W. Swain, Sustitución Fijo Móvil

Page 1 © Copyright 2012

Sus2tución Fijo Móvil

W. Swain 12 June 2012


Agenda

§  Big Themes §  General Framework §  Why is MBB growing faster than FBB? §  Is MBB a subs2tute or complement for FBB?

§  Conclusions


New Mobile Economy

Desktop Internet 1 Billion+ Units/Devices

PC 100 Million+ Units

Mobile Internet projected to exceed 10 billion units/devices by 2016

Opportunity ü  Yankee Group predicts that the

total mobile service market (line subscrip2ons) will exceed $1 trillion by 2014

ü  Yankee Group forecasts that the mobile connected devices market (phones, tablets and e-‐readers) will exceed $435 billion by 2014

ü  Yankee Group predicts that revenues from mobile apps, cloud and adver2zing will grow to $340 billion by 2014

ü  Yankee Group forecasts the

growth in the value of mobile transac2ons worldwide will increase to $984 billion by 2014


Text to Speech to Video

1850 1880 1960 1990 2000 2011

Increasing Bandwidth

Communica9on modes do not disappear but costs are transformed by technology and prices fall towards costs

e.g. Letters to Telegraph to Telex to Fax to Email to SMS to Instant Messaging


68%

17%

48%

26%

12%

5%

3%

59%

10%

32%

19%

7%

5%

2%

0% 20% 40% 60% 80%

Live TV

Game Console

PC/Laptop

Mobile Phone

Digital audio/MP3 Player

Tablet

Handheld Game Console

Under 25

Total

Over 25

Shared Experiences To Personal Experiences

Source: Yankee Group U.S. Consumer Survey, 2011 Hispanic Respondents Only

Between 48% and 93% of those under 25 use personal devices at least once per day for video content

Video Users % who use device at least once per day


70%

36%

14%

14%

7%

21%

54%

20%

18%

7%

5%

29%

0% 20% 40% 60% 80%

User-‐generated videos

Clips from TV shows

Full episodes of TV shows

Full-‐length movies

HD programming

None of the above

Under 25

Total

Over 25

Defined Place to Any Place


Video Use on a Mobile Phone

35% of those under 25 watch full-length content on their mobile phones


Defined Time to Any Time


1 in 5 use DVRs daily

Video Users % who use device at least once per day

68%

15%

59%

22%

0% 20% 40% 60% 80%

Live TV

DVR / Time ShiftedUnder 25

Total

Over 25


Combining these trends favors Mobile/Wireless Delivery for Video Content

Shared to Personal

Defin

ed Place to

Any Place

Mobile TV or OTT TV on a Tablet, Laptop or Large Screen Smartphone

Linear TV in the Living Room IPTV or OTT TV over Fixed Broadband or WiFi

Mobile TV or OTT TV on a Smartphone

Latin Americans are more social so the need for Shared experiences in De!ned Places will persist longer.

Defined Time to Any2me Means I Want It With Me


Although many other applica2ons like Social Networking or Voip command acen2on, the driver of data traffic is Video in both Fixed and Mobile Networks. Indeed, we might not need new mobile technologies like LTE were it not for the explosive growth of Video over Mobile Networks both via smartphones and via dongles / modems / tablets.

Driver for Broadband Growth is Video

12,528

17,867

24,477

32,973

43,772

58,214

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2010 2011 2012 2013 2014 2015

Internet Traffic in PB per Month

Other

Voice over IP (VoIP)

Web, email, and data

Online gaming

File sharing

Video calling

Internet video

Total

Source: Cisco Global VNI, 2012


And Mobile Video Traffic Grows As Well

Source: Allot Communications, Global Mobile Broadband Traffic Report H2/2011

Video Streaming grew over 9x

Just in H2/2011, YouTube grew 100% and HD YouTube grew

300%


General Framework

Source: Yankee Group ConnectedView Mar 2012


General Framework

Source: Yankee Group ConnectedView Mar 2012


General Framework

Source: FCC, Yankee Group ConnectedView, Yankee Group Mobile Carrier Monitor Mar 2012


Tradi2onal Fixed Telecom revenues will flacen in terms of share although obviously con2nue to grow somewhat in absolute terms thanks to Corporate Data and Fixed Broadband. PayTV is the “fixed” service with the greatest poten2al, driven mostly by DTH – a “wireless” service. This tendency is even stronger in the graphs for Brazil and Mexico. We project that Voice ARPUs will con2nue to fall driven primarily by lower rates, meaning that the share of Data Revenues will con2nue to grow.

Telecommunica2ons Revenue Mix

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Latin America TEF Revenues (Share of Total)

M2M

Mobile Data

Mobile Voice

Pay TV

Fixed Broadband

Fixed Voice

Corporate Data

Source: Yankee Group Latin American Forecast, 2012


Why is MBB Growing Faster than FBB? Demand Shared to Personal

Defined Place to Any Place

Defined Time to Any Time

Wait for Service vs NOW!

Contract vs Prepaid

2 to 6 Mbps vs 42Mbps!!!


