to target and generate new service revenue streams.

P34

NEXT LEVEL NETWORK OPTIMISATION > Getting the low down on how new tools are being used to optimise the MOBILE MARKETING: user experience. Scan for your future

P39 Equip yourself to meet the challenges of LTE-Advanced.

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PXA Signal Analyzer (N9030A)

Up to 75 dB of SFDR* over 140 MHz analysis bandwidth for multi-carrier analysis

Up to -87 dBc 3GPP ACLR dynamic range

LTE and HSPA+ are just two of numerous one-button measurement applications

Agilent 89600 VSA software for deep capture and analysis

Save up to 40% on measurement applications and 9LVLWXVDW view LTE ACLR, W-CDMA, Noise Floor Extension app notes at www.agilent.com/ﬁnd/future

BARCELONA!

INSIGHT REPORT The mobile operator journey MOBILE from advertising to marketing, and EUROPE how to navigate it.

EUROPE’S WIRELESS MAGAZINE S issue no. 217 S August/September 2011 S www.mobileeurope.co.uk ALSO INSIDE:

ROAMING STRUCTURES TO CHANGE > Rival telcos to be allowed to bid for separate roaming contracts.

P09

POLICY CONTROL > Find the money How mobile operators are using policy control to target and generate new service revenue streams.

P34

NEXT LEVEL NETWORK OPTIMISATION > Getting the low down on how new tools are being used to optimise the MOBILE MARKETING: user experience. Scan for your future

P39

Contents August/September 2011

Results round-up from northern Europe.

Legacy issues Policy enabling hampering personalised monetisation service introduction as well enforcement REGULARS FEATURES EDITORIAL VIDEO OPTIMISATION Keith Dyer says that while the Greek government’s dash What are the requirements for the optimisation of video 04 for the cash is understandable, it shouldn’t be repeated. 32 streamed across mobile networks, and how should operators best optimise video content? (Sponsored article) NEWS Ericsson, Nokia and Telenor results; Survey shows appetite POLICY CONTROL 06 for carrier provided WiFi calls; Olaf Swantee to take over at From bandwidth management to revenue generation, Everything Everywhere; O2 enters offers market; InMobi Europe 34 those selling the solutions are hoping to make the wider shows mobile ad growth of 21% from Q1 to Q2 2011; EC outlines strategic case for policy within the operator. "profound" changes to roaming market; TeliaSonera joins FT-Orange and Deutsche Telekom’s M2M; Legacy culture stifling change; NETWORK OPTIMISATION Consumers ready to pay for better access and quality; Vodafone and With operators taking steps to gain a customer-centric 3 launch own app store channels; Turkcell launches Android NFC. 39 approach, how does gaining a customer view impact upon network optimisation decisions and processes? DIARY A selection of the major mobile events and conferences in 42 the weeks ahead and a glance at some of the stories to have missed the real news pages.

INSIGHT REPORT INTRODUCTION AND FULL CONTENTS Keith Dyer introduces this issue’s Insight Report into mobile 15 The benefits advertising and marketing. The report points the way ahead for of aiming operators in this field, guided by new research and analysis. low in SPO NSO R’ S FO REW O RD network optimisation Alex Moukas, CEO of report sponsor Velti, welcomes this 16 Insight Report from mobileSQUARED, and says that the time is ripe for operators to take the step to the next level of mobile advertising and marketing.

go to www.mobileeurope.co.uk for the latest information on mobile Mobile Europe |3 Comment editor: keith dyer

Can the industry afford to look to the long term? Governments find it hard to turn down a short term buck at the expense of long term MOBILE tax revenues at the best of times. When they are neck deep in the largest financial crisis to hit their country in modern memory, it is understandable that they take every EUROPE opportunity they can to maximise short term gain. Editor: Keith Dyer [email protected] That appears to be what is happening in Greece, where the Direct tel: +44 (0) 20 7933 8999 government is renewing 2G spectrum licenses for Wind Hellas Production Manager: Tania King and Vodafone Greece, whose license terms for 900MHz and 1800MHz spectrum expire next year. Cosmote, the incumbent Sales Manager: Shahid Ramzan operator that has much less spectrum at 900MHz than its rivals, [email protected] does not see its license expire for a few more years. It will be keen Direct tel: +44 (0) 20 7933 8980 to acquire more sub-1GHz spectrum as it then seeks to refarm it Commercial Director: Justyn Gidley for 3G and 4G services. [email protected] Direct tel: +44 (0) 20 7933 8979 And so the Greek Government is fulfilling a dual purpose. It is determined to extract the maximum value possible from the Publishing director: Chris Cooke spectrum, and it is hoping that by going for an auction it will ISSN: 1350 7362 attract bids for 900MHz spectrum from Cosmote, pushing up the price. The operators are crying foul, and one consultant has warned Free Subscriptions that there may even be a refusal to bid, in protest. Mobile Europe is a controlled circulation monthly magazine available free to selected personnel at the publisher’s discretion. If you wish to apply for regular free copies then please write to: I’m not one of those who automatically assumes governments should give away

spectrum. Operators are commercial entities that should expect to pay fair value for Database Services spectrum. Yet studies have repeatedly shown that loading the tax take on the front of St John Patrick Publishing Ltd a license term limits the long term returns. The Greek government may feel it has no PO Box 6009, Thatcham, Berkshire, RG19 4TT. choice, but its model of auction plus high Tel: +44 (0) 1635 879361 Email: [email protected] reseve price, should not become a or register free online at: www.mobileeurope.co.uk The Greek government may template for 2G spectrum renewals. Paid Subscriptions feel it has no choice, but its Also coming down hard on the operators Readers who fall outside the strict terms of control may model of auction plus high is Neelie Kroes, who is imposing her own purchase an annual subscription . UK 1 Year - £96. International 1 Year - £120. reseve price, should not become double whammy on the industry – imposing retail and wholesale price caps a template. Subscription enquiries should be sent to: on data roaming as well as proposing a Saint John Patrick Publishers long term restructuring of how roaming PO Box 6009, Thatcham, Berkshire RG19 4TT will work within the European mobile industry. It appears she is offering the industry United Kingdom Tel: +44 (0)1635 879361 only pain, as the EC Digital Agenda insists there will be next to no roaming premium Fax: +44 (0) 1635 868594 within the EU by 2015. Yet there is opportunity too. Email: [email protected] Web: wwwmobileeurope.co.uk The imposition of rules allowing operators to offer separate roaming contracts, whilst users retain their existing SIM, number and handset, means that operators now have a Printed by case to “go roaming” where they have previously lacked either a group entity or a Pensord Magazines & Periodicals, Pontllanfraith, UK. competitively priced roaming partner. The prospect of operators cutting each others’ throats for roaming revenue is precisely what the EC wants to see, of course, trusting to competition to do its work (with the braces of price caps still gripping hard).

In response, the operators strongly hint that they will be forced to make up the shortfall elsewhere – in domestic tariffs or non-EU roaming prices. They also hold up The views expressed in Mobile Europe are not necessarily those of the editor the scary prospect of being unable to invest in future networks. It’s a similar story to or the publisher. the net neutrality debate. If we can’t monetise bandwidth, we can’t invest. As roaming Mobile Europe is published by Saint revenues inexorably decline, I wouldn’t be surprised if (The Netherlands aside!) we see John Patrick Publishers Ltd, the EC showing more flexibility on net neutrality. Stranger things have happened 6 Laurence Pountney Hill, London EC4R 0BL.

4|Mobile Europe

News results...results l Everything Everywhere ERICSSON, NOKIA Olaf Swantee to take over at Everything AND TELENOR RESULTS Everywhere after - THE EUROPEAN ANGLE surprise resignation

Several companies posted their 2Q 2011 results NSN HQ: Staying with Nokia for now Tom Alexander, former CEO of Orange UK, at the end of July - but what did they tell us is stepping aside as CEO of Everything about the European wireless market? Everywhere (EE) for "personal reasons". He First, Ericsson. Ericsson reported some decent will leave at the end of August. Orange results overall, but in Europe the picture was less has gone for the experienced Olaf rosy. In Western and Central Europe sales Swantee, a board member of EE since its decreased by 2% year-over-year and 10% inception in September 2009, as his sequentially. The company said that pressure replacement. on overall mobile service revenues in the region Swantee is currently head of operations is leading to network sharing and outsourcing (except France) and sourcing for France initiatives. Despite that, demand for mobile Telecom. That role may sound dry and of broadband continues to be strong, offering an limited strategic importance, but it has upside within the overall decline. seen him spearhead Orange's combined Network modernisation, including services and sourcing strategy - the deployment of multi-standard radio, has started Procurement Alliance - with Deutsche and rollout will accelerate during the second Telekom. half of 2011. The sting in the tale there is that Not only is that strategy a key factor in Ericsson also reported that low margin network controlling group operating costs, but it modernisation projects in Europe negatively involves co-ordinating co-operation impacted the overall margins of its business. Norwegian Kroner in future technologies, in between the same two group entities That said, it added that these types of project Norway alone, in the quarter. represented within EE. in Europe will "accelerate" during the second Then we had Nokia, completing the Norway Swantee's background at Orange half of 2011. Average project duration is - Sweden - Finland trinity. No doubt the overall includes a spell as senior VP of its global expected to be 18-24 months. nature of Nokia's results are well known. With mobile business, as well as time served as There was another sign that belts are being Symbian being shunted aside, and MeeGo also Senior Executive Vice President of the tightened in Europe too: although the vendor in a holding pattern with its N9 phone being Orange Group's mobile services in the UK added 4,500 staff to its services unit, and 1,000 well received but given no mass channel to & EME. It was in the latter capacity that he through acquisitions, most of these were in market, the company essentially had nothing was responsible for hiring Alexander as Brazil, India and China. In countries in Western new to sell. In Europe, unit sales were down Orange UK's CEO in 2007. Alexander Europe Ericsson was laying off staff. 30% year on year and 21% quarter on quarter. reported directly to Swantee at the time. However, away from Western Europe, Russia In total, the company sold just over 18 million Now Swantee steps into the role that was listed as showing strong growth, both year devices (all devices) across Europe in the Alexander has vacated at EE. on year and sequentially. quarter. Swantee has a deep knowledge of Another Nordic company, Telenor, also Its networks unit, NSN, showed better results Orange's mobile businesses, and has been hailed some decent news from Europe. It said though. In Europe it saw net sales decline by involved in key strategic decisions, has that although Asia drove most of its eight just 1% year on year, and rise 12% quarter on experience of dealing with T-Mobile and million subscriber additions for the quarter, its quarter. On a global basis sales were up 20%, DT. customer base in Norway had started growing although this included results of the Motorola A press release from Orange said that again. Data revenues in Norway were growing, acquisition. Excluding the Moto sales, NSN Swantee had, “successfully transformed compensating in part for price pressure on equipment sales would have risen 8% quarter Orange throughout Europe”. voice. on quarter. As it was, with Moto included, sales Everything Everywhere’s quarterly The company said that in the Nordics, service rose 15% quarter on quarter. Moto's network results for 2Q 2011 showed revenues offerings launched this year have had positive sales would have had limited impact on NSN's down from £3.47 billion in the first half of effects. A statement said, “All three operations European sales, one suspects. Nokia and 2010 to £3,36 billion in the first half of are now attracting new customers.” Certainly Siemens also announced they would not be 2011. The company also saw its customer the operator is going to look for some quick looking for a private equity buyer for the base contract by 443,000 in the first half of returns, having invested more than one billion division. 2011.

6|Mobile Europe News operator WiFi WIFI BECOMING STRATEGIC OPERATOR DIFFERENTIATOR Operators can use next generation WiFi billing relationship,” she said. “The OMX can at choke points in a cellular network,” said Dean standards, combined with a WiFi roaming support different business models” Bubley of Disruptive Analysis. “Additionally, exchange model, to offer customers a joined-up The Exchange allows providers to connect service providers can potentially monetise WiFi- WiFi experience that will enable easier data customers to preferred Wi-Fi networks via a client only devices and on-loading of other operator’s roaming, as well as giving operators the app running on Android or Apple OS devices, as customers.” opportunity to attract new customers. well as PCs running Windows. iPass OMX has already been adopted by iPass, which in May provided Deutsche “The next wave of Wi-Fi is becoming a mobile Deutsche Telekom as part of its Wi-Fi Mobilize Telekom with the the technology for its WiFi operator phenomenon, and it is our business to service. Wi-Fi Mobilize is a services exchange for Mobilize service (see picture above right), has help telecom operators enter the Wi-Fi business in-country and international roaming services. expanded on that service to announce the iPass with speed to market and a reduced cost and Nelson said that operators are moving from Open Mobile Exchange (OMX). risk profile, without a need for additional capital seeing WiFi as a tactical coverage solution, to a Operators connected to the exchange will be investment,” said Evan Kaplan, president and key strategic proposition. able to give their users automatic access to WiFi CEO of iPass. “By enabling operators to provide “In the past six to twelve months, WiFi has re- hotspots of other connected carriers. Barbara an integrated approach to mobility, iPass OMX emerged as a critical piece inside mobile network Nelson, CTO of iPass, told Mobile Europe that positions them to participate in the second wave operators. AT&T was perhaps the first to figure some carriers would be able to have direct billing of Wi-Fi.” out WiFi as a strategic asset and was really the relationships, where they see the value, whilst “A WiFi exchange has the prospect of offering canary in coalmine. They accepted this was others would be able to use iPass’ resolution. network operators multiple opportunities to about a broader issue and moved WiFi from “Principally the OMX provides a technical generate services, revenue and an ability to something they used on the quiet to a strategic relationship, which doesn’t have to relate to a reduce signalling load and steer traffic onto WiFi differentiator. Deutsche Telekom is also using WiFi as a differentiator.” Nelson said a more integrated cellular-WiFi strategy could bring three benefits for operators. First, there is the indirect value of being able to automatically offload traffic through free WiFi hotspots. Secondly, there is the added customer value of enabling easier international data roaming. Thirdly, there is the issue of providing better in-building coverage. Nelson added that she could also see certain use cases where “joined up” WiFi hotspots provided cellular-like “blanket” coverage. SURVEY SHOWS APPETITE FOR CARRIER PROVIDED WIFI CALLS Seventy four percent of smartphone users in “definitely” be interested in an application smartphone market, and subscribers are the United States would be interested in a that could be used to boost mobile coverage; interested in options that help them take mobile operator-provided service that uses and 47 percent would “definitely” be better advantage of Wi-Fi for coverage and Wi-Fi to provide lower cost calls, according interested in a Wi-Fi service offering cheaper calling,” said Steve Shaw, VP of to a recent MarketTools Zoomerang survey discounted calling. marketing for Kineto Wireless. “This data of 420 smartphone owners. • Of T-Mobile subscribers, 55% use Wi-Fi helps reiterate the market opportunities for The survey, commissioned by Kineto on their smartphones four or more days each mobile operators. They can improve service Wireless, also showed 72% of smartphone week or every day quality and develop subscriber-friendly users are interested in an application that • 68% of AT&T subscribers use Wi-Fi on services that drive mobile data offload.” uses Wi-Fi to improve cellular coverage. their smartphones four or more days each T-Mobile is the most aggressive US Other results from the online survey week or every day, 32 percent because it is operator in its use of Wi-Fi. In October 2010, conducted in May 2011 include: faster than the cellular network. the company re-launched its Wi-Fi Calling • 44 percent of iPhone owners would “Wi-Fi has become pervasive in the service.

go to www.mobileeurope.co.uk for the latest mobile news Mobile Europe |7 News advertising & marketing O2 ENTERS Caption OFFERS MARKET WITH PRIORITY MOMENTS

O2 has announced that it is entering the offers download or access through their phones by market by launching a service that allows users texting ‘moments’ to 2020. O2 said that the to access partner offers and discounts on their service "goes beyond current voucher schemes" mobile. by combining deals with "enhanced O2 Priority Moments will work as an app, or experiences" such as early access to sales, or Orange signs Daily by browsing a mobile site, allowing a user to other offers. see what offers are available by location, “The key word here is priority," Sally motion exclusive distance and preference. A user can scroll Cowdry, O2 Marketing and Consumer Orange has announced an exclusive through and list preferences, or view offers by Director. “This is not a tactical programme of partnership with Dailymotion to deliver an location. one-off deals – it’s about building a long-term, integrated advertising solution targeting It is important to note this is not a push nationwide service that benefits both our specific audiences and localised content. service, like the O2 More opt-in text alert customers and our partners. With Priority Dailymotion’s video sharing platform service O2 has going with Starbucks and Co-op Moments we are bringing our customers reaches 114 million unique visitors a for example. Instead, it's more of a Groupon exclusive, special offers and experiences from month worldwide, and 20,000 videos are type service, that brings offers from brands and their favourite brands in a way that works for added daily. The Orange Advertising businesses to users. them. The combination of mobile, great offers Network will exclusively represent At launch, O2 has 30 partners signed up, and experiences by trusted companies with Dailymotion’s video advertising inventory representing 3500 high street outlets and the long term partnerships creates what we believe across the UK, Spain and Poland. service eis available for O2 customers to is a special service.” Dailymotion’s content is differentiated between premium and user-generated content, while its catalogue of aggregated InMobi Europe shows mobile ad content is built around the concept of localisation – it has secured extensive growth of 21% from Q1 to Q2 2011 rights to local premium content via InMobi has released its monthly Mobile highest gain during this period, gaining partnerships with the major official Insights Report: Europe Edition Q2 2011. 6.1 share points. Despite this though, providers in each market, such as ITN in The report provides insights from Android remains the top mobile platform the UK, TV Azteca in Latin America, or TV3 InMobi’s network, which served over by ad requests with nearly 25% of all in Spain. This local content means brands 104.9 billion mobile advertising requests. can reach specific customers on a country impressions across the globe in Q2 2011, Rob Jonas, VP and MD Europe and by country level. including 10.8 billion in Europe. Middle East at InMobi, said: “The Q2 Companion ads can also be leveraged by The report shows continued growth of 2011 results show another major a brand to integrate video content impressions on Apple devices. During Q2 inflection point for mobile advertising in alongside traditional web advertising 2011, over 2 billion ad impressions were Europe. Smart devices, driven by iPad, formats such as banners and home-page served on Apple devices in Europe, iPhone, and Android devices, are now takeovers. propelling Apple past Nokia for the first defining the mobile experience for the Luc Tran Thang, Vice President, Orange time. Over the same period, Nokia majority of Europeans. The next phase of Advertising, said, “Advertisers are devices dropped by 0.9 share points and mobile advertising is upon us. It is now increasingly looking to incorporate video now represent 18.7% of ads in the up to brands and agencies to capitalise within their online campaigns but unless region. One of every five ads across with immersive, creative experiences brands can specifically target the right Europe is now on Apple manufactured delivered at scale for consumers.” content relevant to each market, it’s like devices. Total mobile advertising impressions on dropping a needle into a haystack. We can As a result of Apple’s iOS popularity, the InMobi network in Europe grew by 21 ensure that our advertisers connect with Android’s operating system has lost 5.0 percent in Q2, primarily driven by the right target audience, reached by share points against iOS’s gain of 3.3 over smartphone impressions, which grew by targeting localised video content, ensuring the past quarter. RIM, whilst ranked third 31%. United Kingdom and Spain showed a meaningful engagement for brands with in terms of operating systems, saw the the fastest growth in Q2. their consumers online.”

