© 2008 mBlox Enablers: Telcos as a platform A two sided model? Stephen Wood – Global Product Director mBlox Ltd May 25, 2011

© 2008 mBlox 2 mBlox – the worlds largest Mobile Transaction Network A network connecting many Content/Service Providers to many Operators The network for Enabling Services transactions worldwide 4 billion transactions worth $500m in 2010 We sell SMS and Premium SMS services. Delivery and on carrier billing.

© 2008 mBlox 3 Enablers, telcos and content providers - A possible future landscape discussion Telcos have assets of great value to content providers … we know content providers will pay for them, if truly valuable … we know they could provide revenue for operators … in a two sided model of retail and wholesale BUT.. handset/OS providers may diminish the value of these assets … by disintermediation of carriers; providing enablers directly … however, can this be provided effectively to content providers? … and does this model provide the best hope for sustainable data revenue?

© 2008 mBlox 4 Separation of access and service - A trend accelerated by IP services Customers want to buy service, not access. Visible in Mobile Content industry When services were delivered inside the access network, the problem did not arise Deregulation of voice services did not materially change this model IP networks fully separate service and access - a new commercial challenge Wholesale versus retail? Access Terminal Service Terminal Service Terminal

© 2008 mBlox 5 What new business models will prevail? Competing for the consumer, trading together Will the mobile business model converge on the internet, or vice versa? What are the other sources of revenue? Content & service Access Consumer hardware

© 2008 mBlox 6 Content OSS BSS Content Service Marketing Content services Key Enabler Services ($£) Network OSS BSS Comms Service Marketing Core comms services ($£) Enabler Services in Mobile Content The mobile operator as a 2-sided platform Consumer relationships based on core, vertically integrated services… …create valuable enabler services to third parties

© 2008 mBlox 7 Key enabler categories Delivery enablers Text messaging is established and mature Sender-pays data is key Quality of service will be vital Billing enablers Premium and WAP billing are established and mature Refunds and credits need to come faster More advanced on carrier billing Credit and debit card payments….? Handset Context – the next frontier Location lookup? Roaming detection Radio link quality lookup Terminal capabilities and status lookup Subscriber Insight – eventually? Identity management MSISDN or alias links device to person: identification and addressing Handset enablers (possibly via the mobile cloud?) Some complement: accelerometer Some displace: GPS

© 2008 mBlox 8 How Mobile Has Worked pre App Store Phone service relationship gives mobile operators control also over access Mobile operators sell enabling services to content providers Mobile operators provide payment means for service providers and so… …Customers pay for content Disrupted by App Stores -> Handset and OS providers build direct consumer charging relationships Content & service Access & Phone Service Consumer hardware Comms Content services Enabling services (billing, SMS,...)

© 2008 mBlox 9 Enabler Services in the Value Model Tax Carrier Payment Enabler Services Other Net to CP Carrier Delivery Enabler Services Service Marketing Content Rights CP Net Income Enabler services earn carriers ~25% of gross customer spend Scaleable, high margin revenue source, driven by numerous CPs and services Standardized enabler services scale with the growth of content services eg

© 2008 mBlox 10 The Coming Fight Over Enablers Enabling services will be important to erect barriers to customer churn…. …and also important sources of revenue Competition for control over consumer buying decision Different attitude of players: e.g. Apple v. Google Content & service Access & Phone Service Consumer hardware Brand & Application Stores Billing Transmission Network data Subscriber insight Billing Handset control Network visibility Screen layout Store placement

© 2008 mBlox 11 Service providers require a mixture of enablers Network Enablers Payment Enablers Handset Enablers How will these get provided? Telcos, app stores, credit card services…? Has much already been given away? Handset capability..? How are they presented? Divergence a huge issue for content providers. An ecosystem exists… Data, Charge-to-bill, Identity Location, Security, GUI Debit/Credit Card, Paypal, App Store

© 2008 mBlox 12 Mobile Transaction Network – well placed to intermediate Provide a sales and distribution channel to content providers Provide focused service and support wrapper Simplify for content providers (and Telcos) Police and protect Competition; better for all

© 2008 mBlox 13 The Next Challenge for Mobile Mobile broadband is the most significant revenue driver for operators Significant ARPU and low cost (no interconnection) Increasing traffic will cause congestion, voice churn and heavy capex How can operators tame this? Incremental cost per GB traffic £3 - £100

© 2008 mBlox 14 The Impact of Video TV and HD-quality Video-on-Demand is coming Extra revenue/audience for owners of premium content libraries A new broadcasting medium – but who pays? Not just from

© 2008 mBlox 15 The Internet Faustian Pact Consumers favourite services - , information, shopping - are provided free Access providers are able to extract consumer value from these services, effectively selling an infinite bundle of services No commercial relationship need exist between service and access… …as long as neither side breaks the unspoken deal Content & service Access & Phone Service Free! ££ Consumer hardware

© 2008 mBlox 16 Solving the Data Issue in Mobile Data-rich services presented a huge problem of cost and pricing transparency Flat-rate data packages reach only a minority segment of the market Solution is Sender-Pays Data, world-first innovation launched February 2009 in UK Good approach for all –Consumer wins - from total pricing transparency –Content provider wins - from totally transparent pricing model with 100% market reach –Operators win - from more content revenue and scaleable, value-priced revenue model for data Content & service Access & Phone Service Consumer hardware …plus whatever your tariff charges for 5.2MB Buy Toyland for £ Plus an extra data charge of up to £15 if your are on an old O2 tariff, or £1 if you are a prepaid user on Vodafone or T-Mobile and have not yet used up your cap, or no charge at all if you are a bundle customer on any operator and have not yet exceeded your bundle limit, or up to £25 if you have already exceeded your bundle, including Orange Unlimited tariffs which are in fact limited Data termination charges for 5.2MB at agreed rate No extra charge for data Buy Toyland for £4.00 all inclusive

© 2008 mBlox 17 Enablers, telcos and content providers - What happens next? Telcos have assets of great value to content providers … will they provide them? … will they be useful and can they be monetized? … can the ecosystem make this consumable for content providers? And/or … will handset/OS providers diminish the value of telcos assets? … by disintermediation of carriers; providing enablers directly? And/or … will Telcos embrace this model to aid the broadband business model…?