Lte Forum Sweden April 2010 Ventura Lte Discussion

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Ventura addresses the question of whether it makes sense for legacy 900GSM operators in the UK to bid on 800MHz spectrum in view of a proposed sub-1GHz cap on spectrum. Using our suite of wireless technology models, we calculate under different network clutter types for Greater London and Cambridgeshire the conditions under which it would make sense to deploy LTE in 2.6GHz, 800MHz, or persist with HSPA. Our conclusions validate anecdotal evidence that for legacy 900GSM MNO's, there is little to be gained from bidding on 800MHz unless to achieve deep rural coverage.

Ventura has a comprehensive suite of network technology models that are able to calculate network CAPEX and OPEX for GSM, UMTS/HSPA, LTE and WiMAX for any spectrum allocation at any spectrum band. The suite has been designed with CTO technology selection decisions in mind and allows for multi-technology comparisons - quick and simple it isolates the major cost drivers from the perspective of the technology executive. The model outputs cumulative CAPEX, network cost/GB and customer profitability. Used in conjunction with our revenue and market share model, the combined suite can be used to undertake detailed business planning and valuation.

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Lte Forum Sweden April 2010 Ventura Lte Discussion

  1. 1. turning knowledge into action HSPA / LTE Business Case Modeling approach to UK broadband spectrum options LTE Forum Stockholm April 28th, 2010 David Brown: +447939544481, email: david.brown@venturateam.com
  2. 2. Should original GSM900 MNO’s in UK bid for 800MHz? • Loss of 900Mhz (2x10) and significant migration and disruption costs. • Both Vodafone & O2 have invested heavily in UMTS/HSPA. • Both legacy 900GSM operators are investing in HSPA Plus. • What would we have to assume about the growth of data for it to make sense for Vodafone UK & O2 to deploy LTE nationally? Confidential – Page 2
  3. 3. Global data set to grow to 3.6 ExaBytes/month 4,000 Mobile Data / Month (Global) 3,500 3.6 • Dongles (USB) being adopted in ever EB/mont 3,000 h greater quantities. '000 TBytes/Month Data CAGR 108% 2,500 2,000 1,500 • New devices – iPad 1,000 500 0.09 EB/month • New media platforms 0 2009 2010 2011 2012 2013 2014 • e.g Iplayer Source: Cisco Visual Networking Index 2009-2014 • Smart Phones • W. Europe: ~ 50% EoP • Lower cost Netbooks, (emerging markets) Confidential – Page 3
  4. 4. How did we get to 3.6 ExaBytes/month? Confidential – Page 4
  5. 5. Global growth translates into over 400 TB/month for the UK 500 Total UK Traffic Forecast / Month 450 • Aggregate Data CAGR 33% by EoP. Smart Phone USB/Large Screen 400 '000 TBytes/Month 350 300 250 • USB broadband accounts for 15% of 200 all handsets in market by EoP. 150 100 50 0 • Smart Phones (active data 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 users)50% of all handsets by EoP. Source: Ventura analysis adapting underlying Cisco assumptions and trend. Confidential – Page 5
  6. 6. UK data growth translates into over 23GB/month/customer 25 UK Subscriber Traffic / Month Cisco Data Growth Scenario ~ 20 23GB/month USB Data Smart Phone Data GBytes / Month 15 10 5 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Source: Ventura analysis Confidential – Page 6
  7. 7. Options for migrating to LTE in urban and rural areas HSPA Dual / Quad Carrier scenario HSPA Plus LTE @ 2.6GHz Hotspots/urban • Is the perceived speed of LTE noticeably different? LTE @ 900MHz, 1.8GHz & 2.1GHz • Does HSPA provide sufficient ? LTE @ 800MHz Coverage capacity? • Migration path & timing? View on forecast data? Confidential – Page 7
