Broadband Paradox and Mobile CloudBy : Dr.Ir.Joko SuryanaLaboratory of Radio Telecommunications and Microwave Reference sources: Internet
Outline• Mobile and IP-based • Mobile Broadband Facts : services : – European Market – Mobile and Internet – Indonesian Market Subscriptions • ‘Traditional’ Operator – Device Adoption Strategy – Global IP Traffic • Mobile Cloud Approach – Global Mobile Traffic – Traditional Telco vs OTT• Mobile Broadband Operator Paradox – Telco+OTT Approah – Introduction – Mobile Cloud Business – The Paradoxes – Softbank Study Cases – Current Findings
Cisco Global IP Traffic 2010-2015• Total IP Traffic 80.5 Exabytes per month by 2015 – By 2015, annual global IP traffic will almost reach a zettabyte• Fixed Internet 59.4 Exabytes per month by 2015 – By 2015, one million video minutes cross the network each second• Managed IP 14.8 Exabytes per month by 2015 – Business IP video conferencing will grow six-fold from 2010-2015• Mobile Data 6.3 Exabytes per month by 2015 – Mobile video will increase 26-fold from 2010 to 2015Source: Cisco Visual Networking Index (VNI) Global IP Traffic Forecast, 2010–2015
Entering Zettabyte Era • By 2015, global IP traffic will reach an annual run rate of 966 exabytes per year • 966 Exabytes is equal to: – 8X more than all IP traffic generated in 2008 (121 EB) – 28 million DVDs per hour
Global Device Number :By 2015 there will be 1.5 B Device
Indonesian Mobile Broadband: Subscriber Subscription• Total number of cellular subscribers in Indonesia, has reached 225 million in 2010 with an average 1.33 SIM cards used per person, it is estimated that there are approximately 168 million mobile phones in Indonesia.
Indonesian Mobile Operator Profiles BB Infrastructure 2011-2012 FY 2011 Q1 2012 Telkomsel XL Indosat Telkomsel XL IndosatInternet BW 20 Gbps 5 Gbps 8.36 Gbps 20 Gbps 5 Gbps 8.36 GbpsBW of Blackberry (RIM) 5 Gbps 3 Gbps 2.7 Gbps 5 Gbps 3 Gbps 2.7 GbpsMobile Internet Subscribers 45 millions 25.5 millions 20 millions 48 millions 29 millions 22 millionsMobile Broadband Subscribers 6.7 millions 3.7 millions 3 millions 8.6 millions 7 millions 5 millionsBlackberry Subscribers 3.6 millions 1.8 millions 1.7 millions 4.4 millions 2.5 millions 2 millionsTraffic per day 115 TByte 66 TByte 36 Tbyte 115 TByte 66 TByte 36 TbyteNode-B BTS 9500 4910 3400 10000 5000 3500 FY 2012 Outlook Telkomsel XL Indosat Internet BW 35 Gbps 10 Gbps 10 Gbps BW of Blackberry (RIM) 10 Gbps 8 Gbps 5 Gbps Mobile Internet Subscribers 56 millions 36 millions 28 millions Mobile Broadband Subscribers 15 millions 14 millions 8 millions Blackberry Subscribers 6.5 millions 3.5 millions 3 millions Traffic per day 200 Tbyte 120 Tbyte 80 Tbyte Node-B BTS 11000 8000 5000
Mobile Broadband Market Size 2012 The Big Three : TSEL, XL, ISAT• Data ARPU and Infrastructure Profile : – Data ARPU ( blended ) • Rp 100.000 per month (Q1 2012) Benefit • Rp 70.000 per month (Q4 2012) Providers Data Plan (Price – Volume – Speed) – Total BTS Networks : IDR 100,000 – 1 GB – max 1 Mbps Telkomsel Flash Unlimited • 24.000 Node Bs IDR 200,000 – 2.5 GB – max 2 Mbps• Bandwidth Estimation Profile : Indosat Paket Browser Bulanan IDR 100,000 – 1 GB – max 1 Mbps IDR 99,000 – 2.5 GB – max 3.6 Mbps – Internet BW XL Hotrod 3G IDR 199,000 – 6 GB – max 3.6 Mbps • 60 Gbps Axis Bulanan Premium IDR 79,000 – 1 GB – unknown – RIM Bandwidth : Bulanan Ultimate IDR 200,000 – 2.5 GB – unknown IDR 50,000 – 1 GB – unknown • 23 Gbps 3 Paket Internet 3 IDR 75,000 – 2 GB – unknown• Data Business 2012 Profile : IDR 125,000 – 5 GB – unknown – Total data subscribers Bakrie Super Giga Ultimate IDR 100,000 – 2 GB – max 3.1 Mbps IDR 500,000 – 35 GB – max 3.1 Mbps • 37 million user IDR 50,000 – 2 GB – max 3.1 Mbps • 12 x Rp 70.000 x 37 million Smart Paket Data IDR 100,000 – 6 GB – max 3.1 Mbps • Rp 31 trillions IDR 150,000 – 12 GB – max 14.7 Mbps
Indonesia International BW 2010-2015 Fixed BB 2011: 100 Gbps Fixed BB 2012 :120 Gbps
Mobile Broadband Paradox : Definition • Mobile broadband is Traffic Increases rapidly increasing rapidly both when Revenue grows at low level it comes to traffic and number of subscriptions. – The swift growth of the demand will require substantial capacity expansions. • Operators are challenged by the fact that : – Revenues from mobile broadband are limited, just a few per cent of ARPU, and thus not compensating for declining voice revenues , creating a so called : “Broadband Paradox”
Broadband Paradox : Mobile Data Traffic BehaviorThe data services aredominating type of trafficin the networks
Broadband Paradox :Mobile Data Revenue BehaviorBut the data services revenuecontribution is at a low level
Broadband Paradox #4 : Investment• Mobile operator problem : Scalability of cellular systems : – Data traffic and the need for • For a specified amount of spectrum and additional network capacity for the same type of Radio Access ( investments) are increasing Technology : substantially – deployment of N times more – While revenues are growing capacity will imply N times higher at a very low level network costs. • The cost is proportional to the number of users, the demand per user, the service area and also a function of quality
Findings From Current DevelopmentA. Mobile broadband unable to drive revenues• The data points underscores that operators are highly dependent upon the revenue stream from the voice business.• It requires limited network capacity as voice customers only generates 10 MB of traffic per month, while mobile broadband users in average consumes 130 times more traffic, paying only 1% of the price per MB compared to voice.• This asymmetry is unsustainable, although low utilization rates in the UMTS networks initially can handle the increased load factors.
