October 2, 2012 Issue Emma Mohr-McClune Current Analysis Research Director, - Global Until recently, most carriers viewed third-party mvoip apps as an unwelcome and damaging product of the app store age; a major threat to their core mobile voice revenues. Although that view still holds, a number of European and US carriers have decided to meet the third-party app providers head-on, with their own-branded applications for IP comms voice and messaging. Unlike the generic positioning of IP comms OTT apps such as Viber or Skype, carrier mvoip apps tend to demonstrate a more varied, and segmented positioning. apps have been developed to foster value and differentiation across a more granular spectrum of services, to serve different strategic agendas from national prepaid acquisition aggression, to targeting segments with frequent roaming and international calling requirements. Some carriers have even resorted to launching smartphone apps for voice calls which are, in fact, standard circuit-switched mobile voice. This advisory report gives an overview of the variety of approaches in evidence, with carrier mvoip examples from a number of markets. Wes Henderek Current Analysis Principal Analyst, - U.S. Current Perspective Targeting Frequent Travelers To date, a handful of European carriers have launched their own-branded mvoip apps to offer a voiceover-wifi roaming alternative to OTT apps in this space, notably Viber, Vonage Mobile and Skype Mobile. Importantly, early examples of carrier mvoip for roaming all attempt to generate revenue, either directly as a premium service, or indirectly by allowing customers to use their home package s national mobile minutes whilst using the application abroad. One of the first such services to launch in Europe was the 3GlobalWiFi app from 3Sweden. 3GlobalWiFi was brought to market in June 2011 as both an ios and Android free-to-download app, with low-cost bundles of minutes for calling from abroad back to Swedish fixed or mobile lines, from a self-sourced WiFi access point. Although many in the Swedish media dismissed 3GlobalWiFi as superfluous (particularly given the user requirement to self-source the free WiFi access), the operator has continued to market it. Earlier this summer, rival Tele2 Sweden launched a similar proposition, a Tele2-branded ios and Android mvoip app for cheap mobile roaming calls back to Sweden (see Tele2 Sweden Launches +46 WiFi Roaming App). In June 2012, Mobitel (Telekom Slovenija) provided a third such example (see Mobitel (Telekom Slovenije) Launches Mobile VoIP App For Frequent Travellers). In launching this service, Mobitel essentially extended its fixed Communicator (VoIP) service to mobile devices, via an ios and Android app and service. Although all three apps are similar in that they are exclusive to each carrier s customers, and promoted almost entirely via direct marketing, the pricing model differs. Whereas 3GlobalWiFi is a prepaid service, in which 3 Sweden customers pay in advance for an incremental bundle of roaming minutes to be used Europe +33 (0) 1 41 14 83 15. Or visit our Web site: www.currentanalysis.com 1
over WiFi, Tele2 +46 allows Tele2 customers to place calls from abroad using minutes from their national voice bundles. Mobitel s Mobile Communicator service is different again, in that the carrier has essentially extended an existing fixed VoIP service to the mobile screen for an incremental monthly charge. Mobitel Communicator is priced at EUR 3 per month together with a standard mobile plan, or bundled free with higher-value plans, with all calls and messaging placed over the app charged at standard package rates. The Mobitel Communicator app can be used over cellular broadband or WiFi, although the carrier advises the latter to avoid data roaming charges. To be sure, none of these carriers have attempted to hype the success of these apps, and Android app download rates on Google Play indicate unexceptional installation rates. The Tele2 +46 and Mobitel Communicator app services, which both allows users to make use of their existing national minutes abroad over free WiFi abroad, attracted between 1,000 to 5,000 downloads on Google Play over the last 30 days, against Tele2 Sweden s mobile customer base of almost 4 million and Mobitel s base of just over a million. Comparatively, 3GlobalWiFi attracted just 100-500 app downloads from Google Play over the last 30 days, against the carrier s mobile customer base of around 1.5 million. As a comparison point, the Viber: Free Calls and Messages app attracted between 10 and 50 million installations from Google Play over the same time period, driven entirely through viral marketing. Targeting Retention in Youth Segment In Europe, at least two carriers have launched a messaging and voice application as a retention lever for the youth segment, both using Facebook to aid viral marketing. The variance is in the overall pricing proposition. In Poland, T-Mobile launched the Freeyah ios and Android app via its Heyah youth brand in the first quarter of the year, followed by