Eurasia mobile markets - challenges to our mobile networks & business model

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Eurasia mobile markets - challenges to our mobile networks & business model

  1. 1. Eurasia Mobile MarketsChallenges to our mobile networks & business models.Mobile Network Optimization Eurasia Summit 2011, 20th September 2011..<br />Dr. Kim Kyllesbech Larsen, Technology EconomicsTechnology, Deutsche Telekom.<br />
  2. 2. The mega challenges …<br />Mega bucks<br />Mega bits<br />Mega Hz<br />2<br />Dr. Kim Kyllesbech Larsen, Mobile Network Optimization Eurasia Summit 2011, September 20th2011, Istanbul.<br />
  3. 3. The smartphone … The “killer” device and its “killer” applications…<br />3<br />Dr. Kim Kyllesbech Larsen, Mobile Network Optimization Eurasia Summit 2011, September 20th2011, Istanbul.<br />
  4. 4. OTT Mobile Apps impact.Mobile revenues in an Apps-centric world could decline rapidly.<br />(Free) OTT VoIP and Messaging Apps can lead to a<br />dramatic loss of most profitable MNO revenues<br />Illustration<br />CS Voice<br />SMS & MMS<br />PS Data<br />23.01<br />22.41<br />By 2015<br />more than 70%<br />of users have <br />a smartphone<br />6.2<br />?<br />3.3<br />3.4<br />3.8<br />12.7<br />15.7<br />13.0<br />6.2<br />6.5<br />2010A<br />2015E<br />Mobile centric<br />(“worry-free”)<br />2015E<br />Apps centric<br />(“doom”)<br />1 Source 2010 & 2015 Pyramid Research March 2011 Western Europe.<br />4<br />Dr. Kim Kyllesbech Larsen, Mobile Network Optimization Eurasia Summit 2011, September 20th2011, Istanbul.<br />
  5. 5. Tellabs global study 1 …The End of Profit.The end to the mobile-only business model as we know it?<br />Western Europe mobile carrier<br />“End to Profit” (Tellabs study).<br />Annual Growth Projection until 2020.<br />Mounting cash<br />pressure<br />Business<br />model<br />breakdown<br />What can be learned?<br /><ul><li>End of Profit in WEU between 2014 -2016
  6. 6. Accelerate LTE deployment.
  7. 7. Manage traffic via pricing, policy & control.
  8. 8. Spectrum acquisition.</li></ul>Western Europe assessment<br />5<br />Dr. Kim Kyllesbech Larsen, Mobile Network Optimization Eurasia Summit 2011, September 20th2011, Istanbul.<br />
  9. 9. Mobile margin doom… 3-player market with equal market share illustration.<br />Mobile Apps offering “free” voice and messaging (picky bagging on data plans) can lead to a dramatic loss of revenue and margin. <br />Capex to Revenue ratio<br />Ebitda & margin<br />modernization<br />LTE<br />Difference primarily<br />due to Revenue<br />Illustration<br />6<br />Dr. Kim Kyllesbech Larsen, Mobile Network Optimization Eurasia Summit 2011, September 20th2011, Istanbul.<br />
  10. 10. Uncontrolled data growth ... Apple iTune promotion in NL ... free downloads.<br />180 GB & 855 Mbps<br />9× increase in peak throughput.<br />More than twice the total volume.<br />30+ thsd downloads in the peak.<br />Promotion day<br />Normal<br />7<br />Dr. Kim Kyllesbech Larsen, Mobile Network Optimization Eurasia Summit 2011, September 20th2011, Istanbul.<br />
  11. 11. Off-loading benefits are tremendousBut it demands new partnership models for mobile-only.<br />Off-loading Economics.<br />Mobile data is “80% fixed”<br />Free Cash Flow<br />“20% mobility”<br />Business<br />model<br />breakdown<br />Data traffic per user<br />What can be learned?<br />2010<br />2011<br />2012<br />2013<br />2014<br />2015<br />2016<br />2017<br />2018<br />2019<br />2020<br /><ul><li>80% of data traffic carried by 3 sites.