8|Mobile Europe News roaming legislation l M2M roaming EC OUTLINES "PROFOUND" CHANGES TO ROAMING MARKET Neelie Kroes, European Commission Vice opportunities for existing operators to compete Caps on wholesale prices between operators for President for the Digital Agenda has outlined in other markets. She said the proposal would all roaming services will remain until 2022, plans for “profound structural changes” to the give mobile operators the right to use other under the proposals. European roaming market. Clearly frustrated at operators' networks in other Member States at The GSMA said in a statement: “It would be the lack of progress in the mobile industry in regulated wholesale prices, and so encourage counter-productive to combine stringent price eliminating what she termed “roaming rip offs”, more operators to compete. caps with structural measures to foster Kroes said that the Commission has been forced The EC is also proposing to privide a "safety competition in this market. We are to move beyond price caps to focus on net" to consumers while the structural changes disappointed that the Commission is fostering increasing competition in the market, take effect; Kroes proposed renewed retail price considering the retail data roaming market as a by making "profound structural changes". candidate for price cap regulation, in addition The chief proposal is that by 1 July 2014, PROPOSALS COULD BE to proposing structural measures.” consumers will be able to choose a different COUNTERPRODUCTIVE - GSMA roaming contract from their domestic contract, Neelie Kroes: not a fan of without changing their number or SIM. caps, so that by 1 July 2014, roaming “roaming rip- Kroes said that the proposed changes, which consumers would pay no more than 24 cents offs” need to be agreed by the European Council per minute to make a call, a maximum 10 cents and Parliament, are the “most effective and per minute to receive a call, maximum 10 cents sustainable way of reaching the Digital Agenda to send a text message and maximum 50 cents target of assuring that the difference between per Megabyte (MB) to download data or roaming and national tariffs should approach browse the Internet whilst travelling abroad zero by 2015.” (charged per Kilobyte used). The EC thinks the proposals will make it These caps would remain in place until 2016, easier for alternative providers to offer by when Kroes thinks the enhanced competitive competitive services, as well as increase structure of the industry will have taken effect. TeliaSonera joins FT-Orange and Deutsche Telekom’s M2M co-operation TeliaSonera has signed a cooperation quality and network interoperability culd help partnerships in the M2M market segment. agreement with France Telecom-Orange and to ensure M2M services for both machines A feature of the agreement is the incident Deutsche Telekom for machine-to-machine and goods on the move and for customers and troubleshooting capability that France (M2M) communications. whose business models require continuous Telecom-Orange, Deutsche Telekom and The agreement, which initially was signed access. The operator partners said that TeliaSonera will be improving to ensure the by France Telecom-Orange and Deutsche dedicated network supervision processes and best quality of roaming services to their Telekom in February 2011 to cover France, interoperability are important in leveraging customers. Because machine-to-machine Germany, Belgium, and Luxembourg, has the relatively low volume but highly critical communication is business critical for M2M since then added the Netherlands (Deutsche data collected by these devices and delivering customers, all M2M roaming services will Telekom) and most recently the UK through cutting-edge applications to users. have a dedicated support component, Everything Everywhere. The M2M service Against this background, the operators significantly improving previous industry footprint will now extend to cover said that both their partners and customers attempts at troubleshooting and providing TeliaSonera’s geographical reach, including using M2M solutions will benefit from much shorter repair time compared to Sweden, Norway, Finland, Denmark, Estonia operability across borders and enhanced regular procedures. and Lithuania. M2M service quality in the mobile networks Enhanced M2M interoperability will also be While roaming agreements have been of the cooperation members. maintained as the three partners conduct managed bi-laterally only, concentrated The three groups claimed they are not only joint testing to harmonise module standards. within single markets, this multi-lateral focused on enlarging the M2M service Module certification will enable the most cooperation agreement will provide roaming footprint, but also want to keep an elevated optimized interoperability between module services across the countries that have signed level of innovation, by extending their M2M and network. The group hope this will give the agreement. Continuous connection service portfolios and by entering into further them a competitive advantage in M2M.

go to www.mobileeurope.co.uk for the latest mobile news Mobile Europe |9 News innovation l NFC in Turkey LEGACY CULTURE STIFLING CHANGE AT SERVICE PROVIDERS

75% of those surveyed believe that lack of personalised, hi touch and more profitable integration between data sources was customer experiences.” hampering the introduction of new, more Miller said that the only way that can personalised and relevant services. 72% also happen is by marketing and IT working thought that poor alignment between sales, together to bring mutual expertise to the table marketing and IT was hampering efforts. 68% and develop a strategy to deliver the highly agreed that a traditional corporate mindset personalised experience. Yet a closed round was “out of sync with new forms of table event at Management World, hosted by competition”. the CMO Council, convinced Miller that there Additionally, 83% felt they needed to get a is still a way to go. At that event, IT Legacy thinking, a lack of cohesion and better handle on the network resource and participants said they didn't trust marketing internal politics are all hampering operators' support challenges presented by a more teams not to abuse data (“They said they ability to deal with the new communications diverse and demanding customer base and the feared sharing data as they would see it on a environment, according to a survey carried out proliferation of new devices and service billboard campaign the following week”) and by the CMO Council. offerings. one marketing executive said that he had got Nearly three quarters of communciations Miller said, “There is a sense that operators tired of waiting for the IT department to service providers polled by the CMO Council are dealing with a legacy mindset that provide a solution he needed, to he provided think that they suffer from a poor alignment of responds to subscriber demands by applying the budget and resource to self-provision. their operations, IT, marketing and sales teams. traditional infrastructure, operational and “Where is marketing at Management This, combined with a reliance on legacy pricing solutions. The aftermath of that is that World?” Miller asked, “Marketing needs to be thinking that prioritises infrastructure and they do not have enough access to the data involved here, to deliver those new customer pricing structures, is hampering operators' they need to drive data-driven customer experiences. Yet right now it's still a attempts to get to grips with the changing experiences. governance conversation. On the flip side, the subscriber environment. “There is a sense of paralysis to even start to CIO is not just there to keep the lights on. The CMO Council, with sponsorship from aggregate that data, that they are faced with They need to be tapped for the sense of Openet, surveyed 212 staff at operators, this overwhemling wave of customer insights strategy they can bring to the table. The CIO representing marketing and technology that could be aggregated. Then they try to and CMO together have this ridiculous wealth functions. It asked if these professionals aggregate that data and end up with soiled of knowledge, and so together could think thought their own companies were equipped data. more effectively.” to provide consumer-centric services, and “The problem is to turn that key data into Miller did see “individual points of light” respond to the changes in subscriber demands insights that can be actioned. Operators are however: a majority of respondents said that and increasing complexity. looking for new revenue streams and to go they were considering changes to their CRM Liz Miller, VP of Programs and Operations at beyond the new pricing matrix, and beyond platforms — implementing new programmes the CMO Council, told Mobile Europe that these legacy conversations to deliver and strategies.

TURKCELL LAUNCHES ANDROID NFC DEVICE FOR MOBILE WALLET SERVICE Turkcell has officially launched the T20 loaded on the Turkcell T20 and smartphone, one of the world's first communicates with an NFC enabled sim commercially available UICC (Universal card, it aims to transform the physical wallet Integrated Circuit Card), NFC - SWP ("ingle into a mobile one and provide an easy to Wire Protocol) android based device. use and secure environment for all the daily The Turkcell T20 is an Android based needs of Turkcell's subscribers. device from Huawei that also uses With this service, Turkcell also provides a MasterCard's contactless technology, comprehensive end-to-end NFC platform PayPass. open to all service providers and banks. Turkcell said that with Cep-T Cüzdan, its (Left: Turkcell’s Cenk Bayrakdar and Süreyya mobile wallet service, which is already Ciliv)

10 | Mobile Europe News consumer survey l operator app channels CONSUMERS READY TO PAY FOR BETTER ACCESS AND QUALITY

A sizeable number of European consumers 3. Thirdly, there was a desire for one, all-in, "40% said they would pay more for better would be willing to pay a premium for multi- data tariff that includes a number of devices – quality, but only 7% said they were concerned device access to services, for better network rather than specific tariffs for the phone, about speed. Yet operators tend to market on service quality, and for an all-in-one data tariff, dongle, iPad etc. 21% said they would pay a speed," Perlmutter said. "So service providers according to research commissioned by premium for a data bundle for all mobile need to think about their marketing, but also Amdocs. connected devices about the systems they need to provide these Amdocs commissioned a consumer survey The percentage of people saying they would flexible and dynamic pricing models based on from by Coleman Parkes, who surveyed more pay more for other capabilities were as follows: QoS, or on the specific value that a service than 4,700 consumers os in 14 countries. 18% said they would pay more for regular and provides to that consumer. That’s why there’s a According to Daniela Perlmutter, Director of very clear need to have the right policy Amdocs' Market Strategy and Research Team. SERVICE PROVIDERS NEED TO management system in place to make sure a the survey asked which items consumers would THINK ABOUT MARKETING service is actually being delivered to the right be willing to pay a premium for, specifically device, to the right service level.” asking what services consumers would pay agreed device updates; 18% for “cool” devices; more for on top of their existing spend. The top 18% for premium support from the service three answers from the 1,355 European provider; 17% for access to great TV/ other consumers surveyed were: content; 12% for getting regular and agreed 1. 33% said they were willing to pay more updates in service than they already do to gain the ability to use Perlmutter said that this consumer willingness all services and apps from any device, to pay for increased quality and for multiple anywhere. device connectivity would mean operators 2. 28% said they would pay more for better needing to rethink the way that they approach network quality: fewer disconnects, delays, ther customer communication, and design, higher download speeds deliver and assure services. 21% would pay for a multi-device data bundle Vodafone and 3 launch own app store channels on Android and Ovi

Vodafone has launched a Vodafone content for customers to get to the essential apps have a dedicated operator channel within the channel within Android Market. For Vodafone they can trust. More than 75 million app store. This time the app store is Ovi, users the homepage of the app store now Vodafone customers around the world are where there will now be a dedicated Three- has a Vodafone icon, given equal prominence regularly using the mobile internet, and we branded page for the operator’s customers. to Market's usual promo items of Apps and are committed to giving them the best The ‘Three Likes’ page will include a choice Games. possible experience. This focus on quality of 40 apps recommended by Three and will A click on the channel takes a user to a over quantity helps deliver on that be accessible to the operator’s customers Vodafone channel — a store within a store commitment.” using Nokia Symbian devices including the that includes Vodafone apps as well as The own-brand channel is already live in Nokia C7, Nokia E7 and Nokia N8. sponsored or discounted partner content. the UK, Germany, Italy, the Netherlands and Three will recommend different apps every The channel at the moment has Vodafone Spain. Vodafone said it would launch in week. The new Nokia X7 will be the first Music Shop as its top listing, then follows a Greece, Ireland and Portugal “before long”. handset to be integrated with the latest Vodafone Maclaren news feed app. After The Vodafone channel is a further example version of Ovi Store at launch this week. that, the channel aggregate apps from of the ways in which operators are trying to Charlotte Spencer, Director of Products and Vodafone partners, including Rough Guides, remain relevant in the applications and Services at Three, said, “This partnership is Shazam, and others. content space. Instead of expecting users to another example of how Three is leading the Vodafone says the channel is the first of its come to a Vodafone branded portal, the smartphone revolution. kind in Europe. operator has bundled its apps and content “By recommending apps that are relevant Lee Epting, Vodafone Group’s Content within an existing, OTT platform. to our customers and allowing them to pay Services Director said, “Together with Three UK followed Vodafone by also through their phone bill, customers will have Google, Vodafone has made it really simple partnering with an app store provider to a better, easier and faster experience.”

go to www.mobileeurope.co.uk for the latest mobile news Mobile Europe |11 News Vodafone and O2 results VODAFONE SEES NORTH-SOUTH DIVIDE AS REVENUES DROP

Vodafone suffered a slight reduction in its overall and those sold with a data bundle, led to strong European sales in the quarter just ended, seeing a growth in data revenue of 18.9%. Growth in split between northern and southern European fixed line revenue of 11.3% resulted from net operations. In the north, revenues were customer additions. marginally up or stable, despite MTR cuts and, in the UK, a reduction in customers. In southern Spain European operations came under threat from Service revenue declined by 9.9% impacted by macroeconomic and competitive pressures, continued intense competition, general economic Vodafone said. Vodafone now has 147.4 million weakness and high unemployment. During the customers across Europe (including Turkey), with quarter Vodafone reduced prices and said that 61.9% of those prepaid. the general economic weakness has driven The numbers show that service revenues in customers to reduce or optimise their spend on Europe were down 1.3% year on year, at £7.6 tariffs. The move to integrated voice and data billion - a 0.5 percentage point deterioration grew by 24.5% to £1.5 billion, representing tariffs is gaining momentum, however, as compared to the growth rate experienced in the 13.7% of Group service revenue. Mobile internet smartphone penetration grows. Data revenue previous quarter. Revenues from the German revenues grew 44.2% in Europe, while European grew by 8.9%, with strong growth in mobile operation were almost exactly stable while the messaging revenues grew 6.9%. internet revenue offsetting a decline in mobile UK numbers showed a 1.7% rise on last year's broadband revenue. quarter. In Germany the operator added 423,000 Germany Customer net additions in the quarter were at customers in the quarter, whilst in the UK it had a Service revenue increased by 0.2%(*) driven by 123,000, driven by mobile number portability strong data and enterprise revenue growth offset net gains in June. Voice usage increased following REVENUES FROM DATA by the impact of MTR cuts. Data revenue grew the introduction of integrated tariffs. ENTERPRISE GREW by 21.4% as a result of the increased penetration of smartphones and Superflat Internet tariffs. UK net loss of 139,000 customers. Enterprise revenue grew by 4.4% driven by fixed Service revenue grew by 1.7%, with the rate of Italy and Spain both saw reductions, of -1.5% line revenue growth of 8.6% and mobile revenue growth slowing compared to the previous in Italy and -9.9% in Spain. In Italy, Vodafone growth of 3.3%, as a result of customer wins quarter as a result of an MTR cut effective from 1 had a net loss of 197,000 customer in the during the quarter and the previous financial April 2011. Data revenue grew by 21.9%. quarter. Although its Spanish division added year. Total mobile revenue remained stable in the 123,000 subscribers, Spain has been undergoing first quarter despite the impact of an MTR cut Other Europe fierce price reductions and increased competition. effective from 1 December 2010. Service revenue increased by 1.1%(*) as The operator said that macroeconimic conditions During the quarter 1.1 million mobile contract growth in Albania, the Netherlands and Turkey in Southern Europe have also been having a customers were migrated to a mobile virtual offset a decline in the rest of the region, negative impact on revenues. network operator following revised agreements particularly in Greece, which continued to be The operator said that excluding the effect of with wholesale partners, resulting in an overall impacted by the challenging economic MTR cuts its businesses in northern Europe reduction in reported customers. environment and competitive factors. Service "continued to grow strongly" with Germany at Vodafone had 27,000 LTE customers at 30 revenue in Turkey grew by 32.1%. In the 4.0% (including MTR cuts: +0.2%) and UK at June 2011, following the launch last year. Netherlands service revenue increased by 0.5%, 5.3%( (including MTR cuts: +1.7%()). which was a decline on the previous quarter. Vittorio Colao, COE said that these were Italy • Meanwhile, Telefonica Europe also saw its “robust results despite challenging Service revenue declined by 1.5%, resulting German and UK divisions driving most of what macroeconomic conditions across southern from lower voice revenue which continued to be growth it generated, with the operator claiming European economies and the impact of cuts to impacted by price competition and economic revenues across the whole group grew 2.2% year mobile termination rates”. weakness. This was an improvement of 1.5 on year. The UK customer base grew 6% year on “Revenue from our key focus areas of data, percentage points on the growth rate year and now accounts for 48% of Telefonica enterprise and emerging markets continues to experienced in the previous quarter. Enterprise Europe’s customer base. UK service revenues grow strongly. With our broad geographical mix revenue performed strongly, driven by a higher grew 2% “excluding regulatory impacts”. In and improving market positions, we are well customer base and Vodafone One Net, a Germany, the subscriber base grew 9% and placed for the rest of the financial year,” he said. converged, fixed and mobile one number service. revenues 11%, again “excluding the effect of Across the group, data revenue for the quarter An increase in the penetration of smartphones, regulation”.

