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CANTO Presentation July 2009


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Your network is your greatest competitive advantage - choose well - Choose Nexus

Your network is your greatest competitive advantage - choose well - Choose Nexus

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  • 1. Subscribers want Broadband and the more and the cheaper the better. As Incumbent Operators hold strategic sessions on the smartest way to extend their network ensuring they will provide the best service and the greatest possible ARPU against increasing competitive threats and innovations --- As new competitors using leap frog technologies with no drag anchor of legacy encumbrances slowing them down or causing them regulatory pause --- enabling them to by-pass every aspect of the traditional telecom network ---- where Broadband is king and VoIP is ubiquitous... Wired and Wireless --- Mobile and Fixed --- GSM and CDMA --- 3GPP to 4G --- LTE and WiMAX ... As the Fixed and Mobile Access technologies roll out, we also need more for the Core... Wireline Incumbents again face a greater challenge since they must keep their Legacy big iron circuit switches on the books Broadband is delivered via the Mobile telephone network, by the Fixed network, by the Cable network and by Satellite. It carries voice, data, and video enabling Internet gaming, Social Networks, Interactive business meetings, IPTV and other services ... For the Service Providers in the Caribbean Basin like all other Operators around the world --- the business case is successful only if we can deliver the best broadband experience from multiple technology platforms anywhere at any time. Your network is and will remain to be your best competitive advantage.
  • 2. Inertia can be good or bad depending on which side of the curve you are on. If you are riding high on the current business case with an evolved solution and billions of users – you might almost feel invincible. This is where the Mobile Service Providers are. CANTO member Mobile Service providers are mostly GSM technology based and they are beating the path to subscribers with data solutions delivered to multi media devices. As you can see on this chart Mobile subs will number over 3 Billion users by the end of this decade and will increase to about 5 billion devices by the end of 2013! Presently about 70% of these devices use GSM as the base --- and this is increasing. The popularity of Mobile Phones and the Internet is depicted by the Green and Red lines on the chart… both platforms continue to move exponentially each with billions of subscribers. Broadband is also on the rise and is moving exponential. The traditional fixed wireless providers are using DSLAM’s and Fixed Wireless WiMAX to extend their broadband reach… with a business case based on under $500 per subscriber served. There are two types of Broadband Wireless; Fixed Wireless Broadband (which competes with the traditional Fixed Wireline Broadband – DSL) and Mobile Broadband which adds dimensions of Portability, Nomadicity, and Mobility. Fixed WiMAX competes with the fixed Wireline applications while Mobile WiMAX competes with the Cellular Broadband offerings like EVDO, Edge, HSDPA and LTE. But look at where WiMAX is compared to the Mobile (Cellular) network and compared to the Broadband line… In 2011 we will see about 130 Million WiMAX subscribers, delivered from about 500 providers worldwide --- (Telco’s, CableCo’s, and various flavours of business renegade ISP’s including WISP’s and SISP’s ). As can be seen the Inertia for established Mobile (Cellular) Service Providers is the path to LTE. But Fixed WiMAX is a great solution for new operators entering a previously Monopoly market. Mobile WiMAX in my humble opinion, will have a greater challenge overcoming the LTE Inertia... And we have not even talked about the device inertia in both Ecosystems. 2
  • 3. Last November, Qualcomm announced it was stopping its development of Ultra-Mobile Broadband (UMB) 4G technology, and instead would put its focus on Long Term Evolution (LTE) technology. LTE, chosen by CDMA operator Verizon Wireless and many GSM operators as the 4G standard going forward, seems to have effectively killed the need for UMB. As can be seen on this chart, the road to LTE is being built on the back of the GSM side of the curve… The carriers who chose CDMA will have a significant network change out to move from CDMA to an LTE solution. In Canada, Bell and Telus are in this predicament, whereby they must change out the network to a tune of hundreds of millions of dollars … due to a decision made over 10 years ago. Telus and Bell chose CDMA in a Nortel solution; Rogers in Canada chose GSM(GPRS/EDGE) with Ericsson, and is now the leader (and the only game in town) to add multi-media mobile broadband devices like the iPhone. It is not surprising that Ericsson does not have a WiMAX product – why cannibalized a good case? On the commercial side, Flat Rate Data plans must be part of the Mobile Broadband Business Case using SLA’s to optimize price to service ratios. Both LTE and Mobile WiMAX 16m are based on common technology platform components…Both utilize OFDMA, both utilize MIMO and both utilize IP packet control. Some analysts predict both technologies will be run from a common hardware infrastructure --- capable of emulating both LTE and WiMAX in a common hardware, emulating software defined deployment. It could be argued the explosive growth of Mobile Broadband will replace the need for Fixed Broadband (DSL like) as subscribers choose Mobile Broadband as their only requirement. Of the 1.8 Billion broadband subscribers in 2012, 1.2 Billion will be Mobile Broadband subscribers…. HSPA and above provides a viable alternative to DSL… and the 3.5G technologies are putting competitive pressure on the fixed line broadband incumbents. An example of this is Oman Mobile, the wireless arm of the country’s incumbent Telco Oman Telecommunications Company (Omantel), has announced it has introduced mobile broadband speeds of up to 14.4Mbps download on its 3.5G HSDPA network. The mobile broadband service is good enough to cannibalize the DSL business case within the same subscriber base. 3
