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Cumbre de Buenos Aires para Proveedores de Servicio: Andres Maz

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  • 1. 6/10/14 1 Cisco Confidential 1© 2013-2014 Cisco and/or its affiliates. All rights reserved. Technology Policy Implications of Market, Technology, and Policy Trends in the Latin America Telecom Marketplace Andres Maz Advanced Technology Policy Buenos Aires, June 2014 Cisco Confidential 2© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 2© 2013-2014 Cisco and/or its affiliates. All rights reserved. Program Market, Technology and Policy Trends •  Premises for the Future •  Opportunities and Challenges for Telecom Operators Impact to Business Model and Market Evolution •  Forces upsetting the equilibrium Critical Success Factors
  • 2. 6/10/14 2 Cisco Confidential 3© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 3© 2013-2014 Cisco and/or its affiliates. All rights reserved. Four Key Messages Market, technology, and policy trends are upsetting the telecom market equilibrium forcing telecom operators to evolve business models to develop new sources of revenue growth value creation Service providers’ greatest opportunity to create value will depend on their ability to monetize the network and capture new market adjacencies In this dynamic and evolving market telecom operators’ JVs, partnerships and entrepreneurship ventures will be as important as horizontal and vertical consolidation to gain competitive advantage and market leadership A change in mindset and even organization structure will be necessary to enable the evolution Cisco Confidential 4© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 4© 2013-2014 Cisco and/or its affiliates. All rights reserved. Market, Technology and Policy Trends Technology Policy Market •  Role of Government •  Degree of regulatory intervention •  Cybersecurity •  Data Privacy & cross border data flow •  Spectrum •  Net Neutrality •  IoE •  Cloud •  Smart Devices •  Video Evolution •  Traffic Growth •  Voice Revenue
  • 3. 6/10/14 3 Cisco Confidential 5© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 5© 2013-2014 Cisco and/or its affiliates. All rights reserved. Market, Technology and Policy Trends Revenue Trends Cisco Confidential 6© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 6© 2013-2014 Cisco and/or its affiliates. All rights reserved. Fixed Line Voice Subscriptions NOT Declining Source: Informa Telecoms & Media Switched Access Lines The number of fixed voice subscriptions is on the rise in Latin America, whereas it is on the decline in most other regions
  • 4. 6/10/14 4 Cisco Confidential 7© 2013-2014 Cisco and/or its affiliates. All rights reserved. Fixed Broadband ARPU Going UP Findings •  Broadband ARPU is on the rise in Latin America, whereas it is flat or falling in other regions •  ARPU higher than Asia, Eastern Europe, and world average Upside Potential •  ARPU •  Migration to faster connections •  Triple/Quad Play is working •  Subscriber base Fixed Broadband ARPU Source: Informa Telecoms & Media Cisco Confidential 8© 2013-2014 Cisco and/or its affiliates. All rights reserved. Mobile ARPU Revenue Flat… Urgent Need to Evolve •  Voice ARPU declining •  Data ARPU growing… but not enough •  ARPU flat Pressure Factors •  Fixed to Mobile Termination regulated rate down-path •  Roaming rates’ pressure •  New generation usage trends •  Telephone call? •  Leapfrogging to video Revenue Upside Potential •  4G Fixed to Mobile Termination Rates Source: Cullen International Latin America - ARPU Source: Informa/World Cellular Information Service
  • 5. 6/10/14 5 Cisco Confidential 9© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 9© 2013-2014 Cisco and/or its affiliates. All rights reserved. Market, Technology and Policy Trends Traffic Growth Cisco Confidential 10© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 10© 2013-2014 Cisco and/or its affiliates. All rights reserved. The Traffic Challenge Internet Traffic Growing Fast •  How much CAPEX? •  Can faster and robust broadband network generate higher revenues? •  Can fixed broadband compensate for fixed telephony revenue decline? •  Can telecom operators establish commercial agreements with OTTs for faster speeds and QoS? CAPEX and ROI
  • 6. 6/10/14 6 Cisco Confidential 11© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 11© 2013-2014 Cisco and/or its affiliates. All rights reserved. Market, Technology and Policy Trends Smart Phone Adoption Cisco Confidential 12© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 12© 2013-2014 Cisco and/or its affiliates. All rights reserved. Smart Mobile Devices Creating New Value Opportunities Smart Devices Leading Market •  Advertising value moving from fixed big screen to mobile-smart mobile devices •  Critical elements: •  Content •  APPs •  Advertisement •  Data Mining •  Location based services •  Payment platforms Advertising Value Migrating to Small Screen
