Digiworld summit 2011 part1

• 1. NextGen Networks 2 - LTEWhats changing mobile IP?16 November 2011 - Frdric [email protected]

2. Content Introduction Mobile connectivity & smartphones LTE devices LTE networks status & tariffing LTE spectrum: valuation and fragmentation risks Conclusions 3. 3 4. Introduction 5. Mobile status: Europe vs. USAMobile turnover +1% (2010/2009) +5,2% (2010/2009)-3% (2Q11/2Q10) +6% (2Q11/2Q10)Data revenues share (end-2010)26.2% 33.2%29-32% (BoA)37% (BoA)Mobile CAPEXAlmost flat +18% (2Q11/2Q10)LTE launch date/ pop. covered End 2009 (Sweden) End 2010Limited launch except inVZW: 110 M pop (05/2011)Germany 66% pop mid-2012Mobile ARPU (end-2010)$22.5 $50 (-0.2% y-to-y)Mobile penetration (end-2010) 128%98.5%Fragmented markets4 carriers have 93% of thesubscribersSmartphone penetration (end-2010) Vodafone: 19% Verizon: 32% The USA are clearly leading LTE deployments with massive coverage and heavy investmentsSource: IDATE & BoA 6. Mobile status: GDP and mobile revenues Economic slowdown effect on wireless revenues The 2008-2009 slowdown had a significant impact on wireless revenues in EuropeSource: BoA 7. Mobile traffic increaseMobile traffic usage is getting close to DSL Mobile data consumption trends 7-15GB Average traffic consumption per user observed 2010 traffic figuresin 2010(per broadband subscription - not at scale)Teliasonera Sweden: 14 - 15 GB 7 GBYota Russia: 13 GB* 1-2Clearwire : 7 GB GBSK Telecom : 7 GB200 CSL HK : 6 GBMB1 MBMonthly cap Monthly usage 1 mn of MP3Firtst monthlyfor many 3G Monthly usage on DSL *One customer used 2 Terabytes of data in a single month (2010)cap for AT&T on Clearwiressubscriptions network networksSource: IDATE from operators6.6 MB per day 33 to 66 MB per day 233 MB per day 233 to 500 MB per dayMobile broadband traffic mimics the kind of traffic seen on fixed broadband networks Mobile users are running similar applications as on fixed networks: IM, Skype voice call, socialNetworking, video streaming Facebook increased its mobile traffic consumption by 200% during the 1H2010 while Twitter grew by 310% in the meantime (Source: Allot) Video represents 50% of the worlds mobile traffic in 2010 Moving from traditional voice in favor of data-centric, bandwidth-intensive applications 8. Mobile traffic forecasts 2010-2020 Total mobile traffic Total worldwide mobile traffic will reach more than 127 EB in 2020, representing an 33 fold increasecompared with 2010 figure. We anticipate that the total voice and data traffic will reach 45 EBytes in 2015 compared to less than2 EBytes in 2009. The bulk of the traffic will be video traffic. Total mobile traffic (EB per year)140.00120.00100.00 Yearly traffic in EBEurope 80.00AmericasAsia 60.00Rest of the worldWorld Network capacity units: 40.00 20.00 - 2010 2015 2020Source: IDATE for UMTS ForumNote: mobile traffic on licensed spectrum only (Wi-Fi excluded) 9. Mobile connectivity & smartphones 10. Mobile Internet usage: already here, and geared for growth2010: 21.2% mobile Internet penetration,2015: 37.0% mobile Internet penetration,or 1.1 billion subscriptions worldwideor 2.67 billion subscriptions worldwide Leading region: Asia Pacific North America to overtake Asia Pacific by 27.0% penetration rate, or 691M users 2015 largely thanks to Japan, who has close to North America will climb to 43.6% penetration 80% mobile Internet penetration Asia Pacific to grow to 39.1% penetration North America: 26.0% penetration rate EU27 will remain behind these two regions, EU27: 17.9% penetration rate but will enjoy healthy growth to 35.1%Mobile Internet penetration, 2008-2010Mobile Internet