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GSMA Mobile Asia Expo 2013: post-event report

GSMA Mobile Asia Expo 2013:post-event report

Developed with the support of:

1. Foreword — EY and GSMA 03

2. Event summary 04

3. Conference highlights 071. The changing Asian mobile consumer 08

2. Driving business transformation across industries 10

3. Enabling a new era of enterprise mobility 12

4. Capitalizing on mobile cloud capabilities 14

5. Creating value across the mobile payments landscape 16

6. Growing new competencies in big data 18

7. Differentiating through improved network technology 20

8. Continuing innovation in devices and apps 22

4. Conclusion 24

Contents

Foreword — EY and GSMA

This year’s GSMA Mobile Asia Expo showcased an industry that is evolving more dynamically than ever. Asia has arguably adopted mobile technologies faster and in more innovative ways than other regions, and the industry’s prominence in the region was evident during the Shanghai event.

Asia now has the most mobile connections, the highest revenue growth and a rate of mobile investment that makes other regions look on in envy. The vibrancy of the region’s economies, allied to growing levels of customer sophistication, makes Asia an excellent launch pad for new service offerings, while the correlation between overall mobile penetration growth and GDP growth remains strong.

This is not to say that Asia is immune to the challenges facing the telecommunications industry as a whole. Fast-changing consumer demands have created an environment in which operators must prize fl exibility if they are to deliver on the promise of high-speed mobile infrastructure and smart devices. Enterprises are refl ecting this trend, seeking ways to optimize and reduce costs while boosting employee productivity.

Agile technology specialists are also seeking to seize customer mindshare through the provision of new applications. These disruptive players present the delicate problem of balancing competitive instincts and partnering needs for operators — a challenge that has only just begun to be addressed.

Although faced with these challenges, the mobile industry continues to play a transformative role in economies at all stages of maturity. Mobile technology solutions in different industry verticals — from automotive to fi nancial services and health care — provide a platform for new forms of socioeconomic development.

Nevertheless, business models for many new services remain in a state of fl ux. Looking ahead, operators must work closely with ecosystem partners to ensure positive return on investment for all players. Working more effectively on a cross-sector basis, while adjusting operating models to improve time-to-market, will help determine how deep a transformative role the mobile industry can play.

Making the most of a hyper-connected world will take time. Many established players need to consider further steps to rationalize legacy parts of their business (through network sharing, for example) while also future-proofi ng their networks to address new demand scenarios in mobile data. Addressing a wider set of stakeholders — both other industry entities and policy-makers — can also do much to secure an enabling environment for growth.

The mobile industry has an exciting and rewarding role to play as the infrastructure that underpins an increasingly digital economy. EY remains optimistic on the outlook for the industry: as mobile operators improve the way they align demand and profi tability, this consensus can only improve. EY is privileged to lead this summary of the GSMA Mobile Asia Expo, andI would like to thank both the GSMA and EY’s team of analysts in helping to prepare these insights.

Dear colleagues,

Thank you for making the 2013 GSMA Mobile Asia Expo our most successful event ever in Asia.

More than 20,500 unique visitors from 104 countries converged in Shanghai for the 2013 Mobile Asia Expo, an increase of more than 30% over 2012. Attendees included executives from the industry’s largest and most infl uential mobile operators, device makers, equipment providers, software companies and internet companies, as well as government delegations and technology-savvy consumers.

The theme of this year’s Mobile Asia Expo was “Connecting the Future.” Mobile has completely changed how billions of people around the world communicate, interact, learn and are entertained, and this transformation will only continue to accelerate as greater numbers of people and things are connected by mobile technology. Mobile Asia Expo served to showcase the companies, people, technologies, products and services that are making the “Connected Future” a reality today and highlighted the leading role of China and Asia in the global communications marketplace.

As at our inaugural event, our 2013 event offered a thought leadership conference program headlined by executives from the foremost mobile companies from China, throughout Asia and around the world; an exhibition showcasing cutting-edge mobile products and services; the Public Policy Forum for key stakeholders in telecommunications ministries and regulatory bodies; partner events co-located at Mobile Asia Expo; informative educational meetings and seminars; and outstanding business development and networking opportunities.

We were proud to have also introduced several new elements that allowed attendees to truly experience the power of mobile technologies and services. One was the Connected City, which debuted at Mobile Asia Expo this year and provided a lifelike urban environment demonstrating how mobile is making homes smarter, motoring more intelligent, shopping easier and city living safer. Another fi rst for Mobile Asia Expo was the NFC Experience, an interactive experience through which exhibitors, vendors and attendees used mobile near fi eld communication (NFC) technology to exchange information and conduct transactions.

We thank all who contributed to the success of our second Mobile Asia Expo, including the Government of China, the city of Shanghai, our Platinum Event Sponsor China Mobile and all of our exhibitors, sponsors, partners and attendees. We look forward to coming back to Shanghai next year and building on the success of our 2013 event.

EY Foreword GSMA Foreword

Jonathan DharmapalanGlobal Telecommunications LeaderEY

John HoffmanCEOGSMA Ltd.

3GSMA Mobile Asia Expo 2013: post-event report

Event summaryThe second edition of GSMA Mobile Asia Expo (MAE) 2013 held in Shanghai on26–28 June was attended by more than 20,500 unique visitors from 104 countries. The three-day conference and exhibition attracted executives from leading Asian and global mobile operators, device makers, equipment providers, software companies and internet companies, as well as government delegations and consumers.

