Case study: Rogers Wireless Rogers One Number converged-communications service Sponsored by
Informa UK Limited 2012. All rights reserved. The contents of this publication are protected by international copyright laws, database rights and other intellectual property rights. The owner of these rights is Informa UK Limited, our affiliates or other third party licensors. All product and company names and logos contained within or appearing on this publication are the trade marks, service marks or trading names of their respective owners, including Informa UK Limited. This publication may not be:- (a) copied or reproduced; or (b) lent, resold, hired out or otherwise circulated in any way or form without the prior permission of Informa UK Limited. Whilst reasonable efforts have been made to ensure that the information and content of this publication was correct as at the date of first publication, neither Informa UK Limited nor any person engaged or employed by Informa UK Limited accepts any liability for any errors, omissions or other inaccuracies. Readers should independently verify any facts and figures as no liability can be accepted in this regard - readers assume full responsibility and risk accordingly for their use of such information and content. Any views and/or opinions expressed in this publication by individual authors or contributors are their personal views and/or opinions and do not necessarily reflect the views and/or opinions of Informa UK Limited. 2
CONTENTS Executive summary... 4 Introduction... 5 Go-to-market strategy... 6 Product deployment... 7 Business model and pricing strategy... 8 Business benefits... 8 Assessment analysis... 9 Conclusions... 10 Pamela Clark-Dickson Senior Analyst - Mobile Content & Applications Pamela is senior analyst at Informa Telecoms & Media, with a focus on mobile messaging. In her role, Pamela produces analysis of the messaging market for the Mobile Content and Applications Intelligence Center. Her areas of expertise cover all aspects of mobile messaging in the consumer, enterprise and marketing industry sectors globally, including SMS, MMS, mobile e-mail, mobile instant messaging and rich communications. She also co-edits Mobile Media & Messaging, a continuous research service published by Informa. She is a co-author of Mobile Content & Services Report (8th edition, 2012), the co-author of VoIP and IP Messaging: Operator Strategies to Combat the Threat from OTT Players (2012), the author of Mobile Messaging 2010 (2nd edition), a co-author of Mobile Content & Services Report (7th edition, 2009) and the co-author of Mobile Games (2005), all Informa publications. Pamela has covered the telecoms sector for 16 years as an analyst and journalist, and previously worked for Informa as editor of the Mobile Media and Mobile Games Analyst continuous research services. Pamela holds a BA (Journalism) from the University of Southern Queensland, Australia. 3
Executive summary Canada s incumbent mobile operator Rogers Wireless has created a strategically important mobile communications service, Rogers One Number, with which it seeks to mitigate the multiple market pressures that Rogers Wireless is currently facing. In particular, increased competition in the Canadian mobile communications market is placing downward pressure on Rogers Wireless mobile service revenues, and stimulating subscriber churn. In the past two years, Rogers Wireless has faced increasing competition in Canada, not only from the two other national carriers, Bell Mobility and Telus Mobility (see figs. 1, 2), but also from new entrants Wind, Videotron, Mobilicity and Public Mobile. In addition, over-the-top (OTT) providers of voice and messaging applications and services are eroding mobile operators voice and messaging revenues in many developed markets, including Canada. Rogers Wireless 10-year monopoly on GSM services in Canada effectively ended in November 2009, when Canadian CDMA operators Bell and Telus launched their HSPA+ networks, following Rogers HSPA+ launch in September 2009. Bell and Telus have maintained the competitive pressure on Rogers Wireless with regard to their LTEnetwork deployments. Bell launched its LTE network in September 2011, two months after Rogers Wireless July 2011 launch of its LTE network, and Telus LTE network went live in February 2012. The emergence of the multiplay business model in Canada is also placing downward pressure on the revenues of mobile operators, Fig. 1: Canada, mobile subscriptions by operator, 2Q12 Subscriptions (mil.) 10 8 6 4 2 0 including Rogers Wireless. Although Rogers Communications is a quadplay operator in its own right in the province of Ontario where it offers fixed, mobile and Internet services, as well as cable TV Canada s regulatory environment prevents fixed and mobile operators from competing