© Copyright 2005, Yankee Group Research, Inc. All rights reserved. Camille Mendler Vice President Yankee Group Driving Global Change How Asia and Europe

© Copyright 2005, Yankee Group Research, Inc. All rights reserved.

Camille MendlerVice PresidentYankee Group

Driving Global Change How Asia and Europe lead the global ICT market

NetEvents Singapore19 May, 2006

Page 2© Copyright 2006, Yankee Group Research, Inc. All rights reserved.

Agenda

• Introduction• Comparing regional trends• Issues to address• Conclusions


Which of these Victorians was right?

“East is East and West is West and never the twain shall meet”

Rudyard KiplingThe Ballad of East and WestThe Ballad of East and West

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one most adaptable to change.”

Charles DarwinOrigin of the SpeciesOrigin of the Species


Inter-regional dependencies growMultinational companies: 2006 network expansion

Source: Yankee Group 2005 Global Network Strategies Survey, n=1,198 multinational companies globallyRegional samples: Western Europe=317, North America=370, Asia Pacific=311, Latin America=200

81% have network in

Asia

76% have network in

Europe

Continental Asia: 42% will increase capacityPacific Rim: 35% will increase capacity

W. Europe: 28% will increase capacityE. Europe: 24% will increase capacity


Europe and AsiaLarge Enterprise WAN Challenges

Key WAN Challenges

27%

21%

27%

30%

19%

31%

41%

47%

43%

60%

0% 10% 20% 30% 40% 50% 60% 70%

Europe

APAC

Remote & mobile access Network capacity

Disaster recovery/business continuity Containing costs

Network security

Network security key issue across both groups

Source: Yankee Group 2005 Global Network Strategies Survey


Enterprise Priorities By RegionKey investment areas in 2006

Rank North America

Western Europe

Asia Pacific

Latin America

1 Network security solutions

Network security solutions

Expanding Business Operations

VoIP/IP Telephony

2 VoIP/IP Telephony

VoIP/IP Telephony

Implementing business application (SAP, CRM, BI, etc.)

Improving Mobile Communications

3 Improving Mobile Comms

Storage & Data Back-up

Disaster Recovery

Implementing business applications (SAP, CRM, BI, etc.)

VOIP/IP Telephony not a priority across Asia Pac enterprises



Europe and AsiaDisconnect on enterprise IP convergence

IP Telephony Status

5.1%

6.3%

46.9%

15.7%

19.6%

14.8%

79.1%

74.1%

38.3%

NorthAmerica

Europe

APAC

No plans Budgeted plans Deploying

IP Network Convergence

14% 12% 9%

11%25%

13%

26%

25%

17%

21%11%

7%

0%

20%

40%

60%

80%

Europe North America Asia Pacific

Throughout entire network

Between major domestic and international sites

Between major domestic sites

Between major international sites

Almost half of Asia Pacific enterprises have no immediate IPT plans



Europe and AsiaHousehold Penetration: Fixed Broadband Subscribers

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2004 2005 2006 2007 2008 2009 2010

Pe

rce

nt

Australia

China

Hong Kong

India

Japan

South Korea

Western Europe

© Copyright 1997-2006 Yankee Group Research, Inc. All rights reserved.

• Debate continues on level of market saturation for fixed broadband

• Selected Asia Pacific markets more mature in consumer market

• Battle for ARPU vs. penetration


Europe and AsiaBroadband Pricing Shifts Fuel Adoption

• Downward pricing trend in consumer and residential markets.• China and India: deep cuts in business between 2002 and 2005• Australia: Aggressive cuts in residential broadband• Price remains the key broadband facilitator to boost uptake in several

Asian economies—with the exception of Korea, where the broadband market has reached maturity

Source: Yankee Group Global Consumer Fixed-Line & Media and Business Fixed-Line Forecasts, Q1 2006

Consumer DSL ARPU

$0

$10

$20

$30

$40

$50

$60

$70

2002 2003 2004 2005 2006

Australia

China

HongKongIndia

Japan

SouthKoreaEurope

Business DSL ARPU

$0

$50

$100

$150

$200

$250

$300

2002 2003 2004 2005 2006

Australia

China

HongKongIndia

Japan

SouthKoreaTotalEurope


EMEA

2005 2006 2007 2008 2009

Europe and Asia: Next Generation BroadbandMeeting the need for speed

Asia Pacific

2005 2006 2007 2008 2009

VDSL/VDSL2VDSL/VDSL2

ADSLADSL

ADSL2+ADSL2+

Massive shift away from ADSL. But Europe’s lack of investment in fibre optic upgrades beginning to impede.Currently <20% of European local loops are VDSL capable

Source: Yankee Group Global Broadband Forecast, Q1 2006


Asia Pacific Private Sector Investment in Greenfield Projects

• Commitment to ICT development linked to private sector

• Examples where constitutional reforms and interim measures taken to facilitate telecom liberalization

– KOS joint operating schemes in Indonesia, BTO schemes in Thailand and BCC in Vietnam

• Since 2000, growth in private infrastructure investment projects

• Greenfield projects most common, with exception of China, where divestitures preferred

• Companies pursuing infrastructure projects changing

– National large enterprises important participants.

