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Which are the most successful LTE operators to date, and why? How have they positioned LTE to drive customer uptake? Which pricing and value propositions are working in the market and which aren’t? What strategies are operators adopting for voice over LTE? How can operators maximize the value of their LTE investments? How have different operator strategies influenced LTE subscription uptake? How are consumers using LTE? How much data are they consuming and what apps are driving growth?
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LTE launch strategies
What’s working and what isn’t
London, 2-3pm GMT, 29 November 2012
Paul Lambert Thomas Wehmeier Senior Analyst Principal Analyst
Operator Strategy Operator Strategy
LTE is at the top of everyone’s priorities
What will be the single most important area of focus
for telecoms and TV operators in 2013?
Which technologies and strategies will drive profitable
top-line growth in your organization in 2013?
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0% 5% 10% 15% 20% 25% 30%
Other (please specify)
Partnerships with otheroperators and Internet players
Efficiencies, cost control and bestpractice
New digital service developments(digital services)
Customer experiencemanagement
Network deployments anddevelopments (NGN and LTE)
% of respondents
Source: Informa’s Industry Outlook Survey 2013, Oct 2012, CSP respondents only, n=280
0% 10% 20% 30% 40% 50% 60% 70%
Other (please specify)
SDN
Ethernet
High-definition video
Wi-Fi
Multiscreen video
Machine to machine (M2M)
On-demand video
Converged billing
Apps and app stores
Superfast fixed-line broadband
Cloud computing
4G / LTE
% of survey respondents
Where is LTE today?
• 111 live networks in 50+ countries
• Reaching more than 0.5 billion people
• ~50 million connections to LTE networks
• Over 550 LTE-enabled devices, according to GSA
LTE connections by geography, 3Q12
Number of LTE-enabled smartphones by operator, Nov 2012 Global commercial LTE network deployments, Nov 2012
Source: Informa Telecoms & Media
~90% of total global connections
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• Not charging a premium for LTE over 3G is used by some of the most successful LTE operators, measured by subscriptions. • Main strategic LTE tariffing choice facing operators is: charge a premium over 3G (if so, how much?) or price LTE on a par with 3G? • LTE operators that charged a clear premium over 3G are adjusting their prices to bring them in line with 3G rates.
Operator LTE connections % of total base Current premium v 3G (%)*
Verizon Wireless 14.9m 13 0
NTT DoCoMo 6.2m 10 0
SK Telecom 5.7m 21 0
AT&T Mobility USA 5.1m 5 0
LG U+ 3.6m 36 0
KT Corp 2.5m 15 0
Metro PCS 1.1m 1 0
Rogers Wireless 0.8m 8 0
Yota 0.7m 100** n/a
Telstra 0.6m 4 0
*Lowest-priced LTE monthly subscription compared with lowest price 3G subscription **LTE-only network operator Source: Operators, Informa Telecoms & Media
Top 10 largest LTE operators by connections, 3Q12
Which operators have had the most success?
Ready, set, go. When’s the right time to launch?
• Spectrum acquisition
• Spectrum refarming & liberalisation
• Technology leadership & 1st-mover adv
• Technology transitions (CDMA, WiMax)
• Government stimulus
• Competitive dynamics
• Vendor push & lemming mentality
• LTE ecosystem maturity
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Key “business case” drivers
• Increase total bandwidth availability
• Improve customer experience
• Lower the cost of data delivery
• Alleviate traffic bottlenecks
• Drive customer upsell (ARPU accretion)
• Differentiate proposition and grow share
• Open up new revenue streams
• Enhance competitive positioning
External factors driving launch timings
Is there a “smart follower” advantage?
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Mature device ecosystem
Pricing & positioning clarity
Voice over LTE maturing
Advances in LTE roaming
Network stability & reliability
Understanding of usage patterns
Speed
Coverage
Latency demos on operator websites
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What can users DO with 4G?
What are the end-user benefits?
How will their experience change?
What are the lessons learned in how to position
and market LTE to consumers?
Source: AT&T
Are any “LTE services” emerging?
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Consumer Business
Download High-definition video streaming and VoD
High-speed file transfers
Upload Personal content
sharing; consumer cloud applications
Enterprise cloud applications
Latency Online gaming; real-time voice and video
communications
Real-time voice and video communications;
corporate VPN
EE Film EE (UK)
Viewdini Verizon Wireless (US)
joyn MetroPCS (US)
Source: Informa Telecoms & Media
Popular services used to promote LTE benefits
•Operators will be able to charge a premium for VoLTE/RCS services
•Operators will begin to win-back traffic lost to alternative providers
•Operators will see some incremental increases in voice revenues
Best case scenario
•VoLTE/RCS will have no impact on traffic erosion to alternative providers
•Operators will be unable to charge any premium and prices will continue to decline
•Voice revenue declines will continue and, potentially, accelerate
Worst case scenario
•VoLTE/RCS will help slow the decline of traffic loss to alternative providers
•Operators will not be able to charge any premium
•Voice revenues will continue to decline, but at a slower rate
Likely scenario
Voice “for” LTE, VoLTE & the prospects for voice revenues
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VoLTE branding in Korea Live VoLTE deployments • SK Telecom (Korea), August 2012 • LGU+ (Korea), August 2012 • MetroPCS (US), August 2012
• User perception of interim voice for LTE solutions has been “surprisingly” positive
• Clear evidence of a shift to unlimited voice, e.g Verizon Wireless, EE, Swisscom
• There is a deep level of scepticism about the ability to monetise VoLTE/RCS
• “Rich” and “HD” voice services are “table stakes”, not premium services
• The “business case” for VoLTE appears to be based primarily on spectrum usage efficiency
• Operators are generally committed to VoLTE, but will not feel rushed to launch
• Operators that begin to approach nationwide
coverage will move quickest to VoLTE
Potential scenarios for voice
Selected early conclusions on voice for LTE
How are consumers using LTE? How much data
are they consuming?
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• LTE accounts for 35% of total data traffic
• LTE will surpass 3G traffic in early 2013
• Customers on Vodafone’s fixed-broadband replacement service use 11.5-12GB per month
• LTE smartphone users consume ~50% more data versus 3G smartphones
• Average monthly LTE smartphone usage is 1.6GB vs 1.1GB on 3G
• LTE smartphone users consume 8x more data compared to 3G users
• Users on MetroPCS unlimited LTE data plans consume 2-2.5GB on average per month
• LTE users consume 2-5x more data than 3G users
• LTE accounts for 10% of traffic despite
Source: All data as reported by operators directly
Concluding remarks
LTE is an evolution, not a revolution
Focus marketing on tangible benefits
Align all functions internally around the launch
Price LTE for the mass-market
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How can Informa Telecoms & Media help you to
develop your LTE strategy?
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Market status
Future market scenarios
Business models
Risk-reward analysis
Understand Business case modelling
Technology strategy
Go-to-market strategy
Device strategy
Build Pricing strategy
Segmentation strategy
M2M & wholesale strategy
Roaming strategy
Monetise
Further reading Free white paper: http://www.informatandm.com/wp-content/uploads/2012/07/Successful-LTE-strategies-white-paper.pdf
Premium analysis: https://commerce.informatm.com/reports/successful-lte-strategies.html
Thank you.
Paul Lambert Thomas Wehmeier
Senior Analyst | Operator Strategy Principal Analyst | Operator Strategy
@lambertpaul @twehmeier