penetration, 2011-2015 forecasts 90%90% 80%80% 70%70% 60%60% 50%50% 40%40% 30%30% 20%20% 10%10% 0% 0%2008 2009 2010201120122013 2014 2015 FranceGermany Italy Spain UK WorldEuropeFranceGermany Italy USA Japan South Korea EuropeWorldSpainUKUSA Japan South KoreaSource: IDATESource: IDATE 11. Mobile connectivity devices: not just about smartphones Connectivity devices provide the better value and overall shipments will maintain a compared to smartphones steady growth ARPU for connectivity devices can be more By around 2013, embedded connectivitythan double that of smartphones devices will out-ship external ones Particularly strong with business use Decreasing module prices, user friendlinessShipment and breakdown of mobile connectivity devices, 2011-2015 Also means they consume more traffic(thousands) Tariffs for users are also more favourable Per GB price cheaper for connectivity devices Smartphone data tariffs are still unstable Price per GB comparison between devices, UK 35 30 25 20 15 1050 Smartpho neiP ad Do nglesNetbo o ks/lapto psNote: the tariff with the best per GB value is shown in this figureSource: IDATE Source: IDATE 12. Smartphone shipment penetration forecastAdvanced countries: US, EU5 and JapanEmerging countries: BRIC USA: Currently leads, and will continue to lead Brazil: Roughly in line with worldwidesmartphones shipment penetration penetration EU5: Whilst behind the US, will show steady China: Whilst they have a massive population,growth higher than worldwide penetration smartphone penetration expected to remain Japan: Starts as laggard, but expected torelatively low for nowbecome one of the leaders in next few years Russia: Expected to show steady growth, a little Smartphone shipment penetration was lower than behind Chinathat of the world up to 2010, but by end 2011, India: Expected to show the least and slowestexpected to be one of the leadersgrowth of penetration% of smartphone shipments, 2010 - 2015% of smartphone shipments, 2010 - 2015 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10%0%0% 2010 2011 2012 2013 2014 2015 2010 2011201220132014 2015 World EU5 USAJapan WorldBrazilRussiaIndia ChinaSource: IDATESource: IDATE 13. Smartphone shipment forecastThe heavyweights: China, US, EU5 Remaining BRIC countries and Japan 2011: US leads number of smartphones Compared to China, the other BRICshipped, followed by the EU5 and then China countries have much smaller total 2013: Whilst US continues to lead, Chinashipmentscatches up with EU5 Japan, despite its high smartphone 2015: China to overtake the US to becomepenetration rate, remains low in terms ofthe nation to ship the most smartphones total shipment numbers due to the country China, due to its massive population, willitself being much smaller. They are,ship the most smartphones despite their however, ahead than any of the EU5 nationslower penetration rates on an individual basis.Total number of smartphone shipments, 2011 - 2015 Total number of smartphone shipments, 2011 - 2015 120 000 120 000 100 000 100 00080 00080 00060 00060 00040 00040 00020 00020 000 0 0 2011 2012 2013 2014 20152011 2012201320142015 ChinaUSA EU5 Japan Brazil Russia India Source: IDATE Source: IDATE 14. LTE devices 15. LTE devices: positioning and strategies of main players LTE devices roadmap Already close to 200 LTE devices available LTE: a game-changer in the mobile industry? For chipset manufacturers, it will be seen that, in order to be able to succeed, the increased capabilities of mobile devicesincreasingly require competencies in various areas not limited to baseband. In our judgement, this will see Qualcomm,NVIDIA and