GLGi: 4G Cellular - The What, Why and When

GLGi: 4G Cellular - The What, Why and When

Pradeep SamudraIndependent Consultant

© 2007 Gerson Lehrman Group Inc., All Rights Reserved

Council Member Biography

Pradeep Samudra, now an independent consultant at Tellabs, was most recently (10/06) a Vice President at Samsung Telecommunications. He has over 25 years of experience in the telecommunications industry. He is a holder of 7 recent patents and 6 pending applications in the area of Wireless/IP/MPLS/ATM routing and is knowledgeable about the business and technologies of 3G/4G/CDMA/GSM/ WiMAX/xDSL/FTTx/VoIP and IPTV technologies. He is also experienced in developing and marketing broadband and wireless network systems and products. Mr. Samudra has spoken at internationally recognized conferences on topics ranging from market and technology forecasts, planning and deployment. He was a member of the Board of Directors for the prestigious industry standards alliance, ATIS. Recently he managed nationwide VoIP deployment and an IPTV trial in the US. He is knowledgeable in the telecom vertical segment, key players, their strategies, prospects for agents of change and in next-gen wireless technologies such as 3G/3G LTE/Super 3G and 4G, broadband access and core networks.


Table of Contents

► A Quick Review of Cellular Technologies Definition of 4G

► Why do we need 4G? Technologies, standards bodies and vendors/proponents

► The market dynamic: A global perspective Global Trends

► The Time Line for 4G Enablers and Inhibitors


About GLG Institute

GLG Institute (GLGiSM) is a professional organization focused on educating business and investment professionals through in-person meetings. It is designed to revolutionize the professional education market by putting the power of programming into the hands of the GLG community.

GLGi hosts hundreds of Seminars worldwide each year.

GLGi clients receive two seats to all Seminars in all Practice Areas.

GLGi’s website enables clients to: ► Propose Seminar topics, agenda items and locations ► View and RSVP to scheduled and proposed Seminars ► Receive a daily briefing with new posts on your favorite tickers,

subject areas and from trusted Council Members ► Share Seminar details with colleagues or friends


Gerson Lehrman Group Contacts

John AronsohnVice President, TMTGerson Lehrman Group850 Third Avenue, 9th FloorNew York, NY [email protected]

Aaron LibermanManaging Director, Sales and MarketingGerson Lehrman Group850 Third Avenue, 9th FloorNew York, NY 10022212-984-3684 [email protected]

Carly PisarriProcess ManagerGerson Lehrman Group850 Third Avenue, 9th FloorNew York, NY [email protected]

mailto:[email protected]




IMPORTANT GLG INSTITUTE DISCLAIMER – By making contact with this/these Council Members and participating in this event, you specifically acknowledge, understand and agree that you must not seek out material non-public or confidential information from Council Members. You understand and agree that the information and material provided by Council Members is provided for your own insight and educational purposes and may not be redistributed or displayed in any form without the prior written consent of Gerson Lehrman Group. You agree to keep the material provided by Council Members for this event and the business information of Gerson Lehrman Group, including information about Council Members, confidential until such information becomes known to the public generally and except to the extent that disclosure may be required by law, regulation or legal process. You must respect any agreements they may have and understand the Council Members may be constrained by obligations or agreements in their ability to consult on certain topics and answer certain questions. Please note that Council Members do not provide investment advice, nor do they provide professional opinions. Council Members who are lawyers do not provide legal advice and no attorney-client relationship is established from their participation in this project.

You acknowledge and agree that Gerson Lehrman Group does not screen and is not responsible for the content of materials produced by Council Members. You understand and agree that you will not hold Council Members or Gerson Lehrman Group liable for the accuracy or completeness of the information provided to you by the Council Members. You acknowledge and agree that Gerson Lehrman Group shall have no liability whatsoever arising from your attendance at the event or the actions or omissions of Council Members including, but not limited to claims by third parties relating to the actions or omissions of Council Members, and you agree to release Gerson Lehrman Group from any and all claims for lost profits and liabilities that result from your participation in this event or the information provided by Council Members, regardless of whether or not such liability arises is based in tort, contract, strict liability or otherwise. You acknowledge and agree that Gerson Lehrman Group shall not be liable for any incidental, consequential, punitive or special damages, or any other indirect damages, even if advised of the possibility of such damages arising from your attendance at the event or use of the information provided at this event.

