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    Wireless Intelligence 2012

    Wireless Intelligence

    Analysis: Mobile World Congress 2012 wrap-upMarch 2012

    The Wireless Intelligence team was in Barcelona toreport on all the key developments that will shape

    the global mobile industry in the year ahead.

    Our analysis is organised into three key areas: devices,services and networks.

    Devices

    Smartphones

    LTE devicesTablets

    Networks

    LTE

    Network evolutionEmerging markets

    Services

    M2M

    HTML5NFC

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    Wireless Intelligence 2012 2

    Devices: Competition hots up in high-end smartphonesWireless Intelligence: Mobile World Congress 2012 wrap-up

    This years Congress saw a glut o new smartphones announced by a range ovendors. While there was no single stand-out device, quad-core processors werevery much the eature o the day, while Nokia picked up the Best In-Show award

    or its 808 PureView eaturing a 41MP camera - which looks like the last hurrahor the Symbian OS platorm. With such erce competition, it is incumbent onvendors to innovate as yesterdays agship switly loses its lustre.

    Key points

    Quad-core processors were the must-have eatures or premium devices,being included in devices rom HTC, Huawei, LG Electronics and ZTE

    Nokia broadened its Windows Phone portolio with the launch o the mid-tier Lumia 610 and international availability o the premium Lumia 900

    Huawei and ZTE have set aggressive smartphone targets, with the ormertargeting 60 million shipments in 2012, and the latter looking or a top-three

    handset market position by 2015 HTC is looking to regain smartphone momentum

    with its One portolio

    Sony unveiled its XPeria P and XPeria U which,alongside its previously-announced XPeria S, ormpart o the rms XPeria NXT series

    Sony announced that it will make large marketingand advertising investments to boost sales andthat it will engage with customers in new andinnovative ways

    Nokia Lumia 610

    Viewpoint: Dierent challenges or dierent vendors

    This years event was especially signicant or HTC, which is in the midst o a toughperiod as its device line ages. With its One portolio, the manuacturer is looking

    to oer the best all-round smartphone experience, with improved cameras andBeats Audio technology helping it to this end.With more than 140 operators set to oerthe device, the company is well positionedto bolster its agging premium smartphonecredentials.

    Chinese vendors Huawei and ZTE bothhave several hurdles to overcome, but theireorts at Congress show they are working toaddress these. In both cases, the companies

    lack the brand presence o their rivals, withHuawei stating in a press event that its way around this is by oeringthe highest-perormance devices. The pair are also seen as makers o entry-level smartphones the adoption o quad-core processors and other high-endtechnology is a denite eort to counter this perception.

    Just over 12 months on rom announcing its partnership with Microsot, Nokiaslatest device announcements show that not only is it putting a lot o eort intogenerating momentum or its Windows Phone range, but that it is also working tooer products using this platorm at a range o price points. With its Symbian OSsales dropping o dramatically, it will need to ramp up Windows Phone volumes

    switly to counter this, and a broad product range is clearly an eective tool to thisend. Four years in the making, the PureView is likely to be its last Symbian phoneo any signicance.

    For those urther down the tree, lie is not getting any easier. It is early daysor Sonys guidance o the ormer Sony Ericsson, but the company will need todo something impressive sooner, rather than later, i it is to grow beyond thecompanys current position in the eature phone-replacement market. And whileMotorola ew under the radar at the show, all eyes will be on its activities once itis ully ensconced into the Google old.

    Huawe

    iA

    scen

    dD

    HTC One

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    Wireless Intelligence 2012 3

    Devices: LTE smartphones high on the agendaWireless Intelligence: Mobile World Congress 2012 wrap-up

    This years event saw most o the Asian handset manuacturers aggressivelypromoting LTE devices while the likes o Nokia, Motorola - and even Samsung -were displaying very ew LTE-enabled devices. LTE was the key theme o LGs standwith its large LTE device portolio being demoed and a recurrent banner claimingthat LTE, its always LG and that LG holds the largest [number o] essential LTEpatents. Similarly, both ZTE and Huawei were displaying a large number o LTEdevices while Qualcomm and Ericsson were demoing Voice over LTE (VoLTE) callswith prototype smartphones.

