Insight Report Mobile Europe

The mobile operator journey from advertising to marketing, and how to navigate it.
INSIGHT REPORT
MOBILE
EUROPE
ALSO INSIDE:
ROAMING STRUCTURES TO CHANGE
BARCELONA!
EUROPES WIRELESS MAGAZINE S issue no. 217 S August/September 2011 S www.mobileeurope.co.uk
> 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
MOBILE MARKETING: Scan for your future
> Getting the low down
on how new tools are being used to optimise the user experience.
P39
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u.s. 1-800-829-4444
canada: 1-877-894-4414
The mobile operator journey from advertising to marketing, and how to navigate it.
INSIGHT REPORT
MOBILE
EUROPE
ALSO INSIDE:
ROAMING STRUCTURES TO CHANGE
BARCELONA!
EUROPES WIRELESS MAGAZINE S issue no. 217 S August/September 2011 S www.mobileeurope.co.uk
> 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
MOBILE MARKETING: Scan for your future
> Getting the low down
on how new tools are being used to optimise the user experience.
P39
Contents
August/September 2011
Results round-up from northern Europe.
Legacy issues hampering personalised service introduction
Policy enabling monetisation as well enforcement
REGULARS
EDITORIAL
FEATURES
VIDEO OPTIMISATION
What are the requirements for the optimisation of video streamed across mobile networks, and how should operators best optimise video content? (Sponsored article)
04 06
Keith Dyer says that while the Greek governments dash for the cash is understandable, it shouldnt be repeated.
32
NEWS
Ericsson, Nokia and Telenor results; Survey shows appetite for carrier provided WiFi calls; Olaf Swantee to take over at Everything Everywhere; O2 enters offers market; InMobi Europe shows mobile ad growth of 21% from Q1 to Q2 2011; EC outlines "profound" changes to roaming market; TeliaSonera joins FT-Orange and Deutsche Telekoms M2M; Legacy culture stifling change; Consumers ready to pay for better access and quality; Vodafone and 3 launch own app store channels; Turkcell launches Android NFC.
POLICY CONTROL
From bandwidth management to revenue generation, those selling the solutions are hoping to make the wider strategic case for policy within the operator.
34
NETWORK OPTIMISATION
With operators taking steps to gain a customer-centric approach, how does gaining a customer view impact upon network optimisation decisions and processes?
39
DIARY
A selection of the major mobile events and conferences in the weeks ahead and a glance at some of the stories to have missed the real news pages.
42
INSIGHT REPORT
Keith Dyer introduces this issues Insight Report into mobile advertising and marketing. The report points the way ahead for operators in this field, guided by new research and analysis.
15
INTRODUCTION AND FULL CONTENTS

The benefits of aiming low in network optimisation
SPONSOR S FOREWORD
Alex Moukas, CEO of report sponsor Velti, welcomes this 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.
16
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 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 opportunity they can to maximise short term gain. That appears to be what is happening in Greece, where the government is renewing 2G spectrum licenses for Wind Hellas and Vodafone Greece, whose license terms for 900MHz and 1800MHz spectrum expire next year. Cosmote, the incumbent operator that has much less spectrum at 900MHz than its rivals, does not see its license expire for a few more years. It will be keen to acquire more sub-1GHz spectrum as it then seeks to refarm it for 3G and 4G services. And so the Greek Government is fulfilling a dual purpose. It is determined to extract the maximum value possible from the spectrum, and it is hoping that by going for an auction it will attract bids for 900MHz spectrum from Cosmote, pushing up the price. The operators are crying foul, and one consultant has warned that there may even be a refusal to bid, in protest. Im not one of those who automatically assumes governments should give away spectrum. Operators are commercial entities that should expect to pay fair value for spectrum. Yet studies have repeatedly shown that loading the tax take on the front of a license term limits the long term returns. The Greek government may feel it has no choice, but its model of auction plus high reseve price, should not become a The Greek government may template for 2G spectrum renewals. Also coming down hard on the operators is Neelie Kroes, who is imposing her own double whammy on the industry imposing retail and wholesale price caps on data roaming as well as proposing a long term restructuring of how roaming will work within the European mobile industry. It appears she is offering the industry only pain, as the EC Digital Agenda insists there will be next to no roaming premium within the EU by 2015. Yet there is opportunity too. 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 case to go roaming where they have previously lacked either a group entity or a 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 scary prospect of being unable to invest in future networks. Its a similar story to the net neutrality debate. If we cant monetise bandwidth, we cant invest. As roaming revenues inexorably decline, I wouldnt be surprised if (The Netherlands aside!) we see the EC showing more flexibility on net neutrality. Stranger things have happened
MOBILE
EUROPE
Editor: Keith Dyer keithd@mobileeurope.co.uk Direct tel: +44 (0) 20 7933 8999 Production Manager: Tania King Sa l es Ma nage r: Shahid Ramzan shahid.ramzan@mobileeurope.co.uk Direct tel: +44 (0) 20 7933 8980 Commercial Director: Justyn Gidley justyn.gidley@stjohnpatrick.com Direct tel: +44 (0) 20 7933 8979 Publishing director: Chris Cooke ISSN: 1350 7362 Fr ee S u b s c r i p t i o n s Mobile Europe is a controlled circulation monthly magazine available free to selected personnel at the publishers discretion. If you wish to apply for regular free copies then please write to: Database Services St John Patrick Publishing Ltd PO Box 6009, Thatcham, Berkshire, RG19 4TT. Tel: +44 (0) 1635 879361 Email: mobileeurope@circdata.com or register free online at: www.mobileeurope.co.uk Paid Subscriptions Readers who fall outside the strict terms of control may purchase an annual subscription . UK 1 Year - 96. International 1 Year - 120. Subscription enquiries should be sent to: Saint John Patrick Publishers PO Box 6009, Thatcham, Berkshire RG19 4TT United Kingdom Tel: +44 (0)1635 879361 Fax: +44 (0) 1635 868594 Email: mobileeurope@circdata.com Web: wwwmobileeurope.co.uk
feel it has no choice, but its model of auction plus high reseve price, should not become a template.
Printed by Pensord Magazines & Periodicals, Pontllanfraith, UK.
The views expressed in Mobile Europe are not necessarily those of the editor or the publisher. Mobile Europe is published by Saint John Patrick Publishers Ltd, 6 Laurence Pountney Hill, London EC4R 0BL.
4 | Mobile Europe
News
results...results l Everything Everywhere
ERICSSON, NOKIA AND TELENOR RESULTS

- THE EUROPEAN ANGLE
Several companies posted their 2Q 2011 results at the end of July - but what did they tell us about the European wireless market? First, Ericsson. Ericsson reported some decent results overall, but in Europe the picture was less rosy. In Western and Central Europe sales decreased by 2% year-over-year and 10% sequentially. The company said that pressure on overall mobile service revenues in the region is leading to network sharing and outsourcing initiatives. Despite that, demand for mobile broadband continues to be strong, offering an upside within the overall decline. Network modernisation, including deployment of multi-standard radio, has started and rollout will accelerate during the second half of 2011. The sting in the tale there is that Ericsson also reported that low margin network modernisation projects in Europe negatively impacted the overall margins of its business. That said, it added that these types of project in Europe will "accelerate" during the second half of 2011. Average project duration is expected to be 18-24 months. There was another sign that belts are being tightened in Europe too: although the vendor added 4,500 staff to its services unit, and 1,000 through acquisitions, most of these were in Brazil, India and China. In countries in Western Europe Ericsson was laying off staff. However, away from Western Europe, Russia was listed as showing strong growth, both year on year and sequentially. Another Nordic company, Telenor, also hailed some decent news from Europe. It said that although Asia drove most of its eight million subscriber additions for the quarter, its customer base in Norway had started growing again. Data revenues in Norway were growing, compensating in part for price pressure on voice. The company said that in the Nordics, service offerings launched this year have had positive effects. A statement said, All three operations are now attracting new customers. Certainly the operator is going to look for some quick returns, having invested more than one billion
NSN HQ: Staying with Nokia for now
Olaf Swantee to take over at Everything Everywhere after surprise resignation

Tom Alexander, former CEO of Orange UK, is stepping aside as CEO of Everything Everywhere (EE) for "personal reasons". He will leave at the end of August. Orange has gone for the experienced Olaf Swantee, a board member of EE since its inception in September 2009, as his replacement. Swantee is currently head of operations (except France) and sourcing for France Telecom. That role may sound dry and of limited strategic importance, but it has seen him spearhead Orange's combined services and sourcing strategy - the Procurement Alliance - with Deutsche Telekom. Not only is that strategy a key factor in controlling group operating costs, but it involves co-ordinating co-operation between the same two group entities represented within EE. Swantee's background at Orange includes a spell as senior VP of its global mobile business, as well as time served as Senior Executive Vice President of the Orange Group's mobile services in the UK & EME. It was in the latter capacity that he was responsible for hiring Alexander as Orange UK's CEO in 2007. Alexander reported directly to Swantee at the time. Now Swantee steps into the role that Alexander has vacated at EE. Swantee has a deep knowledge of Orange's mobile businesses, and has been involved in key strategic decisions, has experience of dealing with T-Mobile and DT. A press release from Orange said that Swantee had, successfully transformed Orange throughout Europe. Everything Everywheres quarterly results for 2Q 2011 showed revenues down from 3.47 billion in the first half of 2010 to 3,36 billion in the first half of 2011. The company also saw its customer base contract by 443,000 in the first half of 2011.
Norwegian Kroner in future technologies, in Norway alone, in the quarter. Then we had Nokia, completing the Norway - Sweden - Finland trinity. No doubt the overall nature of Nokia's results are well known. With Symbian being shunted aside, and MeeGo also in a holding pattern with its N9 phone being well received but given no mass channel to market, the company essentially had nothing new to sell. In Europe, unit sales were down 30% year on year and 21% quarter on quarter. In total, the company sold just over 18 million devices (all devices) across Europe in the quarter. Its networks unit, NSN, showed better results though. In Europe it saw net sales decline by just 1% year on year, and rise 12% quarter on quarter. On a global basis sales were up 20%, although this included results of the Motorola acquisition. Excluding the Moto sales, NSN equipment sales would have risen 8% quarter on quarter. As it was, with Moto included, sales rose 15% quarter on quarter. Moto's network sales would have had limited impact on NSN's European sales, one suspects. Nokia and Siemens also announced they would not be looking for a private equity buyer for the division.
6 | Mobile Europe
News
operator WiFi
WIFI BECOMING STRATEGIC OPERATOR DIFFERENTIATOR

Operators can use next generation WiFi standards, combined with a WiFi roaming exchange model, to offer customers a joined-up WiFi experience that will enable easier data roaming, as well as giving operators the opportunity to attract new customers. iPass, which in May provided Deutsche Telekom with the the technology for its WiFi Mobilize service (see picture above right), has expanded on that service to announce the iPass Open Mobile Exchange (OMX). Operators connected to the exchange will be able to give their users automatic access to WiFi hotspots of other connected carriers. Barbara Nelson, CTO of iPass, told Mobile Europe that some carriers would be able to have direct billing relationships, where they see the value, whilst others would be able to use iPass resolution. Principally the OMX provides a technical relationship, which doesnt have to relate to a billing relationship, she said. The OMX can support different business models The Exchange allows providers to connect customers to preferred Wi-Fi networks via a client app running on Android or Apple OS devices, as well as PCs running Windows. The next wave of Wi-Fi is becoming a mobile operator phenomenon, and it is our business to help telecom operators enter the Wi-Fi business with speed to market and a reduced cost and risk profile, without a need for additional capital investment, said Evan Kaplan, president and CEO of iPass. By enabling operators to provide an integrated approach to mobility, iPass OMX positions them to participate in the second wave of Wi-Fi. A WiFi exchange has the prospect of offering network operators multiple opportunities to generate services, revenue and an ability to reduce signalling load and steer traffic onto WiFi at choke points in a cellular network, said Dean Bubley of Disruptive Analysis. Additionally, service providers can potentially monetise WiFionly devices and on-loading of other operators customers. iPass OMX has already been adopted by Deutsche Telekom as part of its Wi-Fi Mobilize service. Wi-Fi Mobilize is a services exchange for in-country and international roaming services. Nelson said that operators are moving from seeing WiFi as a tactical coverage solution, to a key strategic proposition. In the past six to twelve months, WiFi has reemerged as a critical piece inside mobile network operators. AT&T was perhaps the first to figure out WiFi as a strategic asset and was really the canary in coalmine. They accepted this was about a broader issue and moved WiFi from something they used on the quiet to a strategic 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 the United States would be interested in a mobile operator-provided service that uses Wi-Fi to provide lower cost calls, according to a recent MarketTools Zoomerang survey of 420 smartphone owners. The survey, commissioned by Kineto Wireless, also showed 72% of smartphone users are interested in an application that uses Wi-Fi to improve cellular coverage. Other results from the online survey conducted in May 2011 include: 44 percent of iPhone owners would definitely be interested in an application that could be used to boost mobile coverage; and 47 percent would definitely be interested in a Wi-Fi service offering discounted calling. Of T-Mobile subscribers, 55% use Wi-Fi on their smartphones four or more days each week or every day 68% of AT&T subscribers use Wi-Fi on their smartphones four or more days each week or every day, 32 percent because it is faster than the cellular network. Wi-Fi has become pervasive in the smartphone market, and subscribers are interested in options that help them take better advantage of Wi-Fi for coverage and cheaper calling, said Steve Shaw, VP of marketing for Kineto Wireless. This data helps reiterate the market opportunities for mobile operators. They can improve service quality and develop subscriber-friendly services that drive mobile data offload. T-Mobile is the most aggressive US operator in its use of Wi-Fi. In October 2010, the company re-launched its Wi-Fi Calling service.
go to www.mobileeurope.co.uk for the latest mobile news
Mobile Europe | 7
News
advertising & marketing
O2 ENTERS OFFERS MARKET

WITH PRIORITY MOMENTS
O2 has announced that it is entering the offers market by launching a service that allows users to access partner offers and discounts on their mobile. O2 Priority Moments will work as an app, or by browsing a mobile site, allowing a user to see what offers are available by location, distance and preference. A user can scroll through and list preferences, or view offers by location. It is important to note this is not a push service, like the O2 More opt-in text alert service O2 has going with Starbucks and Co-op for example. Instead, it's more of a Groupon type service, that brings offers from brands and businesses to users. At launch, O2 has 30 partners signed up, representing 3500 high street outlets and the service eis available for O2 customers to download or access through their phones by texting moments to 2020. O2 said that the service "goes beyond current voucher schemes" by combining deals with "enhanced experiences" such as early access to sales, or other offers. The key word here is priority," Sally Cowdry, O2 Marketing and Consumer Director. This is not a tactical programme of one-off deals its about building a long-term, nationwide service that benefits both our customers and our partners. With Priority Moments we are bringing our customers exclusive, special offers and experiences from their favourite brands in a way that works for them. The combination of mobile, great offers and experiences by trusted companies with long term partnerships creates what we believe is a special service.
Caption
Orange signs Daily motion exclusive

