Mavam brasil ingles final imprenta 02 09

BRASIL Prepared by

11TH EDITION

MAVAM

Acision Monitor for Mobile VAS Š Copyright Acision August 2013

MAVAM | Acision Monitor for Mobile VAS

Editorial The eleventh edition of MAVAM (Mobile Value Added Service Monitor) Brazil, launched by Acision, is specifically focused on Mobile Messaging and Value Add Mobile Services, and strengthens its commitment to provide the industry and operators with the intelligence to understand market dynamics and launch/tailor mobile Value Added Services (VAS) for increased consumer uptake.

The rise in popularity of Smartphones is bringing the internet to more and more into users' hands. With this, new ways for end user interaction and connectivity are being launched over networks all the time, and today, SMS and chat-based over-the-top (OTT) and instant messaging services coexist with traditional voice services. This provides consumers with a variety of new ways to communicate dependent on the recipient and user usage trends.

Fatima Raimondi Acision President Latin America

The report highlights that the number of mobile subscribers in Latin America continues to grow, resulting in an increasing use of value-added services and total revenues.

In Brazil, (VAS) accounted for 25% of operator’s sales, equivalent to R$ 3.57 billion (USD 1.72 billion) in the second quarter of 2013. This represented a 25.51% growth compared to the same period in 2012.

Mobile Internet services generated $R 2.06 billion in the quarter, representing 58% of total VAS revenue in Brazil and a 35% increase when compared with the same period 2012.

SMS keeps growing within the Brazilian market and operators agree that SMS is still very important, especially as SMS revenues reached $R 1.18 billion in sales in second quarter, a 11% increase compared to the same period in 2012. This growth in Brazil is partly due to the operators introducing packaged pricing plans to include SMS and mobile data, with plans incorporating a large number of SMS to accommodate usage.

In addition, we are seeing a trend where today’s consumers are messaging more over a number of different platforms and via multiple devices - a global phenomenon, which we have seen not only in our research but across other analyst and industry data points.

Today, tech-savvy consumers want something ‘extra’ – a combination of universal reach, uncompromised reliability and enriched features – which can only be fulfilled by using multiple services concurrently. Today there is no single application, that meets all consumers messaging requirements which works across any platform, any device at any time. But can operators fulfil a role by providing one single chat/messaging service in the future?

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MAVAM | 1. Acision Monitor for Mobile VAS

With chat OTT services now being incorporated into different platforms, such as social networks, there are some moves towards consolidating platforms. However, mobile operators globally are taking a number of approaches to address this trend, by either partnering with OTT partners or launching their own Rich Messaging and RCS type services, which may one day provide one access point for all messaging. When questioned about such as service in Brazil, referring to the GSMA’s RCS initiative, joyn, respondents showed a hypothetical acceptance with 27% of those questioned stating they would surely use it.

In addition, operators are looking at ways to enrich messaging services, such as enhancing the traditional SMS experience. In this report we highlight some of the services which operators can activate across their network and their appeal to consumers.

When questioned about a range of services, these triggered some high interest, showing that if operators were to launch some of this functionality it would fit with consumer expectations, and enable new routes for service monetisation and incremental revenue.

We hope you find the report interesting reading, providing analyses on user preferences in chat services; instant messaging, SMS and MMS, as well as the possibilities of generating other revenues based services over SMS that empower the value added business and user engagement in Brazil.

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MAVAM | Acision Monitor for Mobile VAS

Index

3

Editorial

6 7 11 14

1. Introduction 1.1. Value-Added Services in the World 1.2. Value Added Services in Latin America 1.3. Value Added Services in Brazil

17

2. MAVAM (Acision Monitor for Mobile VAS)

18 20 28 30 35 39

3. Messaging services (Special topic) 3.1. SMS 3.2. MMS 3.3. Instant Messaging (IM) 3.4. SMS vs IM 3.5. Joyn

40 40 41 41 42 44 44 45 45

4. Mobile Internet 4.1. Use of the Internet through Smartphones 4.2. Plan Type 4.3. Internet uses on the Smartphone 4.4. Social Networks 4.5. Mobile Banking 4.6. Mobile Commerce 4.7. Maps and location 4.8. Marketing and Mobile Advertising

47

5. Conclutions

49

6. Glossary

52

7. Technical File

53

8. Team

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E N S O

MAVAM | 1. Introduction

1

Introduction The year 2013 has been focused on operators launching high speed, fixed (Fiber), as well as mobile (LTE/4G) networks. In the United States, LTE launches are contributing to market growth, while Europe is a region still dominated by 3G. In Latin America, two races are taking place: one for 3G universalization, together with a decrease in Smartphone prices with Firefox supported web phone expectations, and the other, for LTE networks to launch which, as of the closure of this report, stood at 21.

In developed countries, handset-grant elimination models, device-to-device shared data plans and operators' information systems redefinition are being tested, so as to offer integrated services and customized options that will allow fostering consumption and increasing the ARPU. This global crisis and the market dynamics are generating a new merge and acquisition process among operators as well as through the purchase of, or interest in, application and content companies.

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MAVAM | 1. Introduction

1.1. Value-Added Services in the World To understand the value added services (VAS) business worldwide, we analyzed VAS evolution across the biggest mobile operators in various regions around the world. We compared the Q1 values for 2013 and the same period in 2012, except for China Mobile, which publishes annual data as of the closure of 2012 and is compared to 2011.

The companies evaluated are:

Graph 1.1

Analyzed Operators

• América Móvil – Latin America • AT&T - United States • China Mobile • Orange (France Telecom) - France • NTT Docomo - Japan • Telecom Italy • Telefónica • Telefónica Spain • Telefónica O2 United Kingdom

1 As of the closure of this study, Telefónica was in the process of selling this operation.

2 In the sale process as of the closure of this edition.

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• Telefónica O2 Germany • Telefónica O2 Ireland2 • Telefónica O2 Czech Republic • Telefónica Latin America • Vodafone • Vodafone United Kingdom • Vodafone Germany • Vodafone India

MAVAM | 1. Introduction

Graph 1.2

Total ARPU Variation - Selected Operators In USD - Q1 2012-2013

Source: Convergencia Research based on operators' financial statements

In most cases, these operators suffered decreases in their total ARPUs (Voice+VAS) in dollars, some of which is due to the change in exchange rates.

Among the companies studied, ATT kept its ARPU stable and Vodafone Germany incremented it. European suppliers register ARPU’s sharpest drops for different reasons; firstly, they cite that the economic crisis has been preventing greater consumption. On the other hand, some companies mention in their financial statements, that it is predominantly due to the negative impact of EU Regulation 531, which by mid-2012, imposed control over retail prices of roaming services and a reduction in mobile termination rates, among other regulating measures. And lastly, increased competition has pushed service prices downwards even more as operators fight to retain their customers.

In the case of Vodafone Germany, the drop in voice ARPU is compensated by VAS as a result of the increase in Smartphone adoption and SMS, voice and data packages. As a

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MAVAM | 1. Introduction

result, Vodafone‘s network plans are tailored to reflect this, which include SMS, unlimited calls, and a large capacity for data services for any Smartphone model, which may also be combined with fixed services, such as ADSL. ATT maintained its ARPU as the drop in voice usage is compensated with VAS generated by Smartphones as well as by the new users who choose a more economical data plan line.

