Telefónica Digital expects to drive annual revenue of approximately €5 billion for Telefónica by 2015 with an annual revenue growth rate of 20 percent. Significantly, Telefónica Digital expects the great bulk of that revenue to come from services that are “beyond connectivity,” though of course riding on top of Telefónica’s networks.
Ignoring for the moment the issue of “how” service provider software and service innovation “should” be conducted, where Telefónica Digital is looking tells you quite a lot about the places many telcos believe the hunt for significant new revenue has to be focused.
Telefónica Digital was created in September 2011 with the intent of creating revenue for services beyond the traditional network connectivity offered by telecommunications operators.
What is noteworthy are the areas Telefónica Digital believes can drive incremental revenue: mobile commerce, mobile advertising, machine-to-machine services, e-health, video and content, digital security and cloud computing.
In the mobile commerce area, Telefónica has launched a “Direct to Bill” service for application providers selling content or apps to mobile customers, particularly in Latin America where credit card penetration is low and 60 percent of the population does not have bank accounts.
In Germany, some 400,000 customers per month on average are now making payments for a variety of products and services using the service, and Telefónica plans to have the capability live in 14 markets globally by the end of 2012.In the machine to machine area, Telefónica has developed a low-cost version of the Arduino “GSM/GPRS Shield,” allowing devices to use Telefónica's machine to machine (M2M) network.
TU Me, a mobile voice and messaging app, is the first service from Telefónica Digital to launch directly to consumers, and the first time Telefónica has launched a product worldwide, regardless of its operating markets.
Telefónica also is launching a mobile advertising effort in Brazil.
Only over time will it be possible to assess the size of the various opportunities, or Telefónica’s success with its chosen development approach. At least for the moment, Telefónica is betting that application and service development is best conducted “outside” the operating units.
You might liken that as a return, in some sense, to an older pattern of development, where outfits such as AT&T Bell Laboratories or “Bell Communications Research” attempted to create new services and products that operating companies could deploy.
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Edited by
Brooke Neuman 
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