    Key points

    Most LTE smartphones commercially available currently support CircuitSwitch Fall Back (CSFB)

    VoLTE will be introduced to consumers in late 2012 and large scaledeployments o VoLTE with Single Radio Voice Call

    Continuity (SRVCC) will start in 2013 China Mobile President, Li Yue, stressed his support

    or handset vendors developing convergeddevices to promote the wide scale uptake o

    TDD/FDD LTE

    During the Global TD-LTE Initiative (GTI)summit, Qualcomm and Hi Siliconannounced multimode device chipsetssupporting 2G, 3G and TDD/FDD LTE

    Samsung said that it has sold 1.7 millionLTE devices in Q4 2011 and has a 41%

    market share o this segment, making it the LTE marketleader globally

    Wireless Intelligence predicts that global LTE connections willgrow rom 10 million in 2011 to 500 million in 2016

    Wireless Intelligence estimates that handsets will account or20% o the global LTE devices market in 2013, 33% in 2014 and50% in 2015

    Viewpoint: First VoLTE devices signal long road ahead or LTE

    VoLTE smartphones were absent at the Consumer Electronics Show last Januaryand at Congress last week. Most LTE smartphones being displayed during Congress

    were supporting CSFB which relies on 2G/3G legacy networks or voice calls anddata trac outside o LTE coverage zones.

    Last month, Qualcomm and Ericsson announced that they have made the worldsrst voice call handover between LTE and WCDMA networks. At Congress, the pairwere demoing VoLTE calls via SRVCC with prototype smartphones and explainingthat rom a device and chipset pricing point o view, VoLTE does not add anyincremental cost compared to LTE (CSFB) smartphones. Yet, commercial scale inVoLTE is not expected until 2014.

    The availability o LTE smartphones is limited by the lack o LTE spectrum

    harmonisation. Most vendors have to deploy LTE devices on a pergeography and per operator basis. As an illustration, AT&T in theUS has rolled out LTE on the 700 MHz band and its LTE handsetportolio includes the HTC Vivid, HTC Titan II, LGE Nitro HD, NokiaLumia 900, Pantech Burst, Pantech Element, Samsung Galaxy SIISkyrocket, Samsung Galaxy Note, Samsung Exhilarate and SonysXperia ion.

    Most LTE smartphones showcased during the week were tri-band LTE devices supporting 800 MHz, 1800 MHz and 2600 MHzrequency bands such as the LG Optimus Vu and Optimus LTE,

    Samsung Galaxy S II LTE and Galaxy Tab 8.9 LTE. In contrast, HuaweisLTE smartphone portolio Ascend P1 LTE and Ascend D LTE isquad-band, supporting 800 MHz, 1800 MHz, 2600 MHz and 2300 MHz bands.

    ZTE was the only vendor to display a multimode LTE/CDMA smartphone with itsN910, which supports FDD LTE and EV-DO. TD-LTE devices were also absent romthe congress showrooms as the Global TD-LTE Initiative (GTI) summit called orvendors to develop converged FDD/LDD LTE devices.

    HuaweiAscendP1

    ZTEN91

    0

    Sam

    sungGalaxySII

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    Wireless Intelligence 2012 4

    Devices: Ice Cream Sandwich ushers in a new era o iPad rivalsWireless Intelligence: Mobile World Congress 2012 wrap-up

    With the imminent launch o the new iPad, rival tablet vendors used Congress totake the wraps o a slew o new tablets that they hope will enable them to eat intoApples dominant market share. The vast majority will run Android 4.0 (Ice CreamSandwich), the version o the Google platorm designed to unite the smartphoneand tablet orm actors. The new devices on show came with a variety o screensizes, peripherals and in some cases gimmicks. As in the smartphone space, therst tablets powered by quad-core processors were also unveiled, oering PC-likeperormance.