12 | Mobile Europe News German spectrum l Greek spectrum l Radisys acquisition Wind Hellas blasts regulator for 900MHz GERMANY ASSESSES 2G renewals proposals SPECTRUM PAST 2016 The Greek National Telecommunications and The German telecoms regulator has begun Matthias Kurth Post Commission’s (EETT) publication of a procedures to assess the requirements for 900 draft tender document for the renewal of and 1800MHz spectrum when the current licenses for 900Mhz and 1800MHz spectrum licenses for use of the spectrum expire in 2016. bands has created strong criticism from In view of the expiry of GSM licences in operators and observers. 2016, the Bundesnetzagentur plans to launch a Commenting on the draft Tender formal requirements assessment procedure to Document, Nassos Zarkalis, Chairman and determine the frequency needs in the 900Mhz CEO of Wind Hellas, said, “The approach used and 1800MHz range. The Bundesnetzagentur to set the price for the renewal of mobile will use this procedure to determine whether spectrum is driven solely by short-term demand would exceed supply and whether the infrastructures in line with their business models. revenue gains and disregards the need for number of frequency assignment requests “Last year's frequency auction was the key Greece to create a positive investment would exceed the number of frequencies means by which all German mobile operators climate. This sends the worst signal possible available. obtained new and additional frequencies. Such to international investors as they weigh up To assist with the consultation the a spectrum package is unique in Europe. the pros and cons of bringing their capital Bundesnetzagentur also published a key However, we are keen on setting the course for and expertise to our country.” elements paper, outlining the future options for the next decades and to settle the issue of WIND Hellas said that it will submit using the frequency ranges as well as possible frequency use after 2016 at an early stage. A detailed and documented opinions on the assignment proceedings. redistribution merely for a few years would text of the Public Consultation in the near The consultation on the frequency allotment entail considerable problems and from an future, with the aim of contributing to the study ends on 16 September 2011. Comments economic viewpoint would certainly not lead to long-term prospects for the on the key elements of the requirements the desired results,” Matthias Kurth, President of telecommunications industry in Greece. assessment procedure may be submitted until the Bundesnetzagentur, said. Coleago Consulting’s Stefan Zehle said that 12 August 2011. Determination of the In its draft consultation the the reserve price for the renewal of 900MHZ frequency requirements is scheduled for the Bundesnetzagentur comes to the conclusion spectrum amounts to €0.41/MHz/pop. By fourth quarter of this year. that competitive distortions resulting from the comparison the German spectrum auction in The Bundesnetzagentur has also published its current spectrum packages are unlikely. No May 2010 had reserve prices of less than own draft consultation on frequency allotment, competitive distortions were identified when 0.01€/MHz/pop. in which it comes to the conclusion that the examining the 900-MHz range in isolation or Zehle claimed that it is well established that four mobile network operators active on the when studying the totality of frequencies made high prices for spectrum trade off short term German market are equipped with competitive available to the parties concerned for the cash against long term benefit. frequencies enabling them to operate provision of radio access networks for the offer Zehle even warned that operators could sophisticated, broadband, wireless of telecommunications services. choose not to bid. “The example of the French 3G allocation in 2001 springs to mind, he said. “At the Radisys completes Continuous acquisition, time, the legal framework for auction did not exist in France. Hence the government fixed promotes staff to senior roles in merged unit the price at a high level, based on the Continuous Computing’s takeover over by from 2006-2011, will be CEO of the merged amounts that were paid for 3G licences in the Radisys is now complete. The deal sees operation. Mike Coward, a Continuous UK and Germany. SFR and France Telecom Radisys pay $73 million in cash plus Computing veteran and former CTO, Vice bought a 3G licence – Bouygues Telecom 3,666,667 shares of RadiSys common stock. President of Engineering, and General refused. In addition RadiSys will make earn-out Manager at the company, scores a role as “This put the government into an awkward payments based on revenues generated by Vice President, Strategy and Innovation. spot, because it wanted to preserve at least a specified set of Trillium products over a Amit Agarwal will become Vice three operators in France. The episode ended three year period following the closing of President/General Manager; Software and with a climb-down by the Government, which the acquisition. Professional Services. And Manish Singh, substantially reduced the price of the 3G Mike Dagenais, President and Chief who came into Continuous Computing spectrum licence.” Executive Officer of Continuous Computing, through Trillium, will now be Radisys’ CTO.

go to www.mobileeurope.co.uk for the latest mobile news Mobile Europe |13

MOBILE EUROPEINSIGHT REPORT

The operator journey TO MOBILE MARKETING

This report acts as a wake-up and a rallying call to mobile operators to increase their INSIGHT REPORT involvement in mobile marketing. Using detailed numbers and analysis, Nick Lane at CONTENTS: mobileSQUARED has charted a new path for mobile operators through the mobile marketing and advertising market. P16 Sponsor’s Foreword P17 Sponsored Interview: Velti

The thrust of his findings is that the long-term opportunity for mobile operators lies not P20 Mobile and advertising within the core banner and display advertising market, but in marketing and commerce, P21 The operator’s role while operators will still play an indirect role as an enabler for the mobile advertising ecosystem. In particular, he concludes, permission marketing allows operators to P23 The changing landscape capitalise on their consumer data and profiling, which can be further enhanced by P25 M-Commerce location data. P27 Conclusion

I think it’s a positive report that avoids the trap of castigating operators for not P28 Sponsored Feature: achieving the unachievable, but instead lays out a realistic path for growth based on an Gemalto

understanding of consumer behaviour and the wider value chain. P30 Sponsored Interview:

bemoko I’m not sure if we’ll ever reach the “utopian circle” that Lane’s conclusion drives towards, but that doesn’t mean that operators shouldn’t strive to find their role in some rewarding form of value chain, or value circle. REPORT AUTHOR: My thanks are due to the mobileSQUARED team for taking on the challenge of defining NICK LANE the role of the operator so squarely. I’d also like to thank Velti for its headline Nick is Chief Strategy Analyst, sponsorship of the report, as well our other partners Gemalto and bemoko. mobileSQUARED mobileSQUARED provides specialist Keith Dyer, Editor, Mobile Europe research which enables brands, agencies and the mobile industry to increase engagement with the mobile consumer. It delivers exclusive forward-looking data on mobile device usage, focusing on mobile web, app, commerce and marketing trends and usage, and Report sponsored by: mobile advertising responsiveness. INSIGHT REPORT SPONSOR’S FOREWORD

At Velti, we are fortunate to work with some of the world’s most innovative and exciting operators; operators who are committed to taking advantage of the increasing global mobile marketing spend. Our mission is to learn from, share and enhance the knowledge these operators hold already, and to enable all operators to take advantage of the opportunities that exist to build profitable revenues Alex Moukas, Chief Executive Officer, Velti and increase customer loyalty.

In a commoditised world, operators need to work extra hard to keep customers. The right mobile marketing strategy can increase average revenue per user, reduce subscriber churn, enhance brand loyalty and efficiently sell mobile advertising inventory. It is no wonder they are waking up to the proven, measurable impact of the channel.

As well as marketing to customers for their own benefit, operators can also offer a compelling marketing product to brands. As brands seek to gain efficiencies and get more from their marketing budgets, targeting and measurement are becoming key strategic priorities. This creates a powerful opportunity for mobile operators, who have both a large customer base, about which they have an enormous amount of data and insight, and a way to reach these customers anywhere, any time. Permission-Based Marketing enables mobile operators to understand and monetise their customer relationships while providing a uniquely targeted and measureable channel for brands as well as added value for the customer. By creating and segmenting an opt-in customer database, you can deliver highly relevant, targeted offers to customers based on their own preferences, with their permission.

This Mobile Europe Insight Report accords precisely with our aim to learn, enhance and share knowledge of mobile marketing. We know that there is great work going on across the region and operators can benefit from best practices. This report is about advancing mobile marketing expertise to the next level for the operator community and is a must keep.

16 | Mobile Europe Insight Report SPONSORED INTERVIEW GROWING REVENUE AND RETENTION IN A SATURATED MARKET Keith Dyer speaks to Stephen Upstone, VP of Sales and Development for Europe at Velti, about the channels available to mobile operators to increase customer loyalty and mobile revenues.

KEITHKEITH DYER: DYER:Why are operators looking at loyalty that'svariations, hard the work. essence of rightJim, now? Cisco of course is represented in the femtocell allWhen loyalty you programmes are a carrier is market through its MicroCell device, which is most deployingto establish thousands an ongoing of STEPHENnotably supporting UPSTONE: AT&T'sLoyalty femtocell programmes service. play Why an do macrocells,context for learning element more increasinglyyou think Cisco important is well-placed role in competitive to meet carrier markets, needs where managementabout customers, is thefor similarity femtocell of deployment? mobile offers makes differentiation hard fundamentallyinfluencing their different behavior, to achieve, rising volume of advertising noise makes it fromand providing supporting them tens with or difficultJIM TAVARES: for brands to stand out and it is not an option to hundredsadded value of in thousands return. competeWe are on very price excited alone. about As mobile the marketoperators because and other we ofThe femtocells. information You gathered still companiesbelieve it leverages work to increase so many customer key capabilities retention we and have havethrough all theloyalty complexity value,as a company. the leading First, operator there brands is the longhave traditiongone beyond of ofprogrammes, a 3G macrocell including but one-offScientific tactical Atlanta marketing to deliver initiatives carrier-grade to create CPE ongoing into the Orange Spain looked to a boththe scale opt-in is profiles one to and two user orders activity of magnitude tracking, helps larger. the programmeshome. And of that course connect there customers is our position with their within brand in loyalty programme to companyThe problem provide carriers a more need relevant to solve and is competitive to have one relevant,network meaningful, infrastructure and - thatuniquely hasonly differentiated been ways. deliver a differentiated experience,platform managing increasing all retention of this. andOnce customer again this lifetime plays experience for its users. Afterstrengthened all, the first by step the toward Starent increasing acquisition. the Femtocell value of a value.to our For heritage operators of supporting and media companies, tens of millions with ofthe customerplays to both base issegments, to make customers and our strength happy. By in givingboth rightcarrier opt class in permissions, CPE devices. this preference information customerssegments more mean of we what have they the want—more potential to value support for their also enables targeting to increase the value of money,massive a growth more personalized in the mobile and industry. exciting customer advertisingKEITH DYER: inventory. Once customers have been experience,Importantly, more we opportunities believe we to can engage provide in the contentend-to- recruitedDoes the into adoption the loyalty of program, the TR69 their standard behavior not can andend activities femtocell they infrastructure like—companies as one can company, demonstrate from their beaddress influenced the management through targeted issue, coupons putting and femtocells commitmentthe radio front to listening end to the and back-end responding provisioning to their side. incentivesonto the samethat reward footing actions as other such in-home as purchases, broadband customers’We've partnered needs, withand lay a best-in-class the foundation provider for profitable, in upgrades,access devices? downloads, customer referrals, new feature long-termip.access tocustomer provide relationships the RF piece, and as a that more is open not a usage, and prompt bill payment, as well as providing profitabletraditional dialog solution with area consumers. for us. Of course, everyone additionalJIM TAVARES: profiling information. An effective loyalty tends to think about the radio side, but the programTR69 is thus really results a framework in a higher - valuethere's relationship a whole lot for KEITHprovisioning DYER: sideWhat will are impact some as of well. the Unlesschallenges consumer bothon top the of business that to and implement its customers. if you want to really facingdeployment operators of femtocells today and is how zero can touch loyalty then help? there's be zero touch. The standards are really nascent, so no way carriers can scale - and we have the KEITHthat leaves DYER: a lotWhat of work revenue to do drivers as a vendor influence to make STEPHENexperience UPSTONE: to provide theConsumers whole integrated have different loyaltysure you programmes? can deliver a truly zero touch deployment motivationsprovisioning and process. reward levers, varying from savings to approach scale. value, immediacy and emotional connection. This results STEPHENBut I should UPSTONE: add thatOperators I think the use adoption loyalty of inKEITH a need DYER: for operators to demonstrate greater relevance programmesstandards isto ofincrease course positive, revenue, and stimulate both Ciscousage, and and andYou cut mention through. deployment, Additionally, consumers but how important often find will strengthenStarent have customer been leaders retention in standardization.to reduce churn of For pricingongoing plans management complex and ofhard femtocells to benchmark. be for carriers, prepaidexample and Cisco postpaid was an customers. active member The customer in the DSL Traditionalonce they operator have thousands discounts of and femtocells product deployed? reward ABOUT JIM TAVARES informationForum - now captured Broadband through Forum the- program Working enables Group schemes can lack perceived value and have low thethat operator developed to generate TR-069. additional revenue by offering Jim Tavares is a participation.JIM TAVARES: The opportunity is to align loyalty targeted, high-eCPM advertising opportunities, as well Director for Strategy That's exceptionally important. To take one programmes with offers and rewards that are meaningful & Business asKEITH by making DYER: its segmented customer base available to toexample, customers. in the Think USA ofyou this ashave taking got the to have best and integrated most Development in Cisco brandsWhat and other agencies issues for do the you execution think operators of their ownface in relevantGPS to meetoffers e911from ‘Groupon’ requirements, and similarand carriers rewards also Services. loyaltydeveloping programmes. the femtocell As mobile market? markets mature, programmesneed to know and where offering cells them are becauseto mobile they consumers. may want If operators must work harder than ever to grow successfullyto radiate on implemented certain frequencies this can create in certain fans whose locations, revenue.JIM TAVARES: To compete effectively for profitable voice loyaltyor take and steps value to goesavoid beyond interference customer with satisfaction, other femto as or andI woulddata services, mention it’s two now areas. essential The to first convince is that as theymacro have cells. trust So in that the operator.means as well as GPS you also customerswith any new that theservice operator or technology, delivers value there's beyond an just need an integrated network listening capability to minuteseducation and issue. megabytes; WiFi took undifferentiated a while for consumers services and to KEITHknow where DYER: aWhat cell is areby determining loyalty programmes its interactions really bundlesunderstand will always what it be really vulnerable was and toanother what it meant.operator’s about?with the cells around it. Customers may also self- promotionsSo you've got and a understanding similar learning your curve customers with and report where the femto is when they buy the cell. So theirfemtocell preference for consumers, becomes a as strategic well as competitive your retail staff STEPHENyou have to UPSTONE: adjudicateWhile between they all come that in data, many and advantage.in stores or customer support agents on the phone.

Mobile Europe | 17 SPONSORED INTERVIEW

KEITH DYER: Why did Orange Spain launch a loyalty and unique SMS code. The login credentials are checked program? against the Velti mGage platform to check eligibility, thus allowing the subscriber to enter the site. STEPHEN UPSTONE: Orange is the key brand of France By looking at the subscriber’s login credentials, our Telecom and, with nearly 216 million mobile customers system determines what level of reward they are eligible (as of March 2011), is the number three mobile operator for and displays only that content. The subscriber is then in Europe, as well as one of the top mobile phone able to select the reward they want. A selection of providers in Spain, with over 11 million subscribers. With Network and Physical rewards are offered. wireless penetration in Spain at over 110% and a highly ‘Recarga y Gana’ is very simple to understand and competitive market, they needed to move quickly to delivers a good subscriber experience with the additional deliver a differentiated, value-add experience for their business benefits of increased ARPU. There are no subscribers in order to grow revenue and reduce churn. barriers to the program and all subscribers who are Velti helped Orange Spain achieve these goals with a eligible can participate. Subscribers that do not want to prepay Loyalty Top up program. Orange Spain launched be contacted for marketing will be excluded from the the ‘Recarga y Gana’ (recharge & win) campaign in Oct program and there is an ‘opt out’ option available on 2010. The campaign targets all Orange Spain pre pay the website to deliver a clean subscriber experience. subscribers and provides subscribers with the opportunity to win rewards for recharging their mobile phones. The KEITH DYER: What does an operator have to program has been promoted on TV, online and using implement in terms of technology and processes to targeted operator communication channels such as SMS run a loyalty program? and IVR. STEPHEN UPSTONE: Each program is different and KEITH DYER: How is the there is always a balance between speed to market and program relevant to both strength of program in terms of channels and the data the operator and its available to optimize the communication and rewards. customers? To tailor the program to the unique needs and characteristics of the operator, its brand, and its STEPHEN UPSTONE: The customers, Velti begins with a thorough analysis of the program strengthens operator’s customer base to understand existing Orange’s relationship with its customer behavior and trends to understand their top customers by creating an up value, frequency of top up, method, eligibility, tenure emotional connection and tariffs. The analysis is used to build the program through relevant and timely The Recarga y Gana business rules into Velti’s real time engine to ensure that rewards, whilst generating excitement about the brand campaign was launched in the subscriber experience is delivering the relevant and driving competitive differentiation in Spain. Clever October 2010. rewards, achieving successful redemption and relevant data driven business rules and algorithms drive all the channels are being applied to drive subscriber communications and reward allocation which changes communication and lifecycle. over time, therefore making the program customer Based on the insights gained through this process, focused and dynamic. The real-time program monitors Velti can design every aspect of the loyalty program, segment movement to support Orange’s objectives of from its creative look-and-feel and customer experience, increasing APRU and decreasing churn. to a multi-channel acquisition program; to incentives and prize drawings designed to encourage and reward The program Velti designed for the operator was simple in subscriber participation. Velti can also work with partners concept: the service automatically enters those topping up to provide the website creative. less than €10 into a prize draw in which they stand a one in three chance of winning a prize ranging from telecom KEITH DYER: How are loyalty programmes bundles of SMS, minutes and data as well as money-off marketed? restaurant vouchers to playstations and flat screen TVs. Those customers adding more than €10 worth of credit to STEPHEN UPSTONE: Targeted direct marketing is at their mobile are rewarded with a guaranteed prize. the heart of all the communications for a successful loyalty program to create a personalized and effective KEITH DYER: What is the consumer experience? conversation with customers. However a broad mix of marketing elements is used to ensure effective STEPHEN UPSTONE: When a pre-pay subscriber tops- communication and promotion to the operator’s up, they receive a text message from Orange informing customer base. Typical communications can include TV them that they are eligible to redeem a reward. They are & radio commercials, in store advertising, online & social directed to a website and asked to enter their MSISDN networks and broadcast SMS to the segmented base.

