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We make ICT strategies work
Gambia
27.03.2014
LTE Licensing Strategies
Workshop
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Content
1. About Detecon Who We Are?
2. African LTE Technology and Licensing Gap
3. Licensing Challenges and Solutions for African Regulators
4. Licensing Challenges for Operators
5. Summary and Key Take-Aways
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About Detecon Who We Are
Detecon International GmbH is an ICT consultancy company with HQ
in Germany,
branch offices in 12 countries, about 1000 employees and a
turnover of $190m (2013).
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Our permanent staff in Johannesburg orchestrates all Detecon
consultancy projects in Sub-Saharan Africa
Over 50 consultants currently working on variousprojects in the
region
On demand support from global Detecon experts andfull access to
expert knowledge and the skill pool ofDeutsche Telekom.
Global Branch Offices and Positioning Detecon Office Central and
Southern Africa
We are international, with successful realization of more than
6000 projects
in 165 countries
We are the ICT and regulatory experts with more than 50 years of
consulting know-how in the telecommunications
sector
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Detecon - Services portfolio
Detecon is a cross sector Management & ICT consulting
company bridging the business
and IT side through a combination of process orientation and the
use of technology.
4
Corporate Strategy
Marketing Strategy
Sales Strategy
Wholesale Strategy
Regulatory Strategies and Regulatory Compliance
Strategy & Marketing
Corporate Finance
Cost Efficiency Programs & Measure Detailing
Full Due Diligence for Mergers/ Acquisition
Company Analysis and Assessment
Interims and turn around management
Financial Performance & Due Diligence
Service Oriented Enterprise Architecture
Infrastructure, IT & Innovation Strategy
Network Optimization & IT Application Mgmt.
Network Operations, Design & Change
ICT Governance & Risk Management
Infrastructure & Technology
Organization Design & Detailing
Process Design & Re-engineering
CRM and SCM
Human Resources Management
Field Force Optimization
Organization & Processes
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References LTE Support
Detecon - LTE References
Detecon has successfully delivered projects in the area of LTE
for a large number of
clients worldwide.
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RussiaBroadband Technology Study
GermanyLTE License Bid Support
GermanyCore Network Evolution
GermanyPMO for LTE Rollout
CanadaLTE Advisory
GermanySolution Design VoLTE
BulgariaLTE Cost Model
South AfricaTechnical Design
RussiaLTE Tender Compilation
EgyptBroadband Strategy
ChinaLTE Market Research
KazakhstanLTE Benchmarking
NamibiaNGMN Research Study
KazakhstanLTE Benchmarking
RussiaLTE Radio Network Planning
UAETechnology Roadmap
ThailandLTE Tender Compilation
MalaysiaLTE Tender Compilation
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Content
1. About Detecon Who We Are?
2. African LTE Technology and Licensing Gap
3. Licensing Challenges and Solutions for African Regulators
4. Licensing Challenges for Operators
5. Summary and Key Take-Aways
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African Technology Gap
Two thirds of the countries that still have not introduced 3G
are on the African
continent. These countries in particular should think about a
leap-froging to 4G directly.
7
World Commercial 3G Coverage Map
* Source: Estimate, ITU World Communication/ICT Indicators
database
Singapore76% since 2005
Malaysia56% since 2005
Philippines26% since 2006
China20% since 2009
Thailand12% since 2010
Vietnam21% since 2008
Indonesia37% since 2006
India6% since 2008
Portugal77% since 2004
Spain84% since 2004
Italy70% since 2004
Libya9% since 2006
Russia27% since 2007
Ukraine12% since 2008Poland
60% since 2006
2G Only Network 2G/3G Network
Numbers show 3G penetration rate for 2012 and year of 3G
launch
Iran3% since
2008/2012
World 2G/3G Coverage Map (2012)
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World LTE Coverage Map (March 2014)
African Technology Gap
Most countries outside Africa have deployed LTE, more than 70
countries put LTE in
service in 2012 and 2013.
