Will the device be king? The smartphones: a commodity in the Future of Mobile Internet?
17 November 2011 - Frédéric PUJOL [email protected]
Content
► Introduction
► Mobile connectivity & smartphones
► LTE devices
► LTE networks status & tariffing
► LTE spectrum & strategies
► Questions
Introduction
Mobile status: Europe vs. USA
Mobile turnover +1% (2010/2009)
-3% (2Q11/2Q10)
+5,2% (2010/2009)
+6% (2Q11/2Q10)
Data revenues share (end-2010) 26.2%
29-32% (BoA)
33.2%
37% (BoA)
Mobile CAPEX Almost flat +18% (2Q11/2Q10)
LTE launch date/ pop. covered End 2009 (Sweden)
Limited launch except in
Germany
End 2010
VZW: 110 M pop (05/2011)
66% pop mid-2012
Mobile ARPU (end-2010) $22.5 $50 (-0.2% y-to-y)
Mobile penetration (end-2010) 128%
Fragmented markets
98.5%
4 carriers have 93% of the
subscribers
Smartphone penetration (end-2010) Vodafone: 19% Verizon: 32%
Source: IDATE & BoA
► The USA are clearly leading LTE deployments with massive coverage and heavy investments
Mobile status: GDP and mobile revenues
► Economic slowdown effect on wireless revenues
Source: BoA
► The 2008-2009 slowdown had a significant impact on wireless revenues in Europe
Mobile traffic increase Mobile traffic usage is getting close to DSL Mobile data consumption trends
Teliasonera Sweden: 14 - 15 GB
Yota Russia: 13 GB*
Clearwire : 7 GB
CSL HK : 6 GB
SK Telecom : 7 GB
Average traffic consumption per user observed
in 2010
Source: IDATE from operators
Mobile 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, social Networking, 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 world's mobile traffic in 2010
► Moving from traditional voice in favor of data-centric, bandwidth-intensive applications
*One customer used 2 Terabytes of data in a single month (2010)
1 MB
1-2
GB
1 mn of MP3Monthly cap
for many 3G
subscriptions
7 GB
Monthly usage
on Clearwire’s
network
200
MB
2010 traffic figures
(per broadband subscription - not at scale)
Monthly usage
on DSL
networks
7-15
GB
Firtst monthly
cap for AT&T
6.6 MB per day 33 to 66 MB per day 233 to 500 MB per day233 MB per day
Mobile traffic forecasts 2010-2020
► Total worldwide mobile traffic will reach more than 127 EB in 2020, representing an 33 fold increase compared with 2010 figure.
► We anticipate that the total voice and data traffic will reach 45 EBytes in 2015 compared to less than 2 EBytes in 2009. The bulk of the traffic will be video traffic.
Network capacity units:
Source: IDATE for UMTS Forum
-
20.00
40.00
60.00
80.00
100.00
120.00
140.00
2010 2015 2020
Yearl
y t
raff
ic i
n E
B
Europe
Americas
Asia
Rest of the world
World
Total mobile traffic (EB per year)
Note: mobile traffic on licensed spectrum only (Wi-Fi excluded)
Total mobile traffic
Mobile connectivity & smartphones
Mobile Internet usage: already here, and geared for growth
2010: 21.2% mobile Internet penetration, or 1.1 billion subscriptions worldwide
2015: 37.0% mobile Internet penetration, or 2.67 billion subscriptions worldwide
► Leading region: Asia Pacific
● 27.0% penetration rate, or 691M users
● largely thanks to Japan, who has close to
80% mobile Internet penetration
► North America: 26.0% penetration rate
► EU27: 17.9% penetration rate
Mobile Internet penetration, 2008-2010 Mobile Internet penetration, 2011-2015 forecasts
► North America to overtake Asia Pacific by 2015
● North America will climb to 43.6% penetration
● Asia Pacific to grow to 39.1% penetration
