GLOBECOM 2004

IEEE COMMUNICATIONS SOCIETY

Telecom Business Forum

Thursday, December 2, 2004

Beyond Broadband Business

Sanghoon Lee

KT

Beyond Broadband Business — 2 Thursday, December 2, 2004

Telecom Business So Far

• 1990s: Golden age• After 2000:

- Downfall of Main Revenue Stream

- (PSTN & leased line biz)

• Symptoms- Competition- Commoditization of

bandwidth & connectivity- IP technology- Moore’s law outpacing

demand- Stock market collapse

Beyond Broadband Business — 3 Thursday, December 2, 2004

Broadband & Wireless/Mobile as a Rescue

• Broadband take-up over first 10 years is faster than previous services across the OECD countries.

Cellular Subscribers (1985-1995)

Broadband Subscribers (1997-2003)

Narrow-band Internet Subscribers (1992-2001)

ISDN Subscribers (1989-1999)

• Mobile/wireless market goes over the fixed communication market

Fixed BroadbandCAGR 44%

Fixed, CAGR 1%(POTS/ISDN)

Mobile, CAGR 13%

No

of

Su

bsc

riptio

ns

(mill

ion

)

0

300

600

900

1200

1500

1800

2000 2001 2002 2003 2004 2005 2006 2007

2.5 / 3G

Beyond Broadband Business — 4 Thursday, December 2, 2004

Two Sides of Broadband InternetBusiness in Korea

Threat Opportunity&& Revenue: Saturating market with flat rate Expenditure: Increasing CAPEX/OPEX

due to doubling traffic High customer expectation level

Has established - high quality infrastructure - Large customer base Opportunities in application & value-added services

(Unit : Thousand)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

1998 1999 2000 2001 2002 2003 2004 2005 2006

Cumulative TotalAnnual Increment

(Unit : Thousand)

Beyond Broadband Business — 5 Thursday, December 2, 2004

Beyond Broadband Business

> From simple Internet access to “quality life/work services”

> From network service to application services

BrowsersBrowsers Web PagesWeb Pages

HTTPHTTPFTP …FTP …

Any-AccessAny-Access

HTTPHTTP

RTSPRTSPVoIPVoIPWAPWAP

RTPRTP

Wireline

Wireless

Tomorrow

Rich ContentsRich Contents

P2P,GameP2P,Game ServersServers

TodayYesterday

Simple InternetAccess

QualityLife/workservices

Beyond Broadband Business — 6 Thursday, December 2, 2004

Two Basic Questions for Telcos

SubstitutiveTele-presence, Broadcasting,

Networked Home….

Zone of AdversityZone of AdversityImpact of

Packet Services on Traditional Revenues

Alternative

PreemptiveChange inTraditionalTelecom ServicesRevenue

1997 2002 2007 2012

+10%

-10%

-20%

-30%

Telecom Baseline Revenue

+20%

+30%

• Second lines• E1/T1 Sales

Boom

Email, Internet Fax/Phone,Web Transactions….

Zone of OpportunityZone of OpportunitySeizing Digital Economy

SubstitutiveTele-presence, Broadcasting,

Networked Home….

Zone of AdversityZone of AdversityImpact of

Packet Services on Traditional Revenues

Zone of AdversityZone of AdversityImpact of

Packet Services on Traditional Revenues

Alternative

PreemptiveChange inTraditionalTelecom ServicesRevenue

1997 2002 2007 2012

+10%

-10%

-20%

-30%

Telecom Baseline Revenue

+20%

+30%

• Second lines• E1/T1 Sales

Boom

• Second lines• E1/T1 Sales

Boom

Email, Internet Fax/Phone,Web Transactions….

Zone of OpportunityZone of OpportunitySeizing Digital Economy

Zone of OpportunityZone of OpportunitySeizing Digital EconomyA

B

1. Will |A| >> |B|?2. Will Telcos dominate the market?

Beyond Broadband Business — 7 Thursday, December 2, 2004

Beyond Broadband Business: Features

> Different business• From access service to end-to-end service• Both best-effort & quality service• From network service to solution/application services• Applications: from niche market to mass revenue market

> Different focusUbiquity

Personalization

Convergence

QualityHandy

Current broadband“access” business

Bandwidth

Beyondbroadbandbusiness

Beyond Broadband Business — 8 Thursday, December 2, 2004

The Next Generation Network

> The following picture has been in place for more than 10 years

ServicesServicesD

ata

/IP

Netw

ork

sD

ata

/IP

Netw

ork

sD

ata

/IP

Netw

ork

sD

ata

/IP

Netw

ork

s

Mob

ile N

etw

ork

sM

ob

ile N

etw

ork

sM

ob

ile N

etw

ork

sM

ob

ile N

etw

ork

s

PS

TN

/IS

DN

PS

TN

/IS

DN

PS

TN

/IS

DN

PS

TN

/IS

DN

CA

TV

CA

TV

CA

TV

CA

TV

Access Transport & Switching NetworksAccess Transport & Switching Networks

WirelessAccess

WirelessAccess

WirelineAccess

WirelineAccess

Multi-Service IP Backbone

Existing and newlyemerging services

Network control (QoS, Security, IP Mobility)

Too costly, per-service network architecture

Single/simple/cost-effective network infrastructure for existing & new services

Beyond Broadband Business — 9 Thursday, December 2, 2004

NGN: From Vision to Reality

> BcN Initiative in Korea

high-quality broadband multimedia services integrating telecom, broadcasting,and Internet seamlessly at anywhere, anytime, and using any devices