Device and service strategy

More handsets, greater co-operation across Telefónica Group

O2 has been working closely with all Telefónica operating businesses to align its terms and conditions with handset vendors, and its mobile device roll-out plans, whilst taking into account local market differences.

O2 has leveraged the scale of being part of Telefónica to either get savings and/or exclusivity, including time to market or model of phone. O2's chosen vendors now offer it more exclusive devices as part of the Telefónica group. For example, at the end of 2006, O2 had the broadest range of exclusives ever - 44 post-pay handsets and 24 pre-pay.

During 2008, will O2 continue to leverage the scale of Telefónica to deliver more exclusive devices and additional own-branded phones.

3G Growing

3G growth is accelerating as enhanced devices are becoming more widespread in the market. We continue to invest further in network coverage where demand exists.

During the last year, O2 continued to add to its range of 3G mobile data services. As well as PC data-cards aimed mainly at the business market, it launched O2 Cocoon - an own-branded 3G handset featuring MP3 player, 2 megapixel camera, video calling and one button access to the O2 Music Shop.

The successful O2 Active portal continues to offer a personalised menu and faster access to a wide range of innovative data content. More than 40% of O2's customers in the UK, Germany, Czech Republic and Ireland use a non-SMS data service on a regular basis.

Across all its markets O2 is taking a measured, market-driven approach to the introduction of new services for 3G, rather than just selling new technology. O2's goal is to deliver mobile data services that customers truly value, which means offering compelling devices, a great customer experience, ease of use, and value for money.

i-Phone

Apple has launched the revoluntionary iPhone, exclusively with O2 in the UK and Ireland.  

iPhone combines three amazing products - a revolutionary mobile phone, a widescreen iPod with touch controls, and a breakthrough internet communications device with the best applications ever on a mobile phone for email, web browsing, maps and searching - into one small and lightweight handheld device.

iPhone also introduces an entirely new user interface based on a large multi-touch display and pioneering new software, letting you control everything with just your fingers.

We believe that the iPhone ushers in an era of software power and sophistication never before been seen in a mobile device, completely redefining what can be achieved on a mobile phone.

Moving beyond mobile

The enlarged Telefónica O2 Europe Group is helping O2 towards its push to moving beyond mobile into fixed broadband and converged services.

O2 is already providing a number of converged fixed / mobile offers in the Czech Republic and, O2's recent launch of broadband in the UK and Ireland, coupled with our partnership with Telefónica, will help speed up this shift and enable us to draw on their considerable strengths whilst maintaining in-country market needs and dynamics.

Mobile broadband strategy set out

O2 has launched HSDPA across its territories within the UK, Germany, Ireland, Isle of Man and the Czech Republic.  Its launch plans are well advanced for other territories, but the range of devices is currently limited. O2 has learnt with 3G, from its own experience and that of others, that customers value choice - so as with 3G the launch timing will be influenced by the range of devices available and by the demand. 

Approach to 'user-generated' content

The digital content market is growing at a rapid rate but it is still small in comparison to the overall communications market.  O2 remains committed to delivering content and applications to its users as their needs develop. But 'content' means many things to many people.

There has been a lot of talk of the rise of user generated content during 2007. O2 spotted this trend back in 2002 when it referred to it as 'Conversational Content' and its 'Look At Me' service is showing very encouraging early signs.

In Ireland, we've joined forces with Bebo to launch a new Bebo mobile service, exclusively for O2 customers.

Mobile advertising

O2's initial research into mobile advertising has shown that there are three main models that it believes are worthy of further investigation;  banner advertising which has proven popular in France, advertising funded content - of which there has been some early trials - and advertising on keyword search.  However, O2 believes that the most important element is to ensure that the customer experience is right, and therefore it will be undergoing its own trials in 2007.  O2 will be sharing results with Telefónica's other mobile business, movistar. 

In general terms, O2's approach is to ensure that any advertising is not obtrusive, but the content is of benefit and importance to the user.