18 | Mobile Europe SPONSORED INTERVIEW

However the targeting marketing can drive a lot of the value and with the right approach and knowledge web, operator communications and direct marketing can be About Velti very effective without TV advertising. Velti is a leading global provider of mobile marketing and advertising technology. We enable KEITH DYER: What kind of results can operators brands, advertising agencies, mobile operators and expect from a program like this? media companies to implement highly targeted, interactive and measurable campaigns by STEPHEN UPSTONE: Pre paid loyalty programmes can communicating with and engaging consumers via typically see 25% - 35% participation/redemption rates their mobile devices and a 10% - 15% customer value lift (ARPU and churn From large scale SMS competitions and loyalty reduction) running for a number of years if the approach programs, to providing subscribers with something new, different, and relevant to them via advertising is keep fresh with the right mix of direct marketing, opt-in campaigns, Velti’s mGage™ platform does it rewards sourcing and promotions. all. With Velti, operators can even extend their A more relevant, engaging, and rewarding customer marketing beyond mobile advertising to include experience results in increased loyalty and reduced churn mobile communities, social networks, and and a strong impact on net promoter scores. Even in a interactive entertainment. crowded mobile marketplace, the operator can set itself We have the ability to conduct campaigns in apart from the competition and find new ways to over 50 countries and reach 3.7 billion global increase revenue. consumers. A one year business case with 1m consumers for a In 2010, 825 brands, advertising agencies, Western European operator, running a program like this mobile operators and media companies used our can result in an ARPU increase of €5.4m in incremental platform to conduct over 2,700 campaigns. 13 of the world’s 20 largest mobile operators have run revenue and churn reduction around €1.62m for each campaigns with Velti. In Europe alone, current 1m prepaid customers. customers include Vodafone, Orange and T-Mobile.

KEITH DYER: How else can an operator running pre paid loyalty programmes use the platform to develop launching and running these types of programmes future benefits and revenues? with Orange, Vodafone and other leading operators.

STEPHEN UPSTONE: The loyalty program can easily KEITH DYER: be extended into the Post paid customer segment. Post Where is the market is headed next? Pay loyalty programmes are similar to pre pay but instead of using top up triggers they use lifecycle triggers STEPHEN UPSTONE: Smart phones have reached combined with transaction data in the engine to reward tipping point and this enables mobile commerce and customers. richer communication that will drive the mobile Additionally other affinity marketing programmes can marketing and advertising markets exponentially. be run like the 1+1 coupon services that we run with Additionally this allows richer communications and Vodafone Greece. That is available to the whole services to be delivered on the mobile handset from customer base and allows customers to get a coupon to the mobile operator. take a friend for free to the cinema, restaurants and In mature markets this is further and faster catalyzed STEPHEN UPSTONE leisure parks. This whole experience is delivered in a by mobile coupons and NFC (Near Field is VP of Sales and personalised manner to the custmer base. The same Development for Communications) that broaden the ability for platform allows customers to run ARPU lift SMS games Europe at Velti commerce from the mobile internet to retail in the real and competitions and drive other marketing objectives world. Location is already playing an exciting role such as online sales or cross sell and up sell to tariffs and allowing location aware rewards for customer bundles. Velti has run over 100 campaigns with leading programmes and third party advertisers. For customers operators including running games with over 4 million to opt in to receive rewards and offers based on where players in MTS Russia and the first large scale games in they live, work, holiday and are today is enriching to the USA addressing T Mobile USA’s 35 million+ their lives. customers. As the leading company in mobile marketing With the right opt in permission the operator can go globally and after listing on the NASDAQ earlier this beyond CRM and customer paid ARPU by implementing year Velti is best placed to help operators, media permission based advertising programmes that can help companies and brands find increased value from the build loyalty and bring a new revenue stream for the existing customers and to reach and engage new operators from brands that would like to communicate customers. This is an exciting time to be in mobile and offers the customer base. Velti has experience of Velti is thrilled to be leading the space today.

Mobile Europe | 19 ???????? INSIGHT REPORT EVOLVING BEYOND ADVERTISING INTO MARKETING

Mobile operators will have a headline role to play in mobile advertising. The real question is whether that role will be positive or negative.

ntil recently, European mobile increasingly marginalised role in a growing On average, each subscriber is generating operators have been number of European markets. But is this a €85.92 in voice revenues per year (€7.16 U instrumental in creating the situation that the operator community can per month), and €16.12 in data revenues mobile advertising opportunity, by pushing (or want to) resolve? (€1.34 per month). If the €13.8 million is at first rich-media featurephones and now Our research into mobile advertising in indeed reflective of Vodafone’s mobile smartphones to the mass market, by driving 2008 revealed that the then CEO at advertising revenues, then Vodafone’s down data costs and developing a billing Vodafone, Arun Sarin, had identified three subscribers are each generating Average relationship with every consumer. Mobile core revenue generators for the company: Advertising Revenue Per User (AARPU) of operators are the enablers for the mobile voice, data and advertising. €0.04 per year. advertising ecosystem, but as our research This also revealed that Sarin had set an This example is by no means meant to be will highlight, they are now more suited to advertising revenue target for the Vodafone disparaging towards Vodafone, merely, to mobile marketing. Group of €45 million in FY2008/2009. highlight the fact mobile advertising remains In the early days of mobile advertising, it Jump forward to the present day, and it little more than an accounting error for the was assumed that a mobile operator’s role has been suggested that Vodafone Group majority of mobile operators. But then as a in the value chain was assured. made somewhere in the region of €13.8 business, advertising and media is some Over the last six years, which has seen the million in 2010 (though please note this has distance away from their core business of advent of the open internet, the rise of not been substantiated). The mobile communication. Google and the introduction of the iPhone- advertising market continues to lag While the debate rages on about the led smartphone revolution to name but a commercial expectation. mobile operator’s role within the mobile few key influencers, the dynamics of mobile What are the implications of this slower- advertising value chain, it is worth advertising have fundamentally shifted away than-expected rise in mobile advertising considering whether they actually want to from the operators in favour of the direct-to- spend? As of March 31, 2011, Vodafone be involved in the first place? consumer players. Group had 358 million registered With an AARPU of €0.04 it paints an Consequently, operators have seen their subscribers, generating voice revenues of incredibly strong case against their position in the value chain jostled and €30.76 billion, and data revenues of €5.77 involvement, for indeed the majority of squeezed, and being forced to play an billion. mobile operators. MOBILE AND ADVERTISING: A TRUE ROMANCE?

Advertising has long been the darling of the Nielsen). In theory, the marriage of these MOBILE AD SPEND mobile industry, and whereas other two industries is akin to the coming Total global advertising spend is expected proposed revenue saviours for the mobile together of Hollywood A-listers Brad Pitt and to be worth around €347.8 billion in 2011. industry like TV, video, and music have long Jennifer Aniston. Sadly, some unions just mobileSQUARED estimates that the global since fallen by the wayside (though don’t work as well they might. mobile advertising market in 2011 will be resurrected via smartphones, apps and Wifi), Consequently, the mobile advertising worth €2.96 billion, accounting for 0.85% the appeal and demand of advertising to industry has developed significantly slower of total global advertising spend. the mobile industry has never waned. than originally projected – the market Mobile advertising then, remains largely That might have something to do with should now be worth $7.83 billion inconsequential to the advertising the trillion dollar industry that is mobile according to the original forecasts from community in the short-term, but will (source: Informa) converging with the half- Informa back in 2006. In actual fact, it is inevitably become hugely influential in the trillion dollar advertising industry (source: considerably less. medium- to long-term.

20 | Mobile Europe Insight Report INSIGHT REPORT

Figure 1: Total mobile ad spend, Europe’s Big Five, 2011-2014

Collectively, Europe is comparable to the US in terms of population, yet that is where the similarities end, especially if applied to mobile advertising where Europe considerably lags.

Presently, Japan remains the only billion the UK), mobile Euro market, expected to generate €1.1 advertising will billion in 2011. The US is gaining rapidly on generate €152 Japan in terms of spend, and will be worth million, or just 4% €856 million in 2011, and will become the of total mobile second Euro-billion market in 2012. China advertising spend, in will become the third superpower in mobile 2011. advertising, generating revenues of €327.8 Approximately 35% million this year, and is expected to become of those revenues will be generated in the Five markets will generate healthy mobile top €1 billion in 2015. UK, followed by Italy accounting for 25%, advertising revenues of €632.3 million (see Collectively, Europe is comparable to the France on 16%, Germany 14% and Spain Figure 1). If we expand this figure to include US in terms of population, yet that is where 10%. Between 2011 and 2014, there is very the whole of Europe, the total mobile the similarities end, especially if applied to little change in percentage share, with the advertising market will be worth a little over mobile advertising where Europe UK, Italy and France each projected to drop €1 billion – placing the European mobile considerably lags. Across Europe’s big five 1% to account for the increased activity in advertising market approximately 2 years markets (France, Germany, Italy, Spain and Germany and Spain. By 2014, Europe’s Big behind the US in terms of revenues. WHAT THIS MEANS FOR MOBILE OPERATORS

Our research into mobile advertising back in since the topic started to attract a mobile operators truly invested in 2007/2008 revealed that mobile operators reasonable level of interest. At this particular developing the medium. This has not been were in a dominant position. Yet even then, juncture, the mobile operator was the the case and the value chain has been in a their role in the mobile advertising central pin upon which the industry would state of flux for a number of years, as ecosystem was being projected as a perilous rotate and evolve. Leap forward to the companies challenge the direct path with one, with the increase in spend moving modern day, and the role of mobile the consumer previously only enjoyed by away from the operators and towards the operators remains highly questionable in the operators. In 2008, the market operated agencies overseeing the creative, planning some quarters, and positively rebuffed by under a linear value chain, from the creative and buying. So much so, the average others. agency and media buyer all the way along campaign spend percentage attributable to Prior to the rise of the smartphone, to the consumer gatekeeper, also known as a mobile operator would drop from 30% in operators were the gatekeepers to the the mobile operator. 2007 to 13% in 2012. mobile internet. The raging debates centred Slow market growth prompted the The mobile advertising value chain has on on-portal versus off-portal, and that inevitabe consolidation and resulted in the evolved considerably over the last six years, mobile advertising would only flourish if simplifying of the value chain, and mobile

2007 2008 2009 2010 2011 2012 Projected UK campaign AVG COST PER CAMPAIGN 19,500 38,025 43,875 58,500 74,100 87,750 spend % breakdown CREATIVE AGENCY 11 13 16 18 20 21 (made 2008) MEDIA AGENCY (PLANNER/BUYER) 9 13 16 17 18 19 MEDIA SELLER/AGGREGATOR 18 17 16 15 15 15 CONTENT PROVIDER 12 15 18 19 20 20 TECHNOLOGY PROVIDER 20 17 14 13 12 12 MOBILE OPERATOR 30 25 20 18 15 13 TOTAL 100 100 100 100 100 100

Mobile Europe Insight Report | 21 INSIGHT REPORT

Mobile Advertising Value Chain into a more direct marketing concept. And 2008 with good reason...

IMPACT ON REVENUES Mobile operator advertising revenues will increase in the short-term but diminish in the long term, forcing operators to evolve their existing internet-based advertising strategy. For example, across Europe’s Big Five markets, the total mobile display market will be worth €56 million in 2011, rising to €179.2 million in 2014 (Figure 2). Operators will continue to take a slice of the mobile Mobile banner revenues during the forecast period. Advertising Value Chain What’s more the increase in total mobile 2008-2011 banner ad spend between 2011-2014 will virtually offset the operators’ diminishing revenue share percentage. In the UK for example, mobileSQUARED estimates that mobile operators account for 25% of the total mobile display market in 2011 (Figure 3). That means, mobile operators will generate revenues of €5.4 million out of an overall market worth €21.6 million. Because of the increase in spend Mobile during the forecast period, operator banner Advertising ad revenues will peak at €5.8 million in Value Chain 2011 2012 before falling to €5.3 million in 2014, despite a decreasing stake in the value chain from 25% to 8%. Thereafter, mobileSQUARED projects a sustained decline in mobile banner ad revenues for operators in the UK. And it’s a similar tale across Europe (Figure 4), though the less advanced mobile advertising markets – namely those with a lower smartphone penetration or where data costs remain high – generally means that mobile operators can expect a larger

operators’ hegemony challenged by the Figure 2: Europe’s Big Five Total Display Market internet superpowers of Google and Yahoo!. This development remains true in 2011, with mobile operators now viewed as one of many consumer access points. Consequently, their value within mobile advertising has diminished. But there are those mobile operators, such as O2, that have confronted this issue head on, created a large in-house team, and looking to control the core components of the value chain. In doing so, they are ensuring are dominant position within the value chain. This, however, is being achieved because its advertising strategy is starting to morph

22 | Mobile Europe Insight Report INSIGHT REPORT

Figure 3: UK mobile display forecasts percentage of mobile display revenues. For instance, in Germany mobile operators will receive 36% of mobile display revenues in 2011. Even though this figure will fall to 18% by 2014, because of the immaturity of the market, this will result in a revenue increase from €3.4 million to €4.8 million by 2014. However, mobile banner revenues cannot be considered a long term revenue generator for mobile operators. As identified by the IAB UK’s head of mobile, Jon Mew, “operators continue to play a significant role in the display market and search”. That will at least remain the case while featurephones remain mass Figure 4: Mobile operator display forecasts market. mobileSQUARED projects smartphones to surpass featurephones in the UK in 3Q2012, with the remainder of Europe’s big four markets following suit within 12-18 months. “There [operators] stake in the mobile display market will only go down,” says Jon Mew, head of mobile at IAB UK. “The only hope they have of maintaining any growth is using messaging and identifying other areas.” He adds that the mobile and advertising industries are both “too tough on digital, and too tough on mobile compared to other media.” This is a valid point, which again returns to the key point that operators are not media companies. A CHANGING LANDSCAPE

Mobile advertising is evolving beyond the announced that it had over 3 million integrating its mobile advertising efforts with internet-based shackles upon which it subscribers to its opt-in advertising service the m-wallet joint venture. founded. The open internet has seen the and was well on the way to 4 million. It also Like Vodafone, 3 is on the verge of declining appeal of the operator portal, and extended the opt-in concept with the recent announcing a similar opt-in service provider, with it, the associated display and search launch of Priority Moments, a service while T-Mobile’s will join the party when the advertising traffic, with players such as designed to connect its mobile customers to Blyk-run Orange Shots service is extended as Google/Admob, InMobi, Smaato, Adfonic, British high-street brands via an app or part of the Everything Everywhere drive. Like 4th Screen, and YOC to name of a few of mobile site, using location to serve relevant O2, Orange is experiencing rapid opt-in the key mobile ad networks serving the off- and timely offers and vouchers to users. success, having started the year with portal, and in some cases, operator portal Priority Moments builds on the success of 400,000 subscribers and now has over 1 needs. O2’s live music service, Priority Tickets, and million, and looks set to surpass 2 million The mobile advertising market is evolving a more recent location-based campaign for well before the year-end. because of two critical elements: consumer Fitness First which generated revenues of Opt-in advertising is becoming the data and location. Crucially, it is information £400,000 for the gym chain. strategy of choice for the UK market, and that every operator has in abundance, and While O2 was successfully applying with good reason. A survey of the UK Blyk now starting to apply to a mobile location-based advertising techniques to members on Orange Shots revealed that advertising strategy away from the mobile client’s campaigns, Vodafone announced its 93% rated the service as OK or better, with internet. decision to join the opt-in mobile half rating it as good or very good; 35% of The UK continues to be the flagbearer for advertising revolution and is believed to respondents said that Blyk had improved Europe, and the market is being driven by have selected a provider, but is yet to their opinion of Orange. O2. Earlier this quarter, O2 Media divulge whom. The company is intent on Blyk will be hoping similar statistics will be