John Hoffman, CEO, GSMA Ltd., commented, “We’re extremely pleased with the turnout that we’ve seen this week. The strong level of attendance, particularly among the C-suite of the world’s leading communications companies, underscores the importance of Asia in the global mobile landscape. From the conference to the exhibition and the many meetings and events within Mobile Asia Expo, attendees were able to experience the vision of the ‘Connected Future’ today.”

Table 1. Top 10 markets by attendance at the expo

Market Attendance percentageChina (mainland) 87%Republic of Korea 2%United States 1%Japan 1%Hong Kong SAR 1%Singapore 1%Taiwan 1%United Kingdom 1%Thailand 1%India 0.5%

Source: GSMA

Figure 1. Industry breakdown of attendees at the expo

Source: GSMA

0% 5% 10% 15% 20% 25% 30%

Component manufacturer

Government/regulatory

Accessories

Automotive/transportation

Retailer

Systems integrator

Integrated solution vendor (software only)

Consultancy

Network infrastructure vendor

Education/training

Mobile content/creation provider

Service provider

Broadcast/media

Finance/banking/insurance

Consumer electronics manufacturer

Mobile advertising/marketing/PR

IT/hardware manufacturer

Others

App and software development

Device manufacturer

Mobile network operator

4 GSMA Mobile Asia Expo 2013: post-event report


Figure 2. Attendee breakdown by job function at the expo

Source: GSMA

Market Attendance percentageChina (mainland) 66%United States 4%

Republic of Korea 3%Hong Kong SAR 3%Japan 3%Singapore 2%United Kingdom 2%Taiwan 2%Thailand 2%India 1%

Table 2. Top 10 markets by attendance at the conference

Source: GSMA

Industry and government leaders gather in ShanghaiThe two-day conference program opened with an address by Franco Bernabè, Chairman, GSMA; Shang Bing, Vice Minister, Ministry of Industry and Information Technology; and Zhou Bo, Vice Mayor of Shanghai.

The conference featured keynotes from leading organizations, including Alcatel-Lucent, China Mobile, Datang Telecom Technology & Industry Group, Huawei, Indosat, ITU, KT, Ruckus Wireless, SK Planet, SK Telecom, Telenor, Telstra and Ubuntu.

Figure 3. Attendee breakdown by job responsibility at the expo

Source: GSMA

Apart from keynotes, the conference also featured the GTI Asia Conference, hosted by Global TD-LTE Initiative and China Mobile. This included a range of focused breakout sessions examining the key trends and issues in the Asian mobile industry.

The conference program attracted more than 2,100 attendees, with more than 50% of delegates holding C-level positions, including 130 CEOs.

In addition, the MAE hosted several other meetings, including the GSMA Public Policy Forum, the Connected Living Asia Summit, Smart Cities Forum and the ETSI-GSMA Intellectual Property Rights Summit.C-level/owner

Analyst

Vice president

Consultant

Director

Manager

Administrative

Specialist

13%

5%

17%

6%4%4%

40%

10%

Figure 4. Industry breakdown of attendees at the conference

Source: GSMA

0% 5% 10% 15% 20% 25% 30

Sourcing and procurement

Software/app developer

Supply chain management and distribution

Legal/IP

Sourcing/procurement/buyer

Manufacturing

Training/education/HR


Press

Finance/accounting

Client/customer service

App/software developer

Operations management

Research and development

Advisory, strategy, planning, performance

Marketing/advertising/PR

Technical/engineering

Business development/sales

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Venture capital

Association/foundations/NGO

Mobile virtual network operator (MVNO)

Test/measurement vendor

Component manufacturer

Consumer electronics manufacturer

Education/training

Integrated solution vendor (software only)

Mobile content/creation provider

Network infrastructure vendor

Service provider

Mobile advertising/marketing/PR


Broadcast/media

Finance/banking/insurance

Others

IT/hardware manufacturer

Consultancy

App and software development

Device manufacturer

Mobile network operator


Figure 6. Attendee breakdown by job responsibility at the conference

Source: GSMA

Figure 5. Attendee breakdown by job functions at the conference

Source: GSMA

GSMA Public Policy ForumThe second annual GSMA Public Policy Forum at MAE 2013 helped bring together more than 80 key stakeholders from governments, regulators, international organizations, mobile operators and industry manufacturers across the region.

Debating the theme of “Reaching total connectivity,” the forum discussed the regulatory environment that will help deliver services, create growth and improve lives in Asia-Pacifi c and beyond.

Exhibition showcased leading global companies Players across the mobile ecosystem and adjacent sectors showcased their products and services in 200 exhibition stands at MAE 2013, featuring new handsets, technologies, applications, back-end solutions, games, accessories and more.

Prominent companies included Accenture, Alcatel-Lucent Shanghai Bell, Amazon China, AT&T, China Mobile, China Telecom, China Unicom, Chunghwa Telecom, Dell, Facebook, Huawei, Lenovo, Mozilla, NEC, Oracle, Samsung, Sharp, SK Telecom, Sony Mobile Communications, Telecom Italia Sparkle, The Coca-Cola Company, Toshiba, Ubuntu, Visa and ZTE.

The exhibition also featured a number of pavilions and zones focused on specifi c topics or regions:

• Connected City: spread across 1,600 square meters, the fi rst Connected City at the MAE featured a range of mobile connected products and services, providing the opportunity to experience the “Connected Life” fi rsthand. Connected City partners included China Mobile, Cisco, Ford Motor Company, Huawei, KT and SAP.