– Eg: Reliance, Bharti in India and Banpu in Thailand

Private telecom project investments 2001-2004

$0 $2 $4 $6 $8

China

India

Indonesia

Thailand

Divestiture Greenfield project

Source: World Bank PPI Project Database and Yankee Group, 2006

• Level of greenfield investment will drive innovation in Asia Pacific

• European infrastructure investment trends more muted, focused to new EU member nations


Show me the moneyMobile revenues by region 2003 to 2010 ($ millions)

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

2003 2004 2005 2006 2007 2008 2009 2010

Asia-Pacific

Europe

Africa

Middle East

North America

Latin America

Differences in ARPU mask vast size of Asia Pacific market in subscriber terms

Source: Yankee Group Global Mobile Premium Forecast, Q1 2006


Asia and EuropeMobile Data Revenues – 3G and beyond?

APAC

Consumer Messaging Share of Data Revenue

Infotainment Share of Data Revenue

Mobile Marketing/Advertising Share of Data Revenue

M-Commerce Share of Data Revenue

Enterprise Share of Data Revenue

Europe

Consumer Messaging Share of Data Revenue

Infotainment Share of Data Revenue

Mobile Marketing/Advertising Share of Data Revenue

M-Commerce Share of Data Revenue

Enterprise Share of Data Revenue

Enterprise market undeveloped

Infotainment market less developed

Source: Yankee Group Global Mobile Premium Forecast, Q1 2006


Asia Pacific and EuropeAll Eyes on Broadcast Mobile TV and IP TV

Asia: Mobile TV Deployments

Operator Country Standard

KT Freetel Korea T-DMB

LG Telecom Korea T-DMB

SK Telecom Korea S-DMB, T-DMB

NTT DoCoMo Japan ISDB-T

KDDI Japan ISDB-T

Vodafone KK Japan ISDB-T

Beijing Jolon China T-DMB

Guangdong Mobile Television Media

China T-DMB

Europe: IP TV Deployments

Operator Country Service/ Platform

France Telecom

France, (Neth, Spain, UK)

Ma Ligne TV

Fastweb Italy Basic, etc

Free France Freebox

Telefonica Spain, (Czech, Chile, Brazil)

Imagenio

Grupalia Spain Superbanda.net

Homechoice UK Big/base pack

Fitness for purpose? “You can’t eat a sandwich through a straw”


Global deploymentsMobile TV Standards

StandardSpec

DVB-H T-DMB S-DMB MediaFLO IP Datacasting

ISDB-T

Regions Europe, US Asia, Europe Korea US, Japan Global Japan

Channel switching

5 to 8 seconds 2 to 3 seconds 2 to 3 seconds 1.5 seconds N/A N/A

Major Backers

Nokia, TI, Samsung, Philips, Crown Castle, Motorola, Freescale

Korean govt., Samsung, LGE, Toshiba, Frontier Silicon

Samsung, LGE, SK Telecom

Qualcomm, KDDI

Ericsson, Qualcomm, IP Wireless

NEC, Fujitsu, Sony, Mitsubishi

Pros •Piggyback DVB-T sites•Largest list of backers

•Broadcasts over DAB spectrum, largely available Europe and Asia

•First mover advantage

•Spectrum secured in US•Minimal infrastructure investment for US operators

•No spectrum issues•Positioned as bridge to broadcast•Regulatory consistency

•Easy setup in Japan due to existing infrastructure

Cons •Securing spectrum•User experience

•Bulky antenna•Power consumption

•Bulky antenna•Line of sight needs heavy investment•Power consumption•Finite satellite lifespan and repair issues

•Fewer backers outside US, Japan

•Non TV like experience

•Limited to Japan•Power consumption


Issues to AddressLearning from each other

Asia Pacific• Mobile

– Success of Mobile TV still under question – business model/technology

– Leading mobile consumer infotainment

• Fixed Broadband– Saturation in some residential

markets, future push in enterprise– VOIP services now gaining strong

attention– Leader in FTTH

• Content– No global content competitor– Still dominated by US firms

Europe• Mobile

– Operators begin to admit that 3G investment has been disastrous

– Push to reduce opex– Push to find/retain higher ARPU

subscribers (eg: enterprise)• Fixed broadband

– Infrastructure issues begin to impact deployment

– Push for IPTV may be muted– VOIP everywhere

• Content– Wanadoo (France Telecom) only

strong European content provider – but far behind US

Evolution is inevitable, survival is not


Camille Mendler

Vice President

[email protected]

+44 207 307 1085

Charles Moon

Senior Analyst

[email protected]

+852 9047 2490

www.yankeegroup.com

Any Questions?

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© Copyright 2005, Yankee Group Research, Inc. All rights reserved. Camille Mendler Vice President Yankee Group Driving Global Change How Asia and Europe