3G Reality Check the Brazilian Experience
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3G REALITY CHECK THE BRAZILIAN EXPERIENCE LUIS AVELAR VP WIRELESS DATA AND DEVELOPMENT CDG Latin America Regional Conference April 17, 2002, São Paulo LA-20020215-01 VP Wireless Data and Development AGENDA INTRODUCTION COMMERCIAL STRATEGIES TO OFFER NEW DATA SERVICES INITIAL CONCLUSIONS LA-20020215-01 VP Wireless Data and Development INTRODUCTION WHO WE ARE AND WHERE WE STAND * BRAZIL IS THE 5TH BIGGEST COUNTRY OF THE WORLD AND THE MOST IMPORTANT MARKET IN LATIN AMERICA: – 165 MILLION INHABITANTS (40% OF SOUTH AMERICA´S POPULATION) – 9TH BIGGEST CELLULAR MARKET IN THE WORLD (<20% PENETRATION) – NUMBER OF CELLULAR PHONES CLOSING UP ON FIXED LINES – BECOMING A WIRELESS SOCIETY (MOBILE PENETRATION DOUBLES THAN PC PENETRATION) * TELESP CELULAR OPERATES IN THE STATE OF SÃO PAULO – 37 MILLION INHABITANTS (22% OF BRAZIL) – 36% OF BRAZILIAN GDP – LARGER THAN THE ECONOMY OF MEXICO AND ARGENTINA – 34% OF BRAZILIAN PURCHASING POWER (14,4% THE CITY OF SÃO PAULO ALONE) LA-20020215-01 VP Wireless Data and Development INTRODUCTION WHO WE ARE AND WHERE WE STAND * WE OPERATE A CDMA NETWORK – 5,1 MILLION CUSTOMERS (62% PREPAID, 93% DIGITAL) – 98% POPULATION COVERED – 64% MARKET SHARE (FACING BELLSOUTH AND TELECOM AMERICAS) Area 1 Area 2 36% 35% 65% 64% * INNOVATION TRACK RECORD; FIRST TO LAUNCH IN BRAZIL – INTERNATIONAL ROAMING – ELETRONICALLY RECHARGED PREPAID SERVICES – WAP BASED SERVICES – MOBILE PAYMENTS – 2,5G HIGH SPEED DATA SERVICES – PER PACKET BILLING LA-20020215-01 VP Wireless Data and Development INTRODUCTION WHO WE ARE AND WHERE WE STAND * TELESP CELULAR IS CONTROLLED BY PORTUGAL TELECOM – ON THE VERGE OF CONTROLLING GLOBAL TELECOM (PARANÁ, SANTA CATARINA) – OTHER OPERATIONS IN BRAZIL: – MOBITEL (PAGING AND CALL CENTER) – PRIMESYS (SYSTEMS OUTSOURCING) – SIGNIFICANT STAKE IN UOL (ISP) * AGREEMENT WITH TELEFONICA FOR MERGING MOBILE OPERATIONS IN BRAZIL: – COVER 9 STATES – 56% OF BRAZILIAN POPULATION – 78% OF BRAZILIAN GDP LA-20020215-01 VP Wireless Data and Development AGENDA INTRODUCTION COMMERCIAL STRATEGIES TO OFFER NEW DATA SERVICES INITIAL CONCLUSIONS LA-20020215-01 VP Wireless Data and Development COMMERCIAL STRATEGIES TO OFFER NEW DATA SERVICES THE NEED FOR THROUGHPUT * 2G DATA SERVICES ARE NOT SUITABLE FOR THE CORPORATE MARKET – BIGGER THROUGHPUT NEEDED TO BUILD MOBILE OFFICE – CONNECTIVITY WITH OTHER MOBILE DEVICES REQUIRED * 2G DATA SERVICES HAVE SOME DRAWBACKS: – PER MINUTE CHARGING – SMALLER AND BLACK AND WHITE HANDHELD SCREENS – SESSIONS INITIALIZED EVERYTIME CUSTOMERS USE THE SERVICE – NOT SUITED FOR IMAGE TRANSMISSION, GRAPHCALLY AND SPEEDWISE – HIT AND RUN TYPE OF USAGE * ANSWER: GO 2,5G IF COST BEARABLE: - SÃO PAULO CITY NEEDED AN UPGRADE FOR VOICE - USING 2,5G 1XRTT WOULD GIVE BETTER SPECTRUM EFFICIENCY PLUS... ...A PACKET DATA PLATFORM... AT MARGINAL COST ... ENABLING NEW HIGH SPEED DATA SERVICES (UP TO 144KBPS) LA-20020215-01 VP Wireless Data and Development COMMERCIAL STRATEGIES TO OFFER NEW DATA SERVICES SEGMENT CLUSTERS Reluctants 1st wave • Only in the mid/long • Due do its affluence term could use and tech-savviness, mobile internet, due they will be the first to