Frederic Pujol.ppt

DIGIWORLD SUMMIT

Mobile Service ForumRedefining mobile business models

IDATE Contact

Frédéric PUJOL

+33 (0)4 67 14 44 46

[email protected]

2

29th IDATE International Conference

Redefining mobile business models

3


3.5G deployment

Faster speeds and enhanced capacity 3G+, Turbo3G… Up to 7.2 Mbps (downlink)

… cheaper rates Unlimited data packages

Operator Tariff Subscription (EUR/month)

Data included (Mb)

Tarif per add. Mb (EUR)

Contract duration (months)

Vodafone (UK) Mobile Broadband 24

0.00 ou 12.60 EUR/24 hours

- - 18

Mobile Broadband

37.00 Unlimited (or fair use de 3000)

- 18

T-Mobile (UK) Web'nWalk business

43.10 Unlimited (or fair use de 3000)*

- 18

Vodafone (SP) Tarifa Datos Basica Nuevo

15.00 30 1.00 nc

Tarifa Datos Professional Nuevo

25.00 200 1.00 nc

Tarifa Plan 3G Nuevo

32.00 and then 39.00

1000 0.20 nc

Tarifa Plan 3G Premium Nuevo

49.00 5000 0.20 nc

Vodafone (GER) Vodafone Web-Connect – Large

19.95 200 1.30 24

Vodafone Web-Connect –Xlarge

34.95 400 1.30 24

Telefonica Moviles (SP)

Tarifa Plana 3.5G sin limites

58.00** Unlimited (or fair use de 5000)

- nc

Optimus (P) - 39.90 6000 - nc

TeliaSonera (Sw)

- 21.51 Unlimited (or fair use de 6000)

- nc

SFR (Fr) Clé Internet 3G+ 55 1000 - 24

Era (Pl) - 31.90 4000 - nc

The real mobile broadband?Source: GSA October 2007 Source: IDATE

4


Mobile terminals & OS

Evolutions threatening

mobile operators’ revenues

iPhone (not yet 3G)

Nokia’s initiative► Nokia & Navteq map/navigation services► OVI P/F: Music, games, maps…

Operating System►Google & Android (gPhone's open software platform) Based on Linux

► Open Handset Alliance► Handset expected in 2S2008 (HTC…)

Apple30% mobile bill revenue Apple

Skypephone►Free calls & IM between Skype users + Skype-compatible phones

?

5


Mobile trends

Western Europe HSDPA deployment Decreasing ARPU MNO revenues and EBITDA margins under pressure Data services growing slowly; voice & SMS still

represent the lion’s share of revenues Regulatory pressure: termination rates, international

roaming FMC Femtocells

Apple, Google?

Nokia

Telefónica

Mobile advertising

Mobile search

World Telecom Services market

Source: IDATE

Up

Down

MVNOs

CDMA 2000

Mobile WiMAX

Mobile TV?

0

200

400

600

800

1 000

1 200

2002 2003 2004 2005 2006 2007

Bil

lio

n € Data & Internet

Mobile services

Fixed telephony

Western Europe HSDPA deployment Decreasing ARPU MNO revenues and EBITDA margins under

pressure Data services growing slowly; voice & SMS still

represent the lion’s share of revenues Regulatory pressure: termination rates,

international roaming FMC Femtocells

UMTS Share in major Western European countries

2004: 327 million mobile customers 2006: 392 million mobile customers

3G2%

3G13%

*Germany, Belgium, Spain, France, Greece, Italy, Netherlands, United Kingdom, Sweden, Switzerland

Source: IDATE

6


3.5G issues disruptions / Japan and South Korea: 3G pionners

A more important 3G penetration rate Earlier launch Quicker diffusion

Asia is leading in terms of 3G subscribers figures

Japan - 2004

2G9%

3G

South Korea - 2004

2G26%

3G

Japan - 2006

2G39%

3G

South Korea - 2006

2G40%

3G

Asia Pacific

76%

Western Europe

19%

North America

4%

ROW1%

Asia Pacific

51%

Western Europe

30%North America

15%

ROW4%

Source: IDATE

3G market shares (%)

2006: 149 million 3G subscribers2004: 32 million 3G subscribers

Source: IDATE

7


3.5G issues disruptions / Mobile trends: 3G data ARPUD

ata

AR

PU

/ B

len

ded

AR

PU

(%

)

Data ARPU (EUR)

