© 2005. All rights reserved. Understanding Best Practices for Convergence in Broadband Anish Madan 1 & Ravi Sharma 2 A presentation for the 10 th ATIE,
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© 2005. All rights reserved.
Understanding Best Practices for
Convergence in Broadband
Anish Madan1 & Ravi Sharma2
A presentation for the
10th ATIE, Taiwan
7 April 2005
1 2
2
Outline
Overview of Convergence Case Study of a Next-Generation Service Provider Industry Best Practices Concluding Remarks Questions and Answers
3
Convergence of Networks and Technologies
(Mobile, Fixed, Wi-Fi, IP, PSDN, VPN) Terminals/Devices
(Handphones, PCs) Services
(Voice, Data, Multimedia) Regulated Markets
(Telcos, Broadcasters, Media Cos)
Blurring of boundaries between voice, data and
video delivery and applications
Overview of Convergence – Definition
4
Overview of Convergence – Essentials
Voice VoIP Enhanced VoIP (IP Centrex, IP
Conferencing etc.)
Data WAN: IP VPN Internet Access: xDSL, Ethernet Applications: Broadband and Mobility (including
video applications, gaming etc)
Enterprise Specific IP PBX / IP Contact Center,
Network Security Networking
5
Overview of Convergence – Broadband vs. Narrowband
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
50.00%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
Narrowband Penetration % Broadband Penetration % Broadband % of Total Source: Frost & Sullivan
6
Overview of Convergence – Revenue Composition
• Domestic long distance VoIP calls dominate in revenue terms• IP Centrex, IP video conferencing and other IP enhanced services
revenue only nominal in 2003
Local VoIP13%
DLD63%
IP Centrex1%
IP Video Conferencing
1%
ILD22%
Others0%
Local VoIP
DLD
ILD
IP Centrex
IP Video Conferencing
Others
Source : Frost & SullivanData includes Australia. China, Japan, Singapore, South Korea and Taiwan revenues in 2003
7
Overview of Convergence – Market Impact
Significant impact on service providers and customers
Service Providers New business model New opportunity Reduce OPEX Train & retain employees Next Generation Network and Services
Customers Increased Options Possible paradigm shift in service adoption Sophisticated Customer Service Management
8
Infrastructure Provider
Content &Application Provider
End User
Content Aggregator
Content/ServicesH
igh
Investm
ent
Critica
l Mass
of
Dem
and
Conte
nt / A
pplica
tion
Mass
an
d
Dem
and
Mass
Eff
ectiv
e V
alu
e
Pro
positio
n
Revenues Outflow
Overview of Convergence – The New Ecosystem
Services can be in-house, outsourced and hosted
9
Case Study – FastWeb Triple Play
ARPU per year € 780…
Data Voice Video
FastWeb is a leading Broadband SP in Italy (www.fastweb.it)
10
FastWeb – Service Offerings
Fastweb’s Marketing strategy based upon Triple Play service
bundles Voice Internet Video
No single killer application: the real killer application is the
Service Mix
Combination of Flat Rate and Pay Per Use tariff plans to match
specific customer needs
11
FastWeb’s Innovative Services: Fastweb’s TV
FastWeb TV
Video on Demand offer First VoD licensing agreements with First VoD licensing agreements with
US major film studios:US major film studios: 20th Century Fox20th Century Fox Universal StudiosUniversal Studios DreamWorksDreamWorks
Over 3,000 titles (up over 30% from Over 3,000 titles (up over 30% from the end of the second quarter) the end of the second quarter)
Unified interface for content in all formats:Unified interface for content in all formats: Terrestrial broadcast: RAI, Mediaset, ...Terrestrial broadcast: RAI, Mediaset, ... Satellite broadcast : CNN, Bloomberg, ...Satellite broadcast : CNN, Bloomberg, ... Pay-TV/Pay-per-View: Stream & TELE+ Pay-TV/Pay-per-View: Stream & TELE+ Video-on-DemandVideo-on-Demand
Integrated with VideoREC and Electronic Integrated with VideoREC and Electronic Program GuideProgram Guide
12
FastWeb’s Innovative Services:Business and Personal Video Communication
FastWeb’s Video Communication allows business and residential customers to video conference:
Between different locations
With other external parties using FastWeb’s services
With traditional ISDN video conferencing systems and through the Internet with PC-based web-cameras
Non-FastWeb clients (ISDN)
FastWeb clients
Party 1
Party 2
FastWeb residential customers
Internet
PC + Webcam
TV + TV Cam
13
FastWeb’s innovative services: VideoREC
Virtual VCR service: allows clients to record favorite free-to-air TV programs (RAI, Mediaset, ...) with no need for a VCR or tape
