The Future Value of Voice and Messaging

Background – ‘Voice and Messaging 2.0’

This is the latest report in our analysis of developments and strategies in the field of voice and messaging services over the past seven years. In 2007/8 we predicted the current decline in telco provided services in Voice & Messaging 2.0 “What to learn from – and how to compete with – Internet Communications Services”, further articulated strategic options in Dealing with the ‘Disruptors’: Google, Apple, Facebook, Microsoft/Skype and Amazon in 2011, and more recently published initial forecasts in European Mobile: The Future’s not Bright, it’s Brutal. We have also looked in depth at enterprise communications opportunities, for example in Enterprise Voice 2.0: Ecosystem, Species and Strategies, and trends in consumer behaviour, for example in The Digital Generation: Introducing the Participation Imperative Framework.  For more on these reports and all of our other research on this subject please see here.

The New Report


This report provides an independent and holistic view of voice and messaging market, looking in detail at trends, drivers and detailed forecasts, the latest developments, and the opportunities for all players involved. The analysis will save valuable time, effort and money by providing more realistic forecasts of future potential, and a fast-track to developing and / or benchmarking a leading-edge strategy and approach in digital communications. It contains

  • Our independent, external market-level forecasts of voice and messaging in 9 selected markets (US, Canada, France, Germany, Spain, UK, Italy, Singapore, Taiwan).
  • Best practice and leading-edge strategies in the design and delivery of new voice and messaging services (leading to higher customer satisfaction and lower churn).
  • The factors that will drive best and worst case performance.
  • The intentions, strategies, strengths and weaknesses of formerly adjacent players now taking an active role in the V&M market (e.g. Microsoft)
  • Case studies of Enterprise Voice applications including Twilio and Unified Communications solutions such as Microsoft Office 365
  • Case studies of Telco OTT Consumer Voice and Messaging services such as like Telefonica’s TuGo
  • Lessons from case studies of leading-edge new voice and messaging applications globally such as Whatsapp, KakaoTalk and other so-called ‘Over The Top’ (OTT) Players


It comprises a 18 page executive summary, 260 pages and 163 figures – full details below. Prices on application – please email contact@telco2.net or call +44 (0) 207 247 5003.

Benefits of the Report to Telcos, Technology Companies and Partners, and Investors


For a telco, this strategy report:

  • Describes and analyses the strategies that can make the difference between best and worst case performance, worth $80bn (or +/-20% revenues) in the 9 markets we analysed.
  • Externally benchmarks internal revenue forecasts for voice and messaging, leading to more realistic assumptions, targets, decisions, and better alignment of internal (e.g. board) and external (e.g. shareholder) expectations, and thereby potentially saving money and improving contributions.
  • Can help improve decisions on voice and messaging services investments, and provides valuable insight into the design of effective and attractive new services.
  • Enables more informed decisions on partner vs competitor status of non-traditional players in the V&M space with new business models, and thereby produce better / more sustainable future strategies.
  • Evaluates the attractiveness of developing and/or providing partner Unified Communication services in the Enterprise market, and ‘Telco OTT’ services for consumers.
  • Shows how to create a valuable and realistic new role for Voice and Messaging services in its portfolio, and thereby optimise its returns on assets and capabilities


For other players including technology and Internet companies, and telco technology vendors

  • The report provides independent market insight on how telcos and other players will be seeking to optimise $ multi-billion revenues from voice and messaging, including new revenue streams in some areas.
  • As a potential partner, the report will provide a fast-track to guide product and business development decisions to meet the needs of telcos (and others).
  • As a potential competitor, the report will save time and improve the quality of competitor insight by giving strategic insights into the objectives and strategies that telcos will be pursuing.


For investors, it will:

  • Improve investment decisions and strategies returning shareholder value by improving the quality of insight on forecasts and the outlook for telcos and other technology players active in voice and messaging.
  • Save vital time and effort by accelerating decision making and investment decisions.
  • Help them better understand and evaluate the needs, goals and key strategies of key telcos and their partners / competitors