Findings From Current DevelopmentB. Operators forced to look for new revenue streams• This forces operators to launch new value added services to compensate for a deteriorating voice business.• But this has so far been unsuccessful, illustrated by the limited interest users have showed for mobile videoconference, mobile-TV, and gaming.
Findings From Current DevelopmentC.Lower free cash flow restricts capex• The financial crisis has placed the focus on debt making operators more cautious on capex in order to have the ability to service debt, pay dividends and strengthen their balance sheets.• But the operators’ ambition to expand aggressively on mobile broadband requires capex upgrades.• Given that mobile broadband generates no cash flow it weakens operators financially in a time when investors and banks are favoring financial stability.• This forces operators to make strategic prioritizations and subsequently alter business models for mobile broadband.
Operator OptionsStrategy to bridge the revenue gap :1. Network sharing : all forms of operator cooperation where sites or parts of the radio access networks are shared.2. Spectrum refarming : replace or mix radio access technologies in specific frequency bands.3. Offloading heavy data traffic : to local networks or indoor systems.4. Pricing strategies and service differentiation5. New types of services and revenues : M2M, NFC
1. Network sharing• Network sharing includes all forms of operator cooperation where sites or parts of the radio access networks are shared. This is a form of long term cooperation.• In Sweden all 3G operators are involved in different types of joint ventures, and a new constellation has been announced regarding the deployment of LTE.• The cost savings can be in the range 20-40% depending on the level of sharing : – The potential for saving is obvious when you consider coverage and macro base station deployment where the site costs are large – For capacity expansion in urban areas the potential savings with shared networks would presumably be much lower.
2.Spectrum Refarming• Another way to exploit current networks and re-use existing sites is to replace or mix radio access technologies in specific frequency bands. – One example is the 900 MHz band where WCDMA, HSPA or LTE can replace GSM/EDGE resulting in increased capacity per site and MHz of spectrum. WCDMA in the 900 MHz band implies that 3G coverage can be achieved with a lower number of sites than in the 2.1 GHz band. Hence, these benefits would be most valuable for wide area coverage. – On the other hand the present usage of the 900 MHz band is for GSM and EDGE. So when calculating the benefits the costs for the whole WCDMA implementation has to be included. These costs have to be covered by the additional revenues resulting from WCDMA.• Nokia Siemens Networks claims that the total savings in capex and opex can be up to 60%, i.e. total cost of ownership (TCO) is reduced to 40% compared to deployment in the 2.1 GHz band. – For indoor coverage the benefits of the above mentioned type of spectrum refarming is more difficult to exploit than for wide area coverage. – In urban areas high capacity is already achieved by dense deployment of macro or micro sites using WCDMA or HSPA operating at 2.1 GHz.
3. Offloading Heavy Data Traffic• Instead of deploying a large number of outdoor base stations for mobile broadband the heavy data traffic can be offloaded to local networks or operators using indoor systems .• In addition to the potential of substantially lowered network costs a number of other motivations can be identified: – the data traffic is mostly (~90% ) generated indoors – the users are stationary or nomadic – the users are ”known” (at the office or at home) – no need to deal with wall attenuation• Compared to capacity expansion using macro or micro base stations the use of cellular femtocells or WLAN systems indicate cost savings in the range 20 times .
4.Pricing Strategies and Service Differentiation• Currently the flat rate subscriptions area associated with some type of restrictions, e.g. maximum amount of data per month (1GB, 5GB) and maximum data rate (384 kbps, 3,8Mbps, 7Mbps). – Operator “3” in the UK offers subscriptions with different maximum amount of data per month, e.g. 1 GB for £10, 5 GB for £15, and 15 GB for £30. – Heavy data users have to pay more. – This kind of pricing scheme is a way to handle the “waste” problem associated with flat rate.
4.Pricing Strategies and Service Differentiation ( Continue )
5.New types of Services and Revenues• M2M Services• NFC-based Services
Leading Mobile Operator : Mobile Cloud Operator
Mobile Internet Evolution• Mobile Internet 1.0 : – The first wave of mobile data connectivity was very rudimentary with technologies such as CDPD, GPRS, and messaging (SMS).• Mobile Internet 2.0 : – The next wave brought in better devices, faster networks and the consumers started migrating their tasks, content creation and consumption behavior to the mobile platform• Mobile Internet 3.0 : Mobile Cloud Operator – Is defined by the cloud-enabled, software driven, IP-centric, high- speed 4G+ networks; the consumers using multiple connected devices; the flattened value-chains; and the operators relying on mobile data services for majority of their revenues