operator challenges - network related - business related...2 3 0,00 0,20 0,40 0,60 0,80 1,00 macro...
TRANSCRIPT
1
1
Operator challenges - network related- business related
Jan MarkendahlNovember 06, 2012
2
T raffic
Revenue
V i d i t d D t d i t d
R evenue gap
T raffic
Revenue
V i d i t d D t d i t d
R evenue gap
AccessInfrastructure
ValueAdd
Telecom
Content/ServicesBusiness Process
ConsumersValueChain
AccessInfrastructure
ValueAdd
Telecom
Content/ServicesBusiness Process
ConsumersValueChain
Voice services
Mobile broadband
New services??
Voice services
Mobile broadband
New services??
Revenue mix MBB profitability
What to handle for operators?
Changing business landscape
Networks
Customers
Payments
Services
Operator challenges – business related
2
3
0,00
0,20
0,40
0,60
0,80
1,00
Macro Micro Pico WLAN
Backhaul transmission
Site buildout, installation + lease
Radio equipment, O&M, power
0,00
0,20
0,40
0,60
0,80
1,00
Macro Micro Pico WLAN
Backhaul transmission
Site buildout, installation + lease
Radio equipment, O&M, power
Operator challenges – network related
”promised” data rateat ”low” level
”promised” data rateat ”higher” level
”promised” data rateat ”low” level
”promised” data rateat ”higher” level
Cost structure
Data rate depends on range
Scalability
Spectrum allocation
4
Voice services
One motivation for our researchDeclining voice revenues for mobile operators
Years
Revenues
3
5
New services
Mobile Broadband
Voice services
Years
Revenues
One motivation for our researchNew services require new solutions
6
New servicesMobile Broadband
Voice services
Years
Revenues
One motivation for our researchNew services require new solutions
4
7
Voice services
Declining voice revenues
Years
Revenues
8
Voice services
Declining voice revenues for mobile operators
Years
Revenues
5
9
10
Revenues for mobile voice services in Sweden 2000-2008
0
5
10
15
20
25
30
35
40
2000 2001 2002 2003 2004 2005 2006 2007 2008
EU
R
TeliaSonera (EUR) ARPU Sweden (EUR)
From Mölleryd, Markendahl, Werding and Mäkitaloconference paper presented at CTTE 2010, May 2010
6
11
Mobile data traffic will increase 26 times until 2015 .The data traffic growth will require more radio frequenciesOperators will face an ”end of profit”
..
More operator challengesFreday 4 February 2011Newsletter by M. Sjödin
12
The revenue gap”de-coupling” of traffic and revenues”
• Flat rate tariffs create large increase of data traffic –Many GB per user per month–Data traffic up >100 % per year–Revenues do not follow
Traffic
Revenues
Network Cost
TimeVoice is dominating
Data isdominating
Amount of- traffic- revenues- costs
?
?
Traffic
Revenues
Network Cost
TimeVoice is dominating
Data isdominating
Amount of- traffic- revenues- costs
?
?
7
13
Traffic, prices and revenues
Estimated price per MByte for voice, SMS and data for one Swedish operator
2007 20081,46 1,36
439,5 351,60,014 0,011
EUR per MBVoice SMSMobile data (laptop)
SMS + MMS11%
Mobile data8%
Voice81%
Mobile data75%
Voice25%
Revenues Traffic
Traffic and revenue for different services at the Swedish market Q4 2008
14
One big data challenge (Thanks to Bengt Mölleryd)
14
Antagande: YouTube 0.5 Mbit/s och med 5 min clip, 60 * 0.5/8*5 = 19 MB. Pris ca 0,05 kr per MB. SMS 160 bytes = 6250 SMS per MB. Pris 0,20 kr per SMS.
Vidare är SMS mycket lönsam med EBITDA på 90%. Om man antar 15% av omsättning är SMS och en total EBITDA marginal på 35% skulle ett tapp av SMS innebära att marginalen faller till ca 25%
Correspondingdata consumption
5 min clip 115 000
23 000 kr1 kr Revenues
=
8
15
• Amount of voice data 10-20 MB per month
• Amount of mobile broadband data 1–20 GB per month – The number of mobile broad band bits are
100 – 1000 more than the number of voice bits
• But we pay more or less the same, i.e. the price per data bit is 100 – 1000 times lower=> the cost per bit must be 100 – 1000 lower
Traffic, prices and revenues
16
9
17
Changing business landscapecombined with different perspectives
AccessInfrastructure
ValueAdd
Consumer focusTelecom Industry View
Business, society focusInternet Industry viewEU Economy View
Telecom
Content/ServicesBusiness Process
ConsumersValueChain
18
Competetion from many actors
18
Online Services
Enabling technology/services
Connectivity User interface
10
19
”New” services
20
11
21
22
Revenue sharing for Apps?