  8. 8. Validate the prevailing view 800MHz (2x10) insufficient for LTE Using our network modeling tool designed for Executive decision making… Greater London Cambridgeshire SU,U, DU R, SU, U HSPA HSPA Plus HSPA HSPA Plus Target 2Mbps 2Mbps 2Mbps 2Mbps LTE @ 800MHz LTE @ 800MHz LTE 2.6GHz (2x20) (2x10) 4Mbps 2 (2x10) 2Mbps 2Mbps LTE @ 2.6GHz LTE @ 800MHz LTE 2.6GHz (2x20) 1 (2x20) 4Mbps 3 (2x10) 4Mbps 4Mbps LTE @ 800MHz 4 (2x20) 4Mbps Confidential – Page 8
  9. 9. Assumptions 1 / Coverage Greater London Vodafone est: 2.3 million sub’s (pop x penetration x market share) Greater London Pop 7.5 million (2006) Sub-Urban 927km2 Dense Urban 187km2 Sub-Urban 927km2 Density 3,416km2 Urban 1,073km2 Urban 1,073km2 Density 9,164km2 Dense Urban 187km2 Density 18,000km2 (est. day-time pop) Confidential – Page 9
  10. 10. Assumptions 2 / top-level dimensioning • Modulation Scheme 64QAM • Both LTE @ 800Mhz & LTE @ 2.6GHz are deployed on existing sites • Busy hour data calculated on USB dongle only • Assume Smart Phone data spread more evenly over day • Only civil upgrade costs incurred Confidential – Page 10
  11. 11. LTE vs HSPA Greater London: comparable service speeds Customer Proposition HSPA 2Mbps LTE 2Mbps LTE 800MHz (2x10) (SU,U) & 2.6GHz (2x20) in Dense Urban only HSPA @ 2.1GHz (2x15) + LTE @ 2.6GHz (2x20) in Dense Urban only 26GB/month 9GB/month LTE @ 2.6GHz (2x20) in SU, U, DU Spectrum costs excluded from analysis. Confidential – Page 11
  12. 12. Assumptions 3 / Coverage Cambridge & surrounding villages Vodafone est: 240k sub’s (pop x penetration x market share) Cambridge & Rural 752k (2001 census) Rural 4759km2 Rural 4759km2 100km2 Density 100/km2 Urban 5km2 Sub-Urban 50km2 Sub-Urban 56km2 Density 2,400km2 Density 1,500km2 1,500km2 Urban 10km2 Density 2,400km2 Confidential – Page 12
  13. 13. LTE vs HSPA Cambridge: comparable service speeds LTE 800MHz (2x10) converges towards HSPA Plus at higher data speeds. No real 16GB/month advantage to deploy in 800MHz. 26GB/month 9GB/month At lower data levels - LTE 800MHz (2x10) offers coverage benefit over HSPA up until ~ 9GB/month Spectrum costs excluded from analysis. Confidential – Page 13
  14. 14. LTE vs HSPA Cambridge: higher service speed on LTE 13GB/month After 9GB/month LTE 26GB/month 800MHz (2x10) is 9GB/month capacity constrained & LTE 2.6Ghz performs better. Spectrum costs excluded from analysis. Confidential – Page 14
  15. 15. LTE vs HSPA Cambridge: higher speed on LTE & 800MHz (2x20) 13GB/month 26GB/month Coverage advantage for LTE800MHz (2x20up until ~ 13GB/month. There is marginal coverage advantage in the long run. Spectrum costs excluded from analysis. Confidential – Page 15
  16. 16. LTE vs HSPA Cambridge: Cost/GB Cost comparison of deploying LTE in 800Mhz (2x20) offering 2Mbps. Initial cost advantage of deploying in 800MHz (2x20) until system is capacity constrained ~ 13GB/month 26GB/month 13GB/month. Benefit of LTE in 2.6Ghz (2x20) Spectrum costs included in analysis (based on cost / GB for 3G auctions). Confidential – Page 16
  17. 17. LTE vs HSPA Cambridge: Profitability per customer/month Benefit of LTE in 2.6Ghz (2x20) Impact of deploying LTE in 800Mhz (2x20) 26GB/month 13GB/month Analysis assumes: • LTE 4Mbps service • 10 Euro/month • 5 EURO assuming 50% bundle utilisation) • Overhead • Network • Spectrum Confidential – Page 17
  18. 18. Conclusion – we have validated conventional wisdom • Geography where 800MHz is beneficial may be limited to deep rural coverage, transport corridors. • LTE works best in 2x20 as is generally understood. • 800MHz is potentially less valuable to legacy 900GSM operators (also migration costs). • More likely deploy LTE in 2.6GHz and in the longer run migrate voice to 2.1GHz and deploy LTE in 900MHz. • Despite not having access to 800MHz a 900GSM MNO can still launch a compelling broadband proposition in 2.6Ghz. • H3 possibly well positioned to acquire lower band spectrum and deploy a nationwide broadband network. Confidential – Page 18

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