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LTE in service LTE trial
LTE planned No info abt LTE
Canada ; 9,74%Since July 2011
USA ; 22,06%Since Sept 2010
Mexico: 0,043%Since Oct 2012
Brazil: 0,21%Since Dec 2011
Uruguay:0,06%Since Dec 2011
Austraia: 15,3%Since Sept 2011
Japan: 23,7%Since Dec 2010
Singapore: 18,8%Since June 2011
New Zealand: 3,7%Since Feb 2013
HK : 3,5%Since Dec 2010
S.Korea: 47,1%Since July 2011
India: 0,0%Since April 2012 Philippines : 0,01%
Since April 2012
Malaysia: 0,9%Since Jan 2013
Swedenl: 8,98%Since Dec 2009
Norway: 10,39%Since Dec 2009
France: 0,76%Since Nov 2012
Germany: 2,75%Since Dec 2010
Austria: 4,02%Since Nov 2010
Denmark: 3,34%Since Dec 2010
S.Africa 1,01%Since Oct 2012
Namibna: 0,22%Since May 2012
Uganda: 0,05Since Oct2012
Nigeria: 0,02%Since Feb 2013
UAE: 01,6%Since Sept 2011
Oman: 0,398%Since July 2013
Russia: 0,043%Since Jan2012
Kazakhstan: 0,28%Since Dec 2012
Croatia: 3,26%Since May 2012
Estonia: 1,49%Since Dec 2010
SA: 1,68%Since Sept 2011
Angola: 0,9%Since April 2012
Legend:
X,x% = LTE penetration as of Q3/2012
Since xx = LTE in service, based on march 2014 Source: Detecon
Analysis; WCIS Mobile BB Subscription, Q3/ 2013;4G Americas Global
Deployment Status, March2014
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Global Penetration Outlook
Digital Divide between Africa and the rest of the world has
narrowed for mobile voice in
the past, but the gap is increasing again for mobile
broadband.
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Source: IDATE 2013, Informa 2013
Despite fast subscriber growth over the next five years in the
African and Middle Eastern region the penetration is expected to be
less than 10% in 2018.
88% of LTE subscribers will live in developed regions, also
leading in terms of LTE subscriber penetration.
In combination with the under-developed fixed broadband
infrastructure the African continent is going to miss the economic
growth opportunities from global broadband access and
applications.
There is a clear necessity to speed up LTE licensing from the
regulators side and to invest into LTE from the operators side.
1.500
1.200
900
600
300
0
Subs [m]
2018
1.359
2017
961
2016
653
2015
432
2014
276
2013
150
2012
69
242
8982
685
260APAC
N America
MEA
Europe
S America
0
15
30
45
60
2012 2013 2014 2015 2016 2017 2018
APAC
N America
S AmericaMEA
Europe
113%
CAGR 2013/2018
112%
76%
34%
58%
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Key Findings & ChallengesGlobal LTE Subscriber Take-Up
Global LTE Subscriber Penetration [%]
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Frame TemplateMobile Data Traffic Explosion
The Information society of the future is based on ubiquitous
mobile data. African
operators will face significant challenges to upgrade networks
accordingly.
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More devicesper user
Higher speeds
More richcontent
Usage ofcloud
services
More mobile traffic
The formula for mobile data growth
GPRS
EDGE
UMTS
HSDPA
LTE 25 MBit/s
7 MBit/s
384 Kbit/s
217 Kbit/s
53,6 Kbit/s
+13.098%
2025
510.206
2011
3.866
Data
Tra
ffic
(P
B)
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LTE and Global Challenges
LTE can overcome some of the global challenges, but only if
African Regulators are
changing policy.
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Global Trends and the Necessity for LTE Licensing Challenges
Fixed - Mobile Convergence
Users want to have internet access to any service on any
device.
Future networks in high density areas will consist of a
small-cell in every building connected with fiber.
There is no more physical difference between a fixed or mobile
network.
Only if LTE small-cells will have the same costs as a WLAN
shrinking profitability can be avoided.