NTT Docomo drops are partly explained by the yen devaluation compared to the dollar, which accumulated 12.8% in the last year.

In the case of Telefónica Latin America and América Móvil, the ARPU fall is mainly explained by the local currencies devaluation compared to the dollar (Brazil, Argentina, Venezuela, among others), which is not compensated by the appreciation of other countries' currencies (Mexico, Colombia, Peru).

Graph 1.3

VAS Share / ARPU Services In USD – Q1 2013

Source: Convergencia Research based on operators' financial statements

3 In the sale process as of the closure of this edition

VAS ARPU continues increasing its share over the total revenue. NTT Docomo, Telefónica O2 United Kingdom, Telefónica O2 Ireland3, Orange (France Telecom), and Vodafone United Kingdom, already obtain 50% or more of their value-added revenues.

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MAVAM | 1. Introduction

AT&T reports on SMS combined with voice rather than separately, so their VAS cannot be compared exactly to the rest of the operators.

Although, VAS relevance grows, in absolute terms, some operators also suffered drops in VAS as well as Voice ARPU. Generally, they are European operators and this is explained by the crisis and competition.

Graph 1.4

Variation in revenue contribution for Voice services vs. total ARPU VAS Between Q1 2013 and same period in 2012

Source: Convergencia Research based on operators' financial statements

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MAVAM | 1. Introduction

1.2. Value Added Services in Latin America In the second quarter of 2013, Latin America registered 687.354 million mobile subscribers and 116% penetration. This year’s growth in the sector will be guided by a) increased Smartphone adoption and the potential positive effect of Webphones with a Firefox operating system that were launched in late June 2013, and to a lesser extent, tablets; b) LTE service evolution in Mexico, Colombia and Paraguay and LTE launches in Brazil, Chile and other countries to follow later this year and c) development of other value added services, such as mobile payments, content, operator OTT services and M2M. Spectrum bids expected in different countries for the next year could bring incorporation of new players. As of the close of this report (June 2013) for instance, DirecTV had obtained spectrum in Colombia. It is also possible that, as from this year, some mergers and acquisitions may take place.

Lines and revenue growth rates in Latin America, which are higher than those of developed markets, are strategic for operators groups. For example, in the case of Telefónica, revenues generated in Latin America are already equivalent to 51% of the group's revenues, and in the case of América Móvil, Latin America's strength allowed it to start, its expansion towards the European continent, between 2011 and 2012, with the acquisition of interests Dutch operator KPN, among other acquisitions.

Operators believe increasing the postpaid database due to the rise of Smartphones and, at the same time, they restrict the accounting criteria of prepaid lines, so in some cases decreases are observed in the number of lines.

Graph 1.5

Smartphones and mobile broadband lines share over the total lines Q2 2013

Source: Convergencia Research

4 Excluding Nextel

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MAVAM | 1. Introduction

In several countries, the ARPU is adversely impacted by a reduction in interconnection rates. Voice traffic appears to grow although prices are reduced by the packetizing effect.

SMS and MMS service usage continues to grow but at lower rates than previous years.

Latin America still isn’t showing a cannibalization effect from instant messaging (IM) and OTT platforms, such as in Europe. Meanwhile, SMS prices also suffer reductions due to packetizing.

Graph 1.6

Mobile telephony growth by type of revenue Q2 2013 variation vs.Q2 2012 variation in USD billions

Source: Convergencia Research

Graph 1.7

Mobile telephony sales by type of revenue Q2 2013 vs. Q2 2012 in USD billions

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MAVAM | 1. Introduction

Graph 1.8

VAS sales share Q2 2013 in USD billions

During the ďŹ rst semester, some devaluations (Argentina, Venezuela and Brazil, among others) and local currencies appreciations occurred, and as a result, total revenues measured in dollars were affected. Meanwhile, in the local currency, most countries saw an increase in their total sales.

Mobile broadband connections represent 20% of the lines, and Smartphones 18%, and both of which push VAS share in total revenues.

Total revenues in the second quarter represented 25.29 billion dollars, growing 12% compared to the same period in 2012. Voice generated USD 13.96 billion and had a 1% drop in dollars. VAS increased 24% and generated USD 7.67 billion during the quarter and, as a logical consequence of the rise in Smartphones adoption, handset sales grew by 61% compared to 2012 and added up to USD 3.64 billion during the quarter. Revenue growth is therefore driven primarily as a result of VAS and devices sales.

VAS represents 35% of Latin America operators' revenues. Mobile internet was the greatest rising VAS service(33%) and represents 50% of the total VAS market. SMS represents 41% of VAS and grew 17% in the second quarter 2013 compared to the same period of 2012.

Graph 1.9

VAS ARPU share / ARPU Services

Q2 2013 in USD

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MAVAM | 1. Introduction

Graph1.10

Mobile lines by operator

2Q 2013 variation vs. 2Q 2012

1.3. Value Added Services in Brazil This MAVAM edition analyzes the operators' results in the second quarter of 2013 although it is important to mention that as from late April this year, LTE services were first commercially launched in Brazil with high expectations regarding the impact that these networks would have on the use of mobile broadband and data devices. At the end of this study in July 2013, there were 257 thousand LTE connections.

The Brazilian market has been very dynamic with respect to the growth of 3G network coverage, overall infrastructure and service quality improvement There has been increased competition with mobile packages and pricing plans including voice, data and SMS services for prepaid and postpaid users, and new value-added services such as mobile payment options (USSDD and NFC) have been pioneered among other applications and content.

As of the end of the second quarter of 2013, Brazil had 265.7 million5 mobile lines (excluding Nextel), equivalent to 134.4% penetration of the population. Growth for the second quarter of 2013 was 3.8%, compared with the same quarter of 2012.

Graph 1.11

In thousands of lines for Q2 2013

in thousands

Source: Operators' Balance sheets.

Excluding Nextel.

Market share by operator

5 Calculation based on the Operators' balance sheets; Oi data differs in 4 million subscribers compared to the one registered by Tele Brazil with 264 million total lines for Brazil's total as of the closure of the first quarter. As of May 30, 2013, 265.52 million lines according to Telecos' data. Operators' results had not been published as of the closure of this study (first week of July, 2013).

Source: América Móvil and Telefónica balance sheets. Iusacell estimated. Excluding Nextel.

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MAVAM | 1. Introduction

Graph1.12

Total ARPU main operators

In R$ and in USD Q2 2013 vs. Q2 2012

Operator financial statements show that their postpaid customer base increased (+16% year-on-year) as a result of a rapid Smartphones adoption and increases in this user base with more mobile broadband plans sold. Additionally, the prepaid base (+0.9% year-onyear) has shown slower growth partly due to more restrictive criteria by operators when counting active users. As a consequence, customer distribution in Brazil to June 30, 2013 was 79.4% prepaid and 20.6% postpaid.

Except for Vivo, this increased its ARPU by 4.1% in Reales, all the operators went through decreases in their total local currency ARPU. Variations are incremented measured in dollars due to the devaluation of the Real.