Orange has announced an exclusive partnership with Dailymotion to deliver an integrated advertising solution targeting specific audiences and localised content. Dailymotions video sharing platform reaches 114 million unique visitors a month worldwide, and 20,000 videos are added daily. The Orange Advertising Network will exclusively represent Dailymotions video advertising inventory across the UK, Spain and Poland. Dailymotions content is differentiated between premium and user-generated content, while its catalogue of aggregated content is built around the concept of localisation it has secured extensive rights to local premium content via partnerships with the major official providers in each market, such as ITN in the UK, TV Azteca in Latin America, or TV3 in Spain. This local content means brands can reach specific customers on a country by country level. Companion ads can also be leveraged by a brand to integrate video content alongside traditional web advertising formats such as banners and home-page takeovers. Luc Tran Thang, Vice President, Orange Advertising, said, Advertisers are increasingly looking to incorporate video within their online campaigns but unless brands can specifically target the right content relevant to each market, its like dropping a needle into a haystack. We can ensure that our advertisers connect with the right target audience, reached by targeting localised video content, ensuring a meaningful engagement for brands with their consumers online.
InMobi Europe shows mobile ad growth of 21% from Q1 to Q2 2011

InMobi has released its monthly Mobile Insights Report: Europe Edition Q2 2011. The report provides insights from InMobis network, which served over 104.9 billion mobile advertising impressions across the globe in Q2 2011, including 10.8 billion in Europe. The report shows continued growth of impressions on Apple devices. During Q2 2011, over 2 billion ad impressions were served on Apple devices in Europe, propelling Apple past Nokia for the first time. Over the same period, Nokia devices dropped by 0.9 share points and now represent 18.7% of ads in the region. One of every five ads across Europe is now on Apple manufactured devices. As a result of Apples iOS popularity, Androids operating system has lost 5.0 share points against iOSs gain of 3.3 over the past quarter. RIM, whilst ranked third in terms of operating systems, saw the highest gain during this period, gaining 6.1 share points. Despite this though, Android remains the top mobile platform by ad requests with nearly 25% of all requests. Rob Jonas, VP and MD Europe and Middle East at InMobi, said: The Q2 2011 results show another major inflection point for mobile advertising in Europe. Smart devices, driven by iPad, iPhone, and Android devices, are now defining the mobile experience for the majority of Europeans. The next phase of mobile advertising is upon us. It is now up to brands and agencies to capitalise with immersive, creative experiences delivered at scale for consumers. Total mobile advertising impressions on the InMobi network in Europe grew by 21 percent in Q2, primarily driven by smartphone impressions, which grew by 31%. United Kingdom and Spain showed the fastest growth in Q2.
8 | Mobile Europe
News
roaming legislation l M2M roaming
EC OUTLINES "PROFOUND" CHANGES TO ROAMING MARKET

Neelie Kroes, European Commission Vice President for the Digital Agenda has outlined plans for profound structural changes to the European roaming market. Clearly frustrated at the lack of progress in the mobile industry in eliminating what she termed roaming rip offs, Kroes said that the Commission has been forced to move beyond price caps to focus on fostering increasing competition in the market, by making "profound structural changes". The chief proposal is that by 1 July 2014, consumers will be able to choose a different roaming contract from their domestic contract, without changing their number or SIM. Kroes said that the proposed changes, which need to be agreed by the European Council and Parliament, are the most effective and sustainable way of reaching the Digital Agenda target of assuring that the difference between roaming and national tariffs should approach zero by 2015. The EC thinks the proposals will make it easier for alternative providers to offer competitive services, as well as increase opportunities for existing operators to compete in other markets. She said the proposal would give mobile operators the right to use other operators' networks in other Member States at regulated wholesale prices, and so encourage more operators to compete. The EC is also proposing to privide a "safety net" to consumers while the structural changes take effect; Kroes proposed renewed retail price Caps on wholesale prices between operators for all roaming services will remain until 2022, under the proposals. The GSMA said in a statement: It would be counter-productive to combine stringent price caps with structural measures to foster competition in this market. We are disappointed that the Commission is considering the retail data roaming market as a candidate for price cap regulation, in addition to proposing structural measures.
Neelie Kroes: not a fan of roaming ripoffs
PROPOSALS COULD BE COUNTERPRODUCTIVE - GSMA

caps, so that by 1 July 2014, roaming consumers would pay no more than 24 cents per minute to make a call, a maximum 10 cents per minute to receive a call, maximum 10 cents to send a text message and maximum 50 cents per Megabyte (MB) to download data or browse the Internet whilst travelling abroad (charged per Kilobyte used). These caps would remain in place until 2016, by when Kroes thinks the enhanced competitive structure of the industry will have taken effect.
TeliaSonera joins FT-Orange and Deutsche Telekoms M2M co-operation

TeliaSonera has signed a cooperation agreement with France Telecom-Orange and Deutsche Telekom for machine-to-machine (M2M) communications. The agreement, which initially was signed by France Telecom-Orange and Deutsche Telekom in February 2011 to cover France, Germany, Belgium, and Luxembourg, has since then added the Netherlands (Deutsche Telekom) and most recently the UK through Everything Everywhere. The M2M service footprint will now extend to cover TeliaSoneras geographical reach, including Sweden, Norway, Finland, Denmark, Estonia and Lithuania. While roaming agreements have been managed bi-laterally only, concentrated within single markets, this multi-lateral cooperation agreement will provide roaming services across the countries that have signed the agreement. Continuous connection quality and network interoperability culd help to ensure M2M services for both machines and goods on the move and for customers whose business models require continuous access. The operator partners said that dedicated network supervision processes and interoperability are important in leveraging the relatively low volume but highly critical data collected by these devices and delivering cutting-edge applications to users. Against this background, the operators said that both their partners and customers using M2M solutions will benefit from operability across borders and enhanced M2M service quality in the mobile networks of the cooperation members. The three groups claimed they are not only focused on enlarging the M2M service footprint, but also want to keep an elevated level of innovation, by extending their M2M service portfolios and by entering into further partnerships in the M2M market segment. A feature of the agreement is the incident and troubleshooting capability that France Telecom-Orange, Deutsche Telekom and TeliaSonera will be improving to ensure the best quality of roaming services to their customers. Because machine-to-machine communication is business critical for M2M customers, all M2M roaming services will have a dedicated support component, significantly improving previous industry attempts at troubleshooting and providing much shorter repair time compared to regular procedures. Enhanced M2M interoperability will also be maintained as the three partners conduct joint testing to harmonise module standards. Module certification will enable the most optimized interoperability between module and network. The group hope this will give them a competitive advantage in M2M.
Mobile Europe | 9
News
innovation l NFC in Turkey
LEGACY CULTURE STIFLING CHANGE AT SERVICE PROVIDERS

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

Turkcell has officially launched the T20 smartphone, one of the world's first commercially available UICC (Universal Integrated Circuit Card), NFC - SWP ("ingle Wire Protocol) android based device. The Turkcell T20 is an Android based device from Huawei that also uses MasterCard's contactless technology, PayPass. Turkcell said that with Cep-T Czdan, its mobile wallet service, which is already loaded on the Turkcell T20 and communicates with an NFC enabled sim card, it aims to transform the physical wallet into a mobile one and provide an easy to use and secure environment for all the daily needs of Turkcell's subscribers. With this service, Turkcell also provides a comprehensive end-to-end NFC platform open to all service providers and banks. (Left: Turkcells Cenk Bayrakdar and Sreyya 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 would be willing to pay a premium for multidevice access to services, for better network service quality, and for an all-in-one data tariff, according to research commissioned by Amdocs. Amdocs commissioned a consumer survey from by Coleman Parkes, who surveyed more than 4,700 consumers os in 14 countries. According to Daniela Perlmutter, Director of Amdocs' Market Strategy and Research Team. the survey asked which items consumers would be willing to pay a premium for, specifically asking what services consumers would pay more for on top of their existing spend. The top three answers from the 1,355 European consumers surveyed were: 1. 33% said they were willing to pay more than they already do to gain the ability to use all services and apps from any device, anywhere. 2. 28% said they would pay more for better network quality: fewer disconnects, delays, higher download speeds 3. Thirdly, there was a desire for one, all-in, data tariff that includes a number of devices rather than specific tariffs for the phone, dongle, iPad etc. 21% said they would pay a premium for a data bundle for all mobile connected devices The percentage of people saying they would pay more for other capabilities were as follows: 18% said they would pay more for regular and "40% said they would pay more for better quality, but only 7% said they were concerned about speed. Yet operators tend to market on speed," Perlmutter said. "So service providers need to think about their marketing, but also about the systems they need to provide these flexible and dynamic pricing models based on QoS, or on the specific value that a service provides to that consumer. Thats why theres a very clear need to have the right policy management system in place to make sure a service is actually being delivered to the right device, to the right service level.
SERVICE PROVIDERS NEED TO THINK ABOUT MARKETING

agreed device updates; 18% for cool devices; 18% for premium support from the service provider; 17% for access to great TV/ other content; 12% for getting regular and agreed updates in service Perlmutter said that this consumer willingness to pay for increased quality and for multiple device connectivity would mean operators needing to rethink the way that they approach ther customer communication, and design, 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 channel within Android Market. For Vodafone users the homepage of the app store now has a Vodafone icon, given equal prominence to Market's usual promo items of Apps and Games. A click on the channel takes a user to a Vodafone channel a store within a store that includes Vodafone apps as well as sponsored or discounted partner content. The channel at the moment has Vodafone Music Shop as its top listing, then follows a Vodafone Maclaren news feed app. After that, the channel aggregate apps from Vodafone partners, including Rough Guides, Shazam, and others. Vodafone says the channel is the first of its kind in Europe. Lee Epting, Vodafone Groups Content Services Director said, Together with Google, Vodafone has made it really simple for customers to get to the essential apps they can trust. More than 75 million Vodafone customers around the world are regularly using the mobile internet, and we are committed to giving them the best possible experience. This focus on quality over quantity helps deliver on that commitment. The own-brand channel is already live in the UK, Germany, Italy, the Netherlands and Spain. Vodafone said it would launch in Greece, Ireland and Portugal before long. The Vodafone channel is a further example of the ways in which operators are trying to remain relevant in the applications and content space. Instead of expecting users to come to a Vodafone branded portal, the operator has bundled its apps and content within an existing, OTT platform. Three UK followed Vodafone by also partnering with an app store provider to have a dedicated operator channel within the app store. This time the app store is Ovi, where there will now be a dedicated Threebranded page for the operators customers. The Three Likes page will include a choice of 40 apps recommended by Three and will be accessible to the operators customers using Nokia Symbian devices including the Nokia C7, Nokia E7 and Nokia N8. Three will recommend different apps every week. The new Nokia X7 will be the first handset to be integrated with the latest version of Ovi Store at launch this week. Charlotte Spencer, Director of Products and Services at Three, said, This partnership is another example of how Three is leading the smartphone revolution. By recommending apps that are relevant to our customers and allowing them to pay through their phone bill, customers will have a better, easier and faster experience.
Mobile Europe | 11
News
Vodafone and O2 results
VODAFONE SEES NORTH-SOUTH DIVIDE

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

net loss of 139,000 customers. Italy and Spain both saw reductions, of -1.5% in Italy and -9.9% in Spain. In Italy, Vodafone had a net loss of 197,000 customer in the quarter. Although its Spanish division added 123,000 subscribers, Spain has been undergoing fierce price reductions and increased competition. The operator said that macroeconimic conditions in Southern Europe have also been having a negative impact on revenues. The operator said that excluding the effect of MTR cuts its businesses in northern Europe "continued to grow strongly" with Germany at 4.0% (including MTR cuts: +0.2%) and UK at 5.3%( (including MTR cuts: +1.7%()). Vittorio Colao, COE said that these were robust results despite challenging macroeconomic conditions across southern European economies and the impact of cuts to mobile termination rates. Revenue from our key focus areas of data, enterprise and emerging markets continues to grow strongly. With our broad geographical mix and improving market positions, we are well placed for the rest of the financial year, he said. Across the group, data revenue for the quarter
12 | Mobile Europe
News
German spectrum l Greek spectrum l Radisys acquisition
Wind Hellas blasts regulator for 900MHz renewals proposals

The Greek National Telecommunications and Post Commissions (EETT) publication of a draft tender document for the renewal of licenses for 900Mhz and 1800MHz spectrum bands has created strong criticism from operators and observers. Commenting on the draft Tender Document, Nassos Zarkalis, Chairman and CEO of Wind Hellas, said, The approach used to set the price for the renewal of mobile spectrum is driven solely by short-term revenue gains and disregards the need for Greece to create a positive investment climate. This sends the worst signal possible to international investors as they weigh up the pros and cons of bringing their capital and expertise to our country. WIND Hellas said that it will submit detailed and documented opinions on the text of the Public Consultation in the near future, with the aim of contributing to the long-term prospects for the telecommunications industry in Greece. Coleago Consultings Stefan Zehle said that the reserve price for the renewal of 900MHZ spectrum amounts to 0.41/MHz/pop. By comparison the German spectrum auction in May 2010 had reserve prices of less than 0.01/MHz/pop. Zehle claimed that it is well established that high prices for spectrum trade off short term cash against long term benefit. Zehle even warned that operators could choose not to bid. The example of the French 3G allocation in 2001 springs to mind, he said. At the time, the legal framework for auction did not exist in France. Hence the government fixed the price at a high level, based on the amounts that were paid for 3G licences in the UK and Germany. SFR and France Telecom bought a 3G licence Bouygues Telecom refused. This put the government into an awkward spot, because it wanted to preserve at least three operators in France. The episode ended with a climb-down by the Government, which substantially reduced the price of the 3G spectrum licence.
GERMANY ASSESSES 2G SPECTRUM PAST 2016