  12. 12. 20% of users generate 80% of traffic.
  13. 13. Off-loading is an effective financial remedy … but not easy to achieve!</li></ul>HSPA only, No LTE<br />HSPA No LTE 50% off-load from 2012<br />HSPA + LTE<br />HSPA + LTE 50% off-load from 2012<br />8<br />Dr. Kim Kyllesbech Larsen, Mobile Network Optimization Eurasia Summit 2011, September 20th2011, Istanbul.<br />
  14. 14. <ul><li>Today 50+% on 3G/HSPA
  15. 15. 2011+ Ramp-up LTE deployment.
  16. 16. 2015 620 mio mobile subs …10% LTE.
  17. 17. 2020 670 mio mobile subs …60% LTE.
  18. 18. 2G below 10% ca. 2015.</li></ul>LTE later in Growth markets, but will catch up fast.<br />Western Europe 1<br />Mobile Europe<br />Growth Markets 1 2<br />Mobile Growth Markets (APAC)<br /><ul><li>Today less than 20% on 3G/HSPA
  19. 19. Before 2015 limited LTE deployment.
  20. 20. 2017 4.0 bn mobile subs …10%+ LTE.
  21. 21. 2020 4.5 bn mobile subs … 60%+ LTE.
  22. 22. 2G below 10% after 2018.</li></ul>1 Pyramid Research (April 2011) until 2015. After 2015 technology diffusion model applied to technology development favoring LTE as main conversion technology.<br />2 China, India, Indonesia, Malaysia, Pakistan, Philippines, Taiwan, Thailand, Vietnam.<br />9<br />Dr. Kim Kyllesbech Larsen, Mobile Network Optimization Eurasia Summit 2011, September 20th2011, Istanbul.<br />
  23. 23. LTE deployment requires available spectrum.<br />900 MHz (2G some 3G)<br />400 MHz<br />700 MHz (LTE)<br />800 MHz (LTE)<br />UL<br />(35MHz)<br />DL<br />UL<br />DL<br />UL<br />DL<br />UL<br />(30MHz)<br />DL<br />1,800 MHz (2G)<br />1,500 MHz (MSS L-band)<br />UL<br />(75 MHz)<br />DL<br />TDD<br />UL<br />(58 MHz)<br />DL<br />TDD<br />(20 MHz)<br />2,100 MHz (MSS S-band)<br />2,100 MHz (3G)<br />2,300 – 2,400+ MHz<br />DL<br />UL<br />(60 MHz)<br />TDD<br />(100 MHz)<br />DL<br />3G<br />TDD<br />part TDD<br />(mainly APAC)<br />3G<br />TDD<br />UL<br />(20 MHz)<br />2,600 1 MHz (4G & LTE)<br />3,400 – 3,500+ MHz<br />UL<br />(70 MHz)<br />TDD<br />(50 MHz)<br />DL<br />part TDD<br />This band provides interesting backhaul P2P options in some Greenfield scenarios<br />1 The shown structure consistent with European band plan. In USA this band is held by Clearwire and primarily used for<br />TDD WiMax.<br />10<br />Dr. Kim Kyllesbech Larsen, Mobile Network Optimisation Eurasia Summit 2011, September 20th 2011, Istanbul.<br />
  24. 24. Spectrum re-farming … a very complex process...Additional spectrum provides control & mitigate risks.<br />Today <br />situation<br />E.g., GSM<br />3G<br />Ready for<br />re-farm<br />Complex &<br />Difficult to control<br />Time<br />2G<br />Add “new”<br />spectrum<br />Migrate<br />Traffic<br />E.g., LTE<br />Illustration<br />11<br />Dr. Kim Kyllesbech Larsen, Mobile Network Optimisation Eurasia Summit 2011, September 20th2011, Istanbul.<br />
