This presentation contains the most important details and findings of my MBA dissertation work at the Durham University (UK) in 2009

1. Evaluation of Mobile Operators’
Mobile Internet Related
Business Opportunities
MBA Dissertation at the Durham Business School
2009
Author: Ottó Werschitz
Note: this presentation includes only the most important details and findings of
the otherwise in-depth study.

2. This work is licensed under the Creative
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3.0 Unported License. To view a copy of this
license, visit
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nd/3.0/.
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3. Why This Study?
In developed economies, the market for traditional (voice-based)
mobile telecommunications services is saturated - > new growth
opportunities lie mainly in internet and fast mobile data services
In order to address mobile internet related business
opportunities, operators need to develop new business models.
It is essential to explore
• these business models
• other market players involved in this business models
• how these business models help operators exploit mobile
internet related opportunities
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4. The Research Question
Do the business models chosen and
implemented by mobile operators enable them
to position themselves successfully in their
relevant market (as expanded by mobile
internet opportunities) or will the majority of
the value created by mobile internet be
exploited by other players?
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5. Dissertation Structure
1. Literature Review (highlights)
2. Research Design
3. Case Studies
4. Discussion of Results
5. Conclusions
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6. Highlights of Literature Review
 Telecommunications have become a deconstructed industry with
services provided by several inter-operating independent companies (Li
and Whalley, 2002)
 Delivery of value to end-users evolved from integrated value chain to
value networks of independent and inter-working players (Li and
Whalley, 2002)
 Business model innovation is needed for mature industries [such as
telecommunications] to avoid decline and / or to exploit technological
advancement and / or to maintain competitive edge (Chesbrough and
Rosenbloom, 2002; Dowdy and Nikolchev, 1986 )
 Business Models: conflicting definitions. For this dissertation, the
following was selected:
 Osterwalder (2004) for a structured view of business model
 Gordijn and Akkermans (2001) for modelling of value networks
 Ballon et al (2008) for internet-enabled mobile operator specific
business models on the basis of the value network concept
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7. Research Design: Case Study Approach
Three value network based mobile operator related business models are
defined for mobile internet related business opportunities (Ballon et al, 2008)
 Operator-centric: the mobile operator acts alone as Network Operator, Service
Aggregator, Platform Operator and Portal Provider and contracts Service
Providers.
 Device-centric: 3rd-party device vendor (such as Apple) acts as Service
Aggregator, Platform Operator and Portal Provider and contracts Service
Providers. The mobile operator’s role is limited to providing mobile internet
access and (not necessarily) selling the device bundled with subscription.
 Aggregator-centric: an independent 3rd-party (such as Facebook or Google)
takes the Service Aggregator, Platform Operator and Portal Provider Role. The
mobile operator only provides mobile internet connectivity.
A case study for each value network was prepared on the basis of desktop research
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8. Research Design: Case Study Contents
1. Selecting global operators and 3rd parties for
analysing the given value network Types of business
2. Understanding the type of business strategy strategy as defined by
intended by the operator in the value network Porter: cost control,
3. Determining the mobile operator’s position in differentiation or focus
the value network
Focus of the analysis: understand whether the Analysis of market
operator’s position enables the operator to forces: with Porter’s
implement its intended business strategy in the five forces model
(competitive rivalry,
value network within the constraints of the market
suppliers, customers,
forces excercised by other participants of the value substitutes, new
network entrants)
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9. Research Design: Limitations
 Information sources did not allow the examination of
financial aspects, i.e. profits of players and distribution of
profits between players in the value network
 Only public information was available
 Study results based on the selected market players are good
indications, but cannot cover the entire industry
 New, still evolving business models were not considered
In spite of these limitations, the three case studies and
comparing them with each other helped understand the value
creation process related to mobile internet services and gave
indications on mobile operator performance.
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10. Case Studies:
1. Vodafone – Operator-centric Business Model
Arrows in the five-forces model represent Buyers
the market force of the actor. The strength
of force is indicated as low, medium or
high. Media Agencies Vf subscribers
Substitutes: medium medium
independent mobile
portals or device
centric portals Competitors: other
Vodafone with medium
mobile operators with
high
Live! portal portal offering
New Entrants: new
mobile operators or
low medium low to medium
MVNOs with portal
offering
In-search
Advertising Content / Apps
Partner Providers
Suppliers
Compared with other mobile operator portals, Vodafone Live! can be competitive with extensive and
distinctive content. On the other hand, substitutes are a strong threat to reduce Vodafone’s market
share in the domain of mobile internet by taking away subscribers and advertisers or by reducing the
mobile internet spending of Vodafone’s subscribers and advertising customers.
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11. Case Studies:
2. T-Mobile – Device-centric Business Model
Arrows in the five-forces model represent
the market force of the actor. The strength
of force is indicated as low, medium or Buyers:
high. T-Mobile
subscribers
Substitutes: mobile
operators with
medium medium
mobile portals or
independent mobile
Competitors: other
portals T-Mobile
low to medium mobile operators
offering iPhone with smart phone
offering
New Entrants: new
mobile operators
or MVNOs with low to medium
medium to high
portal offering
Suppliers:
Apple and other
handset
manufacturers
T-Mobile’s mobile internet strategy is differentiation by distinctively offering mobile handsets that
enable unique user experience. As long as T-Mobile is handled as a preferred partner by Apple and
other internet enabling smart phone vendors offering valuable mobile internet end-user experience,
the operator can implement its selected business strategy.
