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Monetizing LTEHow LTE can help operators become more profitable
José Villalobos
Senior Consultant
Region Latin America and the Caribbean
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
LTE Growth and Drivers
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
fastest developing Technology
Source: GSA, May 2013
146
4616
2
175
73
2013
+30
+102
+100
+14
248
2010 201220112009
+132%
Commercial LTE network launches - cumulative totals
Forecasted
› Latin America LTE subscriptions (Pop Coverage)
› 2012: 200k (5%)› 2018: 95M (over 50%)
› Early adopters:› Puerto Rico
› Dominican Republic› Antigua and Barbuda
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
better devices and cool apps
Other
Encrypted
Software download &
updateSocial Networking
Web browsingAudio
Video
File Sharing
X2MOBILE DATA TRAFFIC
DOUBLED BETWEEN Q4 2011 AND Q4 2012
Source: Ericsson Source: Ericsson
Mobile data traffic breakdown, 2012
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
Exploring the Drivers
Source: Infonetics Research, LTE Deployment Strategies: Global Service ( n = 19, July 2012)
Source: Informa Telecoms & Media. 52 operators with live LTE networks globally (as at April 24, 2012)
5%
Offer LTE as fixedbroadband service
16%
Lack of spectrum 26%
Denser network coverage 32%
Natural evolution of existinggeneration to the next one
11%Ability to run single network
for voice and data
Opportunity to build a more efficient mobile packet network
37%
Current data network exhaustion 58%
Higher peakrate 58%
Increase ARPU 63%
Lower Latency 68%
Better spectral efficiency 79%
7%
31%
35%
24%
3%
Create new revenue streams based on LTE
Other
Current networks do not offer sufficient capacity
To enter mobile data market for the first time
Build brand value through technology leadership
What is your primary motivation for deploying LTE?
Percent of respondents Rating 6 or 7
HOW IS LTE IMPACTING PROFITABIliTY?TODAY?
1 LTE launched (LGU+ & SKT)
~11% LTE penetration
~28% LTE penetration
2
3
SKT LGU+ KT KOSPI
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
107
Million(>1M TDD)
LTE SUBSCRIPTIONS May 2013
Source: WCIS
2Billion
LTE SUBSCRIPTIONS END 2018
Source: Ericsson
Dec 2010
34%
SK
T
NT
T
LG U
+
KT
Spr
int
32%
Met
roP
CS
53% 29%
AT
&T
13%
Sof
tban
k
11%
Tel
stra
5%
10%
19%
22%
Ver
izon
LTE Subs (M)
Non-LTE Subs (M)
Dec 2010
Sep 2011
Jul 2011
Jul 2012
Jan 2012
Sep 2011
Sep 2010
Sept 2011
Feb 2012
USA54
Korea22
Japan16
Australia5
Rest of World
10
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
ARPU Uplift due to LTE
-15
-10
-5
0
5
10
15
20
3Q11 4Q112Q111Q11 1Q12 2Q12 3Q12 4Q12 1Q13
SKT
KT
LGU+
3Q11
3Q11
1Q12
Service ARPU, % Change YoY
First LTE Smartphone
Source: Operator Quarterly Reports
5041
34 +21%
+48%
LTESmartphoneBlended ARPU
ARPU 4Q12 (KRW ´000)
Source: SKT IR 4Q.2012
› 8X (SP)› 1.5X (SP)
› 2-5X
(LTE users)
Source: Disclose by Operators
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
LTE DATA MonetizationData Allowance
3G LTE
No Change
550MB
1.1GB
2GB
5GB
9GB
13GB
@ Launch@ Launch Q2 2012Q2 2012
Removed unlimited planHigher Tariff Plan with
understanding of 3G ave
data.mth/subs + trends
Increase the bucket size
Removed unlimited planHigher Tariff Plan with
understanding of 3G ave
data.mth/subs + trends
Increase the bucket size
SKT Smartphone Plan (3G vs LTE)
Monthly (USD) Data Allowance
3G LTE 3G LTE
All-in-one 34 vs LTE34 30 30 100MB 350MB
All-in-one 44 vs LTE42 38 37 500MB 700MB
All-in-one 54 vs LTE52 47 45 Unlimited 1.2GB
All-in-one 64 vs LTE62 56 54 Unlimited 3GB
All-in-one 79 vs LTE72 69 63 Unlimited 5GB
All-in-one 94 vs LTE85 82 74 Unlimited 7GB
LTE based residential Broadband Caribbean Residential Internet
Source: Pyramid Research, 2012
Source: Disclose by Operators
Source: Operator Web Page
9%
9%
51%
1%
27%
3%
Cable FTTXNarrowband
xDSL FWA WiMAX
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
customer loyalty
Drivers of loyalty to operator brand (NPS)
LTE
LTE
Source: LGU+ Analysis
Aiming for LTE monetization
Spectrum and Network
Branding and
Marketing
Service and Device
Portfolio
Positioning and Pricing
Strategy
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
LTE ecosystem
316 Smartphones
Source: GSA, Jul, 2013
USAUS700AWS
MexicoAWS
Colombia2600
UruguayAWS
ParaguayAWS/1900
Brazil2500/2600
Chile2600
Europe26001800
Puerto RicoUS700/2100
Antigua & BarbudaUS700
Dominican Rep.1800/1900
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
GSM
Macro
LTEWIFI
850900
18001900
AWS
21002600
700
Indoor
MicroPico
HSPA
DataVoice
CDMA
Application coverage concept
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
Boosting the need for LTE
Source: Wireless Intelligence, September 2012
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
positioning and Pricing
PREMIUM PRICING
PREMIUM PRICING
MBB EXTENSION
MBB EXTENSION
BRAND REFRESH
BRAND REFRESH
2
14
3
MBB Ext Brand Refresh
1
LTE Smartphone Data Plan (Top 20 LTE Subs Operators)
Speed-Consumption Hybrid
Consumption-based
Unlimited
Source: Operators Web Pages, Jul 2013
Source: Wireless Intelligence, Analysis Mason
Dongle tariff
›49% speed-based (Aug 2012)
›Western Europe (2Q12 to 4Q12)
› 33% operators merged 3G/LTE
› Price decreased by 6%
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
CLEAR value benefits
User z (Germany)
Source: Speedtest.net
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
LTE Monetization
LTE Growth and Drivers
-Fastest Adoption-MBB Demand-Video Apps-Revenues Brand Spectrum Performance
How is LTE Impacting
profitability?-Subs-ARPU-Better Pricing-DSL-liked-Customer loyalty
Aiming for LTE
monetization-Ecosystem-App Coverage-Smartphones-Clear Value Proposition-Price levels-Transparency
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
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