0 20

10

20

30

5 10 15

O2 UK

O2 GERO2 IRL

Orange NL

KPN

E-PlusOrange CH

Orange UK

Proximus

Orange FR

TEM

Base

SFR

KDDI

NTT DoCoMo

Optimus

SKT

Advanced MNO :-European 3G-only players-European strongly advanced-Asian 2 and 3G

Mid-advanced MNO

Less advanced MNOCW

VW

WIN KDDI

FOMA DoCoMo

Advanced MNOs’ 3G data

40

3 Austria

3 IT

3 SE/DN

3 AUD

KTF

3 UK

3G ARPU…2006 data

Source: IDATE

8


South Korea

3G technologies competingMobile subscribers by operator

LGT17%

SKT52%

KTF31%

0

1 000 000

2 000 000

3 000 000

4 000 000

5 000 000

6 000 000

2006. 6 9 12 2007. 3 4 5

SDMB TDMB

Mobile TV subscribers

Source: IDATE

Source: MIC

Source: MIC

9


South Korea

HSDPA rapid growth …

KT expects 3.1 million WiBro subscribers with ARPU of $33 per month by 2010

… but disapointing WiBro figures

KTF 1,676,000 (67%)

SKT 808,000 (33%)

1 6003 300

6 100

8 300

21 700

0

5 000

10 000

15 000

20 000

25 000

Dec. '06 Mar. '07 Apr. May Jun.

0

200 000

400 000

600 000

800 000

1 000 000

1 200 000

1 400 000

2007.1 2 3 4 5 6

Samsung PDA (SPH-M8100)

LG PDA (LG-KC1)

Source: IDATE Source: IDATE

Source: IDATE

10


South Korea

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

2001 2002 2003 2004 2005 2006 2007 1Q

Voice Data

0

5

10

15

20

25

30

35

2001 2002 2003 2004 2005 2006 2007 1Q

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

2001 2002 2003 2004 2005 2006 2007 1Q

Voice Data

Source: IDATESource: IDATE

Source: IDATE

Source: KTF

Voice vs. data ARPU of SKT (KRW) Data ARPU % Total ARPU - SKT

Voice vs. data ARPU of KTF (KRW)Data ARPU % by network - KTF

11


Japan & USA

JAPANA dynamic 3G market: close to 60% of the mobile market (1Q07)

EV-DO subscribers representing 51% of KDDI’s subscriber base (1Q07)

WCDMA: 67% of DoCoMo subs and 48% of Softbank subs

ARPU Data ARPU representing 32% of total ARPU

(2Q07)

Increasing competition Softbank more aggressive New mobile WiMAX licences But IP Mobile files for bankruptcy Reduced T/O and margins

USA A significant increase in data ARPU : from 12% of total ARPU in 2006 to 15.5% (1S2007)

Verizon 3Q2007 Revenues up 14.4 percent. Data ARPU revenues up 42.9%. ARPU levels highest ever: $52.17

AT&T 3Q 2007 41 % rise in third-quarter net income 1.4 million iPhones since launching the Apple-branded device in late June A 64 percent increase in mobile data revenues

SPRINT-NEXTEL – Mobile WiMAX

Source: DoCoMo

The Japanese mobile market

12


Spectrum issues / The spectrum “hot topics”

WRC ’07 (October-November 2007) Mobile or 4G frequency bands Mobile services in the UHF and 3.5 GHz bands

The Digital Dividend (RRC ’06)

UMTS in the GSM bands

The 2.6 GHz band & WiMAX development in Western Europe

400 600 700 800

1 GHz

2 GHz

2 GHz

4 GHz3 GHz

3 GHz

4 GHz5 GHz

5 GHz

6 GHz

300 900 1 GHz200100 MHz

Mobile services (IMT 2000)

GSM & UMTS core

UHFVHF

L-Band

UMTS extensionUnlicensed 2.4UMTS core

S band

IMT candidate

IMT candidate

IMT candidateIMT candidate

Unlicensed 5 GHz

IMT candidate IMT candidate

174 223 470

806/862

862

2500 2690

3400 3800

24832400

2300

Unlicensed 5 GHz5470 5725

410

430

450

880 960

GSM

4200

27002900

44004990

500

1452 1492

Fixed wireless access

5150 5350

C band

PMR Broadcasting Fixed services Unlicensed Satellite

915 925

1710 1785 1805 1880

2010-2025 2110

19801900

2170

1920

DECT1479.5

380

1375 14001517

14271350

3600

C band

2200

Source: IDATE

13


Spectrum issues

Digital dividend: broadcast & mobile servicesin UHF bands

3G « extension band » (2.6 GHz)