Traffic Explosion
Also in Africa mobile data traffic will double every year.
Most fixed operators do not have the financial capacities to
expand backbone networks accordingly.
IxPs and CDNs lacking
Mobile operators cannot monetize new data traffic, but need to
increase CAPEX and OPEX to invest in new Access and Aggregation
capacities.
This will result in shrinking profitability.
Restrictive regulation
African Regulators have to license LTE asap
Technology and service specific licensing needs to be replaced
by technology neutral licensing.
New spectrum has to be opened for LTE usage, existing spectrum
has to be re-farmed.
Restrictions for mobile operators to offer fixed network
components and services should be released.
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Content
1. About Detecon Who We Are?
2. African LTE Technology and Licensing Gap
3. Licensing Challenges and Solutions for African Regulators
4. Licensing Challenges for Operators
5. Summary and Key Take-Aways
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Issuing a license to allow the deployment of telecoms
infrastructure by private entities
is one of the regulatory instruments still commonly used in
developing countries.
General Authorization Licensing Contracting PPP
Telecoms Laws imposes the
Licensing Principle
Telecoms Laws states the freedom of
operation
Everything is forbidden unless explicitly allowed
Authorization by means of a license
Everything is allowed unless otherwise specified
Specific authorization required for scarce resources only
Everything is forbidden
Authorization only by means of contractual agreements
Examples: Many BOT contract variations
Involvement of private partner in execution of a public
mandate
Authorization by partnership with the private investor
No Telecoms Laws or no legal authorization
foreseen
Risk sharing between State and the private
partner
Examples
Syria Thailand Implemented worldwide
AfricaEU 27
Alternative Ways of Developing and Deploying Telecoms
Infrastructure
Global Licensing Trends
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Licensing and Regulatory Vision
The Regulators vision and objectives are important to design the
licensing type,
conditions and process.
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Qualification process
timing, license
duration, regulatory
milestones, ?
All existing operators,
some existing
operators, external or
internal newcomer(s)?
Market value of
license depending on
all regulations and
spectrum ?
Universal service
obligations,
infrastructure sharing,
national roaming, ?
Maximize license
revenue or economic
investment or roll-out or
protect incumbent, ... ?
LTE monopoly, LTE
wholesale monopoly,
infrastructure or service
competition, MVNOs, ?
Strategic Structuring of the Regulatory Framework
http://campustocareer.files.wordpress.com/2012/08/10714087-what-when-where-why-how-who-questions-white-chalk-handwriting-on-vintage-slate-blackboards-in-color.jpg
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The selection process for the operators can guarantee, that only
competent bidders will be licensed
Restricting the bid to 2 or 3 national operators will likely
lead to collusion and limit the value of the licenses
The auction design (Combinatorial Clock Auction, Sealed Bid and
Simultaneous Multi Round Auction ) can determine the number of
successful bidders and state objectives
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For spectrum reasons the no. of LTE MNOs has to be limited. A
combination of Beauty
Contest and Auction is best suited to select best capabilities
and best Business Plan.
Content
Price fixed
First Come First Serve
fixed
Lottery
variable
AuctionBeauty Contest
fixed
Hybrid Option
+ Lottery (tied bids)
Direct Granting
fixed
fixed
Competitive selection options
fixed
fixed
variable fixed variable
variable
Others N/A N/A N/A N/A N/A
Possible Selection Methods
Licensees
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Leapfroging or classical technology evolution
A technology-neutral license would allow each operator to use
his technology of choice
and to optimize the mix of technologies according to the
individual situation.
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All operators could get a LTE license immediately.
Advantages
Immediate jump into state-of the art technology
Complexity reduction with less systems and more efficient
technology, - consequently lower OPEX
High data rates, good rural coverage if low frequencies are
used
Modern latency dependent services (cloud, banking, games) need
LTE
Disadvantages
Possibly low LTE capable device penetration in Africa
Challenging Voice over LTE implementation
Operators with 2G license could get a 3G license first and
an LTE license later.