The mobile business net sales, including handsets in the second quarter of 2013, were R$ 15.78 billion (USD 7.67 billion) and increased by 7.9% year-on-year in the local currency (5.81% in dollars due to the currency devaluation).

In USD 2Q 2013 vs. Q2 2012

In the case of services6 the year-on-year variation was -0.77% (-2.69% in dollars) equivalent to R$ 14.17 billion (USD 6.84 billion) of liquid invoicing in the first three months of the year, while handsets sales added up to R$ 1.64 billion (USD 0.78 billion) and grew 46.3% in the local currency (43.52% in dollars).

Between April and June 2013, value-added services net sales reached R$ 3.57 billion, a 25.51% increase compared to the same period in 2012. Value-added services are equivalent to 25% of the sales of mobile operators' services in Brazil.

Graph 1.13

Mobile telephony business net sales

In R$ and in USD billions Q2 2013 vs. Q2 2012

6 Services Revenue includes Voice and VAS

Source: Convergencia Research calculations based on operators' balance sheets. Excluding Nextel

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1,6

1,1

3,6

2,9

10,6

10,7

14,2

13,5

Source: América Móvil and Telefónica balance sheets. Iusacell estimated. Excluding Nextel.

MAVAM | 1. Introduction

Mobile internet is 58% of VAS, and in the second quarter it reached R$ 2.08 billion in net sales, an increase of 34.75% over the second quarter of 2012.

SMS and MMS sales in the second quarter were of R$ 1.18 billion, 10.9% more than in 2012.

Vivo continues being the operator with the highest VAS share over its revenues with a 32% share. TIM has a 22% ratio of the VAS revenues over services. The rest of the operators do not ofďŹ cially inform on this data and were estimated by Convergencia Research.

Graph 1.14

VAS sales by type of service In R$ and in USD billions Q2 2013

2.06

10.59

3.57 0.31 8.85% 1,18 33.28%

Source: Convergencia Research estimations based on operators' balance sheets. Excluding Nextel

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MAVAM | 2. MAVAM (Monitor Acision de Valor Agregado M贸vil)

2

MAVAM

(Monitor Acision de Valor Agregado M贸vil)

The Acision MAVAM study's objective is to analyze the evolution of services in Latin America. This has been carried out in Brazil since 2009 and in Mexico and Argentina since 2010.

This Brazilian edition has a new content structure adapted to support the changes in the market, analyzing new aspects of mobile value-added services.

This edition has the following characteristics: 1. 1300 internet surveys (CAWI) and 200 telephone surveys (CATI) were carried out to mobile telephone users.

2. The geographical area covered includes all Brazil. The sample was selected respecting the percentages of inhabitants per region, revenue levels, gender and country age.

3.

This edition's special topic is messaging services, and special emphasis was placed on the analysis of Smartphone users.

4.

Other topics analyzed in this edition include: Mobile Internet, social networks, mobile commerce, mobile banking, maps and location, and marketing and mobile advertising.

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MAVAM | 3. Messaging services (Special topic)

3

Messaging services

(Special topic)

N O

E

S

In December 2012, the first SMS turned 20 years old. Since then, short messages via mobile phone networks have turned into a pillar for mobile communications, due to their massive nature as well as to the service profitability. SMS has won popularity in every demographic strip due to its simplicity and reliability. In Latin America, with a prepaid base that may be around 80% and 90% of subscribers and an ARPU of around USD 10, the price ration between the SMS and minute of voice was fundamental when expanding the frequency of use of text messages. In those countries where SMS was introduced with a unit value per message sent substantially lower than that of voice minute, the frequency was higher7.

In 1996, ICQ was created, the first computer instant messaging system. Then, ICQ was sold and, as from 1999, Microsoft Messenger has turned into the number one desktop chat platform. Some years later, MSN changed its name for Windows Live Messenger until 2011, when Microsoft bought the IP voice system Skype and decided to integrate, under this latter brand and platform, instant messaging and IP voice services.

With Smartphones, instant messaging (IM) reached mobile phones and users adopted it at high speeds. In previous MAVAM editions, we could observe that, despite the many entertainment options, the telephone's main function was still communication with others: voice, SMS, e-mail, instant messaging and social networks.

7 See MAVAM Brazil, Mexico, Argentina, earlier editions

The instant messaging growth is such that according to Informa consulting firm, in 2012, for the first time, more chat messages than SMS messages were interchanged in the world.

However, neither service is a perfect substitute: SMS may be sent from, and received in, every phone and from any operator in the world, while instant messaging systems are almost restricted to smartphones and also require data connection.

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MAVAM | 3. Messaging services (Special topic)

Users' appetite for instant communication gives rise to new Chat companies with varied business models. From the emblematic BlackBerry Messenger (BBM) linked to the manufacturer's operating system, to WhatsApp -which plans to start charging for its services at some point- to Line, which revenue comes from the sale of digital assets (stickers and games). Moreover, besides text chat, messaging platforms add functionalities such as sending photos, IP voice and other communication alternatives.

The number of IM ventures is giving rise to a merge and acquisition wave, where any member of the telecommunications value chain may be interested in acquiring or being acquired by another one. For example, Facebook acquired Beluga, Deustche Telecom bought Pinger, Yahoo acquired interest in Kakao and Samsung has shown some interest in MessageMe and Viber, according to versions circulating in different media.

Operators and even social networks try to incorporate chat for their customer communities.

For example, in 2011, Facebook launched Facebook Chat; in 2012, Telef贸nica launched its TuMe rich communications application. And it is precisely rich communications that the market aims at.

Even with initiatives like the Joyn application, driven by operators and manufacturers through the GSM Association.

All these transformations happen at record speeds, that is why the special topic of this MAVAM edition is instant messaging.

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MAVAM | 3. Messaging services (Special topic)

3.1. SMS 92% of respondents used the text messaging service (SMS) during the last three months.

The number of people that use SMS in Brazil has remained relatively constant at around 90% since 2010. The percentage of people, who use SMS, in our sample, is higher among those who own Smartphones (95%) than among those who have Feature Phones (88%).

Graph 3.1

Graph 3.2

Test message users (SMS)

SMS: Feature Phone Users vs.

Smartphone Users

Sample: total sample (1500 cases- 1Q 2013)

Sample: Feature Phones 953 cases, Smartphones 547 cases (Q1 2013)

3.1.1. SMS frequency of use Some operators that were consulted by Convergencialatina* agreed that in Brazil the SMS grows and no adverse effect has yet been observed in its use, just like in Europe.

Regarding Vivo, Alexander Fernandes (VAS Director) indicated that with VIVO On and Vivo SMS they seek a bigger SMS use as from packetizing and expect people to send more SMS, and does not consider the service to be threatened under any parameter.

Roberto Giemzbirger, Director of Products and Mobility with Oi, said that in Brazil, SMS messages grow steadily and that penetration has not reached 100%, so there is still (*) see article: http://www.convergencialatina.com/noticia.php?id=133233

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MAVAM | 3. Messaging services (Special topic)

Graph 3.3

Evolution of SMS sent over the first quarter Sample: Q1 2013: SMS Users (1386 cases)

space for growth. In this sense, he considered that, so far, instant messaging and the SMS are supplementary. He also explained that the operators integration has enabled a 3.5 times growth in two years.