the launch of Vodafone Germany s HeyHo app, specifically for its prepaid, youth-targeted Smartphone CallYa Fun customer base, later in June. The Freeyah app allows users to make use of WiFi for free calling, messaging and chat, but the app can be used over the cellular network in conjunction with Heyah s Internet Non Stop L or Internet Non Stop XL, 30-day rolling Mobile Internet plans. Any calls or messages placed using the cellular connection are free, and do not count against the user s data plan. Heyah customers are also encouraged to consider using the Freeyah app over free WiFi access abroad, to skirt high roaming call costs. The Freeyah app is free to download and is available to both Heyah customers and non-customers, alike. Freeyah app users can also invite friends to use the app via Facebook. According to Google s own figures, the Freeyah app has seen between 50,000-100,000 installations in the last 30 days, a high number for an app promoted almost exclusively through a highly local (Polish) youth secondary brand, and virally via Facebook. Conversely, Vodafone Germany launched the HeyHo app to encourage its youth prepaid CallYa Smartphone Fun customer base to keep topping up credit. Once the app is downloaded, customers can invite and then call friends for free with a minimum top-up of EUR 15 per month. Calls are positioned as free, but also high-quality. Interestingly, calls are placed over the circuit-switched network. These are standard mobile voice minutes, placed over an app interface: Standard voice dressed up as mvoip. To be sure, this is not the first time a European carrier has disguised standard voice as mvoip, see 3UK Shakes Up Industry with Free Mobile Skype: No Data Charges (Ha Ha) April 24, 2009, but the youth targeting, and retention-based incentives behind Vodafone Germany s HeyHo is implicit confirmation of how far the European carrier community concede the superior usability of app-based interfaces for standard mobile communications. The HeyHo app further allows friends to form gaming communities and compete for prizes. According to Google Play, HeyHo has seen between 10,000 50,000 installations over the last 30 days, despite it being limited to Android smartphones right now. Vodafone Germany is planning to make HeyHo accessible on ios, but also from Facebook, in much the same way as T-Mobile USA s Bobsled service. Europe +33 (0) 1 41 14 83 15. Or visit our Web site: www.currentanalysis.com 2
for Prepaid Acquisition Aggression In Germany, prepaid brand Blau.de has deployed an mvoip app, explicitly positioned as a cost-saving app for long-term contract customers of rival carriers, tied on a flatrate mobile data packages with expensive out-of-bundle mobile calling rates. The Blau.de brand, one of KPN s several secondary brands in Germany, first flagged the launch of the Blau.de mvoip app this February. At launch, Blau.de was fashioned as a free-to-download Android-only app for mvoip calling over cellular data networks or WiFi. On download, new users were required to register for the service providing a mobile phone number and other details, to receive a BlauApp registration code. On registering the code, each new user received EUR 1.00 of credit, to place national calls/texts at standard Blau.de rates of EUR 0.09/ national minute or SMS. Registered users must then top-up to continue service on the expiration of the starter credit. This basic proposition has been unchanged since launch, although Blau.de has channeled a number of promotions to encourage installation and top-ups. Currently, the carrier is offering three free months of flat-rate calling to national fixed lines for a minimum top-up of EUR10. The app has also been made available to ios devices. According to Android Google Play s statistics, the BlauApp has registered between 10,000 50,000 Android device installations over the last 30 days. for International Calling Some weeks ago, T-Mobile UK announced a trial of a new mobile application explicitly targeted at people who wish to stay in contact with friends and family abroad: the low-cost international calling segment. T-Mobile UK s Clever Connect app, still in trial today, offers free in-app calling (free calls between Clever Connect friends over the app platform), over WiFi or 3G, together with low-cost international calling rates to phones abroad. Clever Connect is a customised version of the popular Vopium IP Comms app, and from T-Mobile UK s description, the app automatically chooses the lowest-cost route from the available access options. The app is certainly anticipated to end its trial period in the coming weeks, although no firm launch target date has been set. Targeting the Bring Your Own Device (BYOD) Segment In the US, T-Mobile has struggled as the number four carrier in the market, with several quartersworth of postpaid customer defections. As a result, the carrier has been trying several new strategies in order to appeal to a wider number of customers. Two new strategies are a new focus on VoIP/mVoIP services (via its T-Mobile Bobsled