Refarming: UMTS in 2G frequency bands

IMT advanced bands (« 4G »)

Dynamic access to spectrum

USA 700 MHz auctions

Short term

Long term

14


Spectrum issues / Major breakpoints in the spectrum field

Mainland China France Japan USA

Telecom 3 3 (15%)

3 3

Broadcast 1 1 (46%)

1 2

Defence 2 2 (33%)

2 1

Civil aviation 4 4 (3%)

4 4

Space 5 5 (0.5%)

5 5

Mainland China France Japan USA

Telecom 2 2 (35%)

2 2

Broadcast 5 5 (0.2%)

5 5

Defence 1 1 (44%)

1 1

Civil aviation 3 3 (9%)

3 3

Space 4 4 (5.6%)

4 4

Source: IDATE

Main users of radio spectrumRanking of spectrum users by sector below 1 GHz Ranking of spectrum users by sector between 1 and 10 GHz

Main factors driving spectrum demand:

Development of mobile traffic, multiplication of wireless technologies

Development of broadband wireless access

Convergence in wireless industries New entrants

More spectrum and/or smaller cells?

Evolution 1950-2000

15 times by using more spectrum (3 GHz vs. 150 MHz)

5 times from better voice coding

5 times from better MAC and modulation methods

2,700 times from smaller cells

Total gain 1 million-fold

15


Spectrum issues / What is the spectrum / licences price?

3G licences priceCountry 3G Holders Price per licence

(EUR) Spectrum FDD + TDD Method

Denmark TDC

Telia Denmark

Orange

H3G

0.127 billion

0.127 billion

0.127 billion

0.127 billion

2x15MHz + 5MHz

2x15MHz + 5MHz

2x15MHz + 5MHz

2x15MHz + 5MHz

Sealed bid process

France Orange France

SFR

Bouygues Telecom

619 million, plus a 1% tax on UMTS revenues

2x15MHz + 5MHz

2x15MHz + 5MHz

2x15MHz + 5MHz

Beauty contest

Germany Vodafone D2

T-Mobile Deutschland

E-Plus

O2 Germany

Mobilcom*

Quam (3G Group)

8.4 billion

8.5 billion

8.4 billion

8.4 billion

8.4 billion

8.4 billion

2x5MHz + 5MHz

2x5MHz + 5MHz

2x5MHz + 5MHz

2x5MHz + 5MHz

2x5MHz + 5MHz

2x5MHz + 5MHz

Auction

Italy TIM

Vodafone Omnitel

Wind

ISPE2000

Andala (H3G)

2.417 billion

2.448 billion

2.427 billion

2.442 billion

2.427 billion

2x10MHz + 5MHz

2x10MHz + 5MHz

2x10MHz + 5MHz

2x15MHz + 5MHz

2x15MHz + 5MHz

Hybrid: auction and beauty contest

The Netherlands

KPN Mobile

Vodafone (Libertel)

Orange (Dutchtone)

Telfort

T-Mobile Netherlands

0.7 billion

0.7 billion

0.4 billion

0.4 billion

0.4 billion

2x15 MHz +5MHz

2x15 MHz +5MHz

2x10 MHz

2x10 MHz

2x10 MHz

Auction

Spain Telefónica Moviles

Vodafone Spain (Airtel)

Amena

Xfera

0.13 billion

0.13 billion

0.13 billion

0.13 billion

2x15MHz + 5MHz

2x15MHz + 5MHz

2x15MHz + 5MHz

2x15MHz + 5MHz

Beauty contest

The UK Vodafone UK

O2 UK

Orange UK

T-Mobile UK

Hutchison 3G UK

9.85 billion

6.65 billion

6.75 billion

6.61 billion

7.23 billion

2x15MHz + 5MHz

2x10MHz + 5MHz

2x10MHz + 5MHz

2x10MHz + 5MHz

2x15MHz

Auction

An average value of10 EUR per pop

(upfront payment only)

A maximum value of164 EUR per pop

A maximum value of106 EUR per pop

An average value of23 EUR per pop

An average value of3.2 EUR per pop

Source: IDATE

16


Spectrum issues / What is the spectrum price?