    Key points

    Samsung launched a 10.1-inch version o its Note tablet, a ollow up to therst (5.3-inch) Note unveiled at last years event. The Android 4.0 poweredtablet comes with Samsungs S-pen technology

    ASUS announced a number o new Transormer Pads as well as its PadFone

    hybrid, a 4.3-inch Android smartphone that can be plugged into the PadFonestation to become a tablet, while a keyboard dock can be added to create anetbook

    Huawei launched the MediaPad10 FHD 10-inch tablet boasting a 1.5GHzquad-core processor. Available rom Q2, this is the ourth tablet rom theChinese vendor

    ZTE launched our tablets: the PF100 and T98 both sport the Nvidia Tegra 31.5GHz quad-core chip and boast 10.1-inch and 7-inch screens, respectively.

    The low-end 10.1-inch V9S is an Android 3.2 tablet with aQualcomm dual-core 1.2GHz processor,while the Android 4.0-based 10.1-inch

    V96 runs 1.7GHz Qualcomm dual core Toshiba launched the 10.1-inch Excite

    X10 LE, which it claims is the thinnesttablet in the market at just 0.3-inches(7.7 mm) thick

    Other highlights include awaterproo tablet rom Fujitsu(Arrows) and the 5-inch Optimus Vusmartphone/tablet hybrid rom LG

    Viewpoint: Asian vendors raise the stakes with rst quad-core tablets

    The array o new Android-powered tablets on show represents resh momentumbehind Android as a tablet platorm, moving on rom the oten disappointing

    early models.

    The 10.1-inch screen size is emerging as standard (slightly larger than the 9.7-inchiPad), while a 7-inch display is emerging as the dominant display or smartphone/tablet hybrids.

    Samsung has blurred the distinction between its Note and Tab lines, launchinga ull size (10.1-inch) Note and previously announcing a 7-inch Galaxy Tab. In theabsence o the anticipated Galaxy S III smartphone, the 10.1-inch Note was theSouth Korea vendors most signicant product launch o the week.

    Like its new Ascend D smartphone, Huaweis MediaPad10 FHD runs the Chinesevendors own quad-core chipset, though rival quad-core devices (eg: ZTE) haveopted or Nvidias Tegra 3. It remains to be seen how the Asian vendors will pricetheir high-end devices but they are likely to be highly disruptive.

    No major updates to the Motorola XOOM were announced, due (presumably)to Googles on-going acquisition o Motorola Mobility. Research In Motion wassimilarly quiet on the tablets ront, though the rm released new sotware (2.0) orits PlayBook device a week prior to the event, adding several much-needed neweatures, including native email.

    Despite the product launches, there were ew tablet-relatedapps, services or content announcements, an area that hasunderpinned the recent success o the Amazon Kindle Fire.Instead, Android vendors are looking at peripherals anddocking options (eg: ASUS) as a possible dierentiator inan increasingly crowded market.

    ASUS PadFone

    Sam

    sungGalaxyNote10.1

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    Wireless Intelligence 2012 5

    Services: Connectivity the key to uture transport and urbanisationWireless Intelligence: Mobile World Congress 2012 wrap-up

    The unusual presence o motor companies during Congress was evidence o arapidly changing mobile ecosystem. Bill Ford Jr started his Monday keynote bypainting the risks that a global gridlock would have on our uture i the motor andmobile industries do not collaborate. This gridlock phenomenon is exacerbatedby growing population and urbanisation rates and Fords view was later echoedby Google and Ericsson in their respective keynotes. By mid-century, the urbantransportation landscape will have radically changed and mobile networks haveto rapidly adapt to a ast approaching M2M reality.

