Kim Kyllesbach Larsen- T-Mobile- LTE Deployment
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1 Examine the economics of rolling-out LTE LTE World Summit 2010, Tuesday May 18th, Amsterdam, The Netherlands. Dr. Kim (Kyllesbech Larsen) International Network Economics, Technology, T-Mobile
Transcript of Kim Kyllesbach Larsen- T-Mobile- LTE Deployment
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Examine the economics of rolling-out LTELTE World Summit 2010, Tuesday May 18th, Amsterdam, The Netherlands.
Dr. Kim (Kyllesbech Larsen)International Network Economics,Technology, T-Mobile
Story…..
Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010 2
Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010 3
The 3G traffic jam!
3G capacity crunch.
Re-farming existing spectrum.
New spectrum demand.
Empty 2G roads - in time?
The incumbent mobile operator’s near-future … “it aint pretty”!
Re-farming GSM!
Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010 4
1 MHz in LTE ≈ 5 MHz in 3G.
Too little too late?
The Greenfield … “happy” short-term, a tougher future.
Fixed-like demand!
Dramatic Hz / customer drop!
Limited free cash for growth?
Tougher future … growth limitations.
Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010 5
Lots of Hz per customer!
Higher speed than HSPA+?
ROI optimized?
Happy startup … plenty of quality.
The mobile broadband traffic jam … Turnaround?… avoiding customer dissatisfaction …
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Telco Europe is all about efficiency … … avoiding shareholder unhappiness …
Growth markets
EBITDA GROWTH
OPEX GROWTH
REVENUE GROWTH
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2010 – 2014 ILLUSTRATION
Western EuropeOPEX GROWTH
REVENUE PRESSURE
The Netherlands 2014 …broadband everywhere, for everyone.
Every house-hold has at least 2 PCs.
PopulationEvery house-hold has (fixed) broadband.
MobileBroadband
PCs2
01
6
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Population
16.7mn
House-holds
7mn
Fixedbroadband
6 out of 10 people will have mobile broadband.
Every house-hold has (fixed) broadband.
The Dutch 2.6 GHz auction …is c$ 0.15 / MHz / pop cheap?
€2.6mn for 130 MHz FDD.
“cabled” entrants with wireless ambition.
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“cabled” entrants with wireless ambition.
Is there (economically) room for 2 more?
2.6GHz mobile coverage range is poor … the business model could mitigate this … “forced” focus on wireless DSL?
distance
DL power
3 dB
2.6 GHz 1800 MHz 850 MHz
10 dB
Digital dividend
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Propagation Loss + Link Budget +
In-Building Penetration Loss =
- 3 dB 0 dB up-to: - 2 dB
- 5 dB
2.6 GHz needs 2×××× more sites to match 1800 MHz mobile coverage.
Greenfield minimum requirements by 2012 … 80 km2.
75 – 125 LTE nodes.
max. 460,000 (3%) pop.
Greenfield operator
Cash required ca. €150 mn.
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1 mn (4%) LTE devices.
$3.3 bn mobile data top-line.
Market projections
Note: there are many ways to deploy the Greenfield network and ultimately will depend on the chosen business model.
Illustration
100% coverageNo (0%) coverage
Greenfield minimum requirements by 2016 … 800 km2.
750 – 1,250 LTE nodes.
Ca. 2.3 (14%) mn pop.
Greenfield operator
Cash required ca. €400 mn.
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5 mn (20%) LTE devices.
$4.5 bn mobile data top-line.
Market projections
Note: there are many ways to deploy the Greenfield network and ultimately will depend on the chosen business model.
Illustration
100% coverageNo (0%) coverage
Partnership with an incumbent operator will provide the Greenfield much better economics and market timing.
BTS / NODE-B
BSS
GreenfieldCore
Site(acq. + build)
Radio(electronics)
Backhaul(transport)
Backbone(transport)
Core BSS
Incumbent
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NODE-B
eNodeB
BSS
Capex prevention
50%-70% min 35% up-to 50% up-to 50%Partly
possibleLess likely
Opex prevention
min. 35% ca. 35%scale
discountscale
discountPartly
possibleLess likely
IncumbentCore
Is the service worth paying for ? …(it is in fixed broadband!)…
×1↑×1/3
×20↑
In relative usage
×70↑+
×100↑+
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Mobile broadband850 MHz – 2.1 GHz
BWA2.3 – 2.5+
GHz
FixedwithWiFi
Mobile industry: hardly any QoS pricing mainly based on volumetric FUP.
Wireless & Fixed Broadband business model uses QoS-based pricing.
Always best connected with QoS-based pricing.
HIGH QoS REQUIREMENTAND HIGH VOLUME
MEDIUM QoS REQUIREMENT
Bandwidte.g.<14 MbpsEtc…e.g. < 2 Mbps
BEST EFFORT
Illustration
$$
$
$
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Mobile, Nomadic & In-door broadband850 MHz – 2.5+ GHz with Cable/DSL
Bandwidth
e.g.<14 MbpsEtc…e.g. < 2 Mbps
2.5 GHz Greenfield LTE deployment appears un-economical.
Partnership model (e.g., network sharing) is essential.
Why should we care?
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Partnership model (e.g., network sharing) is essential.
Managing broadband demand is a critical success factor.
“Cabled” 2.6 GHz Greenfield – does it make sense?
Weakness.Strength.
� Existing fixed broadband customer base.
� Leverage on own backhaul & backbone.
� One single (mobile) technology to optimize.
� Almost all house-holds have fixed broadband.
� Negative 10 year standalone NPV.
� 2.6 GHz is coverage in-efficient .
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Threats.Opportunities.
� Mobile competition better spectrum position.
� Growth limitation due fixed-like demand.
� Lack of mobile broadband scale.
� Fixed-like strategy mitigate poor propagation.
� Network sharing on 1800 MHz best-fit grid.
� Partnership reducing total cost pressure.
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Contact:
[email protected]: +31 6 2409 5202http://nl.linkedin.com/in/kimklarsen
Thank you very much!Acknowledgement: Denis Gautheret and many other very talented colleagues in T-Mobile & DTAG. Furthermore, many thanks to Michael Lai, CEO P1 Malaysia, for allowing re-use of their great ad campaign of „cut the wires“.