Source: IDATE
Type I-Mode Apple
12
23
Mobile operators “joins forces” and form Wholesale Applications Community
• The alliance launched by the 24 operators, is backed by the GSMA, and device manufacturers LG Electronics, Samsung and Sony Ericsson
• The alliance "will build a new, open ecosystem to spur the creation of applications that can be used regardless of device, operating system or operator"
24
13
25
Many actors have business relations with the end-users
Network vendors
OthersMobile Network
Operators
OthersEnd-users
Vendors of user equipment
Providers ofapplications
Network vendors
OthersMobile Network
Operators
OthersEnd-users
Vendors of user equipment
Providers ofapplications
26
T raffic
Revenue
V i d i t d D t d i t d
R evenue gap
T raffic
Revenue
V i d i t d D t d i t d
R evenue gap
AccessInfrastructure
ValueAdd
Telecom
Content/ServicesBusiness Process
ConsumersValueChain
AccessInfrastructure
ValueAdd
Telecom
Content/ServicesBusiness Process
ConsumersValueChain
Voice services
Mobile broadband
New services??
Voice services
Mobile broadband
New services??
Revenue mix MBB profitability
What to handle for operators?
Changing business landscape
Networks
Customers
Payments
Services
Operator challenges – business related
14
27
T raffic
Revenue
V i d i t d D t d i t d
R evenue gap
T raffic
Revenue
V i d i t d D t d i t d
R evenue gap
AccessInfrastructure
ValueAdd
Telecom
Content/ServicesBusiness Process
ConsumersValueChain
AccessInfrastructure
ValueAdd
Telecom
Content/ServicesBusiness Process
ConsumersValueChain
Voice services
Mobile broadband
New services??
Voice services
Mobile broadband
New services??
Revenue mix MBB profitability
What to handle for operators?
Changing business landscape
Networks
Customers
Payments
Services
Operator challenges – business related
28
T raffic
Revenue
V i d i t d D t d i t d
R evenue gap
T raffic
Revenue
V i d i t d D t d i t d
R evenue gap
AccessInfrastructure
ValueAdd
Telecom
Content/ServicesBusiness Process
ConsumersValueChain
AccessInfrastructure
ValueAdd
Telecom
Content/ServicesBusiness Process
ConsumersValueChain
Voice services
Mobile broadband
New services??
Voice services
Mobile broadband
New services??
Revenue mix MBB profitability
What to handle for operators?
Changing business landscape
Networks
Customers
Payments
Services
Operator challenges – business related
15
29
0,00
0,20
0,40
0,60
0,80
1,00
Macro Micro Pico WLAN
Backhaul transmission
Site buildout, installation + lease
Radio equipment, O&M, power
0,00
0,20
0,40
0,60
0,80
1,00
Macro Micro Pico WLAN
Backhaul transmission
Site buildout, installation + lease
Radio equipment, O&M, power
Operator challenges – network related
”promised” data rateat ”low” level
”promised” data rateat ”higher” level
”promised” data rateat ”low” level
”promised” data rateat ”higher” level
Cost structure
Data rate depends on range
Scalability
Spectrum allocation
30
GSM Coverage Tele2 - Telenor - Telia
~90% covered area~65% covered area ~70% covered area
16
31
Coverage maps – Telia web page
Jan Markendahl Från teleekonomi till mobilsamhälle 2012-09-06
32
Downtown Stockholm and close to ”here”
17
33
HSPA year 2008 LTE year 2010 LTE year 2010
Assuming 3 sector site20 MHz of bandwidthand cell averagespectral efficiency0,7 bps per Hz (HSPA)1,7 bps per Hz (LTE)
Siteand
Trans
Radio
SiteAnd
Trans
Radio
Trans
Cost for upgrading
an existingsite ~ 30k€
Capacity ofradio base station site~ 10 Mbps
Capacity ofradio base station site~ 100 Mbps
Total costfor new site
~ 110k€
Capacity ofradio base station site~ 100 Mbps
Radio
Siteand
Trans
Radio
SiteAnd
Trans
Radio
Trans
Cost for upgrading
