Post on 19-Jan-2015
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ALL RIGHTS RESERVED. COPYRIGHT © ALCATEL-LUCENT 2011.
QITCOM – May 25th 2011
André Merigoux – Public Affairs Director
Turbulence ahead: innovative thinking urgently needed to unleash digital delivery
COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
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1- Disruptive changes ahead
Massive investment needed
• Fixed and mobile / Core - backhaul - Access
• Future of mobile = fixed /
• Investments start in all regions of the World: USA, Asia, Russia, etc. ..
• But Europe is lagging behind
• Europe: the need for incremental investment over 10 years of 380 billion € in Europe, including 100 M € in the radio access (source: EC)
• End of voice models - distance
• Inability to monetize the explosion of data traffic for operators via traditional business models
• Decoupling traffic / revenue - erosion of margins
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The changes in the value chain
• End of voice models - distance
• Inability to monetize the explosion of data traffic for operators via traditional business models
• Decoupling traffic / revenue - erosion of margins
Emergence of OTT (Over The Top)
• OTT Generate traffic growth and innovation
• Bandwidth-intensive applications
• No incentive for an efficient use of bandwidth
• Unbalanced data interconnection agreements with operators
• OTT’s are global / operators are local
• Business Model: Market Cap and Price / Earning ... is different
1- Disruptive changes ahead
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2- What are the solutions for business models? New business models between operators and OTTs:
• Agreements of "wholesale" grading services on QoS: throughput, latency, stability, security , jitter
• Multilateral agreements based on open protocols and standard
• Allow operators to manage their networks to offer differentiated services - Debate on Net Neutrality ...
• 3 Conditions:
• Investments needed
• Non harmful discrimination
• Increased transparency: throughput, capacity, traffic management system, user information on services offered
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2- What are the solutions for revenue increase?
Increased revenues from end users
• Monetizing new services
• Segmentation based on experience levels expected
• Responding to various requests from users
• Available in "overlay" and offer standard "best effort " with appropriate pricing
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2 – What are the solutions for policy makers?
Governments step-in to accelerate,ensure coverage, perequation and openness
• To achieve ubiquitous coverage of very high speed connectivity and tackle future challenges of society (social inclusion, ageing population, climate change)
• To complement private initiatives in policy driven areas and maximize network’s social benefits, minimize public funding thanks to perequation.
• To ensure network openness and cost-effective connectivity through network sharing and competition while encouraging new investments needed to handle data explosion
Different types of public intervention • Government driven PPP projects (Australia, New Zealand, Singapore,
India,Brazil…) to foster coverage and competition
• Regional and local PPP projects (Italy, France, Spain,…) based on infrastructure sharing
• Rural projects based on new competition models ( LTE sharing in rural areas,…)
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DIFFERENT POLICY & REGULATORY APPROACHES
Americas
• Vertical integration & platform competition
• Unregulated broadband markets
• No public intervention outside rural areas
• Pro-active spectrum allocation policy
• CALA countries focus on open access wireless and open backbones
APAC
• Network separation & service-based competition
• Heavy influence of government and regulation
• Structural separation, growth through premium connectivity wholesale
• Bitstream wholesale, open backbones & universal coverage lead network transformation
EMEA
• Infrastructure competition & public Intervention
• NGA regulatory framework in place (LLU & bitstream)
• State Aid in rural and medium density areas/infra sharing
• Digital dividend allocation decided at Member-State level
• Digital Agenda targets difficult to meet with current incremental model - N. Kroes initiative to foster investments in NGA (300 B€ required)
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3- What are the solutions for access networks?
New investment models for fixed networks
• Layer 1: passive infrastructure (civil engineering, dark fiber) = 80% of the cost of the network with ROI of 15 years
• Layer 2: active infrastructure (network intelligence) = Return On Investment of 5 years
• Layer 3: service = OTT model
Need to share, co-finance and open Layer 1
• Global phenomenon: Asia - Latin America
Mobile networks sharing
• Capacity increase will come from network densification: pico and femto cells with fixed backhaul
• Shortage in the number of sites in urban / environmental consideration = sharing sites themselves and Rans
• « Ran sharing » = sharing of radio access
• Spectrum scarcity particularly in LTE with larger channels, should lead operators to increasingly share spectrum
• Useless duplication of 3 or 4 networks in rural areas
The future of mobile networks relies on fixed networks
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3- What are the solutions in Europe?
Devise new investment models
• Revisit the dogma of passive infrastructure competition in favor of active infrastructure competition?
• Avoid duplication of infrastructure level 1 and admit it should be considered as an essential infrastructure?
• Define methods of long-term financing for this level 1 (European Investment Bank Fund - national grant - local) if necessary using the flexibility of PPP Models?
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4- Initiative of Neelie Kross/ European Commission on 3rd March 2011
• Alierta César * Telefonica
• Bäcklund Marcus * Voddler
• Ballmer Steve * Microsoft
• Balsillie Jim * Research in Motion
• Bates Tony *** Skype
• Berkett Neil * Virgin Media
• Bernabè Franco Telecom Italia
• Bogaert Lorenz Netlog
• Calve Simon * Lovefilm
• Chambers John T. *** Cisco
• Colao Vittorio Vodafone
• Confalonieri Fedele Mediaset
• Danon Pierre Numericable
• Donahoe John *** eBay
• Elop Stephen Nokia
• Fries Michael T. * Liberty Global
• Gee-Sung Choi *** Samsung
• Godlewski Miros•aw Netia PL
• Granryd Mats Tele2
• Gubitosi Luigi Wind
• Guillemot Yves *** Ubisoft
• Hagemann Snabe Jim *** SAP AG
• Jobs Steve ** Apple
• Lévy Jean-Bernard Vivendi
• Livingston Ian BT
• Murdoch James * Newscorp
• Niel Xavier Iliad Group
• Nyberg Lars TeliaSonera
• Obermann René DT
• Ostrowski Hartmut Bertelsmann
• Paolini Nonce * TF1
• Piel Monika *** ARD
• Richard Stéphane FT
• Sandberg Sheryl *** Facebook
• Schaeffer Dave Cogent
• Scheepbouwer Ad KPN
• Schmidt Eric *** Google
• Stefano Parisi Fastweb
• Stringer Sir Howard *** Sony Music
• Suri Rajeev *** Nokia-Siemens Networks
• Thompson Mark *** BBC Trust
• Tournay Cédric *** Dailymotion
• Verwaayen Ben Alcatel Lucent
• Vestberg Hans *** Ericsson
Participants CEO