    Key points

    Global vehicle population: 1 billion cars today on the road worldwide, anumber predicted to grow to 4 billion by 2050

    Ford is launching its SYNC voice-activated in-car mobile connectivity systemin Europe with its new B-MAX amily car (Bluetooth, iPod and USB connection

    and emergency assistance) Ford detailed its Blueprint or mobility programme which communicates

    real-time data using mobile networks and tools such as 3D mapping, geo-localisation and web-based services to optimise transportation

    BMW ConnectedDrive service is available in nine countries and will bedeployed in 38 countries by 2015

    BMW is to include in-car services such as advanced internet browser,personal entertainment solutions, server-based hybrid oboard-navigation,e-navigation, eatures and message dictation

    Ericsson presented the Copenhagen Wheel, a connected bicycle developedby MIT Senseable City Lab which provides eedback on pollution, traccongestion and road conditions in real-time

    Viewpoint: Motor and mobile rms speed up M2M collaboration

    According to Bill Ford Jr, a global gridlock impliesnever ending road trac congestion and increased

    pollution. In the decade to come, 75% o the worldpopulation is expected to live in large cities and 50o these cities will have more than ten million people.With our billion cars expected on the road in 2050, Ford urther stated that i welook at the numbers and at the state o our global transportation inrastructure,it is not dicult to see a uture where the ow o commerce and even healthcareand ood delivery are compromised. I that happens, I believe that global gridlockbecomes a human rights issue.

    Hans Vestberg CEO o Ericsson mentioned similar urbanisation challenges,particularly those that would aect the development o heterogeneous networks.

    Having already surpassed the point where the majority o the population lives inurban areas, Ericsson urther estimated that by 2016, 30% o the population willlive on 1% o the surace o the Earth and generate 60% o all data trac.

    Both Ford and Ericsson highlighted the large potential or M2M and an urgent needor network optimisation. Ford called or the need to optimise the transportationecosystem through a single network that uses real-time data to link togetherpublic and personal transportation (pedestrian walkways, bicycles, buses, trains,planes, automobiles) to save time, conserve resources and lower CO

    2emissions.

    Ford also acknowledged that motor companies have historically been slow atimplementing in-car mobile innovation and that they are now ready to speed-up

    such processes to adapt to a ast-moving mobile industry.

    A week ater the Congress, Vodaone and BMW announcedthat BMW ConnectedDrive cars in Germany will be tted withVodaone SIM cards to enhance saety, trac avoidance andmotoring eciency. From 2015 onwards, all new cars will betted with latest mobile data connections and SIM cards thatautomatically call the emergency services in the event o anaccident an innovation led by the European Union eCall initiative.3rd wave1st wave

    Networked Consumer

    Electronics

    2nd wave

    Networked Verticals

    2.0 Industries

    Networked Everything

    Networked Society

    Source: Ericsson

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    Wireless Intelligence 2012 6

    Services: Recalibrating the mobile apps ecosystemWireless Intelligence: Mobile World Congress 2012 wrap-up

    While HTML5 has been a hot topic in the apps industry or some time, thetechnology came into the spotlight at Congress, thanks to high-prole supportrom Telenica Digital and Facebook. An apps and content ecosystem poweredby HTML5 will provide a more open alternative to those controlled by companiessuch as Apple, Google and Microsot, with collaboration being the word o theday as the technology standards evolve.

    Key points

    Telenica announced a partnership with Mozilla to create a handsetplatorm built on web technologies, enabling the creation o lower-costdevices that still oer high perormance

    Deutsche Telekoms Innovation Labs is also working with Mozilla, withdedicated development resources assigned to the project, and DTevaluating urther steps based on the work

    Facebook pledged to work with the community, including vendors, operatorsand other partners, to drive the evolution o web technologies. Its ocus is onstandardisation and payment mechanisms

    Viewpoint: HTML5 comes o age - nearly

    Currently, the industry is dominated by app silos or smartphone platormsincluding iOS, Android and Windows Phone, giving signicant power to the

    companies controlling these platorms Apple, Google and Microsot, respectively.

    As much as HTML5 provides a tool or the creation o a standards-based apps andcontent ecosystem, perhaps more signicantly it will provide a way to wrest backsome control. With Apple, Google and Microsot (to varying degrees) controllingthe channel to customers, app approvals process, and monetisation options, itis easy to see why other participants in the ecosystem notably operators anddevelopers may be seeking an alternative.