Advantages
Easy implementation of single RAN based on mature and cheap
technology
Retarded negative impact on WiMAX and existing 3G operators
Usage of hidden 3G potential of existing devices in Africa
Less problems with voice and core network
Disadvantages
More than 150 operators have launched LTE, Africa would be
behind leading technologies for years.
Higher total cost due to less efficient interim technology
Classical Technology Evolution Leap-Frog to LTE
GSM
UMTS
LTE
HSPA+
GSM
LTE
UMTS
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Service offering portfolio allowed
Spectrum allocation
Number portability enforced
Rights of way granted
Technical standards required
Fees, taxes, penalties
Interconnection rules
Infrastructure sharing enforced
(National) Roaming enforced
Retail price regulation
Universal Service Obligations
Roll-out targets and QoS rules
Legal interception requirements
Privacy and data protection rules
Dispute resolution process
.
Impact on License Value
Information Memorandum
Press Releases
Invitation to pre-qualify
Invitation to tender
Administrative documents
Terms of Reference, Terms of Conditions
Draft License Agreement
Connected regulatory documents specifying rights and
obligations
Business Case for LTE License
reflected in documents and B.-Case
License Value
Accurately anticipating cash flows for specific Regulatory
Scenarios is important to
achieve a fair license value. The impact of the regulatory
framework on NPVs is key.
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New LTE License:
Bidders will pay max. the NPV of the expected
additionalprofits from the license
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Baseline
Detecon uses a straightforward modeling approach to determine
the value (typically
used for Reserve Price) per spectrum lot.
License Valuation Modeling Approach
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Traffic Demand Incremental Network Costs NPV over license
lifetime
202520202015
Traffic
High Demand
Low Demand
Baseline
25242322212019181716152014
CAPEX
OPEX
25242322212019181716152014
Alternative Scenario
-43%-35%
NPV comparison
Baseline
Alternative 2
Alternative 1
Determination of traffic forecast (baseline)
Sensitivity within certain range
Traffic split per operator
Focus on data traffic Calculating incremental
network costs based on defined scenarios
Cost projection per operator
NPV comparison between baseline and alternative scenarios costs
determination of savings size
Highest savings potential basis for Reserve Price
Modeling Approach for a specific (status quo) Regulatory
Scenario
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License Value
A Regulatory Net Benefit Analysis for different Regulatoy
Scenarios provides a basis
for the comparison of different regulatory regimes for operators
and the Government.
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The Approach: Compare predicted revenue flows to government on
different bases
The aim is to identify the most suitable and preferred
regulatory regime
Status Quo Alternative A Alternative B Alternative C Net
Gain
License (SQ1)
Spectrum (SQ2)
Profit Share.....
License (A1)
Spectrum (A2)
Profit Share.....
License (B1)
Spectrum (B2)
Profit Share.....
License (C1)
Spectrum (C2)
Profit Share.....
(ALTi - Sqi) = .......
For each alternative and regulatory field consider the delta
between alternative and status quo If delta >0 then the
government would be better off on the alternative regulatory regime
If delta
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LTE can use virtually any Frequencies
By end of 2013, 800MHz, 1500MHz, 1800MHz and 2600MHz will be
most commonly
deployed around the world. What should the LTE operators deploy
in Africa?
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Regulators have different
options to provide the right set
of spectrum for coverage and
capacity optimization
Re-farming or declaration of
service neutrality for existing
spectrum
Distributing new spectrum in the
700/800 band plus 2100-2600
band
Device availability and price for
less common spectrum is key.
Spectrum is the most valuable
element of the license value!