its reluctance in wave of adopting the using technology Executives 3G1X technology Top Laggards Mature Top Mature up to date Convenient Mature Young Techies Wired Workforce Potential Young Follower Mobile Workforce Distant Impossibles adopter 2st wave Unreachable Non-users • Due to is low Late Potential Adopter • They might become spending power, is the 2nd wave in difficult that they adopting the 3G1X have access to technology mobile internet • Once it spreads on applications the 1st wave - as they are technology followers - due to its affluency and needs The market research was done only with the segments most likely to adopt the service. LA-20020215-01 VP Wireless Data and Development COMMERCIAL STRATEGIES TO OFFER NEW DATA SERVICES APPLICATION FOR THE FIRST PHASE Selected + Helps people Chat Instant appplications for the communicate messaging E-mail first phase Wireless internet access Match maker Wireless VPN Communities Agenda synch Music Downloads Downloads screensavers/ Shopping ringtones Assistance City/ Trafficc Guide COMMUNICATION Games Downloads Weather Stock forecast Banking Enquiry/ potfolio Travel Assistance Transaction - PRACTICALITY + Eases lifestyle The most interesting applications are the ones that most incentive communication and/ or ease lifestyle • The selection matches the fixed Internet “killer apps” for which mobility adds value • Unlike in Japan, the handset is not seen as an entertainment device LA-20020215-01 VP Wireless Data and Development COMMERCIAL STRATEGIES TO OFFER NEW DATA SERVICES TARGETING OF APPLICATIONS AND PLATFORMS Services st nd Segments 1 phase 2 phase Technological Platforms Wireless internet access Sales force automation Wireless LAN access Vertical applications Corporate E-mail Agenda SMS Wireless Internet access Connected communities E-mail Stock portfolio mgmt. WAP 2G SME´s Instant messenger Travel Assistance Mobile banking Agenda WAP 3G1X City Guide SOHO PROFESSIONAL Traffic Guide MExE Wireless Internet access Grow Wap offer E-mail Match maker Enhanced chat Weather forecast WIA Instant messenger Shopping Assistance Residential Mobile banking Travel Assistance W-VPN-A Agenda More complex downloads City Guide Games Traffic Guide MP3 Agenda Sports events Screensavers & ringtones Music clips and movie trailers The set of services that Telesp Celular wants to offer can be developed in several different platforms. The most adequate must be chosen. LA-20020215-01 VP Wireless Data and Development COMMERCIAL STRATEGIES TO OFFER NEW DATA SERVICES SEGMENTED AND BRANDED OFFERS (WAAAP TURBO, ZAAAP AND ZAAAP VPN) Target Segments 1xRTT Data Service Service Description • Secure Wireless VPN access to resources in Corporate LANs and WANs (R$120 per month / 50MB) - Corporate email - Intranet VPN - Files / Directories Business (Corporate and SMEs) • Wireless Internet access through Laptops, PDAs with 1xRTT aircards (R$85 per month / 50MB) - Own Telesp ISP - Other large ISPs (existing user ISP) Individuals • WAP access through 1xRTT phones ($19.9 per (Residential and SOHO) month / 2MB) - Mobile Portals - Messaging (IM and email) - Gaming / Banking / Shopping LA-20020215-01 VP Wireless Data and Development COMMERCIAL STRATEGIES TO OFFER NEW DATA