as national providers of cable TV. 7.5 Bell Mobility Mobilicity 0.4 0.5 0.3 MTS Mobility Source: Informa Telecoms & Media Public Mobile But operators can partner with incumbent cable-tv providers in selected provinces to offer wireless services bundled with TV, which is proving to be a potent combination against competition from single-play mobile operators in these markets, according to Larry Baziw, Rogers Communications senior director for voice and video development. Baziw said in an interview with Informa Telecoms & Media that in local markets where a mobile operator or an incumbent cable provider is Rogers Wireless SaskTel Mobility Telus Mobility Fig. 2: Canada, mobile operators by market share, 2Q12 Telus Mobility 27.7% SaskTel Mobility 2.2% Source: Informa Telecoms & Media Videotron 1.5% Rogers Wireless 34.7% 9.4 Wind Mobile 1.8% 7.5 0.6 0.5 0.4 Videotron Bell Mobility 27.7% Mobilicity 1.5% MTS Mobility 1.8% Public Mobile 1.1% offering wireless services bundled with TV, the market share of a single-play wireless carrier quickly drops to second or third position. Canada s new mobile operators have typically employed aggressive subscriber-acquisition strategies, which are aimed at encouraging the subscribers of other networks to switch to the new operator s network. These strategies tend to focus on offering dramatically lower prices for handsets and service plans, and place additional downward pressure on the wireless revenues of incumbents. Wind Mobile Consequently, in the past two years, Rogers Wireless has focused on developing an anchor service for its IMS/LTE network that would help meet its strategic objective of reducing subscriber churn. The concept of this anchor service, which 4
would eventually be commercially launched as Rogers One Number, was that it could be attached to Rogers subscribers existing wireless service in such a way that customers would find it undesirable to switch to another network. The customization and personalization required for Rogers One Number users to achieve maximum value from the service would play a primary role in discouraging churn, with an increase in service revenues being a positive side effect of the churn reduction. Rogers One Number is Rogers Wireless first convergedcommunications service to be offered over its IMS platform and LTE network. Launched in February 2012, Rogers One Number is available to postpaid subscribers only. Introduction Rogers One Number is a free, multimodal service that enables Rogers Wireless subscribers to use their mobile phone number as their single identity for accessing a range of services via a Web portal on a PC or Mac (see fig. 3). In short, Rogers One Number could be regarded as Rogers Wireless attempt to create an IP-based communications service that resembles Skype or Google Voice. Fig. 3: Rogers One Number service features HD Source: Rogers Wireless Single inbox for SMS messages, calls, voice-mail messages and e-mail (Rogers Yahoo and Gmail) Network address book: synchronization of contacts between mobile phone and PC- or Mac-based Web phone PC- or Mac-based voice calls, SMSes and MMSes PC- or Mac-based video calling, including HD video Call pull (transfer call from mobile to PC/Mac while in middle of call) Advanced call routing (reach-me rules, do not disturb, number blocking) PC- or Mac-based conference calling (up to five participants, including host) Ability to make simultaneous calls to two separate numbers using PC- or Mac-based phone and mobile phone Web-based call-and-message-management portal Fig. 4: Rogers One Number Reach Me Rules 5 Source: Rogers Wireless Rogers One Number user selects time of day when he does not want to be disturbed. Minimum one hour, maximum 24 hours. All communications during this time sent to voice mail. Rogers One Number user can forward incoming calls to a different number or select callers to reach him at a different number; call forwarding can be set for a specific period of time. Rogers One Number user can associate up to five numbers to the service; he can also set the numbers to ring simultaneously or in sequence. Rogers One Number does share some characteristics with Skype and with Google Voice, in that it enables users to initiate voice calls and video calls, and to send SMSes, from their PC or Macintosh desktop computers. But in keeping with Rogers Wireless objective of trying to provide a service that uniquely differentiates the mobile operator from its competitors which comprise OTT providers such as Skype and WhatsApp, as well as other mobile operators Rogers One Number also includes a number of features that are made possible only by virtue of Rogers Wireless status as a mobile network that is also a division of a multiplay operator. These features include call pull, advanced call routing, networkbased address book, Web-based