The German telecoms regulator has begun procedures to assess the requirements for 900 and 1800MHz spectrum when the current licenses for use of the spectrum expire in 2016. In view of the expiry of GSM licences in 2016, the Bundesnetzagentur plans to launch a formal requirements assessment procedure to determine the frequency needs in the 900Mhz and 1800MHz range. The Bundesnetzagentur will use this procedure to determine whether demand would exceed supply and whether the number of frequency assignment requests would exceed the number of frequencies available. To assist with the consultation the Bundesnetzagentur also published a key elements paper, outlining the future options for using the frequency ranges as well as possible assignment proceedings. The consultation on the frequency allotment study ends on 16 September 2011. Comments on the key elements of the requirements assessment procedure may be submitted until 12 August 2011. Determination of the frequency requirements is scheduled for the fourth quarter of this year. The Bundesnetzagentur has also published its own draft consultation on frequency allotment, in which it comes to the conclusion that the four mobile network operators active on the German market are equipped with competitive frequencies enabling them to operate sophisticated, broadband, wireless
Matthias Kurth
infrastructures in line with their business models. Last year's frequency auction was the key means by which all German mobile operators obtained new and additional frequencies. Such a spectrum package is unique in Europe. However, we are keen on setting the course for the next decades and to settle the issue of frequency use after 2016 at an early stage. A redistribution merely for a few years would entail considerable problems and from an economic viewpoint would certainly not lead to the desired results, Matthias Kurth, President of the Bundesnetzagentur, said. In its draft consultation the Bundesnetzagentur comes to the conclusion that competitive distortions resulting from the current spectrum packages are unlikely. No competitive distortions were identified when examining the 900-MHz range in isolation or when studying the totality of frequencies made available to the parties concerned for the provision of radio access networks for the offer of telecommunications services.
Radisys completes Continuous acquisition, promotes staff to senior roles in merged unit
Continuous Computings takeover over by Radisys is now complete. The deal sees Radisys pay $73 million in cash plus 3,666,667 shares of RadiSys common stock. In addition RadiSys will make earn-out payments based on revenues generated by a specified set of Trillium products over a three year period following the closing of the acquisition. Mike Dagenais, President and Chief Executive Officer of Continuous Computing, from 2006-2011, will be CEO of the merged operation. Mike Coward, a Continuous Computing veteran and former CTO, Vice President of Engineering, and General Manager at the company, scores a role as Vice President, Strategy and Innovation. Amit Agarwal will become Vice President/General Manager; Software and Professional Services. And Manish Singh, who came into Continuous Computing through Trillium, will now be Radisys CTO.
Mobile Europe | 13
MOBILE EUROPE
INSIGHT REPORT
The operator journey TO MOBILE MARKETING

This report acts as a wake-up and a rallying call to mobile operators to increase their involvement in mobile marketing. Using detailed numbers and analysis, Nick Lane at mobileSQUARED has charted a new path for mobile operators through the mobile marketing and advertising market. The thrust of his findings is that the long-term opportunity for mobile operators lies not within the core banner and display advertising market, but in marketing and commerce, 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 capitalise on their consumer data and profiling, which can be further enhanced by location data. I think its a positive report that avoids the trap of castigating operators for not achieving the unachievable, but instead lays out a realistic path for growth based on an understanding of consumer behaviour and the wider value chain. Im not sure if well ever reach the utopian circle that Lanes conclusion drives towards, but that doesnt mean that operators shouldnt strive to find their role in some rewarding form of value chain, or value circle. My thanks are due to the mobileSQUARED team for taking on the challenge of defining the role of the operator so squarely. Id also like to thank Velti for its headline sponsorship of the report, as well our other partners Gemalto and bemoko. Keith Dyer, Editor, Mobile Europe
INSIGHT REPORT CONTENTS:

P16 Sponsors Foreword P17 Sponsored Interview: Velti P20 Mobile and advertising P21 The operators role P23 The changing landscape P25 M-Commerce P27 Conclusion P28 Sponsored Feature:
Gemalto
P30 Sponsored Interview:

bemoko
REPORT AUTHOR:
NICK LANE Nick is Chief Strategy Analyst, mobileSQUARED mobileSQUARED provides specialist 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 mobile advertising responsiveness.
Report sponsored by:
INSIGHT REPORT
SPONSORS FOREWORD
Alex Moukas, Chief Executive Officer, Velti
At Velti, we are fortunate to work with some of the worlds 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 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: Why are operators looking at loyalty KEITH DYER: Jim, Cisco right now? of course is represented in the femtocell
market through its MicroCell device, which is most
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.
that's hardthe essence of variations, work. all When you are a carrier loyalty programmes is deploying thousands of to establish an ongoing macrocells,learning more context for element management is about customers, fundamentally different influencing their behavior, fromproviding them with and supporting tens or hundreds of in return. added value thousands of femtocells. You still The information gathered have all the complexity through loyalty of a 3G macrocell but programmes, including the opt-in one to two orders of magnitude larger. bothscale is profiles and user activity tracking, helps the The problem carriers need to solve is to have one company provide a more relevant and competitive platform managing all of this. Once again this plays experience, increasing retention and customer lifetime to our heritage of and media tens of millions the value. For operators supporting companies, with of carrier class CPE devices. right opt in permissions, this preference information
STEPHEN UPSTONE: Loyalty programmes play an do notably supporting AT&T's femtocell service. Why
you think important role in competitive markets, where increasinglyCisco is well-placed to meet carrier needs for femtocell deployment? the similarity of mobile offers makes differentiation hard to achieve, rising volume of advertising noise makes it JIM TAVARES: difficult for brands to stand out and it is not an option to We are very excited As mobile operators and other compete on price alone.about the market because we believe it work to increase customer retention and companies leverages so many key capabilities we have as a the leading operator is the have gone beyond value,company. First, therebrands long tradition of Scientific Atlanta to deliver carrier-grade CPE into the one-off tactical marketing initiatives to create ongoing home. And that connect customers with their brand programmes of course there is our position within in network infrastructure - uniquely differentiated ways. relevant, meaningful, and that has only been strengthened by the Starent acquisition. value of a After all, the first step toward increasing theFemtocell plays to base segments, and our strength in both customer both is to make customers happy. By giving segments mean we have the potential to support customers more of what they wantmore value for their massive more personalized and exciting money, agrowth in the mobile industry. customer Importantly, we believe we can provide end-toexperience, more opportunities to engage in the content end femtocell infrastructure as one company, from and activities they likecompanies can demonstrate their the radio front end to the back-end provisioning commitment to listening and responding to their side. We've partnered and a the foundation for profitable, customers needs, withlaybest-in-class provider in ip.access customer relationships and more not long-term to provide the RF piece, asathat is opena traditional solution consumers. profitable dialog witharea for us. Of course, everyone tends to think about the radio side, but the provisioning side will impact as well. challenges KEITH DYER: What are some of the Unless consumer deployment of femtocells is zero touch then there's facing operators today and how can loyalty help? no way carriers can scale - and we have the experience to provide Consumers have different STEPHEN UPSTONE: the whole integrated provisioning process. motivations and reward levers, varying from savings to
Orange Spain looked to a loyalty programme to deliver a differentiated experience for its users.
also enables targeting to increase the value of KEITH DYER: advertising inventory. Once customers have been Does into the loyalty the TR69 standard not recruited the adoption ofprogram, their behavior can address the through targeted coupons and be influencedmanagement issue, putting femtocells onto the that reward actions such as purchases, incentives same footing as other in-home broadband access devices? upgrades, downloads, customer referrals, new feature usage, and prompt bill payment, as well as providing JIM TAVARES: additional profiling information. An effective loyalty TR69 thus results in a higher there's a whole lot program is really a framework - value relationship for on top business implement if you both theof that toand its customers. want to really
be zero touch. The standards are really nascent, so
KEITH DYER: What revenue drivers influencemake that leaves a lot of work to do as a vendor to
sure you can deliver loyalty programmes?a truly zero touch deployment approach scale.
value, immediacy and emotional connection. This results KEITH for operators to demonstrate greater relevance in a need DYER: You through. Additionally, but how important and cutmention deployment, consumers often findwill ongoing management of femtocells be for carriers, pricing plans complex and hard to benchmark. once they have thousands of femtocells reward Traditional operator discounts and productdeployed? schemes can lack perceived value and have low JIM TAVARES: participation. The opportunity is to align loyalty That's exceptionally and rewards that are meaningful programmes with offers important. To take one example, in Think of this have got to best integrated to customers. the USA you as taking the have and most GPS to offers from requirements, and carriers also relevant meet e911 Groupon and similar rewards need to know where cells are to mobile consumers. If programmes and offering them because they may want to radiate implemented this can in certain locations, successfully on certain frequenciescreate fans whose or take steps to avoid interference with other femto loyalty and value goes beyond customer satisfaction, as or macro cells. So the means as they have trust inthat operator. well as GPS you also
need an integrated network listening capability to
STEPHEN UPSTONE: Operators use loyalty of But I should add that I think the adoption
standards is of course revenue, stimulate usage, and programmes to increasepositive, and both Cisco and Starent have been retention to reduce churn For strengthen customerleaders in standardization. of example Cisco was customers. The customer prepaid and postpaidan active member in the DSL Forum - now Broadband Forum program enables information captured through the - Working Group that developed TR-069. the operator to generate additional revenue by offering targeted, high-eCPM advertising opportunities, as well KEITH DYER: as by making its segmented customer base available to What other issues do you think operators face brands and agencies for the execution of their own in developing the femtocell market? loyalty programmes. As mobile markets mature, operators must work harder than ever to grow JIM TAVARES: revenue. To compete effectively for profitable voice I data services, its now essential to convince and would mention two areas. The first is that as with any that service or technology, there's an customers new the operator delivers value beyond just education issue. WiFi took a while for consumers to minutes and megabytes; undifferentiated services and understand what be vulnerable to what it operators bundles will alwaysit really was and another meant. So you've and similar learning curve with promotionsgot aunderstanding your customers and femtocell for consumers, strategic your retail their preference becomes aas well ascompetitive staff in stores or advantage. customer support agents on the phone.
ABOUT JIM TAVARES Jim Tavares is a Director for Strategy & Business Development in Cisco Services.
KEITHwhere a What are determining its interactions know DYER: cell is by loyalty programmes really
with the about? cells around it. Customers may also selfreport where the femto is when they buy the cell. So
STEPHEN to adjudicateWhile theyall thatin many you have UPSTONE: between come data, and
Mobile Europe | 17
SPONSORED INTERVIEW
KEITH DYER: Why did Orange Spain launch a loyalty
program? and unique SMS code. The login credentials are checked against the Velti mGage platform to check eligibility, thus allowing the subscriber to enter the site. By looking at the subscribers login credentials, our system determines what level of reward they are eligible for and displays only that content. The subscriber is then able to select the reward they want. A selection of Network and Physical rewards are offered. Recarga y Gana is very simple to understand and delivers a good subscriber experience with the additional business benefits of increased ARPU. There are no barriers to the program and all subscribers who are eligible can participate. Subscribers that do not want to be contacted for marketing will be excluded from the program and there is an opt out option available on the website to deliver a clean subscriber experience.
STEPHEN UPSTONE: Orange is the key brand of France

Telecom and, with nearly 216 million mobile customers (as of March 2011), is the number three mobile operator in Europe, as well as one of the top mobile phone providers in Spain, with over 11 million subscribers. With wireless penetration in Spain at over 110% and a highly competitive market, they needed to move quickly to deliver a differentiated, value-add experience for their subscribers in order to grow revenue and reduce churn. Velti helped Orange Spain achieve these goals with a prepay Loyalty Top up program. Orange Spain launched the Recarga y Gana (recharge & win) campaign in Oct 2010. The campaign targets all Orange Spain pre pay subscribers and provides subscribers with the opportunity to win rewards for recharging their mobile phones. The program has been promoted on TV, online and using targeted operator communication channels such as SMS and IVR.
KEITH DYER: What does an operator have to

implement in terms of technology and processes to run a loyalty program?
STEPHEN UPSTONE: Each program is different and KEITH DYER: How is the
program relevant to both the operator and its customers? there is always a balance between speed to market and strength of program in terms of channels and the data available to optimize the communication and rewards. To tailor the program to the unique needs and characteristics of the operator, its brand, and its customers, Velti begins with a thorough analysis of the operators customer base to understand existing customer behavior and trends to understand their top up value, frequency of top up, method, eligibility, tenure and tariffs. The analysis is used to build the program business rules into Veltis real time engine to ensure that the subscriber experience is delivering the relevant rewards, achieving successful redemption and relevant channels are being applied to drive subscriber communication and lifecycle. Based on the insights gained through this process, Velti can design every aspect of the loyalty program, from its creative look-and-feel and customer experience, to a multi-channel acquisition program; to incentives and prize drawings designed to encourage and reward subscriber participation. Velti can also work with partners to provide the website creative.
STEPHEN UPSTONE: The

program strengthens Oranges relationship with its customers by creating an emotional connection through relevant and timely rewards, whilst generating excitement about the brand and driving competitive differentiation in Spain. Clever data driven business rules and algorithms drive all the communications and reward allocation which changes over time, therefore making the program customer focused and dynamic. The real-time program monitors segment movement to support Oranges objectives of increasing APRU and decreasing churn. The program Velti designed for the operator was simple in concept: the service automatically enters those topping up less than 10 into a prize draw in which they stand a one in three chance of winning a prize ranging from telecom bundles of SMS, minutes and data as well as money-off restaurant vouchers to playstations and flat screen TVs. Those customers adding more than 10 worth of credit to their mobile are rewarded with a guaranteed prize.
The Recarga y Gana campaign was launched in October 2010.
KEITH DYER: How are loyalty programmes

marketed?
STEPHEN UPSTONE: Targeted direct marketing is at

the heart of all the communications for a successful loyalty program to create a personalized and effective conversation with customers. However a broad mix of marketing elements is used to ensure effective communication and promotion to the operators customer base. Typical communications can include TV & radio commercials, in store advertising, online & social networks and broadcast SMS to the segmented base.
KEITH DYER: What is the consumer experience? STEPHEN UPSTONE: When a pre-pay subscriber topsup, they receive a text message from Orange informing them that they are eligible to redeem a reward. They are directed to a website and asked to enter their MSISDN
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 very effective without TV advertising.
About Velti
Velti is a leading global provider of mobile marketing and advertising technology. We enable brands, advertising agencies, mobile operators and media companies to implement highly targeted, interactive and measurable campaigns by communicating with and engaging consumers via their mobile devices From large scale SMS competitions and loyalty programs, to providing subscribers with something new, different, and relevant to them via advertising opt-in campaigns, Veltis mGage platform does it all. With Velti, operators can even extend their marketing beyond mobile advertising to include mobile communities, social networks, and interactive entertainment. We have the ability to conduct campaigns in over 50 countries and reach 3.7 billion global consumers. In 2010, 825 brands, advertising agencies, mobile operators and media companies used our platform to conduct over 2,700 campaigns. 13 of the worlds 20 largest mobile operators have run campaigns with Velti. In Europe alone, current customers include Vodafone, Orange and T-Mobile.
KEITH DYER: What kind of results can operators

expect from a program like this?
STEPHEN UPSTONE: Pre paid loyalty programmes can