SERVICES WAAAP TURBO – SERVICE PRICING New pricing Data consumption and cost of different services KB per Cost Service service (cents) Pay as • 2 cents per KB • Reading an e-mail 3,5 7 you go (R$ 20,5 per MB) • Checking a fligth departure time 8 16 • Finding a bar or arestaurante 10 20 On average • Checking the horoscope 14 28 Post- a paid • Reading daily news 4,5 9 • R$ 19,9 for every 40 - 50% 2 MB • Checking the weather forecast 8 16 - 1 cent for any • Looking for cinemas 11 22 discount Bundle additional KB • Getting information on soccer results 4,5 9 over the [More than 50% • Accessing summary of the day’s soap opera 4 8 discount in relation to existing • Downloading a ringtone* 12 24 flat rate] Waaap • Checking the USD exchange rate 4 8 • Checking the back account status 7 14 (WAP2G) • Making an investment in a fund 13,5 27 service Pre-paid • 3 cents per KB (R$ • Finding the best route 10 20 (launch date TBD) 30,7 per MB) • Sending a Torpedo SMS with an image 10,5 21 pay or you go • Chatting for 10 minutes 79 158 (R$ 1.58) LA-20020215-01 VP Wireless Data and Development COMMERCIAL STRATEGIES TO OFFER NEW DATA SERVICES ZAAAP - SERVICE PRICING Implicit price/ MB Considerations • 50 MB = R$85 • R$ 1,7 • Do not overcome the psychological - Additional MB=R$1,5 • R$ 1,5 R$100 threshold Bundle • The bundle will be stimulated vs. the flat fee in order to stim usage • MB = R$15 • R$ 15 • Flat fee mandatory for legal purposes Zaaap Flat fee • R$ 14,90 – unlimited • The user can subscribe to another ISP ISP access that is 1XRTT-enabled - This ISP will pay R$7-8 to Telesp Celular • 50 MB = R$ 120 • R$ 2,4 • No need to hire an ISP given that the - Additional MB=R$1,9 • R$ 1,9 Internet Access will be provided by the Bundle corporate vpn Zaaap VPN • MB = R$18 • R$18 • Flat fee mandatory for legal purposes Flat fee LA-20020215-01 VP Wireless Data and Development COMMERCIAL STRATEGIES TO OFFER NEW DATA SERVICES 1XRTT NETWORK ROLL OUT SCHEDULE Network roll-out Cajamar Pirapora do Bom Jesus Caieiras Arujá Guarulhos Perus Tremembé Anhanguera Aeroporto Jaraguá Cachoeirinha Santana de Parnaíba Jaçana Itaquaquecetuba Tucuruvi Pirituba Jardim Helena Vila Medeiros Alphaville São Domingos Limão Cangaíba Santana Vila Jacuí Jaguara Itaim Paulista Alphaville Vila Guilherme Barueri Lapa Penha Osasco Bom Retiro Perdizes Belém Itaquera Lajeado Jaguaré Brás Tatuapé Vila Matilde Poá Jandira Consolação Sé C. Deus Carrão Carapicuiba Itapevi Bela Vista Mooca Jose Bonifácio Butantã Pinheiros Vila Formosa Cidade Lider COMMERCIAL PILOT São Mateus Cidade Tiradentes Raposo Tavares Ipiranga Morumbi Moema São Lucas A1A1 Área2.5G de as Abrangência of end-November em 28/11/01 2001 Saúde SapopembaSapopemba Taboão Da Serra SãoSão Rafael RafaelIguatemiIguatemi Campo Belo São Caetano Do Sul A2A2 Área2.5G de as Abrangência of end-December em dezembro/01 2001 Campo Limpo Cursino Suzano Vargem Grande Paulista Santo Amaro Embu Jabaquara A3A3 Área2.5G de as Abrangência of end-February até fevereiro/02 2002 Capão Redondo Cidade Ademar BB ÁreaPacket-switched de Abrangência @ até 9.6 fevereiro/02 Kbps (end-Feb 2002) Cotia São Paulo com velocidade 9.6kbps Diadema CC Waaap Pedreira 2G (circuit switched @ 9.6 Kbps) Jardim Angela