Operators need a combination
of low and high Mhz spectrum
LTE Frequency Spectrum (2013E) Remarks
Source: Informa 2013; IDATE 2013; Detecon Analysis
900 MHz 2700 MHz
MHz 700 800 900 1500 1800 1900 2100 2300 2500 2600
N-America 2 1 1 2 1
S-America 4 2 2 5 5 5
W-Europe 15 12 12 21
E-Europe
Middle East 1 2 3
Africa 4 1 5 1 1 3 1 5
Asia Pacific 2 2 1 8 1 1 4 2 3
SE Asia 1 1 1 3 2 3
Total 9 24 2 15 32 8 12 7 4 40
Frequency Coverage
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Reserve Price Calculation Example
Based on the benchmark results, spectrum reserve price ranges
can be calculated. It is
important to adjust according to country size, license duration,
exchange rates, etc.
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Reserve Price Calculation for 800 MHz Spectrum (PMP in USD)
Package A2x10 MHz
800 MHz range
Package B2x10 MHz
2,600 MHz range
USD 41,300,000
USD 4,000,000
Band: 20 MHz
Population: 5,000,000
Band: 20 MHz
Population: 5,000,000
Reserve Price Calculation for 2,600 MHz Spectrum (PMP in
USD)
0.574
AT
0.314
AU
0.357
HK
0.027
DE
0.004
FR
0.492
DK
0.110
CZ ES UK
0.114
KR
0.518
0.260 0.413
0.739
0.413
SERO
0.715
1.267
0.048
CHPT
0.594
IE
0.505
0.389
HRBE IT
0,027
0,099
0,011
0,145
0,040
0,001
0,000
0,0630,082
0,039
0,069
0,006
0,003
FI DEFR
0,0040,003
CH
0,04
UK
0,005
ESSESGRO
0,005
PTNO
0,004
NZNLLV
0,016
ITHK
0,269
DK
0,002
CZBEATAU
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Content
1. About Detecon Who We Are?
2. African LTE Technology and Licensing Gap
3. Licensing Challenges and Solutions for African Regulators
4. Licensing Challenges for Operators
5. Summary and Key Take-Aways
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LTE Vendor Analysis and Deployment Status
Most of LTE-enabled user devices are available for the European
frequency bands. 1/3 of
all LTE devices offered are smartphones, showing strong growth
towards VoLTE.
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Source: GSA (Global Mobile Supplier Association), August
2013
FDD-LTE Band Devices
2600MHz band 7 324
1800MHz band 3 284
800Mhz band 20 243
700Mhz (#12,17) 224
2100MHz band 1 215
700MHz band 13 211
800/1800/2600MHz tri-band 209
AWS band 4 203
900MHz band 8 105
850MHz band 5 80TD-LTE Band Devices
2600MHz band 38 153
2300MHz band 40 137
1900MHz band 39 45
2600MHz band 41 37
Camera
Femtocell
0,11%
0,63%
PC Cards
0,21%
Notebooks
3,06%
Tablets
8,02%
Modules
9,49%
Dongles13,92%
Routers
31,22%
Smartphones
33,33%
Since 2011 the availability of LTE-enabled smartphones has
surpassed the number of routers demonstrating strong growth towards
VoLTEdevelopment. Also, the first LTE-enabled camera has been
launched.
Devices by typeDevices by LTE band
948 different LTE User Device product announcements by 100
manufacturers, including frequency and carrier variants
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Impact on Core Network
Aggregation and core network have to be upgraded to handle the
exploding data traffic,
if 4G is introduced. The core requires all IP and fiber
upgrade.
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Expected mobile data traffic growth requires also capacity
expansion in the core network, however if it is a fiber network it
should not be a problem.
However, an all IP network is required - LTE does not provide
circuit switched services
Builds on 3GPP IP Multimedia Subsystem specification for
delivery of multimedia services
Flat system architecture; separation between control and user
traffic
"Always-on" connectivity
Idle-mode signaling reduction (ISR): more efficient mobility
management for UEs with multiple radio access technologies
Simplified QoS concept
IPv4/v6 support
Traffic Growth Core Network Impact
123,10
6,401,300,170,02
Fixed Double Play
8x
Fixed Triple Play
Handset Internet iPhone
5x8x
19x
Mobile Broadband
Handset Internet Smartphone
3G and 4G mobile devices will multiply data traffic, soon. This
will be a major upgrade problem for the aggregation network, if 3G
and 4G antennas are co-located on 2G sites.
