Where’s The Money? New Carrier Business Models In the Age of Declining Greenfield Markets

1. Where’s The Money?New Carrier Business Models In the Age of Declining Greenfield Markets Camille Mendler Vice President Telecommunications Strategies cmendler@yankeegroup.com

2. The Market in Review • The industry struggles to break the status quo and post-2000 doldrums • Emerging ecosystems accelerate service innovation potential and disrupt traditional business models • Uncertain market demands drive increased service velocity • Need to shift from a communication to a media and application focus for innovation • Lofty investments in new entrant web players increase market uncertainty What’s the way forward?

3. Commerce Centric Amazon.com eBay Media Centric Network Communications Centric BitTorrent YouTube Vonage Apple News Corp Ad-Supported Search Centric CE Centric Sling Media Yahoo! Google Seeking Business Models in a Fluid EnvironmentDigital Media and Internet Disrupt The Status Quo Network Centric Verizon Wireless Comcast Sprint China Mobile France Telecom Telecom Italia Vodafone P2P Communications Centric Skype AIM Google Talk Community Centric MySpace Sina Craigslist

4. ARPU: $50 51 million subscribers (YE 2005) Comcast Verizon Wireless ARPU: $53 21.4 million video subscribers (YE 2005) Vonage ARPU: $27 1.6 million subscribers (YE 2005) ARPU: $8.60 247 million subscribers (YE 2005) China Mobile ARPU: $2.70 402 million subscribers (YE 2005) ARPU: ~$0.20 75 million subscribers (YE 2005) Yahoo! Pure Equipment Sell: ~$200 Skype Sling Media Fragmented Markets and Business ModelsTraditional Subscriber-Centric Models Are Under Attack ARPU or Equivalent Google Number of Users ARPU: Average revenue per user Source: Company Annual Reports and Yankee Group

5. Where Does Value Lie? Perceptions Differ Sharply Value in the Subscriber Verizon Wireless Sprint H3G Vodafone Vonage ARPU or Equivalent TIM China Mobile Value in the Community Yahoo! eBay MySpace YouTube Google Craigslist Skype Sling Media Number of Users Source: Company Annual Reports and Yankee Group

6. Determining the Future: Who’s on Top?Option One - The Imperialists Who: Telcos, wireless operators, cable cos Business Model: Subscription Primary Asset: Consumer context (location, services, profile, usage) The managed network Devices: Terminal handset, set-top box, home gateway Locus of Innovation: Internal Image Source: Flickr

7. Determining the Future: Who’s on Top?Option Two –The Guerillas Who: Portals, Web 1.0 survivors, Web 2.0 entrants, CE vendors, PC vendors, venture capital firms, millions of consumers Business Model: Advertising supported, subscription, transaction, barter, no business model at all Primary Asset: Audience, community, open standards Devices: Laptops, PCs, game consoles, DVRs, web tablets, portable audio devices, portable video devices Locus of Innovation: The crowd, the visionaries, the startup, the dormitory Image Source: Flickr

8. Conclusions • Business models – take your pick in today’s market • Quality vs. quantity in definition of value • In the words of Cole Porter: “Anything Goes”

9. Thank You Camille Mendler Vice President Telecommunications Strategies cmendler@yankeegroup.com +44 (0)207 307 1085 Come and visit us at one of our upcoming Live! events or tune in to one of our free webinars. • December 4-8 ITU Telecom Forum (event); Hong Kong • January 8-11, 2007 First Annual Mobile Broadband and Content TechZone at CES (event); Las Vegas, NV November December January, 2007 For schedules, please visit our web site: www.yankeegroup.com • November 21 The Anywhere Consumer (webinar) • December 7 The Economics of Delivering Triple Play to the Home (webinar) • December 19 Managing and Securing the Anywhere Network (webinar) • January 12 Evolution of the Anywhere Enterprise (webinar)