Pradeep Samudra December 2007 Page 7 of 27

Year Commercializ

ed

GSM/UMTS (3GPP)

CDMA (3GPP2)

IEEE(802.16, 20, 22)

Capacity (bps)

2G 1998 GSM 1X RTT 30K-90 K

2.5G 2002 GPRS/EDGE 1X EVDOr0 150K

3G 2006 WCDMA 1X EVDOrA400K-700K

3.5-9G

2006-8

HSPA+/OFDMA

nX EVDOrB/C

2007: 802.16e (WiMAX)

1M-15M

nextG ? OFDMA/MIMO

(LTE/SAE?)

UMB (TEF?)

2009: 802.16m

(WiMAX+?)?

4GPP?/4G Forum

Cellular Technologies 2G-4G

LTE/SAE – Long Term Evolution (3GPP)/System Architecture EvolutionMIMO – Multiple Input/Multiple Output OFDMA – Orthogonal Frequency Division Multiple AccessTEF – Technology Evolution Framework (3GPP2/CDG)UMB – Ultra Mobile Broadband

3G = 1st Gen of Mobile Broadband4G = Wireline Substitutable and Mobile

1. What is 4G?


Wireless Technology Evolution to 3.9G

CDMA(IS-95A)

GSM

CDMA(IS-95B)

cdma2000

1xEV-DORev 0/A/B

UMB802.20

2G

2.5G

3G

3.5G

3.9G

GPRS

E-GPRSEDGE

HSDPAFDD/TDD

TDMAIS-136

WCDMAFDD/TDD

TD-SCDMA

LCR-TDD

HSUPAFDD/TDD

HSPA+LTE

E-UTRA

IEEE802.16

Fixed WiMAX802.16d

Mobile WiMAX802.16e

WiBRO

IEEE802.11

802.11g

802.11a

802.11g

802.11n

CDMA GSM/UMTS IEEE Cellular IEEE LAN

1. What is 4G?


ITU’s Vision for the Next Gen Access

1. What is 4G?


The Next Gen Vision

Distinctions between Portability, Nomadicity and Mobility are eliminated.

Connectivity is ABC – Always Best Connected.

“Commercial services in multi-user environments targeting peak data rates approaching 100 Mbps for “highly mobile” users and up to 1 Gbps for nomadic (low mobility or stationery) users”

1. High data rates – Efficient spectrum utilization (up to 10 b/s/Hz) – Advanced antenna and modulation techniques– 100 Mbps @250 KMph or 1 Gbps nomadic/ portable

2. IP/Web based services

– QoS for peer-peer services

3. Reconfigurable/dynamic service provisionable

– May use sensor/cognitive networks

4. Seamless roaming among heterogeneous networks

– 2G/2.5G/3G/3.xG/LTE, WLAN/WMAN/WPAN, DVB, DAB– Backward compatible

5. Scalable up and down

– In cost, performance and power

6. Open Access? – Any device, any app, any network, any place..

1. What is 4G?


Goal: A Unified Architecture

1. What is 4G?


Integration Challenge: The Next Gen Universe

1. What is 4G?


The Service Continuity Challenge

1. What is 4G?


3G: Some Unfinished Business

Financial

• Balance sheet cleanup (debt reduction)

• Capacity Utilization

• Business Models for New Services

Technical

• Improved coverage (e.g., residences)

• Inter technology roaming

• Inter carrier compensation(esp. data services)

The goal of Universal, Ubiquitous, and Interoperable Service

at affordable price has not yet been achieved.

1. What is 4G?


So What is 4G?

• Another incremental increase over 3.9G?– 5 7 14 40 Mbps of HSPA– Just another “fat pipe”?

• Limited to OFDMA?– WiMAX+, UMB and LTE are variations (all use

OFDMA DL).

• Non-compatible Heterogeneous Networks?– Non-roaming, closed networks

• Non-IMS based?– P2P, Web 2.0 domination

With a definition not based on IMT-A, 4G can have a difficult time meeting cost and connectivity goals

1. What is 4G?


A Look at Fundamental Requirements

Human Sense Sound Sight Knowledge

↓ Network Generation

1G-2G Voice - Low Speed Data

3G Voice Images Hypertext (HT)

4G Voice, Speech VideoFiles (Speech, HT,

Video)

Typical Bandwidth 10-80 Kbps 1 - 20 Mbps 0.5-10 Mbps

Required Latency <160 ms <100 ms <5 s

Principal Application Communication Entertainment Information

1. What is 4G?


Trends in New Applications2. Why 4G?

