Your SlideShare is downloading. ×
The Smartphone Challenge (a European perspective)
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Saving this for later?

Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime - even offline.

Text the download link to your phone

Standard text messaging rates apply

The Smartphone Challenge (a European perspective)

1,992
views

Published on

Presented at the High-Tech Forecasting & Planning Summit, San Francisco, April 15th 2011.

Presented at the High-Tech Forecasting & Planning Summit, San Francisco, April 15th 2011.

Published in: Technology

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,992
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
96
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. The smartphone challenge (a European perspective).High-Tech Forecasting & Planning Summit, San Francisco,15th April 2011.
    Dr. Kim Kyllesbech Larsen, Technology EconomicsTechnology, Deutsche Telekom.
  • 2. The smartphone … The “killer” device and its “killer” applications…
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    2
  • 3. The smartphonechallenge… The killer device and its killer applications…
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    3
  • 4. A bygone time … ca. 36 month ago … When 1 + 1 was close to 2.
    Blablabla
    ... Bla …
    Mobile Network
    We talked (a lot)
    Rarely did we use the (mobile) web.
    We SMS’ed (even more)
    ILLUSTRATION
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    4
  • 5. A new paradigm … 1 + 1 is no longer “just” 2 ... Applications have “taken over” the communications.
    1
    User
    1
    Device
    Many applications
    User & application initiated bandwidth demand.
    Device & application (IP addr, keep alive, …) driven signaling resources.
    ILLUSTRATION
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    5
  • 6. Uncontrolled data growth ... Smartphone traffic tsunami.
    Smartphone indicators
    ×7
    Data signaling
    Problems!
    May – June 2010 (Netherlands).
    “iPhone overload T-Mobile (NL) network” (Volkskrant, May 2010).
    “T-Mobile (NL) gives compensation”.
    (2 month no data charge & iPhone users gets €30.)
    “T-Mobile (NL) admits not able to handle data growth in its mobile network“ (Tweakers.net).
    ×6
    Smartphones
    ×4
    Throughput
    ×5
    Volume
    December 2008 to December 2010
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    6
  • 7. Uncontrolled data growth ... All you can eat … network indigestion..
    June 2007 AT&T Inc. and Apple® today announced three simple, affordable service plans for iPhone™ which start at just $59.99 per month. All three plans include unlimiteddata. 
    June 2010 “AT&T wireless chief Ralph de la Vega has said the carrier is battling congestion in New York and San Francisco as a surge in smartphone use has clogged its network. “ (Bloomberg).
    June 2009 De La Vega (AT&T) said that just three percentof smartphone users are eating up 40 percent of available capacity, and that most of it is thanks to high-bandwidth video streaming apps.
    June 2009 AT&T announces unlimited data plans for all smartphones for $30 monthly charge.
    June 2010AT&T Inc “will cut wireless data-plan prices for most users next week and stop offering unlimited data plans to manage soaring demand for data-hungry devices like Apple Inc.’s iPhone.”(Bloomberg)
    September 2009 “Customers Angered as iphonesOverload AT&T.”
    (The New York Times)
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    7
  • 8. Uncontrolled data growth ... Apple iTune promotion in NL ... free downloads.
    180 GB & 855 Mbps
    9× increase in peak throughput.
    More than twice the total volume.
    30+ thsd downloads in the peak.
    Promotion day
    Normal
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    8
  • 9. Growth drivers.Smartphones and apps driving all growth indicators.
    Average annual growth rates 2010 - 2015
    Illustration
    300%
    2010 – 2015 Worldwide estimates
    • 10+ -> 60+ Billion App downloads.
    • 10. 20+ -> 30+ Apps per device.
    Typical App size
    • iPhone App 12±16 MB (Wireless).
    • 11. iPad App 80±125 MB (WiFi).
    200%
    180%
    130%
    25%
    2%
    Traffic prioritization and apps control essential for managing growth.
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    9
  • 12. Your chatty smartphone.iPhone vs Android – same volume, twice the Signaling.
    Signaling msg per Device
    ×3
    Illustration
    Android
    ×1.2
    Android
    Apple iOS
    Volume per Device
    iOS
    Volume
    Signaling
    Browsing
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    10
  • 13. Forecast and planning challenge ... How to deal with hyper-growth and the unknown.
    MARKET MODEL INCLUDING
    • SITE ROLLOUT
    • 14. TECHNOLOGY CHOICES (HSPA+, LTE, RENEWAL. etc…)
    NETWORK MODEL
    SIZING
    INPUT CONFIGURATION OF INSTALLED BASE.
    TRAFFIC MODEL
    FINANCIAL MODEL
    REVENUE, OPEX & CAPEX
    Optimize
    PROFIT & LOSS
    Re-invest in business
    Conceptualview
    Free Cash Flow
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    11
  • 15. Smartphone business challenge… Smartphone is not only a network challenge.
    • New revenue opportunities.
    • 16. Expand value chain.
    • 17. Better network monetization.
    Total Revenue

    Usage cost

    • Increased demand, increased usage cost.
    • 18. Subsidies of high cost smartphones.
    • 19. Churn prevention (SRC1).
    Market invest

    Personnel

    Technology cost (ca. 15% – 20% of Opex)
    • Network expansions.
    • 20. More sites and equipment.
    • 21. Higher backhaul costs.

