canto 2013 keynote: monetizing lte: how lte can help operators become more profitable

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Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant, Latin America & Caribbean

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Presentated at CANTO 2013, July 17, 2013 José Villalobos Senior Consultant Region Latin America and the Caribbean

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Page 1: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

Monetizing LTE How LTE can help operators become more profitable

José Villalobos Senior Consultant, Latin America & Caribbean

Page 2: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

Public | © Ericsson AB 2013

LTE Growth and Drivers

Page 3: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

Public | © Ericsson AB 2013

fastest developing Technology

Source: GSA, May 2013

146

46162

175

73

2013

+30

+102

+100

+14

248

2010 2012 2011 2009

+132%

Commercial LTE network launches - cumulative totals Forecasted

› Latin America LTE

subscriptions (Pop Coverage) › 2012: 200k (5%) › 2018: 95M (over 50%)

› Early adopters:

› Puerto Rico › Dominican Republic › Antigua and Barbuda

Page 4: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

Public | © Ericsson AB 2013

better devices and cool apps

Other Encrypted Software download & update

Social Networking

Web browsing Audio Video File Sharing

X2 MOBILE DATA TRAFFIC DOUBLED BETWEEN Q4 2011 AND Q4 2012

Source: Ericsson Source: Ericsson

Mobile data traffic breakdown, 2012

Page 5: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

Public | © Ericsson AB 2013

Exploring the Drivers

Source: Infonetics Research, LTE Deployment Strategies: Global Service ( n = 19, July 2012)

Source: Informa Telecoms & Media. 52 operators with live LTE networks globally (as at April 24, 2012)

5%

Offer LTE as fixed broadband service 16%

Lack of spectrum 26%

Denser network coverage 32%

Natural evolution of existing generation to the next one

11% Ability to run single network for voice and data

Opportunity to build a more efficient mobile packet network 37%

Current data network exhaustion 58%

Higher peakrate 58%

Increase ARPU 63%

Lower Latency 68%

Better spectral efficiency 79%

7%

31%

35%

24%

3%

Create new revenue streams based on LTE

Other

Current networks do not offer sufficient capacity To enter mobile data market for the first time

Build brand value through technology leadership

What is your primary motivation for deploying LTE?

Percent of respondents Rating 6 or 7

Page 6: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

HOW IS LTE impacting Profitability??

1 LTE launched (LGU+ & SKT)

~11% LTE penetration

~28% LTE penetration

2

3

SKT LGU+ KT KOSPI

Page 7: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

Public | © Ericsson AB 2013

107 Million (>1M TDD)

LTE SUBSCRIPTIONS May 2013

Source: WCIS

2 Billion

LTE SUBSCRIPTIONS END 2018

Source: Ericsson

Dec 2010

34%

SK

T

NTT

LG U

+

KT

Spr

int

32%

Met

roP

CS

53% 29%

AT&

T

13%

Sof

tban

k

11%

Tels

tra

5%

10%

19%

22%

Veriz

on

LTE Subs (M) Non-LTE Subs (M)

Dec 2010

Sep 2011

Jul 2011

Jul 2012

Jan 2012

Sep 2011

Sep 2010

Sept 2011

Feb 2012

USA

54

Korea

22

Japan

16

Australia

5

Rest of World

10

Page 8: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

Public | © Ericsson AB 2013

ARPU Uplift due to LTE

-15

-10

-5

0

5

10

15

20

3Q11 4Q11 2Q11 1Q11 1Q12 2Q12 3Q12 4Q12 1Q13

SKT KT LGU+

3Q11

3Q11

1Q12

Service ARPU, % Change YoY

First LTE Smartphone

Source: Operator Quarterly Reports

5041

34 +21%

+48%

LTE Smartphone Blended ARPU

ARPU 4Q12 (KRW ´000)

Source: SKT IR 4Q.2012

› 8X (SP) › 1.5X (SP)