Mobile marketing and advertising

Business potential viewed with great enthusiasm within dominant and leading markets.

Mobile Search Knee for takeoff : replicate desktop success

M-commerce/M-Wallet

SMS messaging enables interactivity with other forms of entertainment (e.g., Polling)., Credit purchases.

Mobile Gaming Evolving into “Casual Gaming” with challenges for distribution and revenue collection.

Mobile e-Mail Going mass scale as productivity enhancer to move into rank and file employees beyond executives and field sales force.

Presence, MMS, Instant Conferencing, push-to-video, and mobile news

MusicStation (UK) from Vodafone: Omniphone’s deal with Telenor (Sweden), 3 (HK), and Vodacom (SA).

Content Focus shifting from “Major Media Brand - Formal Content” to “User Generated Content” in mobile networks. Photo swapping, mobile social media, one-to-one communications

Revenue sharing Music and video sharing, with subscribers via ads and P2P E.g., SeeMeTV by 3 allows video uploaders to get paid when their content is downloaded.

Webco Platform Deals with (Vodafone/MySpace, Sprint/GOOG), Android


Key Business Trends1. Global Telecom Spending Patterns Realigning

– Early growth in international capex, US capex lag

2. Rise in Mobile Data Revenues Internationally– ARPUs up by 25% CAGR, US [< 5% CAGR]

3. 50% Rise in Mobile Voice Subscribers [+1.4B] – International +100%, US +15%– Emerging markets to remain unsaturated through 2012– Mobile broadband subscribers up 275% [+750M]

4. New Mobile Services Taking Hold – SK/Japan/Nordics– Provide impetus to mobile data services

5. Operators Consolidating Domestically While Expanding Overseas

– E.g., AT&T Mobility India, Telefonica (+TIM) CALA

2. Why 4G?


Examples of Mobile Data ServicesCountry Operator Service

1 USA T-Mobile BlackBerry Email and IM

2 USA SprintNextel, VZW

Mobile Broadband (EvDOrA)

3 UK 3 Mobile TV and Video Streaming

4 Italy Vodafone Casa FastWEB

5 Italy 3 Mobile TV Broadcasting

6 Egypt Vodafone MiniCall BubbleTALK Voice SMS

7 Japan NTT DoCoMo DCMX Mobile Payment

8 Japan KDDI EZ Chaku-uta Full

9 UK O2 SMS

10 So. Korea

SKT Cyworld Mobile

2. Why 4G?

Mobile TV Technology OptionsUnicast 3G - MachBlue by Orange (UK)Bcast OFDM - Vcast by Verizon (US)Bcast DVB-H - KT, SKT (SK)


Projected Capacity Needs - Developed Market (EU)

2. Why 4G?


A Perspective: Wireline Demand

Source: The FTTH Council

2. Why 4G?


The Three Horses of 3G

Organization

Technology

Strength

Weakness

Migration

4G Prospects

3GPPUMTS -WCDMA

Voice DataLTE

(2010)Strong

3GPP2cdma200

0 -CDMA

Voice DataUMB

(2009)Weak

IEEEWiMAX -OFDMA

Data Voice802.16

m (2009)

Mixed

3. The Global Dynamic


The Four Horses of 4G

SupplierPortfolio 4G Prospects

LTE

UMB

WiMAX+

APAC

CALA

EMEA

NA

Alcatel-Lucent

€€ €€€ €€ €€

Ericsson x x €€€ €€ €€€ €

Nokia-Siemens

x € € €€ €€

Nortel x €€ € €€€€

Motorola x x € ? ? €

APAC – Asia Pacific [SKT, NTT, Vodafone]CALA – Central and Latin America [Telefonica]EMEA – Europe, Middle East, Africa [Vodafone, DT, Telefonica]NA – North America [Sprint, Verizon and AT&T]€€€ - Strong, €€ - Medium, € - Weak



Global Mobile Penetration Rates

2006

2012

Markets Saturated by/before 2012 Room to Grow Beyond 2012

, July 2007

81% of the 1.4B new additions will be pre-paid with ARPUs of $6 (vs post-paid ARPU of $37), using GSM (2G) for voice,in effect, delaying bandwidth and service deployments to these markets.