► EU27 will remain behind these two regions, but will enjoy healthy growth to 35.1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2008 2009 2010
France Germany Italy Spain UK
USA Japan South Korea Europe World
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2011 2012 2013 2014 2015
World Europe France Germany Italy
Spain UK USA Japan South Korea
Source: IDATE Source: IDATE
Mobile connectivity devices: not just about smartphones Connectivity devices provide the better value compared to smartphones…
… and overall shipments will maintain a steady growth
► ARPU for connectivity devices can be more than double that of smartphones
● Particularly strong with business use
● Also means they consume more traffic
► 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
Shipment and breakdown of mobile connectivity devices, 2011-2015
(thousands)
► By around 2013, embedded connectivity devices will out-ship external ones
● Decreasing module prices, user friendliness
0
5
10
15
20
25
30
35
Smartphone iPad Dongles Netbooks/laptops
Note: the tariff with the best per GB value is shown in this figure
Source: IDATE Source: IDATE
Smartphone shipment penetration forecast Advanced countries: US, EU5 and Japan Emerging countries: BRIC
► USA: Currently leads, and will continue to lead smartphones shipment penetration
► EU5: Whilst behind the US, will show steady growth higher than worldwide penetration
► Japan: Starts as laggard, but expected to become one of the leaders in next few years
● Smartphone shipment penetration was lower than
that of the world up to 2010, but by end 2011,
expected to be one of the leaders
% of smartphone shipments, 2010 - 2015
Source: IDATE Source: IDATE
% of smartphone shipments, 2010 - 2015
► Brazil: Roughly in line with worldwide penetration
► China: Whilst they have a massive population, smartphone penetration expected to remain relatively low for now
► Russia: Expected to show steady growth, a little behind China
► India: Expected to show the least and slowest growth of penetration
0%
10%
20%
30%
40%
50%
60%
70%
2010 2011 2012 2013 2014 2015
World EU5 USA Japan
0%
10%
20%
30%
40%
50%
60%
2010 2011 2012 2013 2014 2015
World Brazil Russia India China
Review of LTE devices availability
Early LTE handsets:
Samsung Craft and
Galaxy Indulge
Voice supported on 3G networks
HTC Thunderbolt, Verizon, first
LTE Smartphone
Dongles and personal hot-spot devices prove to be popular
Tablets are an important part of the device offer Routers for rural areas (Germany, Verizon)
Novatel MiFi 4510L mobile hotspot
Dongles & mobile hot-spots
Tablets
Mobile handsets: early developments
Other connected devices
Motorola Xoom tablet
ZyXEL LTE fixed router
Sierra Wireless M2M LTE gateway
Samsung’s first LTE dongle
AT&T’s first mobile hotspot and dongle
AT&T’s first smartphones
Samsung’s GalaxyTab 10.1
►30 Modules, 11 Tablets, 10 Notebooks, 2 PC Cards, 27 Smartphones, 70 Routers, 47 Dongles - Source: GSA 11/2011
►700 MHz: 106, 800 MHz: 42, 1800 MHz: 41, 2600 MHz: 52, 800/1800/2600 MHz: 32, AWS: 35
LTE networks status & tariffing
LTE deployment roadmap Geographical mapping of early LTE commercial deployment
Major operators LTE commercial deployment schedule
Source: IDATE
Canada and USA
Europe
Asia
3GPP WCDMA
Operators
TD- SCDMA
3GPP2
CDMA
operators
2009 2010 2011 2012 2013
In September 2011, 30 operators had
launched LTE service and at least 16 more are
expected during the second half of the year
Major deployment for Verizon Wireless: 110 M