• NFC Experience: exhibition attendees with an NFC-enabled handset were able to experience NFC technology at various locations throughout the exhibition and conference venue. China Mobile was the offi cial operator partner, and supporting partners included Samsung, Huawei, China UnionPay, Sandpay, Shanghai Pudong Development Bank and Shanghai COS Software Co.

• Innovation Labs and App Planet: informative presentations in the Innovation Labs, sponsored by FingerQ and Orange, along with app developer conferences and App Lab sessions in App Planet, proved to be effective forums to exchange ideas and learn about new technologies.

• Other pavilions: Augmented Reality Pavilion, Gaming Zone and Mobile Entertainment Pavilion

C-level/owner

Analyst

Vice president

Consultant

Director

Manager

Administrative

Specialist

21%

13%

24%3%3%3%

29%

5%

0% 5% 10% 15% 20% 25%

Supply chain management anddistribution

Sourcing/procurement/buyer

Manufacturing

Software/app developer

Training/education/HR

Press

Finance/accounting

App/software developer

Client/customer service

Legal/IP


Operations management

Research and development

Technical/engineering

Marketing/advertising/PR

Advisory, strategy, planning,performance

Business development/sales


Conference highlights

The changing Asian mobile consumer

Driving business transformation across industries

Enabling a new era of enterprise mobility

Capitalizing on mobile cloud capabilities

Creating value across the mobile payments landscape

Growing new competencies in big data

Differentiating through improved network technology

Continuing innovation in devices and apps

1

2

3

4

5

6

7

8

8

Asia: the engine for global mobile growthAccording to GSMA Intelligence, the number of unique mobile subscribers in Asia reached close to 1.8 billion at the end of June 2013 and accounts for 53% of the global subscriber market. The rapid penetration of mobile services and early rollout of mobile broadband networks are driving economic change in new and vibrant ways.

Dealing with dynamic consumer demandsAlongside rapid growth rates in connections and revenues, the mobile industry is also experiencing a wave of consumer demands.

Today’s end users are more informed than ever, seizing upon new technologies and exploring them in new ways. Consumer needs are driving innovation in a number of service domains, from chat services through to social networking, which are in turn impacting society at large. The connected life is now fast becoming a reality as mobile networks become ubiquitous and smart devices become a mass-market phenomenon.

Consumers in Asia, particularly youth segments, are displaying a range of behaviors that set them apart from their global peers. Increasingly confi dent about their socioeconomic prospects, they see technology playing a central role in their lives and are adopting new devices and services in ever-greater numbers.

01The changing Asian mobile consumer



Figure 1. Consumer characteristics

Source: “Millennial survey,” Telefonica, June 2013.

Operator strategies must adapt to changing consumer profi lesAs customers become increasingly technology-savvy, operators must align their offerings to meet new consumer needs. Network quality will remain a key differentiator in providing a high-quality customer experience, so continued investment in network capability remains an industry given.

Nevertheless, other strategies are also coming to the fore. Increasing competition in legacy services and the associated pricing pressure are forcing operators to rethink their business models. The challenge is to defi ne new forms of value while re-educating customers in the process. At the same time, operators must decide how best to compete or cooperate with over-the-top (OTT) players. New ways of engaging with application developers are vital, and supporting start-ups at an earlier stage by reconfi guring venture capital agendas can play an important role.

As consumer activity embraces the online world, there is a substantial opportunity in virtual goods, including apps, services and digital versions of physical goods. Depending on how operators position themselves in the value chain, they can become either producers of virtual goods or enablers of them. At the same time, consumers, corporations and governments face mounting challenges in addressing online privacy and security concerns, leading to an urgent need to accurately and securely authenticate the identity of individuals.

Digital identity fast becoming a strategic consideration Within a very short period of time, digital identity has risen to become a strategic consideration for mobile operators. Identity is already part of mobile operators’ core business, and there is a strong argument to suggest that mobile identity solutions can add considerable value and differentiation. The security benefi ts of the SIM card, with its ability to be updated over the air, can act as the foundation for a range of new services that appeal to customers because of their integrity as well as their functionality.

An increasing number of operators are starting to understand the importance of mobile identity and are beginning to reap the gains from investment in these services. Services range from federated identity, which allows mobile subscribers to create a single, mobile-based identity that can be used as a login for multiple websites and online services, through to mobile signature, which provides a direct replacement for a “wet” ink signature on a paper contract, to mobile two-factor authentication, which utilizes more than one mechanism or parameter in identifi cation.

For operators to make the most of changing customer needs, an environment that enables growth has to be in place. Constructive dialogue with regulators and policy-makers is essential if the industry landscape is to remain investment-friendly and new ecosystems are to continue to evolve.

Global

Own a smartphone76%

Believe their country’s best days are ahead

67%

Believe technology is the

36%

Asia

Own a smartphone86%

Believe their country’s best days are ahead

79%

Believe technology is the

44%


Figure 2. M2M connections forecast in Asia (excluding Japan)

Source: “Asia/Pacifi c (Excluding Japan) M2M, Ecosystem and Uses Cases Forecast and Analysis 2013–2017,” IDC, July 2013.