typically see 25% - 35% participation/redemption rates and a 10% - 15% customer value lift (ARPU and churn reduction) running for a number of years if the approach is keep fresh with the right mix of direct marketing, rewards sourcing and promotions. A more relevant, engaging, and rewarding customer experience results in increased loyalty and reduced churn and a strong impact on net promoter scores. Even in a crowded mobile marketplace, the operator can set itself apart from the competition and find new ways to increase revenue. A one year business case with 1m consumers for a Western European operator, running a program like this can result in an ARPU increase of 5.4m in incremental revenue and churn reduction around 1.62m for each 1m prepaid customers.
KEITH DYER: How else can an operator running pre paid loyalty programmes use the platform to develop future benefits and revenues? STEPHEN UPSTONE: The loyalty program can easily
be extended into the Post paid customer segment. Post Pay loyalty programmes are similar to pre pay but instead of using top up triggers they use lifecycle triggers combined with transaction data in the engine to reward customers. Additionally other affinity marketing programmes can be run like the 1+1 coupon services that we run with Vodafone Greece. That is available to the whole customer base and allows customers to get a coupon to take a friend for free to the cinema, restaurants and leisure parks. This whole experience is delivered in a personalised manner to the custmer base. The same platform allows customers to run ARPU lift SMS games and competitions and drive other marketing objectives such as online sales or cross sell and up sell to tariffs and bundles. Velti has run over 100 campaigns with leading operators including running games with over 4 million players in MTS Russia and the first large scale games in the USA addressing T Mobile USAs 35 million+ customers. With the right opt in permission the operator can go beyond CRM and customer paid ARPU by implementing permission based advertising programmes that can help build loyalty and bring a new revenue stream for the operators from brands that would like to communicate offers the customer base. Velti has experience of
launching and running these types of programmes with Orange, Vodafone and other leading operators.
KEITH DYER:
Where is the market is headed next?
STEPHEN UPSTONE: Smart phones have reached

tipping point and this enables mobile commerce and richer communication that will drive the mobile marketing and advertising markets exponentially. Additionally this allows richer communications and services to be delivered on the mobile handset from the mobile operator. In mature markets this is further and faster catalyzed by mobile coupons and NFC (Near Field Communications) that broaden the ability for commerce from the mobile internet to retail in the real world. Location is already playing an exciting role allowing location aware rewards for customer programmes and third party advertisers. For customers to opt in to receive rewards and offers based on where they live, work, holiday and are today is enriching to their lives. As the leading company in mobile marketing globally and after listing on the NASDAQ earlier this year Velti is best placed to help operators, media companies and brands find increased value from the existing customers and to reach and engage new customers. This is an exciting time to be in mobile and Velti is thrilled to be leading the space today.
STEPHEN UPSTONE is VP of Sales and Development for Europe at Velti
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 operators have been instrumental in creating the mobile advertising opportunity, by pushing at first rich-media featurephones and now smartphones to the mass market, by driving down data costs and developing a billing relationship with every consumer. Mobile operators are the enablers for the mobile advertising ecosystem, but as our research will highlight, they are now more suited to mobile marketing. In the early days of mobile advertising, it was assumed that a mobile operators role in the value chain was assured. Over the last six years, which has seen the advent of the open internet, the rise of Google and the introduction of the iPhoneled smartphone revolution to name but a few key influencers, the dynamics of mobile advertising have fundamentally shifted away from the operators in favour of the direct-toconsumer players. Consequently, operators have seen their position in the value chain jostled and squeezed, and being forced to play an
increasingly marginalised role in a growing number of European markets. But is this a situation that the operator community can (or want to) resolve? Our research into mobile advertising in 2008 revealed that the then CEO at Vodafone, Arun Sarin, had identified three core revenue generators for the company: voice, data and advertising. This also revealed that Sarin had set an advertising revenue target for the Vodafone Group of 45 million in FY2008/2009. Jump forward to the present day, and it has been suggested that Vodafone Group made somewhere in the region of 13.8 million in 2010 (though please note this has not been substantiated). The mobile advertising market continues to lag commercial expectation. What are the implications of this slowerthan-expected rise in mobile advertising spend? As of March 31, 2011, Vodafone Group had 358 million registered subscribers, generating voice revenues of 30.76 billion, and data revenues of 5.77 billion.
On average, each subscriber is generating 85.92 in voice revenues per year (7.16 per month), and 16.12 in data revenues (1.34 per month). If the 13.8 million is indeed reflective of Vodafones mobile advertising revenues, then Vodafones subscribers are each generating Average Advertising Revenue Per User (AARPU) of 0.04 per year. This example is by no means meant to be disparaging towards Vodafone, merely, to highlight the fact mobile advertising remains little more than an accounting error for the majority of mobile operators. But then as a business, advertising and media is some distance away from their core business of communication. While the debate rages on about the mobile operators role within the mobile advertising value chain, it is worth considering whether they actually want to be involved in the first place? With an AARPU of 0.04 it paints an incredibly strong case against their involvement, for indeed the majority of mobile operators.
MOBILE AND ADVERTISING: A TRUE ROMANCE?

Advertising has long been the darling of the mobile industry, and whereas other proposed revenue saviours for the mobile industry like TV, video, and music have long since fallen by the wayside (though resurrected via smartphones, apps and Wifi), the appeal and demand of advertising to the mobile industry has never waned. That might have something to do with the trillion dollar industry that is mobile (source: Informa) converging with the halftrillion dollar advertising industry (source:
Nielsen). In theory, the marriage of these two industries is akin to the coming together of Hollywood A-listers Brad Pitt and Jennifer Aniston. Sadly, some unions just dont work as well they might. Consequently, the mobile advertising industry has developed significantly slower than originally projected the market should now be worth $7.83 billion according to the original forecasts from Informa back in 2006. In actual fact, it is considerably less.
MOBILE AD SPEND Total global advertising spend is expected to be worth around 347.8 billion in 2011. mobileSQUARED estimates that the global mobile advertising market in 2011 will be worth 2.96 billion, accounting for 0.85% of total global advertising spend. Mobile advertising then, remains largely inconsequential to the advertising community in the short-term, but will inevitably become hugely influential in the medium- to long-term.
INSIGHT REPORT
Figure 1: Total mobile ad spend, Europes 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 Euro market, expected to generate 1.1 billion in 2011. The US is gaining rapidly on Japan in terms of spend, and will be worth 856 million in 2011, and will become the second Euro-billion market in 2012. China will become the third superpower in mobile advertising, generating revenues of 327.8 million this year, and is expected to become top 1 billion in 2015. 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. Across Europes big five markets (France, Germany, Italy, Spain and the UK), mobile advertising will generate 152 million, or just 4% of total mobile advertising spend, in 2011. Approximately 35% of those revenues will be generated in the UK, followed by Italy accounting for 25%, France on 16%, Germany 14% and Spain 10%. Between 2011 and 2014, there is very little change in percentage share, with the UK, Italy and France each projected to drop 1% to account for the increased activity in Germany and Spain. By 2014, Europes Big
Five markets will generate healthy mobile advertising revenues of 632.3 million (see Figure 1). If we expand this figure to include the whole of Europe, the total mobile advertising market will be worth a little over 1 billion placing the European mobile advertising market approximately 2 years behind the US in terms of revenues.
WHAT THIS MEANS FOR MOBILE OPERATORS

Our research into mobile advertising back in 2007/2008 revealed that mobile operators were in a dominant position. Yet even then, their role in the mobile advertising ecosystem was being projected as a perilous one, with the increase in spend moving away from the operators and towards the agencies overseeing the creative, planning and buying. So much so, the average campaign spend percentage attributable to a mobile operator would drop from 30% in 2007 to 13% in 2012. The mobile advertising value chain has evolved considerably over the last six years, since the topic started to attract a reasonable level of interest. At this particular juncture, the mobile operator was the central pin upon which the industry would rotate and evolve. Leap forward to the modern day, and the role of mobile operators remains highly questionable in some quarters, and positively rebuffed by others. Prior to the rise of the smartphone, operators were the gatekeepers to the mobile internet. The raging debates centred on on-portal versus off-portal, and that mobile advertising would only flourish if mobile operators truly invested in developing the medium. This has not been the case and the value chain has been in a state of flux for a number of years, as companies challenge the direct path with the consumer previously only enjoyed by the operators. In 2008, the market operated under a linear value chain, from the creative agency and media buyer all the way along to the consumer gatekeeper, also known as the mobile operator. Slow market growth prompted the inevitabe consolidation and resulted in the simplifying of the value chain, and mobile
Projected UK campaign spend % breakdown (made 2008)
2007 AVG COST PER CAMPAIGN CREATIVE AGENCY MEDIA AGENCY (PLANNER/BUYER) MEDIA SELLER/AGGREGATOR CONTENT PROVIDER TECHNOLOGY PROVIDER MOBILE OPERATOR TOTAL 19,500 11 9 18 12 20 30 100
2008 38,025 13 13 17 15 17 25 100
2009 43,875 16 16 16 18 14 20 100
2010 58,500 18 17 15 19 13 18 100
2011 74,100 20 18 15 20 12 15 100
2012 87,750 21 19 15 20 12 13 100
Mobile Europe Insight Report | 21
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Mobile Advertising Value Chain 2008
into a more direct marketing concept. And 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 Europes 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 banner revenues during the forecast period. Whats more the increase in total mobile 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 during the forecast period, operator banner ad revenues will peak at 5.8 million in 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 its 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 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
Figure 2: Europes Big Five Total Display Market
Mobile Advertising Value Chain 2008-2011
Mobile Advertising Value Chain 2011
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Figure 3: UK mobile display forecasts
Figure 4: Mobile operator 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 UKs 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 market. mobileSQUARED projects smartphones to surpass featurephones in the UK in 3Q2012, with the remainder of Europes 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 internet-based shackles upon which it founded. The open internet has seen the declining appeal of the operator portal, and with it, the associated display and search advertising traffic, with players such as Google/Admob, InMobi, Smaato, Adfonic, 4th Screen, and YOC to name of a few of the key mobile ad networks serving the offportal, and in some cases, operator portal needs. The mobile advertising market is evolving because of two critical elements: consumer data and location. Crucially, it is information that every operator has in abundance, and now starting to apply to a mobile advertising strategy away from the mobile internet. The UK continues to be the flagbearer for Europe, and the market is being driven by O2. Earlier this quarter, O2 Media announced that it had over 3 million subscribers to its opt-in advertising service and was well on the way to 4 million. It also extended the opt-in concept with the recent launch of Priority Moments, a service designed to connect its mobile customers to British high-street brands via an app or mobile site, using location to serve relevant and timely offers and vouchers to users. Priority Moments builds on the success of O2s live music service, Priority Tickets, and a more recent location-based campaign for Fitness First which generated revenues of 400,000 for the gym chain. While O2 was successfully applying location-based advertising techniques to clients campaigns, Vodafone announced its decision to join the opt-in mobile advertising revolution and is believed to have selected a provider, but is yet to divulge whom. The company is intent on integrating its mobile advertising efforts with the m-wallet joint venture. Like Vodafone, 3 is on the verge of announcing a similar opt-in service provider, while T-Mobiles will join the party when the Blyk-run Orange Shots service is extended as part of the Everything Everywhere drive. Like O2, Orange is experiencing rapid opt-in success, having started the year with 400,000 subscribers and now has over 1 million, and looks set to surpass 2 million well before the year-end. Opt-in advertising is becoming the strategy of choice for the UK market, and with good reason. A survey of the UK Blyk members on Orange Shots revealed that 93% rated the service as OK or better, with half rating it as good or very good; 35% of respondents said that Blyk had improved their opinion of Orange. Blyk will be hoping similar statistics will be
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INSIGHT REPORT
released in the Netherlands, where it runs the opt-in service for Vodafone. Since its launch in May 2010, little data has been released apart from the fact that the response rate exceeds 25%, as is the case in the UK also. The response rate of over 25% has now become an internal thing, and if the response rate drops below that figure, we ask questions why, says Antti Ohrling, cofounder and UK CEO, Blyk. He believes that the hard opt-in model represents the fundamental difference with alternative mobile advertising models. But the level of response rate is open to interpretation. For instance, Hallmark ran a two-for-one Halloween card campaign in the UK delivering over 136,000 ads, generating an 8.2% click-through rate (totalling 11,152 clicks), with 2,573 vouchers downloaded, equating to a 23% CTR conversion or a total campaign conversion of 1.89%. However, Blyk does not reveal how many members actually responded opting to receive, or stop receiving, additional information on that particular campaign. Assuming the response rate of 25%, then approximately 34,000 responded in either the positive or the negative. Either way, that is significantly higher than all other forms of media, let alone other forms of mobile advertising. Based on such high response rates, Blyk claims that it can generate annualised ARPM (average revenue per member) upwards of 13 on a sustained basis. In comparison, Facebook generates APRU of between 0.53. In the Netherlands, Vodafone selected MADS as its mobile advertising sales network, a deal which was replicated in Greece. But the latter was a short-lived deal as Out There Media took over Vodafones entire Greek mobile ad operation. And Out There Media followed this deal by collaborating with Cosmote in July. Not wanting to be excluded, Orascom invested 6.89 million for a minority investment in MyScreen to orchestrate a permission- and incentive-based advertising model that compensates users with rewards for allowing targeted advertisements to appear at the end of a call in a variety of formats to the operators 18 million subscribers, which includes both Wind Greece and Wind Italy. Wind Italy has also worked with Upstream on a promotion for Wind called VIP SMS to
generate revenues and an opt-in database from Winds subscriber base. Wind now has an opt-in database exceeding 2.5 million. A permission-based advertising program was also launched in June when Velti signed a strategic three-year partnership agreement with Vodafone Portugal. The Vodafone Promo4U service enables subscribing customers to receive high-value discounts
Mobile advertising is a media property development, and operators are not good at doing that. Where they can excel is in mobile marketing.
and exclusive offers from their favourite brands free of charge on their mobile phones. Examples of mobile advertising activity across Europe are rife, with operators either opting to pursue an in-house strategy such as O2, or outsource externally to companies such as Velti and 4th Screen. Clearly, mobile operators remain active in the mobile advertising ecosystem, though their role is evolving. The mobile industry is clearly split on the role of the mobile operators within mobile advertising. KF Lai, CEO of Buzzcity, goes straight for the jugular and says operators do not make good media companies, and are therefore not adept at mobile advertising. Operators are not good at launching and maintaining media properties, he says. Mobile advertising is a media property development, and operators are not good at doing that. Where they can excel is in mobile marketing, such as opt-in messaging. An alternative view is that operators have a significant role to play in the mobile advertising value chain, but are now exploring a range of go-to-market strategies. One example is a dramatically increased willingness to forge partnerships or to opt for small, lean technical solutions that are ready for just a few new use cases but are able to scale later if successful, says Dietmar Maierhfer, senior specialist, mobile advertising at Nokia Siemens Networks. Both ways open up strong opportunities and the required flexibility to play a significant role in the ad business.
NSN is clearly identifying a risk-averse strategy for operators in their approach to mobile advertising: either partner and limit investment, or start small with the potential to scale if required. Both suggestions imply an immature market and operator uncertainty, which is understandable given the way operators are becoming peripheral to mobile internet-based advertising models. Operators were big in the area of display advertising through their portals until the walled gardens opened up, and they had to find other ways to play in the advertising space, says Dan Cuffley, director of sales for Europe at Velti. Operators are sitting on a mountain of customer data so they are looking for ways to harness this data. An operators biggest opportunity in this area is by providing access to their base of customers. This can be through operator permission-based advertising programs as well as passing through information to the advertisers. Carl Uminski, COO at Somo Agency, believes operators have made a number of mistakes but should now focus on their core areas. Where theyve really messed up is SMS billing, he says. What are they doing charging 30-40% commission for a transaction of no more than 10? Ideally they should be looking at transactions of up to 100 and charging 3-4% commission and Apple needs to wake up to that as well. Mobile has to move away from the microtransactions, and look at the macro market, as that is where the commerce is. Uminski says operators have got the bank account and contact details of their customers, and most importantly their trust, so they must look at a proposition around this. For me it has to be payments, and not mobile advertising. Regardless, if progress in mobile advertising is already protracted, the addition of mobile operators to the mixer only delays proceedings further. It has taken 10 years for the GSM Association to encourage the UK mobile operators to agree to sharing data anonymously to create the Mobile Media Metrics service delivered in association with comScore to drive the planning, understanding and execution of mobile advertising campaigns. (Other data is available, including mobileSQUAREDs own Mobile Consumer Trends.) Similar discussions between other markets for similar metrics remain ongoing, with very little movement of note to date.
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M-COMMERCE: THE DRIVING FORCE BEHIND MOBILE ADVERTISING?