As for TIM, for example, growth started with the launch of unlimited offers for a fixed price, such as Infinity (R$ 0.50 in the prepaid modality) and Liberty Torpedo (R$ 19.90 a month in the postpaid modality). The simplified rate structure enabled a 19% growth in days of use and 13% in number of users, the operator indicates in its latest balance sheet.

In MAVAM's survey, users send 94 SMS a month on average. This number, such as in previous editions, reflects the trend, although it may not be extrapolated to Brazil's total, as the survey is done via internet.

Graph 3.4

SMS (Text Messages) frequency of use Sample: SMS Users (1386 cases)

Depending on the device, the frequency of use varies. Customers who own a Feature Phone tend to have higher relative frequencies in the options of lower numbers of SMS sent per day. This behavior would be indicating that those who have a traditional telephone make a less intensive use of text messaging than those who own a Smartphone.

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MAVAM | 3. Messaging services (Special topic)

3.1.2. Plans and recharges In MAVAM's sample, the preponderant hiring modality is prepaid, in the case of Smartphones (65%), as well as in the case of Feature Phones (79%).

Graph 3.5

Hiring plans by device type Basis: Feature Phones (547 cases) -

Smartphones (953 cases)

Feature Phone

Smartphone

The 35% of those who have a postpaid plan say that it includes unlimited SMS; in the second place are those who pay per message (23%), and thirdly, those who do not know how the service is paid for. Regarding recharges, 54% do not need to make additional recharges to their plan.

People who told they had a prepaid plan were asked how many SMS the recharges they bought normally had: 43% were not able to specify this information, which could suggest that there are opportunities to improve the way in which prepaid users are informed about offers or SMS recharge alternatives, or that initial recharges are enough.

Graph 3.6

SMS plans and recharges (Postpaid)

Postpaid users: 432 cases

SMS plans

SMS recharge frequency

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30% of those who have a prepaid plan answered that the most frequent recharge modality is the unlimited daily option, this is in line with the activity observed in Brazil for the last two years with respect to fostering payment of the unlimited daily use.

MAVAM | 3. Messaging services (Special topic)

Graph 3.7

SMS plans and recharges (Postpaid) Sample: Postpaid (1068 cases)

3.1.3. Difficulties in SMS use Questions were made about the difficulties experienced regarding SMS and MMS use in Smartphones and Feature Phones.

Smartphone users pointed out that the delivery speed (37%) and the impossibility to know if the person is available (36%) are the main barriers for SMS use (Graph 3.8).

While for a 36% of those who have a Feature Phone none of the options mentioned is a hindrance, the messages delivery speed appears in second place (33%).

Graph 3.8

Difficulties in Smartphone SMS use

Sample: Smartphones - Multiple Choice

Speed stands out as an indispensable attribute for any messaging solution. Smartphone users surveyed on this occasion also said that speed may be a barrier when using instant messaging applications, which shows a generalized demand level in the speed attribute.

The second barrier for Smartphones is a characteristic provided by IM platforms and not SMS. The same happens with the third limitation, which is not knowing if the person is writing a message. Therefore, a guarantee of immediacy (knowing that the other person is writing an answer) seems to be an attribute to add to SMS.

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MAVAM | 3. Messaging services (Special topic)

Also, in other answers the idea that people not only expect a reliable delivery from the communication is iterative, but also to know what the person who receives the message is doing (if they are available, if they are writing, etc.). Therefore we may conclude that communicating instantly is not enough anymore, now it is necessary to know what the other person is doing.

Graph 3.9

Difficulties in Feature Phone SMS use Smartphone users. Sample: 937 cases Multiple Choice

Graph 3.10

(Detailed) Reaction in front of an eventual elimination of the SMS service.

SMS users. Sample: 1386 cases

3.1.4. SMS relevance To know the relevance that the SMS service has for users, they were asked what they would feel if operators eventually eliminated the service. The answers were concrete: 68% considered that the lack of SMS service would represent a nuisance.

This may lead to think that the level of substitution of SMS for IM is not total and that it has certain characteristics that users value and believe, to begin with, they are irreplaceable by another service or that the substitution process is incipient between one modality and another or that SMS is an intrinsically natural service to mobile telephones.

3.1.5. New SMS-based services Due to the transformation time of the messaging business explained at the beginning of this chapter, it is interesting to analyze consumers' willingness in front of new functions that could be offered together with the SMS service.

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MAVAM | 3. Messaging services (Special topic)

To find out about willingness, two questions were asked: one for users to indicate the appeal of a service list and another one to indicate the appeal of a list of functions that could be offered with the SMS. 3.1.5.1. Appeal according to the type of service The respondents were asked how appealing the following services would be for them.

A message service that would ensure immediate delivery of all messages. For example: if you sent a whatsapp message to a friend but at that time your contact did not have access to internet, the messaging service would send a message via sms, ensuring that your message is delivered immediately.

A message service through which you may send all your messages to all your contacts, friends and family without worrying which means to use. Your message will be delivered regardless of the means that your contacts would rather use.

A message service through which you may reach everybody regardless of the means each of them is using at that time.

For example: you are sending a message to three friends. Two of them are using whatsapp and another one, sms. the message will reach the three of them without your needing to shift from whatsapp to sms or viceversa.

A message service where you may receive all your messages regardless of the fact whether you are using a smartphone, computer or tablet. for example: a friend of yours sends a message from his/her cell phone. Your smartphone is off and you are using the computer at that moment. You will receive the message in your computer instantly.

An instant message service where you have a single history of all your conversations, regardless of the means used (smartphone, tablet, notebook, desktop). For example: you and your friend are communicating via sms or facebook messenger. You visualize all the messages in a single history.

To define the appeal of each of the functionalities, the respondents were asked to assign a score from 1 to 5 according to how attractive they found them, 1 being “Not appealing at all” and 5, “Extremely appealing”.

8 Multiple comparisons were carried out through a free distribution method (i.e., free from assumptions about the distribution of these data).

Even though it may be observed that immediate delivery service is the one that has the highest average score, and that the single history service is the one with the lowest average score, after a detailed analysis of the data, we have concluded that with a 95% reliability we may be certain that there are no statistically significant differences between these two averages8.

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MAVAM | 3. Messaging services (Special topic)

Graph 3.11

New services appeal

You have a single history of all your conversations regardless of the means used

3,59

You can receive all your messages no matter from what device

Sample: SMS and IM Users - 937 cases

3,99

You can reach everyone regardless of the means being used

3,89

You can send all your messages without worrying about the means

3,88

That guarantees immediate delivery of all messages

4,04 0

1

2

3

4

5

Qualification

From this similarity between the average scores, we infer that none of the proposed services generated enough impact on the respondents so as to "polarize" the answers.

3.1.5.2. Appeal of functions offered together with SMS To this aim, respondents were asked how appealing they would ďŹ nd the functions listed below if they were offered together with the SMS service.

Generally, all the services evidenced a mild interest. Only the SMS delivery or reading notice service stands out (with a 3.91 average).

1.

Presence: it shows whether your Smartphone is connected.

2.

Message notice: an indication of when an SMS was delivered/opened

3.