call-and-message-management portal, and the ability to make simultaneous calls to two separate numbers using either a PC- or Mac-based softphone, and a mobile phone. All these features in particular require integration with mobile- and fixed-line networks, and so represent a more significant opportunity for Rogers to add value for its subscribers in a way that would be difficult for a third party, or even its Canadian mobile operator rivals, to replicate. Call pull is the ability for a Rogers One Number user to transfer a call from his mobile to his PC- or Macbased softphone while in the middle of a call. Advanced call routing comprises a number of features, including reach-me rules and number blocking (see figs. 4, 5). 5
In addition, Rogers One Number brings voice-mail transcription and delivery into a single inbox for SMS, voice calls and e-mail (the initial version of the service supports Rogers Yahoo and Gmail only). There are a number of third-party providers of these kinds of services; however, the integration of such services with a mobile operator network would likely provide a better user experience and a better quality of service. Fig. 5: Devices compatible with Rogers One Number mobile Reach Me Rules Android Apple/iOS RIM/BlackBerry All smartphones and tablets apple All iphone and ipad devices Symbian Windows Phone 7 All All All BlackBerry devices with minimum OS5 Go-to-market strategy Source: Rogers Wireless Rogers One Number is Rogers Wireless first convergedcommunications service to be offered over its IMS platform and LTE network. Rogers Wireless viewed its investment in IMS as strategically significant, in that it enabled the operator to be the first in Canada to deliver consumer services to smartphones connected to its LTE networks. Canadian mobile operators had initially thought that the first LTE services would be highspeed dongles, with smartphones and circuit-switched-fall-back (CSFB) services coming later. I think all of the carriers in North America were surprised at how soon [LTE] smartphones would come, said Baziw. The value of Rogers Wireless investment in its IMS infrastructure is split between three use cases: LTE, VoLTE and Rogers One Number. Rogers One Number was a conceptual service until mid-2010. In 2H10, Rogers Wireless trialed its Integrated Voice service, a precursor to Rogers One Number, and simultaneously began to develop Rogers One Number as a commercial service. Another important factor in the development of Rogers One Number is that from 3Q10, Rogers Communications new CEO at the time, Nadir Mohamed, began instituting convergence as a strategic direction across the three segments of Rogers business: Rogers Wireless, Rogers Cable and Rogers Media. That strategic direction has led to the convergence of Rogers business units, such that all three are involved in the development of converged products. The move ultimately resulted in Rogers Wireless development of Rogers One Number and delivery of Rogers One Number as a commercial service. Rogers Wireless development of Rogers One Number is also an outcome of its parent company s relatively new experience-centric view of the customer. In pursuing this experience-centric vision, Rogers has prioritized the discovery of the communications experiences that customers actually want from their mobile operator, after which it will determine the technology platforms required to deliver these experiences, or how it can use its existing core network to do so. Consequently, Rogers now views its core network as an enabler for multiple product portfolios and for customer experiences or services that span multiple network technologies and devices. The Rogers One Number service is Rogers Wireless first such converged offering. Rogers Wireless has made Rogers One Number available to all subscribers with a Rogers postpaid voice or voice-and-data service plan. It is not available to Rogers Wireless prepaid subscribers or to business, corporate and government customers. By making Rogers One Number available only to postpaid subscribers, Rogers Wireless aims to recruit and retain customers who potentially represent higher value, while at the same time ensuring that the free service is still associated with a source of recurring revenue on a monthly basis. Prepaid subscribers, who are typically less loyal and more likely to churn than postpaid, also comprise only 17.1% of Rogers Wireless subscribers, according to Informa Telecoms & Media (see fig. 6). But Rogers One Number s features are likely to be more attractive to early adopters and the youth market, the segment most actively accessing similar alternative services such as those provided by Skype, WhatsApp and Facebook. 6
