DIGIWORLD SUMMIT
Mobile Service ForumRedefining mobile business models
IDATE Contact
Frédéric PUJOL
+33 (0)4 67 14 44 46
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29th IDATE International Conference
Redefining mobile business models
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3.5G deployment
Faster speeds and enhanced capacity 3G+, Turbo3G… Up to 7.2 Mbps (downlink)
… cheaper rates Unlimited data packages
Operator Tariff Subscription (EUR/month)
Data included (Mb)
Tarif per add. Mb (EUR)
Contract duration (months)
Vodafone (UK) Mobile Broadband 24
0.00 ou 12.60 EUR/24 hours
- - 18
Mobile Broadband
37.00 Unlimited (or fair use de 3000)
- 18
T-Mobile (UK) Web'nWalk business
43.10 Unlimited (or fair use de 3000)*
- 18
Vodafone (SP) Tarifa Datos Basica Nuevo
15.00 30 1.00 nc
Tarifa Datos Professional Nuevo
25.00 200 1.00 nc
Tarifa Plan 3G Nuevo
32.00 and then 39.00
1000 0.20 nc
Tarifa Plan 3G Premium Nuevo
49.00 5000 0.20 nc
Vodafone (GER) Vodafone Web-Connect – Large
19.95 200 1.30 24
Vodafone Web-Connect –Xlarge
34.95 400 1.30 24
Telefonica Moviles (SP)
Tarifa Plana 3.5G sin limites
58.00** Unlimited (or fair use de 5000)
- nc
Optimus (P) - 39.90 6000 - nc
TeliaSonera (Sw)
- 21.51 Unlimited (or fair use de 6000)
- nc
SFR (Fr) Clé Internet 3G+ 55 1000 - 24
Era (Pl) - 31.90 4000 - nc
The real mobile broadband?Source: GSA October 2007 Source: IDATE
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Mobile terminals & OS
Evolutions threatening
mobile operators’ revenues
iPhone (not yet 3G)
Nokia’s initiative► Nokia & Navteq map/navigation services► OVI P/F: Music, games, maps…
Operating System►Google & Android (gPhone's open software platform) Based on Linux
► Open Handset Alliance► Handset expected in 2S2008 (HTC…)
Apple30% mobile bill revenue Apple
Skypephone►Free calls & IM between Skype users + Skype-compatible phones
?
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Mobile trends
Western Europe HSDPA deployment Decreasing ARPU MNO revenues and EBITDA margins under pressure Data services growing slowly; voice & SMS still
represent the lion’s share of revenues Regulatory pressure: termination rates, international
roaming FMC Femtocells
Apple, Google?
Nokia
Telefónica
Mobile advertising
Mobile search
World Telecom Services market
Source: IDATE
Up
Down
MVNOs
CDMA 2000
Mobile WiMAX
Mobile TV?
0
200
400
600
800
1 000
1 200
2002 2003 2004 2005 2006 2007
Bil
lio
n € Data & Internet
Mobile services
Fixed telephony
Western Europe HSDPA deployment Decreasing ARPU MNO revenues and EBITDA margins under
pressure Data services growing slowly; voice & SMS still
represent the lion’s share of revenues Regulatory pressure: termination rates,
international roaming FMC Femtocells
UMTS Share in major Western European countries
2004: 327 million mobile customers 2006: 392 million mobile customers
3G2%
3G13%
*Germany, Belgium, Spain, France, Greece, Italy, Netherlands, United Kingdom, Sweden, Switzerland
Source: IDATE
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3.5G issues disruptions / Japan and South Korea: 3G pionners
A more important 3G penetration rate Earlier launch Quicker diffusion
Asia is leading in terms of 3G subscribers figures
Japan - 2004
2G9%
3G
South Korea - 2004
2G26%
3G
Japan - 2006
2G39%
3G
South Korea - 2006
2G40%
3G
Asia Pacific
76%
Western Europe
19%
North America
4%
ROW1%
Asia Pacific
51%
Western Europe
30%North America
15%
ROW4%
Source: IDATE
3G market shares (%)
2006: 149 million 3G subscribers2004: 32 million 3G subscribers
Source: IDATE
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3.5G issues disruptions / Mobile trends: 3G data ARPUD
ata
AR
PU
/ B
len
ded
AR
PU
(%
)
Data ARPU (EUR)
0 20
10
20
30
5 10 15
O2 UK
O2 GERO2 IRL
Orange NL
KPN
E-PlusOrange CH
Orange UK
Proximus
Orange FR
TEM
Base
SFR
KDDI
NTT DoCoMo
Optimus
SKT
Advanced MNO :-European 3G-only players-European strongly advanced-Asian 2 and 3G
Mid-advanced MNO
Less advanced MNOCW
VW
WIN KDDI
FOMA DoCoMo
Advanced MNOs’ 3G data
40
3 Austria
3 IT
3 SE/DN
3 AUD
KTF
3 UK
3G ARPU…2006 data
Source: IDATE
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South Korea