Mobile Europe Insight Report | 23 ???????? INSIGHT REPORT

released in the Netherlands, where it runs generate revenues and an opt-in database NSN is clearly identifying a risk-averse the opt-in service for Vodafone. Since its from Wind’s subscriber base. Wind now has strategy for operators in their approach to launch in May 2010, little data has been an opt-in database exceeding 2.5 million. mobile advertising: either partner and limit released apart from the fact that the A permission-based advertising program investment, or start small with the potential response rate exceeds 25%, as is the case in was also launched in June when Velti signed to scale if required. Both suggestions imply the UK also. a strategic three-year partnership agreement an immature market and operator “The response rate of over 25% has now with Vodafone Portugal. The Vodafone uncertainty, which is understandable given become an internal thing, and if the Promo4U service enables subscribing the way operators are becoming peripheral response rate drops below that figure, we customers to receive high-value discounts to mobile internet-based advertising models. ask questions why,” says Antti Ohrling, co- “Operators were big in the area of display founder and UK CEO, Blyk. He believes that advertising through their portals until the the “hard opt-in model” represents the Mobile advertising is a walled gardens opened up, and they had to fundamental difference with alternative media property development, find other ways to play in the advertising mobile advertising models. space,” says Dan Cuffley, director of sales for But the level of response rate is open to and operators are not good at Europe at Velti. “Operators are sitting on a interpretation. For instance, Hallmark ran a doing that. mountain of customer data so they are two-for-one Halloween card campaign in the Where they can excel is in looking for ways to harness this data. An UK delivering over 136,000 ads, generating operator’s biggest opportunity in this area is an 8.2% click-through rate (totalling 11,152 mobile marketing. by providing access to their base of clicks), with 2,573 vouchers downloaded, customers. This can be through operator equating to a 23% CTR conversion – or a and exclusive offers from their favourite permission-based advertising programs as total campaign conversion of 1.89%. brands free of charge on their mobile well as passing through information to the However, Blyk does not reveal how many phones. advertisers.” members actually responded opting to Examples of mobile advertising activity Carl Uminski, COO at Somo Agency, receive, or stop receiving, additional across Europe are rife, with operators either believes operators have made a number of information on that particular campaign. opting to pursue an in-house strategy such mistakes but should now focus on their core Assuming the response rate of 25%, then as O2, or outsource externally to companies areas. “Where they’ve really messed up is approximately 34,000 responded in either such as Velti and 4th Screen. Clearly, mobile SMS billing,” he says. “What are they doing the positive or the negative. Either way, that operators remain active in the mobile charging 30-40% commission for a is significantly higher than all other forms of advertising ecosystem, though their role is transaction of no more than £10? Ideally media, let alone other forms of mobile evolving. they should be looking at transactions of up advertising. The mobile industry is clearly split on the to £100 and charging 3-4% commission Based on such high response rates, Blyk role of the mobile operators within mobile and Apple needs to wake up to that as well. claims that it can generate annualised ARPM advertising. KF Lai, CEO of Buzzcity, goes Mobile has to move away from the micro- (average revenue per member) upwards of straight for the jugular and says operators do transactions, and look at the macro market, €13 on a sustained basis. In comparison, not make good media companies, and are as that is where the commerce is.” Facebook generates APRU of between €0.5- therefore not adept at mobile advertising. Uminski says operators have got the bank 3. “Operators are not good at launching and account and contact details of their In the Netherlands, Vodafone selected maintaining media properties,” he says. customers, and most importantly their trust, MADS as its mobile advertising sales “Mobile advertising is a media property so they must look at a proposition around network, a deal which was replicated in development, and operators are not good at this. “For me it has to be payments,” and Greece. But the latter was a short-lived deal doing that. Where they can excel is in not mobile advertising. as Out There Media took over Vodafone’s mobile marketing, such as opt-in Regardless, if progress in mobile entire Greek mobile ad operation. And Out messaging.” advertising is already protracted, the addition There Media followed this deal by An alternative view is that operators have of mobile operators to the mixer only delays collaborating with Cosmote in July. a significant role to play in the mobile proceedings further. It has taken 10 years for Not wanting to be excluded, Orascom advertising value chain, but are now the GSM Association to encourage the UK invested €6.89 million for a minority exploring a range of go-to-market strategies. mobile operators to agree to sharing data investment in MyScreen to orchestrate a “One example is a dramatically increased anonymously to create the Mobile Media permission- and incentive-based advertising willingness to forge partnerships or to opt for Metrics service delivered in association with model that compensates users with rewards small, lean technical solutions that are ready comScore to drive the planning, for allowing targeted advertisements to for just a few new use cases but are able to understanding and execution of mobile appear at the end of a call in a variety of scale later if successful,” says Dietmar advertising campaigns. (Other data is formats to the operator’s 18 million Maierhöfer, senior specialist, mobile available, including mobileSQUARED’s own subscribers, which includes both Wind advertising at Nokia Siemens Networks. Mobile Consumer Trends.) Similar Greece and Wind Italy. “Both ways open up strong opportunities discussions between other markets for similar Wind Italy has also worked with Upstream and the required flexibility to play a metrics remain ongoing, with very little on a promotion for Wind called VIP SMS to significant role in the ad business.” movement of note to date.

24 | Mobile Europe Insight Report INSIGHT REPORT M-COMMERCE: THE DRIVING FORCE BEHIND MOBILE ADVERTISING?

A lack of activity is in stark contrast to the and contactless ‘Near Field Communication’ investment for companies investing in a endeavours surrounding m-commerce, (NFC) technology. transaction-led mobile advertising where there has been a flurry of mobile It’s a similar story across Europe. M- campaign, as opposed to a brand awareness operator joint initiatives throughout Europe, commerce is not only starting to take off, it investment. This further emphasises the and reiterates Somo’s Uminski’s comment. is about to explode into life. According to mobile operators’ role as an enabler of the Most recently, Vodafone, Everything Yankee Group forecasts, global mobile mobile advertising ecosystem, but more Everywhere and O2 in the UK entered a transactions (including banking) were worth importantly, it’s even better news for joint venture called m-wallet based on a $162 billion in 2010 and will be a operators as mobile marketers. smartphone app enabling contactless staggering $984 billion in 2014. Of payments. This followed news that Orange particular interest, is their projection that the EVOLUTION TO MOBILE MARKETING UK had also embarked on a partnership with number of active mobile coupon users will Consumer data, including location, is the Barclaycard to offer contactless mobile grow from 2.7 million in 2010 to nearly 35 ultimate arsenal for mobile operators. phone payment solutions. million in 2014. Furthermore, the number of What’s more, they have invested in the Heading south, the three largest Spanish Near-field communications-enabled phones networks, and developed customer mobile operators, Orange, Telefónica will grow from 834,000 in 2010 to 151 relationships, so should the mobile Movistar and Vodafone, signed a million in 2014, with NFC transactions advertising industry realistically expect (or cooperation agreement in March 2011 to leaping from $27 million in 2010 to $40 even rely) on operators sharing this generate a stable Near-Field Communication billion in 2014. Forrester Research, information, even at a high price? (NFC) ecosystem, to pre-empt the risk of meanwhile, believes mobile commerce will In actual fact, mobile operators are market fragmentation. In addition, mobile increase from $6 billion in 2011 to $31 already using their consumer data very barcode specialist Scanbuy announced a billion in 2016. effectively, but are often overlooked when it service they were developing with Movistar, Most intriguing is that while mobile comes to using mobile as a targeted sales Vodafone and Orange called BIDI. All three operators appear to be persisting with and marketing channel. As Marco Veremis, operators are now pre-loading the barcode mobile advertising strategies, virtually every CEO of Upstream says, mobile operators scanner, allowing subscribers to access the mobile operator is turning its attention have become “extremely sophisticated” at same codes. towards m-commerce. This presents mobile marketing. With this in mind, he says Similarly in France, Atos Origin, Bouygues something of a fundamental shift in mindset operators will not share customer data Telecom, Orange and SFR formed a joint by the operators, and perhaps most notably, because they need it for themselves. venture (JV) company in February to launch the commercial realisation that operators are Operators have realised that impressions an innovative payment solution, backed by communication specialists with a billing over mobile, whether page impressions online retailers, including Aquarelle, relationship with consumers. Therefore, m- when browsing or messages, are a finite Brandalley, Darty and Rue du Commerce. commerce can effectively become an resource, and they can only communicate The service, called Buyster, will be available extension of that billing relationship and is a with a customer a few times per month. in France from mid-2011 and is described as strategy considerably more aligned with This leaves mobile operators with the choice ‘an innovative, simple, fast and secure mobile operators than any attempt to of using this finite medium for themselves or remote payment solution for fixed and become a media company: which they are letting third parties communicate with their mobile internet purchases.” Scanbuy’s not, never have been, and never will be. subscribers. Orange connection has also been extended Nevertheless, the rise of m-commerce is “People in mobile operators, like the head into France. very, very good news for mobile advertising, of prepay or head of data are always February proved a busy month for as it provides the ultimate return on thinking about how they can boost sales by allegiances with Belgacom, BASE (KPN cross-selling over mobile,” says Veremis. Group Belgium) and Mobistar also joining mobileSQUARED has been researching forces to launch a new mobile payment Virtually every mobile ways of placing a value on this form of system in Belgium. They are currently operator is turning its attention stealth form of mobile marketing. The looking at the possibilities for jointly research has revealed that on average, an developing and optimising a product that towards m-commerce. This operator will talk to a subscriber four times will be accessible for the public by the end presents something of a per month. In developed markets such as of 2011. The purpose is to make it possible fundamental shift in mindset the US and UK, the number of for consumers to swiftly use their mobile as communications is less, whereas in markets an electronic purse for the standard by the operators... where legislation remains less stringent, like payment of small amounts (maximum 25 China, operator communications can reach EUR). The system relies on the use of SMS 50 per month. What’s more, the ability to

Mobile Europe Insight Report | 25 INSIGHT REPORT

too. Combined with a profile /opt-in portal CSPs can provide a single point of control which allows for transparency and gives subscribers control over their own profile data. This is a clear differentiator for CSPs in a world where privacy is becoming increasingly important.” This differentiator, when combined with location, can deliver an incredibly powerful permission marketing service to the mobile operator’s clients. As already highlighted, operators across Europe are now adopting this form of marketing (though some refer to it as advertising: advertising is the Figure 5: Operator glamourous subset of marketing after all). marketing messages 2011 To this end, it is location that will provide the final piece of the contextualised jigsaw on mobile, and provide brands and businesses with the capability to drive footfall into their outlets or restaurants, for example, and deliver a very strong return on investment, as demonstrated by O2’s campaign for Fitness First. To this end, it is location that will provide the final piece of the contextualised jigsaw on mobile, and provide brands and businesses with the capability to drive footfall into their outlets or restaurants, for example, and deliver a very strong return on investment, as demonstrated by O2’s campaign for Fitness First. However, mobileSQUARED believes it will be incumbent on the mobile operators to promote the development of location. A Figure 6: Operator total marketing -based demonstrated in the UK during the back- incremental revenues (€), 2011 end of 2010, the major retail brands are yet cross-sell and upsell data bundles, subscriber base. Based on the incremental to grasp the concept of mobile, despite the subscriptions, device upgrades for example revenues, that will cost the operators $1.02 availability of location-based advertising that via these mobile communications is believed billion in 2011. can potentially drive footfall. The survey of to be a €27.63 billion global market in In addition, it is a very simple value chain, the UK’s 30 most important retail brands’ 2011. in which the operator controls 80% of the mobile strategy revealed that only two have Because operators use SMS, USSD or cell value (see figures 5 & 6). their site optimised for a mobile experience, broadcast to disseminate the This method of communicating can be while eight of the retail brands had communications and promotions, there is deemed opt-out marketing, but can also be developed iPhone store finder apps. Tesco no cost attached. However, this form of used effectively to drive an operator’s opt-in has developed four iPhone apps Clubcard, marketing has generally been outsourced to database, or permission marketing, which is Finder, Wine Finder and WhatDidl – but was a third-party, whom will receive commission where mobileSQUARED believes offers the yet to cater for the 75% of non-iPhone based on the incremental sale. If we assume biggest opportunity for mobile operators in browsers. that commission is 20%, then this kickback the marketing (and advertising) domain. “Mobile is about the ‘now’, and to the third-party provider can be “CSPs [operators] are increasingly about influencing behaviour close to the considered the “cost” to the operator. developing consolidated databases to allow point of purchase,” says Brad Liebmann, Therefore, with the global incremental sales a single view of their customer data, as well CEO of Geocast. He claims that retailers market valued at €27.63 billion, mobile as a profiling strategy to support churn want an extension of their storefront, operators are spending €5.53 billion on this prediction and to tailor their marketing which he describes as “thousands of stealth form of mobile marketing. campaigns,” says Nokia Siemens Networks’ sandwich boards” outside their Across 17 markets in Europe, operators Maierhöfer. “These powerful systems premises. “That’s what these devices are expected to send 25.6 million comprising a cornucopia of network data are,” he adds. “These are the sandwich “communicative” messages in 2011 to their can easily be used for targeted advertising board of today. Drive the customers to

26 | Mobile Europe Insight Report INSIGHT REPORT

the store, and help them get there.” of brand at O2, Shadi Halliwell. “The main satisfaction. There is a contract between all One operator that is now driving that driver is, ‘I want the voucher, I want it of the partners that we work with. Where concept is O2. As already highlighted earlier now’.” brands are giving us extra special deals and in this report, O2 launched what it called a The customer will be served offers exclusive offers, we won’t be charging “supercharged” version of its Priority Tickets based on his/her location, but as yet there them to take part in Priority Moments. service in July, complimenting the existing is no search function, only a way to Where a deal is non-exclusive the brand will scheme which turned them into the UK’s prioritise favourite types of offers so they pay to be included. We have 22 million biggest sellers of gig and event tickets. They appear at the top of the feed. However, customers in the UK and we hope this will have now extended this into the retail the app will develop over time, eventually help those partners reach their own environment through O2 Priority Moments, including some kind of push notification objectives.” utilising its consumer data, opt-ins, and based on customer preferences and newly The challenge now facing the mobile location. available offers. industry, is to highlight the value of location The multi-million pound investment by During the launch period there will be to consumers. This is where O2 will see Priority Moments serving more than 40 offers from 30 brands for mobileSQUARED believes the operators will location-based money saving offers direct to use in over 3,500 stores nationwide, but play a critical role, by applying their wealth the phones of its 22 mobile customers that the initial four gold brands of Zizzi, of consumer data, including location, to can access the service via an app or a WHSmith, Odeon and Harvey Nichols deliver relevant and contextual marketing mobile site using a GPS-enabled device. The have signed bigger deals with O2 to be campaigns. Subsequently, this will educate service has already received support from elevated to the front of the TV advertising their mobile customers about the merit of brands such as Yo! Sushi, French campaign. using their location beneficially, and will Connection, Toni & Guy, Chocolat, O2 says the O2 media team have “been have a positive knock-on effect for the Essensuals, National Express, Fitness First, absolutely instrumental in delivering and mobile advertising industry. Viagogo and JJB Sports. doing those deals and talking to the For instance, research by Navteq has “We have applied lessons from Priority partners, so they’re very much part of shown that 31% of consumers seeing a Tickets to Prioirity Moments and Priority Moments.” specific mobile ad went on to visit a store supercharged it to appeal to all of our “The primary reason we’re doing this is location. And of those, more importantly, customers, not just music lovers,” says Head to drive loyalty, engagement and 53% said they did directly because of the ad. CONCLUSION mobileSQUARED believes the long-term opportunity for mobile operators is marketing and commerce, while playing an indirect role as an enabler for the mobile advertising ecosystem. In particular, permission marketing allows operators to capitalise on their consumer data and profiling, which can be further enhanced by location data. For this reason, operators are more suited to marketing practices than advertising. While the research has identified that consumers will not accept more than a limited amount of operator communications per month, mobileSQUARED research has revealed that consumers will accept multiple communications per month from a brand, or brands, of their choice. Once the The utopian value consumer has opted in, it is essential that chain sphere this relationship is developed, and the operators are ideally placed to drive this opportunity. the consumer on an ongoing basis. This level emerging relationships between brands and The permission element therefore, creates a of communications must be reflected in the consumers. It is critical that the players in the virtuous cycle of communication between the value chain, which can no longer be viewed in ecosystem ensure that this level of brand and the consumer, with the brand a linear format. Anyone component, or all, communication is maintained on a consistent encouraging engagement and interaction with can potentially harness these new and basis.

Mobile Europe Insight Report | 27 SPONSORED FEATURE INTERACTIVEA TECHNOLOGY SMSWHOSE - THE TIME NEXT HAS GENERATION COME

MOBILE-CRMJim Tavares is a Director for CHANNEL Strategy & Business Development in Cisco Services. Keith Dyer Caroline Doussot, Head of Mobile Marketing, Gemalto, on mobile’s most effective channel.

