Flash Insight: Are OTT Attackers in Pole Position to Make Use of esim? June 2017

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1 Flash Insight: Are OTT Attackers in Pole Position to Make Use of esim? June

2 esim will make the provision of connectivity services very attractive for firms outside the telco industry, so called OTTs. esim Impact on Telco Market New esim features enable fully digitalized customer relationship. For the first time, all interactions with customer can happen exclusively online. No need for SIM card logistics. Activation of profile and connectivity happens on-the-go, there is no time lag between sale and usability. esim enables profile management of multiple devices. Through esim, Digital Customer Management becomes key to providing connectivity services. 24/7 Interactions with connectivity provider will multiply. More devices per customer and more interactions per device. Customer can switch esim profiles and does his own subscription and service management. Customer is used to excellent customer service from e-commerce and expects the same for telco services. Telco market is attractive for OTTs for its recurring revenues and the opportunity to complete their service portfolio. OTTs in pole position to enter the market can be identified via few key criteria: A compatible business model and digital capabilities are primary factors to identify possible entrants. Secondary factors Existing Payment Service and Existing ID Verification" generate competitive advantage. 2

3 The esim will fully digitalize customer relationship and will enable connectivity management of multiple devices. esim Features Combined SIM & Subscription Delivery at Point of Sale Split esim & Subscription Provisioning in the Future SIM vendor SIM Today s MNOs MNOs +? SIM + Subscription esim vendor esim Subscription OEM OEM SIM either bought at point of sale or online and shipped to customer SIM has to be plugged in manually, activation takes time All customer interactions can happen exclusively online Activation of profile on-the-go, no time lag between sale and usability 3

4 Through esim, Digital Customer Management becomes the number one success factor in providing connectivity services. Importance of Digital Customer Management 24/7 100% Digital Relationship Connectivity Provider Enhanced Customer Expectations Customer is used to excellent services from e-commerce companies. He will expect the same level for future telco services: Profile management of several personal devices 24/7 Instantaneous activation and push of profiles Adaption of telco services to personal preferences More and Digital Customer Interactions Increased number of esim enabled devices per customer which all can be added and deleted from customer profile Interactions per device more frequent as telco services needs to be managed among all devices (e.g. parallel ringing, message/voice forwarding) General shift of customer service to digital channels Digital Capabilities as Key to Success Factors MNOs OTTs Smooth and intuitive digital user experience Agile and scalable IT infrastructure Cost-efficient and excellent (self-)service 4

5 A compatible business model and above-average digital capabilities are identifiers for possible OTT entrants to the telco market in the esim era. Criteria to Identify Potential Market Entrants Factors Adaptable and Compatible Business Model Primary Factors Excellent Digital Capabilities Existing Payment Service Secondary Factors Existing ID Verification Assessment Criteria No conflict of interest with current business model or strategy, e.g. through existing relations with MNOs Previous experience with expansion into business fields unrelated to core business Business model further developed than industry standard Existing customer base target group for connectivity services Cost-efficient and excellent digital customer (self-) service Experience in the seamless delivery of digital products Smooth and intuitive digital user experience Access to customers on their primary devices, e.g. smartphones or other digital channels Lower contract signing barriers through available payment credentials Seamless and reliable purchase process in place Previous experience with subscription services Pre-existing electronic ID verification in place, either via video verification or Personal ID ID verification via already existing face-to-face customer relationship instore 5

6 Possible entrants come from a wide range of sectors. Some have already made a move and are currently testing initial services. Identification of Potential Entrants Digital Capabilities Majority of companies selected on base of Interbrand Best Global Brands Ranking 2016 ID Verification = Payment Service = Compatible Business Model 6

7 Bundling opportunities and being a prime contact for mobile contracts make firms excellent candidates. Dependence on operators is, however, detrimental. Exemplary Assessment of Potential Entrants Strengths Challenges Fitness + Attractive bundling of music streaming and corresponding connectivity - Own MVNO services would undermine strategy of zero-rating at as many MNOs as possible + Fruitful cross-selling of aviation, rental cars and accommodations + Direct customer interaction over-the-counter and onboard - Development of international full MVNO costly and far from current operations when compared to other candidates + Prime contact point and existing tools for mobile contract and tariff comparison + Delivery and independent structuring of offerings, opening business opportunities + Potential bundling of connectivity and prime service or fire hardware + Experience in the seamless delivery of digital products + Digital service excellence 7

8 Mücke, Sturm & Company supports its clients based on profound knowledge and expertise about the most important areas of digital transformation, such as esim. Contact Competence Center New Telco Profound esim Knowledge MS&C has gained profound esim expertise in conducting the Global MNO esim Study, the State of esim Implementation in Europe and several other publications. Essential esim Project Experience Supporting a major European telco group, and consulting other stakeholders, MS&C knows the pain points of developing and implementing esim strategies. Axel Meiling Associate Partner Telco and esim Expert 18 Years of Proven Experience in Telco Industry Nicolas Bell Associate Partner Expert for Digital Customer Management 15 Years of Proven Experience in Optimizing Customer-facing Processes Extensive esim Network As a keynote speaker on all relevant congresses, MS&C maintains far-reaching contacts to all major telco stakeholders and investors throughout Europe. Head Office Munich Theresienhöhe Munich Germany T F Hamburg Munich 8

9 Copyright This document is intended for personal use only. Distribution is only permitted without any changes or omissions publication, in whole or in parts, requires prior written consent by MÜCKE, STURM & COMPANY and correct citation of sources. The herein published texts and graphics were used by MÜCKE, STURM & COMPANY in the context of a presentation; they themselves do not represent the presentation in its entirety. All mentioned company names, logos, brands, brand symbols and other copyrighted material are the sole properties of the respective company; they are only used for illustrative purposes. 9