3G technologies competingMobile subscribers by operator
LGT17%
SKT52%
KTF31%
0
1 000 000
2 000 000
3 000 000
4 000 000
5 000 000
6 000 000
2006. 6 9 12 2007. 3 4 5
SDMB TDMB
Mobile TV subscribers
Source: IDATE
Source: MIC
Source: MIC
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South Korea
HSDPA rapid growth …
KT expects 3.1 million WiBro subscribers with ARPU of $33 per month by 2010
… but disapointing WiBro figures
KTF 1,676,000 (67%)
SKT 808,000 (33%)
1 6003 300
6 100
8 300
21 700
0
5 000
10 000
15 000
20 000
25 000
Dec. '06 Mar. '07 Apr. May Jun.
0
200 000
400 000
600 000
800 000
1 000 000
1 200 000
1 400 000
2007.1 2 3 4 5 6
Samsung PDA (SPH-M8100)
LG PDA (LG-KC1)
Source: IDATE Source: IDATE
Source: IDATE
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South Korea
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
2001 2002 2003 2004 2005 2006 2007 1Q
Voice Data
0
5
10
15
20
25
30
35
2001 2002 2003 2004 2005 2006 2007 1Q
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
2001 2002 2003 2004 2005 2006 2007 1Q
Voice Data
Source: IDATESource: IDATE
Source: IDATE
Source: KTF
Voice vs. data ARPU of SKT (KRW) Data ARPU % Total ARPU - SKT
Voice vs. data ARPU of KTF (KRW)Data ARPU % by network - KTF
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Japan & USA
JAPANA dynamic 3G market: close to 60% of the mobile market (1Q07)
EV-DO subscribers representing 51% of KDDI’s subscriber base (1Q07)
WCDMA: 67% of DoCoMo subs and 48% of Softbank subs
ARPU Data ARPU representing 32% of total ARPU
(2Q07)
Increasing competition Softbank more aggressive New mobile WiMAX licences But IP Mobile files for bankruptcy Reduced T/O and margins
USA A significant increase in data ARPU : from 12% of total ARPU in 2006 to 15.5% (1S2007)
Verizon 3Q2007 Revenues up 14.4 percent. Data ARPU revenues up 42.9%. ARPU levels highest ever: $52.17
AT&T 3Q 2007 41 % rise in third-quarter net income 1.4 million iPhones since launching the Apple-branded device in late June A 64 percent increase in mobile data revenues
SPRINT-NEXTEL – Mobile WiMAX
Source: DoCoMo
The Japanese mobile market
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Spectrum issues / The spectrum “hot topics”
WRC ’07 (October-November 2007) Mobile or 4G frequency bands Mobile services in the UHF and 3.5 GHz bands
The Digital Dividend (RRC ’06)
UMTS in the GSM bands
The 2.6 GHz band & WiMAX development in Western Europe
400 600 700 800
1 GHz
2 GHz
2 GHz
4 GHz3 GHz
3 GHz
4 GHz5 GHz
5 GHz
6 GHz
300 900 1 GHz200100 MHz
Mobile services (IMT 2000)
GSM & UMTS core
UHFVHF
L-Band
UMTS extensionUnlicensed 2.4UMTS core
S band
IMT candidate
IMT candidate
IMT candidateIMT candidate
Unlicensed 5 GHz
IMT candidate IMT candidate
174 223 470
806/862
862
2500 2690
3400 3800
24832400
2300
Unlicensed 5 GHz5470 5725
410
430
450
880 960
GSM
4200
27002900
44004990
500
1452 1492
Fixed wireless access
5150 5350
C band
PMR Broadcasting Fixed services Unlicensed Satellite
915 925
1710 1785 1805 1880
2010-2025 2110
19801900
2170
1920
DECT1479.5
380
1375 14001517
14271350
3600
C band
2200
Source: IDATE
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Spectrum issues
Digital dividend: broadcast & mobile servicesin UHF bands
3G « extension band » (2.6 GHz)
Refarming: UMTS in 2G frequency bands
IMT advanced bands (« 4G »)
Dynamic access to spectrum
USA 700 MHz auctions
Short term
Long term
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Spectrum issues / Major breakpoints in the spectrum field
Mainland China France Japan USA
Telecom 3 3 (15%)
3 3
Broadcast 1 1 (46%)
1 2
Defence 2 2 (33%)
2 1
Civil aviation 4 4 (3%)
4 4
Space 5 5 (0.5%)
5 5
Mainland China France Japan USA
Telecom 2 2 (35%)
2 2
Broadcast 5 5 (0.2%)
5 5
Defence 1 1 (44%)
1 1
Civil aviation 3 3 (9%)
3 3
Space 4 4 (5.6%)
4 4
Source: IDATE
Main users of radio spectrumRanking of spectrum users by sector below 1 GHz Ranking of spectrum users by sector between 1 and 10 GHz
Main factors driving spectrum demand:
Development of mobile traffic, multiplication of wireless technologies
Development of broadband wireless access
Convergence in wireless industries New entrants
More spectrum and/or smaller cells?