A lack of activity is in stark contrast to the endeavours surrounding m-commerce, where there has been a flurry of mobile operator joint initiatives throughout Europe, and reiterates Somos Uminskis comment. Most recently, Vodafone, Everything Everywhere and O2 in the UK entered a joint venture called m-wallet based on a smartphone app enabling contactless payments. This followed news that Orange UK had also embarked on a partnership with Barclaycard to offer contactless mobile phone payment solutions. Heading south, the three largest Spanish mobile operators, Orange, Telefnica Movistar and Vodafone, signed a cooperation agreement in March 2011 to generate a stable Near-Field Communication (NFC) ecosystem, to pre-empt the risk of market fragmentation. In addition, mobile barcode specialist Scanbuy announced a service they were developing with Movistar, Vodafone and Orange called BIDI. All three operators are now pre-loading the barcode scanner, allowing subscribers to access the same codes. Similarly in France, Atos Origin, Bouygues Telecom, Orange and SFR formed a joint venture (JV) company in February to launch an innovative payment solution, backed by online retailers, including Aquarelle, Brandalley, Darty and Rue du Commerce. The service, called Buyster, will be available in France from mid-2011 and is described as an innovative, simple, fast and secure remote payment solution for fixed and mobile internet purchases. Scanbuys Orange connection has also been extended into France. February proved a busy month for allegiances with Belgacom, BASE (KPN Group Belgium) and Mobistar also joining forces to launch a new mobile payment system in Belgium. They are currently looking at the possibilities for jointly developing and optimising a product that will be accessible for the public by the end of 2011. The purpose is to make it possible for consumers to swiftly use their mobile as an electronic purse for the standard payment of small amounts (maximum 25 EUR). The system relies on the use of SMS and contactless Near Field Communication (NFC) technology. Its a similar story across Europe. Mcommerce is not only starting to take off, it is about to explode into life. According to Yankee Group forecasts, global mobile transactions (including banking) were worth $162 billion in 2010 and will be a staggering $984 billion in 2014. Of particular interest, is their projection that the number of active mobile coupon users will grow from 2.7 million in 2010 to nearly 35 million in 2014. Furthermore, the number of Near-field communications-enabled phones will grow from 834,000 in 2010 to 151 million in 2014, with NFC transactions leaping from $27 million in 2010 to $40 billion in 2014. Forrester Research, meanwhile, believes mobile commerce will increase from $6 billion in 2011 to $31 billion in 2016. Most intriguing is that while mobile operators appear to be persisting with mobile advertising strategies, virtually every mobile operator is turning its attention towards m-commerce. This presents something of a fundamental shift in mindset by the operators, and perhaps most notably, the commercial realisation that operators are communication specialists with a billing relationship with consumers. Therefore, mcommerce can effectively become an extension of that billing relationship and is a strategy considerably more aligned with mobile operators than any attempt to become a media company: which they are not, never have been, and never will be. Nevertheless, the rise of m-commerce is very, very good news for mobile advertising, as it provides the ultimate return on investment for companies investing in a transaction-led mobile advertising campaign, as opposed to a brand awareness investment. This further emphasises the mobile operators role as an enabler of the mobile advertising ecosystem, but more importantly, its even better news for operators as mobile marketers. EVOLUTION TO MOBILE MARKETING Consumer data, including location, is the ultimate arsenal for mobile operators. Whats more, they have invested in the networks, and developed customer relationships, so should the mobile advertising industry realistically expect (or even rely) on operators sharing this information, even at a high price? In actual fact, mobile operators are already using their consumer data very effectively, but are often overlooked when it comes to using mobile as a targeted sales and marketing channel. As Marco Veremis, CEO of Upstream says, mobile operators have become extremely sophisticated at mobile marketing. With this in mind, he says operators will not share customer data because they need it for themselves. Operators have realised that impressions over mobile, whether page impressions when browsing or messages, are a finite resource, and they can only communicate with a customer a few times per month. This leaves mobile operators with the choice of using this finite medium for themselves or letting third parties communicate with their subscribers. People in mobile operators, like the head of prepay or head of data are always thinking about how they can boost sales by cross-selling over mobile, says Veremis. mobileSQUARED has been researching ways of placing a value on this form of stealth form of mobile marketing. The research has revealed that on average, an operator will talk to a subscriber four times per month. In developed markets such as the US and UK, the number of communications is less, whereas in markets where legislation remains less stringent, like China, operator communications can reach 50 per month. Whats more, the ability to
Virtually every mobile operator is turning its attention towards m-commerce. This presents something of a fundamental shift in mindset by the operators...
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 operators clients. As already highlighted, operators across Europe are now adopting this form of marketing (though some refer to it as advertising: advertising is the glamourous subset of marketing after all). 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 O2s 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 O2s campaign for Fitness First. However, mobileSQUARED believes it will be incumbent on the mobile operators to promote the development of location. A demonstrated in the UK during the backend of 2010, the major retail brands are yet to grasp the concept of mobile, despite the availability of location-based advertising that can potentially drive footfall. The survey of the UKs 30 most important retail brands mobile strategy revealed that only two have their site optimised for a mobile experience, while eight of the retail brands had developed iPhone store finder apps. Tesco has developed four iPhone apps Clubcard, Finder, Wine Finder and WhatDidl but was yet to cater for the 75% of non-iPhone browsers. Mobile is about the now, and about influencing behaviour close to the point of purchase, says Brad Liebmann, CEO of Geocast. He claims that retailers want an extension of their storefront, which he describes as thousands of sandwich boards outside their premises. Thats what these devices are, he adds. These are the sandwich board of today. Drive the customers to
Figure 5: Operator marketing messages 2011
Figure 6: Operator total marketing -based incremental revenues (), 2011
cross-sell and upsell data bundles, subscriptions, device upgrades for example via these mobile communications is believed to be a 27.63 billion global market in 2011. Because operators use SMS, USSD or cell broadcast to disseminate the communications and promotions, there is no cost attached. However, this form of marketing has generally been outsourced to a third-party, whom will receive commission based on the incremental sale. If we assume that commission is 20%, then this kickback to the third-party provider can be considered the cost to the operator. Therefore, with the global incremental sales market valued at 27.63 billion, mobile operators are spending 5.53 billion on this stealth form of mobile marketing. Across 17 markets in Europe, operators are expected to send 25.6 million communicative messages in 2011 to their
subscriber base. Based on the incremental revenues, that will cost the operators $1.02 billion in 2011. In addition, it is a very simple value chain, in which the operator controls 80% of the value (see figures 5 & 6). This method of communicating can be deemed opt-out marketing, but can also be used effectively to drive an operators opt-in database, or permission marketing, which is where mobileSQUARED believes offers the biggest opportunity for mobile operators in the marketing (and advertising) domain. CSPs [operators] are increasingly developing consolidated databases to allow a single view of their customer data, as well as a profiling strategy to support churn prediction and to tailor their marketing campaigns, says Nokia Siemens Networks Maierhfer. These powerful systems comprising a cornucopia of network data can easily be used for targeted advertising
INSIGHT REPORT
the store, and help them get there. One operator that is now driving that concept is O2. As already highlighted earlier in this report, O2 launched what it called a supercharged version of its Priority Tickets service in July, complimenting the existing scheme which turned them into the UKs biggest sellers of gig and event tickets. They have now extended this into the retail environment through O2 Priority Moments, utilising its consumer data, opt-ins, and location. The multi-million pound investment by O2 will see Priority Moments serving location-based money saving offers direct to the phones of its 22 mobile customers that can access the service via an app or a mobile site using a GPS-enabled device. The service has already received support from brands such as Yo! Sushi, French Connection, Toni & Guy, Chocolat, Essensuals, National Express, Fitness First, Viagogo and JJB Sports. We have applied lessons from Priority Tickets to Prioirity Moments and supercharged it to appeal to all of our customers, not just music lovers, says Head of brand at O2, Shadi Halliwell. The main driver is, I want the voucher, I want it now. The customer will be served offers based on his/her location, but as yet there is no search function, only a way to prioritise favourite types of offers so they appear at the top of the feed. However, the app will develop over time, eventually including some kind of push notification based on customer preferences and newly available offers. During the launch period there will be more than 40 offers from 30 brands for use in over 3,500 stores nationwide, but the initial four gold brands of Zizzi, WHSmith, Odeon and Harvey Nichols have signed bigger deals with O2 to be elevated to the front of the TV advertising campaign. O2 says the O2 media team have been absolutely instrumental in delivering and doing those deals and talking to the partners, so theyre very much part of Priority Moments. The primary reason were doing this is to drive loyalty, engagement and satisfaction. There is a contract between all of the partners that we work with. Where brands are giving us extra special deals and exclusive offers, we wont be charging them to take part in Priority Moments. Where a deal is non-exclusive the brand will pay to be included. We have 22 million customers in the UK and we hope this will help those partners reach their own objectives. The challenge now facing the mobile industry, is to highlight the value of location to consumers. This is where mobileSQUARED believes the operators will play a critical role, by applying their wealth of consumer data, including location, to deliver relevant and contextual marketing campaigns. Subsequently, this will educate their mobile customers about the merit of using their location beneficially, and will have a positive knock-on effect for the mobile advertising industry. For instance, research by Navteq has shown that 31% of consumers seeing a specific mobile ad went on to visit a store location. And of those, more importantly, 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 consumer has opted in, it is essential that this relationship is developed, and the operators are ideally placed to drive this opportunity. The permission element therefore, creates a virtuous cycle of communication between the brand and the consumer, with the brand encouraging engagement and interaction with
The utopian value chain sphere
the consumer on an ongoing basis. This level of communications must be reflected in the value chain, which can no longer be viewed in a linear format. Anyone component, or all, can potentially harness these new and
emerging relationships between brands and consumers. It is critical that the players in the ecosystem ensure that this level of communication is maintained on a consistent basis.
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INTERACTIVE SMS - THE TIME HAS COME A TECHNOLOGY WHOSE NEXT GENERATION MOBILE-CRMfor Strategy & Business Development in Cisco Services. Keith Dyer Jim Tavares is a Director CHANNEL
Caroline Doussot, Head of Mobile Marketing, Gemalto, on mobiles most effective channel.
Due to its low cost, universal access and KEITH DYER: interoperability course devices and mobile networks, Jim, Cisco of across is represented in the femtocell SMS is the most its MicroCell device, which is to market through effective way for consumers most communicate with each other. Theseservice.factors notably supporting AT&T's femtocell same Why do are also enabling businesses, includingcarrier needs you think Cisco is well-placed to meet government departments, deployment? for femtocell banks, financial institutions, consumer brands, retailers and transport providers, to better communicate with target demographics. A recent JIM TAVARES: report are Informa Telecoms and market stated that We by very excited about the Media because we SMS should not be so many keyas a core servicehave believe it leverages overlooked capabilities we for mobile users asFirst, there is thesignificant source of as a company. it will remain a long tradition of revenues and traffic deliver carrier-grade CPE a global Scientific Atlanta to for mobile operators on into the basis until atof course there is our position within rise home. And least 2015. Revenues are forecast to to $136.9 billion by 2015 with globalbeen traffic network infrastructure - that has only SMS increasing from five trillion in 2010 to a staggering strengthened by the Starent acquisition. Femtocell 8.7 trillion by 2015. plays to both segments, and our strength in both Despite mean we have the potential to support segments the fast adoption of smartphones, SMS is still the preferred communication channel amongst massive growth in the mobile industry. consumers. A study from Deloitte providethat the Importantly, we believe we can found the end-tomajority (90 percent) of smartphone users send at the end femtocell infrastructure as one company, from least one text messageback-end compared toside. 40 radio front end to the per day provisioning just percent, who usewith a handsets to access social We've partnered their best-in-class provider in networks including Twitter piece, as that is not a ip.access to provide the RF and Facebook. The continued popularity of Of course, everyone traditional solution area for us. SMS amongst smartphone users also creates an ideal opportunity tends to think about the radio side, but the for businesses seekingimpact as well. as an advertising provisioning side will to use mobile Unless consumer platform. A spokesperson is zero touch then there's no deployment of femtocells from comScore said recently that can scale - and we have the experience to way carriers mobile ads are twice as effective with smartphone whole integrated provisioning process. provide the users. Businesses are finally waking up to the many benefits of mobile messaging marketing. Consumer KEITH DYER:
Gemaltos best practices on Messaging are:

