Presentation from Andy Castonguay from Informa. Delivered at TC3 in Sunnyvale last week.

1. What you need to know about telecoms
operators’ growth and innovation strategies
Andy Castonguay, Principal Analyst

2. Informa Telecoms & Media
Informa Telecoms & Media delivers strategic
insight, key market data and forecasts. We’ve been
helping our clients make better business decisions
for more than 25 years.
Our aim is to be accessible, responsive and
connected both to markets we serve and our clients’
business goals.
We have 65 analysts in nine research offices offering
pragmatic advice to the leading global operators and
builders of communications infrastructure.
These analysts are informed, objective and a ready
to apply practical ‘real world’ experience to your
business challenges and opportunities.

3. Our methodology: talk and
listen to the industry
9/18/2012 www.informatandm.com 3

4. Today’s discussion points
The state of the telecoms operator business
Operators’ next big bets
Relationship with OTT players
Getting the most out of your relationship
with telecoms operators

5. Key Observations of Operator VC &
Innovation Strategies
Operators are banking on innovation to save them from a
future as a dumb pipe.
Venturing is now being absorbed into the overall strategy for
partnering and new services.
Operators from outside of the U.S. are looking to partner
with firms from Silicon Valley.
“Digital” initiatives have been set up across several divisions
in some telcos while others are setting up dedicated units

6. With Few Exceptions, Operators Face
Challenging Global Mobile Dynamics
Global mobile revenues ($m), 2009 2010 2011 2012
2009-2012 Total 845,954 894,979 961,583 1,005,743
1,200,000 Voice 645,808 654,811 670,755 668,373
Data 200,146 240,168 290,828 337,370
1,000,000
800,000
Total
600,000
Voice
Data
400,000
200,000
0
2009 2010 2011 2012
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7. Operators resorting to “non-telecoms” benefits
because they cannot differentiate their core products
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8. Today’s discussion points
The state of the telecoms operator business
Operators’ next big bets
Relationship with OTT players
Getting the most out of your relationship
with telecoms operators

9. Fixed and mobile broadband access
revenues are growing by 20% + per year
www.informatandm.com 9

10. Laptops, tablets, e-readers: operators want
to connect your devices to their network
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11. In M2M evolution, operators want to move
from (dumb) connectivity to (smart) services
2012 2015
Decision support, reports
and alerts, analytics
Security, demand response,
performance management
Consulting, integration,
software development
M2M
revenue Communications services,
distribution associated communications
hardware
Source: Informa Telecoms & Media
www.informatandm.com 11
©All rights reserved

12. M2M and cloud hold huge promise but
their potential has been overhyped
M2M revenues are
generating $4.6bn
annually for mobile
operators.
Telco cloud
revenues will be
worth $5.7bn in
2012
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13. Operator focus is moving away from the
consumer market to B2B and B2B2C
• The “two-sided business
business-model has never
really got much traction.
• Operators still believe in the
strategy of exposing their
APIs but monetisation is
difficult.
• Operators are (slowly)
starting to verticalize their
enterprise divisions.
• In many verticals operators
will pursue both B2B2C and
B2C business models.
• Carrier billing is gaining
momentum.
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14. In an IP world operators need to look
beyond the(ir) network
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15. Today’s discussion points
The state of the telecoms operator business
Operators’ next big bets
Relationship with OTT players
Getting the most out of your relationship
with telecoms operators

16. Video has become a major headache for
mobile operators, opportunity for partners
• Although monetization options will
multiply around new video-on-demand
0.4% and digital-locker services, most video
streaming will continue to be
19.7% consumed for free.
• Piracy will also continue to undermine
Traffic Revenue revenue-generating efforts, especially
80.3% 2011 99.6% in emerging markets.
• Operators’ video and TV offerings will
Mobile video become increasingly irrelevant as over-
Other services 0.7% the-top players take center-stage via
smartphone apps.
34.3% • OTT services – from movie rentals, to
65.7% catch-up TV and e-commerce sites –
Traffic Revenue will help turn video streaming into a
2016 99.3% mainstream activity on
phones, engaging 35% of mobile users
globally by 2016.
Source: Informa Telecoms & Media
www.informatandm.com 16
© Informa UK Limited 2012. All rights reserved

17. How can operators generate revenue from
OTT partners and 3rd parties?
Marketing support / distribution
Embedded apps / device real estate / devices?
Network prioritisation / guaranteed QoS
Revenue share for premium services
Local caching / CDNs
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18. Today’s discussion points
The state of the telecoms operator business
Operators’ next big bets
Relationship with OTT players
Getting the most out of your relationship
with telecoms operators

19. Operators are desperate to become more
innovative. You can help them in 3 ways
1. Create new revenue streams
New services and applications
Revenue share
2. Enhance core services
Slowing price erosion
Improving customer loyalty
Attracting new consumers
3. Improve processes / Network
efficiencies / Retail
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20. Operators are stepping up their VC
activities in Silicon Valley
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21. “Digital” units are becoming the focal point:
Telefonica Digital sets the standard
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22. Top 5 areas of operator VC focus
1. Social networking, media & entertainment
2. Advertising
3. Cloud services
4. Applications
5. M2M
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23. Thank you! Andy Castonguay
Principal Analyst
Questions?
acastonguay@informa.com