Delivered at ETSI's Business Innovation Summit: "The Wireless Network of the Future", London, 4th October 2011.

1. Disruptive Business Models for mobile networksin mature markets.ETSI’s Business Innovation Summit 2011, 4th October 2011.. Dr. Kim Kyllesbech Larsen, Technology EconomicsTechnology, Deutsche Telekom.

2. Changing business models … Coolstuff OTT Apps Mobile Operator Garden “New” Billing CS Voice Mobile Data SMS SIM SIM Billing Network 50 – 700 MHz Cloud Regulation Whitespace Smartdevices 2 Dr. Kim Kyllesbech Larsen, ETSI’s Business Innovation Summit, October 4th 2011, London.

3. The mega disruptive challenges … Mega bucks Mega bits Mega Hz 3 Dr. Kim Kyllesbech Larsen, ETSI’s Business Innovation Summit, October 4th 2011, London.

4. ARPU … OTT Mobile Apps topline impact.Mobile revenues in an Apps-centric world could decline rapidly. (Free) OTT VoIP and Messaging Apps can lead to a dramatic loss of most profitable MNO revenues Illustration CS Voice SMS & MMS PS Data 23.01 ARPU 22.41 By 2015 more than 70% of users have a smartphone 6.2 ? 3.3 3.4 3.8 12.7 15.7 13.0 6.2 6.5 2010A 2015E Mobile centric (“worry-free”) 2015E Apps centric (“doom”) 1 Source 2010 & 2015 Pyramid Research March 2011 Western Europe. 4 Dr. Kim Kyllesbech Larsen, ETSI’s Business Innovation Summit, October 4th 2011, London.

6. Accelerate LTE deployment

7. Manage traffic via pricing, policy & control.

8. Spectrum re-purpose & acquisition.Western Europe assessment 5 Dr. Kim Kyllesbech Larsen, ETSI’s Business Innovation Summit, October 4th 2011, London.

10. Network Factory /Network spin-off.

11. Increased purchasing power

12. DT-FT Procurement JV.

13. New partnership models – de-risk mobile.Spectrum Amortization − ↑ Capex (ca. 7% to 15% of Revenue) − 1BoA ML Global Wireless Matrix 1Q11, margin data for 4Q 2010. 6 Dr. Kim Kyllesbech Larsen, ETSI’s Business Innovation Summit, October 4th 2011, London.

15. Leapfrog network capacity:

16. Pico – Femto cells.

17. Smart antenna systems.

18. White-space systems.

19. Price, Control & Policy.Data demand: CAGR 71% < 2015 CAGR 61% 2016 (*) Report for Ofcom,: 4G Capacity Gains, Final Report, January 2011. 1 Illustration for a mobile operator with 20MHZ @ 800 MHz, 20MHZ @ 900MHZ, 50MHZ @ 1800MHz and 30MHZ @ 2100MHZ. 7 Dr. Kim Kyllesbech Larsen, ETSI’s Business Innovation Summit, October 4th 2011, London.

20. Mobile data growth in for a crash ... unless managed.” 8 Dr. Kim Kyllesbech Larsen, ETSI’s Business Innovation Summit, October 4th 2011, London.

22. 20% of users generate 80% of traffic.

23. Off-loading is an effective financial remedy … but not easy to achieve! HSPA only, No LTE HSPA + LTE 50% off-load from 2012 9 Dr. Kim Kyllesbech Larsen, ETSI’s Business Innovation Summit, October 4th 2011, London.

24. LTE deployment requires available spectrum. 900 MHz (2G -> 3G) 800 MHz (LTE) 700 MHz 50 MHz UL (35MHz) DL White-space UL (30MHz) DL 1,800 MHz (2G  LTE) 1,500 MHz (MSS L-band) UL (75 MHz) DL TDD UL (58 MHz) DL TDD (20 MHz) 2,100 MHz (MSS S-band) 2,100 MHz (3G) 2,300 – 2,400+ MHz DL UL (60 MHz) TDD (100 MHz) DL 3G TDD part TDD (mainly APAC) 3G TDD UL (20 MHz) 2,6001 MHz (LTE) 3,400 – 3,500+ MHz (WiMax -> LTE) UL (70 MHz) TDD (50 MHz) DL FDD part TDD This band provides interesting backhaul P2P options in some Greenfield scenarios 1 The shown structure consistent with European band plan. In USA this band is held by Clearwire and primarily used for TDD WiMax. 10 Dr. Kim Kyllesbech Larsen, ETSI’s Business Innovation Summit, October 4th 2011, London.