application), and targeting BYOD customers, and notably Apple iphone customers a cornerstone mobile device, which is still noticeably absent from T-Mobile USA s device portfolio. The Bobsled service was originally launched back in April 2011 as a PC-based Facebook voice application in partnership with Virox. The service, which is still open to anyone, was initially targeted at Facebook users as a way to provide free voice calling and voice messaging capabilities, straight from the Facebook interface. Customers could initiate VoIP calls directly from the application, or send voice messages to someone s Facebook wall, along with private voice messaging capabilities. On the mobile side, Bobsled was initially only used to power T-Mobile USA s group and cloud text messaging features on the youth oriented Sidekick 4G messaging device. In January, 2012, T-Mobile USA then expanded Bobsled beyond Facebook with the launch of ios and Android apps for full mvoip capabilities. Reports on the growth of Bobsled users overall have been mixed, but the carrier indicated in May 2012, it had crossed the 1 million subscriber mark, while reaching the 2 million subscribers in July 2012. In terms of released statistics, T-Mobile has indicated that 90 percent of Bobsled messaging is being used domestically, while 80 percent of its voice calls originate outside of the US. According to Google Play statistics, the Bobsled Calling app has attracted between 500,000 1,000,000 installations in the last 30 days. Notably, T-Mobile USA s positioning of Bobsled Calling is heavily crossplatform. The app is described as providing free unlimited calling between Web, Android, iphone, ipad, ipod and other phones. Europe +33 (0) 1 41 14 83 15. Or visit our Web site: www.currentanalysis.com 3
for OTT Offset To be sure, all of the apps described above have OTT offset as a common incentive. The carrier community now well understands the cannibalization threat of smartphone apps to core mobile voice and messaging revenues, and there is a clear imperative for carriers, as communications providers, to keep in step with changed customer behavior. As described above, carriers can deploy mvoip apps to serve a number of various service strategy goals, from nurturing retention among the youth community and boosting prepaid customer numbers, to targeting users with friends and family abroad, and more. However, one carrier mvoip app in particular has taken the lead in competing head-on with the IP comms app community, both as an OTT itself, and in the same generic, non-specified, global and viral marketing terms. For more information on Telefonica Digital s TU Me app, please see Telefonica Digital Unveils TU Brand, with Free IP Comms for Starters May 9, 2012. Tu Me was launched in May this year, originally as an ios-only app and positioned as a free all-inone global communication app which allows users to text, talk and share for free. In the eight weeks after launch, Tu Me was introduced in over 100 markets, extended to Android, and acquired 250,000 active users, with the highest number of active users coming from Spain, the UK, the US and Mexico, according to Telefonica Digital. At June 2012, engagement levels indicated an average of seven communications sessions per app active user, per day. Around 65% of all sessions are chat, with voice representing 25% and photo sharing the third most popular function. The app also reached number one in the Apple App Store in Spain and Brazil, and number two in France over the same time period. Within Google Play, the Tu Me Android app is described as having attracted between 500,000 1,000,000 installations over the last 30 days. Recommended Actions Recommended Vendor Actions If there is one important partner within the emerging breed of carrier mvoip apps, it is Facebook. The ability to call and message from Facebook, as well as invite new friends from Facebook, is a common feature of many of the apps described above. In the case of T-Mobile USA s Bobsled, the initiative first found root as a Facebook-only tool, and the ability to call and message straight from the Facebook interface has been an important part in the viral marketing of this service. Insofar as the positioning of all these apps differs, so does the monetization path. For some apps, the monetization is obvious. For example, T-Mobile UK s CleverConnect will charge premium bundles of international calling minutes for out-of-app usage to international numbers, Blau.de s BlauApp in Germany is primarily concerned with attracting an entirely new pool of customers and generating new business and revenue, from a segment it was previously unable to touch i.e., German smartphone users bound by a long-term postpaid contract with a rival MNO. Other carriers will be able to justify monetization in terms of customer retention; the two apps targeting the youth segment in this report Heyah s Freeyah app and Vodafone Germany s HeyHo both apply here. In other cases, the monetization path is less obvious, and yet to be fully tested, let alone proven. Telefonica