The Future Value of Voice: Report Content Summary

  • Executive Summary. (18 pages outlining the opportunity and key strategic options)
  • Introduction. Disruption and transformation, voice vs. telephony, and scope.
  • The Transition in User Behaviour. Global psychological, social, pricing and segment drivers, and the changing needs of consumer and enterprise markets.
  • What now makes a winning Value Proposition? The fall of telephony, the value of time vs telephony, presence, Online Service Provider (OSP) competition, operators’ responses, free telco offerings, re-imaging customer service, voice developers, the changing telephony business model.
  • Market Trends and other Forecast Drivers. Model and forecast methodology and assumptions, general observations and drivers, ‘Peak Telephony/SMS’, fragmentation, macro-economic issues, competitive and regulatory pressures, handset subsidies.
  • Country-by-Country Analysis. Overview of national markets. Forecast and analysis of: UK, Germany, France, Italy, Spain, Taiwan, Singapore, Canada, US, other markets, summary and conclusions.
  • Technology: Products and Vendors’ Approaches. Unified Comminications. Microsoft Office 365, Skype, Cisco, Google, WebRTC, Rich Communications Service (RCS), Broadsoft, Twilio, Tropo, Voxeo, Hypervoice, Calltrunk, Operator voice and messaging services, summary and conclusions.
  • Telco Case Studies. Vodafone 360, One Net and RED, Telefonica Digital, Tu Me, Tu Go, Bluvia and AT&T.
  • Summary and Conclusions. Consumer, enterprise, technology and Telco OTT.

Innovation Strategies: Telefonica 2.0 Vs. Vodafone 2.0

Summary: Telefonica and Vodafone are both European-based tier 1 CSPs with substantial revenues, cash flows and subscribers. They have both expanded beyond Europe – Vodafone into Africa and Asia and Telefonica into Latin America. However, their Telco 2.0 strategies are rather different. In this extract from our forthcoming report, A Practical Guide to Implementing Telco 2.0, we outline their Telco 2.0 strategies and their benefits and risks. (September 2012, Executive Briefing Service, Transformation Stream.)

Telefonica Strategy 2.0 Chart

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Below is an extract from this 14 page Telco 2.0 report that can be downloaded in full in PDF format by members of the Telco 2.0 Executive Briefing service and the Telco 2.0 Transformation Stream here. Non-members can subscribe here

This report is itself an edited section taken from our forthcoming strategy report, A Practical Guide to Implementing Telco 2.0We will be sharing some of the findings, and exploring them in the market context at Digital Arabia, the Telco 2.0 invitation only Executive Brainstorm taking place in Dubai, 6-7 November, in and Digital Asia in Singapore, 3-5 December, 2012. 

To find out more about any of these services, apply for an invitation to the Brainstorms, and for any other enquiries, please email contact@telco2.net / call +44 (0) 207 247 5003.

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Two Different Telco 2.0 Strategies

‘Full Service Telco 2.0’ Vs. Telco 2.0 ‘Happy Piper’

In our reports the ‘Roadmap to New Telco 2.0 Business Models’ and ‘A Practical Guide to Implementing Telco 2.0’, we identify two archetypal Telco 2.0 strategies: ‘Full Service Telco 2.0’; and ‘Telco 2.0 Happy Piper’.

Figure 1 – Porter and Telco 2.0 competitive strategies

Telefonica Vodafone Telco 2.0 Porter diagram Sept 2012

Source: Michael Porter / STL Partners / Telco 2.0

  • Full-Service Telco 2.0’. In this ‘two-sided’ business model, CSPs have two clear customer groups: end-users and other 3rd Party Organisations who interact with end-users (what we call ‘Upstream’ companies – banks, retailers, advertisers, government, utilities, software developers other telcos). CSPs seek to compete with each other and with others, such as the ‘internet players’, by differentiating both in the end-user services (communications, content, etc.) and with the enabling services they provide to other service providers (identity and authentication, customer targeting/marketing services, payments, customer care, and so forth).
  • The ‘Telco 2.0 Happy Piper’. CSPs that pursue this strategy will focus on retail or wholesale connectivity to upstream and/or downstream customers rather than on higher-level (value-added) services. It is worth noting that although simplicity and cost control are key themes of the ‘Telco 2.0 Happy Piper’, there remains scope for revenue growth through providing ‘enhanced connectivity’ options.

Overview: Telefonica 2.0 and Vodafone 2.0

At a top-level, Telefonica is pursuing a ‘Telco 2.0 Service Provider’ strategy whereas Vodafone, although dabbling in Telco 2.0 services, is largely committed to a defensive approach to digital services (protecting voice and messaging) and is aggressively pursuing a ‘Happy Piper’ strategy. We illustrate a qualitative assessment of where the two CSPs sit on the Happy Piper-Service Provider continuum, together with a selection of other CSPs in Figure 2.