  • 4. We all know Packet Switching changed forever the way we communicate… we also know Alexander on the left of the screen as the father of the need for Voice Centric Circuit Switching --- initially done by ladies connecting chords to switchboard holes to complete the circuit for the duration of the call. We are mostly not as familiar with Leonard Kleinrock, the father of the need for Data Centric Packet Switching – basically a connectionless approach to moving data. And we also all know that voice can be just another byte of data… where a sound byte is actually part of the Sound Bite . One of the disadvantages of the Cellular Mobile Network is that it is optimized for voice… this is one argument the WiMAX sales people use when talking about the all IP WiMAX standardizes protocol and the ITU standard GSM and CDMA . The WiMAX network is optimized for DATA. The introduction of 3G technology provided a bridge between the Circuit Switch technology of the original GSM to a packet based connection. The earlier 3G networks required support of both packet and circuit switching – the later 3G network technologies eliminate the Circuit Switch and are a Packet Switch only deployment. Circuit switches in Mobile networks are being replaced and eliminated. Again in the case of some incumbent operators in the Caribbean Basin, the mixture of legacy Circuit Switching and Packet Switching technologies adds complexity to the OPEX side of the business case. New competitors deploying Mobile WiMAX can totally bypass the incumbents network. New entrants with a flat IP architecture and SoftSwitch deployments do not have the OPEX encumbrances. Optimizing your circuit and packet switching assets is critical to keeping your competitive edge. Both WiMAX and 3.5G technologies can deliver the bandwidth needed for new packet based services like Carrier grade VoIP mingled with IP video, Peer to Peer and IP TV and Value Added Services. HSDPA+ is now delivering 14Mb/s and WiMAX is doing the same --- both technologies are moving up the bandwidth ladder and will soon be in the +35Mb/s range --- The 100Mb/s 4G speeds will be reached by both LTE and WiMAX (m) within the next two years… IP Packet end to end is a crucial design consideration for any Broadband operator right now!
  • 5. Another choice facing the Fixed and Mobile Broadband operators; the choice of Spectrum. The legacy wireless Broadband /Wireline replacement stuff is usually in the non-licensed 900 MHz and 5.8GHz bands using proprietary equipment , and these bands are usually crowded with noisy competitors. The recent 3.65 quasi licensed spectrum in the US has also proven successful for rural applications. Some providers around the Caribbean have utilized the 3.5 GHz and 2.5GHz licensed bands as well for Wireless Local Loop proprietary solutions to deliver voice services to outlying areas. In these cases the proprietary legacy gear has been MD’d , forcing the operators to look for another solution. Licensed spectrum WiMAX is successful since it can be bought today as a substitute for copperware in the 2.3, 2.5, 3.5 and 4.9 spectrum which are being deployed in different countries… 2.3 in Korea, Australia and soon to be Latin America and the Caribbean, 2.5 in the USA, China, Canada, Latin America and the Caribbean and more… 4.9 as a Municipal play in the USA and Canada and as a commercial play in the UK and Japan and more… 700 MHz is on the way and should be widely deployed especially in rural regions… IEEE and the WiMAX Forum are defining and ratifying the open standards around WiMAX, Greenfield WiMAX operators are usually interested in providing Broadband first, Broadband and Voice second and Voice only third to their usually eager subscribers, using 3.5GHz, 2.3GHz and 2.5GHz licensed spectrum. “Sweet spot” licensed spectrum ensures competitive advantage And then there is the GSM to LTE spectrum used by the Mobile operators and currently being ratified and vetted by 3GPP (this is the group of Mobile Operators and technology developers who have been tremendously successful over the past few years delivering lots of voice and growing data to the Cellular subscribers). Planning for and winning the best spectrum possible is key to your future success 5
  • 6. Vendors are biased to their own solutions and that is the way it should be… Vendors are also mostly concerned with their part of the solution… and end-to-end considerations or conflicts are left to the Operator. Experience has shown it is easy to underestimate the end-to-end challenges involved in the integration and deployment of a multi-vendor solution. Some vendors like Motorola will provide product in both the LTE and WiMAX areas… but will only provide the WiMAX Mobile (802.16 2005) and in the future WiMAX (m), with no interest in the 802.16 2004 solutions.. Other vendors like Airspan, Alvarion and Redline started the battle from the beginning with a Fixed WiMAX (802.16 2004) and most Fixed WiMAX providers guarantee a software upgrade path between Fixed WiMAX and Mobile WiMAX… the problem with this strategy is that most of the Fixed WiMAX wins are in underserved or non-served areas usually in remote or rural locations. This business case is more concerned with providing Broadband Internet connectivity and Voice --- sometimes with voice as the prime requirement. Soft switch vendors like Sonus and Metaswitch will provide the full IP class 4 and 5 switching solutions which can connect to legacy networks in emulated T1 and E1 trunk configurations --- using SS7 as the signaling protocol when connecting to the Legacy International Circuit switches --- basically incumbent legacy providers are bypassed totally --- From the RAN to the NGN to the fiber rings provided by International Capacity providers --- different vendors, different technologies and different areas of responsibility. Of course the Billing and ARPU gaining Value Added Services Platform vendors are also in the mix. The 3rd Party sourcing of customer advocate Engineering consulting firms providing trusted guidance from Discovery to RFI/RFQ/RFP articulation, Vendor and Technology vetting along with selection and tested execution will add to your Time to Market and Competitive Edge. Vendor Agnostic, Technology Neutral – Customer Advocate.