Black List: blocking people who you do not wish to receive messages from

4.

White List: presetting the people that you wish to receive SMS from

5.

Automatic answer: Similar to the e-mail out of office function

6.

Automatic subject: Similar to the e-mail automatic subject

7.

A copy of the messages: all your SMS messages are sent (as a copy) to your e-mail

8.

Collect SMS: when the addressee is the one who pays for the SMS if, for example, the SMS issuer had no prepaid credit.

9.

Prepaid SMS: for when you want to give courtesy credit, a text message for the person to be able to answer your message without paying for it.

10. Forward messages: when you ask for an SMS to be sent to a tablet or notebook that you preset.

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MAVAM | 3. Messaging services (Special topic)

Graph 3.12

Appealing additional functions Sample: SMS and IM Users - 937 cases

To define the appeal of each of the functionalities, the respondents were asked to assign a score from 1 to 5 according to how appealing they found them, 1 being not appealing at all and 5, extremely appealing.

Bearing in mind that the immediate delivery service and the delivery notice function were the ones which reported the highest average, we could conclude that there is a special interest in everything that provides a certain "guarantee" that the communication has been completed.

Automatic subject, copy of messages and collect SMS present a bigger variation in the scores obtained (some give very high and others, very low scores); i.e., there is no consensus among the respondents. When analyzing the percentage of people that scored these functions with 4 o 5 points by age group, we can observe a slight trend to giving a higher score as the age gets older. This would indicate that these functions appeal to a certain target. Nevertheless, to obtain more information on the potential of these ideas, complementary research is necessary.

The rest of the functions may be considered of a mild appeal given that, regardless of the average obtained having a lesser variation in scores; they would be indicating that there is more consensus in the respondents regarding appeal.

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MAVAM | 3. Messaging services (Special topic)

Graph 3.13

3.2. MMS

MMS use in the last three months

Sample: 1500 cases

A 25% of respondents used the MMS service at least once during the last three months. The figure is 10 points higher than the one obtained in the last MAVAM (fourth quarter of 2011). Just like text messages, the use of multimedia messaging is higher among Smartphone users (30%) than among Feature Phone users (16%).

53% of those who use MMS and have a Smartphone expressed that during the last year they had increased the use of multimedia messaging. When they were asked about the reasons for this increase, the ones that stood out were "Because their friends and contacts also increased their use of MMS" (40%) and "Because the mobile phone camera is better" (30%).

Graph 3.14

Reasons for increasing MMS frequency of use

Sample: Smartphone users who increased the use of MMS - 134 cases - Multiple choice

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MAVAM | 3. Messaging services (Special topic)

They were also asked about the situations when they use MMS, related to the fact that respondents indicated that the most frequent situation was "Special or funny moments" (64%). In MAVAM's previous edition, the most frequent mention was related to "Holidays". The answers may suggest that sending images is related to leisure time.

Graph 3.15

MMS usage situations Smartphone & MMS users Sample: 283 cases

3.2.1. Barriers and motivations for MMS use The main barrier for MMS use is that the service is expensive (51%). The same barrier was identified in previous MAVAM editions. On this occasion, however, the percentage of answers related to the certainty that everyone can receive the message (48%) and that the message has been successfully sent (48%) increased.

Graph 3.16

MMS use barriers Smartphone & MMS users Sample: 283 cases

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MAVAM | 3. Messaging services (Special topic)

In concordance with the option mostly mentioned in the use barriers is the fact that 63% considered that a price reduction could motivate a higher use of MMS. The positive impact on the demand of a price reduction would not only imply a challenge to find the reduction value to attract the highest number of customers, but also it will relate to its relative value concerning other communication services. Additionally, as Smartphones expand, MMS may be substituted by the delivery of images through IM platforms.

The motivation that the service will be part of the hired pack ranks second (41%).

Graph 3.17

Motivation to increase MMS use Sample: Smartphone users that use MMS 283 cases - Multiple choice

3.3. Instant Messaging (IM) In this MAVAM edition, we asked about the use of instant messaging only among those who have a Smartphone, which in the case of MAVAM's sample it represents 68% of the respondents. This percentage is higher than the one estimated for Brazil, where approximately 20% of mobile lines correspond to Smartphones.

A 98% of Smartphone users in MAVAM's survey use at least one instant messaging application.

Facebook Messenger is the most frequently used application (69%), followed by WhatsApp (35%) and Twitter (27%). These three messaging applications differ from one another: Facebook Messenger is a functionality within a social network, WhatsApp is an instant

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MAVAM | 3. Messaging services (Special topic)

messaging application by definition and Twitter is a microblogging platform. This could indicate that chat applications respond to different communication needs or interaction preferences.

Graph 3.18

Instant Messaging (IM) use Sample: Smartphone users 953 cases - Multiple choice

The use of instant messaging decreases as users are of an older age. Drops are bigger in the case of Facebook, where it has an 81% penetration among users younger than 24 years of age, and the 64% of the 25-34 year-old group uses the service while people over 45 only use it in 48% of the cases. Regarding Google Talk and Skype Messenger, we cannot say if there is a remarkable trend related to age.

Graph 3.19

Use of Instant Messaging (IM) by age group Sample: Smartphone users 953 cases - Multiple choice

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MAVAM | 3. Messaging services (Special topic)

63% of the people use more than one instant messaging application. Application combinations that are jointly installed are WhatsApp and Facebook (29%), Facebook and Twitter (24%), Facebook and Skype (19%), and Facebook and Google Talk (18%). This evidences that different applications may coexist, and this coexistence is possible given the specialization of every platform: each platform has some distinct strength and, in this way, they compensate each other to cover a wide range of the users' communication demands.

3.3.1. Behavior and Attitude 88% of those who own a Smartphone use more than one application at the same time and 75% of them, this simultaneous use is common. These values could be reasserting the idea that instant messaging platforms coexist.

Graph 3.21

Attitude before the simultaneous use of Smartphone message applications Sample: Users of multiple Smartphone IM applications - 937 cases

Graph 3.20

Simultaneous use of Smartphone message applications Sample: Users of multiple Smartphone IM applications - 937 cases

3.3.2. Frequency of use We asked about the number of messages they send on average per day using the applications installed in their phones. We have observed that those who use WhatsApp send 35 messages a day on average, while Facebook Messenger users said they send around 29 messages a day via this platform. Based on this, we concluded that although Facebook Messenger is the mostly used service regarding penetration, the use of WhatsApp is somewhat more intensive.

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MAVAM | 3. Messaging services (Special topic)

Graph 3.22

Average of messages sent per day via the three main IM applications in Brazil Sample: Users of multiple Smartphone IM applications - 937 cases

Graph 3.23

Average of contacts by IM application in Brazil

3.3.3. Contacts

Sample: Users of multiple Smartphone IM applications - 937 cases

Respondents were asked to indicate how many contacts they communicated via every application and we could observe that Facebook and Twitter are the most frequently used options to communicate with more contacts, with averages of almost 14 and 13 contacts respectively. It is not a minor detail that these two platforms come from social networks.

Considering that Facebook is the social network with the highest penetration, it is only natural for a person to have a bigger number of contacts on this platform and to feel more encouraged to use this application. As for Twitter, as it is a microblogging network, the same value proposal (followers and following) drives a contact increase.

