1. 1 Jos Gerrese www.ganeshaconsult.nl The Mobile Commercial Challenge

2. 2 Agenda Historic overview Remedies Fundamental law of pricing Infrastructure aspects Commercial aspects actors and revenues Partnering models Warning Conclusions

3. 3 Brief Historic Overview 1 In telecom the Sky was the limit Governments want piece of the pie GSM is success; Internet is success  UMTS will be a success too € 150 billion license costs € 2000 per capable head in Europe

4. 4 Brief Historic Overview 2 Infrastructure –Ca. € 125 billion new investments –New handsets –Cell location issues End of Hype –Bankruptcies –550.000 redundancies –Criminal top executives

5. 5 The Remedies 1 Industry must restore credibility in order to find new investors “Newest Economy”: no business without profits Develop UMTS applications that satisfy customers so that they render profitable revenues

6. 6 The Remedies 2 Credibility –Some operators demonstrated possibility to bounce back and find new funding Profitability –Competitive environment killed most competitors Prices can be raised to profitable levels Services and Applications –?? No killer application –Multi-media messaging –Market segment specific information

7. 7 Fundamental Law of Pricing The selling price for any service, goods or application lies between: –The Minimum level to reach a defined profit to the seller –The Maximum level being the added business value to the buyer

8. 8 Infrastructure aspects Cell structure –Density 4 x GSM –Difficult to find locations –People resist placing antennas out of radiation fear and esthetic reasons Handsets –New technology –Wideband –Better and larger screens –Battery life –  expensive handset

9. 9 Commercial aspects Can we earn back the € 275 billion ? Quick & Dirty : NPV analysis –Assumptions Interest rate7,5 % Average annual spend per customer € 1200 Market has 80 million target customers 1 employee per 10.000 customers € 75.000 p/a No costs yet for CRM, Billing etc..

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12. 12 Actors and Revenues Governments Licensed Telcos Telcos with infrastructure Application developers Hardware developers Customers Airtime per time unit Basic subscriptions Service specific subscriptions Services pay for use

13. 13 Value Chain Model Total Chain Value = price paid by end user back-to-back revenues between chain partners

14. 14 Meshed Interworking Model Operator Service Provider Appl. Prov. Customer Group Operator Service Provider Service Provider Service Provider Appl. Prov. Appl. Prov. Appl. Prov. Customer Group Customer Group Customer Group Operator

15. 15 Warning We have seen what greed, hype and government forced competition did to the telecom industry The power/energy sector is now undergoing the same diseases Be aware of your energy supply –If ICT is the oxygen of society than power supply is the bloodstream No blood  No oxygen !!

16. 16 Conclusions Greed, Hype and forced competition brought the industry on its knees UMTS is not successful by default All potential users must use it A meshed co-operation model has more chances for success than a chain model No profits  No business

17. 17 GANESHA consult Thanks for your attention j.gerrese@wxs.nl phone: +31 71 5416959 fax: +31 71 5894800