© Logica 2008. All rights reserved

Can you believe that it’s the French who get it right?

Almost all Marketing & Product Management of Telco Services is Wrong

Rudolf van der BergLogica Management Consulting

Rudolf.van.der.berg@logica.com+31 6 13414512

http://internetthought.blogspot.com

Outline• Telcos fail at marketing because they are schizophrenic

about their role. They are connection providers, not Google

• All of them offer the same services with no innovation

• Free.fr has accepted it’s telco role. It has1 triple play offer for 30 euro, but with scores of services you can’t get elsewhere

• This offer together with operational excellence has transformed the French market

• Pigs will fly before most incumbents apply this, but challengers should seriously evaluate this model

Marketing is the activity, set of institutions, and processes for

creating, communicating, delivering, and exchanging

offerings that have value for customers,

clients, partners, and society at large. (American Marketing association)

Telcos are dissatisfied with being a utility•Global•Many niches, long tail•Creativity•Mutually exclusive target groups•Monopoly on a specific expression – unlimited expressionsContent•Global, but sold local•Many try, most fail•Winner takes all or commoditisation•There are no network (fixed/mobile) specific servicesServices•Any time, any place, anywhere•Competition on price and featuresAccess•Local, by definition•Monopolistic•Stewardship essential

Infrastructure

Where they want to be

Where they are

They see no value being

They invest in being

Telcos want to offer value, but differently

Stuck in a standard value proposition?• Telcos fail at innovations• Every telco offers the same

double, triple, quad play• It’s all internet, telephony

and TV (with HD)• There are 80 options in this

screen and behind the tabs• Telco innovation now is

slicing and dicing differently• Customers pick the middle

Free.fr offers value differently

It has 1 offer: Everything for 30 euro

Cool features

•Free to 100 nations, SIP phone, conference callsTelephony•May 09: acces to 3 million hotspots (FON-style)

•May 09: UPNP enabled on Freebox to access content on LAN via TV

•Oct 09: Computer Games??? ?•2010: Bidding for a mobile licenseGSM/3G

The Philosophy

• Offer the best product in the market. Deny competitors competition on price or bandwidth. Prevent Churn

• Services don’t need to add to ARPU, but to make Free more attractive. No fake projected take-up + profits

• From €30 subtract line-rental, tax, capex, opex and profit, remainder finances new services.

• Keep the back-office (provisioning, billing) simple (1 offer)

• Introduce something new regularly

How can you copy Free• Accept that you work for a telco and not Google or in Media

• Think up all the cool things you want to do with mobile, fixed, wifi, television, telephony etc.

• Simplify your provisioning and billing to one product (with some top ups)

• Start building. Listen to your customers. Improve every time

• Work 10 years

Bonus: Are they successful?

Bonus: TV-Perso Broadcast yourself

All you need is a camcorder (or any other S-video device) connect it to the Freebox and it sends it out to other Free.Fr users. Like Youtube, but can do live broadcasts

Bonus: operational excellence• Design own hardware: DSLAM, Freebox modem, In-House

Powerline communication (FreePlug)

• Design own software: Freeplayer (TV on PC), Freebox

• Low headcount: 1000 staff and 850 call center

• Hardly any Sales or Marketing people (their customers call themselves Freenauts and are the best sales and marketing)

Rudolf van der BergLogica Management ConsultingRudolf.van.der.berg@logica.com+31 6 13414512http://internetthought.blogspot.com