26. Cognisant network.

27. Optimized service delivery

28. Network friendly apps.

29. Cloud-Device optimization.

30. E2E SON.data voice Off-busy-hour In-fill delivery 11 Dr. Kim Kyllesbech Larsen, ETSI’s Business Innovation Summit, October 4th 2011, London.

31. The cognisant network experience.Cognisant experience – aggressive innovation. Capacity limit Network optimized OS & Apps Self-Optimized & Cognisant Network Average load BH time frame (sec by sec) Smart & Interconnected (ad-hoc) Devices 12 Dr. Kim Kyllesbech Larsen, ETSI’s Business Innovation Summit, October 4th 2011, London.

32. Cost-optimized LTE deployment models.Availability of a wide range of frequencies will be essential for economical network deployment. Throughput / Capacity 2.3 - 3.6 GHz Typical BWs/Operator > 40 MHz Femto/Pico cells & smart-antenna systems. Hot- Spots 2.3 To 3.6 GHz Rural Fixed-like Typical BWs/Operators < 20 MHz LTE connectivity Urban – Suburban: Up-to 2100 MHz Rural / Nation-wide: Digital dividend up-to 900 MHz Illustration 13 Dr. Kim Kyllesbech Larsen, ETSI’s Business Innovation Summit, October 4th 2011, London.

33. Backhaul will force re-thinking the network design.LTE’s extremely power-full air-interface, i.e., 100+ Mbps, will require extensive backhaul fiber deployment. LTE air-interface 30mean to 100+peak Mbps (per sector) DWDM DWDM Evolved Packet Core 100 Gbps DWDM eNode 100 GbE DWDM DWDM FTTS1 100+ Mbps 32:1 320:1 eNodes per element 3200:1 BH Throughput 3+ 32+ 320+ In Gbps Illustration 14 Dr. Kim Kyllesbech Larsen, ETSI’s Business Innovation Summit, October 4th 2011, London.

36. Beyond network sharing.

37. Multi-party sharing (>2 parties).

38. Mobile-Fixed JVs.

39. Network spin-offs.Home Environment with ca. 2.3 people per Home FTTH 100+ Mbps Cable 100+ Mbps VDSL 40+ Mbps 15 Dr. Kim Kyllesbech Larsen, ETSI’s Business Innovation Summit, October 4th 2011, London.

40. 2020 Western Europe Prediction 1 Prediction 2 Max 2 mobile network infrastructures (per country) connected to 1 Fiber or DOCSISx networks (1 pan-European mobile LTE network incl. S-band & white-space). Most MNOs have spun-off their mobile networks or leasing their infrastructure to Global Service Providers. (mobile-fixed-media JVs and mergers). Prediction 3 Prediction 4 Cognisant network and massive interconnected smart-devices. (more than 50% mobile data traffic being off-loaded to fixed, cloud storage/computing) Smart-device and application oriented business models rules across all platforms & channels. (provided by GSPs) 16 Dr. Kim Kyllesbech Larsen, ETSI’s Business Innovation Summit, October 4th 2011, London.

41. Re-think the Mobile-only business model.What we need to be passionate about. Mitigate spectrum crunch-> acquisition, off-loading & policy. New partnership models optimizing across Mobile, Fixed & Device. Innovation across network, device & OS -> The Cognisant Network. New financing structures -> public funding, supplier financing, … 17 Dr. Kim Kyllesbech Larsen, ETSI’s Business Innovation Summit, October 4th 2011, London.

42. Thank you for your interest! Contact: kim.larsen@t-mobile.nl Mobile: +31 6 2409 5202 http://nl.linkedin.com/in/kimklarsen Acknowledgement: I am indebted to my fantastic team for always being patient with my data requests, for their great suggestions and support in creating this presentation.