an existingsite ~ 30k€
Capacity ofradio base station site
Mbps
Capacity ofradio base station site~ 100 Mbps
Total costfor new site
~ 110k€
Capacity ofradio base station site~ 100 Mbps
~ 20 k€
~100k€
5 MHz
Cost structure, bandwidth and capacity
34
Cost structure, bandwidth and capacity
HSPA year 2008 LTE year 2010 LTE year 2010
Assuming 3 sector site20 MHz of bandwidthand cell averagespectral efficiency0,7 bps per Hz (HSPA)1,7 bps per Hz (LTE)
Radio
Siteand
Trans
Total costfor new site
~ 200k€
Radio
SiteAnd
Trans
Radio
Trans
Cost for upgrading
an existingsite ~ 30k€
Capacity ofradio base station site~ 40 Mbps
Capacity ofradio base station site~ 100 Mbps
Total costfor new site
~ 110k€
Capacity ofradio base station site~ 100 Mbps
Radio
Siteand
Trans
Total costfor new site
~ 200k€
Radio
SiteAnd
Trans
Radio
Trans
Cost for upgrading
an existingsite ~ 30k€
Capacity ofradio base station site~ 40 Mbps
Capacity ofradio base station site~ 100 Mbps
Total costfor new site
~ 110k€
Capacity ofradio base station site~ 100 Mbps
20 MHz
18
35
HSPA year 2008 LTE year 2010 LTE year 2010
Assuming 3 sector site20 MHz of bandwidthand cell averagespectral efficiency0,7 bps per Hz (HSPA)1,7 bps per Hz (LTE)
Radio
Siteand
Trans
Total costfor new site
~ 200k€
Radio
SiteAnd
Trans
Radio
Trans
Cost for upgrading
an existingsite ~ 30k€
Capacity ofradio base station site~ 40 Mbps
Capacity ofradio base station site~ 100 Mbps
Total costfor new site
~ 110k€
Capacity ofradio base station site~ 100 Mbps
Radio
Siteand
Trans
Total costfor new site
~ 200k€
Radio
SiteAnd
Trans
Radio
Trans
Cost for upgrading
an existingsite ~ 30k€
Capacity ofradio base station site~ 40 Mbps
Capacity ofradio base station site~ 100 Mbps
Total costfor new site
~ 110k€
Capacity ofradio base station site~ 100 Mbps
20 MHz 20 MHz 20 MHz
Cost structure, bandwidth and capacity
36
Cost of radio equipment is decreasing rapidly
512 MSEK (50 MEuro)~6 KEuro per base station
~ 750 MSEK
19
37
Base station site location in urban areasfrom PTS “Transmitter map” web page, December 2009
Downtown Stockholm
Kista Industry Area
38
Examples of Base station densities(Urban areas in Sweden )
Name and type of area Total density
of sites Typical densities
for operators
Residential area in Uppsala ~6 per km2 1 3 per km2
Residential area Akalla ~ 14 per km2 3 5 per km2
Central part of Uppsala ~ 20 per km2 3 8 per km2
Industry area Kista ~ 50 per km2 7 20 per km2
Central part of Stockholm ~ 130 per km2 20 40 per km2
20
39
To handle increasing user demand
• Two main development paths• Improve network performance and capacity• Add more spectrum
40
From Ericsson Capital markets day
May 2008
21
41
From Ericsson Capital markets day
May 2009
42
Peak data rate ~10 - 20 bps per Hz Cell border rate < 0,10 bps per Hz Average data rate ~1 -2 bps per Hz
Averagecell border
Peak data rate ~10 - 20 bps per Hz Cell border rate < 0,10 bps per Hz Average data rate ~1 -2 bps per Hz
Averagecell border
Distance from base station
To improve the spectral efficiency – i.e. more bits/second per Hz of spectrum
22
43
From Ericsson Capital markets day, May 2008
44
Spectrum, capacity and cost
• High bandwidth means high capacity per site,i.e less number of base station sites
23
45
Numner of base station sites
0
10
20
30
40
50
60
70
80
90
100
0 10 20 30 40 50
Used spectrum (MHz)
Nu
mb
er
of
sit
es Spectral eff = 1,70
(LTE type)
Spectral eff = 0,70(HSPA type)
Amount of spectrum and number of sites
Example: New Kista area, 10 000 office workers
46
Short exercise – work in 4 groups• How many base station sites need to be deployed in
the following cases?