0

1

2

3

4

5

6

7

0

10

20

30

40

50

60

70

80

2012 2017

M2M connections M2M spending

Connections (m) Spending (US$b)

Mobile operators as change agentsWhile operators remain mindful of how best to serve long-standing customer needs in an era where demand for data is soaring, there are also plenty of opportunities to expand the range of services they provide. This is particularly true of the Asia-Pacifi c region, where the mobile-fi rst nature of many economies puts mobile operators in a strong position to serve new demand scenarios.

One of the key themes emerging at MAE 2013 was the role of machine-to-machine (M2M) technology as a tool to transform a number of industry verticals. While M2M is very much a global phenomenon, the prominence of mobile infrastructure across Asia-Pacifi c means mobile connectivity and applications will be central to industry sectors’ efforts to boost operational effi ciencies and develop new service propositions.

02Driving business transformation across industries



Connected life: a new realityBy providing intelligent connectivity of people to products and devices, mobile operators can transform a number of verticals, ranging from the provision of new automotive and health services to public sector initiatives with smart cities. Such innovations will be essential to long-term socioeconomic developments inAsia-Pacifi c.

The role that mobile infrastructure can play in driving new effi ciencies and extending customer propositions in various verticals is wide-ranging. Some examples include:

• Asia-Pacifi c is expected to account for the largest share of the global M2M connections by 2017. China is expected to lead the growth thanks to its Government’s drive to manage energy demand with smart meters.

• Total health care costs in the Asia-Pacifi c region are expected to increase 8.2% annually to US$2.7 trillion by 2020. This rise will be particularly pronounced in emerging markets, where health care costs have historically accounted for a lower proportion of GDP.1

• India has emerged as one of the world’s largest and fastest- growing automotive industries. It is estimated to be the sixth- largest globally, producing more than 3.9 million telematics units last year.2

1. “Health Protection Gap in the Asia-Pacifi c region will hit USD197 billion in 2020,” Swiss Re,28 November 2012.2. “Telematics in APAC,” Business Standard, 7 November 2012.

Redefi ning vertical ecosystemsAs operators focus on M2M opportunities as part of their strategic agendas, a number of different considerations need to be met head-on. For a start, operators should consider verticals where they are best positioned to add value. This could hinge upon a number of factors — for example, what geographic coverage is required for various solutions and whether specifi c M2M solutions require higher levels of support in the form of managed services.

For their part, operators need to understand the ecosystem requirements per industry vertical and consider which core competencies are required for M2M solutions to fl ourish. This could entail rethinking partnering models — handling complex M2M projects will require a mix of skill-sets, so close collaboration with technology specialists will prove increasingly important. In this light, partnerships will need to cover a number of domains, from technology to service distribution and delivery.

Aligning different stakeholders as part of a unifi ed ecosystem presents challenges. For example, central and local governments may have contrasting views on mission-critical applications for smart cities, while the very increase of use cases in automotive M2M means effective stakeholder management will be vital if new solutions are to gain traction.


Dynamic shifts in corporate customer needsEnterprise mobility initiatives have been in place for a number of years. Historically, the mobile agenda for business has been straightforward: enabling voice communications alongside email access on the move. However, the rising popularity of smart devices and high rates of take-up for mobile applications in the consumer world have set the stage for the incorporation of more advanced technologies and services within the workplace.

With business users demanding access to corporate data anytime and anywhere, mobility devices and solutions are becoming integral components of the overall IT strategy in the enterprise. Both large and small-to medium-sized enterprises (SMEs) are focusing on developing policies that are fl exible enough to embrace a growing number of devices but don’t compromise the security and privacy of the corporate IT network.

Bring your own device (BYOD) and the consumerization of IT herald a number of new benefi ts for enterprises that can exploit them. Improved operational effi ciencies and time-to-market, in

Enabling a new era of enterprise mobility

tandem with enhanced customer engagement and a better brand image, await those organizations that can take advantage of more sophisticated mobile technology.

Looking ahead, the number of mobile workers worldwide is set to grow, reaching 1.3 billion in 2015 and representing 37% of the global workforce.3 Enterprises are already taking steps to invest in applications that support a new generation of mobile and remote employees in order to support productivity gains.

According to ABI Research, mobile service revenues from business users worldwide are set to total US$340 billion in 2017.4 This includes voice, messaging, handset data plans, mobile broadband and enterprise applications, as well as management services revenues.

3. “Worldwide Mobile Worker Population Forecast,” IDC,http://www.businesswire.com/news/home/20120105005455/en/Mobile-Worker-Population-Reach-1.3-Billion-2015, 5 January 2012.4. Smartphones, BYOD, and Mobile Data Plans to Drive $340 Billion Enterprise Mobile Services Market,” ABI Research,http://www.abiresearch.com/press/smartphones-byod-and-mobile-data-plans-to-drive-34,9 October 2012.

03Enabling a new era of enterprise mobility



Figure 3. Proportion of global mobile workforce by region, 2015

Source: “Worldwide Mobile Worker Population Forecast,” IDC, 2013.

Creating fl exible service propositionsThe opportunity landscape for mobile operators is widening as they look to support increasingly sophisticated mobility needs within the enterprise. Device and application management, mobile data analytics and cloud services all represent areas of growth.

However, new opportunities also bring new challenges. Building new relationships with corporate customers is essential and may prove complex given the legacy relationships that enterprises have with IT vendors and systems integrators. At the same time, tailoring services to appeal to organizations of different sizes and within different industry verticals also requires careful consideration.