ST-Ericsson establishing themselves as Tier 1 players in this market For mobile device manufacturers, the challenges will be to have the best possible integration of 4G into existing devices,with, of course, a series of challenges: technical, cost, IPR (Intellectual Property Rights) and Time To Market. Each of thedevice manufacturers has so far adopted different strategies. Some, such as Apple, have adopted a cautious approach,waiting for the technology to mature for mass market adoption. On the other hand, device vendors such as HTC orSamsung and LG have entered the market very early in an attempt to differentiate themselves and increase market share.In the long term, however, we do not see early LTE adoption into devices as an entry barrier for newcomersSource: IDATE 16. Review of LTE devices availabilityDongles & mobile hot-spotsMobile handsets: early developments Samsungs first LTE dongle Novatel MiFi 4510L mobile hotspot Early LTE handsets:Samsung Craft andGalaxy Indulge AT&Ts first smartphonesHTC Thunderbolt, Verizon, firstLTE SmartphoneAT&Ts first mobile hotspot and dongle Dongles and personal hot-spot devices prove to be popularVoice supported on 3G networks Tablets Other connected devices ZyXEL LTE fixed router Sierra Wireless M2M LTE gateway Motorola Xoom tabletSamsungs GalaxyTab 10.1 Tablets are an important part of the device offerRouters for rural areas (Germany, Verizon)30 Modules, 11 Tablets, 10 Notebooks, 2 PC Cards, 27 Smartphones, 70 Routers, 47 Dongles - Source: GSA 11/2011700 MHz: 106, 800 MHz: 42, 1800 MHz: 41, 2600 MHz: 52, 800/1800/2600 MHz: 32, AWS: 35 17. Review of LTE devices availability USB dongles and mobile hotspotsNovatel MiFi 4510L mobile hotspotManufacturer Device name Chipset usedModesBands Launch dateEpicom Unknown QualcommUnknownUnknown Q3 2011Huawei Huawei Mobile WiFi E589 Qualcomm MDM 9200 LTE/HSPA/GSM 2600, 2100, 1800, 900 MHz Q3 2011NovatelNovatel MiFi 4510LQualcomm MDM 9600 LTE/CDMA EVDO/1x RTT 700 MHz for LTE Q1 2011SamsungSamsung SCH-LC11LTE/CDMA EVDO/1x RTT 700 MHz for LTE March 2011 Thanks to more mature chipsets being available commercially and more LTE networks being launched worldwide, thedevice market has evolved faster than expected The first multi-mode dongles have been released The basic USB dongles were naturally followed by MiFi devicesSource: IDATE 18. Review of LTE devices availabilityMobile handsets: early developments The early launch of the first LTE handset (Samsung Craft) on the USEarly LTE handsets: Samsung Craft andGalaxy Indulgemarket (in 2010) has come sooner than expected HTC was the first mobile device manufacturer to launch an LTE-poweredsmartphone, the Thunderbolt, for the Verizon network The table below is a summary of announced LTE handsets. Most of themHTC Thunderbolt, Verizon, first LTE Smartphoneare for the Verizon Wireless Band 13 (700 MHz) LTE network, and arepowered by a Qualcomm chipset.Manufacturer Device name SpecificationsHTCThunderbolt 1 GHz Snapdragon processor / MDM 9600 / Android 2.2 / 4.3" capacitive screen / 8 GB / 8 MP camera + rear-facing camera / DLNA supportLG Revolution1 GHz Snapdragon processor / MDM 9600 / Android 2.2 / 4.3" capacitive screen / 16 GB / 5 MP camera + rear-facing camera / HDMI / DLNA supportMotorola Droid Bionic 4G Dual core 1.2 GHz Cortex A9 processor / MDM 9600 (*) / Android /4.3" capacitive screen / 16 GB / 8 MP camera + rear-facing camera / HDMI / DLNA support Craft Feature phone / Samsung CMC 2200 + Via Telecom / Proprietary OS / 165 MB internal memory + SD memory card / 3 MP camera Galaxy Indulge1 GHz Hummingbird Samsung processor / Android 2.2 / 3.5 