Figure 2: Positioning CSPs on the Happy Piper – Service Provider continuum

Telefonica Vodafone Continuum diagram Sept 2012

Source: STL Partners / Telco 2.0

Telefonica: Telco 2.0 Service Provider

Background: Digital Innovator

STL Partners believes that Telefonica is arguably the most advanced operator globally in moving from traditional telecoms (Telco 1.0) to a Telco 2.0 Service Provider strategy. This belief was reinforced by the reorganisation in Autumn 2011 in which Matthew Key, the European CEO, was appointed head of a new unit, Telefonica Digital, which has the objective to build the company’s presence and value in the digital world. A press release in September 2011 summarised the objectives of the division as being:

  • To take full advantage of the opportunities afforded by the digital world with respect to new products, services and value chains, both in markets where the company operates directly and those in which it has industrial alliances or the potential to operate directly in OTT (over the top) businesses.
  • This unit will be responsible for developing and globally exploiting businesses like, among others, video and entertainment, e-advertising, e-health, financial services, cloud and M2M. It will aim its activity both at the corporate and residential segments. 
  • To actively help the two major geographic regions, Europe and Latin America, take advantage of their distinguishing traits (relationship with and proximity to more than 300 million customers, capillarity, invoicing and distribution capabilities).
  • To attain this goal, the unit will develop top-flight global competencies in the areas of business intelligence, pricing strategies and management of alliances in the digital environment with respect to both hardware (i.e. devices) and software.
  • Generate new growth opportunities by investing in new digital businesses, while grouping together or reinforcing initiatives such as Amerigo, Wayra and Vc’s.

Figure 3: Telefonica’s Telco 2.0 Service Provider strategy

Telefonica 2.0 Strategy chart Sept 2012

Source: Telefonica

Telefonica Digital is a significant development in the company’s commitment to Telco 2.0 services for three reasons:

  1. For the first time a CSP has been transparent about how much revenue it is generating from non-traditional ‘digital’ services. In 2011, Telefonica Digital generated revenue of €2.4 billion and intends to grow this by around 20% a year to reach around €5 billion in 2015.
  2. Telefonica Digital is a relatively autonomous entity with separate headquarters (in London rather than Slough) and separate product and service development capabilities. It can both leverage Telefonica’s commercial distribution capabilities (via the operating companies) and, crucially, distribute services over-the-top via app stores and the internet. Essentially, it has been given the authority to compete with the core business as an in-house ‘OTT player’.
  3. It is specifically focused on the services layer – both end-user services and enabling services for third-party service providers (including advertising and security). It will leverage Telefonica’s network where it makes sense to do so (e.g. for M2M) but will not be tied to the network if it makes sense to build OTT services (e.g. Tu Me, one of its OTT voice services, is available for non-Telefonica customers). It also seeks to buy (e.g. Terra, Tuenti), build (e.g. Priority Moments) and partner (via various models including Wayra, in which Telefonica makes seed capital available to early stage businesses).

Figure 4: Telefonica’s Telco 2.0 service portfolio

Telefonica digital innovation calendar diagram sept 2012

Source: Telefonica

To read the note in full, including the following additional sections detailing support for the analysis…

  • Telefonica’s Telco 2.0 products and services
  • Vodafone’s approach
  • Background: safety first
  • Vodafone’s Telco 2.0 services
  • Vodafone One Net: Unified Communications in the Cloud for SMBs
  • Vodafone Freebees: Retaining the Pre-pay base
  • Summary: Strategic Evaluation

…and the following figures…

  • Figure 1 – Porter and Telco 2.0 competitive strategies
  • Figure 2: Positioning CSPs on the Happy Piper – Service Provider continuum
  • Figure 3: Telefonica’s Telco 2.0 Service Provider strategy
  • Figure 4: Telefonica’s Telco 2.0 service portfolio
  • Figure 5: Vodafone – main messages are about being an efficient data pipe
  • Figure 6: Vodafone One Net – a defensive play in the SMB market
  • Figure 7: Telefonica and Vodafone Telco 2.0 strategies – evaluation

Members of the Telco 2.0 Executive Briefing Subscription Service and the Telco 2.0 Transformation Stream can download the full 14 page report in PDF format hereNon-Members, please subscribe here. For this or other enquiries, please email contact@telco2.net / call +44 (0) 207 247 5003.

Companies and Technologies Featured: Vodafone, Telefonica, O2, Priority Moments, Top-Up Surprises, Freebees, Tu Me, Tuenti, Terra, OneNet, Wayra, M2M, OTT, Jajah, Happy Piper, Full Service, Telco 2.0.