However, Rogers Wireless does have a high proportion of subscribers between the ages of 18 and 30, the market segment most likely to peer their mobile phones with the Internet and to use services such as Skype and Google Talk. It is also the group most likely to be prepaid subscribers. This segment, which Rogers Wireless has further split into youth and transyouth (young single adults), is the operator s initial target market for Rogers One Number. Fig. 6: Rogers Wireless, pre- and postpaid subscription split, 2Q11-2Q12 Split (%) Prepaid Postpaid 90 80 70 60 50 40 30 20 10 0 2Q11 3Q11 4Q11 1Q12 2Q12 Source: Informa Telecoms & Media Rogers Wireless conducted a largescale advertising and marketing campaign in 1Q12 to promote Rogers One Number to Canadian subscribers (see fig. 7). The marketing costs for the campaign, which included television, radio, print (including direct advertising to Rogers Wireless customers) and billboard advertising, comprised a significant proportion of the operator s total marketing budget for the quarter. Fig. 7: Rogers One Number online marketing The campaign focused on building awareness of Rogers One Number as well as educating mobile subscribers about how to use the service s features, primarily via online and in-store demonstrations. Rogers Wireless trained its in-store employees how to promote and demonstrate Rogers One Number to potential customers in advance of the commercial launch of the service, and is refreshing the training as required. Source: Rogers Wireless Product deployment Subscribers interested in Rogers One Number must complete a three-step registration process via the Rogers One Number website, which will enable Rogers to determine whether they are eligible to use the service. Rogers One Number enables subscribers to customize how they want to be reached, by setting up to five mobile or fixed-line phone numbers to which incoming calls can be routed at the same time as to the mobile. The Rogers One Number service is available to Rogers Wireless subscribers who own a device that runs on the following OSes: Android, BlackBerry, ios (iphone and ipad), Symbian and Windows Phone 7. Making Rogers One Number available to multiple smartphone platforms is essential to ensuring high penetration of the service. Rogers One Number customers can use the Rogers One Number Web phone, or an integrated-access device. The integrated-access device is called the Rogers One 7
Number Adapter, and customers can purchase it from Rogers Wireless for C$24.99. Customers will also then need to purchase the Rogers One Number Phone Add-On, which has a monthly subscription fee of C$9.95. Rogers Wireless is using a number of technology vendors to enable Rogers One Number, but the service is essentially powered by mobile- VAS-platform provider Comverse. Comverse has supplied the underlying messaging infrastructure for Rogers One Number, including its SMSC, IP-SM gateway, voice-mail platform and Service Enablement Management (SEM) middleware. Comverse s IP-SM gateway fundamentally acts as a bridge between the mobile operator s messaging infrastructure and its IP-communications platforms. Other vendors that are also providing infrastructure for the Rogers One Number service include Canadian software company Counterpath, VoIPplatform provider BroadSoft, mobile- VAS-platform vendor Ericsson and software vendor Architect. Because the Rogers One Number service has touch points into multiple technology platforms, its deployment required input from a number of operations teams within Rogers Communication, creating a unique challenge for Rogers Wireless with regard to the service s development and ongoing lifecycle management. The business-as-usual process we had is not good enough for such a broad-reaching platform, said Baziw, adding that one of the lessons learned during the development and deployment of Rogers One Number is that it is key to secure the involvement of the necessary teams at the beginning of the process. Rogers Wireless has also adopted an Internet-style approach to the development of Rogers One Number, making changes and additions to the service s capabilities every two or three months. Again, the approach of frequently iterating the service is essential if Rogers Wireless is to make Rogers One Number truly competitive with OTT-provided services, and it will also help Rogers Wireless stay ahead of its mobile operator competitors in Canada. For future versions of Rogers One Number, Rogers Wireless is exploring the possibility of extending the service from the PC and Mac to adjacent screens, such as smartphones, tablets and TVs. Socialnetworking integration is also an area of interest. In terms of addressable market, Rogers Wireless is looking at broadening the service into other market segments, such as small business. Business model and pricing strategy Rogers Wireless primary business model for Rogers One Number is that it should essentially