  • 7. 6/10/14 7 Cisco Confidential 13© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 13© 2013-2014 Cisco and/or its affiliates. All rights reserved. Market, Technology and Policy Trends Video Cisco Confidential 14© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 14© 2013-2014 Cisco and/or its affiliates. All rights reserved. Video to Exceed 72 Percent of Mobile Data Traffic by 2018 LATAM Mobile Data Traffic Growth / Apps •  Multi-platform and mobile •  Netflix, Apple TV, Amazon fireTV, youtube •  Telecom Operators’ online video offerings •  AT&T to start a venture to launch both online video platforms and on-demand TV channels •  Horizontal Expansion •  AT&T’s DIRECTV acquisition •  Policy Issues •  Vertical integration (Comcast – Time Warner) •  Must Carry and Must Offer Regulations •  Bundling •  Policies for on-net vs. off-net content e.g. Bandwidth cap exceptions for on-net content On-line Video Platforms Disrupting the Market 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 2013 2014 2015 2016 2017 2018 ExabytesperMonth Mobile File Sharing (3.4%) Mobile M2M (4.8%) Mobile Audio (10.3%) Mobile Web/Data (9.4%) Mobile Video (72.1%) Mobile Video 72% 66% CAGR 2013–2018
  • 8. 6/10/14 8 Cisco Confidential 15© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 15© 2013-2014 Cisco and/or its affiliates. All rights reserved. Market, Technology and Policy Trends Cloud Cisco Confidential 16© 2013-2014 Cisco and/or its affiliates. All rights reserved. 0.0 0.1 0.1 0.2 0.2 0.3 0.3 0.4 2012 2013 2014 2015 2016 2017 Zettabytes/Year Latin America Cloud Traffic Growth Cloud Traffic Will Grow 3.9 Fold from 2012 to 2017 31% CAGR 2012–2017 298 EB 249 EB 77 EB 117 EB 159 EB 203 EB
  • 9. 6/10/14 9 Cisco Confidential 17© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 17© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cloud: Opportunities and Challenges to Telecom Operators Cloud Readiness •  Cloud applications’ network speed and quality requirement will add additional stress to telecom networks •  Network capacity upgrades will be necessary. Can investments be monetized? •  What are the options? Cisco Confidential 18© 2013-2014 Cisco and/or its affiliates. All rights reserved. Network Infrastructure Needed to Support to the Cloud Network Requirements for Concurrent Applications Basic Cloud Apps Concurrency Bucket Network Requirements: Download Speed: ~1900 kbps Upload Speed: ~600 kbps Latency: Above 160 ms Intermediate Cloud Apps Concurrency Bucket Network Requirements: Download Speed: ~7,000 kbps Upload Speed: ~2,600 kbps Latency: 159 - 100 ms Advanced Cloud Apps Concurrency Bucket Network Requirements: Download Speed: ~21,000 kbps Upload Speed: ~9,000 kbps Latency: Less than 100 ms •  Text communications (email, instant messaging) •  Web browsing •  File sharing (low-res video) •  Web conferencing •  Social networking (basic text only) •  Stream basic video/ music •  File sharing (high-res video) •  IP Telephony •  ERP / CRM •  Basic gaming (single player) •  Basic video chat (low-res video) •  IP audio conferencing •  Basic video conferencing (low-res video) •  Advanced social networking (multimedia/interactivity) •  HD video streaming •  HD Industrial design collaboration •  Advanced gaming (multi player) •  Advanced video chat (high-res video) •  Advanced file sharing (super high-res video) •  HD audio conferencing •  HD video conferencing (high-res video) •  Stream super HD video
  • 10. 6/10/14 10 Cisco Confidential 19© 2013-2014 Cisco and/or its affiliates. All rights reserved. Regional End User Cloud Readiness—2013 Supporting Business & Consumer Applications Today on Fixed Networks (Concurrent Apps) Basic Cloud Application Ready Intermediate Cloud Application Ready Hi Lo Latency Advanced Cloud Application Ready WEAPAC CEE NA LATAM MEA Uruguay UAEUSA  Romania    Hong  Kong    Korea   Lithuania     Luxembourg    Sweden   Lo Hi Average Broadband Speed Cisco Confidential 20© 2013-2014 Cisco and/or its affiliates. All rights reserved. Regional End User Cloud Readiness—2013 Supporting Business & Consumer Applications Today on Mobile Networks (Concurrent Apps) Basic Cloud Application Ready Intermediate Cloud Application Ready Hi Lo Latency Advanced Cloud Application Ready NA WE CEE MEA APAC LATAM Singapore Hong Kong UAE Kuwait Lo Hi Average Broadband Speed
  • 11. 6/10/14 11 Cisco Confidential 21© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 21© 2013-2014 Cisco and/or its affiliates. All rights reserved. Market, Technology and Policy Trends IoE Cisco Confidential 22©2014 Cisco and/or its affiliates. All rights reserved. Daily Data Growth Exabytes (10^18) of new data are created every single day and 90% of the world’s stored data was created in the last two years alone. Cisco Confidential 22©2014 Cisco and/or its affiliates. All rights reserved.