As enterprise needs become more complex, operators need to move beyond selling connectivity toward providing fl exible solutions where connectivity is just one element of the service. For the true

value of mobility in the enterprise to be delivered, operators need to reinvigorate their relationships with corporate customers. IT departments could fear a loss of control in a BYOD environment, while increased customization needs may require longer sales cycles, so high levels of trust are needed in the evolving relationship between service providers and their customers.

Working together to deliver new benefi tsAs the lines blur between consumer and enterprise needs, so operators should move closer to their enterprise customers. Balancing the need for fl exible device policies with consistent security and privacy frameworks is no small challenge, and operators who can build long-term relationships with enterprise clients based on trust will be best placed to succeed.

Organizations themselves should approach mobility with a focus on business outcomes as opposed to treating mobility as an isolated technology solution. Service providers should ensure that business priorities are aligned to mobility needs, helping to isolate which roles and functions are best suited for new device and application capabilities.

For their part, mobile operators should take steps to employ measurable total cost of ownership metrics, while also reassessing the partnering landscape to identify new types of collaboration in terms of joint product development or go-to-market strategy. Both operators and their business customers stand to benefi t from a more integrated ecosystem where core competencies are pooled and innovation is shared.

16%

63%

18%

3%

0% 10% 20% 30% 40% 50% 60% 70%

Americas

EMEA

Japan

2015

13


Isolating new opportunities for operatorsThe cloud signals innovation on a number of fronts for the mobile industry. As consumers become more demanding and boundaries blur between technology and telecommunications players, virtualization is becoming an increasingly important foundation for industry growth.

Traditional business models based on the provision of reliable networking services to business and retail customers are being overhauled. As demand for data-centric services continues to rise, the provision of mobile applications through the cloud is gaining momentum.

Mobile cloud-based services are expected to generate annual revenues of US$9.5 billion worldwide by 2014, while the number of mobile cloud service subscribers is predicted to reach one billion in the same year, of which some 130 million will be enterprise users.5

For operators to take advantage of cloud-based demand scenarios, a number of considerations need to be met. These include isolating the unique competencies required for a mobile cloud environment, defi ning service opportunities according to different customer needs and assessing how partnering models need to adapt to new forms of service delivery.

5. “Cloudy, with a High Chance of Mobility, How Mobile Cloud Will Redefi ne Mobility,” Cisco, 2012.

Capitalizing on mobile cloud capabilities 04



Figure 4. Move from IT to the mobile cloud

Source: “How to move from Cloud to Mobile Cloud,” Telecom Italia, June 2013.

Pursuing improvements in service creation and deliveryMany operators in recent years have focused their cloud strategy on building a suite of everything-as-a-service propositions. Although expanding their cloud-based services is critical for many, question marks remain as to how service providers can best monetize the demand for cloud solutions.

Nevertheless, operators should recognize the urgency of developing their own mobile cloud-based services, or they face the risk of being marginalized by disruptive players as IP-based alternatives emerge.

While improving their service creation capabilities, operators also need to ensure that their offerings are well-suited to the needs of different customer segments. In the consumer market, operators should understand the changing needs of the customer and how the take-up of OTT services is already shaping end user expectations.

Service providers need to consider community cloud services, which leverage the unique social attributes of mobile to interconnect different groups of cloud users. Successful providers in this space can add signifi cant value to their end users by integrating different cloud offers, boosting their customer retention rates in the process.

For enterprise customers, the move to a cloud-based mobile application model requires operators to implement a multi-tenant

Evaluating the challenges specifi c to AsiaOperators in Asia may be better placed than their counterparts elsewhere to compete successfully against OTT players. Favorable economics and demographics, together with sociocultural factors, mean that local mobile operators have a customer base that continues to grow in size and affl uence as they adopt smarter devices.

In many markets, 4G services are now live, while the region is also the fi rst to witness the appearance of LTE-Advanced capabilities, paving the way for cloud to support the growth of HD content services. However, barriers also exist: network outages in the last year or two, along with the high number of multi-SIM users in the region, attest to the need to improve network quality in some markets.

Looking ahead, mobile cloud providers must place robust networks at the heart of their service agenda as they provide differentiated levels of service and reduce network latency. At the same time, gaining end user trust will require strong network security and data privacy credentials.

Partnering models also need to adapt to the cloud environment. Relationships between operators and their suppliers could be simplifi ed, while both parties focus on business models that allow them to share risks and rewards.

delivery platform. Enterprises can then leverage this cloud to deliver mobile applications securely to their workforce. Given the contrasting use cases for cloud according to industry vertical, service providers need to ensure that their cloud delivery models adapt to a range of customer needs.

Source: EY analysis.

Figure 5. Opportunities in the mobile cloud value chain

Cloud services

Direct cloud services

Cloud industry solutions

Cloud enablement services

Premium mobile video services

Delivery model

Cloud services delivered directly to the end customer

Solutions for health care, fi nancial services, government, etc.

Equipping others to deliver cloud services

HD content on any device

SaaS

PaaS

Network optimization

IaaS

Pay as you use

Pay as you use

Pay as you use

Limited radiocapacity

IT cloud Mobile cloud

Mobile appsMobile CRM

Mobile device managementMessaging and collaboration

Mobile middleware inhosting/housingVirtualization

Radio priority

Policy/app managementContent delivery adaptation


An impressive growth story continuesIndustry forecasts suggest that the mobile payments market is set to maintain its strong growth in years to come. According to Gartner, global mobile payment transaction values will reach US$235.4 billion in 2013, up 44% year-over-year, while the number of mobile payment users worldwide is set to total 245 million this year.6

Asia-Pacifi c is expected to play a key role in driving mobile payments growth, with transaction value in the region growing at 38% this year. By 2016, Asia-Pacifi c is expected to overtake Africa to become the world’s leading region in terms of transaction value, boosted by successful mobile payments deployments in markets such as South Korea, Singapore and India.