DueKEITH to its DYER: low cost, universal access and interoperabilityJim, Cisco of courseacross devices is represented and mobile in the networks, femtocell Gemalto´s best practices SMSmarket is the through most its effective MicroCell way device, for consumers which is tomost communicatenotably supporting with each AT&T's other. femtocell These service. same factors Why do on Messaging are: areyou also think enabling Cisco is businesses, well-placed including to meet carrier government needs departments,for femtocell deployment? banks, financial institutions, consumer • Be simple. Mobile devices offer limited space and brands, retailers and transport providers, to better time for the users to grasp the marketing message communicateJIM TAVARES: with target demographics. A recent • Don’t spam. Gone are the days of spam reportWeare by Informa very excited Telecoms about and the market Media statedbecause that we marketing, brands need to be careful about SMSbelieve should it leverages not be sooverlooked many key as capabilities a core service we have for properly using the advantages offered by the third mobileas a company. users as First, it will there remain is the a significant long tradition source of of screen revenuesScientific and Atlanta traffic to deliverfor mobile carrier-grade operators CPE on ainto global the • Be clear, identify yourself as the sender. basishome. until And at of least course 2015. there Revenues is our position are forecast within to rise Messages must identify in the first sentence that tonetwork $136.9 infrastructure billion by 2015 - that with has global only been SMS traffic the sender is the operator PLUS the brand increasingstrengthened from by five the trillion Starent in acquisition. 2010 to a staggeringFemtocell • Be recordable. Make sure that the campaigns 8.7plays trillion to both by 2015.segments, and our strength in both can be evaluated segmentsDespite themean fast we adoption have the of potential smartphones, to support SMS is • Be Gratifying. Who doesn’t love rewards? stillmassive the preferred growth in communication the mobile industry. channel amongst Mobile devices are a great medium to work in a consumers.Importantly, A study we believe from Deloitte we can provide found that thethe end-to- targeted aspect to wide-reaching campaigns majorityend femtocell (90 percent) infrastructure of smartphone as one company, users send from at the leastradio one front text end message to the back-end per day compared provisioning to side. just 40 percent,We've partnered who use with their a handsets best-in-class to access provider social in engage in a real dialogueor take with steps consumers to avoid networksip.access includingto provide Twitter the RF piece,and Facebook. as that is not a G Permission marketinginterference capability: with Permission-based other femto or traditionalThe continued solution popularity area for us. ofSMS Of course, amongst everyone mobile marketingmacro cells. enables So that organisations means as well to tailor as GPS smartphonetends to think users about also the creates radio anside, ideal but opportunity the campaignsyou also according need an integrated to individual’s network preferences listening forprovisioning businesses side seeking will impact to use as mobile well. asUnless an advertising consumer Caption CaptionCaption capabilitywhich improves to know relevance where a cell and is acceptanceby determining rates. its platform.deployment A spokesperson of femtocells isfrom zero comScore touch then said there's no CaptionCaption interactionsThe ease in with which the customers cells around can it. opt-outCustomers is may recentlyway carriers that can mobile scale ads - and are we twice have as the effective experience with to CaptionCaption alsoanother self-report advantage. where the Customers femto is can when step they out buy at smartphoneprovide the whole users. integrated provisioning process. CaptionCaption Caption theanytime, cell. So automatically you have to adjudicate “cleaning” between the database all that Businesses are finally waking up to the many data,and and therefore that's hardincreasing work. acceptance rates. benefitsKEITH ofDYER: mobile messaging marketing. Consumer G StandardisedWhen you are metrics: a carrier SMS deploying is a mature thousands model of macrocells,with accurate element and management standardised is metrics fundamentally already in differentplace from supporting tens or hundreds of By better understanding consumers’ needs, interests and thousandsSo whatdoes of femtocells. this tell us? You Mobile-CRM still have all the provides preferences, operators can significantly boost revenues through richcomplexity pickings of for a 3G mobile macrocell operators. but the By scale better is one to understandingtwo orders of magnitude consumers’ larger. needs, The interests problem and carriers highly targeted campaigns, up-selling, cross-selling, location-based preferences,need to solve operators is to have can one boost platform their managing service all offers, or even coupons from other brands revenuesof this. Once through again highly this plays targeted to our deals, heritage up-selling of orsupporting cross-selling tens offers, of millions location-based of carrier class services CPE or evendevices. coupons from other brands. The targeted acceptanceYou mention is also deployment, increasing but as a how result important of more will nature of mobile-CRM also provides cost savings by desirableongoing managementincentives offered of femtocells by operators be for and carriers, brands. enablingKEITH DYER: operators to send only relevant offers to Eachonce of they these have factors thousands suggests of femtocells that mainstream deployed? interestedDoes the subscribers, adoption of creating the TR69 a standardhigher success not uptake will take place sooner than we expect. rate.address The the trade-off management is clear issue, from puttingthe beginning, femtocells JIMFor TAVARES: businesses there are several benefits for organisationsonto the same can footing customise as other services in-home and broadband offers to adoption:That's exceptionally important. To take one suitaccess specific devices? customer needs and in return, Gexample,Reach: SMS in the delivers USA you total have real got reach to have to all integrated handset customers benefit from useful deals. GPSregardless to meet of e911 the requirements, brand or model and carriers also JIMThe TAVARES: question now is how can operators capture GneedDirect-marketing to know where capability: cells are because It provides they an may want thisTR69 data? is really a framework - there's a whole lot on toopportunity radiate on certain for mobile frequencies operators in certain and brands locations, to topTo of address that to this implement challenge, if you Gemalto want to created really be

28 | Mobile Europe SPONSORED FEATURE

Interactive SMS, by Gemalto

• Reach: Compatible with 100 per cent of handsets – including the iPad • Simple dialogue, unique use cases: It enables open questions or multiple choice menus, providing an ideal platform for opt-in, qualification, and quick surveys • Always seen: Interactive SMS pops-up in the idle screen • Easy to use: Requires just a single click to access the next screen, a truly interactive two-way communication • Better ROI: Acceptance rates up to 10 times higher than via simple SMS campaigns h t t p : / / g t u b e . g e m m a l l t o . c c o m

Interactivezero touch. SMS, The standardsenabling operatorsare really nascent,to truly developso that marketingsimilar learning services. curve As with an option, femtocell operators for consumers, can aleaves one-to-one a lot of relationship work to do withas a vendorconsumers. to make Upon sure monetizeas well as theiryour highlyretail staff qualified in stores database or customer with activationyou can deliver the user a truly will zeroreceive touch a text deployment message which othersupport brands’ agents direct on the marketing. phone. In the future willapproach require scale. a single click to reply, making it the ideal GemaltoAnother may factor also carriers brings need brands to beon veryboard clear thanks toabout its ad-sales is that femtocellservices. is challenging typical carrier businessResults models.speak for Carriers themselves. are used A Gemalto to subsidising One of our European customers achieved a 12 per cent acceptance customerCPE for marketing that executed reasons a mobile- not in marketing order to rate when using Interactive SMS to promote its new electronic invoice campaigngenerate capex in Europe reductions recently by useddriving Interactive traffic off SMS tonetwork. promote So its the new return e-invoice on that service. subsidy Acceptance is driven by service. This was six times greater than the acceptance rate achieved ratedifferent was 12metrics per cent, from sixtheir times usual more model. than a from the same campaign delivered via standard SMS previousThat leads campaign to another delivered issue, via which standard is that SMS. Anotherfemtocell mobile crosses campaign classes of inorganisational Asia, promoting structure sportswithin news, a carrier. received It touches a response the operations rate of 7.7 team, per solutionBut I shouldfor the add recruitment that I think for theloyalty adoption programmes. of centmarketing compared and monitoringto 0.2 per centand assurance,when delivered as well via as Withstandards a unique is of designcourse includingpositive, and open both questions Cisco and and ABOUT JIM TAVARES standardcustomer SMS. service and retail. That's a new paradigm multipleStarent havechoice been menus, leaders Interactive in standardization. SMS is also For a toA get Latin their American head around. customer received an Jim Tavares is a greatexample channel Cisco for was conducting an active member quick surveys in the amongstDSL acceptanceBut I would rate also of approximatelylike to say that 30I actually per cent think on consumersForum - now on Broadband the go. Moreover, Forum - Workingit provides Group that itsthere first has campaign been great and progress35 per cent in many on its of second, these and businessesdeveloped withTR-069. the opportunity to engage in a provingother key that areas. users Most were importantly, so satisfied therewith theis a serviceclear simple dialogue with subscribers, yet at the same theysupply agreed chain to forming participate - from again. chipset providers to timeKEITH providing DYER: them with complete autonomy over theWhat types other of offers issues they do receive.you think Gemalto’s operators Interactive face in CAROLINE DOUSSOT is Head of Mobile SMSdeveloping is compatible the femtocell with all market? handset models including Marketing, Gemalto. Since 2002, Caroline has basic SMS phones, as well as Apple’s iPad so that held several strategic marketing positions within usersJIM TAVARES:can easily top-up prepaid internet connectivity. Gemalto’s Telecom business unit in Europe and GemaltoI would mention also offers two full-marketing areas. The first services is that toas with Latin America. Prior to joining the company, she operators.any new service These orencompass technology, access there's to anbusiness education gained extensive experience working for a leading marketing consultancy in Paris. intelligenceissue. WiFi took tools a andwhile regional for consumers expert teamsto understand www.gemalto.com dedicatedwhat it really to deliveringwas and what best-in-class it meant. commercial So you've got and a

Mobile Europe | 29 SPONSORED INTERVIEW GOING MOBILE: CHANGING THE MINDSET Keith Dyer spoke to Phillip Clement, of bemoko, about the opportunities for brands and publishers in going mobile, and of the role of the mobile operator. Jim Tavares is a Director for Strategy & Business KEITH DYER: KEITHPhillip, DYER: this Insight Report is assessing the move toJim, mobile Cisco marketing of course and is represented advertising. in the As someonefemtocell whomarket works through in the its heart MicroCell of that device, industry, which would is most younotably say mobilesupporting is now AT&T's totally femtocell mainstream service. in Why do now mean thatmacrocells, a mobile element strategy management is essential? is web/marketing/online?you think Cisco is well-placed How to would meet carrieryou needs fundamentally different from characterisefor femtocell the deployment? state of the mobile internet and PHILLIP CLEMENT:supporting tens or hundreds of where do you see further opportunities for the use Mobile webthousands and appswill of femtocells. significantly You change still have the ofJIM mobile? TAVARES: fundamental wayall the that complexity businesses of attract, a 3G macrocell engage and We are very excited about the market because we transact with theirbut the customers. scale is one Mobile to two commerce orders of is PHILLIPbelieve it leverages CLEMENT: so many key capabilities we have expected to reachmagnitude $31 billion larger. by The 2016, problem which carriers is an asWell, a company. NASA make First, regular there is trips the long to outer tradition space, of but annual growthneed rate ofto 39%. solve isThose to have companies one platform that unfortunatelyScientific Atlanta this to doesn’t deliver make carrier-grade it mainstream. CPE into Ask the a do not have amanaging mobile strategy all of this.will miss Once out again on onethis of consumerhome. And whether of course they there think is our mobile position websites within are the biggest growthplays areas to our in heritage recent years. of supporting mainstreamnetwork infrastructure or watch someone’s - that has only face beenwhen they try andstrengthened book a cinema by the ticket Starent or viewacquisition. their bank Femtocell statementplays to both on their segments, Blackberry and our and strength I think you’ll in both have Developers have become lazy — they don’t give a thought to yoursegments answer! mean we have the potential to support page weight or mobile bandwidth, so operators need to endorse massiveIf I were growth to characterise in the mobile the state industry. of the mobile internetImportantly, — well we to coin believe a well-known we can provide mainstream the end-to- best practices, and promote the use of web frameworks like marketingend femtocell phrase…confused.com. infrastructure as one While company, brands from all the bemokoLive that deliver websites that are optimised for mobile. debateradio front whether end to to the go forback-end an App provisioning or develop side.a mobile websiteWe've partnered …or both, with their a best-in-class customers desperately provider in try, andip.access fail, to to interact provide with the RFthem piece, on theas that very is expensive not a KEITH DYER: tens of millions of carrier class CPE smartphonestraditional solution that come area withfor us. the Of promise course, everyoneof seamless In what circumstancesdevices. should content owners browsing.tends to think about the radio side, but the consider an app and/or mobile internet site. Are provisioningOpportunity side is everywhere will impact as— well. the technology Unless consumer is Caption CaptionCaption bothKEITH approaches DYER: necessary? heredeployment and customer of femtocells adoption is zero is voracious touch then — butthere's most no CaptionCaption Does the adoption of the TR69 standard not enterprises,way carriers brands can scale and - andretail we businesses have the are experience to CaptionCaption PHILLIPaddress the CLEMENT: management issue, putting femtocells underpinnedprovide the whole by existing integrated systems provisioning and processes process. that CaptionCaption Caption ontoThe the line same between footing web as and other apps in-home is both broadband blurring just won’t cope with a mobile economy. POS andaccess becoming devices? more distinct — the simple answer is systems,KEITHDYER: CMS, CRM, databases, mainframes, and e- use both, but use them in the right context and for commerceYou mention websites deployment, will need but to be how upgraded, important and will theJIM right TAVARES: reason. Think about how people ‘search for thisongoing is the management easy bit. Think of about femtocells the commercial be for carriers, and things’.TR69 The is really web a is framework generally the - there's first place a whole people lot on marketingonce they shifthave that thousands will need of femtocells to take place deployed? to meet willtop look of that for toa product implement service if you or want company, to really be the true demands of the new mobile economy: downloadingzero touch. The an standardsapp adds arean unnecessary really nascent, step so in that the vouchers,JIM TAVARES: location-based campaigns, virtual money process.leaves a If lot you of dowork develop to do as an a app vendor remember to make it sure will earnedThat's for exceptionally the purchase important. of virtual Toproducts take one like online beyou publicly can deliver rated. a Onetruly of zero my touch favourite deployment things to do gameexample, points in the being USA earned you have by buying got to have real-world integrated whenapproach I have scale. a spare moment is to check out the products.GPS to meet And e911 then requirements, there are mobile and payments… carriers also commentsBut I should on retailers’ add that app I think offerings the adoption – they make of needNo wonderto know they’re where cells all confused. are because they may want interestingstandards is and of coursesometimes positive, hilarious andboth reading! Cisco and toThe radiate usual on suspects certain frequencieslike Facebook inand certain Google locations, are Starent have been leaders in standardization. For leadingor take thesteps way, to avoid but none interference of us can with use other these femto or KEITHexample DYER: Cisco was an active member in the DSL behemothsmacro cells. as So a that benchmark means as — well or can as GPS we? you Following also ForumWhich - now OS/ Broadband app platforms Forum does - Working bemoko Group see as yourneed next an integrated nearest competitor network listening is simply capability point scoring. to addingthat developed most value TR-069. for developers/ content Lookknow to where the real a cell trailblazers is by determining and you won’t its interactions go far owners wrong.with the cells around it. Customers may also self- KEITH DYER: report where the femto is when they buy the cell. So PHILLIPWhat other CLEMENT: issues do you think operators face in KEITHyou have DYER: to adjudicate between all that data, and developingLast month the iOS femtocell was top market? of the pile. Now all of a that'sWhat hard are work. the advantages of a mobile strategy in sudden it’s Android, who knows who will be at the termsWhen of you reach, are scale a carrier and deploying responsiveness? thousands Do of these topJIM in TAVARES: a few months? Windows perhaps?