  • 12. 6/10/14 12 Cisco Confidential 23© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 23© 2013-2014 Cisco and/or its affiliates. All rights reserved. Internet of Everything •  More Connected Devices that People •  By 2020, the total number of connected devices will range from around 20 billion to 50 billion •  Most applications do not exist today Cisco Confidential 24©2014 Cisco and/or its affiliates. All rights reserved. IoE Transformation Parking Increased compliance Reduced search times Lighting OpEx reductions Crime reductions Road Pricing Improved traffic flow City revenue Particulate Monitoring Improved health Improved compliance to standards Buses (Bus Stops) Reduced wait times Higher occupancy Toll Booths Faster processing times Reduced traffic congestion Waste Management OpEx reductions Usage-based pricing City •  Gas monitoring •  Video surveillance •  Water management •  Smart parking •  Public transportation •  Smart street lighting •  Smart grid •  Disaster response •  Chronic disease management •  Telework •  Smart payments •  Smart buildings •  Fleet management
  • 13. 6/10/14 13 Cisco Confidential 25©2014 Cisco and/or its affiliates. All rights reserved. Technical Policy Legacy Regulatory Frameworks Cross-border data traffic Reliability Scaling Electrical Power Policy and Technical Issues Facing Big Data and the IoE Privacy & Security Spectrum & Bandwidth Constraints Standards & Interoperability Network Intelligence Cisco Confidential 26© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 26© 2013-2014 Cisco and/or its affiliates. All rights reserved. Internet of Everything Unlimited Opportunities for Service Providers to Create Value in the Ecosystem •  IoE Lead Player •  Partnerships and Entrepreneurship • APPs networks inter-dependence • High dependence on entrepreneurship and new ventures • Degree of Service Providers integration with the ecosystem •  Bandwidth and platform provider •  Payment Platforms
  • 14. 6/10/14 14 Cisco Confidential 27© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 27© 2013-2014 Cisco and/or its affiliates. All rights reserved. Market, Technology and Policy Trends Policy & Regulation Cisco Confidential 28© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 28© 2013-2014 Cisco and/or its affiliates. All rights reserved. Evolution ICT Ecosystem – Networked Readiness Index 30   40   50   60   70   80   90   100   110   2009   2010   2011   2012   2013   2014   Networked  Readiness  Ranking   Argen1na   Brazil   Chile   Colombia   Mexico   Peru   High Low Chile Colombia Brazil Mexico Peru Argentina WEF GITR
  • 15. 6/10/14 15 Cisco Confidential 29© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 29© 2013-2014 Cisco and/or its affiliates. All rights reserved. Key Policy and Regulatory Issues Role of Government Degree of Regulatory Intervention Cybersecurity Data Privacy & Cross Border Data Flow Spectrum Net Neutrality Cisco Confidential 30© 2013-2014 Cisco and/or its affiliates. All rights reserved. Changing Views on the Role of Government Regulated Market + State Owned Telecom Company Free Market Regulated Market State Monopoly Regulatory Intervention GovernmentInvestment + + - -
  • 16. 6/10/14 16 Cisco Confidential 31© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 31© 2013-2014 Cisco and/or its affiliates. All rights reserved. Degree of Regulatory Intervention The Regulatory Tool Kit State Intervention • Wholesale • Retail Wholesale • Access to network elements / unbundling • Transparency • No discriminatory obligations • Accounting Separation • Price Controls / Cost Oriented Rates • Functional Separation Retail • Price Controls • Bundling limitations • No discrimination Cisco Confidential 32© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 32© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cybersecurity •  Network security as a national priority •  Concerns: •  -Law enforcement and intelligence •  -National Security •  -Citizen’s privacy rights False Choice. Security by Decree •  Data localization requirements •  Security certifications •  Domestic technology mandates Government’s ResponseChanging Landscape Comprehensive National Security Strategy •  National security frameworks •  Investment in security •  Government-to-government collaboration •  Industry – government partnership
