Mr. André Merigoux's presentation at QITCOM 2011


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Turbulence Ahead: Innovative Thinking Urgently Needed to Unleash Digital Delivery

Mr. André Mérigoux – Alcatel-Lucent Director, Public Affairs

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Mr. André Merigoux's presentation at QITCOM 2011

  1. 1. Turbulence ahead: innovative thinking urgentlyneeded to unleash digital deliveryQITCOM – May 25th 2011André Merigoux – Public Affairs Director ALL RIGHTS RESERVED. COPYRIGHT © ALCATEL-LUCENT 2011.
  2. 2. 1- Disruptive changes ahead Massive investment needed • Fixed and mobile / Core - backhaul - Access • Future of mobile = fixed / • Investments start in all regions of the World: USA, Asia, Russia, etc. .. • But Europe is lagging behind • Europe: the need for incremental investment over 10 years of 380 billion € in Europe, including 100 M € in the radio access (source: EC) • End of voice models - distance • Inability to monetize the explosion of data traffic for operators via traditional business models • Decoupling traffic / revenue - erosion of margins 2 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
  3. 3. 1- Disruptive changes ahead The changes in the value chain • End of voice models - distance • Inability to monetize the explosion of data traffic for operators via traditional business models • Decoupling traffic / revenue - erosion of marginsEmergence of OTT (Over The Top) • OTT Generate traffic growth and innovation • Bandwidth-intensive applications • No incentive for an efficient use of bandwidth • Unbalanced data interconnection agreements with operators • OTT’s are global / operators are local • Business Model: Market Cap and Price / Earning ... is different 3 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
  4. 4. 2- What are the solutions for business models? New business models between operators and OTTs:• Agreements of "wholesale" grading services on QoS: throughput, latency, stability, security , jitter• Multilateral agreements based on open protocols and standard• Allow operators to manage their networks to offer differentiated services - Debate on Net Neutrality ...• 3 Conditions: • Investments needed • Non harmful discrimination • Increased transparency: throughput, capacity, traffic management system, user information on services offered 4 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
  5. 5. 2- What are the solutions for revenue increase? Increased revenues from end users• Monetizing new services• Segmentation based on experience levels expected• Responding to various requests from users• Available in "overlay" and offer standard "best effort " with appropriate pricing 5 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
  6. 6. 2 – What are the solutions for policy makers? Governments step-in to accelerate,ensure coverage, perequation and openness• To achieve ubiquitous coverage of very high speed connectivity and tackle future challenges of society (social inclusion, ageing population, climate change)• To complement private initiatives in policy driven areas and maximize network’s social benefits, minimize public funding thanks to perequation.• To ensure network openness and cost-effective connectivity through network sharing and competition while encouraging new investments needed to handle data explosion Different types of public intervention• Government driven PPP projects (Australia, New Zealand, Singapore, India,Brazil…) to foster coverage and competition• Regional and local PPP projects (Italy, France, Spain,…) based on infrastructure sharing• Rural projects based on new competition models ( LTE sharing in rural areas,…) 6 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
  7. 7. DIFFERENT POLICY & REGULATORY APPROACHES Americas EMEA APAC• Vertical integration & • Infrastructure competition • Network separation & platform competition & public Intervention service-based competition• Unregulated broadband • NGA regulatory framework in • Heavy influence of government markets place (LLU & bitstream) and regulation• No public intervention outside • State Aid in rural and medium • Structural separation, growth rural areas density areas/infra sharing through premium connectivity• Pro-active spectrum allocation • Digital dividend allocation wholesale policy decided at Member-State level • Bitstream wholesale, open• CALA countries focus on open • Digital Agenda targets difficult backbones & universal coverage access wireless and open to meet with current lead network transformation backbones incremental model - N. Kroes initiative to foster investments in NGA (300 B€ required) 7 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
  8. 8. 3- What are the solutions for access networks? New investment models for Mobile networks sharing fixed networks• Layer 1: passive infrastructure (civil • Capacity increase will come from network engineering, dark fiber) = 80% of densification: pico and femto cells with the cost of the network with ROI of fixed backhaul 15 years • Shortage in the number of sites in urban /• Layer 2: active infrastructure environmental consideration = sharing sites (network intelligence) = Return On themselves and Rans Investment of 5 years • « Ran sharing » = sharing of radio access• Layer 3: service = OTT model • Spectrum scarcity particularly in LTE with larger channels, should lead operators to increasingly share spectrum Need to share, co-finance • Useless duplication of 3 or 4 networks in and open Layer 1 rural areas• Global phenomenon: Asia - Latin The future of mobile networks America relies on fixed networks 8 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
  9. 9. 3- What are the solutions in Europe? Devise new investment models• Revisit the dogma of passive infrastructure competition in favor of active infrastructure competition?• Avoid duplication of infrastructure level 1 and admit it should be considered as an essential infrastructure?• Define methods of long-term financing for this level 1 (European Investment Bank Fund - national grant - local) if necessary using the flexibility of PPP Models? 9 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
  10. 10. 4- Initiative of Neelie Kross/ European Commission on 3rd March 2011 Participants CEO• Alierta César * Telefonica • Gee-Sung Choi *** Samsung • Paolini Nonce * TF1• Bäcklund Marcus * Voddler • Godlewski Miros•aw Netia PL • Piel Monika *** ARD• Ballmer Steve * Microsoft • Richard Stéphane FT • Granryd Mats Tele2• Balsillie Jim * Research in Motion • Gubitosi Luigi Wind • Sandberg Sheryl *** Facebook• Bates Tony *** Skype • Guillemot Yves *** Ubisoft • Schaeffer Dave Cogent• Berkett Neil * Virgin Media• Bernabè Franco Telecom Italia • Hagemann Snabe Jim *** SAP AG • Scheepbouwer Ad KPN• Bogaert Lorenz Netlog • Jobs Steve ** Apple • Schmidt Eric *** Google• Calve Simon * Lovefilm • Lévy Jean-Bernard Vivendi • Stefano Parisi Fastweb• Chambers John T. *** Cisco • Livingston Ian BT • Stringer Sir Howard *** Sony Music• Colao Vittorio Vodafone • Suri Rajeev *** Nokia-Siemens Networks • Murdoch James * Newscorp• Confalonieri Fedele Mediaset • Niel Xavier Iliad Group • Thompson Mark *** BBC Trust• Danon Pierre Numericable • Nyberg Lars TeliaSonera • Tournay Cédric *** Dailymotion• Donahoe John *** eBay • Obermann René DT • Verwaayen Ben Alcatel Lucent• Elop Stephen Nokia• Fries Michael T. * Liberty Global • Ostrowski Hartmut Bertelsmann • Vestberg Hans *** Ericsson 10 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.