› 2-5X (LTE users)

Source: Disclose by Operators

Page 9: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

Public | © Ericsson AB 2013

LTE DATA Monetization Data Allowance

3G LTE

No Change

550MB

1.1GB

2GB

5GB

9GB

13GB

@ Launch Q2 2012 Removed unlimited plan

Higher Tariff Plan with

understanding of 3G ave

data.mth/subs + trends

Increase the bucket size

SKT Smartphone Plan (3G vs LTE)

Monthly (USD) Data Allowance

3G LTE 3G LTE

All-in-one 34 vs LTE34 30 30 100MB 350MB

All-in-one 44 vs LTE42 38 37 500MB 700MB

All-in-one 54 vs LTE52 47 45 Unlimited 1.2GB

All-in-one 64 vs LTE62 56 54 Unlimited 3GB

All-in-one 79 vs LTE72 69 63 Unlimited 5GB

All-in-one 94 vs LTE85 82 74 Unlimited 7GB

LTE based residential Broadband

Caribbean Residential Internet

Source: Pyramid Research, 2012 Source: Disclose by Operators

Source: Operator Web Page

9%9%

51%

1%

27%

3%

Cable FTTX Narrowband xDSL FWA WiMAX

Page 10: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

Public | © Ericsson AB 2013

customer loyalty

Drivers of loyalty to operator brand (NPS)

LTE

LTE

Source: LGU+ Analysis

Page 11: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

Aiming for LTE monetization

Spectrum and Network

Branding and

Marketing

Service and Device

Portfolio

Positioning and Pricing

Strategy

Page 12: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

Public | © Ericsson AB 2013

LTE ecosystem

316 Smartphones Source: GSA, Jul, 2013

USA US700 AWS

Mexico AWS

Colombia 2600

Uruguay AWS

Paraguay AWS/1900

Brazil 2500/2600

Chile 2600

Europe 2600 1800

Puerto Rico US700/2100

Antigua & Barbuda US700

Dominican Rep. 1800/1900

Page 13: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

Public | © Ericsson AB 2013

GSM

Macro

LTE WIFI

850 900

1800 1900

AWS

2100 2600

700

Indoor

Micro Pico

HSPA

Data Voice

CDMA

Application coverage concept

Page 14: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

Public | © Ericsson AB 2013

Boosting the need for LTE

Source: Wireless Intelligence, September 2012

Page 15: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

Public | © Ericsson AB 2013

positioning and Pricing

PREMIUM PRICING

MBB EXTENSION

BRAND REFRESH

2

14

3

MBB Ext Brand Refresh

1

LTE Smartphone Data Plan (Top 20 LTE Subs Operators)

Speed-Consumption Hybrid Consumption-based

Unlimited

Source: Operators Web Pages, Jul 2013

Source: Wireless Intelligence, Analysis Mason

Dongle tariff › 49% speed-based (Aug 2012) › Western Europe (2Q12 to 4Q12)

› 33% operators merged 3G/LTE › Price decreased by 6%

Page 16: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

Public | © Ericsson AB 2013

CLEAR value benefits

User z (Germany)

Source: Speedtest.net

Page 17: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

Public | © Ericsson AB 2013

LTE Monetization LTE Growth and Drivers - Fastest Adoption

- MBB Demand

- Video Apps

- Revenues Brand Spectrum Performance

How is LTE Impacting profitability? - Subs

- ARPU

- Better Pricing

- DSL-liked

- Customer loyalty

Aiming for LTE monetization - Ecosystem

- App Coverage

- Smartphones

- Clear Value Proposition

- Price levels

- Transparency

Page 18: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable

Public | © Ericsson AB 2013

JOIN THE CONVERSATION

EricssonCaribbean

EricssonCarib

Ericsson

Ericsson.com/jm

Page 19: CANTO 2013 Keynote: Monetizing LTE: How LTE can help operators become more profitable