5%

7%

10%

4%

8%

10%

14%

6%

11%

10%

12%

9%

9%

15%

3%

8%

6%

6%

5%

2%

6%

11%

11%

6%

1%

2% 1%

0% 5% 10% 15% 20% 25%

Rent-‐government

Rent-‐private

Own/mortgage

DE

C2

C1

AB

75+

65-‐74

55-‐64

35-‐54

25-‐34

15-‐24

All

Fixed and mobile broadbandMobile broadband only

Mobile Broadband Cannibalization"

Percentage of Household Take-‐up

(USB modems, U.K. market data, Q1 2010)!

Source: Ofcom Communica@ons Market report, August 2010. Survey base: Consumers aged 15 and older (n = 9,013)

Age

Socio-‐Economic Group

Housing

Comparison: In Italy 34% of MBB

users do not use landline BB

Source: Between –Broadband Report

July 2010, Company data


Why is MBB Growing Faster than FBB? Supply

Lots of evidence that carriers (LA and elsewhere) are cutting back FBB investment (except FTTx) • No announcements of new ADLS2+ investments and none for VDSL • Few offers above 6Mbps or very restricted geographically • Poor quality Outside Plant means upgrading CO equipment isn’t the only cost • Tier 1 vendors selling off their FBB businesses • Bundling MBB with FBB, encouraging adoption of MBB


Shown here are the range of speeds for FBB and the “Headline” speed for MBB. Prices are for the cheapest Postpaid plan. In AR, BR and CO the best FBB is faster than the best MBB, although in BR they are “close” and in AR, CO an upgrade to just HSPA would eliminate the gap. In CL and PE the opposite is true. (There is no Telefonica FBB in EC, MX or VE.) “Headline” prices for entry level plans are always cheaper in MBB although caps make the customer experience completely different. FBB plans are always unlimited and o_en include Voice.

Telefonica Broadband Offers Usually Look Becer in MBB Than FBB

Speed Range Telefonica Broadband Offers and Entry Prices

Source: Websites, Yankee Group 2012 NOTE: PE is HSPA+ but local regulation prohibits use of 21Mbps “headline”

0 5 10 15 20 25

Argentina FBBArgentina MBB

Brazil FBBBrazil MBBChile FBBChile MBB

Colombia FBBColombia MBBEcuador FBBEcuador MBBMexico FBBMexico MBB

Peru FBBPeru MBB

Venezuela FBBVenezuela MBB

No Fixed Network

No Fixed Network

No Fixed Network

US$18.00

US$8.09

US$29.76

US$16.21

US$54.35

US$25.05

US$42.26

US$12.87

US$19.00

US$14.87

US$47.70

US$20.42

US$8.27


Is MBB Really a Subs2tute for FBB?

HSPA+, DC-‐HSPA and LTE are becoming more efficient every day – higher speeds and more capacity at lower cost.

CPE prices are already compe99ve (at least for HSPA+ and DC-‐HSPA) Overcome the problems of bad copper

If all users in a sector are streaming HD video, capacity will exhaust very quickly.

Number of users per sector harder to predict than number of users per DSLAM



§  Incumbent Fixed and Mobile Operator in Denmark

§  LTE Tes2ng completed in 2.6Mhz in May 2010 §  Launched in 10 ci2es October 2011

§  Delay from problems with 2G/3G handover §  Pleased with LTE performance

§  Looking at 1800Mhz and 800Mhz (auc2on 03/12)

§  Doesn’t view FBB / MBB as binary choice – complements not subs2tutes

§  Both strategies require deep fiber investments

Source: Yankee Group 2011



MBB or

FBB? Rural? MBB

Fringe Urban?

Low Subs

Density? MBB

High HD RT

Video?

MBB +

DTH

FTTH

MBB

YES

YES YES

YES

NO

NO NO

NO V. Hi Income


The Challenge is Video Esp. Real Time and HD If all traffic were just “normal” Internet, latency and capacity issues would be more tolerable. The problem is Real Time i.e. Event TV, especially HD channels which require 4-6Mbps each nearly dedicated. That means a 42Mbps sector would saturate with only 7 to 10 active users. Video conferencing has similar challenges

New multicast LTE technologies (e.g. by Qualacomm) will eventually aleviate the Linear TV issue but only in 3-5 years. The answer is not to deliver Linear HD TV over the Internet but via Satellite TV. Normal Internet would use MBB.


§  Lack of spectrum could prevent operators from responding to the growth in broadband using Mobile Broadband

§  A similar issue is the backlash against towers – an advantage of copper-‐based solu2ons is that they don’t go up 100m into the skyline. Small cell architectures are the mi2ga2ng strategy.

§  Tiered plans and high tariffs could definitely put a break on this trend – or shim it to WiFi §  FBB in La2n America is s2ll Flat Rate / Unlimited

What could change about this impera9ve? What could impede it?


Conclusions

§  MBB has overtaken FBB in La2n America and Revenues will soon follow

§  The driver for whether MBB truly subs2tutes for FBB is VIDEO not Internet §  If all users needed to do was non-‐video Internet, FBB would be DEAD

§  Both FBB and MBB have their roles in a na2onal broadband policy §  Video usage and subscriber density are the drivers

§  Caps and high tariffs could impede growth of MBB


¡Gracias!

¿Preguntas? W. Swain

Managing Partner, C3 Comunicaciones SAS SVP Emerging Markets, Yankee Group [email protected] [email protected] www.MacondoTelecom.net @WSYGLA

Technology

W. Swain, Sustitución Fijo Móvil