    Late last year, it was reported that Facebook was planning its own HTML5-basedapp platorm, as a way to extend its existing app economy to mobile. At this point,

    it was noted that with Facebooks impressive reach in mobile 425 million mobileusers and the deep engagement o its customers, the company could easilyprove to be a disruptive orce.

    In his keynote, Brett Taylor, CTO o Facebook, took an altogether more collaborativestance. By working through standards group W3C, and by partnering with devicevendors and operators, the company is clearly looking to give the message that itcomes in peace, with a ull mobile internet, open to all, to the greater good.

    Teleonicas work with Mozilla takes this even urther, to the point where the wholedevice platorm is based on web technologies. Mozilla provides an interesting

    partner in this project: the companys web credentials are sound, but it hasproved less o a threat than other internet players such as Google or Microsot making it the ideal ally. While the embracing o standards is also a positive, it willbe important or W3C to be able to keep pace with the ast-moving industries inwhich it is working device capabilities increase at an impressive pace, with appdevelopers also innovating in order to dierentiate.

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    Wireless Intelligence 2012 7

    Services: NFC shows steady progress, but no big breakthroughWireless Intelligence: Mobile World Congress 2012 wrap-up

    Mobile payments were once again a key theme at Congress but the headlineswere made by on-going innovations in this area in the developed world (withplenty o announcements rom the likes o Western Union) rather than in NFC-based payments. NFC has already established itsel as the de acto standard orcontactless mobile transactions but widespread adoption o services remainshamstrung by limited handset and merchant support. Operator momentumbehind SIM-based NFC was typied by major announcements rom Vodaone andthe ISIS US JV but the operator-led approach now aces major competition romthe likes o Google Wallet.

    Key points

    Vodaone and Visa announced what they claim is the worlds largest mobilepayments partnership to develop a mobile wallet service that will launchinitially in Germany, Netherlands, Spain, Turkey and the US. In developedmarkets, purchases will be able to be made using NFC-enabled smartphonesequipped with Visa payWaves technology

    ISIS, the US operator m-payments JV, announced deals with card issuersChase, Capital One and Barclaycard to enable the banks customers to loadmoney into the ISIS mobile wallet via their credit, debit or prepaid cards

    Smartcard-maker Gemalto struck a deal with Sony to support the Japaneserms proprietary (but widely used in Japan) FeliCa contactless technology inits NFC-enabled SIMs. Under the agreement, Gemalto will incorporate FeliCainto its NFC SIM product line-up, beginning this year

    Google announced that it would launch the rst non-Samsunghandset carrying its NFC-based mobile wallet very soon.

    The LG Viper will be the third deviceto support the service ater theSamsung Nexus S and Galaxy Nexus

    A study by Booz & Company(commissioned by the GSMA)showed the service value per walletwas US$114 in a ragmented marketagainst US$128 in a collaborativeset-up

    Viewpoint: Vodaone rollout the highlight in a muted week or NFC

    Vodaones announcement that it will rollout NFC-based payments in conjunctionwith Visa in ve markets later this year is probably the most signicant

    announcement to date in the NFC space by the UK-based operator giant, whichuntil now had been quiet on this ront (certainly compared to European rivals suchas Orange). Successul early deployments could see the scheme extended acrossVodaones vast global ootprint, including in India.

    Vodaone has also hinted that it is looking to extend the platorm, noting thatit is inviting banks, retailers, transport and utility companies, event organisers,smartphone application developers and advertisers to host a broad range oservices within its mobile wallet.

    In the US, the ISIS joint venture (AT&T, Verizon, T-Mobile) showed progress by

    signing up a host o major US card issuers having already signed up the majorcard marques (Visa, MasterCard, Amex and Discover), and is on track to launch inUtah and Texas this summer.

    Despite being beaten to launch by Google Wallet, ISIS can now claim to have aricher ecosystem in place; the Google service is supported by just one operator(Sprint), one issuer (Citi), and still has only two (soon to be three) supporteddevices.