be perceived as a free service for mobile subscribers, in much the same way as similar services provided by OTTs are seen as free. The theme is that Rogers comes with Rogers One Number, said Baziw. Consequently, the mobile operator does not charge a monthly fee for Rogers One Number, with the service included in its postpaid price plans for qualified mobile subscribers. The operator s objective is that Rogers Wireless existing subscribers will choose to use Rogers One Number ahead of similar OTT services, and that they regard Rogers One Number as a compelling reason to remain Rogers Wireless subscribers or to switch from their existing network. In the case of prepaid Rogers Wireless subscribers, the operator can position Rogers One Number as a reason to change to postpaid plans. Rogers One Number enables free calling to any Canadian mobile or landline number from a PC or Mac (regardless of whether the Rogers One Number user is in Canada), free SMS sending from a PC or Mac, and free PC- or Mac-based video chat to other Rogers One Number users. Incoming voice and video calls to the Rogers One Number Web phone are also free, although incoming messages to the Web phone, the Rogers One Number portal or a Rogers One Number Add-On Device will also be sent to the Rogers One Number user s mobile phone, and are therefore chargeable. But there is potential for the Rogers One Number service to generate incremental revenues. In addition to the out-of-bundle messaging charges outlined above, out-of-bundle voiceminute charges apply. Rogers One Number users who want to dial US numbers via the service can purchase an unlimited voice-minutes package for C$10 (US$10.06) a month, and those who want to be able to dial international numbers in 26 countries can purchase an unlimited-voiceminutes package for C$20 a month. Calls to numbers outside the US, Canada and the 26 countries are charged at Rogers Wireless standard per-minute long-distance rates, which vary by country. Business benefits Rogers Wireless regards its investment in the Rogers One Number service as long-term and strategic. The mobile operator s objectives in terms of business benefits include being able to prove that it can deliver a convergedcommunications service over its IMS platform and LTE network 8
with a good quality of service, while reducing churn and increasing customer lifetime value. Rogers Wireless is less focused on whether Rogers One Number can provide an immediate return on investment in terms of revenue uplift. It s likely that any revenue increase that occurs as a result of its subscribers adoption and use of Rogers One Number would likely become evident within six to eight months. Baziw said, however, that by end- March, subscriber take-up of Rogers One Number was such that it had crossed a number of thresholds that Rogers Wireless had set for further investment in its IMS platform, and also that Rogers One Number was on track to exceed the operator s yearone forecasts. The exuberant take-up of the product far exceeded our expectations Although Baziw declined to comment further on to what extent Rogers Wireless has met its churn-reduction targets, data from Informa Telecoms & Media shows that the operator has experienced an increase in both the number of overall subscriptions and in the ratio of its postpaid subscriptions to prepaid (see fig. 6) since the service launched in February 2012. Rogers Wireless subscription total stood at an estimated 9.4 million in June 2012, up from 9.3 million in March 2012, according to Informa, and postpaid subscriptions as a proportion of total subscriptions increased to 82.9% in June 2012, up from 81.9% in March 2012. It is possible that Rogers Wireless launch of Rogers One Number is responsible for the increase in both metrics. Informa understands that Rogers Wireless Rogers One Number subscriptions totaled about 200,000 at end-july 2012. Rogers One Number is also meeting its objectives with regard to churn reduction The operator has also experienced a rise in its messaging traffic as a result of its subscribers use of Rogers One Number. The increase was driven by the way the service has been designed to enable Rogers One Number users to send SMSes from their PCs, and also to enable SMSes to be sent to multiple devices simultaneously. Baziw said he was also heartened by the fact that six months after the launch of Rogers One Number, Rogers Wireless rivals in Canada have not yet introduced a competitive service. The feedback from the operator s sales channels, including in-store representatives, has been that the service has helped to close sales. Assessment analysis Rogers Wireless Rogers One Number service has put the mobile operator in a leadership position in Canada, if not the world, in the context of its ability to provide a converged-communications