1© nokia siemens networks broadband without boundaries / ghw / september 23rd, 2008 broadband with...

1 © Nokia Siemens Networks Broadband without Boundaries / GHW / September 23rd, 2008

Broadband with no Boundaries

Expocomm, Buenos Aires

September 2008


Our market vision of 2015 – the World connected

Applications pre-dominantly

in Internet

Broadband Everywhere

5 Bn people connected

Multitude of business models

Applications predominantly

in Internet


What trends are currently changing our industry? From Voice to data

Social trends

Mobile communication everywhere

Richer communication

Traffic

ARPU

Cost

Economic trends Price erosion

New service Strategy

Technological trends Penetration of Internet

Broadband access Requirements for higher profitabilityin the world of communication

• Cheap voice for the mass market

• Multimedia applications as a commodity, and mobility

• High bandwidth and capacity at low cost

The current trends put operator demands in conflict with subscriber requirements: Profitability vs. The market wants ‘more for less’


Content

• Service trends

• End-user insights

• Broadband service strategy development

• Broadband service examples & success stories

• Broadband Solutions & Evolution

• Summary


Worldwide Service Provider Revenues (bn €) CAGR 2007-10

Broadband data is the growth segment in the telecommunications market

-1,1%

3,1%

-11,1%

14,9%

18,6%

10,1%

Mobile Data

Fixed DSL+Internet

Fixed Data IP/Enet

Fixed Data Legacy

Mobile Telephony

Fixed Telephony

Source: Nokia/Nokia Siemens Networks July 2007, Yankee Group Fixed Revenue

352 343 340 336

436 452 468 482 495

31 38 44 50 56

85107

130154 178

348

2844 40 35 31

11810979 95

126

2006 2007 2008 2009 2010

1.0201.080 1.130

1.180 1.230

Broad-band


Mobile internet access is taking off - Worldwide 3G Penetration is hitting 15%

3G relates to WCDMA and CDMA2000 1xEV-DOSource: Strategy Analytics 2007

0%

10%

20%

30%

40%

50%

60%

70%

0 2 4 6 8 10 12 14 16 18 20 22

Quarters after Launch

Japan

Korea

Italy

UK

France

Australia

Portugal

US

3G Subscriber Market Share


Broadband enables VoIP

Services become network independent

time

PSTN

PLMN

Data and IP

broad-band

broad-band

fixednetworks

mobilenetworks

VoIP

WLANdeviceFMC

mobiledevices(device FMC)

VoIP

traffic

WLAN unwires VoIPMobile devices support VoIP over WLANand affect mobile networks… and finally mobile broadband support VoIP as wellVoIP is the first service to become network independent


NTT Corp 55 5)NTT Corp 55 5)

Vodafone 192Vodafone 192

China Mobile 296China Mobile 296

T-Com 50 5)T-Com 50 5)

Verizon 53 4)Verizon 53 4)

AT&T 76 4)AT&T 76 4)

China Netcom 127 4)China Netcom 127 4)

Top 5 fixed operators (# subscribers)

Top 5 mobile operators (# subscribers) 5)

Top 5 internet portals (# IM and VoIP subscribers)

China Unicom 163China Unicom 163

Telefonica Móviles 118Telefonica Móviles 118

T-Mobile 92T-Mobile 92

Source: Nielsen/Netratings 03/06, Nokia Siemens Networks 2007

Benchmark of active user bases (subscribers in million)

4) Status: 31.12.05, source: company pages5) Status: Q3/2006, source: company pages

AOL 533)

eBay/Skype 212+1361)

Google 4672)

1) Members + VoIP users, 10/062) Site users, 10/063) Active IM users, 03/06

MSN 273)

Yahoo 223)

Major internet portals offer VoIP to their large active user base, threatening traditional telcos


Market boundaries are diminishing – different players are increasing their addressable market

• Fixed and mobile Broadband Internet

• Bundling with VoIP and home multimedia

• Unification of Customer Relationship Management

• Mobile only broadband on the move and at home

• Hybrid strategy with additional fixed broadband offer

• PSTN substitution with home zone or VoIP on top of DSL

• MVNO launch

• Fixed broadband with VoIP on top as complementary voice product

• IPTV based home multimedia

Multi-play providers are often only virtually integrated, owning no or just one network, and offering services on the other side by utilizing others’ wholesale capacity.