pop covered at end-2010 and 160 M at mid-
2011 (nationwide by 2013)
Limited coverage for European operators
except Germany
LTE subscribers figures Sept. 2011
Verizon Wireless: around 3
million
DoCoMo: 390,000 Xi (LTE) subscriptions, with a full-year target of 1.3 million
Enablers of mobile traffic and tariffing trends
Source: IDATE
►Towards more differentiation (device type, speed…), more QoS management
LTE tariffing TeliaSonera (Sweden) - 2009
► EUR 62 per month including the usage of 30 GB data per month
► Additional data volume costs € 8.7 per 2GB and € 12.9 for 5GB
MetroPCS (USA) - 2010
► The $55 plan includes unlimited voice, texting and LTE data access
► LTE-capable Samsung Craft for $299
A1 Telekom (Austria) - 2010
► Plans LTE commercial service in Vienna in the 2.6 GHz band
► 30 GB of data a month at speeds of up to 150 Mbps for €90 per month
Vodafone (Germany) - 2011
► 7.2 Mbps downstream for €39.99 per month with a cap of 10 GB
► For a downlink speed of 50 Mbps and 30 GB cap, the monthly cost is
€ 69.99
Source: IDATE
Plan Monthly fee Monthly data
Allowance
Overage fee
4G mobile broadband plans (for 4G USB modems) USD 50 5 GB USD 10 per 1 GB
USD 80 10 GB USD 10 per 1 GB
Mobile broadband connect and 3G mobile hotspots
(for smartphones and feature phones)
USD 20 2 GB USD 20 per 1 GB
Mobile broadband plans (tablets, netbooks) USD 20 1 GB USD 20 per 1 GB
USD 35 3 GB USD 10 per 1 GB
USD 50 5 GB USD 10 per 1 GB
USD 80 10 GB USD 10 per 1 GB
Name and scope of rate plan Speed/
‘Surfzone’
hotspot
speed
USB-modem
(for contract
of 18 months)
Data
volume
Monthly tariff/
rate with
discount 1
Mellan 4G (‘Intermediate 4G’)
5-10
Mbit/s
<22 Mbit/s
Included 10 GB SEK 299
SEK 249
Stor 4G (‘Grand 4G’) – Promotion
price
10-20
Mbit/s
<22 Mbit/s
Included 20 GB SEK 349 for
18 months2/
SEK 299 for
18 months3
Total 4G – Promotion price 10-80
Mbit/s
<22 Mbit/s
Included 30 GB SEK 349 for
six months4
SEK 249 for
6 months5
The LTE wholesale model
Source: IDATE
Sells Mobile
WiMAX
capacity
Will sell LTE
capacity
Provides cells
sites and
helps building
theterrstrial
LTE network
Build a common GSM and LTE
network (Sweden)
Will sell LTE
capacity to
MVNOs and
distributors Sells LTE
capacity
Sharing
agreement?
Sells LTE
capacity?
Builds a wholesale LTE network in
the 2.3 GHz band for rural areas
Builds a wholesale LTE network in
the 1800 MHz band (Poland)
Plans to build a wholesale LTE
network in the S-band (USA)
Many actors using new
spectrum (satellite L-
Band, S-band, 2.3
GHz…)
Consolidation likely in
the USA
Difficulties in Russia
Sharing and wholesale
model can be
combined
LTE subscribers forecasts
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Asia-Pacific 1,066 8,383 29,260 70,402 133,310
Western Europe 1,103 4,292 14,946 44,607 85,246
Central & Eastern Europe 68 1,547 3,600 11,592 21,879
North America 11,635 32,588 58,323 85,535 118,955
Latin America 247 1,027 3,402 11,128
Africa-Middle East 223 1,469 5,298 8,493
Total 13 872 47,280 108,624 220,836 379,012
2011 2012 2013 2014 2015
Source: IDATE (June 2011)
► By the end of 2015, we forecast that overall there will be more than 379 million LTE subscribers (worldwide).
► We forecast 13.8 million LTE subscribers at the end of 2011 with the USA representing the bulk of this figure with 11.6 million subscribers.
► At the end of 2015, Asia-Pacific should represent 35.2% of the total, North America 31.4% and Western Europe 22.5%.