30 | Mobile Europe SPONSORED INTERVIEW

I gave up trying to predict mobile device and OS penetration years ago! Android is doing pretty well MOBILE EUROPE and so is Blackberry right now, but I’m sure Apple will release some new phone on a ridiculous tariff with one of the operators in order to gain back some GOES MOBILE market share. Whatever the landscape will be, one thingI would is for mention certain; none two areas. of us The have first any is control that as over with WITH BEMOKO itany —new so in service my view or it’stechnology, futile trying there's to predict an education or manageissue. WiFi campaigns took a while based for on consumers mobile penetration. to understand No It was becoming a source of embarrassment to us onewhat would it really run was a campaign and what or it meant. write a So website you've based got a at Mobile Europe that we had no dedicated mobile onsimilar which learning PC manufacturer curve with femtocell is number for one. consumers, Or run a as site. We want our content to be accessible wherever TVwell ad as campaign your retail aimed staff in at stores LG TVs or because customer they support are our readers are, in the format that best suits them. theagents top on selling the phone.brand. Why? Because it doesn’t That is why we still pubish in print and produce a matter!Another So howfactor cool carriers would need it be to for be usvery all clear if mobile about digital issue, and it is also why we wanted a site that handsetis that femtocell or operating is challenging system figures typical were carrier of no business is optimised to mobile. relevance?models. Carriers What ifare brands used to could subsidising just do CPE‘mobile’ for - all When we looked around for someone who devices,marketing tablets, reasons smartphones…everything - not in order to generate all capex in one would understand our objectives, we settled on place?reductions Strangely, by driving that’s traffic what off bemoko network. does. So the return bemoko, as their approach accorded directly with on that subsidy is driven by different metrics from ours. Their technology, with its dynamic device and KEITHtheir usual DYER: model. software recognition, will render our content in the WhatThat leads role doto another you see issue, for mobile which is operators that femtocell most optimised fashion for any mobile device. withincrosses mobile classes ofmarketing? organisational Could structure operators within take a Of course, many devices can access the site morecarrier. of It a touches lead in the helping operations businesses team,go marketing mobile, and already, and are doing so. Indeed, one of the first extractingmonitoring benefits and assurance, from mobile as well sites/apps/as customer service things bemoko asked us to confirm was which customerand retail. interaction? That's a new Does paradigm bemoko to get have their any head mobile OS were already hitting the site. We knew directaround. or indirect relationships with mobile that iPad and iPhone were 3rd and 4th, with operators?But I would also like to say that I actually think Android 6th. But the experience is not optimised, there has been great progress in many of these and and over a mobile network our pages are heavy. PHILLIPother key CLEMENT:areas. Most importantly, there is a clear So as we develop the mobile site, we are asking supplyLike the chain M25 forming [London’s - from orbital chipset motorway], providers which to radio you what you would want to see from it — what experiencessoftware providers congestion and end-to-end due to its huge system popularity, providers. content, features and functions you like, and those mobileWith any browsing new supply will start chain to it put takes a strain a while on for the every you don’t. You can email me your thoughts at operator’spiece at every ability level to cope,to drop speeds into place, will slow and up, you and will [email protected] or leave a comment costsget inevitable will rise. Rather interoperability than leaving issues, it up but to there's the been at http://mobileeurope.co.uk/news/blog/8867. operatorsgreat progress. to deliver more bandwidth and customers Keith Dyer, Editor, Mobile Europe to put up with slow speeds and high data charges, developersKEITH DYER: need to take responsibility for their code, access point and router with a femtocell. Every andHow the about way that issues they around build price? their sites. There But was this a feeling is a bemokoLivecarrier is very web different framework and you comprises have toa take highly that bigthat education vendors would process. have Developers to hit a certain have become price point lazy in powerfulinto account suite as of well. tools that form the foundation of —order they for don’t femtocell give a to thought be viable. to page weight or newKEITH and DYER: innovative multi-channel services. We mobile bandwidth, so operators need to endorse workStepping with global away brands, from operator systems concerns integrators, - what do bestJIM practices, TAVARE: and promote the use of web ABOUT JIM TAVARES contentyou think providers, will drive ERP/E-commerce consumer adoption and of media frameworksI understand like that bemokoLive this is a nascent that deliver market websites and not agenciesfemtocells? who use bemokoLive at the heart of their thatyet all are that optimised sophisticated, for mobile. so price is something people PHILLIP CLEMENT is mobile web and applications strategy. can get their hands on initially. But over time, Sales and Marketing JIMbemokoLive TAVARES: removes the burden of supporting KEITHattention DYER: will turn to the benefits of being able to Director for bemoko. theI widening think it's simply array of a fact mobile that devices wireless such and mobility as operateFinally, at Phillip, large scale, can you with give reliable, us some zero touch www.bemoko.com tabletsis so much and more smartphones, important games than it consoles was a few and years backgrounddeployment. to If I bemoko save $5 on – what a component areas your in order to internetago to how TV with people centralised live their management lives. What we're - all companymeet some works arbitrary in and price your point, place but in then the have mobile to devicesfindingand is that services traditional are supported view of how and to managed build in marketingspend $50 valueon support chain? calls - then have I saved any onenetwork place, to reducing support that management lifestyle need overhead is becoming and a money? increasingproblem. In market Europe, reach. for example, Delivering UMTS complex is at 2.4GHz PHILLIPI also think CLEMENT: price is impacted by operators' own campaignsand home construction that play to isthe often strengths of cement of feature-rich and steel. prioritiesAs PCs become around aesthetics, replaced by and tablets physical and integration. devicesSo the RF is achieved propagation with is complete not what it freedom is in 2G. to smartphones,Some carriers all are organisations very interested will in have aesthetics, the need as this to interfaceAnother with example related is platformsthat the whole such busy as payment hour on a targetis an item a wide that range will be of going different into devices, people's operating homes. services,network e-commerce is changing. It's and moving m-commerce back later systems, into the systemsOthers are and thinking browsers. about To enable how to that, combine our a WiFi GPS,evening, mapping as people and come social home networking. and then use their

Mobile Europe | 31 Advertorial: Video optimisation HANDLING THE MOBILE VIDEO CHALLENGE

By Gijs van Kersen and Steve Hratko, Juniper Networks

ideo presents a unique conundrum for mobile Progressive download is used by most web sites on service providers. On the one hand, the ability the Internet (including YouTube). It downloads a video V to deliver video efficiently to mobile devices file at the fastest rate that can be supported by the presents a significant opportunity for new services, network. Once the mobile device has enough of the file revenue generation, and competitive differentiation. in its buffer, it begins to play the video. There is no Services such as interactive video, anytime and correlation between the download speed and the anywhere delivery of premium video content, and real- playback speed. PD counts on a deep buffer in the time surveillance are only a few of the possible value- client device to handle any changes in network added services that rely on efficient delivery of video to performance. Such changes are very common in a mobile devices. mobile environment where radio performance will On the other hand, the sheer volume and growth of typically drop way off as the user gets near the edge of video traffic is straining mobile operators’ networks to a cell and pick up as the user gets closer to the cell their breaking point — making it difficult to deliver center (i.e. the base station). video with the quality that users expect. According to A different approach, adaptive streaming (AS), is Yankee Group, video is projected to exceed 65 percent starting to replace progressive download at many of all mobile data traffic by 2013. In December 2010, Internet sites. With AS, “chunks” of content, usually YouTube announced that each day 200 million videos representing a few seconds worth of video and audio, were being played on mobile devices globally – up 300 are streamed one by one to the mobile device. When percent from a year before. the mobile device is ready, it will request the next As mobile access becomes more ubiquitous and chunk. If network conditions change as the user moves devices more capable, subscribers will be less likely to around, the client can request that the next chunk be tolerate degraded quality—rather they will expect an downloaded at a lower or higher bit-rate. Adaptive experience similar to that which we now enjoy on wired streaming videos are stored on the origin server using a networks (much as users did in the early days of mobile number of alternate encodings, at a variety of different voice; the expectation was based upon many years of bit-rates to handle a variety of different network reliable landline services). This means that to capitalise conditions. Streaming at a different bit-rate provides on the growing demand for mobile video, operators very much the same function as pre-filling a large must first optimise their networks to deliver video playback buffer in PD, but in a much more bandwidth efficiently, at scale, and with exceptionally high quality. efficient way. There are several options available to operators to address the growth in data traffic, including: Wi-Fi offload, COMPRESSION introduction of HSPA+ or LTE, more base stations, more The primary method for optimising progressive spectrum, and video optimisation technologies. In order to download traffic is to compress it. There are several meet the demand and expectations, a combination of all ways to compress PD traffic. The most popular is of these will be required. This article focuses on content-aware compression, where the algorithm takes technologies which can optimise video streams before advantage of the way the human brain processes video they hit the most expensive part of the network: the radio and removes data that would not be noticed. This access network (RAN). Steve Hratko is technique can consistently compress traffic by about 30 A number of tools are available for mobile video Marketing Manager percent with almost no impact on the user experience. optimisation, which will be described in the following for Mobility Products, Higher compression ratios are also possible, but that Juniper Networks. sections. Again, the best results will be achieved by becomes more noticeable. Even then, compression Contact: applying a coordinated combination of all these offers a superior user experience compared to videos [email protected] mechanisms. freezing and stuttering during times of congestion.

VIDEO STREAMING TECHNOLOGIES Any discussion of video optimisation must start with The sheer volume and growth of video traffic is straining a discussion of streaming technologies. The two most popular video streaming technologies are progressive mobile operators’ networks to their breaking point — making it download (PD) and adaptive streaming (AS). Both are difficult to deliver video with the quality that users expect. in common use today and require very different optimisation approaches.

32 | Mobile Europe Advertorial: Video optimisation

JUST-IN-TIME DELIVERY CACHING Another technique that can be used to optimise PD Certain videos can become very popular and sweep content is just-in-time delivery (JIT). Unlike across the Internet. In this scenario, it makes great sense compression, this is a lossless technique. JIT can also to cache these videos locally in an optimised format. be thought of as buffer management. Instead of Then all future users who wish to access the video will allowing the mobile device to download a large PD get a much quicker download than if it were necessary file and then start the playback function, content is to fetch it from the origin server. In the case of PD metered out slowly so the mobile device’s buffer only streaming, these videos would be cached in an already- has just enough data to enable smooth playback. The compressed format. In the case of adaptive streaming, reason this approach provides savings is that most Internet videos are not viewed to completion. If the user abandons a video after a few 10s of seconds, all of the data left in the device’s playback buffer is With mobile video optimisation, the end result for subscribers wasted. With JIT delivery, the size of the playback will be a high quality user experience, while service providers are able buffer is carefully managed to minimize this waste. to defer investments in additional RAN infrastructure – potentially Of course the downside to JIT is that, in case of sudden degradation of bandwidth, the buffer will resulting in a return on investment of nine months or fewer. empty and playback quality will suffer....

MANIFEST OPTIMISATION multiple low-bit-rate versions would be brought down As part of the setup procedure for Adaptive from the origin server and cached. DRM-encoded Streaming (AS) videos, the origin server will send the content (Digital Rights Management) should not be mobile device a manifest that lists all the bit-rates cached and would always need to be fetched from the that can be supported when streaming that video. origin server. When using a cache, it is always necessary The mobile device selects one of the offered bit-rates to check with the origin server each time there is a and the process begins. The tendency is for the cache hit to make sure the content is still valid (hasn’t mobile device to select the fastest bit-rate that it can been pulled for copyright reasons) and so the origin handle, but this may not be in the best interest of server can keep count on how often a video is accessed. the mobile operator. One technique to control this process is to modify CONCLUSION the manifest so that the mobile device never sees the Video optimisation is most appropriate when used for higher bit-rate options. If the choices are 100 kbps, congestion management. The goal for service providers 200 kbps, 500 kbps, and 1 Mbps it might be in the is to maximise the return on their RAN investment, operator’s best interest to remove the two higher while at the same time keeping users happy. A speeds from the manifest and let the device pick compelling user experience is only possible if from either 100 kbps or 200 kbps. Smartphones do congestion can be avoided – either by video not need more than 100kbps, but if you are viewing Gijs van Kersen is optimisation or by increasing RAN capacity. a video on a high-end laptop with wireless dongle, Marketing Manager for With a properly-designed video optimisation toolkit, then the video quality will be lower than optimal. Mobile Solutions, it is possible to perform optimisation only in those parts Juniper Networks, in of the network where it’s really needed. A single, the EMEA region. TRAFFIC SHAPING centralised optimisation function can thus avoid or Contact: Once the flow is under way, the manifest can’t mitigate congestion across an extensive RAN footprint. [email protected] help with further modifications of AS content. In that While some forms of optimisation may result in scenario traffic shaping comes into play. In traffic reduced video resolution, in most cases users won’t shaping the network will slow the flow down to the notice – certainly compared with not doing any rate that it can handle and this will “encourage” the optimisation at all! mobile device to select a lower bit-rate from the The end result for subscribers will be a high quality origin server. user experience, while service providers are able to While video quality may be somewhat impacted defer investments in additional RAN infrastructure – (especially for PD), this is better overall than allowing potentially resulting in a return on investment (ROI) of the congestion to continue. nine months or fewer.

Mobile Europe | 33 Policy Management MOBILE’S MONETARY POLICY

Policy management has gone way beyond data caps and enforcing bandwidth controls – and operators and vendors alike are starting to talk up its potential to enable new revenue streams sourced from end users and from content providers. Can policy management show operators the money? Keith Dyer asks the experts.

Tekelec, says that operators are beyond dipping their toes into policy management – for instance he estimates that by the end of 2011 there will be no operators in mature markets without a PCRF. But he still thinks that operators are no more than “ankle deep” in terms of how they are thinking about what they can enable in terms of generating increased revenues. Infonetics’ Shira Levine, too, detects a shift in the way operators are thinking about policy. In a note for Infonetics, Levine defines policy management in the following way: “At a very rudimentary level, policy management is software that uses business rules or logic to control subscribers’ access to specific applications, services, or network. Over the last few years, policy management has evolved to handle not only static data such as subscriber, network, and device information, but also dynamic, session-based data such as the network bandwidth requirements of an application, which network routes or hops should be used to deliver the best QoS to a subscriber, and what QoS a subscriber is entitled to under his service agreement.” olicy Management, or at least the application of It is this shift in the use of policy that Levine also policy management enable features, is determines. “There is growing interest in using policy to P changing. Forecasts from ABI Research claim enable value-added capabilities such as advanced that the market for policy management servers in mobile subscriber control or variable charging based on time of broadband networks will grow from approximately $350 day or subscriber profile. million in 2010 to almost $1.6 billion by 2016. “The role of policy management is expanding beyond Most importantly, there are clear signs that policy has its traditional position in the network realm to encompass moved from being an enforcer or caps and limits to a new range of operator requirements, including enabling something that enhances the revenue streams of mobile differentiated services and supporting convergence operators themselves. Although the policy element strategies vendors have a clear interest in talking up this sector, the “As operators roll out new services and capabilities, they analysts tend to agree that policy control does lend itself have had to add new logic and control at the edges of to a key strategic role within mobile operators’ networks. their networks to better manage the requirements of these “In most businesses, a big increase in demand for your applications, as well as the wide range of end-user devices products and services would be considered a good currently in use. The aim is for operators to have better thing,” says ABI principal analyst Jim Eller. “Instead of visibility and control of their access networks so they can trying to block or throttle data traffic, mobile operators better manage overall and specific customer experience. need to figure out how they can profit from the huge “Policy management is emerging as a key tool to opportunity that has fallen into their laps. With achieve that goal, particularly when used in conjunction worldwide data traffic volume growing at a CAGR of with the authorisation and enforcement capabilities more than 50% annually, trillions of dollars in data offered by other network resources, such as AAA and revenues are at stake.” RADIUS servers, edge routers, and standalone policy “Policy is more than just bandwidth management,” enforcement solutions like deep packet inspection (DPI).” adds practice director Aditya Kaul. “Policy is also about Levine states that operators are increasingly moving quality assurance, flexible tariff plans, and creating new away from their traditional all-you-can-eat billing strategies revenue streams.” and introducing tiered pricing, but to do so they will need Randy Fuller, Director of Strategic Marketing at policy control capabilities to manage subscribers’

34 | Mobile Europe Policy Management

bandwidth caps, particularly those distributed across management to differentiate their services, by adding multiple device or network types. When integrated with value to the user experience. Policy-based controls such as charging, policy control also enables operators to go notifications, bill shock / roaming controls, parental and beyond tiers and offer more real-time, flexible pricing content controls, URL filtering, and time-of-day restrictions models, such as offering variable pricing based on time shape the customer experience, especially when these can of day or the subscriber’s location, or charging for a be configured and controlled by subscribers. bandwidth “boost” during peak usage hours for certain services. Service differentiation So is there a growing momentum behind using policy Policy Management also makes it possible for operators to to drive new revenues, and if so, what are the revenues differentiate their own premium services, such as mobile that operators are chasing? TV, by making sure that their premium services are not Jonathan Downey, Director Product Marketing, counted against a customer’s data quota. Openet, says that a lot of the excitement around policy Also instead of selling all-included data access, wireless management is indeed driven by the potential to operators are looking at new data plan propositions on increase revenues. top of the traditional data access model: reflecting the fact “One way operators hope to do this is by better that not everyone wants to commit to a 2 year contract aligning subscriber data usage with revenues, using tiers for data access. of data usage and bandwidth speed. With the advent of “We’ve worked with several Tier-1 operators to deliver LTE, this segmentation of data offerings is core to many service passes, also known as day passes. These make for a operators’ strategy to monetise their 4G networks. compelling service offering for customers who want a Policy’s role as a revenue engine is cemented when it is more flexible billing arrangement, and in addition, given combined with Charging. Making policy decisions based the limited commitment, they also appeal to non- on network resources and subscriber entitlements lacks subscribers,” says Downey. important context. Giving subscribers the option to “Service passes represent an opportunity to go beyond purchase data services in real-time, along with providing “vanilla” data access, giving the potential to introduce information about pricing, subscriber usage, and highly segmented offers, supporting different charging balances, provides strong monetization opportunities. models for access. This was central to a leading North “For example,” Downet continues, “we have American operator’s roll-out of its iPad offering, enabling customers who by coordinating Policy with Charging it to sell data access by volume of data usage and offer promotions in real-time, based on what a customer duration; thus meeting demand for flexible, personalized is actually doing, for example allowing them to make an service offerings.” upsell offer to sell a service pass, or to allow a customer That’s a model that Gayda recognises too. to purchase an extention to a fair usage limit.” “One of our customers introduced the ‘Turbo Button’ in Christian Gayda, Head of Product Line Management addition to Fair Usage Policy,” he states. “With this Policy Control, Nokia Siemens Networks, concurs that business model, end users have flat rate tariffs that are policy management today has dual objectives – “give the sufficient for regular usage. Pushing the ‘Turbo Button’ subscriber the experience they expect and allow allows subscribers to expand the available bandwidth for a operators to regain some of the lost profit.” specific application such as video-on-demand. This But he cautions that Policy must also be seen as part of approach allows end-users to stay with low flat rate tariffs the overall customer experience. “Policy controls allow for daily usage, while they can tiered services with different quality of service which are purchase advanced network services adapted to users’ needs and price expectations,” he says. One of our customers for specific applications if needed. For “Another example is to allow policies to be controlled by the CSP, the ‘Turbo Button’ option the subscriber directly – for instance using a handset introduced the ‘Turbo Button’ in means additional revenue on top of flat application – and enable users to upgrade, downgrade, addition to Fair Usage Policy. For rates. This is a good example how tap into congestion peak banks, change setting etc.” the CSP, the ‘Turbo Button’ option increased customer experience and Certainly this shift in policy seems to have benefited personalisation provides additional Nokia Siemens Networks, which has seen significant means additional revenue on top of profit.” growth in its policy management business. Gayda says flat rates. This is a good example Policy also lies at the heart of the that its customer base has increased by 550% during the how increased customer experience differing ways operators can react to last year and he sees this trend continuing in 2011. macro market conditions. Tekelec’s So what examples of new service offers could policy and personalisation provides Randy Fuller comments on the enable. It’s all very well talking n general terms, but what additional profit different situations being faced by of the specifics? operators in Poland and Austria. Downey says that operators are looking to policy (Continued, Page 38)