Capacitative screen / micro SD slot / 3.2 MP camera + 1.3 Mp rear facing camera /Samsung Stealth 4G1 GHz Hummingbird (Cortex A8) processor / MDM 9600 / Android 2.2 / 4.3" capacitive screen / 16 GB / 8 MP camera + rear-facing camera / HDMI / DLNA supportSource: IDATE 19. Review of LTE devices availability Motorola Xoom tabletTablets: LTE as differentiating advantage? The tablet segment is bristling to establish itself on the mobile device marketquickly, especially as mobile device manufacturers do not want to let Applegrab the whole of the pie Motorola was the first to announce an LTE-based version of its Xoom tabletin January 2011 Below is a summary of announced and expected LTE tablets on the market:ManufacturerDevice nameSpecificationsLaunch dateCommentsMotorola XoomNvidia Tegra 2 Dual core Cortex A9 1 GHz processor /Q3 2011First launched with 3G only, it will be hardware-upgraded to LTE in Q2 2011. MDM 9600 (*) / Android 3.0 / 10.1" capacitive screen / 32SD Card and Adobe Flash support not functional when launched but GB + SD card / 5 MP camera + 2 MP rear camera / HDMI / expected to come with software upgrade. 725gRIM Playbook 1 GHz Dual core Coretex A9 processor / QNX / 7"2nd half of 2011Will come first in a WiMAX edition for Sprint, and later in an LTE version, capacitive screen / 16 - 32 - 64 GB / 5 MP camera + 3MPprobably for Verizon. Will support Android application through a porting of the rear-facing camera / HDMI / 400g Android Dalvik Java virtual machine.SamsungGalaxy Tab 4G 1.2 GHz Coretex A8 Hummingbird processor / Android 2.2 /end of Q2 2011 (*) Samsung is constantly updating its specs depending on competitors. It is 7" capacitive screen / 2 GB / 5 MP camera + 1.3 MP rear- thus still unclear if the version finally released will have these characteristics facing camera / DLNA / 400gor not. Android 2.2 is, among others, not the most appropriate OS for tablets.ZTE- Light LTE 1.2 Ghz undefined processor / Android 3.0 / 10Planned for Q1 2012 It is not clear if V11 LTE tablet and Light LTE tanlets are the same devices. Capacitative screen / 4/8/16/32 GB / 5 MP camera + 1.3 MPThe baseband will support FDD LTE / HSPA / WCDMA / Edge rear facing camera -Source: IDATE 20. Review of LTE devices availability Machine to Machine communication modules As far as M2M communication modules and gateways are concerned, somecompanies have already announced product availability. This is notably the case of Cinterio and, more recently, Sierra Wireless but thecase for such use has not yet been proved. M2M usages are today rather narrowband usages and sensitivity to prices is veryhigh, meaning that M2M LTE devices are not yet particularly relevant. However, remote video surveillance is seen already as a worthy usage for LTE Sierra Wireless M2M LTE gatewayM2M. Besides, as very few 3G M2M modules are today available, companies may wellchose to switch directly from GPRS / Edge module to 4G modules, so as tomaximise the communication module life cycle. Below is a summary of availableLTE M2M products: Company Name of the product Kind of product Specifications Sierra Wireless Airlink GX440 M2M gateway Band 13 (700 Mhz), 3G gateway upgradable to 4G to ease transition Cinterion NANAReportedly working on it Source: IDATE 21. Review of LTE devices availability Other LTE devices ZyXEL LTE fixed router Fixed routers and / or gateways: as for Fixed (Ultra) BroadbandWireless Access, some companies have been devising LTE homegateways to serve grey areas in areas of low population density. Thismarket could be driven by countries such as Germany where MNOsare obliged by their license to deploy broadband