MobileVoice

Fixed Voice

Broadband Internet

TV

Expansion towards Quadruple-Play Offers

Hybrid provider

Fixed provider

Mobile provider

ISP • MVNO launch

• Fixed boadband Internet with voice flat rate on top

• Own community setup

Typical strategies


Content

• Service trends





• Summary


The next step for applications is going mobile

Mobile portals Mobile broadbandContent• Self-created• Online

distribution

Information• Search, maps• Creation • Publishing

Commerce• Online commerce of

physical and digital goodsWAPEDIA

Work• Mobile

push e-mail

Virtual environments

•Gaming•Dating•Etc…

Communities• Contact networks• Blogs• Recommending,

tagging, swapping content


Large user segments change from being a passive consumer to an actively participating “prosumer“

» Web2.0 is deeply collaborative

» Intensive communication over various channels

» Media discovery

» Search and social interaction are replacing media company control

» Terms of consumption

» Consumers can time-shift, place-shift, and device-shift content

» User-generated and selected content

» Value of blogs, wikis, video clips and podcasts etc) increases by tags and comments of others

The users become active part of the Web2.0


User loyalty is strongly decreasing

%

Likelihood of changing operator/ provider within next three months

3 2 2 4 194 2

7 44 3

34

4

65

65

9109

1212 13

14

1933 37

42

35 41 44

33

44 43

2838

35 3225

<1

2

1 21 3 21

Mrz 04 Sep 04 Mrz 05 Okt 05 Mai 06 Okt 06 Jul 07

Certain not to change

Very unlikely to change

Fairly unlikely to change

Fairly likely to change

Very likely to change

Certain to change

Don't know

Base: All main mobile phone users


Data service quality, service portfolio and service bundles are major sources of subscriber dissatisfaction

%

SatisfactionTop 2 boxes (4-5)

%

70

74

71

65

60

57

55

55

53

49

40

Base: All main mobile phone users

Overall satisfaction

Voice/ reception quality

Network coverage

Brand/ image of network operator

Handset offerings

Tariff structure and bundle offerings

Customer care/ after sales service

Service offerings

Call cost

Quality of data service (including speed)

Data cost

Satisfaction level with current mobile operator overall and with respective aspects

N=603

31

33

33

31

28

26

26

23

22

21

17

39

41

38

34

32

31

29

32

31

28

22

21

17

17

27

22

25

23

27

29

25

26

5

4

6

2

5

6

9

5

10

5

9

1

4

1

4

1

3

3

5

11

8

9

11

3

19

21

3

1

2

3

2

1

4

5 - Very satisfied 4 3 2 1 - Not satisfied at all Don’t know/ refused


Top 3 most influential factors for using broadband content services

Pricing of services

Ease of access

Speed of downloading

Quality of image and sound

Speed of browsing

Up-to-date service content

Popularity of services

Network quality or reception

Variety of content service category/ topics

Knowledge of the benefits/ information of the service

Speed of video/ audio streaming

Variety of information within content service category

Word-of-mouth of services

Ability to download to phone and PC at same time/ cost Base: All who have ever used any content service (184)

%

Prompted – Top mentions

User experience in terms of simplicity, quality, speed and ubiquitous availability is key

31

26

25

21

15

15

15

9

7

4

3

2

66

45


Content

• Service trends





• Summary


The user‘s „why, where and how“ questions have to be answered convincingly

Staying connected with peers and personal content

Best available quality and speed on most appropriate device

Convenient usage avoiding cognitive effort

Premium interactive multimedia services• Enhanced Web2.0• Premium VoIP• Converged IPTV

Ubiquitous high speed access• Always best connected - wireless and wireline• Bandwidth evolution from xDSL towards xPON• Bandwidth evolution from HSPA towards LTE & WiMAX

Access independent service availability• Common access method and feature set• Call continuity between stationary and on the move

User desired benefits Key success factors for provider differentiation

„Why should I use it?“

„How complicated is it?“

„Where can I use it?“


Providers competitive advantage – providing premium services ubiquitously and simply

Acc

ess

inde

pend

ent

serv

ice

avai

labi

lity

Prem

ium interactive

multim

edia services

Ubiquitous high speed access

„Why should I use it?“„H

ow c

ompl

icat

ed is

it?“

„How fast is it? Where can I use it?“

How to gain competitive advantages?