Evolution 1950-2000
15 times by using more spectrum (3 GHz vs. 150 MHz)
5 times from better voice coding
5 times from better MAC and modulation methods
2,700 times from smaller cells
Total gain 1 million-fold
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Spectrum issues / What is the spectrum / licences price?
3G licences priceCountry 3G Holders Price per licence
(EUR) Spectrum FDD + TDD Method
Denmark TDC
Telia Denmark
Orange
H3G
0.127 billion
0.127 billion
0.127 billion
0.127 billion
2x15MHz + 5MHz
2x15MHz + 5MHz
2x15MHz + 5MHz
2x15MHz + 5MHz
Sealed bid process
France Orange France
SFR
Bouygues Telecom
619 million, plus a 1% tax on UMTS revenues
2x15MHz + 5MHz
2x15MHz + 5MHz
2x15MHz + 5MHz
Beauty contest
Germany Vodafone D2
T-Mobile Deutschland
E-Plus
O2 Germany
Mobilcom*
Quam (3G Group)
8.4 billion
8.5 billion
8.4 billion
8.4 billion
8.4 billion
8.4 billion
2x5MHz + 5MHz
2x5MHz + 5MHz
2x5MHz + 5MHz
2x5MHz + 5MHz
2x5MHz + 5MHz
2x5MHz + 5MHz
Auction
Italy TIM
Vodafone Omnitel
Wind
ISPE2000
Andala (H3G)
2.417 billion
2.448 billion
2.427 billion
2.442 billion
2.427 billion
2x10MHz + 5MHz
2x10MHz + 5MHz
2x10MHz + 5MHz
2x15MHz + 5MHz
2x15MHz + 5MHz
Hybrid: auction and beauty contest
The Netherlands
KPN Mobile
Vodafone (Libertel)
Orange (Dutchtone)
Telfort
T-Mobile Netherlands
0.7 billion
0.7 billion
0.4 billion
0.4 billion
0.4 billion
2x15 MHz +5MHz
2x15 MHz +5MHz
2x10 MHz
2x10 MHz
2x10 MHz
Auction
Spain Telefónica Moviles
Vodafone Spain (Airtel)
Amena
Xfera
0.13 billion
0.13 billion
0.13 billion
0.13 billion
2x15MHz + 5MHz
2x15MHz + 5MHz
2x15MHz + 5MHz
2x15MHz + 5MHz
Beauty contest
The UK Vodafone UK
O2 UK
Orange UK
T-Mobile UK
Hutchison 3G UK
9.85 billion
6.65 billion
6.75 billion
6.61 billion
7.23 billion
2x15MHz + 5MHz
2x10MHz + 5MHz
2x10MHz + 5MHz
2x10MHz + 5MHz
2x15MHz
Auction
An average value of10 EUR per pop
(upfront payment only)
A maximum value of164 EUR per pop
A maximum value of106 EUR per pop
An average value of23 EUR per pop
An average value of3.2 EUR per pop
Source: IDATE
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Spectrum issues / What is the spectrum price?
