LTE launch strategies: what's working and what isn't?


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Which are the most successful LTE operators to date, and why?
How have they positioned LTE to drive customer uptake?
Which pricing and value propositions are working in the market and which aren’t?
What strategies are operators adopting for voice over LTE?
How can operators maximize the value of their LTE investments?
How have different operator strategies influenced LTE subscription uptake?
How are consumers using LTE? How much data are they consuming and what apps are driving growth?

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LTE launch strategies: what's working and what isn't?

  1. 1. LTE launch strategiesWhat’s working and what isn’tLondon, 2-3pm GMT, 29 November 2012Paul Lambert Thomas WehmeierSenior Analyst Principal AnalystOperator Strategy Operator Strategy
  2. 2. LTE is at the top of everyone’s prioritiesWhat will be the single most important area of focus Which technologies and strategies will drive profitablefor telecoms and TV operators in 2013? top-line growth in your organization in 2013? Network deployments and 4G / LTE developments (NGN and LTE) Cloud computing Superfast fixed-line broadband Customer experience management Apps and app stores Converged billing New digital service developments (digital services) On-demand video Machine to machine (M2M) Efficiencies, cost control and best Multiscreen video practice Wi-Fi Partnerships with other High-definition video operators and Internet players Ethernet SDN Other (please specify) Other (please specify) 0% 5% 10% 15% 20% 25% 30% 0% 10% 20% 30% 40% 50% 60% 70% % of respondents % of survey respondentsSource: Informa’s Industry Outlook Survey 2013, Oct 2012, CSP respondents only, n=28011/30/201 22
  3. 3. Where is LTE today? LTE connections by geography, 3Q12• 111 live networks in 50+ countries ~90% of total global connections• Reaching more than 0.5 billion people• ~50 million connections to LTE networks• Over 550 LTE-enabled devices, according to GSA Global commercial LTE network deployments, Nov 2012 Number of LTE-enabled smartphones by operator, Nov 2012Source: Informa Telecoms & Media
  4. 4. Which operators have had the most success?Top 10 largest LTE operators by connections, 3Q12 • Not charging a premium for LTE over 3G is used by some of theOperator LTE connections % of total base Current premium v 3G (%)* most successful LTE operators,Verizon Wireless 14.9m 13 0 measured by subscriptions.NTT DoCoMo 6.2m 10 0 • Main strategic LTE tariffingSK Telecom 5.7m 21 0 choice facing operators is: chargeAT&T Mobility USA 5.1m 5 0 a premium over 3G (if so, howLG U+ 3.6m 36 0 much?) or price LTE on a par withKT Corp 2.5m 15 0 3G?Metro PCS 1.1m 1 0 • LTE operators that charged aRogers Wireless 0.8m 8 0 clear premium over 3G areYota 0.7m 100** n/a adjusting their prices to bringTelstra 0.6m 4 0 them in line with 3G rates.*Lowest-priced LTE monthly subscription compared with lowest price 3G subscription**LTE-only network operatorSource: Operators, Informa Telecoms & Media 11/30/201 4 2
  5. 5. Ready, set, go. When’s the right time to launch? External factors driving launch timings Key “business case” drivers• Spectrum acquisition • Increase total bandwidth availability• Spectrum refarming & liberalisation • Improve customer experience• Technology leadership & 1st-mover adv • Lower the cost of data delivery• Technology transitions (CDMA, WiMax) • Alleviate traffic bottlenecks• Government stimulus • Drive customer upsell (ARPU accretion)• Competitive dynamics • Differentiate proposition and grow share• Vendor push & lemming mentality • Open up new revenue streams• LTE ecosystem maturity • Enhance competitive positioning11/30/201 52
  6. 6. Is there a “smart follower” advantage? Mature device Network stability & Understanding of ecosystem reliability usage patterns Pricing & Voice over LTE Advances in LTE positioning clarity maturing roaming11/30/201 62
  7. 7. What are the lessons learned in how to positionand market LTE to consumers? Source: AT&TSpeed What can users DO with 4G?Coverage What are the end-user benefits?Latency demos on operator websites How will their experience change?11/30/201 72
  8. 8. Are any “LTE services” emerging? Viewdini Verizon Wireless (US) Popular services used to promote LTE benefits Consumer Business High-definition video High-speed file Download streaming and VoD transfers Personal content Enterprise cloud EE Film Upload sharing; consumer cloud applications applications EE (UK) Online gaming; real- Real-time voice and Latency time voice and video video communications; communications corporate VPN Source: Informa Telecoms & Media joyn MetroPCS (US)11/30/201 82
  9. 9. Voice “for” LTE, VoLTE & the prospects for voice revenues Selected early conclusions on voice for LTE Live VoLTE deployments VoLTE branding in Korea• User perception of interim voice for LTE solutions has • SK Telecom (Korea), August 2012 been “surprisingly” positive • LGU+ (Korea), August 2012 • MetroPCS (US), August 2012• Clear evidence of a shift to unlimited voice, e.g Verizon Wireless, EE, Swisscom• There is a deep level of scepticism about the ability to Potential scenarios for voice monetise VoLTE/RCS Best case scenario• “Rich” and “HD” voice services are “table stakes”, not •Operators will be able to charge a premium for VoLTE/RCS services •Operators will begin to win-back traffic lost to alternative providers premium services •Operators will see some incremental increases in voice revenues Worst case scenario• The “business case” for VoLTE appears to be based •VoLTE/RCS will have no impact on traffic erosion to alternative providers primarily on spectrum usage efficiency •Operators will be unable to charge any premium and prices will continue to decline •Voice revenue declines will continue and, potentially, accelerate• Operators are generally committed to VoLTE, but will Likely scenario not feel rushed to launch •VoLTE/RCS will help slow the decline of traffic loss to alternative providers •Operators will not be able to charge any premium •Voice revenues will continue to decline, but at a slower rate• Operators that begin to approach nationwide coverage will move quickest to VoLTE 11/30/201 9 2
  10. 10. How are consumers using LTE? How much dataare they consuming? • LTE users consume 2-5x • Customers on Vodafone’s • LTE accounts for 35% of more data than 3G users fixed-broadband total data traffic replacement service use • LTE accounts for 10% of 11.5-12GB per month • LTE will surpass 3G traffic in traffic despite early 2013 • Users on MetroPCS • LTE smartphone users • LTE smartphone users unlimited LTE data plans consume ~50% more data consume 8x more data consume 2-2.5GB on versus 3G smartphones compared to 3G users average per month • Average monthly LTE smartphone usage is 1.6GB vs 1.1GB on 3GSource: All data as reported by operators directly11/30/201 102
  11. 11. Concluding remarks LTE is an evolution, not a revolution Focus marketing on tangible benefits Align all functions internally around the launch Price LTE for the mass-market11/30/201 112
  12. 12. How can Informa Telecoms & Media help you todevelop your LTE strategy? Understand Build Monetise Business case Pricing Market status modelling strategy Future market Technology Segmentation scenarios strategy strategy M2M & Business Go-to-market wholesale models strategy strategy Risk-reward Device Roaming analysis strategy strategyFurther readingFree white paper: analysis: 12
  13. 13. Thank you.Paul Lambert Thomas WehmeierSenior Analyst | Operator Strategy Principal Analyst | Operator Strategy@lambertpaul