in such areas.Kindle store on iPad and Samsung Galaxy Tab eReaders are, broadly speaking, very specialised tablets with adaptedhardware and electronic ink display enabling long-lasting batteriesand increased comfort for reading. We do not see, however, thebusiness case for LTE support in these devices, with their verycompetitive prices. We believe more eReader manufacturers willeither enter the tablet market with a device proposition or adapt theircontent distribution platform to be available on smartphoneMobile gaming devices: some companies Sony Ericsson is one such are now transforming their smartphones into gaming devicesSony Ericsson Xperia Play rather than adding connectivity to existing gaming devicesSource: IDATE 22. LTE networks status & tariffing 23. LTE commercial servicesThe LTE ecosystem is growing from strength to strength with more than 200 operators already having announced their commitment to LTE technologyOperator CountryDateFrequency bandOperator CountryDateFrequency bandAT&T USA09/2011 700 MHz OmnitelLithuania04/2011 2.6 GHzA1 (Telekom Austria) Austria11/2010 2.6 GHz Rogers WirelessCanada 07/2011 1.7/2.1 GHz (AWS)Aero2Poland 09/2010 1800 MHzSK Telecom South Korea07/2011 2.1 GHzBell MobilityCanada 09/2011 1.7/2.1 GHz (AWS) Smart Communications Philippines04/2011 2.6 GHzCSLHong-Kong11/2010 1800 MHz & 2.6 GHzSTCSaudi Arabia 09/2011 2.6 GHzDoCoMo Japan12/2010 2.1 GHz T-Mobile Germany04/2011 800 MHzElisaFinland12/2010 2.6 GHz TeliaSoneraDenmark12/2010 2.6 GHzEMTEstonia12/2010 2.6 GHz TeliaSoneraFinland05/2010 2.6 GHzLG U+South Korea07/2011 2.1 GHz TeliaSoneraNorway 12/2009 2.6 GHzLMTLatvia 05/2011 1800 MHzTeliaSoneraSweden 12/2009 2.6 GHzM1 Singapore06/2011 1.8 GHz and 2.6 GHz UCellUzbekistan 08/2010 2.6 GHzMetroPCS USA09/2010 1.7/2.1 GHz (AWS) Verizon Wireless USA11/2010 700 MHzMTSUzbekistan 08/2010 2.6 GHz Vodafone Germany12/2010 800 MHzMobily Saudi Arabia 09/2011 2.6 GHz Zain Saudi Arabia 09/2011 2.6 GHzNet4Mobility Telenor & Tele2 Sweden 11/2010 2.6 GHzO2 Germany07/2011 800 MHzSource: IDATE October 2011 24. LTE deployment roadmapGeographical mapping of early LTE commercial deploymentIn September 2011, 30 operators had launched LTE service and at least 16 more are expected during the second half of the yearEuropeMajor deployment for Verizon Wireless: 110 M pop covered at end-2010 and 160 M at mid- 2011 (nationwide by 2013) Canada and USALimited coverage for European operators except GermanyAsiaMajor operators LTE commercial deployment schedule20092010 2011 20122013 LTE subscribers figures Sept. 2011 3GPP WCDMA Operators Verizon Wireless: around 3 millionTD- SCDMA DoCoMo: 390,000 Xi (LTE) subscriptions, with a full-year target of 1.3 million3GPP2CDMA operatorsSource: IDATE 25. Enablers of mobile traffic and tariffing trends Towards more differentiation (device type, speed), more QoS managementSource: IDATE 26. TeliaSonera (Sweden) - 2009 LTE tariffing Name and scope of rate planSpeed/ USB-modem Data Monthly tariff/ EUR 62 per month including the usage of 30 GB data per monthSurfzone (for contract volume rate with Additional data volume costs 8.7 per 2GB and 12.9 for 5GB hotspotof 18 months)discount 1speedMetroPCS (USA) - 2010Mellan 4G (Intermediate 4G)5-10 Included10 GBSEK 299Mbit/sSEK 249 The $55 plan includes unlimited voice, texting and LTE data access LTE Watch Service Database - a unique, continually updated market database, providing market data by country and by technology and forecasts Insights - Monthly views on key issues Market reports - in-depth analysis Analyst Access - consulting hours, analyst briefs, presentations 36. THANK YOU! 36