  • 7. The choice of a best practice Process in the deployment of your network or in the upgrading of your network assets is also critical to success, Plan – Evaluate – Execute Obtaining the help of an engineering consulting company, with expertise in Access and Core Network design/deployment will ensure the process is followed and the most appropriate decisions are made. The engagement is “kicked off “ with the signing of a Mutual NDA between both parties and then a Discovery meeting to validate the goals of the project and establish metrics of the Business Case and timing of events. The approach should be both Technology and Vendor agnostic… and the Consulting team should be considered as an extension of the Executive, Engineering and Marketing teams as advocates for the network operator. The approach should also enable the Operator a Faster Time to Market with a superior Competitive advantage. Due to time considerations, I will not go into detail on the process points shown on this slide, but I am available for discussion at your convenience during this conference or afterwards. 7
  • 8. This paper briefly discussed the current choices in front of regional operators on how to bring Broadband Access and Next Generation Core Networks to subscribers using the resources of the Mobile Cellular Network or the Wireline Network and the Circuit Switched or Packet switched assets. Caribbean Basin Network Providers – whether working in a “Greenfield” new competitor or a mature incumbent environment, must make the right strategic decisions ensuring their deployed network is able to meet the competitive pressures of future. A “Mind-Wide-Open” approach using non-biased highly professional Customer Advocate Consultants will diminish Risk and Increase your future success. Ian Lenathen VP Sales and Business Development Nexus Communications Ltd 416.527.3748 8
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  • 11. At the end of March 2009 global wireless subscribers reached 4.16 billion, an impressive 19% increase from a year earlier and not that far off the pace from what has been experienced over the last five years. However, TeleGeography's GlobalComms Insight forecasts that the average annual growth rate over the next five years will drop to 10%, and the fact that growth from 4Q 2008 to 1Q 2009 was just 4%, is one indicator of that slowdown. Over the next five years it is little surprise that there will be notable differences across the regions, with annual subscriber growth rates in Africa and Asia staying comfortably in the double-digit zone, while Europe and North America will be come in at less than 5% per annum. But to truly understand the growth opportunities you need to go deeper and look at individual countries. By defining 'large' wireless markets as having at least 20 million subscribers, at the end of Q1 2009 there were 37 such countries across the world. The growth rates achieved by these 37 during the past twelve months has ranged from zero to 100%, as shown in the figure above. Clearly the growth rates at the top end of the scale are not sustainable over a long period of time, but the average annual growth rate for the group over the next five years will range from 1% to 23%. 'There is a huge range in growth rates, which presents a real challenge to companies targeting the markets,' said TeleGeography executive director John Dinsdale. 'Many will be surprised by some of the countries at the extremes of this range. For example, many countries in Eastern Europe have very rapidly moved from subscriber boom to saturation and minimal growth.' TeleGeography's GlobalComms Insight provides detailed annual subscriber forecasts for over 160 countries and is a companion to the GlobalComms Database, a regularly updated online database of wireline, wireless and broadband competition. No other telecoms market research service rivals their collective geographic scope and depth of coverage. For further information, please contact: John Dinsdale or call an account manager on +1 202 741 0020 11
  • 12. New research released by TeleGeography shows that while the global recession has dampened growth in many markets, this is a short-term phenomenon. GlobalComms Insight forecasts that by the end of 2013 the number of broadband subscribers across the world will have grown by 72% to over 700 million, while wireless subscriptions will have grown by well over two billion, an increase of 60%. The death of traditional fixed line phone services has been much talked about, but its demise has been greatly exaggerated: the number of fixed lines will fall over the next five years, but the decline will be gradual and will be offset by continued strong growth in both broadband and wireless customers. In aggregate, GlobalComms Insight predicts that by the end of 2013 there will be no fewer than 2.5 billion net new subscribers or revenue generating units. That represents a CAGR of almost 8%. GlobalComms Insight shows that the Asia-Pacific region will continue to dominate the global market in terms of subscriber numbers, but the story is very different when considering market value. In 2013 the region’s 50% share of global subscribers will account for only 28% of global market value. Conversely, while the relative size and importance of the North American market continues to diminish, in 2013 its 7% of subscribers will still account for 23% of global market value. Which countries are reporting the highest growth figures and by how much? How much revenue will be generated by those subscribers? Where are the growth opportunities for service providers? What will be the winning strategies for those service providers? These questions and many more are answered in TeleGeography’s new research service – GlobalComms Insight. To find out more visit, call us at +1 202-741-0042, or email 12