6. “Gartner Says Worldwide Mobile Payment Transaction Value to Surpass $235 Billion in 2013,” Gartner, 4 June 2013.

Creating value across the mobile payments landscape 05

Meanwhile, the enabling environment for mobile payments continues to improve. Several countries across Asia-Pacifi c have already deployed contactless point-of-sale terminals in readiness for NFC services, while the number of NFC-capable terminals available to end users is rising fast.

At the same time, technology gains are driving the appearance of new use cases. NFC services are now evolving well beyond the point of sale: new applications range from tag-based promotional campaigns and information services using smart posters to health monitoring devices.



Improving the mobile money ecosystemHorizontal and vertical partnerships remain the key to unlocking the mPayments opportunity. At this stage of the market’s evolution, generating scalable, national solutions is of paramount importance.

However, there remains the risk that competing ecosystems will form, limiting the addressable market for new services. To avoid this, operators and their peers in other industries should ensure that partnering models remain fl exible, adapting to the needs of different industry entities. In this light, mobile wallet strategies should be fl exible enough to cater for a wide range of use cases. For example, loyalty schemes may prove a more enticing factor for retailers than pure payment functionality.

In addition, all ecosystem participants should be mindful of technology fragmentation. Transit systems that could benefi t from NFC capabilities may be running proprietary technologies, while embracing alternative delivery mechanisms for proximity payments, such as barcodes, can strengthen NFC-based initiatives.

Nevertheless, mPayments providers should remain highly sensitive to local market factors. Although experiences gained through multi-market trials are important, each country will have a unique policy environment along with a distinctive landscape of pre-existing payments, instruments and customer preferences.

Raising customer awareness levelsDespite the signifi cant strides taken to commercialize different forms of mobile fi nancial services, awareness levels among end users remain low. Crucially, those services where mobile operators are deeply involved in service delivery — such as messaging-based payments, and NFC solutions — are areas where consumer familiarity is at its lowest.

Going forward, different stakeholders within the ecosystem need to articulate a consistent message to end users, one that underlines the convenience of mobile payment solutions while reassuring consumers that mobile payment solutions are safe and secure. In an EY survey of 6,000 mobile users worldwide, more than 4 in 10 potential users of mobile money transfer and mobile payment at location services would try them sooner if they had more information on privacy and security measures.7

As part of this, operators can engage with partners in the technology and fi nancial services sectors, while governments and regulators also have a proactive role to play by bringing different industry players together and ensuring that consumer benefi ts remain at the heart of national mPayments initiatives.

For example, looking at the successful deployment of a joint NFC platform in Singapore, the regulator’s emphasis on consumer benefi ts of proximity payments has proved important. As NFC services extend beyond transactions themselves toward mobile ticketing and identity services, such support at a policy level can act as an important catalyst for growth.

7. The mobile maze, EY, October 2012.

Figure 6. Asia-Pacifi c user awareness of mobile payment by service type

Source: “Smartphone Shopping Trend Sweeps Asia/Pacifi c Region: MasterCard Online Shopping Survey,” MasterCard, 20 March 2013 (interviews with 7,011 respondents from 14 Asia-Pacifi c markets).

% respondents familiar with service

0 10 20 30 40 50

Mobile NFC payments

Peer-to-peer mobile payments

SMS/MMS-based payments

In-game app shopping

App shopping in socialnetworking

Mobile banking apps


Capturing new customer insightsBig data is becoming an increasingly important consideration as mobile operators consider new ways to deepen their customer relationships. As greater volumes of data are generated about customers, products and network assets, so the mobile industry stands on the cusp of a range of gains, which can help drive better organizational decision-making while also delivering a better customer experience.

In mature markets, where mobile data consumption is in an advanced phase and OTT players have already gained ground through the use of analytics tools, those industry players who can leverage customer insights can gain a long-term competitive advantage.

Churn forecasting is one area where big data is already producing tangible results. Identifying those customers that are likely to churn is becoming critical, and deeper customer insights can help operators to formulate specifi c offers that appeal to newly isolated target segments. In this way, customer analytics can help operators retain existing subscribers while also enabling the creation of new services.

06Growing new competencies in big data



Using big data to deepen relationships withthird partiesMobile operators’ customer information assets can also be used to drive more lucrative relationships with third parties. The mobile channel already features more prominently as a customer touch point for sales, marketing and customer service in Asia-Pacifi c compared to other regions. This puts service providers in a strong position to capitalize on the role of the mobile device in customer-to-business communications.

While the landscape for customer insights — location-based, transaction-based — promises much, a number of challenges exist. Mobile operators need to clearly articulate their approaches to data privacy, while sensitivity to local laws is essential and opt-in andopt-out strategies also need to be carefully confi gured.

Creating an analytics-led organizationWhile the use cases for big data continue to widen, the primary challenge for many mobile operators will be to position their organizations correctly so as make the most of innovations in business intelligence.

At one level, management buy-in is critical: organizations that prize agility and perceive the benefi ts of big data as a route to better internal processes and differentiated client offers will be best placed to succeed.