service over its LTE/IMS network. The service has the potential to help Rogers reduce subscriber churn while providing a strong competitive proposition against its Canadian rivals and OTTs. In Rogers One Number, Rogers Wireless has combined OTT-like features and an Internet-style mindset in terms of service development, with capabilities such as call pull and advanced call routing that can be delivered only through tight integration with its mobile network. In offering Rogers One Number to its postpaid subscribers only, Rogers Wireless is working toward its objective of reducing churn in Canada s increasingly competitive mobile communications market, by attempting to provide a service that will encourage subscribers to remain on, or churn to, its network. The early indications are that Rogers Wireless has been somewhat successful in meeting this objective, having increased its overall subscription base and its proportion of postpaid subscriptions since Rogers One Number launched in February 2012. Although Rogers Wireless has not revealed how many subscribers are using Rogers One Number, Informa understands that the service has about 200,000 users. However, Rogers One Number is available to all Rogers Wireless subscribers, although the capability of the service will depend on the subscriber s device and network. Rogers Wireless appears to have conducted the large-scale marketing campaign for Rogers One Number in an effective manner, in terms of making Canadian mobile users aware of the service and its capabilities. But in order for a large-scale marketing campaign to be effective, the promoted service also needs to work as advertised. It is probably too early to accurately assess whether Rogers One Number users are satisfied with the performance of the service. 9
Conclusions: Lessons to be learned from Rogers Wireless deployment of Rogers One Number 1. The Rogers One Number service required multiple catalyzing elements Rogers Wireless development of Rogers One Number was driven by a number of catalysts, including Canada s increasingly competitive mobile communications market (with pressure from other mobile operators and OTTs), Rogers Wireless deployment of its LTE/IMS infrastructure and a desire by Rogers Wireless parent company (a multiplay operator) to converge its three divisions from a technology and a business standpoint. Had any one of these elements not been in place, it is unlikely that the Rogers One Number service could or would exist. 2. Rogers Wireless is using Rogers One Number to encourage postpaid subscribers to remain on, or churn to, its network By including Rogers One Number free of charge as part of a postpaid package, Rogers Wireless has a better chance of retaining its existing customers and luring new subscribers to its network, and of generating recurring revenues from these customers. Although the operator might not generate direct revenues by charging a monthly subscription fee for Rogers One Number, Rogers Wireless aims to use Rogers One Number to prevent its subscribers churning to its rivals or to the services provided by OTTs. 3. Mobile operators that are part of a multiplay company (mobile, fixed, cable TV, Internet) have a unique advantage in the IP-communications market Rogers Wireless has been able to develop Rogers One Number as a converged service because it is part of Rogers Communications, which operates fixed-line telephony, high-speed Internet and cable businesses in addition to the Rogers Wireless mobile communications business. The development of Rogers One Number is one result of Rogers Communications requiring all its divisions to participate in a process of converging their technology and business assets. Other multiplay operators could seize the same opportunity. 4. RCS/RCSe might not be required in order for mobile operators to successfully offer IP-based communications services The Rogers One Number service has not been developed as an RCS- or RCSe-based service, although Rogers has deployed it over its LTE/IMS network. Assuming that Rogers One Number does prove to be a success and it is still far too early to gauge with any accuracy whether this will be the case the other mobile operators in Canada, or indeed, mobile operators in other markets, might well be encouraged to develop their own converged IP-based communications services without using RCS as the underlying architecture. 10
11
ABOUT INFORMA TELECOMS & MEDIA Informa Telecoms & Media is the leading provider of business intelligence and strategic marketing solutions to global telecoms and media markets. Driven by constant first-hand contact with the industry, our 65 analysts and researchers produce a range of intelligence services including news and analytical products, in-depth market reports and datasets focused on technology, strategy and content.