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Operators with an existing mobile network have to evaluate the
value of a specific
spectrum lot based on plans for new sites versus expansion of
existing ones.
Spectrum Valuation for Operators
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U2100L1800L2600
U2100L1800L2600
Baseline expansion by new sites
U2100L1800
U2100L1800
U2100L1800
New capacity site
Alternative scenario 1 expansion of existing sites with
LTE800
U2100L1800L800
U2100L1800L800
Adding LTE on existing sites
Adding LTE on existing sites
OR
Under the existing spectrum operators might need to build
additional capacity filler sites
When new frequencies (800, 2600) are allocated to operators they
can deploy capacity by expanding existing sites
The value of the spectrum will be determined by the difference
NPV of new site NPV of expanded site
U2100 UMTS / 3G on 2100MHz
L800/1800/2600 LTE on respective frequency
Legend
Alternative scenario 2 expansion of existing sites with
LTE2600
Spectrum Value determination for Capacity Expansion
Scenarios
-
How to monetize LTE?
LTE License prices can be monetized, if Telcos are able to
increase ARPU levels
compared to 3G ARPU. Forecasts for the APAC region are
encouraging.
26
Key Findings & Implications3G vs. LTE ARPU Example APAC
Source: Juniper 4G LTE Strategy 2013; Pyramid Research APAC
Mobile Data Forecast Q2/; 2013; Detecon Analysis; *) inflation is
not taken into consideration
Currently LTE ARPU levels are significantly higher compared to
3G ARPU levels.
Although LTE ARPUs will decrease over time, it is expected that
LTE ARPU levels than be kept higher than todays 3G APRU levels
(>40%*)
As LTE penetration increases, 3G penetration will decrease; less
3G revenues is generated .
Telcos in APAC (esp. in Korea, Japan, and Singapore) have
adapted their LTE pricing to realize higher ARPUs.
Data flat rates are avoided as of now.
Consumers are willing to pay a premium for the new technology
and the better QoSattached
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15,818,7
22,829,0
37,0
47,1
66,7
75,881,6
88,9
98,8
112,2
0
20
40
60
80
100
120+41,6%
2017F2016F2015F2014F2013E2012
LTE ARPU3G ARPU
0
50
100
150
200
250
300
350
LTE price premium
%ARPU [USD]
-
Monetize Voice over LTE
OTT VoIP solutions will be popular in LTE considering the higher
bandwidth advantage.
Operators need to overcome the CS voice challenge in LTE to
maintain competitiveness.
27
VoLGAInitiative
1 An industry initiative that lacks operator support so far. The
LTE network is simulated to be a 2G/3G network through protocol
translation by a special network controller. Special terminals are
needed but currently not available.
CS Fall-Back Solution
2 The terminal is pushed to connect over a co-existing 2G/3G
network for conducting the circuit switched call. Currently this
solution is being adopted by the early launches of LTE with
dual-mode mobile devices
IMS BasedSolution
3 The IMS is a VoIP based multi-media function that is to be the
future architecture for managing voice independent of access type.
Currently there are no commercially successful models and its
integration is complex
Circuit Switched (CS) Voice LTE Options Commercial Implications
& Challenges
Several operators foresee LTE as a data only option
initially
Whether in fixed or mobile use cases users will have the choice
to utilize OTT VoIP solutions over the LTE data connection even
better than 3G.
Additionally providing the voice service in its traditional
sense is expected by users therefore putting more pressure on
operators to adopt a solution quickly
As dual mode devices are most likely to find their way to the
market soon, the CS Fall-Back solution is the most likely to be
adopted until a feasible IMS solution is made possible
Challenges:
How to best integrate voice services over LTE into tariff
offerings?
How to charge for voice services over LTE?
LTE Coverage
VoLGA elements
3G Environment
LTE Coverage
3G Coverage
Voice Call
Data Connection
Voice & Data
LTE Coverage
2G/3G Coverage
IMS
-
With the launch of the LTE generation new and innovative tariff
designs need to be
introduced focusing on customer-centric structures.