LTE spectrum & strategies
LTE spectrum
► Regional harmonisation likely to be the first step
Americas: DD (700 MHz), AWS, 2.6 GHz
Europe: DD (800 MHz), 1800 MHz, 2.6 GHz
Asia Pac: 2.3 GHz, 2.6 GHz
► In the USA, LightSquared will use specific bands (1.4-1.6
GHz…)
► Roaming is not a priority today
Source: IDATE
Main LTE frequency bands
Fragmentation is here Countries Existing frequency bands New frequency bands
Europe 900 MHz
1800 MHz
2.1 GHz
800 MHz (790-862 MHz – Digital Dividend)
2.6 GHz
USA 850 MHz
1.7/2.1 GHz (AWS)
1900 MHz (PCS)
2.6 GHz
700 MHz (698-806 MHz)
1.4-1.6 GHz (LightSquared)
S-band (Dish)?
South America 1.7/2.1 GHz (AWS)
1800 MHz
1900 MHz (PCS)
700 MHz (698-806 MHz)
2.6 GHz
China 2.3 GHz
2.6 GHz
Japan 850 MHz
1.7/1.9 GHz
2.1 GHz
700 MHz (698-806 MHz planned)
1.5 GHz
South Korea 1800 MHz
2100 MHz
800 MHz
Rest of Asia-Pacific 1800 MHz 700 MHz (698-806 MHz planned)
2.3 GHz
2.6 GHz
Legend: Currently used by LTE Likely use by LTE Other mobile frequency bands
5.1
84.2
29.9 20.3
49.6 50.670.3
518.2
10.7
54.531.1
71.4
0
100
200
300
400
500
600
Australia 850
MHz 2004
Canada
AWS 2008
France
UMTS core
band 2001
France Free
2009
France 2.1
GHz Orange
2010
France 2.1
GHz SFR
2010
Germany
800 MHz T-
Mobile 2010
Germany
UMTS core
band
Germany
2.1 GHz
2010
Spain 800
MHz 2011
Sweden 800
MHz 2011
USA 700
MHz 2008
Premium spectrum (€ cents per MHz per pop)
► EUR 70 cents per MHz per pop in Germany for
the DD: very close to the level reached in the
USA. In Sweden it sold for EUR 31 cents, in
Spain for EUR 54 cents and in Italy for 85 cents.
► 2.6 GHz spectrum much cheaper: in the EUR
0.1-10 cents range
► France 2.6 GHz: € 11 cents
► Italy 2.6 GHz: € 6 cents
Spectrum price
21
Need for
additional
capacity
Reduce costs
Competition
Increase
ARPU
Provide
higher data
rates
Need for
additional
capacity
Reduce costs
Competition
Increase
ARPU
Provide
higher data
rates
Need for
additional
capacity
Reduce costs
Competition
Increase
ARPU
Provide
higher data
rates
Need for
additional
capacity
Reduce costs
Competition
Increase
ARPU
Provide
higher data
rates
Need for
additional
capacity
Reduce costs
Competition
Increase
ARPU
Provide
higher data
rates
Need for
additional
capacity
Reduce costs
Competition
Increase
ARPU
Provide
higher data
rates
Reduce costs
Competition
Increase
ARPU
Reduce costs
Competition
Increase
ARPU
Reduce costs
Competition
Increase
ARPU
Need for
additional
capacity
Need for
additional
capacity
Need for
additional
capacity
Provide
higher data
rates
Provide
higher data
rates
Provide
higher data
rates
Source: IDATE
LTE strategies
IDATE has identified five key drivers as reasons for MNOs to migrate to LTE: ►Reduce costs ►Need for additional
capacity ►Increase ARPU ►Provide higher data
rates ►Competitive pressure
Questions
Is the feature phone dead?
What could be the features and functionalities of future smartphones?
What price range for smartphones in 2012?
How many operating systems will survive?
What will be the economic burden of the associated application stores?
Is there a real risk of operator disintermediation via Soft SIM card strategies?
THANK YOU!
23