  • 17. 6/10/14 17 Cisco Confidential 33© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 33© 2013-2014 Cisco and/or its affiliates. All rights reserved. Data Privacy & Cross Border Data Flow A growing list of issues and ideas to regulate • Data localization requirements • Data controller requirements • Data processors requirements and liability • Breach notifications • Consultations with data protection authority • Data storage regulation • Right to be forgotten • Data portability • Standardization • Network information security Cisco Confidential 34© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 34© 2013-2014 Cisco and/or its affiliates. All rights reserved. Spectrum 700 MHz Spectrum critical to accelerate 4G networks build out -Auction timelines -Spectrum Caps -Wholesale Single Networks -Price / Conditions WiFi off-load critical to alleviate network congestion
  • 18. 6/10/14 18 Cisco Confidential 35© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 35© 2013-2014 Cisco and/or its affiliates. All rights reserved. Net Neutrality Net Neutrality regulation could weaken network resiliency, limit innovation and new business models, and increase network vulnerabilities Cisco Confidential 36© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 36© 2013-2014 Cisco and/or its affiliates. All rights reserved. Implications Net Neutrality Regulation •  Use of traffic management tools to resolve congestion. Regulations could require equal treatment to different types of traffic independent of the applications’ needs •  Data mining •  Agreements with OTTs •  Sponsored access data •  Low cost limited packages •  Value Added Services
  • 19. 6/10/14 19 Cisco Confidential 37© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 37© 2013-2014 Cisco and/or its affiliates. All rights reserved. Lessons Learned From The EU Impact To Telecom Operators’ Financial Health Arthur D Little National Fibre Strategies www.adl.com/Fibre Cisco Confidential 38© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 38© 2013-2014 Cisco and/or its affiliates. All rights reserved. Impact to Business Models and Market Evolution
  • 20. 6/10/14 20 Cisco Confidential 39© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 39© 2013-2014 Cisco and/or its affiliates. All rights reserved. Forces Upsetting The Equilibrium IoE Cloud Video Evolution Traffic Growth Role of Goverment Degree of Regulation Data Privacy & Cross Border Data Flow Spectrum Net Neutrality Cisco Confidential 40© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 40© 2013-2014 Cisco and/or its affiliates. All rights reserved. Business Model and Market Evolution Service Aggregation Value Creation Niche Services
  • 21. 6/10/14 21 Cisco Confidential 41© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 41© 2013-2014 Cisco and/or its affiliates. All rights reserved. Business Model and Market Evolution Service AggregationNiche Players Smaller but Specialized Networks •  Ability to differentiate product and segment markets •  Commercial agreements to access third party last mile and transport networks (market or regulatory driven) Large and Complex Networks •  Ability to aggregate services •  Landline, mobile, broadband, pay-tv, cloud •  Robust and wide high-speed fiber networks •  Room for consolidation •  M&A, JVs, partnerships •  Policy understanding and Strategy Cisco Confidential 42© 2013-2014 Cisco and/or its affiliates. All rights reserved. Market Evolution Vertical and Horizontal Market Moves Fixed Voice Mobile Voice & Data Broad- band Broadcast TV Pay-TV on-net Pay-TV off-net DC Cloud IoE Horizontal Expansion: Organic, Acquisitions, JVs, Partnerships Consolidation
  • 22. 6/10/14 22 Cisco Confidential 43© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 43© 2013-2014 Cisco and/or its affiliates. All rights reserved. CRITICAL SUCCESS FACTORS Cisco Confidential 44© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 44© 2013-2014 Cisco and/or its affiliates. All rights reserved. Critical Success Factors Major Industry Transformation And Game Changers Unlimited opportunities to create new sources of value • Revenue and growth Identifying and capturing opportunities will require: • Enable intelligence in the network • Business development & market intelligence • Partnerships • Pro-innovation regulatory environment Dynamic organization structure
  • 23. 6/10/14 23 Cisco Confidential 45© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 45© 2013-2014 Cisco and/or its affiliates. All rights reserved. Thank you amaz@cisco.com

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