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Designing Future Business

How to create profitable fixed mobile convergent services?! Lars Theobaldt Detecon International GmbH Head of Group Sales Strategy Consultancy (Tunis – 29 June 2005). Designing Future Business. Two in one. Two in one. Contents. The Migration into a Convergent World - A Telco Perspective.

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Designing Future Business

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  1. How to create profitable fixed mobile convergent services?! Lars TheobaldtDetecon International GmbHHead of GroupSales Strategy Consultancy(Tunis – 29 June 2005) Designing Future Business Two in one

  2. Two in one Contents

  3. The Migration into a Convergent World - A Telco Perspective 1. Grasping the FMC Opportunity1.1 Fixed-Mobile Convergence is a journey! • The technology is there and the market is ready to offer real FMC solutions on a large scale. • In addition to this, a main trigger for FMC is the challenge for fixed carriers to ‚re-invent the PSTN’ ! FMC Preparingfortheconverged telecommunication industry to come Mass Market Fixed Voice Converged Voice Mobile Voice End-to-end Solutions (IP) 2010 Mobile Data Converged Data Fixed Data Niche Market Window of opportunity time 2004 2008

  4. Examples Bundling, cross-selling/-branding, single point of contact, Hybrid devices, VoWLAN/Bluetooth phones Shared fixed-mobile minutes, free call home, home zone, single bill Single number, single voice mail, fast forwarding, PIM synchronization, integrated fixed and mobile VPNs, Centrex mobile NGN, IMS, Integrated Service Convergence Platforms, Multi Access PlatformsSeamless roaming • Grasping the FMC Opportunity1.2 The building blocks for FMC are interdependent • Sharing a common understanding on FMC throughout value chains and partners is key for success! ISP/ TV Fixed Mobile CRM / POSManagement Convergence on marketing level(Bundling, Cross-selling) SalesCo. Devices Convergence on device level Customer Care/Billing Convergence on tariff level Content Convergence on service level ServCo. Depth of integration Value-addedServices BasicApplications Convergence on network level NetCo. Access Networks Transport Networks WLAN GSM DSL …

  5. 1. Grasping the FMC Opportunity1.3 Development trends in FMC • The long-term perspective of FMC will merge areas beyond fixed and mobile telecoms, especially all aspects of the home sphere. Home Network Public Network WLANHot Spot WLAM/LAN basedAccess Extension PC -Cluster RemoteAccess BroadbandAccess DSLModemRouter DSL Access Extensionfor second System GSMGPRSUMTS WLAN NetworkTermination HomeTheater Link for InternetContent Download Home Router (with UPnP Stack) VirtualGateway TVAccess CATV SAT HomeAutomation Cluster InternetAccess DSL HomeServiceHub Security Entertainment Cluster Metering POTS Gateway ISDN DSL Control & Maintenance IP-Back-bone AccessNetwork Internet

  6. Convenience Cost savings Performance • Focus on value formoney, obtain benefitfor using more services from provider • Allow customer to use mobile as much as fixed phone • Cheap calls in local area • Predictability of bill. Cost control features • Control incoming communication & infos • Congestion-free network • Seamless integration into business environments • Reachablity where customers spend 90% of time (inside residential & commercial buildings) under one number • Easy to buy / Simple tariffs • Immediate connection • Packaged service and easy to use • Use one handset for home-base and abroad • Make and receive calls whenever and wherever 1. Grasping the FMC Opportunity1.4 The customer’s view is straight forward, but challenging to match for the operator • The customer’s specific requirements on FMC is ‘seamless mobility‘ and can be boiled down into 3 major client benefits: High mobility Metro-Zone Neighborhood-Zone Peripherie Home/ Office-Zone

  7. Winning FMC together 2.1 FMC breaks up the industry structure and fosters innovative partner concepts • Convergent services start to become visible and constitute a real threat for established operators – fixed and mobile! Freenet • iPhone-offer with DSL, VoIP and mobile phone • Freenet iP1 (Bluetooth-GSM-Handset) • Freenet HomeStation (DSL-Router, Modem with WLAN, Bluetooth, VoIP-capable, analogue) • Up to 7 handsets can be connected • Inside „freenet PhoneZone“outgoing calls over the Internet/VoIP (via Bluetooth/HomeStation) • Outside „freenet PhoneZone“ dedicated e-plus mobile tariff • No seamless handover, 2 phone numbers, SIM Phonebook can be used in fixed network as well • Flatrate for voice into German fixed net • Calls to iPhone users & cooperation partners are free