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MAVAM | 3. Messaging services (Special topic)

3.3.4. Difficulties in IM use Respondents were asked about which had been the situations that stopped them from using instant messaging applications. The option most frequently mentioned was "Because I don't have WiFi access" (25%), which indicates that there are Smartphone users who try to leave the mobile network as much as possible or who do not use the mobile network for data service. The second option was "Speed: Sometimes the message takes too long to arrive" (24%). This attribute appears recurrently in many answers in this study and from this derives that, like for SMS, delivery speed is one of the most important attributes for users.

Graph 3.24

Reasons that hinder IM use Sample: Users of multiple Smartphone IM applications - 937 cases

Graph 3.25

(Detailed) Reaction in front of an eventual IM elimination Sample: Users of multiple Smartphone IM applications - 937 cases

3.3.5. IM Relevance Respondents were asked how they would feel in front of an eventual elimination of the IM service. The answers were concrete: 70% considered that the lack of the service would be a nuisance. 42% considered that even with SMS, they would need the messaging service.

In a comparison with what was stated for the SMS hypothetical elimination, we can observe that the answers are very similar, so we deduce that IM, as well as SMS, are indispensable for users.

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MAVAM | 3. Messaging services (Special topic)

3.4. SMS vs. Instant Messaging (IM) To understand the SMS and instant messaging services coexistence, the preferences of one over the other under different circumstances were analyzed.

3.4.1. Superioridad Respondents were asked if any of the two services was superior to the other one in relation to reliability, delivery speed, cost/price and quality.

Regarding reliability and quality, there is not enough evidence to prove there is some kind of tendency. However, based on the data collected, we may say that, with 95% of reliability, IM services are perceived as superior regarding delivery speed and cost/price.

This consumers' perception concerning delivery speed may be due to the fact that instantaneity is part of the value proposal intrinsic to IM applications, and in the case of price/cost, because the messaging application does not have a unit cost, such as the SMS, but its cost is indirectly absorbed by the data plan.

Graph 3.26

SMS and IM service assessment Smartphone, IM & SMS users Sample: 937 cases

3.4.2. Service preference according to addressee

9 With a 95% reliability, we may say that the distribution of percentages on which these statements are based are significantly different from 33%-33%-33%.

To know how SMS and IM applications coexist, respondents were asked which service they would choose in the face of different situations. From the data presented in Graph 3.27, we conclude that IM use is perceived as more appropriate to communicate with people they know in social networks, and SMS is used for work matters9. For the rest of the analyzed options, both services are similarly appropriate.

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MAVAM | 3. Messaging services (Special topic)

Graph 3.27

Selecting the most appropriate service for each occasion Sample: IM and SMS Smartphone users 937 cases

3.4.3. Reasons Smartphone users were asked what the reasons were for which they would rather use IM instead of SMS. The two reasons most frequently mentioned were the cost (47%) and the possibility of knowing if the person to be contacted is available (39%).

Graph 3.28

Reasons for using IM instead of SMS

Sample: IM and SMS Smartphone users - 937 cases

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MAVAM | 3. Messaging services (Special topic)

Also, an inverse question was asked so as to learn the circumstances in which they would prefer using SMS instead of IM. What stood out in relation to this question is that SMS are more frequently used to communicate more important messages (42%).

Graph 3.29

Reasons for using SMS instead of IM

Sample: Smartphone users that use IM and SMS - 937 cases

3.4.4. IM and SMS combinations N O

E

S

Given that instant messaging and SMS coexist as communication options, it is interesting to ask about the SMS frequency of use against the highest penetration chat platforms (Facebook and WhatsApp).

3.4.4.1. Facebook + SMS 97% of those who use Facebook Messenger also use SMS, which shows that although the social network messaging application is used, this does not override the SMS use, partly because the latter is of a universal nature. Graph 3.30 shows that Facebook Messenger is used more intensely than SMS. The average number of messages sent by this group via Facebook Messenger is 29, and the average number of SMS is 22 a day.

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MAVAM | 3. Messaging services (Special topic)

Graph 3.30

Average messages sent per day Facebook Messenger vs. SMS Sample: Smartphones using Facebook Messenger and SMS - 639 cases

3.4.4.2 WhatsApp + SMS 96% of the respondents that use WhatsApp also use SMS. When comparing the number of messages sent via WhatsApp and SMS, we may observe a higher intensity in the chat platform.

The number of daily messages sent, on average, by this group via WhatsApp is 29, and the average number of SMS is 22 a day.

Graph 3.31

Average messages sent per day Facebook Messenger vs. SMS WhatsApp and SMS smartphones users Sample: 323 cases

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MAVAM | 3. Messaging services (Special topic)

3.5. Joyn Graph 3.32

Joyn awareness Sample: Total 1500 cases

Joyn is an application driven by the GSM Association (GSMA), which combines voice communication, chat with one or multiple persons at the same time and also allows sharing videos, photos and files. This application enables contacting users who do not have the SMS or mail application.

In general, it is a free-of-charge application with flat rate or prepaid plans within the territory of a certain country.

World operators are cooperating in the initiative for the platform to have interoperability, that is, for it to "simply be on the phone and work". Movistar, Orange and Vodafone have already launched this service in some countries.

Handset manufacturers10 are driving this platform and, in some models, it is already preloaded. It may also be downloaded for iPhone and Android platforms.

3.5.1. Awareness The 7% of respondents stated having heard about Joyn. This figure seems to be a bit high as the service has not been launched in any country of the region yet.

Graph 3.33

Possible reception of Joyn

3.5.2. Willingness

Sample: Total 1500 cases

All users were explained what Joyn consists of and then they were asked if they would use it or not. The willingness showed was important: 27% answered that they would surely use it, 29% would use it if it was part of a package and 23% if it was free of charge. Virtually, there are no opinion differences between Feature Phone users and Smartphone users.

From these answers, we may conclude that for users to adopt Joyn, the platform should be free of charge and perceived as such.

10 Some Smartphone models by Huawei, HTC, LG Electronics, Motorola Mobility, Nokia, RIM, Samsung, Sony, ZTE.

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MAVAM | 4. Mobile Internet

4 Graph 4.1

Internet users through Smartphones Smartphone users - Sample: 953 cases

Mobile Internet In the second quarter of 2013, in Brazil there were 59.9 million 3G 11 phones, equivalent to almost 22% of mobile subscriptions.

In the sample selected for MAVAM, survey made to internet users, the ratio of smartphones climbs to 68%. As explained in previous editions, in general, the respondent’s proďŹ le through the Internet is more familiar with technology and usually has either more intensive uses of the services or more innovative devices.

Given these characteristics, usage patterns are representative of Smartphone users and should not be construed as being extrapolated to the entire population of Brazil.

4.1. Use of the Internet through Smartphones 90% of those who have a Smartphone accessed the Internet over the last three months. And an 86% of those who have a Smartphone access the Internet daily. The highest frequency of use is several times a day (59%).