    Elsewhere, the deal between Gemalto andSony demonstrates urther alignment

    between NFC and the FeliCa contactlessstandard that is entrenched in Japanbut not used elsewhere. This dealollows on rom the agreementorged late last year by Japaneseoperators NTT Docomo, KDDI, andSotBank to support NFC as theinternational variant o FeliCa.

    LG Viper

    payWave

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    Networks: Asian heavyweights aim or LTE scaleWireless Intelligence: Mobile World Congress 2012 wrap-up

    Aside rom the LTE devices that were on show at Congress, a number o operatorsand vendors detailed their ambitious plans towards the next generationtechnology. China Mobile revealed its TD-LTE network roadmap which will see thedeployment o 200,000 TD-LTE base stations by 2013, while Samsung announcedits target to become a top three LTE network vendor by 2013.

    Key points

    China Mobile said that over 20,000 LTE base stations will be in operation bythe end o this year, growing to 200,000 by 2013

    China Mobile will launch LTE services in Hong Kong this year as an earlyexample o converged FDD/TDD LTE service in the region

    Samsung announced its long-term target to become one o the top threeglobal LTE inrastructure vendors by 2013

    IP Hong, Samsungs VP o Marketing, mentioned that the company has eight

    commercial LTE contracts (all outside o Europe) and that it has deployedtens o thousands o base stations

    A recent Wireless Intelligence study shows that there are just over 50 liveLTE networks across 30 countries at present (covering 5% o the worldpopulation), growing to over 200 networks in more than 70 countries in 2016

    Viewpoint: Diagnosing LTE spectrum

    Spectrum has oten been reerred to as the lieblood o the mobile industryand remains a key enabler or LTE networks and devices. As regulators in most

    developing markets are in the process o allocating spectrum or new LTE networks,there are still many issues acing operators and manuacturers.

    LTE spectrum ragmentation is caused by 38 deployed requency bandcombinations. Such ragmentation has the potential to hinder global LTE roamingi device manuacturers are required to include support or many disparaterequencies in their devices. During a brieng rom the Next Generation MobileNetwork (NGMN) group at the Congress, Yuhong Huang, deputy general managerChina Mobile research institute, said that development o devices that are ableto support these [LTE] requency bands and in addition multiple technologies is aprerequisite or global roaming, but it is a challenge to implement more than ten

    LTE bands in current products.

    The NGMN group mentioned that one o the main issues acing operators was toresolve global roaming by the use o multiband/multimode devices. The grouplaunched its multiband/multimode project which involves the major chipset anddevice vendors so as to enable eective knowledge transer.

    Furthermore, the ITU Secretary-General, Hamadoun Tour, spoke during theCongress to call on governments to nd alternative solutions to allocate spectrum,stating that the traditional spectrum auction approach was ar rom ideal. Dr Tourcalled or governments to lessen the cost burden on mobile operators by reducing

    license ees and taxation, stating that such high costs stie industry growth andhave an adverse impact on economic perormance.

    Meanwhile, an agreement has been reached during the recent WorldRadiocommunication Conerence (WRC-12) to open the 700 MHz band to mobilebroadband services.

    0%

    25%

    50%

    75%

    100%

    GSM/EDGE HSPA LTE

    2010 2016

    Global coverage, % populationSource: Ericsson

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    Networks: Network evolution aims to address data challengesWireless Intelligence: Mobile World Congress 2012 wrap-up

    Ericsson CEO Hans Vestberg used his Wednesday evening keynote to outline hisvision or the connected uture (a networked society), highlighting not only thecurrent demand on inrastructure but also the vastly untapped opportunity inboth the developing world and or non-smartphone users. On next-generationnetworks, Vestberg highlighted that latency should be treated as importantly ascapacity and speed, which would lead to new opportunities, such as real-timeemergency alerts rom connected cars.

    Throughout the week, the same message was heard rom the handset andoperating system vendors (notably Google), M2M players (notably Ford) and theGSMA itsel. The message was one o sheer scale - we may have reached 6 billionconnections today, but the growth certainly isnt slowing.