Country Main licence holders Licence reach Price per licence FDD spectrum Method

Austria

WiMAX Telecom GmbH (6 regions)Telekom Austria(5 regions)Telekabel (4 regions)Telesystem Tirol and Teleport Consulting (1 region)

RegionalAssignments in 6 regions

Total brought in by the auction:464,000 EURof which 160,000 EUR for a nationwide WiMAX telecom licence

3.4 GHz – 3.6 GHz band2x20MHz in each region

Auction (2004)

France

Bolloré TelecomMaxtel (50% owned by WiMAX operator Altitude Telecom)HDRR (90% owned by tower company TDF) Local authorities

Regional2 licences for each of the 22 metropolitan regions

The auctions brought in a total 125 million EUR (corresponding to 2 national licences)

3.4 GHz – 3.6 GHz bandTwo duplexes of 2x15MHz in each region

Hybrid: auction and beauty contest(07 2006)

Germany

Clearwire, Inquam and DBS got licences with national coverage. MGM productions got 2 regional licences and Televersa got one.

Four licences auctioned for 28 regions. Bidders could bid for Germany-wide Blocks, or only in specific regions.

The auctions brought in a total 56 million EUR (corresponding to 4 national licences)

Four paired 21 MHz blocks between 3.4 GHz and 3.6 GHz in each region

Auction(12 2006)

Norway 8 operators RegionalThe auctions brought in 6 million EUR

150 blocks of frequencies in the 3.4 to 3.6 GHz band

Auction(11 2004)

The UK

PCCW through UK subsidiary Pound Radio:13 licencesRed Spectrum and Public Hub obtained one licence each

15 regional licencesAuction of 2.5 to 2.69 GHz spectrum on techno / service neutral basis at the end of 2007.

PCCW 13 licences for a total of 6.3 million GBP and 330,000 GBP for each remaining licence

3.4 GHz band Auction (05 2004)

SouthKorea

Korea TelecomSK TelecomHanaro Telecom*

National 87 million EUR per national licence

2.3GHz band(TDD spectrum)

Hybrid: auction and beauty contest(02 2005)

Fixed / nomadic servicesin Western Europe

An average license valueof 1 EUR per pop

Mobile services

So

urce: ID

AT

E

Price of WiMAX licensesin selected countries:

17


Options for 4G / Which spectrum for 4G?

Predicted spectrum requirements by the year 2020 for IMT – 2000 and IMT-Advanced

Candidate bands

Region 1 (Europe) Region 2 (Americas) Region 3 (Asia)

User Demand Setting

Predicted Total (MHz)

Identified (MHz)

Net Additional

(MHz)

Identified (MHz)

Net Additional

(MHz)

Identified (MHz)

Net Additional

(MHz)

Low 1280 693 587 723 557 749 531

High 1720 693 1027 723 997 749 971

Band Spectrum (maximum)

410 - 430 MHz 20 MHz

450 - 470 MHz 20 MHz

Parts of 470 - 806 (862) MHz 336 MHz (392 MHz)

2300 - 2400 MHz 100 MHz

2700 – 2900 MHz 200 MHz

3400 - 4200 MHz 600 MHz

4400 - 4900 MHz 500 MHz

Note to Table: Predictions are based on one network deployment

Source: ITU

Source: IDATE

18


Options for 4G

GSM

TDMA-136

IS-95

IDen

PDC PDC-P

GSM

HSCSD

GPRS

EDGE

W-CDMA

HSDPA

GSM/GPRS

EDGE

W-CDMA

HSDPA

IS-95BCDMA

2000 1x

CDMA 2000 1xEV-

DO

CDMA 2000

1xEV-DO Rev

a.

PDC-PW-

CDMA

TD-SCDMA

W-CDMA

2.5G 3G2G

GSM operators (Europe, The Americas, Asia)

TDMA-136 operators (The Americas)

IS-95 operators (The Americas, Asia)

iDEN operator (United States)

PDC operators (Japan)

GSM operators (China)

Main logical migration

Possible migration

HSDPA

IS-95 IS-95BCDMA

2000 1x

CDMA 2000 1xEV-

DO

HSDPA

CDMA 2000

1xEV-DO Rev

a.

Specific cases (South Korea, Australia…)

LTE

UMB

HSDPA

4G

802.16m

1992 1996 2002 2006 2010-2012

3G4GVerizon: LTE?

2G3G: Telstra, Vivo…: CDMA 2000 to HSPDA migrationSource: IDATE

Documents

Frederic Pujol.ppt