Graph 4.2

Internet access frequency through Smartphones Smartphone users who access to mobile internet. Sample: 854 cases

11 Source: Anatel, Telebrasil, Teleco

Among the 10% of those who despite not having a Smartphone do not use the Internet, the main reason (42%) is that the browsing speed is very low or slow. Secondly (28%) there is the fact that they consider they do not need to access the Internet on the phone. Responses maintain MAVAM prior trends.

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MAVAM | 4. Mobile Internet

Graph 4.3

Reasons not to access the Internet on the Smartphone Smartphone users who do not access to mobile internet - Sample: 99 cases

Graph 4.4

4.2. Type of plan hired

Amount of megabytes hired Smartphone and postpaid users Sample: 462 cases

The 45% of users hire a postpaid subscription plan and in most cases, they do not know how many megabytes are included in their plan. 32% do not know and 17% don’t know, but the service is included in their plan. 14% of users hire unlimited plans.

46% of cases, the limit of megabytes hired is not exceeded.

4.3. Uses of the Internet on the Smartphone The two most frequently mentioned activities when using the Internet on the Smartphone are access to social networks (77%) and e-mails consultation (76%). The 59% of those using the e-mail consult it more than twice a day.

A second group is made up of searches (68%), use of instant messaging (66%) and news reading (61%). The most frequently mentioned news site is Globo.com (71%) followed

by UOL (56%).

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MAVAM | 4. Mobile Internet

Graph 4.5

Activities performed when using the Internet on the Smartphone Smartphone users who access internet through the mobile - Sample: 854

4.4. Social Networks Among users who have a Smartphone and accessed social networks over the cell phone (77%/ 657 cases), 98% has an active profile in Facebook (98%), 51% in Twitter and 45% in Google +.

Graph 4.6

Active profiles in social networks Smartphone users with active profiles in social networks - Sample: 657 cases

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MAVAM | 4. Mobile Internet

Facebook (71%) and Instagram (48%) have the highest ratio of daily usage frequency, although the latter has a much smaller customer base (35% have an active profile on Instagram vs. 98% on Facebook).

Orkut, as observed in MAVAM’s previous editions, although still having a large member’s base, said members have a marginal activity; the majority (49%) though having an active profile has not consulted it over the last three months.

Graph 4.7

Access frequency to social networks Sample: It varies depending on the social network

Graph 4.8

Facebook uses Smartphone users with active profiles in

Facebook main activities are the relationship with friends through messaging (92%), photos and moments (80%), search for people and relatives (74%) and knowing people’s profile (69%).

Facebook - Sample: 643 cases

| 43 |

MAVAM | 4. Mobile Internet

4.5. Mobile Banking 37% of Smartphone users make queries or access banking information. The main activity is making balance queries, which generates an average of 10 visits per month. The second activity is making credit card balance queries, with an average of 6 interactions per month.

Graph 4.9

Use frequency of mobile banking services.

Smartphone users who use mobile banking services - Base: 315 cases

Graph 4.10

Products search and shopping through the Smartphone Smartphone users. Sample: 230 cases

Search

4.6. Mobile Commerce 27% of people having Smartphones searched for products and services over the last three months, but only 42% made a purchase. While another 27% say to have made purchases through the Smartphone but not over the last three months.

Shopping

The top three reasons cited for not making a purchase using the Smartphone are the preference to buy through the computer (64%), that shopping sites do not fit the Smartphone (34%) and that it is difficult to make payment through the mobile device (23%).

The top-five categories of products purchased through the Smartphone are: books (44%), footwear (39%), home appliances (33%), electronics (33%), clothing (32%).

Purchase frequency is at least once a month (87%) and the main means of payment is credit card (80%).

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MAVAM | 4. Mobile Internet

4.7. Maps and location 57% of those having a Smartphone use map services. 62% consult the map for getting oriented, and 46% mentioned that after consulting the map, they generally visit the site or store consulted.

Graph 4.11

Activity performed after consulting maps Smartphone users who used the maps Base: 494 cases

Activity

%

I was just using it to get directions I went to the shop/store/facilities I just wanted to see what the store looked like

64% 46% 29%

I searched for the site of the shop/store/facilities

22%

I went to the store/facilities and I did shopping

22%

I went to the store/shop and I used the services thereof

21%

I phoned the shop/store/premises

13%

I recommended the shop/store/premises

9%

I made an online purchase in the shop/store/facilities

8%

Other

0%

4.8. Marketing and mobile advertising Respondents were asked how much they agreed with receiving relevant messages from operators and other companies on the cell phone. The results do not allow to state if, in statistical terms, there is more agreement than disagreement.

However, when asked about the preferred communication means when receiving messages from operators or companies on the cell phone, 62% opted for the SMS. Secondly, but very distant, are those for which any of the proposed options (SMS, IM, MMS, Facebook, Other application) are the same for them, with 14% of responses. And Facebook ranks third (12%).

Graph 4.12

Preferred medium to receive advertisement Sample: Total 1500 cases

SMS is the preferred medium both for Feature Phone and for Smartphone users.

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MAVAM | 4. Mobile Internet

Note: 41% of those who have a Smartphone, pay attention always (20%) or often (21%) to advertising messages both in this device and on the computer.

Search sites (65%) and shopping sites (53%) are the places with the highest number of mentions on display of advertising messages.

Graph 4.13

Places mentioned to have displayed an advertisement Smartphone and feature phone users Base: 467 cases

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MAVAM | 5. Conclusions

5

Conclusions Value Added Services in Brazil generated overall sales amounting to R$3.54 billion during the second quarter of 2013 which represents a total of 25% of mobile operator service revenue.

Mobile Internet represents the 58% of VAS in Brazil (R$2.08 billion in the second quarter).

SMS have 33% share of value added revenue and the remaining 9% corresponds to VAS services.

Both mobile internet and SMS are growing in Brazil. The ďŹ rst one as a result of the increased Smartphones base and the second one as a result of simpliďŹ ed unlimited pricing plans for one day and unlimited mobile service plans that include SMS, data and voice bundles.

Smartphones growth while expanding the adoption of instant messaging applications (IM) has not lead to a decline in text messaging as 92% of people still use SMS , but has had an impact on the frequency of use. In general, users send more messages in OTT Chat applications (29per day) than SMS (22 messages per day).

Coexistence of services. The 88% of those Smartphone owners use more than one instant messaging application and generally consider the use of more than one messaging platform as normal (73%). This indicates that while chat applications are popular and usage is on the increase, they do not provide the full functionality need to enable interoperability across all messaging services, as they as used in islands and communities, and users still have to full back to SMS. Today there is no single application, that meets all consumers messaging requirements across cost, rich features and service quality which works across any platform, any device at any time. Moreover, for both services, users claim that if a hypothetical case of termination of either SMS or IM, they could not be easily replaced with other alternatives. Both of them are necessary.

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MAVAM | 5. Conclusions

N E

O S

Difference. The fact that there are different applications does not limit the penetration of other service, as long as each platform provides a differentiated experience. For example, the three most used messenger applications in Brazil are: Facebook Messenger (69%), WhatsApp (35%), and Twitter (27%). These three messaging applications are different: Facebook Messenger is another feature in a social network, WhatsApp is an instant messaging application by definition and Twitter is a micro-blogging platform.