Major Mobile Operators - EuropeOperator

Total Subs(M)

3G Devices (M)

Wireline Wireless Major Markets

1 Telefonica+O2 217 E E Spain, Italy, Brazil, CALA, Europe2 Vodafone 200 18.5 Minor E UK, US, FR, Germany, India + 22 other3 DT 112 E E Germany, Other EU4 FT+Orange 102 9 E E France, UK Several other5 TeliaSonera 82 E E Nordic, Baltic, CIS, Turkey,…6 Telenor 80 E E Norway, Sweden, Finland, RU + 7 other7 PT 39 E E Portugal + 8 other8 Telecom Austria 11 E E Austria9 3 (HWL) 10 10 x E UK+10 other mkts

10 TDC 10 E E Denmark11 KPN 9 E E Netherlands, Belgium, Germany12 Bouygues SA 9 x E France13 Swisscom 5 E E Switzerland14 Belgacom 4.4 E E Belgium



Data Service Revenues: A Case Study (Sprint)

Sprint’s WiMAX Strategy (“XOHM”) of “Open Access” creates new openings in their walled garden.

, Oct 2007

Google is close to a deal with Verizon Wireless and Sprint Nextel over its new mobile phone. An agreement is likely to reached within two weeks for launch of a Google phone in the middle of 2008. The central feature of the Google handset will be an open operating system that will encourage developers to create apps beyond search, interactive communications and social networking. (Wall Street Journal Oct 31, 2007)

As an open access operator, challenges related to security, privacy and billing are compounded due to complexity of multiple “virtual providers”. Billing options to include flat (advanced payment) or transaction based.

By 2012, sales of unsubsidized devices (non-laptop) are expected to contribute significantly to the top line. These include handsets, cameras, printers, Internet tablets, PDAs, gaming and video devices.

Elephant in the Room: How to compensate for ICI? (i.e., Network Roaming Agreements*)

Mechanisms (e.g., IPSphere) not likely to be in place till ’09-10* Sprint exited agreement with Clearwire partly due to lack of a viable ICI (Reuters, 11/9/07).

Key Requisite: “Open Access”


Accelerators of the 4G Timeline

• Business Need and Opportunity • Technology Pull • Rate of Innovation • Disruptive Technologies• Standardization• New Revenue Opportunities• Developments in the Wireline

World

4. The 4G Timeline

700 MHz may prove to be the most significant accelerator of 4G


• 3G Reaching Maturity and Profitability • Development and Deployment of IMS and

Multi-service Interoperable Networking• Validation of Radio Technologies• Cost and Availability of Spectrum• Migration Cost

– Migrating CDMA2000 to 1xEVDOrA (Verizon Wireless) $6B over 3 years for a nationwide footprint

• Viable Business Model for Service Offering• Backhaul Capacity• Issues Related to Content Ownership• Concurrent Development of the Ecosystem

What Can Give 4G a Pause?

4. The 4G Timeline


Beneficiaries of 3G/4G Timeline

• Mobile Operators (basic service revenue)– Top 4 - VZW AT&T T-Mobile SprintNextel

• Operators providing service to other verticals– e.g., healthcare, automotive, retail, etc.

• Vendors providing product related service to operators

– ERIC, ALU, CSCO, TLAB, CIEN, ADC, JNPR, NSN• Vendors providing professional services to operators• Application SW providers – mostly startups• Webcos: GOOG, YHOO, MSFT, Adobe• Security appliance makers – mostly small pre-/post-

IPO.• Quality/measurement tools maker and user

companies– Agilant, Anritsu, small private co’s


Summary

• 4G Definition Informal• 4G at Hype Stage• 2012-15 Likely Deployment• Near-term Investment Opportunities

– 3G Application Developers– Spectrum Lessees– Selected Equipment Vendors– Global Operators


Backup Slides


Competitive Access Technologies

WLAN802.11n

Cellular 3G

Cellular 3.9G

cdma2000

Cellular 3.9G

UMTS

802.16e/ WiMAX

1 Technology

OFDM/TDM

T/F/CDMA CDMA/OFDMA

OFDMA/FDMA

OFDMA/OFDMA

2 Spectrum Unlicensed Licensed Licensed Licensed Licensed

3 BW Allocn Fixed Semi-fixed Flexible Flexible Flexible

4 Data rate* 70Mbps 1Mbps 70Mbps 40Mbps 70Mbps

5 Distance 50 M 2-5 KM 2-5 KM 2-5 KM 2-5 KM

6 Voice VoIP TDM CDMA/VoIP

TDM/VoIP VoIP

7 Video Streaming, HD

Streaming Streaming, HD

Streaming, HD

Streaming, HD

8 Security MAC/IP IP IP IP MAC/IP

9 QoS MAC TDM/ATM

MAC MAC MAC

10 Mobility Portable Mobile Mobile Mobile Mobile

11 Cost (incr)

Low Medium High High Medium* Typical of the several possible Bold font = strength of the technology


