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Who pays for mobile broadband?

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This presentation was given as a teaser at the Open Mobile Summit 2011 in London followed by a Fireside talk on "Who pays for mobile broadband?".

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Who pays for mobile broadband?

  1. 1. Who pays for mobile broadband?Open Mobile Summit, June 8th 2011 London, UK.<br />Dr. Kim Kyllesbech Larsen, Technology EconomicsTechnology, Deutsche Telekom.<br />
  2. 2. A bygone time … not so long ago ...When 1 + 1 was close to 2.<br />Blablabla<br />... Bla …<br />Mobile Network<br />We talked (a lot)<br />Rarely did we use the (mobile) web.<br />We SMS’ed (even more)<br />2<br />Kim Kyllesbech Larsen, Mobile Open Summit 2011, June 8th, 2011, London, UK.<br />
  3. 3. A new paradigm … 1 + 1 is no longer “just” 2 ... Applications have “taken over” the communications.<br />1<br />User<br />1+<br />Device<br />Many applications<br />User & application initiated bandwidth demand.<br />Device & application (IP addr, keep alive, …) driven signaling resources.<br />3<br />Kim Kyllesbech Larsen, Mobile Open Summit 2011, June 8th, 2011, London, UK.<br />
  4. 4. Its all in the data package ... Mobile revenues in an Apps centric world could decline rapidly.<br />Western Europe ARPU development in Euro<br />Illustration<br />CS Voice<br />SMS & MMS<br />PS Data<br />23.0<br />22.4<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<br />centric<br />2015E<br />Apps<br />centric<br />Source 2010 & 2015 Pyramid Research March 2011 Western Europe.<br />4<br />Kim Kyllesbech Larsen, Mobile Open Summit 2011, June 8th, 2011, London, UK.<br />
  5. 5. When the mobile network becomes a bit-pipe ... Apple iTune promotion in NL ... free downloads.<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 />5<br />Kim Kyllesbech Larsen, Mobile Open Summit 2011, June 8th, 2011, London, UK.<br />
  6. 6. Smartphone traffic tsunami ... and growth expected to continue for quite a few years more...<br />Smartphone indicators<br />×7<br />Data signaling<br />Problems!<br />May – June 2010 (Netherlands).<br />“iPhone overload T-Mobile (NL) network” (Volkskrant, May 2010).<br />“T-Mobile (NL) gives compensation”. <br />(2 month no data charge & iPhone users gets €30.)<br />“T-Mobile (NL) admits not able to handle data growth in its mobile network“ (Tweakers.net).<br />×6<br />Smartphones<br />×4<br />Throughput<br />×5<br />Volume<br />December 2008 to December 2010<br />Illustration<br />6<br />Kim Kyllesbech Larsen, Mobile Open Summit 2011, June 8th, 2011, London, UK.<br />
  7. 7. Smartphone usage ... 2GB = unlimited ... for most.<br />Monthly volume relative to Average usage:<br />>2GB<br />3% of users with<br />30% of volume<br />Outside bundle:<br />4% of users with<br />35% of volume<br />Illustration<br />Laptops<br />Today<br /> ca. 20% unlimited subscriptions takes ca. 60% of data volume.<br />Less than 2% of Laptops<br />takes more than 20% of data volume.<br />7<br />Kim Kyllesbech Larsen, Mobile Open Summit 2011, June 8th, 2011, London, UK.<br />
  8. 8. The profitability Squeeze.<br />Cash pressure by un-controllable<br />mobile data growth<br />As it looks today<br />Mobile data growth will be very challenging to support with HSPA-only.<br />Free cash flow<br />Trends<br /><ul><li>HSPA alone cannot sustain the traffic.
  9. 9. LTE deployment will be accelerated.
  10. 10. In-door off-loading to WiFi and Femto.</li></ul>HSPA only <br />-<br />No LTE<br />HSPA, with LTE deployment<br />HSPA+LTE, 50% off<br />-<br />load<br />2010<br />2012<br />2014<br />2016<br />2018<br />2020<br />Operator illustration<br />8<br />Kim Kyllesbech Larsen, Mobile Open Summit 2011, June 8th, 2011, London, UK.<br />
  11. 11. Network sharing a way to profitability and cash.<br />> 7 years<br />< 5 years<br />4 – 8 years<br />The best sharing strategy depends on the business cycle and<br /> technology age.<br />LTE<br />UMTS & GSM -> LTE<br />HSPA / UMTS<br />HSPA+<br />Rollout Phase<br /> (primarily coverage)<br /> Steady State<br />(capacity & in-fill)<br /> Modernization<br /> (replacement)<br />Illustration<br />Rollout<br />Steady state<br />Modernization<br />Significant Capex savings.<br />Substantial Opex prevention.<br />Best shared network.<br />Little Capex benefits.<br />Substantial Opex savings.<br />Significant write-offs & re-structuring costs.<br />Significant Capex savings.<br />Substantial Opex savings.<br />Minor write-off.<br />Re-structuring costs.<br />9<br />Kim Kyllesbech Larsen, Mobile Open Summit 2011, June 8th, 2011, London, UK.<br />
  12. 12. The smartphone … The “killer” device and its “killer” applications…<br />The smartphone … The “killer”device and its “killer”applications…<br />10<br />Kim Kyllesbech Larsen, Mobile Open Summit 2011, June 8th, 2011, London, UK.<br />
  13. 13. Key challenges.What we need to be passionate about.<br />How to spend it<br />How to earn it back<br />11<br />Kim Kyllesbech Larsen, Mobile Open Summit 2011, June 8th, 2011, London, UK.<br />
  14. 14. 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 />The key value proposition of a mobile network is ....<br />mobility<br />Let the discussion begin!<br />Contact: kim.larsen@t-mobile.nl<br />Mobile: +31 6 2409 5202<br />http://nl.linkedin.com/in/kimklarsen<br />

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