Country Main licence holders Licence reach Price per licence FDD spectrum Method
Austria
WiMAX Telecom GmbH (6 regions)Telekom Austria(5 regions)Telekabel (4 regions)Telesystem Tirol and Teleport Consulting (1 region)
RegionalAssignments in 6 regions
Total brought in by the auction:464,000 EURof which 160,000 EUR for a nationwide WiMAX telecom licence
3.4 GHz – 3.6 GHz band2x20MHz in each region
Auction (2004)
France
Bolloré TelecomMaxtel (50% owned by WiMAX operator Altitude Telecom)HDRR (90% owned by tower company TDF) Local authorities
Regional2 licences for each of the 22 metropolitan regions
The auctions brought in a total 125 million EUR (corresponding to 2 national licences)
3.4 GHz – 3.6 GHz bandTwo duplexes of 2x15MHz in each region
Hybrid: auction and beauty contest(07 2006)
Germany
Clearwire, Inquam and DBS got licences with national coverage. MGM productions got 2 regional licences and Televersa got one.
Four licences auctioned for 28 regions. Bidders could bid for Germany-wide Blocks, or only in specific regions.
The auctions brought in a total 56 million EUR (corresponding to 4 national licences)
Four paired 21 MHz blocks between 3.4 GHz and 3.6 GHz in each region
Auction(12 2006)
Norway 8 operators RegionalThe auctions brought in 6 million EUR
150 blocks of frequencies in the 3.4 to 3.6 GHz band
Auction(11 2004)
The UK
PCCW through UK subsidiary Pound Radio:13 licencesRed Spectrum and Public Hub obtained one licence each
15 regional licencesAuction of 2.5 to 2.69 GHz spectrum on techno / service neutral basis at the end of 2007.
PCCW 13 licences for a total of 6.3 million GBP and 330,000 GBP for each remaining licence
3.4 GHz band Auction (05 2004)
SouthKorea
Korea TelecomSK TelecomHanaro Telecom*
National 87 million EUR per national licence
2.3GHz band(TDD spectrum)
Hybrid: auction and beauty contest(02 2005)
Fixed / nomadic servicesin Western Europe
An average license valueof 1 EUR per pop
Mobile services
So
urce: ID
AT
E
Price of WiMAX licensesin selected countries:
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Options for 4G / Which spectrum for 4G?
Predicted spectrum requirements by the year 2020 for IMT – 2000 and IMT-Advanced
Candidate bands
Region 1 (Europe) Region 2 (Americas) Region 3 (Asia)
User Demand Setting
Predicted Total (MHz)
Identified (MHz)
Net Additional
(MHz)
Identified (MHz)
Net Additional
(MHz)
Identified (MHz)
Net Additional
(MHz)
Low 1280 693 587 723 557 749 531
High 1720 693 1027 723 997 749 971
Band Spectrum (maximum)
410 - 430 MHz 20 MHz
450 - 470 MHz 20 MHz
Parts of 470 - 806 (862) MHz 336 MHz (392 MHz)
2300 - 2400 MHz 100 MHz
2700 – 2900 MHz 200 MHz
3400 - 4200 MHz 600 MHz
4400 - 4900 MHz 500 MHz
Note to Table: Predictions are based on one network deployment
Source: ITU
Source: IDATE
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Options for 4G
GSM
TDMA-136
IS-95
IDen
PDC PDC-P
GSM
HSCSD
GPRS
EDGE
W-CDMA
HSDPA
GSM/GPRS
EDGE
W-CDMA
HSDPA
IS-95BCDMA
2000 1x
CDMA 2000 1xEV-
DO
CDMA 2000
1xEV-DO Rev
a.
PDC-PW-
CDMA
TD-SCDMA
W-CDMA
2.5G 3G2G
GSM operators (Europe, The Americas, Asia)
TDMA-136 operators (The Americas)
IS-95 operators (The Americas, Asia)
iDEN operator (United States)
PDC operators (Japan)
GSM operators (China)
Main logical migration
Possible migration
HSDPA
IS-95 IS-95BCDMA
2000 1x
CDMA 2000 1xEV-
DO
HSDPA
CDMA 2000
1xEV-DO Rev
a.
Specific cases (South Korea, Australia…)
LTE
UMB
HSDPA
4G
802.16m
1992 1996 2002 2006 2010-2012
3G4GVerizon: LTE?
2G3G: Telstra, Vivo…: CDMA 2000 to HSPDA migrationSource: IDATE