Investing in new expertise will also be important — at present, there may be a shortage of deep analytical talent until the education system better refl ects market demand. Dedicated analytics units can also help foster new skills, signaling a long-term commitment to make big data a core competency within the organization.

Improvements to operational excellence should also top the analytics agenda. Fragmented legacy systems work against the effective collection, aggregation and enrichment of customer and network data. While big data strategies need to enable improved customer retention and new opportunities with third parties, the internal benefi ts should not be underestimated. Improved transparency of information between different business units within telco organizations can aid a number of issues on the strategic agenda, including network planning, for example.

Figure 7. Proportion of consumer interactions made through mobile devices

Source: “The New Digital Mobile Consumer: How Large Companies are Responding,” Tata Consultancy Services, September 2012.

Business models are still forming, yet the ability to trade or sell mobile-driven customer insights will become more important, particularly given that data storage and management costs are increasing. For example, location-sensitive data can aid fraud detection, while services relating to customer footfall can add value in new ways for retailers.

OTT players have already made the most of their customer analytics in online and mobile advertising. Operators have unique assets they can leverage in this space, which could underpin new forms of interactions between infrastructure owners and application providers.

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LTE makes its presence feltThe rise of LTE technology was a central talking point at this year’s MAE. The mobile industry is preparing for a paradigm shift in business and operating models as a result of the rollout of 4G infrastructure. One network vendor commented that the evolutions to 2G and 3G were technology transformations, while migration to LTE infrastructure heralds a range of new revenue opportunities.

According to GSMA Intelligence, Asia will grow eightfold in LTE connections between 2013 and 2017, accounting for almost half of all global LTE connections by 2017. As LTE continues to grow, advertising-led business models are expected to grow in importance. Launches of 4G services, are also associated with the introduction of tiered data tariffs, representing a better monetization model for mobile data. Although LTE population coverage worldwide stood at 10% last year, by 2018 it is expected to exceed current levels of global 3G coverage.

Figure 8. Population coverage by technology, 2012–18

Source: “Ericsson Mobility Report,” Ericsson, June 2013.

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07Differentiating through improved network technology



Network technology as a competitive differentiatorEven with LTE at an emerging level of take-up, more sophisticated mobile network technologies are emerging. Two Korean operators have launched the world’s fi rst commercial LTE-Advanced networks, offering a theoretical peak download speed of 150Mbps. In total, some 13 operators in eight markets have now committed to the latest iteration of LTE.

Service providers that lead the deployment of LTE-Advanced networks can set themselves apart from their peers, both in terms of strengthened network quality and increased service competitiveness. Operators can boost the creation and provision of new and innovative services, such as ultra-high-defi nition voice/video services and content delivery, gaining the upper hand over OTT rivals in the process.

Consumers themselves are increasingly concerned with network quality. In one survey, 20% of smartphone customers cited network performance as a driver of loyalty to service providers, compared to value for money (16%) and ongoing communication (11%).8

For robust networks and services to take shape, industry players need to ensure that a supporting ecosystem is in place. As TD-LTE technology is rolled out, a wide choice of terminals is essential — at present there are just 166 TD-LTE-capable devices, of which 18 are smartphones.9 Looking ahead, many equipment vendors are already positioning themselves for future iterations of mobile technology by conducting R&D on advancements in LTE technology and standards.

While much is made of LTE’s role in providing a sophisticated mobile internet experience, 4G technology can also allow operators to improve their customer experience in voice services. Voice-over-LTE (VoLTE) paves the way for service providers to provide high-defi nition voice — a vital enhancement to voice when facing competition from OTT providers with mobile VoIP offerings.

Growing role for small cells and Wi-FiEquipment manufacturers and specialists continue to provide innovative approaches to managing the explosion in mobile data traffi c. Heterogeneous networks (HetNets) are an attractive means of expanding mobile network capacity, with Wi-Fi and small cells now emerging as important ways to improve the customer experience and manage traffi c effectively.

Historically there has been a greater focus on Wi-Fi as a supporting technology that enables data offl oad, while scalable small-cell network deployment is still in the very early stages in Asia-Pacifi c. Yet vendors see Wi-Fi as a natural complement to small-cell deployments due to its greater capacity and cost-effectiveness, particularly for indoor data usage.

8. “Ericsson Mobility Report,” Ericsson, June 2013.9. “Chinese market players aim for widespread TD-LTE adoption,” ZDNet, 1 July 2013.

There are challenges to be addressed for Wi-Fi to ensure a good user experience. The large number of competing Wi-Fi networks in high-traffi c locations can cause interference that undermines a consistent and reliable end user experience. Automatic sign-on at hotspots requires a seamless integration of Wi-Fi and mobile network with a shared back-end allowing for additional cost effi ciencies. The GSMA and the WBA (Wireless Broadband Alliance) have collaborated to provide the seamless integration betweenWi-Fi and mobile networks. Looking ahead, carriers will need to scale the provisioning and management of Wi-Fi networks, and roaming partnerships may have a key role to play in this scenario.

Creating a supportive regulatory environmentWhile mobile technology adoption rates remain strong, mobile operators are still mindful of the investment challenge that accompanies demand for mobile data. In years to come, vital investment in mobile infrastructure may be at risk if the regulatory environment does not adapt to meet industry needs. As such, taxation policies, spectrum release programs and support for local application and content developers will do much to encourage a sustainable investment environment.

For example, there is increasing support across Asia-Pacifi c for the APT700 band plan. A harmonized approach to spectrum release can help unlock the economies of scale in devices and equipment, speeding up the rollout of LTE services, particularly in sparsely populated areas that are well-suited to the signal propagation properties of digital dividend spectrum.