  25. 25. Spectrum demand and availability.<br />There are still large amount of untapped spectrum resources available.<br />20Hz<br />3kHz<br />50MHz<br />4GHz<br />300GHz<br />400THz<br />X-RAY<br />MICROWAVES<br />ULTRA-SOUND<br />INFRARED<br />4GHz<br />700MHz<br />50MHz<br />WHITESPACE<br /> TRADITIONAL CELLULAR / MOBILE SPECTRUM RANGE<br />Very High<br />Small<br />BANDWIDTH<br />COVERED UNIT AREA<br />Very Large<br />Very Low<br />With current data growth, by 2030 spectral BW demand could be beyond 4 GHz.<br />1995<br />50MHz (900 MHz)<br />Voice Centric<br />1<br />2010<br />340 MHz (900,1800 & 2100 MHz)<br />Voice Centric with mobile data<br />×7<br />2015<br />590 MHz (800, 900,1800, 2100, 2600 MHz)<br />Broadband data centric with voice.<br />×12+<br />1 …<br />12<br />Dr. Kim Kyllesbech Larsen, Mobile Network Optimisation Eurasia Summit 2011, September 20th 2011, Istanbul.<br />
  26. 26. LTE deployment models.Availability of a wide range of frequencies will be essential for economical network deployment.<br />Throughput / Capacity<br />2.3 - 3.6 GHz<br /> Typical BWs/Operator > 40 MHz<br /> Femto-cells<br />Hot-<br />Spots<br />2.3<br />To<br />3.6 <br />GHz<br />Rural Fixed-like<br />Typical BWs/Operators < 20 MHz<br />LTE connectivity<br />Urban – Suburban:<br />Up-to 2100 MHz<br />Rural / Nation-wide: Digital dividend  900 MHz<br />Illustration<br />13<br />Dr. Kim Kyllesbech Larsen, Mobile Network Optimization Eurasia Summit 2011, September 20th2011, Istanbul.<br />
  27. 27. Backhaul will force you to re-think network design.LTE’s extremely power-full air-interface, i.e., 100+ Mbps, will require extensive backhaul fiber deployment.<br />LTE air-interface<br />30mean to 100+peak Mbps<br />(per sector)<br />DWDM<br />DWDM<br />Evolved<br />Packet<br />Core<br />100 Gbps<br />DWDM<br />eNode<br />100<br />GbE<br />DWDM<br />DWDM<br />FTTS1 100+ Mbps<br />32:1<br />320:1<br />eNodes per element<br />3200:1<br />BH Throughput<br />3+<br />32+<br />320+<br />In Gbps<br />Illustration<br />14<br />Dr. Kim Kyllesbech Larsen, Mobile Network Optimization Eurasia Summit 2011, September 20th2011, Istanbul.<br />
  28. 28. The backhaul challenge … macro vs micro.Distribute mobile broadband traffic differently.<br />Illustration<br />LTE provides up-to 100Mbps<br />per sector<br />AP (e.g., WiFi / Femto,..)<br />Node<br />FTTS1 100+ Mbps<br />100+ to<br />40 Mbps<br />300 – 7,000 active devices<br />per macro-cellular node<br />(dense-urban / urban)<br />100+ Mbps<br />shared with <br />up to 7,000 devices.<br />Home Environment<br />with ca. 2.3 people per Home 1<br />connected to Fiber, Cable or VDSL.<br />Up-to 100+ Mbps<br />shared by<br />2+ people.<br />1 Average for Western Europe.<br />15<br />Dr. Kim Kyllesbech Larsen, Mobile Network Optimization Eurasia Summit 2011, September 20th2011, Istanbul.<br />
  29. 29. Key challenges.What we need to be passionate about.<br />Backhaul -> Gbps will be needed -> Think Fiber and off-loading.<br />Radio nodes -> multi-mode SDR capabilities to mitigate uncertainty .<br />Spectrum -> acquisition and re-purposing of legacy bands.<br />Prepare for early LTE deployment -> might be needed sooner than later.<br />16<br />Dr. Kim Kyllesbech Larsen, Mobile Network Optimization Eurasia Summit 2011, September 20th2011, Istanbul.<br />
  30. 30. Thank you for your interest!<br />Contact: kim.larsen@t-mobile.nl<br />Mobile: +31 6 2409 5202<br />http://nl.linkedin.com/in/kimklarsen<br />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.<br />
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