Guarantee. Among the services that might be added to SMS, the one that evoked the most interest was immediate delivery guarantee of all messages regardless of the application or the user’s type of device.

And among a list of 10 functions that could be offered along with the SMS, the one most valued by users was a service which enabled notification of delivery receipt and SMS reading, when an SMS is sent.

Condition. The speed of message delivery becomes a critical feature for any messaging solution to be launched into the market. Immediacy also appears as a priority. In several of the issues addressed in the survey, there appears to be the need to be certain that the other person is available and to know if the message is being delivered.

Opportunity. Among Smartphone users, on comparing IM and SMS, the IM is perceived as superior with regards to speed of delivery and cost. In terms of reliability and quality, there is not enough statistical proof in favour of one or the other, but there is a clear opportunity for a messaging service with both the reliability of SMS and rich communications of IM. Joyn. Before the possible launch of a service like Joyn (the GSMA’s RCS initiative) in Brazil, respondents showed a hypothetical acceptance of such a service, with 27% would surely use it, 29% would use it if it were in the package, 23% would use it if it were free.

From these responses, it can be concluded that in order for users to adopt Joyn, it will be important to position the service to offer the attributes and differentiation needed to convince the undecided, and with those determined, the service should be free or perceived as such.

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MAVAM | 6. Glossary

6

Glossary The description of the services presented in this report is presented in the following sections.

Messages The services in this category can be defined as: SMS (Short Message Services): sends short text messages.

MMS (Multimedia Message Service): sends short text messages with image, photo, or video.

E-mail: receives or sends emails via cell phone. Receiving or sending can be done manually, in other words by user’s initiative, or can be activated through the push mechanism, which periodically and automatically receives and sends mail.

Instant Messages: service which permits access to instant messaging systems like MSN or Yahoo.

Answering Machine or Voice Messaging: gives access to the automatic messages recording service offered by the carrier, in case of receiving calls that can’t be answered.

Entertainment The services in this category can be defined as: Music: service which provides the download of songs to be played in the cell phone. The handset must be able to play several music formats such as MP3, AAC, MP4, WAV, among others.

Ringtone: service which provides the download of ringtones to be used in the handset.

The cell phone must be able to play multiple formats of ringtones, such as MIDI, AAC, MP3, MP4, WAV, among others.

Images: service which provides the download of images and photos to be displayed on the cell phone. The handset must be able to display several formats of pictures and images such as JPEG, GIF, among others.

Games: service which provides the download of games to be played on the cell phone, individually, or through internet or Bluetooth connections, in groups. The cell phone must

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MAVAM | 6. Glossary

be able to run the games available in the device and also the downloaded ones, and additionally provide Bluetooth or data connectivity for internet access (eg.: EDGE, EVDO, or 3G).

Video: service which provides the download of videos or video streaming to be played on cell phone. The handset must be able to play downloaded videos or received video streaming.

The cell phone must be able to play videos in 3GP, MP4, WMV, AVI, among others.

Open TV: This feature is present in some cell phones and permits user to watch free TV programs with the handset acting as an analogue or digital TV receptor and capturing contents through the same signals (frequencies) received by traditional TV’s at home.

Internet and Location The services in this category can be defined as: Internet Access: service which provides broadband access to the Internet via cell phone or modem. In both cases users must have a data plan contract with the mobile operator.

This service has the following characteristics: Cell phone: the internet access from cell phone can be done in the following ways: 1. Using a browser to access the same websites accessed by fixed internet through a computer. Examples of browsers: the ones offered by the cell phone or smartphone (Internet Explorer Mobile, for Windows Mobile), or alternative browsers such as Skyfire or Opera.

2. Accessing the WAP websites inside the Carrier network through WAP browser.

3. Through specific programs installed in the handset (Widget, Web-App) provided by companies like Yahoo Mobile.

Modem: devices which can be connected to desktop computers or notebooks. Provides Internet broadband connection using a computer browser (Internet Explorer, Firefox, and others).

Social Networks: service which includes all the necessary elements to provide access to social networks such as Orkut, Twitter, Facebook, and others. This access can be done

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MAVAM | 6. Glossary

through browser and internet access, both present on cell phones, or through a specific application provided by mobile operators or other companies.

Payments and Banking: usually offered by banks or other credit institutions, which allows the access to users accounts in these institutions. These services can range from simple balance consults to the payment of bills or conclusion of investment transactions.

N

O E

S

Location Based Services: service which provides users’ geographic location. These services have the following characteristics: Location: can be provided as the following: 1. Through a process of triangulation using information from cell sites and application systems provided by the operator for this purpose; 2. Through the GPS installed in the cell phone.

Offered Services: 1. Location: service usually offered by the mobile operator which allows informing the geographic location of a particular subscriber. Eg.: service hired by parents to monitor their children’s habits, or with the purpose of promoting safety.

2. Maps: service offered by other companies providing maps on cell phones, usually to locate addresses, and also permits to locate users in the map if their handsets have a built-in GPS. 3. Contextual Filter: permits the mobile operator, or other service providers, to offer addresses or other types of promotions at stores, restaurants, movies, among others, based on the instant location of users.

Mobile Marketing The services in this category can be defined as: Mobile Marketing: these services are implemented by mobile operators, to advertise the operator itself or other companies for the subscriber base. Usually these ads are sent via SMS. The advertisements can also be sent directly by competitor carriers or other companies, again using SMS messages.

Mobile Advertising: similar to Mobile Marketing, Mobile Advertising is also an advertising service implemented by mobile operators or other companies. If the subscribers agree to receive it they can participate of promotions such as free minutes, free SMS packages, and others, as a reward for receiving advertisements.

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MAVAM | 7. Technical File

7

Technical File Scope

Mobile phone users

Technique Method Sample Market Survey date

CAWI (Computer-Assisted Web Interviewing) 12/15-minute survey 1500 cases Mexico May 29 - June 3 2013

Sex

Sample

Male Female

750 750

Age

50% 50%

Sample

18-24 years old 25-34 years old 35-44 years old 45 o more

409 541 309 241

Location

27% 36% 21% 16%

Sample

North Northeaast Southern South Center-West

45 275 820 240 120

Nivel Socio Económico

3% 18% 55% 16% 8%

Sample

A B1 B2 Cd

159 329 499 513

Operador

Sample

Claro Oi Tim Vivo CTBC Nextel Sercomtel

325 345 453 351 2 14 10

Plan contratado

11% 22% 33% 34%

22% 23% 30% 23% 0% 1% 1%

Sample

Prepaid (Rechargeable card) Pospaid (Monthly billed - without limit of use) Pospaid + control

540 79 178

67,8 % 9,9 % 22,3 %

(A monthly bill, with limit of use.Once limit is reached, I can make a recharge and continue using it)

˙

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MAVAM | 8. Team

8

Team

Fatima Raimondi | President, Acision Latin America Silviane Rodrigues | Market Development Director, Acision Latin America

Mariana Rodríguez Zani | Director Emilia Gibellini | Analyst Nadia Arno | Analyst Román Mergá | Analyst Leonardo Nocera, Bernabé Diaz | Design

Humberto Perissé | Director Izildinha Neumann | Commercial

Fábio Cardo | Director Antônio Costa Filho | Director

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