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1. Core Tariff 2. Add-on Options3. Value-Added Services
4. Device Subsidy
General Tariff information
Tiered pricing based on data volume, speed, time, service,
location etc.)
Bundled offering of various services (incl. data, voice,
VAS)
Flex tariff (automated optimization for customer)
Charges for off-bundled usage
Payment method: prepaid, postpaid, hybrid
Various add-on options for data and other services to optionally
subscribe to:
Speed Booster
Volume Booster
Night Pass
24 hour Pass
Zero-Rating Pass
Per unit charge
VoLTE charge
Rich Communication Suite charge
International Roaming charge for voice and/ or data
General charges independent from actual tariff for using
value-added data or voice services
Mobile TV
Any applications (esp. for tablet & smartphones)
HD-video voice calling
Market- and segment-specific recommendation to balance b/w LTE
service penetration and high subsidy costs:
classical subsidy included in postpaid plans
Reverse device subsidy (Full price of device and monthly
discounts on tariff plan)
Device leasing (Separate leasing agreement for device
independent from tariff)
Bring your own Device SIM-only offerings
Monetize Voice over LTE
From Core Tariff Structure to Add-on Options & Device
Subsidy
-
Selection of Possible LTE Wholesale Strategies
Regulatory obligations, internal targets as well as the
competitive situation of operators
result in different strategic options for the players in the
market.
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TE
LIC
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Strategic options for LTE network operators
Combined
(Retail and Wholesale)
Stand-alone
(Retail or Wholesale)
LTE WholesaleStrategy
PartneringNetwork sharingNational roaming
Joint infrastructure
Operators going for a retail only strategy strengthen their
market position by providing best in class quality, offering
highest bandwidths, being the innovation leader, etc.
A pure infrastructure provider with aWS only approach is
mostlikely driven by regulators.Commercial offers of the
playersbuild the basis for competition.
Fiber backhaul for 3rd partiesas WS product
Offering retail and whole-sale LTE services is likely to be the
business model for most of the operators in the mid- to
long-term.
This approach ensures additional revenues for operators.
Fiber backhaul for 3rd partiesas WS product
Infrastructure sharing focuses on cost efficient way to roll-out
LTE infrastructure. It decreases the initial infrastructure
investment.
National roaming provides the opportunity to costs efficiently
expand network coverage.
Using LTE technology a small cell approach for the network
enables operators to face the exploding traffic figures.
Partnering necessary in aggregation networks. Synergies are
possible with FTTx roll-out.
-
Selection of Possible LTE Wholesale Strategies
The different options can be categorized in cost driven and
revenue driven approaches.
The strategic directions may change over time due to evolving
market conditions.
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Strategic options categorized in cost-driven and
revenue-driven
Cost-drivenRevenue-driven
Partneringmodel 1
1a - Joint infrastructure1b - Network sharing
Stand-alonemodel 2
Retail offer only
Partneringmodel 2
National roaming
Combined offers
Retail + Wholesale
Stand-alonemodel 1
Pure wholesale
Regulatoryobligation
Please note: External and internal circumstances differ from
country to country and from operator to operator.Implication:
Therefore, operators as well as regulators need to consider all
these aspects while developing the right
LTE WS strategy.
Please note: Furthermore, telecommunication markets are highly
dynamic, which means that market conditions are rapidly
changing.
Implication: Consequently, operators need to judge the short
term and a long term view in their strategy. It possibly results in
different options and strategic scenarios for the business model of
the respective company.
-
Rationale for wholesale & partnering models Project
example
Cost Impacts
Increasing LTE subscriber numbers and higher bandwidth demand
will require large
investments into mobile infrastructure especially into RAN
equipment and fiber.