Be simple. Mobile devices offer limited space and time for the users to grasp the marketing message Dont spam. Gone are the days of spam marketing, brands need to be careful about properly using the advantages offered by the third screen Be clear, identify yourself as the sender. Messages must identify in the first sentence that the sender is the operator PLUS the brand Be recordable. Make sure that the campaigns can be evaluated Be Gratifying. Who doesnt love rewards? Mobile devices are a great medium to work in a targeted aspect to wide-reaching campaigns
engage in a real dialogue with consumers or take steps to avoid

interference with other femto or G Permission marketing capability: Permission-based
Caption CaptionCaption CaptionCaption CaptionCaption CaptionCaption Caption
By better understanding consumers needs, interests and preferences, operators can significantly boost revenues through highly targeted campaigns, up-selling, cross-selling, location-based offers, or even coupons from other brands
acceptance is also increasing butahow important will You mention deployment, as result of more desirable management of femtocells be for carriers, ongoing incentives offered by operators and brands. Each of these factors suggests that mainstream once they have thousands of femtocells deployed? uptake will take place sooner than we expect. For businesses JIM TAVARES:there are several benefits for adoption: That's exceptionally important. To take one G Reach: SMS delivers total real reach to all handset example, in the USA you have got to have integrated regardless e911 brand or model GPS to meet of the requirements, and carriers also G Direct-marketing capability:because they may want need to know where cells are It provides an toopportunitycertain frequencies in certain locations, radiate on for mobile operators and brands to
mobile marketing enables organisations to tailor macro cells. So that means as well as GPS campaigns according to individuals preferences you also need an integrated network listening which improves where a cell is by determining its capability to know relevance and acceptance rates. The ease with the cells around it. Customers interactionsin which customers can opt-out is may another advantage. Customers when they buy also self-report where the femto is can step out at anytime, you have to adjudicate between all that the cell. So automatically cleaning the database and therefore increasing data, and that's hard work. acceptance rates. When you are a carrier deploying thousands of G Standardised metrics: SMS is a mature model with accurate and standardised metrics already macrocells, element management is fundamentally in place different from supporting tens or hundreds of So what of femtocells. You still have all provides thousands does this tell us? Mobile-CRM the rich pickings for 3G macrocell but the scale is one to complexity of a mobile operators. By better understandingmagnitude larger. The problem carriers two orders of consumers needs, interests and preferences, operators can boost their service all need to solve is to have one platform managing revenues through highly targeted deals, up-selling of this. Once again this plays to our heritage of or cross-selling offers, location-basedclass CPE or supporting tens of millions of carrier services even coupons from other brands. The targeted devices. nature of mobile-CRM also provides cost savings by enabling DYER: KEITH operators to send only relevant offers to interested subscribers, creating a standard not Does the adoption of the TR69 higher success rate. Thethe management issue, putting femtocells address trade-off is clear from the beginning, organisations can customise services and offers to onto the same footing as other in-home broadband suit specific customer needs and in return, access devices? customers benefit from useful deals. The question now is how can operators capture JIM TAVARES: this data? really a framework - there's a whole lot on TR69 is To address implement if Gemalto created top of that tothis challenge,you want to 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
Interactive SMS, standards operators nascent, develop zero touch. The enabling are really to truly so that a one-to-one relationship with vendor to make sure leaves a lot of work to do as a consumers. Upon activation the user will zero touch deployment which you can deliver a truly receive a text message will require a single click to reply, making it the ideal approach scale.
One of our European customers achieved a 12 per cent acceptance rate when using Interactive SMS to promote its new electronic invoice service. This was six times greater than the acceptance rate achieved from the same campaign delivered via standard SMS
solution should add that I think the adoption of But I for the recruitment for loyalty programmes. With a unique design includingand both Cisco and standards is of course positive, open questions and multiplehave been leaders in standardization. For Starent choice menus, Interactive SMS is also a great channel for conductingmember in the amongst example Cisco was an active quick surveys DSL consumers onBroadband Forum - Working Group that Forum - now the go. Moreover, it provides businesses with the opportunity to engage in a developed TR-069. simple dialogue with subscribers, yet at the same time providing them with complete autonomy over KEITH DYER: theWhat other issues do receive. Gemaltos Interactive types of offers they you think operators face in SMS is compatible with all handset models including developing the femtocell market? basic SMS phones, as well as Apples iPad so that users TAVARES: JIM can easily top-up prepaid internet connectivity. Gemaltomention two areas. The first is that to with I would also offers full-marketing services as operators. Theseor technology, there's an education any new service encompass access to business intelligencetook a and regional expert teams issue. WiFi tools while for consumers to understand dedicated to delivering best-in-class commercial and what it really was and what it meant. So you've got a
ABOUT JIM TAVARES Jim Tavares is a
marketing services. Aswithoption, operators can similar learning curve an femtocell for consumers, monetize their highly qualified database with as well as your retail staff in stores or customer other brands direct marketing. In the future support agents on the phone. Gemalto may also bringsneed to be very clear Another factor carriers brands on board thanks to its ad-salesfemtocell is challenging typical carrier about is that services. Results speak for themselves. A to subsidising business models. Carriers are usedGemalto customer that executed a mobile marketing CPE for marketing reasons - not in order to campaigncapex reductions by used Interactive SMS generate in Europe recently driving traffic off to promote its new e-invoice service. Acceptance network. So the return on that subsidy is driven by rate was 12 per cent, six times more than a different metrics from their usual model. previous campaign delivered via standard SMS. That leads to another issue, which is that Another mobile campaign in Asia, promoting femtocell crosses classes of organisational structure sports news, received a response rate of 7.7 per within a carrier. It touches the operations team, cent compared monitoring cent assurance, as well as marketing and to 0.2 per and when delivered via standard SMS. and retail. That's a new paradigm customer service Latin American customer received an toAget their head around. acceptance rate of approximately 30 per cent on But I would also like to say that I actually think its firsthas been great progresscent on its second, there campaign and 35 per in many of these and proving that users were so satisfied there the service other key areas. Most importantly, with is a clear they agreed to participate again. supply chain forming - from chipset providers to
CAROLINE DOUSSOT is Head of Mobile Marketing, Gemalto. Since 2002, Caroline has held several strategic marketing positions within Gemaltos Telecom business unit in Europe and Latin America. Prior to joining the company, she gained extensive experience working for a leading marketing consultancy in Paris. www.gemalto.com
Mobile Europe | 29
http://gtube.gemalto.c om m l c
SPONSORED INTERVIEW
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.
KEITH DYER:
GOING MOBILE: CHANGING THE MINDSET

Jim Tavares is a Director for Strategy & Business
KEITH DYER: Phillip, this Insight Report is assessing the move to Jim, Cisco of course and advertising.the someone mobile marketing is represented in As femtocell who works in the heart of that industry, would market through its MicroCell device, which is most you say mobile is now totally mainstream in do notably supporting AT&T's femtocell service. Why web/marketing/online? How would carrier needs you think Cisco is well-placed to meet you characterise the state of the mobile internet and for femtocell deployment? where do you see further opportunities for the use of mobile? JIM TAVARES:
We are very excited about the market because we
now mean that a mobile strategy is essential? macrocells, element management is

fundamentally different from
PHILLIP CLEMENT: tens or hundreds of supporting

Mobile web thousands will significantly change the and apps of femtocells. You still have fundamental waythe complexity of a 3G macrocelland all that businesses attract, engage transact with their the scale is one to two orders of but customers. Mobile commerce is expected to reach $31 billion by The problem carriers magnitude larger. 2016, which is an annual growthneed of 39%. is to have one platform rate to solve Those companies that do not have a managing all of this. miss out on one of mobile strategy will Once again this the biggest growth areas in recent years. plays to our heritage of supporting
PHILLIP leverages so many key capabilities we have believe it CLEMENT:

asWell, NASA make regular trips long tradition ofbut a company. First, there is the to outer space, unfortunately thisto deliver carrier-grade CPE into the Scientific Atlanta doesnt make it mainstream. Ask a consumer whether they think our position within home. And of course there is mobile websites are mainstream or watch someones only been they try network infrastructure - that has face when and book a cinema ticket or view their bank strengthened by the Starent acquisition. Femtocell statement on their Blackberryour strength youll have plays to both segments, and and I think in both your answer! segments mean we have the potential to support If I were to characterise the industry. massive growth in the mobile state of the mobile internet well we coin a well-known mainstream Importantly, to believe we can provide the end-tomarketing phraseconfused.com. While brands allthe end femtocell infrastructure as one company, from debate whether to the for an App or develop side. radio front end to go back-end provisioning a mobile website or both, their best-in-classdesperately try, We've partnered with a customers provider in and fail, to interact with RF piece, the very expensive ip.access to provide the them on as that is not a smartphones that come with the promise everyone traditional solution area for us. Of course, of seamless browsing. tends to think about the radio side, but the Opportunity is will impact the Unless consumer provisioning side everywhere as well.technology is here and customer adoptionzero touch then but most deployment of femtocells is is voracious there's no enterprises, brands and and we have the are way carriers can scale - retail businesses experience to underpinnedwhole integrated provisioning process. provide the by existing systems and processes that just wont cope with a mobile economy. POS systems, DYER: KEITH CMS, CRM, databases, mainframes, and ecommerce websites will needbut be upgraded, and You mention deployment, to how important will this is themanagement of about the commercial and ongoing easy bit. Think femtocells be for carriers, marketing shift that will need femtocells deployed? once they have thousands of to take place to meet the true demands of the new mobile economy: vouchers, location-based campaigns, virtual money JIM TAVARES: earned for the purchase of virtual To take one online That's exceptionally important. products like game points the USA you have buying have integrated example, in being earned by got to real-world products. And thenrequirements, and payments GPS to meet e911 there are mobile carriers also No to know where all confused. need wonder theyre cells are because they may want toThe usual suspects frequencies in and Google are radiate on certain like Facebook certain locations, leading the way,avoidnone of us can use these or take steps to but interference with other femto or behemoths as a that means as wellcanGPS you also macro cells. So benchmark or as we? Following your nextintegrated network listening capability to need an nearest competitor is simply point scoring. Look to the real trailblazers and you wont go far know where a cell is by determining its interactions wrong. cells around it. Customers may also selfwith the report where the femto is when they buy the cell. So
Developers have become lazy they dont give a thought to page weight or mobile bandwidth, so operators need to endorse best practices, and promote the use of web frameworks like bemokoLive that deliver websites that are optimised for mobile.
KEITH DYER:
tens of millions of carrier class CPE
Caption CaptionCaption CaptionCaption CaptionCaption CaptionCaption Caption
devices. In what circumstances should content owners consider an app and/or mobile internet site. Are both approaches necessary? KEITH DYER: Does the adoption of the TR69 standard not
PHILLIP CLEMENT: issue, putting femtocells address the management

onto the same footing asand apps is both blurring The line between web other in-home broadband and becoming more distinct the simple answer is access devices? use both, but use them in the right context and for the right reason. Think about how people search for JIM TAVARES: things. The webaisframework the first place peopleon generally - there's a whole lot TR69 is really will look for toproduct service or want to really be top of that a implement if you company, downloading an standards are unnecessary step in the zero touch. The app adds an really nascent, so that process. If you do develop as aapp remember itsure leaves a lot of work to do an vendor to make will be publicly rated. One of my favourite things to do you can deliver a truly zero touch deployment when I have a spare moment is to check out the approach scale. comments on retailers app offerings they make But I should add that I think the adoption of interesting is of course positive, and both Cisco and standards and sometimes hilarious reading! Starent have been leaders in standardization. For
KEITH DYER:was an active member in the DSL example Cisco

Forum - now Broadband Forum - Working Group as Which OS/ app platforms does bemoko see adding most value for developers/ content that developed TR-069. owners KEITH DYER:
PHILLIP CLEMENT: you think operators face in What other issues do

developing the femtocell market?pile. Now all of a Last month iOS was top of the sudden its Android, who knows who will be at the top inTAVARES: JIM a few months? Windows perhaps?
KEITH DYER: you have to adjudicate between all that data, and
that's hard work.advantages of a mobile strategy in What are the terms of you are scale and responsiveness? Do these When reach, a carrier deploying thousands of
30 | Mobile Europe
SPONSORED INTERVIEW
I gave up trying to predict mobile device and OS penetration years ago! Android is doing pretty well and so is Blackberry right now, but Im sure Apple will release some new phone on a ridiculous tariff with one of the operators in order to gain back some market share. Whatever the landscape will be, one thing is for mention noneareas. The first iscontrol over I would certain; two of us have any that as with it new service or its futile trying to predict or any so in my view technology, there's an education manage campaigns based on mobile penetration. No issue. WiFi took a while for consumers to understand one would run a campaign or meant. So you've got a what it really was and what it write a website based on which PC manufacturer femtocell for consumers, as similar learning curve with is number one. Or run a TV ad campaign aimedin stores orbecause they are well as your retail staff at LG TVs customer support the top on the phone. Why? Because it doesnt agents selling brand. matter! So how cool would it be for us allclear about Another factor carriers need to be very if mobile handset or operating system figures were of no is that femtocell is challenging typical carrier business relevance? What if brands to subsidising CPE for - all models. Carriers are used could just do mobile devices, tablets, smartphoneseverything allcapex marketing reasons - not in order to generate in one place? Strangely, thats whatoff network. So the return reductions by driving traffic bemoko does.
on that subsidy is driven by different metrics from their usual model. KEITH DYER: That role to you see for which operators Whatleads doanother issue,mobile is that femtocell within mobile of organisational structure within a crosses classes marketing? Could operators take more ofItatouches the operations team, go mobile, lead in helping businesses marketing and carrier. extracting benefits from mobile sites/apps/ service monitoring and assurance, as well as customer customer interaction? Does bemoko have any and retail. That's a new paradigm to get their head direct or indirect relationships with mobile around. operators? But I would also like to say that I actually think there has been great progress in many of these and other key areas. Most importantly, there is a clear PHILLIP CLEMENT: supplythe M25 [Londons orbital motorway], which Like chain forming - from chipset providers to radio experiences congestion end-to-endhuge popularity, software providers and due to its system providers. mobile browsing will start to put a strain on the With any new supply chain it takes a while for every operators ability to cope, speedsplace, and up, and piece at every level to drop into will slow you will costsinevitable Rather than leaving it up to the been get will rise. interoperability issues, but there's operators to deliver more bandwidth and customers great progress. to put up with slow speeds and high data charges, developers need to take responsibility for their code, KEITH DYER: and the about issues around price?sites. But this feeling How way that they build their There was a is a big educationwould have to hit a certain become lazy that vendors process. Developers have price point in they dont give ato be viable. page weight or order for femtocell thought to mobile bandwidth, so operators need to endorse best practices, and promote the use of web JIM TAVARE: frameworks like that this is a nascent market and not I understand bemokoLive that deliver websites that all that sophisticated, so price is something people yet are optimised for mobile. can get their hands on initially. But over time, KEITH DYER: to the benefits of being able to attention will turn operate atPhillip, can you give us some touch Finally, large scale, with reliable, zero background toI bemokoonwhat areas yourorder to deployment. If save $5 a component in company works in and your place in the mobile meet some arbitrary price point, but then have to marketing value chain? - then have I saved any spend $50 on support calls money? PHILLIP CLEMENT: I also think price is impacted by operators' own priorities becomeaesthetics,by tablets and As PCs around replaced and physical integration. smartphones, all organisations will have the need this Some carriers are very interested in aesthetics, as to targetitem that will be going into people's homes. is an a wide range of different devices, operating systems are thinking about enable that, our a WiFi Others and browsers. To how to combine
MOBILE EUROPE GOES MOBILE WITH BEMOKO