Digital s Tu Me app falls into this category, as does T-Mobile USA s Bobsled. In creating an mvoip app, carriers need to think clearly about both the target segment and the near-term monetization path from the outset. In Europe, a growing number of carriers are now including roaming and international minutes, and even data, as part of their integrated and bundled service plan for smartphone users. In increase in this trend could encourage more carriers to look to international calling apps (such as T-Mobile UK s Clever Connect, currently in trial) and even roaming apps (such as 3GlobalWiFi from 3Sweden) to differentiate themselves from the bundled approach. Certainly, an app interface offering unlimited Europe +33 (0) 1 41 14 83 15. Or visit our Web site: www.currentanalysis.com 4
free calling between friends, but additional messaging and sharing features, will seem more appealing to the smartphone generation than a bundle of minutes, with out-of-bundle charges associated. All carriers should note that the rise of IP comms apps for free calling over cellular networks will encourage users to scrutinize the fair usage policies of their current mobile data provider, with reference to bans on mvoip usage. Certain carrier mvoip apps available today BlauApp is a good example already warn users against such limitations. To avoid customer conflict (and negative regulatory interest) it is likely that many European carriers will follow TeliaSonera s lead. The Swedish incumbent recently decided to shelve plans to try the same model in its home market. Instead, TeliaSonera started including mvoip usage in all its subscription plans (with one new voice-centric plan exception), raised prices and plan data allocations. T-Mobile USA should consider how to monetize its Bobsled service, while at the same time better integrating the Bobsled value proposition to support the carrier s marketing efforts within its core business. From a monetization point of view, the carrier should look be one of the first mainstream VoIP providers to offer true quality of service guarantees at different price tiers. In addition, given T-Mobile s current focus on trying to get iphone customers to bring their device to the T-Mobile network, the carrier should consider including information about Bobsled as a core value added service for iphone customers to tie together connectivity between all their devices, across different OS platforms, rather than just their Apple devices with FaceTime and imessage. The idea of dressing up real (circuit-switched) mobile voice as mvoip may seem an unusual, and even anti-intuitive approach at first glance, although this is precisely how apps such as Vodafone Germany s HeyHo works. Customers get app-like features (messaging, sharing, even gaming community features), and even the usability benefit of one-click call to friends from an attractive and differentiated interface, together with a quality voice experience. Carriers should consider whether this quality lever might just become a new monetization route for Carrier faux mvoip in the mid-term. One could even argue that the recent launch of Joyn apps in Spain and Germany do, essentially, the same thing provide free quality voice services from an app-based interface, in lieu of the long-awaited Joyn-native devices. Europe +33 (0) 1 41 14 83 15. Or visit our Web site: www.currentanalysis.com 5
Coverage Description Europe Smart Innovations Weekly - Europe A weekly round-up of the most interesting multiplay partnerships and value-added service innovations from the European carrier community The Current Analysis Smart Innovations Weekly Europe focuses on new offers that create differentiation or a new competitive coordinate, highlight ongoing trends in service modeling, positioning or value add. Over the last year, we have featured: Emergence of Carrier branded Smartphone Apps Plays Zero rated Content Location based Offers Mobile Marketing Device Financing Innovation Unusual LTE Pricing Models New Differentiating Support Initiatives Smart Innovations Weekly Europe reports evaluate the innovation level and market impact of new services categorized into the following classes: Smart partnerships Data multi SIM Prepaid innovation Smart bundles Multi screen innovation Smart multi screen bundles Mobile advertising/marketing Mobile advertising/marketing Mobile payments New ways with WiFi Operator branded smart devices and applications Carrier cloud services The compact, analytical view of Smart Innovations Weekly Europe can help a broad array of vendors, service and solution providers stay on top of the key service trends and service provider movements in this fast moving industry, as well as a quarterly look back on the status of key innovations to assess competitive response developments within the various categories. EMPOWER YOUR TEAM WITH KNOWLEDGE THAT WILL GIVE YOU THE COMPETITIVE EDGE! Current Analysis, Inc. All rights reserved. North America: +1 703 404 9200, toll-free +1 877 787 8947 Europe: +33 (0) 1 41 14 83 15 www.currentanalysis.com