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12. Case Studies:
3. „3” – Aggregator-centric BM
Arrows in the five-forces model represent
the market force of the actor. The strength
of force is indicated as low, medium or Buyers:
high. “3” subscribers
Substitutes:
mobile operators medium medium to high
with mobile portals
and device centric “3” offering pure Competitors:
portals mobile internet other mobile
medium
access on operators offering
handsets mobile internet
New Entrants:
access on handsets
new mobile
operators or low
low to medium
MVNOs with portal
offering
Suppliers:
Yahoo and other
independent
mobile portals
„3” strategy for mobile internet is cost leadership by focusing on internet access only at reasonable
costs. Since “3” in this scenario does not differentiate itself by offering any mobile internet related
value added, there is a threat that its market share and revenues are limited by other mobile
operators with similar offers for mobile internet. The threat of operators offering other value added,
such as attractive smart phones to customers (i.e. substitutes), further limits the room of “3” for
implementing its strategy.
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13. Discussion of Results
1. SWOT-analysis of Operator-centric Model
Strengths Weaknesses
- Strong offering on the basis of agreements with - Live! only focuses on Vodafone’s own subscribers,
content publishers and application developers. i.e. the possible reach of customers limited,
whereas independent portals target all mobile
- One stop shopping offered to customers internet users.
(access, content & applications, services).
- Vodafone may not be seen as an authentic brand
- Multiple revenue sources. for value added mobile internet services.
- Customer ownership including valuable profile
information to be used for e.g. targeted
advertisements.
Opportunities Threats
- Increasing number of mobile internet users of - Independent aggregators of mobile internet
Vodafone’s subscriber base. services and device centric portals (substitutes).
- Service bundling to stimulate Live! usage (e.g. - Instead of using Live! subscribers only use mobile
with mobile internet access). internet access offered by Vodafone and consume
value objects from substitutes.
- Advertisement funded content and application
offers to subscribers. - Advertisers rather go to substitutes.
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14. Discussion of Results
2. SWOT-analysis of Device-centric Model
Strengths Weaknesses
- Strong offering on the basis of agreement with - Value added by T-Mobile is limited to mobile
Apple (and possibly with other smart phone internet access in this value network.
vendors).
- iPhone users stimulate mobile internet traffic
from which the operator is benefited by access
fees.
Opportunities Threats
- Increasing demand for value objects on device - Customer ownership being taken over by device
centric portals drives T-Mobile’s mobile internet vendors.
access revenues.
- End of exclusivity with Apple and / or other
- Increasing value added and generating more operators increasingly become re-sellers of smart
revenues by being involved in device centric phone brands.
value networks more actively by “selling” user
profile information as newly created value - Decreasing profits on mobile internet access
objects to device vendors with portal offering. provision.
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15. Discussion of Results
3. SWOT-analysis of Aggregator-centric Model
Strengths Weaknesses
- “3” focus on operator core competence by - Value added by “3” is limited to mobile internet
offering mobile internet access. access in this value network.
- Strong internet brands, such as Yahoo generate - Overall value delivered to end-users may be lower
demand for mobile internet usage from which because of weak user profile management.
“3” is benefited by collecting access revenues.
Opportunities Threats
- Increasing value added and generating more - Customer ownership being taken over by
revenues by handing over subscriber profile data aggregators.
as newly created value objects to aggregators
and receiving a share of related aggregator - Increase of price competition with other mobile
revenues. operators.
- Decreasing profits on mobile internet access
provision.
- Value added offering by other mobile operators.
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16. Conclusion:
Answering the Research Question
Do the business models chosen and implemented by mobile operators enable
them to position themselves successfully in their relevant market (as expanded
by mobile internet opportunities) or will the majority of the value created by
mobile internet be exploited by other players?
 3rd party actors in mobile internet value networks are better positioned
to capture the majority of economic value related to mobile internet
service provisioning, since
 operators can have profitability issues with their most natural offering,
i.e. mobile internet access, and
 face a strong competition of and at the same time are dependent on
global media and other internet brands when offering value added
services, i.e. mobile internet content, applications and advertising as
well as mobile internet enabling handsets.
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17. Conclusion:
Opportunities for Operators
1. Valuable subscriber related assets, such as user profile and location
information can be turned into „value objects” and „sold” to co-operating
3rd parties
 to increase the operator’s share in the (economic) value
creation, and
 also to increase the overall value of mobile internet offering.
2. Operators may also work on managing their roles in all three business
models to “internalize” substitutes and by this improving competitive
position.
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18. Appendix:
Quoted Literature Sources
Ballon P et al, 2008, “An Advertisement-based Platform Business Model for
Mobile Operators”, IBBT SMIT, Vrije Universiteit Brussel, Belgium.
Chesbrough H and Rosenbloom RS, 2002, “The Role of the Business Model in
Capturing Value from Innovation: Evidence from Xerox Corporation’s Technology
Spinoff Companies," Industrial and Corporate Change, vol. 11 (3), pp. 529-555.
Gordijn J and Akkermans H, 2001, “Designing and Evaluating E-Business Models”,
IEEE Intelligent Systems, July/August, pp. 11-17
Li F and Whalley J, (2002), “Deconstruction of the telecommunications industry:
from value chains to value networks”, Telecommunications Policy no. 26 pp 451-
472
Osterwalder A, 2004, “The Business Model Ontology. A Proposition in a Design
Science Approach”, PhD Thesis, HEC Lausanne, Lausanne
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