WCDMA (3GPP) Performance Roadmap

Latency (ms)

Capacity DL (Mbps/5 MHz)

Peak DL(Mbps/5 MHz)

Capacity UL (Mbps/5 MHz)

Peak UL (Mbps/5 MHz)

• 100

• 2.5

• 4.3

• 1

• 0.384

• 75

• 2.5 (4-5)

• 14

• 1-2

• ~2

• 30-50

• 4-5

• 14

• ~2

• 4-6

• 10-15 10

• 4-5* 8-10

• 14* 25

• ~2 4-5

• 4-6 12.5

• HSDPA

• Enh UL• HSDPA Ph2• (GRAKE)

• MBMS• Enh UL Ph2

• 3G LTE

• 150

• 1

• 0.384

• 1

• 0.064

2004 2005

• R99

2006 2007-8 2009WCDMA OFDM (Targets)

OFDM on 20 MHz gives 100 / 50 Mbps in DL / UL resp. 2x2 ant.enna assumed for the DL

* With 2x2 MIMO in DL these numbers will be higher


Cdma2000 Roadmap

(Source: CDG)


About GLG Institute

GLG Institute (GLGiSM) is a professional organization focused on educating business and investment professionals through in-person meetings. It is designed to revolutionize the professional education market by putting the power of programming into the hands of the GLG community.

GLGi hosts hundreds of Seminars worldwide each year.

GLGi clients receive two seats to all Seminars in all Practice Areas.

GLGi’s website enables clients to: ► Propose Seminar topics, agenda items and locations ► View and RSVP to scheduled and proposed Seminars ► Receive a daily briefing with new posts on your favorite tickers, subject

areas and from trusted Council Members ► Share Seminar details with colleagues or friends


Gerson Lehrman Group Contacts

Nick GoodmanVice PresidentGerson Lehrman Group850 Third Avenue, 9th FloorNew York, NY [email protected]

Christine RuaneSenior Product ManagerGerson Lehrman Group850 Third Avenue, 9th FloorNew York, NY 10022212-984-8505 [email protected]


IMPORTANT GLG INSTITUTE DISCLAIMER – By making contact with this/these Council Members and participating in this event, you specifically acknowledge, understand and agree that you must not seek out material non-public or confidential information from Council Members. You understand and agree that the information and material provided by Council Members is provided for your own insight and educational purposes and may not be redistributed or displayed in any form without the prior written consent of Gerson Lehrman Group. You agree to keep the material provided by Council Members for this event and the business information of Gerson Lehrman Group, including information about Council Members, confidential until such information becomes known to the public generally and except to the extent that disclosure may be required by law, regulation or legal process. You must respect any agreements they may have and understand the Council Members may be constrained by obligations or agreements in their ability to consult on certain topics and answer certain questions. Please note that Council Members do not provide investment advice, nor do they provide professional opinions. Council Members who are lawyers do not provide legal advice and no attorney-client relationship is established from their participation in this project.

You acknowledge and agree that Gerson Lehrman Group does not screen and is not responsible for the content of materials produced by Council Members. You understand and agree that you will not hold Council Members or Gerson Lehrman Group liable for the accuracy or completeness of the information provided to you by the Council Members. You acknowledge and agree that Gerson Lehrman Group shall have no liability whatsoever arising from your attendance at the event or the actions or omissions of Council Members including, but not limited to claims by third parties relating to the actions or omissions of Council Members, and you agree to release Gerson Lehrman Group from any and all claims for lost profits and liabilities that result from your participation in this event or the information provided by Council Members, regardless of whether or not such liability arises is based in tort, contract, strict liability or otherwise. You acknowledge and agree that Gerson Lehrman Group shall not be liable for any incidental, consequential, punitive or special damages, or any other indirect damages, even if advised of the possibility of such damages arising from your attendance at the event or use of the information provided at this event.

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