Figure 9. The importance of Wi-Fi integration

Source: Ruckus Wireless.

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Creativity needed to drive device evolutionOne of the key developments in the device industry this year has been the emergence of new form factors. Phablets and smart watches are just some of the new device types that were showcased at MAE, highlighting how the device ecosystem is becoming increasingly varied. As consumers collect and combine different types of devices, so vendors are developing terminals with specifi c functionalities in mind. In the case of the smart watch, notifi cations, app interfaces and the ability to control smartphones remotely are some of the specifi c features manufacturers are prioritizing.

At the same time new mobile operating systems are appearing, with open-source platforms potentially allowing for new types of interaction between device manufacturer, application developer

and mobile operator. Service providers still prize the ability to control and customize content, and new mobile OS may give them greater scope on that score, while also paving the way for lower smartphone prices due to simpler hardware requirements.

Smartphone growth, globally and within Asia-Pacifi c, remains robust. However, 40% of consumers in the region still use feature phones. While initiatives in low-cost devices remain crucial to the health of the mobile industry in emerging Asia, vendors should look well beyond their pricing approaches. Creativity is needed — whether in terms of developing intellectual property or considering new end user needs and how they translate into specifi c device functionalities.

08Continuing innovation in devices and apps



Figure 10. What types of devices do we use?

Source: Mobile Consumer Report, Nielsen, February 2013.

Supporting a new wave of application developmentInnovation levels in the mobile sector are at their quickest in the fi eld of applications. The fast-rising penetration of 4G devices is opening many opportunities in applications and new services that target owners of high-performance devices.

In order to deliver a fi rst-rate customer experience, application developers can benefi t from the guidance of their ecosystem partners. For example, the GSMA has recently updated the Smarter Apps Guidelines as interactive web pages that cover best practices in a number of areas, including connectivity, power consumption, network reliability and security. Developers can follow these guidelines to create network-friendly apps, thereby reducing strain on operators’ networks, improving battery life and delivering a better and more reliable user experience.

Joint product development with OTTs is also seen as an important way of meeting fast-changing customer needs. In this scenario, mobile operators can leverage their network and back-offi ce capabilities so that app developers can take their ideas to proof-of-concept trials.

By tying such approaches into venture capital strategies, operators can help shape the development of innovative services and applications at a far earlier stage. New forms of collaboration can also help overhaul business models, paving the way for a range of direct and indirect revenue streams that can sustain a fast-evolving industry ecosystem.

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Convergence of mobile and social mediaSocial media over mobile is an undeniable growth phenomenon — an EY survey on consumer usage of mobile data found that 49% of respondents regularly used social media on their devices.10 For operators, the challenge is how best to enable and monetize such consumer behavior.

Many operators have already launched their own social media services to compete against OTT players. However, they need to alter their business models to better exploit social media and the range of information assets they provide. For example, enabling social media functionality across different devices can help provide customer insights regarding purchasing preferences or overall market trends.

10. The mobile maze, EY, October 2012.

Incorporating social media into the innovation process itself is another way of leveraging new consumer behaviors, so that innovation becomes a shared process between application developer and end user. Meanwhile, operators can also incorporate social media approaches into the day-to-day activities of their own organization as they seek greater agility and responsiveness in the digital age.

Figure 11. How do you access social network sites?

Source: The Social Media Report 2012, Nielsen, June 2013.

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Conclusion: mobile technology as a tool for transformationMAE 2013 highlighted an industry where the pace of change is quickening. From new use cases across a variety of industries to the continued rollout of LTE networks, the mobile sector has never had more to look forward to.

Allied to high levels of technology and service innovation, different stakeholders are collaborating to a greater degree, as we have witnessed. For the reality of the connected life to take shape in Asia-Pacifi c, it is vital that operators, vendors and application developers work closely together, reducing risks and sharing rewards. In addition, policy-makers must create a strong environment for investment so that mobile technology can continue to unlock benefi ts for citizens, businesses and societies.

The mobile-fi rst nature of many Asia-Pacifi c markets already provides a solid bedrock for ongoing industrygrowth — enlightened sector regulation, deeper forms ofcooperation and closer relationships with customers will all play fundamental roles in securing this growth story for many years to come.


About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

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How EY’s Global Telecommunications Center can help your business Telecommunications operators are facing a rapidly transforming business model. Competition from technology companies is creating challenges around customer ownership. Service innovation, pricing pressures and network capacity are intensifying scrutiny on return on investment. Additionally, regulatory pressures and shareholder expectations require agility and cost efficiency. If you are facing these challenges, we can provide a sector-based perspective to addressing your assurance, advisory, transaction and tax needs. Our Global Telecommunications Center is a virtual hub that brings together people, cultures and leading ideas from across the world. Whatever your need, we can help you improve the performance of your business.

© 2013 EYGM Limited. All Rights Reserved.

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In line with EY’s commitment to minimize its impact on the environment, this document has been printed on paper with a high recycled content.

This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

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EY | Assurance | Tax | Transactions | Advisory

Contacts

Jonathan Dharmapalan Global Telecommunications [email protected]

Holger Forst [email protected]

Luis Monti Brazil [email protected]

Masahiko Tsukahara [email protected]

Olivier Lemaire [email protected]

David McGregor Australia [email protected]

Cover photograph courtesy of Holger Forst.

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