It was becoming a source of embarrassment to us at Mobile Europe that we had no dedicated mobile site. We want our content to be accessible wherever our readers are, in the format that best suits them. That is why we still pubish in print and produce a digital issue, and it is also why we wanted a site that is optimised to mobile. When we looked around for someone who would understand our objectives, we settled on bemoko, as their approach accorded directly with ours. Their technology, with its dynamic device and software recognition, will render our content in the most optimised fashion for any mobile device. Of course, many devices can access the site already, and are doing so. Indeed, one of the first things bemoko asked us to confirm was which mobile OS were already hitting the site. We knew that iPad and iPhone were 3rd and 4th, with Android 6th. But the experience is not optimised, and over a mobile network our pages are heavy. So as we develop the mobile site, we are asking you what you would want to see from it what content, features and functions you like, and those you dont. You can email me your thoughts at keithd@mobileeurope.co.uk or leave a comment at http://mobileeurope.co.uk/news/blog/8867. Keith Dyer, Editor, Mobile Europe access point and router with a femtocell. Every
ABOUT JIM TAVARES
PHILLIP CLEMENT is Sales and Marketing Director for bemoko. www.bemoko.com
bemokoLive web framework comprises a highly carrier is very different and you have to take that powerful suite ofwell. that form the foundation of into account as tools new andDYER: KEITH innovative multi-channel services. We work with global brands, systems integrators, do Stepping away from operator concerns - what content providers, ERP/E-commerce and media you think will drive consumer adoption of agencies who use bemokoLive at the heart of their femtocells? mobile web and applications strategy. bemokoLive removes the burden of supporting JIM TAVARES: theI wideningsimply offact that devices such mobility think it's array a mobile wireless and as tablets and more important than it was a few years is so much smartphones, games consoles and internethow with centralised management - all ago to TV people live their lives. What we're devices and services are supported and managed in finding is that traditional view of how to build one place, reducingthat lifestyle need is becoming a network to support management overhead and increasingIn Europe, for example, UMTS is at 2.4GHz problem. market reach. Delivering complex campaigns construction is often of cement and steel. and home that play to the strengths of feature-rich devices RF achieved with complete it is in 2G.to So the is propagation is not what freedom interface with related platforms such busy hour on a Another example is that the whole as payment services, e-commerceIt's moving back later into the network is changing. and m-commerce systems, GPS, mapping and come home and then use their evening, as people social networking.
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 service providers. On the one hand, the ability to deliver video efficiently to mobile devices presents a significant opportunity for new services, revenue generation, and competitive differentiation. Services such as interactive video, anytime and anywhere delivery of premium video content, and realtime surveillance are only a few of the possible valueadded services that rely on efficient delivery of video to mobile devices. On the other hand, the sheer volume and growth of video traffic is straining mobile operators networks to their breaking point making it difficult to deliver video with the quality that users expect. According to Yankee Group, video is projected to exceed 65 percent of all mobile data traffic by 2013. In December 2010, YouTube announced that each day 200 million videos were being played on mobile devices globally up 300 percent from a year before. As mobile access becomes more ubiquitous and devices more capable, subscribers will be less likely to tolerate degraded qualityrather they will expect an experience similar to that which we now enjoy on wired networks (much as users did in the early days of mobile voice; the expectation was based upon many years of reliable landline services). This means that to capitalise on the growing demand for mobile video, operators must first optimise their networks to deliver video efficiently, at scale, and with exceptionally high quality. There are several options available to operators to address the growth in data traffic, including: Wi-Fi offload, introduction of HSPA+ or LTE, more base stations, more spectrum, and video optimisation technologies. In order to meet the demand and expectations, a combination of all of these will be required. This article focuses on technologies which can optimise video streams before they hit the most expensive part of the network: the radio access network (RAN). A number of tools are available for mobile video optimisation, which will be described in the following sections. Again, the best results will be achieved by applying a coordinated combination of all these mechanisms.
Progressive download is used by most web sites on the Internet (including YouTube). It downloads a video file at the fastest rate that can be supported by the network. Once the mobile device has enough of the file in its buffer, it begins to play the video. There is no correlation between the download speed and the playback speed. PD counts on a deep buffer in the client device to handle any changes in network performance. Such changes are very common in a mobile environment where radio performance will typically drop way off as the user gets near the edge of a cell and pick up as the user gets closer to the cell center (i.e. the base station). A different approach, adaptive streaming (AS), is starting to replace progressive download at many Internet sites. With AS, chunks of content, usually representing a few seconds worth of video and audio, are streamed one by one to the mobile device. When the mobile device is ready, it will request the next chunk. If network conditions change as the user moves around, the client can request that the next chunk be downloaded at a lower or higher bit-rate. Adaptive streaming videos are stored on the origin server using a number of alternate encodings, at a variety of different bit-rates to handle a variety of different network conditions. Streaming at a different bit-rate provides very much the same function as pre-filling a large playback buffer in PD, but in a much more bandwidth efficient way.
COMPRESSION
The primary method for optimising progressive download traffic is to compress it. There are several ways to compress PD traffic. The most popular is content-aware compression, where the algorithm takes advantage of the way the human brain processes video and removes data that would not be noticed. This technique can consistently compress traffic by about 30 percent with almost no impact on the user experience. Higher compression ratios are also possible, but that becomes more noticeable. Even then, compression offers a superior user experience compared to videos freezing and stuttering during times of congestion.
Steve Hratko is Marketing Manager for Mobility Products, Juniper Networks. Contact: shratko@juniper.net
VIDEO STREAMING TECHNOLOGIES

Any discussion of video optimisation must start with a discussion of streaming technologies. The two most popular video streaming technologies are progressive download (PD) and adaptive streaming (AS). Both are in common use today and require very different optimisation approaches.
The sheer volume and growth of video traffic is straining mobile operators networks to their breaking point making it difficult to deliver video with the quality that users expect.
32 | Mobile Europe
Advertorial: Video optimisation
JUST-IN-TIME DELIVERY
Another technique that can be used to optimise PD content is just-in-time delivery (JIT). Unlike compression, this is a lossless technique. JIT can also be thought of as buffer management. Instead of allowing the mobile device to download a large PD file and then start the playback function, content is metered out slowly so the mobile devices buffer only has just enough data to enable smooth playback. The 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 devices playback buffer is wasted. With JIT delivery, the size of the playback buffer is carefully managed to minimize this waste. Of course the downside to JIT is that, in case of sudden degradation of bandwidth, the buffer will empty and playback quality will suffer....
CACHING
Certain videos can become very popular and sweep across the Internet. In this scenario, it makes great sense to cache these videos locally in an optimised format. Then all future users who wish to access the video will get a much quicker download than if it were necessary to fetch it from the origin server. In the case of PD streaming, these videos would be cached in an alreadycompressed format. In the case of adaptive streaming,
With mobile video optimisation, the end result for subscribers will be a high quality user experience, while service providers are able to defer investments in additional RAN infrastructure potentially resulting in a return on investment of nine months or fewer.
MANIFEST OPTIMISATION
As part of the setup procedure for Adaptive Streaming (AS) videos, the origin server will send the mobile device a manifest that lists all the bit-rates that can be supported when streaming that video. The mobile device selects one of the offered bit-rates and the process begins. The tendency is for the mobile device to select the fastest bit-rate that it can handle, but this may not be in the best interest of the mobile operator. One technique to control this process is to modify the manifest so that the mobile device never sees the higher bit-rate options. If the choices are 100 kbps, 200 kbps, 500 kbps, and 1 Mbps it might be in the operators best interest to remove the two higher speeds from the manifest and let the device pick from either 100 kbps or 200 kbps. Smartphones do not need more than 100kbps, but if you are viewing a video on a high-end laptop with wireless dongle, then the video quality will be lower than optimal.
multiple low-bit-rate versions would be brought down from the origin server and cached. DRM-encoded content (Digital Rights Management) should not be cached and would always need to be fetched from the origin server. When using a cache, it is always necessary to check with the origin server each time there is a cache hit to make sure the content is still valid (hasnt been pulled for copyright reasons) and so the origin server can keep count on how often a video is accessed.
CONCLUSION
Video optimisation is most appropriate when used for congestion management. The goal for service providers is to maximise the return on their RAN investment, while at the same time keeping users happy. A compelling user experience is only possible if congestion can be avoided either by video optimisation or by increasing RAN capacity. With a properly-designed video optimisation toolkit, it is possible to perform optimisation only in those parts of the network where its really needed. A single, centralised optimisation function can thus avoid or mitigate congestion across an extensive RAN footprint. While some forms of optimisation may result in reduced video resolution, in most cases users wont notice certainly compared with not doing any optimisation at all! The end result for subscribers will be a high quality user experience, while service providers are able to defer investments in additional RAN infrastructure potentially resulting in a return on investment (ROI) of nine months or fewer.
Gijs van Kersen is Marketing Manager for Mobile Solutions, Juniper Networks, in the EMEA region. Contact: gvankersen@juniper.net
TRAFFIC SHAPING
Once the flow is under way, the manifest cant help with further modifications of AS content. In that scenario traffic shaping comes into play. In traffic shaping the network will slow the flow down to the rate that it can handle and this will encourage the mobile device to select a lower bit-rate from the origin server. While video quality may be somewhat impacted (especially for PD), this is better overall than allowing the congestion to continue.
Mobile Europe | 33
Policy Management
MOBILES 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. It is this shift in the use of policy that Levine also determines. There is growing interest in using policy to enable value-added capabilities such as advanced subscriber control or variable charging based on time of day or subscriber profile. The role of policy management is expanding beyond its traditional position in the network realm to encompass a new range of operator requirements, including enabling differentiated services and supporting convergence strategies As operators roll out new services and capabilities, they have had to add new logic and control at the edges of their networks to better manage the requirements of these applications, as well as the wide range of end-user devices currently in use. The aim is for operators to have better visibility and control of their access networks so they can better manage overall and specific customer experience. Policy management is emerging as a key tool to achieve that goal, particularly when used in conjunction with the authorisation and enforcement capabilities offered by other network resources, such as AAA and RADIUS servers, edge routers, and standalone policy enforcement solutions like deep packet inspection (DPI). Levine states that operators are increasingly moving away from their traditional all-you-can-eat billing strategies and introducing tiered pricing, but to do so they will need policy control capabilities to manage subscribers
olicy Management, or at least the application of policy management enable features, is changing. Forecasts from ABI Research claim that the market for policy management servers in mobile broadband networks will grow from approximately $350 million in 2010 to almost $1.6 billion by 2016. Most importantly, there are clear signs that policy has moved from being an enforcer or caps and limits to something that enhances the revenue streams of mobile operators themselves. Although the policy element vendors have a clear interest in talking up this sector, the analysts tend to agree that policy control does lend itself to a key strategic role within mobile operators networks. In most businesses, a big increase in demand for your products and services would be considered a good thing, says ABI principal analyst Jim Eller. Instead of trying to block or throttle data traffic, mobile operators need to figure out how they can profit from the huge opportunity that has fallen into their laps. With worldwide data traffic volume growing at a CAGR of more than 50% annually, trillions of dollars in data revenues are at stake. Policy is more than just bandwidth management, adds practice director Aditya Kaul. Policy is also about quality assurance, flexible tariff plans, and creating new revenue streams. Randy Fuller, Director of Strategic Marketing at
34 | Mobile Europe
Policy Management
bandwidth caps, particularly those distributed across multiple device or network types. When integrated with charging, policy control also enables operators to go beyond tiers and offer more real-time, flexible pricing models, such as offering variable pricing based on time of day or the subscribers location, or charging for a bandwidth boost during peak usage hours for certain services. So is there a growing momentum behind using policy to drive new revenues, and if so, what are the revenues that operators are chasing? Jonathan Downey, Director Product Marketing, Openet, says that a lot of the excitement around policy management is indeed driven by the potential to increase revenues. One way operators hope to do this is by better aligning subscriber data usage with revenues, using tiers of data usage and bandwidth speed. With the advent of LTE, this segmentation of data offerings is core to many operators strategy to monetise their 4G networks. Policys role as a revenue engine is cemented when it is combined with Charging. Making policy decisions based on network resources and subscriber entitlements lacks important context. Giving subscribers the option to purchase data services in real-time, along with providing information about pricing, subscriber usage, and balances, provides strong monetization opportunities. For example, Downet continues, we have customers who by coordinating Policy with Charging offer promotions in real-time, based on what a customer is actually doing, for example allowing them to make an upsell offer to sell a service pass, or to allow a customer to purchase an extention to a fair usage limit. Christian Gayda, Head of Product Line Management Policy Control, Nokia Siemens Networks, concurs that policy management today has dual objectives give the subscriber the experience they expect and allow operators to regain some of the lost profit. But he cautions that Policy must also be seen as part of the overall customer experience. Policy controls allow tiered services with different quality of service which are adapted to users needs and price expectations, he says. Another example is to allow policies to be controlled by the subscriber directly for instance using a handset application and enable users to upgrade, downgrade, tap into congestion peak banks, change setting etc. Certainly this shift in policy seems to have benefited Nokia Siemens Networks, which has seen significant growth in its policy management business. Gayda says that its customer base has increased by 550% during the last year and he sees this trend continuing in 2011. So what examples of new service offers could policy enable. Its all very well talking n general terms, but what of the specifics? Downey says that operators are looking to policy
management to differentiate their services, by adding value to the user experience. Policy-based controls such as notifications, bill shock / roaming controls, parental and content controls, URL filtering, and time-of-day restrictions shape the customer experience, especially when these can be configured and controlled by subscribers.
Service differentiation
Policy Management also makes it possible for operators to differentiate their own premium services, such as mobile TV, by making sure that their premium services are not counted against a customers data quota. Also instead of selling all-included data access, wireless operators are looking at new data plan propositions on top of the traditional data access model: reflecting the fact that not everyone wants to commit to a 2 year contract for data access. Weve worked with several Tier-1 operators to deliver service passes, also known as day passes. These make for a compelling service offering for customers who want a more flexible billing arrangement, and in addition, given the limited commitment, they also appeal to nonsubscribers, says Downey. Service passes represent an opportunity to go beyond vanilla data access, giving the potential to introduce highly segmented offers, supporting different charging models for access. This was central to a leading North American operators roll-out of its iPad offering, enabling it to sell data access by volume of data usage and duration; thus meeting demand for flexible, personalized service offerings. Thats a model that Gayda recognises too. One of our customers introduced the Turbo Button in addition to Fair Usage Policy, he states. With this business model, end users have flat rate tariffs that are sufficient for regular usage. Pushing the Turbo Button allows subscribers to expand the available bandwidth for a specific application such as video-on-demand. This approach allows end-users to stay with low flat rate tariffs for daily usage, while they can purchase advanced network services for specific applications if needed. For One of our customers the CSP, the Turbo Button option introduced the Turbo Button in means additional revenue on top of flat rates. This is a good example how addition to Fair Usage Policy. For increased customer experience and the CSP, the Turbo Button option personalisation provides additional means additional revenue on top of profit. Policy also lies at the heart of the flat rates. This is a good example differing ways operators can react to how increased customer experience macro market conditions. Tekelecs and personalisation provides Randy Fuller comments on the different situations being faced by additional profit operators in Poland and Austria. (Continued, Page 38)
Mobile Europe | 35
Policy Management
run he expects to see policy control in the security area, defining and taking decisions on security policy depending on network and environment conditions. Policy management will also be linked with Cloud computing, Gayda adds. CSPs can use external server farms to be able to temporarily assign external computing capacities. The policy control server is used to decide where to get additional capacities for peak situations. From a revenue generation perspective CSPs need to ensure they continuously create interesting promotions and offers using real-time policy. We are probably going to see service-based revenue coming from an entire ecosystem of partners and advertisers as well as subscribers similar to what we are currently seeing with the use of the Internet. Downey agrees that we will continue to see the integration of Policy and Charging evolve. Keep an eye out for work being done by the 3GPP on the proposed new Sy reference point between the OCS and PCRF, he says. This will manifest itself in a more joined-up proposition from operators. We have already seen some policy and charging capabilities being exposed to subscribers. In Openet we see this trend accelerating, to the point where customers will interact with, and be able to configure, view, control and purchase services communicating the value of the heretofore invisible services of the telecommunication companies. Another aspect of policy will be influenced by the way operators are slowly beginning to establish revenuegenerating partnerships with third party providers of content, applications, services and devices. We will start to see more sophisticated Comes with data business models emerging, Downey says, such as those found in the popular Amazon Kindle 3G. 3GPP has been doing a lot of work around sponsored data connectivity, and it is a use case we are seeing more and more interest in from operators, as they look to ways to monetise over-the-top applications. The use of policy, then, looks to be key to operators future strategies as they grapple with OTT players, new embedded forms of connectivity, and their hard-won ability to stay relevant to their own customers. Its unsurprising, then, that the analysts have it marked as a growth area, in developing and developed markets alike.
Keep an eye out for work being done by the 3GPP on the proposed new Sy reference point between the OCS and PCRF. This will manifest itself in a more joined-up proposition from operators. We have already seen some policy and charging capabilities being exposed to subscribers...we see this trend accelerating... communicating the value of the heretofore invisible services of the telecommunication companies
"Despite being relatively close to each other in terms of geography, the Austrian and Polish mobile data markets have evolved very differently. When you compare how mobile broadband/USB modem services are marketed in Austria you will see that the operators tend to compete on a larger usage bucket for more money, and quite often for not that much money. 3 Austria has changed the simple model somewhat, now offering tariffs such as unlimited usage (no cap, no overage fees), roaming on the other 3 Europe networks at national rates, and a multi-device add-on package, so it will be interesting to see if these offers shake up the market." He contrasts that approach with that in Poland. "Polish operators use a very wide variety of mechanisms that include speed-based tiers and a very broad range of usage buckets, up to 40+GB/month in some cases." According to Fuller the Polish market is more versatile and operators are prepared to offer their subscribers a number of offers and incentives, which include:
G Various overage options including bandwidth limits