    Key points

    Reached 6.6 billion connections globally, 85% global coverage by population

    O these, 1.3 billion connections are used via mobile broadband technologies

    Mobile broadband in particular has grown 60% year-on-year

    For every 10% increase in broadband penetration, Ericsson estimates acorresponding 1% increase in GDP

    Data growth a catalystor network investment,particularly in LTE

    Global smartphonepenetration hassurpassed 10%, butEricsson see moreopportunity in theunserved 90%

    Viewpoint: Ericssons strategy remains unchanged, but producing dividends

    In several areas - smartphones, mobile broadband and M2M - Vestberg highlightedthat there was more o an opportunity among the unconnected than those using

    such technologies today. Vestbergs main message - change will never again bethis slow - called attention to the inancy o the industry but also the tremendousrate at which each successive technology is adopted.

    Smartphone usage and M2M were presented as the key examples o theopportunity available to operators, a view mirrored (in separate sessions) byGoogles Eric Schmidt and an operator panel including Bharti Airtel, Telenicaand VimpelCom, highlighting the smartphone opportunity. The challenge orinrastructure vendors, noted Vestberg, was that networks originally built or voicecalls are now ocussed on delivering data. Raw capacity isnt the only concern, butalso density planning in urban areas where small cells or Wi-Fi ofoad make more

    sense. Ericsson stated that in some cases, up to 80% o trac is even indoors.

    Last year, Ericsson expanded into content services in a big way by announcing atie-up with Akamai to support the caching o content within operators networks,thus reducing the time required to deliver (particularly data-hungry) content tosubscribers devices. Vestberg was joined on stage by the digital heads o UniversalMusic and Thomson Reuters to highlight progress in this area, and both reiteratedthat content providers need to work with the digital revolution, not against it - amistake that has cost the music industry dearly over the last decade.

    However, as data-hungry devices and services prolierate, mobile operators at

    congress raised their concerns around the role o over-the-top (OTT) players indata network congestion and investments. Executives o Telenica Latin America,VimpelCom and Bharti Airtel agreed that mobile content should pay its way. SunilMittal, Chairman and MD o Bharti Airtel, stated that i Google, Facebook andothers are not going to pay or [network bandwidth], it will be transerred entirelyonto customers. Mittal urther added that i we have to build the highways, therehas got to be a tax on highways. This debate led to a possibility or operators toimpose interconnection charges on OTT players, lowering operator taris andunding spectrum and network investment.

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    2011 2012 2013 2014 2015 2016

    C el lu la r O ff lo ad

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    Trafficfrom

    mobiledevices(EB/month)

    Mobile device trac 201116Source: Cisco

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    Wireless Intelligence 2012 10

    Networks: Operators in developing economies outline domestic challengesWireless Intelligence: Mobile World Congress 2012 wrap-up

    Operators rom developing economies were well represented at Congress, withseparate sessions on strategy and innovation in these regions identiying somecommon themes. Not least among these was the opportunity or mobile to connectthe ve billion or so people on the planet who have never used the internet, andthe challenge o producing the necessary devices at aordable prices or countrieswith low average national incomes. Mobile CEOs rom Latin America, Russia, Indiaand Arica also shared their opinions on regulation and taxation regimes, over-the-top (OTT) players and mobile money, as well as the most exciting and mostchallenging elements o operating in their home markets.

    Key points

    Lack o xed inrastructure increases the importance o mobile internet access,e.g. in Brazil, 50% o access is via mobile compared to 17% in UK and 15% in US

    Smartphone penetration lower than global average e.g. less than 5% in India

    Large, growing young middle class population in some regions (e.g. 56% inBrazil in 2011, expected to rise to 60% in 2014) will intensiy internet demand

    Governments need to understand scale o capacity required to meet potentialmobile internet demand and provide supportive regulatory rameworks

    Operators must avoid example o developed markets by teaching consumersthat access to the internet cannot be ree, and have dialogue with OTT players

    The key price point required to drive mass smartphone adoption was variouslyidentied as US$150 in China, US$100 in Latin America and US$50 in India

    Viewpoint: Aordable handsets will drive the explosion in mobile internet

    The smartphone revolution will be universal, asserted Google CEO Eric Schmidtin his Tuesday evening keynote, a vision that was endorsed by the various mobile

    and internet provider CEOs representing emerging markets during Congress.However, these companies were also equivocal in their view that this will onlybe achieved i manuacturers are able to produce smartphones at prices that aresuited to the developing world.

