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Head of Telefónica Digital, Matthew Key.

Telefónica Digital goes ‘beyond connectivity’

Posted By TelecomTV One , 06 July 2012 | 1 Comments | (0)
Tags: Telefonica Digital firefox OS mobile Wireless OTT M2M ehealth

Telefónica Digital boss Matthew Key presents details of his company’s plans, including the mobile Firefox OS, at this year’s media and analysts' day in London. Guy Daniels reports.

Telefónica Digital announced today that it expects to drive annual revenues of approximately €5 billion for its parent company Telefónica by 2015 with an annual revenue growth rate of 20 per cent.


The company also announced global agreements with Facebook, Google, Microsoft and RIM to use Telefónica’s billing relationships so customers can pay for mobile content such as apps, games or in-app purchases. The direct to bill payment has started to be rolled out in Europe and will be live in 14 of Telefónica’s operating businesses globally by the end of this year. 400,000 customers in Germany are already paying for digital goods via their mobile phone bills.


Much of the interest at its Media and Analysts' day in London was focused on the Firefox OS announcement. Head of Telefónica Digital, Matthew Key, revealed some additional detail about the Firefox OS handset and Telefónica’s involvement:


“We’re talking to at least another 3 or 4 to get onboard. It’s important because of scale. We also want more operators to get involved. The first handset cost will be sub $100 when it launches in Brazil. We can produce the same experience as an Android handset at a lower price, or a better experience at the same price.”


He adds that strategically, for any business to be reliant on any one supplier is not a good thing. Telefonica in Latin America is very reliant on Android.


“Strategically it’s really important for us to do it. But we don’t under-estimate the size of the task.

There have been many attempts at a new OS that have failed.”


Although Telefónica Digital, launched in 2011, it arguably started three years ago in November 2009, when Telefónica created a vertical market organisation with the launch of GiffGaff and O2 More, and the purchase of US OTT company Jajah.


Key says he doesn’t want Telefonica Digital to be a Google or Facebook, he’s not interested in hardware (not even around Firefox OS), and doesn’t want to just be an investor in digital companies – any investment has to help Telefonica’s core business of 300 million customers:


“If we think we can produce differentiated products on our own platforms ourselves, we will. But if we can’t, that’s fine. We’re very open to partnerships. And if we can’t find a partner, we’ll buy or invest in a company, such as Joyent.”


The ‘TU me’ service is one of the company’s latest, and will be joined by ‘TU go’ very soon. With just £200,000 of advertising, to launch the service, Key says it’s an example of the type of innovative viral service that he wants to see  Telefónica Digital associated with:


“Whether we like it or not, products like WhatsApp were gaining customer traction. We developed ‘TU me’ in 100 days, that’s not the traditional telco product cycle. ‘TU me’ will help us retain great relationships with our customers. The more products our customers use, the lower the churn.”


Telefonica also announced this week that it will make a multi-million euro investment (exact figure not revealed) to kick-start the mobile advertising market in Brazil, using its UK O2 Media model as a template. Mobile advertising is expected to be worth €300 million by 2015. Adding work in eHealth and security to its advertising services, Key says:


“We think the digital society can fundamentally transform Latin America.”


Telefónica Digital additionally announced an agreement with Etisalat to jointly develop business opportunities, license products and share knowledge across a range of digital services. They will develop business opportunities in M2M, financial services, device procurement, cloud computing, video services, digital advertising, eHealth and OTT communications. Both telcos are also supporting Mozilla’s new mobile Firefox OS.


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(1) 06 July 2012 19:56:47 by Rahul Malviya

The connectivity services offered by Communication companies are so vital to modern life that it wouldn't be a leap of imagination to brand them as 'Utilities'. Yet, most people have been quick to write them off as bit-pipe providers unable to compete with OTT/Device players. In this overzealousness to write the epitaph of Telecom companies, most people forget that they have Millions of paying customers and Petabytes of data about them. The link between Device/OTT vendors with customers (mostly non-paying for Google/Facebook) is relatively tenuous when compared with Telecom companies. Whether it is Nokia/RIM, the fall from grace is sudden. However, stories of Telecom companies with meagre portfolis and even poorer customer experience are few and far between.

Continuing with the analogy of Utility, it is more likely that I buy a water hardness tester from my water utility and get that added to monthly bill rather than continue to maintain a separate relationship with the tester supplier (who also maintains the tester after initial purchase).

I recall reading somewhere that Telcos don't need to out-innovate OTT players, merely work out a symbiotic relationship where the purchases are added to Telco bill. The business model being championed by Telefonica Digital might well be the 'Telco of the future'.