Mobile Europe |35

Policy Management

Keep an eye out for work being done by the 3GPP on the run he expects to see policy control in the security area, defining and taking decisions on security policy proposed new Sy reference point between the OCS and PCRF. This depending on network and environment conditions. will manifest itself in a more joined-up proposition from operators. “Policy management will also be linked with Cloud We have already seen some policy and charging capabilities being computing,” Gayda adds. “CSPs can use external server farms to be able to temporarily assign external exposed to subscribers...we see this trend accelerating... computing capacities. The policy control server is used to communicating the value of the heretofore invisible services of the decide where to get additional capacities for peak telecommunication companies situations. “From a revenue generation perspective CSPs need to ensure they continuously create interesting promotions "Despite being relatively close to each other in terms of and offers using real-time policy. We are probably going geography, the Austrian and Polish mobile data markets to see service-based revenue coming from an entire have evolved very differently. When you compare how ecosystem of partners and advertisers as well as mobile broadband/USB modem services are marketed in subscribers similar to what we are currently seeing with Austria you will see that the operators tend to compete the use of the Internet.” on a larger usage bucket for more money, and quite Downey agrees that we will continue to see the often for not that much money. integration of Policy and Charging evolve. “3 Austria has changed the simple model somewhat, “Keep an eye out for work being done by the 3GPP on now offering tariffs such as unlimited usage (no cap, no the proposed new Sy reference point between the OCS overage fees), roaming on the other 3 Europe networks and PCRF,” he says. at national rates, and a multi-device add-on package, so “This will manifest itself in a more joined-up it will be interesting to see if these offers shake up the proposition from operators. We have already seen some market." policy and charging capabilities being exposed to He contrasts that approach with that in Poland. "Polish subscribers. In Openet we see this trend accelerating, to operators use a very wide variety of mechanisms that the point where customers will interact with, and be able include speed-based tiers and a very broad range of to configure, view, control and purchase services – usage buckets, up to 40+GB/month in some cases." communicating the value of the heretofore invisible According to Fuller the Polish market is more versatile services of the telecommunication companies.” and operators are prepared to offer their subscribers a Another aspect of policy will be influenced by the way number of offers and incentives, which include: operators are slowly beginning to establish revenue- G Various overage options including bandwidth limits generating partnerships with third party providers of and an option to buy out of the bandwidth limits for content, applications, services and devices. an additional fee “We will start to see more sophisticated ‘Comes with G Discounts for bundled voice and USB modem users data’ business models emerging,” Downey says, “such as G Bonus SMS and voice minutes those found in the popular Amazon Kindle 3G. 3GPP has G Discounts for users who renew their contracts been doing a lot of work around ‘sponsored data G Unlimited usage during night-time hours connectivity’, and it is a use case we are seeing more and G Free WiFi hot-spot usage more interest in from operators, as they look to ways to G Free multi-app "social network package" (free usage of monetise over-the-top applications.” Facebook, Goldenline, LinkedIn, etc.) The use of policy, then, looks to be key to operators’ G Free anti-virus software future strategies as they grapple with OTT players, new embedded forms of connectivity, and their hard-won Where to next? ability to stay relevant to their own customers. It’s There are softer gains too, that act to protect revenues by unsurprising, then, that the analysts have it marked as a ensuring the overall customer experience. growth area, in developing and developed markets alike. “We are working with a leading Indonesian Telecom Provider to mitigate network congestion issues caused by usage of BitTorrent by subscribers,” Downey says, “and From a revenue generation perspective CSPs need to ensure they ensure that these heavy users are not consuming capacity to such an extent that it is causing a deterioration of continuously create interesting promotions and offers using real- service to other subscribers.” time policy. We are probably going to see service-based revenue So where does the use of policy management and coming from an entire ecosystem of partners and advertisers as well control head next? Gayda says that in the mid term we are likely to see as subscribers similar to what we are currently seeing with the use of end-to-end quality management with congestion control the Internet (PCS controls access and core/backbone). In the longer

38 | Mobile Europe Network optimisation HOW LOW CAN YOU GO?

Driven by the need to offer more dynamic, personalised services, and protect the user ecperience, operators are introducing more sophisticated tools to collect, correlate and analyse network, service and device-level data. But could this information also be used to ensure a better quality, more fit for purpose network? And is the role of network optimisation changing in the face of changing user requirements?

customer experience as the subscriber views it, and the impact of that upon the network,” Arieso CTO Mike Flanagan said at the time. This year, however, has seen a surge of operator investment in data analysis tools that enable them to get a customer-centric view of the user experience. Operators are mainly making these investments to give their marketing and business units a clearer view of how specific service, applications and devices are performing on the network. But with this level of data analysis and correlation being considered, is there a case for feeding that information back into the network optimisation and planning teams, so that decisions can be made in the ith ongoing pressures to maintain Diving deep down into full light of the facts about where the most valuable customer satisfaction, and the user data could target customers are, at what times of the day, and what W increasing number of data-intensive network resources their behaviour is? more effectively. products and services requiring better management Flanagan’s boss, Arieso CEO Shirin Dehghan, says of network capacity, mobile operators are being that she is beginning to see operators use a much tasked with the problem of better managing their more granular level of data at the network level. network as data usage increases. “Certainly we are,” she confirms. “One of the Not only are revenues under pressure, deployed challenges of the traditional sources of data capex must be highly targeted to meet these revenue mentioned has always been one of coverage. For generating users. ABI Research anticipates that network engineering purposes, samples and trends operators globally will deploy nearly 80,000 W-CDMA are not very useful — you need the actual detailed base stations by the end of 2011 — a predicted total information, and it is never cost effective or practical base station investment of US$5.6bn in 2011. Earlier this year network optimisation company Arieso estimated that up to 10% of that base station investment could be under-utilised merely through Is there a case for feeding that less than optimum positioning. That’s the sort of information back into the network impact that can seriously dent a network business optimisation and planning teams, so that case. “Network operators are doing the best they can decisions can be made in the full light of with the tools they have available, but they need the facts? more efficient tools that show them the actual

Mobile Europe |39 Network optimisation

ALLOT’S 12 USE CASES FOR OPTIMISING, MONETISING AND PERSONALISING OPERATOR NETWORKS

Fair Use Management to cover the entire network with probes. As an responsible for 22% of OTT Video Caching example we are aware of one operator who gets two global mobile bandwidth. OTT Video Optimization hours of data a day from a rolling 20% of their RNCs. Service Tiering Being able to identify the This coverage challenge means it is rare that the Bill Shock Prevention dominant content information needed to work on a particular issue or Off-peak Happy Hour providers, allows operators project will be immediately available, and re- Volume Charging (Quota) to approach these providers configuration to get the right data takes time. Our Application-based Charging with partnership offers that experience is that with the data immediately available Bandwidth on Demand Turbo Boost contribute to both network at their fingertips engineers are inclined to make Illegal Content Blocking QoE and profitability. much greater use of it.” DDoS Prevention Blacklist Prevention Jonathon Gordon, Director of Marketing, Allot THE BENEFITS OF Communication, agrees that there has certainly been DETAIL a move to acquiring and acting on more granular Dehghan says that one of the key advantages of information. 24/7 geolocation technology is that the operator is “The need to generate new revenue streams able to produce very detailed traffic maps and without making major CAPEX investments has precisely identify hotspots. Another trend is for become more pressing,” he says. “As a result, we operators to focus on ever finer problems. have definitely seen the demand for more awareness “A common remark from Arieso’s users is ‘we would and more granular information rise on all levels. This never have been able to see that before’, when they includes awareness of the type of applications have uncovered and resolved a problem that whilst running on the network, the device, the subscriber, only affecting a small area, was seriously impacting the and the content provider.” experience of a significant number of what we call So what use can this level of information be put 'forgotten customers' whose poor experience is now towards? being revealed to operators. This type of problem has Gordon says that some of the use-cases he has been nearly impossible to detect and resolve with the come across within his operator customer base classic combination of statistics and drive test.” include: There is another level perhaps arriving in this move •Application awareness, such as the ability to to granularity – and another approach that sidelines distinguish between specific video or VoIP the drive test, and that is crowd-sourcing network applications, is used by operators for network optimisation. Or, if you prefer a less on-trend term, planning and for deciding on what network using the users themselves to self-report thei capabilities they should have. As a result, it affects experience. One network quality monitoring company what optimization solutions operators deploy and called Metricell has launched a service that lets users where they are placed in the network architecture. track, by location and time, the quality of service they •Device awareness: similarly used to implement are receiving from their network provider. solutions such as device-aware video optimisation, The service, called Tracesaver, is available as an which can provide significant bandwidth savings Android or Blackberry app (Apple app is "coming" the while at the same time improving subscriber QoE, by company said) and is said to deliver continuous applying different levels of compression per device. transparent tracking of phone usage and precise •Subscriber awareness is used in conjunction with locations across the day. application awareness to implement intelligent If it delivers on its promise, it could provide a service charging models and policies per subscriber, for that lets users see exactly the quality they have example tiered service plans, which guarantee specific received, and of course have the ability to share that throughput per user. The ability to ‘bucket’ with their service provider or operator. subscribers according to Tracesaver users are provided with encrypted their data usage patterns is access to an industry quality web site to review their especially useful for If it delivers on its promise, it could call details, whereabouts and all other key facts. marketing value-added provide a service that lets users see exactly Weekly, monthly summaries are provided to show services like unlimited social the quality they have received, and of course metrics concerning the service performance they network plans. receive from their network provider. Low signal and •Finally, as Allot’s have the ability to share that with their dropped calls are pinpointed, services used, upload MobileTrends report recently service provider or operator data speeds and more are summarised for all revealed, YouTube alone is registered mobiles. An overall Global Service Quality

40 | Mobile Europe Network optimisation

measure is provided for users over any period. large venues for major events. This starts to make a The service can also be made available to mobile change in some of the KPIs, away from "how did our operators, with the platform tailored to integrate with network perform" to "What service did we provide to an operator's customer support services function. our customers". Metricell said that the use of smartphones to report “This same shift towards a customer centric the actual customer experience could enable major approach impacts the working methods as well. advances to existing operator customer support Rather than investigate with drive test data to try and systems with efficiency benefits and cost reductions understand the reason behind a poor KPI, engineers by eliminating most 1st generation drive test are able to work with real subscriber data, certain in measurements. the knowledge that they are diagnosing the actual Steve Mockford, Metricell’s Managing Director problem being experienced indoors as well as comments, “Tracesaver uses smartphones to capture outdoors.” key data 24-7 to pinpoint network problem areas. Allot’s Gordon says, “When there was less granular Subscribers have a free service to track their data, there was also very little latitude for operators whereabouts and summarise all aspects of their to optimise traffic without hurting the subscriber mobile phone usage. Customer use cases include experience. As visibility into the network has emergency location of family or general tracking of improved, the new key performance indicator for fleet vehicles. operators is achieving the correct balance between “Many users specifically want to pinpoint where subscriber QoE and cost-saving on traffic.” they have unacceptable network service levels. From That is always a balance that operators must strike, an operator point of view, Tracesaver has targeted but now, it appears, they have more data with which collection to report locations of poor quality or to make those important decisions. dropped calls. Other key metrics such as upload data speeds, services used, overall coverage experience and more.” ANOTHER WAY TO SAVE? TURN OFF THAT BASE STATION! Metricell works already with MBNL, providing its Mobile operators could potentially save more than $560m in operational Livetime NetView product. Its Subscriber Experience expenditure annually by “powering down” redundant base stations at quiet module for Livetime can be used with Livetime times, according to calculations by Arieso. By analysing actual subscriber network NetView in an operator environment, and drives the traffic data, Arieso believes that around 390,000 base stations can be powered Tracesaver customer-facing application. down during quiet night time periods, saving more than 3.5 billion KWh of Livetime also acts as the project data warehouse for electrical power. Everything Everywhere's network consolidation Most importantly, this can be achieved without affecting the service of users who project. would require service in a given area, Arieso clains. Operators can use new tools And recently, the BBC started its own project, using to understand which base stations can be powered down and for how long, an app from Epitiro. Users can download an app without affecting the consumer experience. which will record the signal you're getting on your As consumer appetite for mobile data continues to rise, operators have sought to phone - 3G, 2G or nothing - and feed the data back add more network capacity by deploying new base stations in densely populated areas, or busy urban zones. New base stations may help solve capacity issues to our research project. The UK 3G survey app has during peak hours, but during the dead of night, many of these base stations been developed by Epitiro, the firm behind Ofcom's become redundant – yet still consume the same amount of power. recent report on mobile broadband speeds. “It’s well understood that energy consumption makes up a major portion of It will record phone signal data all the time the operator OPEX, and powering down base stations to reduce this has been phone is switched on, and Epitiro is going to work discussed in the industry for some time,” said Michael Flanagan, CTO of Arieso. with us to collect the results over the next month. “However, the challenge of knowing how and when to save power safely, The aim is then to plot the findings on a map which without affecting the user experience, has not been met. Understanding the will be searchable by postcode. If we succeed, this detail of when and, more importantly, where subscribers are using – or not using should yield some interesting results. – the network is central to making these choices and realising the savings.” So if operators are taking a much more user-centric Using standard industry figures, Arieso has also calculated that this approach to their network optimisation, is this “unnecessary” power consumption contributes large volumes of CO2 to the earth’s atmosphere. Reducing the 3.5 billion KWh consumption shown in this altering the ways in which the network and technical study equates to a reduction of 1.9 million metric tonnes of CO2e (1.9 Mt teams measure their own success? CO2e). Dehghan says that Arieso’s customers are now Eliminating these emissions would be equivalent to taking approximately routinely carrying out 24/7 proactive monitoring of 478,000 cars off the road each year, globally. services at key corporate customer locations, and

Mobile Europe | 41 Diary & Notes ”THE TRUTH? YOU CONFERENCE HIGHLIGHTS CAN’T HANDLE THE TRUTH” POLICY MANAGEMENT & CONTROL SDP GLOBAL SUMMIT 12 - 14 September, Berlin 20 - 22 September, Berlin Policy management and control is becoming crucial to operators as As the flagship event of informa's SDP series, this conference and they need to better manage broadband traffic on their networks as large-scale exhibition is a unique occasion to address the most well as profit from the increased data usage from customers. The crucial issues in advanced content and service delivery and learn conference will gather over 150 leading industry experts under one more about the vast range of SDP opportunities. roof for a two day interactive conference on a topic of vital www.sdpsummit.com relevance to the mobile operator. www.iir-telecoms.com/event/policymanagement CUSTOMER EXPERIENCE MANAGEMENT IN TELECOMS 26 - 29 September, Budapest NUMBER PORTABILITY 2011 Never has it been more important to develop, implement and 19 - 21 September, Madrid leverage new and innovative customer experience management Whether your country has already implemented or is about to strategies. But how can you keep track of your customers’ constantly introduce number portability, it is and still remains an issue for evolving needs? operators and regulators as evidenced by IIR’s long running (16 www.customerexperienceevent.com years) annual Number Portability conference. www.iir-telecoms.com/event/np

INTERCONNECTION & TERMINATION RATES 19 - 22 September, Austria Interconnection has until now provided operators with a huge source of revenue. However with the recent directive to lower termination rates, and with many operators looking to migrate to all-IP networks, current interconnection models will need to be re- evaluated in order to ensure profitable interconnection agreements. Find out how your business can benefit. www.interconnectionevent.com

Around the mobile world in 300 words best that the industry can deliver. That would just about And so the great search for a city magnificent, obsequious make up for 55,000 mobile industry types asking the way to and brave enough to pay court to the mobile industry came the Fira for a week a year, and hogging all the taxis. to an end. A search that began in Barcelona, and went as far as, er, Paris, finally returned to the Catalonian capital. A Festival of Mobile though, come on. Get involved. Send your ideas in - they’re going to need them. And so you, I and all of our colleagues will be traipsing to Barcelona every year until at least 2018 for Mobile World Another baffling debate in the mobile world is whether or Congress. The GSMA strongly rejected those cheeky enough not Apple will produce a white iPhone 4, or even iPhone 5. to suspect that the event was never on the move. It was a For some unfathomable reason, the tech world waited with genuine competition, it said. So how was the decision made? baited breath for news of another white phone from the What were the criteria? “Even the cities don’t know that,” California dreamers. Who knows why? But now, perhaps came the reply from the GSMA Ltd’s CEO John Hoffman. emboldened by the sheer excitement afforded by producing That’s right, this process, so “unbiased and transparent” is an existing device in a different colour, Samsung has stolen a just too complicated to outline to the mobile industry. It’s all march on its trans-Pacific rivals. Because the company has right, though, because the board of the GSMA are happy with taken the step of producing a Galaxy S II...in white. It will be the decision. called the Samsung Galaxy S II white (of course) and will be available in the UK across all major networks and retailers And actually, it is the right decision, and it’s the GSMA’s from 1st September 2011. event so they can take it the hell they like and quite rightly so. More interesting, perhaps, is the concept of the Mobile Mobile Europe recalls the trend for pink phones after World Capital, a concept that will span some kind of Motorola (used to be a mobile phone company - ask your permanent exhibition, a Festival of mobile and also foster dad, he’ll remember) cleaned up with the colour. At one service innovation. If I lived in Barca I’d be wanting NFC point, you could express your individuality by buying any one transport, payment and retail, mobile health services, the of 15 pink phones on the market. White...the new pink?

42 | Mobile Europe