  8. Winning FMC together2.2 A sound ‘outside-in’ approach for FMC product development is mandatory • According to our experience, the following formula has proven to be viable. • In the beginning, it is not about technical features ! Typical FMC Customer Segments  Always start with the customer ! ‘Process-oriented SMEs’ ‘Trendy Data Youth’ ‘Tele-congested Families’  Define customer-specific offerings  Determine Co-operation Models Mobile Define ‘win-win’ Business Models ISP/ TV Fixed

  9. Customer Segments Customer Segments Customer Segments Customer Segments 2. Winning FMC together2.3 Determine ‘win-win’ business models among partners • The following five FMC Business Model- and Customer Leadership Scenarios exist for integrated telcos/ partners: Customer Segments NewCo Fixed Mobile Sales & ServCo Fixed Mobile Customer Leadership Mobile Fixed Fixed Mobile Fixed Mobile NGN-NetCo Fixed Mobile Production Networks 2 3 5 1 4 Customer Segment-specific Roles Business Model Scenario NewCo builds up new market channels Enhanced Service Prov. /Fixed MVNO UMA enabled Broadband resale Horizontally Layered -Organization Variations of these business models are to be considered; starting with totally seamless offerings, over a co-opetition (some areas/segments fixed and mobile cooperate, in others they compete) as well as a total competition between fixed and mobile.

  10. CORP SME SOHO Private 2. Winning FMC together2.4. Customer Leadership can also be defined for a transitory phase • Customer Segment-specific concepts enable transitory Leadership Roles towards an horizontally layered ‘Sales- and ServCo’! Process Focus • Core competency in Fixed, Data & Systems Integration • Account Mgmt.-driven Solutions Possible FMC-Customer Leadership Model ‘Corridor for discussion’ Communications Focus • Retail efficiency / FMCG distribution • Branding

  11. 3. How to create profitable fixed mobile convergent services?! 3.1. Even the best product idea must be based on a ‘win-win’ business model • Which business model is most profitable for a vertically integrated Telco/ Partners? Major assumptions must be taken! Example Fixed Fixed Mobile 3 3 2 2 Fixed Mobile 2 Enhanced Service Prov. /Fixed MVNO OR Mobile Fixed Mobile 3 UMA enabled Broadband resale Total EBITDA-Balance for the Group/ Partners

  12. Fast-cycle research: The Outside world Rapid prototyping: Internal capabilities 1 Principals of convergence Economic & strategic leverage Framework for analysis corporate strategies 6 7 Strategies& capabilities of Business & Action Plan on basis of detailed Roadmap for FMC Retail Services (Residential & Business) as basis for Top Management Decision 2 Business drivers of convergence Customer segments & demand Technological innovation Competition& regulation matching 3 World-class benchmarks & lessons learnt Case studies “Dos & Don’ts” The national Market Place Qualified Market Opportunities & Threats FMC-Service Offerings 4 5 Potential customer applications Blueprints for FMC-products & business models 3. How to create profitable fixed mobile convergent services?! 3.2. Detecon’s Project Methodology for the Retail Business Assignment • Our approach is highly action-oriented and results out of thorough experiences with an ‘outside-in’-approach

  13. Product Management Project Management‚ ‘Cross-Cultural‘ [fixed-mobile] Sales &Distribution ServiceImplementation BusinessIntelli-gence PortfolioManage-ment ProductStrategy & Finance 3. How to create profitable fixed mobile convergent services?! 3.3 The purpose of FMC is to get and retain valuable customers ! Harness the potential of FMC to … • respond to increasingly demanding customers • position in times of dramatic competitive threats • pave the migration into high-growth areas • get new and retain valuable customers! • Providers have to respond to thisreality with a suitable, market tailored approach. However,there are some generic success factors like… • sales & customer leadership • simplicity of processes and IT • increasing customer choice whilst reducing portfolio elements • start with customers’ convergence needs, then with technology Managing the complexity of FMCinitiatives requires sound andcomprehensive ...

  14. 4. Detecon’s consulting services Contacts FMC Preparingfortheconverged telecommunication industry to come For additionalinformationplease contact Mr. Lars THEOBALDTCompetence Practice Strategy & MarketingDetecon International GmbHOberkasseler Str. 253227 Bonn (Germany)Phone +49 228 700 25 40Fax +49 228 700 25 07Mobile +49 175 932 35 84 Lars.Theobaldt@detecon.com Mr. GerardoBEHNE Telco Providers Middle EastDetecon International GmbHOberkasseler Str. 253227 Bonn (Germany)Phone +49 228 700 2221 Fax +49 228 700 1607Mobile +49 171 760 4051 Gerardo.Behne@detecon.com

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