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Source: Strategy Analytics (2Q/13), Detecon Research
0
2
4
6
8
10
12
2010 2012 2014 2016 2018 2020 2022 2024
35
30
25
20
15
10
5
0
GB
34,0
10,2
5,0
Subs [m]
Transmission
PSTN
Internet
RAN Core
SubscribersGB/month per sub
Up
gra
de
Re
qu
irem
en
tsPassive
Active
Core
20%
Transmission
30%
RAN
50%
45%
55%
High investments are necessary of which 80% are counting for RAN
and Transmission.
MNOs seeking for ways to lower the costs for example by sharing
and partnering.
% of total cost
Fast growing subscriber numbers plus fast growing traffic per
subscriber will impact total capacity costs.
-
Content
1. About Detecon Who We Are?
2. African LTE Technology and Licensing Gap
3. Licensing Challenges and Solutions for African Regulators
4. Licensing Challenges for Operators
5. Summary and Key Take-Aways
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c
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Executive Summary
A fast implementation of LTE licenses are a major prerequisite
for Africa to close the
digital divide and realize the required ICT infrastructure for
economic development.
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Development
LTE Licensing
LTE License Value
Operator Retail
Strategies
Operator Wholesale
Strategies
Digital Divide
2
3
4
5
6
1The African Digital Divide has been significantly narrowed for
mobile voice,
but is worse than ever for fixed and mobile broadband.
This will most likely become a bottleneck for African economic
development in
future, if regulators and operators do not start with LTE
implementation, now.
African Regulators have to adapt their licensing, in particular
license in a
technology neutral way, remove fixed network licensing
restrictions, price
according to spectrum value corrected by regulatory
obligations.
Operators need a bundle of spectrum with low frequencies for
coverage and
high frequencies for capacity increase. Benchmarks can be used
for reserve
prices, auctions to find the best bidder with the most
profitable business case.
A clear solution for Voice over LTE is a major prerequisite for
LTE
implementation in Africa. Innovative retail pricing plans
according to customer
segment and LTE-lifecycle are required to monetize the LTE
potential.
MNOs in Africa need to think about partnering and profitable
wholesale
strategies to realize a profitable LTE business case. This is in
particular true
for smaller, independent operators.
1,5
1,0
0,5
0,0
Broadband (BB)
1,41,2
Internet
1,1
0,8
Mobile
Telephony
0,8
0,6
Fixed
Telephony
0,7
0,4
GDP
Growth
(%)
Low Income Economies
High Income Economies
http://images.google.de/imgres?imgurl=http://www1.istockphoto.com/file_thumbview_approve/5061098/2/istockphoto_5061098-competition.jpg&imgrefurl=http://deutsch.istockphoto.com/file_closeup/concepts-and-ideas/5061098-competition.php?id=5061098&usg=__eujeACJLkDVcfHXoWiRsjey2Fkg=&h=285&w=380&sz=33&hl=de&start=2&um=1&tbnid=fqMgYPT6ubUSjM:&tbnh=92&tbnw=123&prev=/images?q=competition&um=1&hl=dehttp://images.google.de/imgres?imgurl=http://www1.istockphoto.com/file_thumbview_approve/4415349/2/istockphoto_4415349-money-bag.jpg&imgrefurl=http://deutsch.istockphoto.com/file_closeup/business/business-concepts/4415349-money-bag.php?id=4415349&usg=__Mbm_Igs-hk4clwXaORil98ShbRA=&h=380&w=340&sz=44&hl=de&start=3&um=1&tbnid=PPhJiUYPByo1VM:&tbnh=123&tbnw=110&prev=/images?q=money&um=1&hl=de
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Contact Sheet
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Dr. Arnulf HeuermannManaging PartnerDetecon International
GmbH
Sternengasse 14-1650676 Cologne (Germany)Phone:+49 221 9161
1550Mobile:+49 171 225 42 17
e-Mail: [email protected]
Ties HartmanPartner
Detecon International GmbHBldg. 27 The Woodlands Office Park,
Woodlands Drive, Woodmead 2191,Sandton, South Africa
Phone: +27 11 2081850Mobile: +27 82 6565553Email:
[email protected]
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