    Other cost
    =
    EBITDA

    Network depreciation (ca. 10% to 20%)
    =
    Contribution Margin (after depreciation)
    • Spectrum demand.
    • 22. Acquisition/auction cost.

    Spectrum amortization
    =
    EBIT
    • Network expansions (i.e., capacity, sites, cell splits).
    • 23. Forced technology migration
    ….

    Capex (ca. 7% to 15%)
    1 SRC = Subscriber Retention Cost.
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    12
  • 24. Revenue
    Smartphone profitability challenge... Will it lead to the End of Profitability?
    12% CAGR
    Positive
    Free Cash Flow
    Traffic growth
    Negative
    70% CAGR
    Illustration
    Flat price plans and uncontrolled traffic growth
    will accelerate the road to The End.
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    13
  • 25. Smartphone spectrum challenge ...Mobile data will accelerate spectrum shortage.
    3G spectrum crunch!
    3G capacity crunch.
    Re-farming spectrum.
    New spectrum demand.
    Empty 2G roads - in time?
    Re-farming GSM!
    HSPA+ versus LTE ?
    Technology timing!
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    14
  • 26. Smartphone the network challenge...Network expansion as traffic “management” remedy.
    Air/TRX/Site
    Spectrum &
    Floor space
    Nodes
    Processing
    capacity
    Backhaul
    bandwidth
    Backbone
    bandwidth
    Core
    Switching
    Web
    Apps servers
    Bandwidth, CPU & Storage.
    traffic pressure points
    due to aggregation
    + Sectorization
    + Additional spectral capacity (if available)
    Off Loading
    (AP, Femto, …)
    RNC
    GGSN
    SGSN
    RNC
    GGSN
    SGSN
    LL -> MW -> Fiber
    -> + Colors
    Packet
    Core
    Web 2.0
    Node
    +CE
    + Colors
    + switching capacity
    + CPU
    + switching
    capacity
    +CPU (i.e., CE, etc.)
    (up-to system limit)
    100:1
    2000:1
    Nodes per element
    4000:1
    Illustration
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    15
  • 27. Remedies for traffic management.FUP & Throttling … Fair and efficient?
    FUP flavors
    • Hard volume-limit throttling.
    • 28. BH throttling.
    • 29. Service based (dpi) throttling.
    • 30. Traffic de-prioritization … etc…
    Volume per User
    Throttling
    64 kbps
    FUP Limit
    2 GB
    Days of
    “normal” usage
    1 Mbps
    • Re-active remedy.
    • 31. Typically capture <10% of users.
    • 32. Little structural network impact.
    0
    31
    Subscription days per month
    FUP implementations might not be very efficient
    as traffic management remedies.
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    16
  • 33. Data traffic trend to be considered.Mobile data usage is very different from voice.
    Traffic
    Maximum load
    Current BH load
    • Evening peak busiest hour.
    • 34. ca. 16 traffic hours.
    • 35. 30% traffic in-fill possibility.
    data
    voice
    traffic management, traffic shaping and
    new business models.
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    17
  • 36. Data traffic trend to be considered.Most mobile data traffic is fixed based.
    Number of sites utilized per
    usage category.
    • 80% subs generates <20% traffic.
    • 37. 80% data traffic carried by 3 cells1.
    • 38. Remaining 20% carried over 28 cells.
    “20% mobility”
    Traffic off-load & throttling policies and
    new business models.
    1 on a per user basis.
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    18
  • 39. Smartphone & application trends.Plenty of opportunities to make moneyor loose them.
    Smartphone & application trends (far from exhaustive).Plenty of opportunities to make money
    Social network application continue to grow and develop.
    Share everything anytime across all platforms.
    Increased interactivity between Apps and Web (and users).
    Security and threat issues will increase exponential.
    Paperless society.
    Increased integration of network functionality in Apps.
    Near-field communication and tethering.
    Augmented reality, 3D displays and interactive gaming.
    Data mining, intelligent profiling/layering and smart-apps, etc...
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    19
  • 40. Key challenges.What we need to be passionate about.
    Intelligent traffic management of data growth -> monetization.
    Modeling & Forecasting smartphone usage and business impact.
    Smartphone is a business challenge with great opportunities.
    Kim Kyllesbech Larsen, High-Tech Planning & Forecasting Summit, April 15th, 2011, San Francisco.
    20
  • 41. Thank you for your interest!
    Contact:
    kim.larsen@t-mobile.nl
    Tel: +31 6 2409 5202
    http://nl.linkedin.com/in/kimklarsen
    Acknowledgement: I am indebted to my great team for always being patient with my data requests, for their great suggestions and support. For this work I am in particular thankful to Veli-Pekka Kroger, Minoo Abedi and Xi Bin.