    Operators and content providers rom the BRIC nations described at WednesdaysRegional Focus panel how the scarcity o xed internet in their regions had ledto an immense opportunity or mobile internet growth, but in almost all casesthe availability o handsets was the biggest single actor restricting demand. Thatthese countries typically have smartphone penetration below the global average around 10% in Russia and China and considerably lower in India and Arica is

    a clear indication that their inhabitants are unable to aord an average US$500smartphone. Indeed Sunil Mittal, chairman and MD o Bharti in India, said that asmartphone priced as low as US$50 would be required to move orward to thenext business model and the mobile broadband networks would ollow.

    To some extent we are already seeing the smartphone market divide into premiumand low-cost segments, but rom where can we expect a US$50 smartphone toemerge? Perhaps the obvious answer is China, where there are now over 600dierent handset models and yet component suppliers continue to enter themarket and drive prices down. Subsequently white-label Chinese manuacturersare able to produce cheaper and cheaper devices, sacricing margins or volume,

    and leveraging operators brands where they do not have an established brand otheir own.

    However, Schmidt wasnt ound wanting when it came to identiying how hethought the challenge would be met, describing how Google was currentlyworking with partners on smartphones in the US$100 to $150 range - with aneventual goal o a US$70 device that would be achievable within the next coupleo years. Schmidt urther stated that in 12 years, handsets are going to be 20 timesaster, which means phones that cost US$400 now will be available or US$20.Santiago Fernndez Valbuena (Telenica), Jo

    Lunder (VimpelCom) and Sunil Mittal (Bharti Airtel)

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    About Wireless Intelligence

    Wireless Intelligence is the denitive source o mobile operator data, analysis and orecasts, delivering the most accurate and complete set o industry metrics available.

    Relied on by a customer base o over 700 o the worlds mobile operators, device vendors, equipment manuacturers and leading nancial and consultancy rms, the data

    set is the most scrutinised in the industry. With 8 million individual data points updated daily the service provides coverage o the perormance o all 950 operators and

    800 MVNOs across 3,500 networks, 55 groups and 236 countries worldwide.

    Whilst every care is taken to ensure the accuracy o the inormation contained in this material, the acts, estimates and opinions stated are based on inormation and sources which, while we believe them to be reliable, are not guaranteed. In particular, it should not

    be relied upon as the sole source o reerence in relation to the subject matter. No liability can be accepted by Wireless Intelligence, its directors or employees or any loss occasioned to any per son or entity acting or ailing to act as a result o anything contained in or

    omitted rom the content o this material, or our conclusions as stated. The ndings are Wireless Intelligences current opinions; they are subject to change without notice. The views expressed may not be the sam e as those o t he GSM Association. Wireless Intelligence

    has no obligation to update or amend the research or to let anyone know i our opinions change materially.

    Wireless Intelligence 2012. Unauthorised reproduction prohibited.

    Please contact us at [email protected] visit www.wirelessintelligence.com. Wireless Intelligence does not reect the views o the GSM Association, its subsidiaries or its members. Wireless Intelligence does not endorse companies or their products. Wireless

    Intelligence operates under an Independence Charter. For ull details please see www.wirelessintelligence.com/independence.aspx.

    GSM Media LLC, 1000 Abernathy Road, Suite 450, Atlanta, GA 30328.

    [email protected]/wi

    Joss Gillet

    Senior Analyst

    Will Croft

    Analyst

    Jon Groves

    Analyst

    Calum Dewar

    Analyst

    Matt Ablott

    Analyst

    Tim Ferguson

    Analyst

    Steve Costello

    Analyst

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