Easy and convenient programming: just click on the desired show, directly on your TV or on any PC with an Internet connection
14
Fast Internet at up to 10 Mb/s from any point of the house
No need for wires or cables
Fastest wireless offer on the market
Access kit on sale at only 250 EUR
Access base
FastWeb’s network
FastWeb’s innovative services: Wireless-Fidelity (“Wi-Fi”)
15
FastWeb’s innovative services: IP VPNs and B2E Installed IP VPNs grew 85 (from 255 to 340) in 3Q 2002, confirming
FastWeb’s unique accelerated pace in this market segment
10 Mb/s (scalable) bi-directional connection among different branches and from employees’ premises to the corporate LAN, on FastWeb network
Service quality and security guaranteed through MPLS technology and IPSec protocol
Big Internet
FastWeb’s server farm
Branch 2
Branch 1
Business-to-Employee (B2E) services
IP VPNs
Other networks
Branch 3
16
Industry Best Practices – Drivers of Convergence
85%
45%
53%
8%
18%
5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Cost GlobalConnectivity
Efficiency Convergence BundledService/VAS
MarketingPush
23%
35% 38%
100%95%
33%
53%
73% 75%
60%
0%
20%
40%
60%
80%
100%
120%
ERP CRM SCM Email Data Transfer VoIP Video E-Commerce Real Time Collaboration
Both residential and enterprise users find IP
an attractive value proposition
Source: Frost & Sullivan
17
Supply demand match
Point to point
connectivity
Distance & bandwidth
sensitivity
Individual
services/rigid
Services abundance
Any to Any connectivity
Distance insensitive
Service suites/total solutions/flexible
Traditional Structure Emerging Structure
Technology Push
Market Pull
Regulatory Arbitration
Industry Best Practices – Industry Structure
18
Regulatory Framework – A Tale of Four Countries
• No national broadband (triple play) policy
• Light touch
• USO metric: homes passed rather than uptake
• Build-up of national facilities encouraged
• Technology neutral
• Broadband vision (E Korea 2005, Cyber Korea 21)
• Policies for competition in voice, data & mobile
• Hands off internet services regulation
• Competition of facilities-based SPs
• Promotion of broadband network building (loans, KII, Internet usage, public/education sectors)
• Sharing infrastructure and facilities
• Stimulating supply of content, applications & services
• Encouraging SMEs to e-biz
• Creating a secondary market for radio spectrum
• Unified regulatory regime (Multimedia & Telecommunications Regulatory Commission)
• Promotion of multimedia super-corridor and flagship projects
• Possible competition between incumbent, competitive 3G carriers and CATV operator
19
Regulatory Best Practices – Issues
Licensing of all existing and new services as they emerge,
under the ambit of convergence Licensing fee – Auction, beauty contest or free for all? Service area – Universal Service or roll-out Obligations Setting an appropriate Universal Service incentive Creating a level playing field for incumbent or competitive,
standalone or full service operators Interconnectivity and tariff agreements Numbering and addressing issues, directory and look-up
services Regulation of shared facilities, example infrastructure and OSS
20
Industry Strategies for Growth
• Stabilize voice revenues• Velocity and shelf-life of Next-Gen services• Open platforms and business models• One-touch for the customer
• Increase data revenues• Grow an Internet based economy
• New Generation networks • Applications • Critical mass of subscriber services
• Allow SPs the opportunity to “lock-in” customers• Recognize that access and services are evolving separately
21
Concluding Remarks – Moving Up the Value Chain
Technology
Consumer Markets
RegulatoryPolicy
• Strengthen regulatory framework;• Consumer advocacy• Enable Growth of innovation drivers• Availability of workforce with specific
skill sets at competitive costs
• Facilitate environment for high adoption of new technologies;
• Availability of latest services with service quality;
• Competitive Cost for these services;• Skilled IT workforce
• Knowledgeable and sophisticated user communities
• Drivers for sustainable growth• Support for open competition
22
Concluding Remarks – The Convergence effect
Benefits predominantly for end user
Service providers
Core competency based
Advantage Competition: Leap-frogging with Cost and Scale
Content/Application Developers/Providers also benefit
Create green-field applications and opportunities
Customers will not pay; unless …
They can’t do without it (the utility of convergence)
© 2005. All rights reserved.
Thank You
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