Multi-play


Different broadband use cases have to be covered to maximize share on subsriber‘s wallet

Mobile TV

Stationary Internet(incl. basic VoIP)

IPTV home infotainment

• Web2.0 communities• Premium VoIP• Premium content

Inner multiplay area - Differentiation & Up Sell

Broadband ARPU estimate for active users of the service• Average Western Europe values • Only direct revenues, no advertising considered

Internet

At home / office

TV

On the move

Mobile Internet

8€ 2€

40€

20€

10€

Broadband multiplay arena


Content

• Service trends





• Summary


Quadruple play packaging is a megatrend in the market

Source: DTAG, 2006

Source: BT, 2005

Source: Wanadoo, 2006

Source: Cascade- A PCCW company @ NGN Asia, 2006


Content

• Service trends





• Summary


Price per Mbyte has to be reduced to remain profitable

Source: Light Reading (adapted)

Voice dominated

Data dominated

Traffic volume

Revenue

Time

Network cost (€/bit)

Trafficvolume


Availability of access highways Innovating wired and wireless access technologies and standards

GERAN evolution / HSPA & LTE Towards cost efficient high speed mobile access

Radio technologies for IMT-Advanced

Increased spectral efficiency, link capacity and coverage

DSL and fiber evolution Towards cost efficient high speed fixed access

ISDN

HDSL

SDSL

G.SDSL

ADSLADSL2

ADSL2+

VDSL

VDSL2

GSM / GERAN

UMTS / HSPA

WLAN / WiMAX

NGMN

GSM / GERAN

UMTS / HSPA

WLAN / WiMAX

NGMN


Availability of access highways… in terms of bit rate, coverage, quality, security

• DSL is the benchmark for end-user experience today

• Requirements on network set by

• Innovative services with high volume traffic (e.g. IP TV)

• Interactive Web2.0 based applications

• Increase bitrates on copper cables utilizing the existing infrastructure

• Improve fiber optics to maximize performance-to-cost-ratio

• Drive radio access evolution addressing performance and cost challenges

• Build-up powerful and flexible backbones for high-volume traffic at high quality

1990 Time1995 2000 2005 2010

100k

1M

100M

1G

10G

10M

GSM 9,6 Kbps

ISDN-BRI2x64+16 Kbps

ADSL3-8 Mbps

Cable40-50 Mbps

GPRS 40-75 Kbps

EDGE 220-384 Kbps

WCDMA 2 Mbit/s

HSDPA 10 Mbps

Fixed Access

Mobile Access

VDSL50 Mbps

FTTH155 Mbps

LTE 100 Mbit/s

4G 1 Gbit/s

Bandwidth (bps)[peak user data rates]


Content

• Service trends





• Summary


Premium interactiveservices • Premium VoIP to address

the Web2.0 paradigm shift

• IPTV with personalized and interactive content

• Strong user, ARPU and loyalty growth

Ubiquitous high speedaccess• Fast rollout of sufficient

DL and UL capacity needed: VDSL/fiber and HSPA/WiMAX)

• Hybrid fixed and mobile strategy for maximum revenues

Access independentservice availability• User is always best

connected

• No complexity challenges for the user

• Service continuity and simple access to personal service suite

Broadband everywhere….

Enforced competition is re-defining the market• Market boundaries are diminishing, Major internet players are threatening telcos• With broadband access, services become network independent.

User loyalty is strongly decreasing• Data service quality, service portfolio and bundles are major sources of dissatisfaction • Speed, ubiquitous availability, quality of content presentation and simplicity is key


Thank you !

1© nokia siemens networks broadband without boundaries / ghw / september 23rd, 2008 broadband with...

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