and an option to buy out of the bandwidth limits for an additional fee G Discounts for bundled voice and USB modem users G Bonus SMS and voice minutes G Discounts for users who renew their contracts G Unlimited usage during night-time hours G Free WiFi hot-spot usage G Free multi-app "social network package" (free usage of Facebook, Goldenline, LinkedIn, etc.) G Free anti-virus software
Where to next?
There are softer gains too, that act to protect revenues by ensuring the overall customer experience. We are working with a leading Indonesian Telecom Provider to mitigate network congestion issues caused by usage of BitTorrent by subscribers, Downey says, and ensure that these heavy users are not consuming capacity to such an extent that it is causing a deterioration of service to other subscribers. So where does the use of policy management and control head next? Gayda says that in the mid term we are likely to see end-to-end quality management with congestion control (PCS controls access and core/backbone). In the longer
38 | Mobile Europe
From a revenue generation perspective CSPs need to ensure they continuously create interesting promotions and offers using realtime policy. We are probably going to see service-based revenue coming from an entire ecosystem of partners and advertisers as well as subscribers similar to what we are currently seeing with the use of the Internet
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 full light of the facts about where the most valuable customers are, at what times of the day, and what their behaviour is? Flanagans boss, Arieso CEO Shirin Dehghan, says that she is beginning to see operators use a much more granular level of data at the network level. Certainly we are, she confirms. One of the challenges of the traditional sources of data mentioned has always been one of coverage. For network engineering purposes, samples and trends are not very useful you need the actual detailed information, and it is never cost effective or practical
ith ongoing pressures to maintain customer satisfaction, and the increasing number of data-intensive products and services requiring better management of network capacity, mobile operators are being tasked with the problem of better managing their network as data usage increases. Not only are revenues under pressure, deployed capex must be highly targeted to meet these revenue generating users. ABI Research anticipates that operators globally will deploy nearly 80,000 W-CDMA base stations by the end of 2011 a predicted total 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 less than optimum positioning. Thats the sort of impact that can seriously dent a network business case. Network operators are doing the best they can with the tools they have available, but they need more efficient tools that show them the actual
Diving deep down into user data could target network resources more effectively.
Is there a case for feeding that information back into the network optimisation and planning teams, so that decisions can be made in the full light of the facts?
Mobile Europe | 39
ALLOTS 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. Being able to identify the Service Tiering This coverage challenge means it is rare that the dominant content Bill Shock Prevention information needed to work on a particular issue or providers, allows operators Off-peak Happy Hour project will be immediately available, and reto approach these providers Volume Charging (Quota) Application-based Charging configuration to get the right data takes time. Our with partnership offers that Bandwidth on Demand Turbo Boost experience is that with the data immediately available contribute to both network Illegal Content Blocking at their fingertips engineers are inclined to make QoE and profitability. DDoS Prevention much greater use of it. Blacklist Prevention Jonathon Gordon, Director of Marketing, Allot THE BENEFITS OF DETAIL Communication, agrees that there has certainly been 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 Ariesos 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 If it delivers on its promise, it could especially useful for call details, whereabouts and all other key facts. provide a service that lets users see exactly marketing value-added 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 have the ability to share that with their Finally, as Allots 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
measure is provided for users over any period. The service can also be made available to mobile operators, with the platform tailored to integrate with an operator's customer support services function. Metricell said that the use of smartphones to report the actual customer experience could enable major advances to existing operator customer support systems with efficiency benefits and cost reductions by eliminating most 1st generation drive test measurements. Steve Mockford, Metricells Managing Director comments, Tracesaver uses smartphones to capture key data 24-7 to pinpoint network problem areas. Subscribers have a free service to track their whereabouts and summarise all aspects of their mobile phone usage. Customer use cases include emergency location of family or general tracking of fleet vehicles. Many users specifically want to pinpoint where they have unacceptable network service levels. From an operator point of view, Tracesaver has targeted collection to report locations of poor quality or dropped calls. Other key metrics such as upload data speeds, services used, overall coverage experience and more. Metricell works already with MBNL, providing its Livetime NetView product. Its Subscriber Experience module for Livetime can be used with Livetime NetView in an operator environment, and drives the Tracesaver customer-facing application. Livetime also acts as the project data warehouse for Everything Everywhere's network consolidation project. And recently, the BBC started its own project, using an app from Epitiro. Users can download an app which will record the signal you're getting on your phone - 3G, 2G or nothing - and feed the data back to our research project. The UK 3G survey app has been developed by Epitiro, the firm behind Ofcom's recent report on mobile broadband speeds. It will record phone signal data all the time the phone is switched on, and Epitiro is going to work with us to collect the results over the next month. The aim is then to plot the findings on a map which will be searchable by postcode. If we succeed, this should yield some interesting results. So if operators are taking a much more user-centric approach to their network optimisation, is this altering the ways in which the network and technical teams measure their own success? Dehghan says that Ariesos customers are now routinely carrying out 24/7 proactive monitoring of services at key corporate customer locations, and
large venues for major events. This starts to make a change in some of the KPIs, away from "how did our network perform" to "What service did we provide to our customers". This same shift towards a customer centric approach impacts the working methods as well. Rather than investigate with drive test data to try and understand the reason behind a poor KPI, engineers are able to work with real subscriber data, certain in the knowledge that they are diagnosing the actual problem being experienced indoors as well as outdoors. Allots Gordon says, When there was less granular data, there was also very little latitude for operators to optimise traffic without hurting the subscriber experience. As visibility into the network has improved, the new key performance indicator for operators is achieving the correct balance between subscriber QoE and cost-saving on traffic. That is always a balance that operators must strike, but now, it appears, they have more data with which to make those important decisions.
ANOTHER WAY TO SAVE? TURN OFF THAT BASE STATION! Mobile operators could potentially save more than $560m in operational expenditure annually by powering down redundant base stations at quiet times, according to calculations by Arieso. By analysing actual subscriber network traffic data, Arieso believes that around 390,000 base stations can be powered down during quiet night time periods, saving more than 3.5 billion KWh of electrical power. Most importantly, this can be achieved without affecting the service of users who would require service in a given area, Arieso clains. Operators can use new tools to understand which base stations can be powered down and for how long, without affecting the consumer experience. As consumer appetite for mobile data continues to rise, operators have sought to 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 during peak hours, but during the dead of night, many of these base stations become redundant yet still consume the same amount of power. Its well understood that energy consumption makes up a major portion of operator OPEX, and powering down base stations to reduce this has been discussed in the industry for some time, said Michael Flanagan, CTO of Arieso. However, the challenge of knowing how and when to save power safely, without affecting the user experience, has not been met. Understanding the detail of when and, more importantly, where subscribers are using or not using the network is central to making these choices and realising the savings. Using standard industry figures, Arieso has also calculated that this unnecessary power consumption contributes large volumes of CO2 to the earths atmosphere. Reducing the 3.5 billion KWh consumption shown in this study equates to a reduction of 1.9 million metric tonnes of CO2e (1.9 Mt CO2e). Eliminating these emissions would be equivalent to taking approximately 478,000 cars off the road each year, globally.
Mobile Europe | 41
Diary & Notes

CONFERENCE HIGHLIGHTS
POLICY MANAGEMENT & CONTROL
12 - 14 September, Berlin Policy management and control is becoming crucial to operators as they need to better manage broadband traffic on their networks as well as profit from the increased data usage from customers. The conference will gather over 150 leading industry experts under one roof for a two day interactive conference on a topic of vital relevance to the mobile operator. www.iir-telecoms.com/event/policymanagement
SDP GLOBAL SUMMIT
THE TRUTH? YOU CANT HANDLE THE TRUTH
20 - 22 September, Berlin As the flagship event of informa's SDP series, this conference and large-scale exhibition is a unique occasion to address the most crucial issues in advanced content and service delivery and learn more about the vast range of SDP opportunities. www.sdpsummit.com
CUSTOMER EXPERIENCE MANAGEMENT IN TELECOMS

26 - 29 September, Budapest Never has it been more important to develop, implement and leverage new and innovative customer experience management strategies. But how can you keep track of your customers constantly evolving needs? www.customerexperienceevent.com
NUMBER PORTABILITY 2011

19 - 21 September, Madrid Whether your country has already implemented or is about to introduce number portability, it is and still remains an issue for operators and regulators as evidenced by IIRs long running (16 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 reevaluated in order to ensure profitable interconnection agreements. Find out how your business can benefit. www.interconnectionevent.com
Around the mobile world in 300 words

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

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The mobile operator journey from advertising to marketing, and how to navigate it.

EUROPES WIRELESS MAGAZINE S issue no. 217 S August/September 2011 S www.mobileeurope.co.uk

> Rival telcos

to be allowed to bid for separate roaming contracts.

> Find the money

NEXT LEVEL NETWORK OPTIMISATION

MOBILE MARKETING: Scan for your future

> Getting the low down

Equip yourself to meet the challenges of LTE-Advanced.

Download an in-depth LTE-A App Note Visit www.agilent.com/nd/LTE-A-Insight

How about 4G and beyond?

Equip yourself to meet the challenges of LTE-Advanced.

Download an in-depth LTE-A App Note Visit www.agilent.com/nd/LTE-A-Insight

How about 4G and beyond?

How about 4G and beyond?

EUROPES WIRELESS MAGAZINE S issue no. 217 S August/September 2011 S www.mobileeurope.co.uk

> Rival telcos

to be allowed to bid for separate roaming contracts.

> Find the money

NEXT LEVEL NETWORK OPTIMISATION

MOBILE MARKETING: Scan for your future

> Getting the low down

Legacy issues hampering personalised service introduction

Policy enabling monetisation as well enforcement

INTRODUCTION AND FULL CONTENTS

go to www.mobileeurope.co.uk for the latest information on mobile

Printed by Pensord Magazines & Periodicals, Pontllanfraith, UK.

ERICSSON, NOKIA AND TELENOR RESULTS

Olaf Swantee to take over at Everything Everywhere after surprise resignation

WIFI BECOMING STRATEGIC OPERATOR DIFFERENTIATOR

SURVEY SHOWS APPETITE FOR CARRIER PROVIDED WIFI CALLS

go to www.mobileeurope.co.uk for the latest mobile news

O2 ENTERS OFFERS MARKET

Orange signs Daily motion exclusive

InMobi Europe shows mobile ad growth of 21% from Q1 to Q2 2011

EC OUTLINES "PROFOUND" CHANGES TO ROAMING MARKET

PROPOSALS COULD BE COUNTERPRODUCTIVE - GSMA

TeliaSonera joins FT-Orange and Deutsche Telekoms M2M co-operation

go to www.mobileeurope.co.uk for the latest mobile news

LEGACY CULTURE STIFLING CHANGE AT SERVICE PROVIDERS

TURKCELL LAUNCHES ANDROID NFC DEVICE FOR MOBILE WALLET SERVICE

CONSUMERS READY TO PAY FOR BETTER ACCESS AND QUALITY

SERVICE PROVIDERS NEED TO THINK ABOUT MARKETING

21% would pay for a multi-device data bundle

go to www.mobileeurope.co.uk for the latest mobile news

VODAFONE SEES NORTH-SOUTH DIVIDE

REVENUES FROM DATA ENTERPRISE GREW

Wind Hellas blasts regulator for 900MHz renewals proposals

GERMANY ASSESSES 2G SPECTRUM PAST 2016

go to www.mobileeurope.co.uk for the latest mobile news

The operator journey TO MOBILE MARKETING

INSIGHT REPORT CONTENTS:

P30 Sponsored Interview:

Report sponsored by:

Alex Moukas, Chief Executive Officer, Velti

16 | Mobile Europe Insight Report

GROWING REVENUE AND RETENTION IN A SATURATED MARKET

STEPHEN UPSTONE: Orange is the key brand of France

KEITH DYER: What does an operator have to

STEPHEN UPSTONE: The

The Recarga y Gana campaign was launched in October 2010.

KEITH DYER: How are loyalty programmes

STEPHEN UPSTONE: Targeted direct marketing is at