Enablers Telcos as a platform A two sided

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

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

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

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

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

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

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

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

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

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

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

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

The Impact of Video Not just from TV and HD-quality Video-on-Demand is coming Extra

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

Solving the Data Issue in Mobile Buy “Toyland” for £ 4. 00 £ 3. 00. . . Plus an extra data charge of up to £ 15 if your are on an old O 2 tariff, or £ 1 if you are a prepaid user on Vodafone or T-Mobile and have not yet used up your cap, or no charge at all if you are a bundle customer on any operator and have not yet exceeded your bundle limit, or up to £ 25 if you have already exceeded your bundle, including Orange Unlimited tariffs which are in fact limited all inclusive Content & service Data termination charges for 5. 2 MB at agreed rate Consumer hardware Access & Phone Service …plus whatever No extra charge your tariff charges for data for 5. 2 MB Data-rich services presented a huge problem of cost and pricing transparency Flat-rate data packages reach only a minority segment of the market Solution is “Sender-Pays Data”, world-first innovation launched February 2009 in UK Good approach for all – Consumer wins - from total pricing transparency – Content provider wins - from totally transparent pricing model with 100% market reach – Operators win - from more content revenue and scaleable, value-priced revenue model for data © 2008 m. Blox 16

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