• Operator A, LTE in the 2.6 GHz• Operator B, HSPA in the 2.6 GHz• Operator C+D, LTE in the 2.6 GHz band and share network• Operator E, LTE using unlicensed 1800 MHz band
• You are allowed to ask me one question per group
24
47
Numner of base station sites
0
10
20
30
40
50
60
70
80
90
100
0 10 20 30 40 50
Used spectrum (MHz)
Nu
mb
er
of
sit
es Spectral eff = 1,70
(LTE type)
Spectral eff = 0,70(HSPA type)
Cases for different Swedish operators using 2.6 GHz band
Amount of spectrum and number of sites
48
Numner of base station sites
0
10
20
30
40
50
60
70
80
90
100
0 10 20 30 40 50
Used spectrum (MHz)
Nu
mb
er
of
sit
es Spectral eff = 1,70
(LTE type)
Spectral eff = 0,70(HSPA type)
Brazil operators
UK operators
Amount of spectrum and number of sites
25
49
• Deployment for low or medium data rates
• Coverage for high data rates with existing sites
• Deployment needed forhigh data rates
Scalability of cellular systems For a specified amount of spectrum and for the same type of radio technology deployment of N times more capacity at data rate X will imply N times higher costs
50
26
51
”Offered” bit rate vs coverage & load
”promised” data rateat ”low” level
”promised” data rateat ”higher” level
”promised” data rateat ”low” level
”promised” data rateat ”higher” level
52
Marketing by mobile operators
27
53
Industry focus• Three main strategies to increase radio network
capacity is described (Landström et al, 2011). ; • to improve the performance of the macro layer, • to build a denser macro layer (more base stations) • to add low power pico or femtocell base stations
• Current focus for R&D and standardization• To increase the peak data rate• To combine spectrum into larger chunks• To offload heavy data traffic from macro layer
to local networks: picocells, femtocells or WiFI
54
Data rate, bandwidth andaggregation of carriers or bands• The higher bandwidth the higher the data rate
28
55
To offload data traffic from the macrolayerFrom Vodafone:Investor relation info, March 2008
56
The capacity needs to be increase at least 1000 times the coming years
Contributions• One enabler is ”more spectrum” • Another contribution comes from ”better technology”
(improved spectral efficiency )• A third contribution is from ”denser network”
3 minute discussion – discuss in groups• How do you think the different aspects contribute? (More spectrum)*(improved spectral eff.)*(denser network ) = 1000
29
57
Cooper´s law• “the number of “conversations” that can theoretically be
conducted over a given area in all of the useful spectrum is doubled every two-and-a-half years (www.arraycomm.com/technology/coopers-law)
• The improvement in spectrum utilization has been over a trillion times in the last 90 years and a million times in the last 45 years.
• “Of the million times improvement in the last 45 years, • 25 times were the result of being able to use more spectrum • 5 times can be attributed to the ability to divide the radio
spectrum into narrower slices• Modulation techniques like FM, SSB, time division multiplexing,
another 5 times or so• The remaining sixteen hundred times improvement was the
result of confining the area used for individual conversations to smaller areas, what we call spectrum re-use”.
58
To handle increasing user demand
• Two main development paths• Improve network performance and capacity• Add more spectrum
• Current focus for R&D and standardization• To increase the peak data rate• To combine spectrum into larger chunks• To offload heavy data traffic from macro layer
to local networks: picocells, femtocells or WiFI
30
59
BUT, there are two ”buts”1. Spectrum alone is not the main issue
• The traffic increases 1000 times the coming years• Only 2 – 5 times more spectrum is discussed
2. Regions and countries in the world are different– The world it is not like a ”Sweden XL” – In countries like Sweden and Germany :
• There is a lot of fixed line infrastructure• Operators have ”quite a lot of” spectrum
60
Differencies between countries
31
61
0,00
0,20
0,40
0,60
0,80
1,00
Macro Micro Pico WLAN
Backhaul transmission
Site buildout, installation + lease
Radio equipment, O&M, power
0,00
0,20
0,40
0,60
0,80
1,00
Macro Micro Pico WLAN
Backhaul transmission
Site buildout, installation + lease
Radio equipment, O&M, power
Operator challenges – network related
”promised” data rateat ”low” level
”promised” data rateat ”higher” level
”promised” data rateat ”low” level
”promised” data rateat ”higher” level
Cost structure
Data rate depends on range
Scalability
Spectrum allocation
62
T raffic
Revenue
V i d i t d D t d i t d
R evenue gap
T raffic
Revenue
V i d i t d D t d i t d
R evenue gap
AccessInfrastructure
ValueAdd
Telecom
Content/ServicesBusiness Process
ConsumersValueChain
AccessInfrastructure
ValueAdd
Telecom
Content/ServicesBusiness Process
ConsumersValueChain
Voice services
Mobile broadband
New services??
Voice services
Mobile broadband
New services??
Revenue mix MBB profitability
What to handle for operators?
Changing business landscape
Networks
Customers
Payments
Services
Operator challenges – business related
32
63
Thanks for your attention• Link to my PhD Thesis, February 2011
”Mobile Network operators and cooperation– A tele-economic study of infrastructure sharing
and mobile payment services”http://www.impgroup.org/dissertations.php
• Link to Telia investor relation informationhttp: //www.teliasonera.com/investors/reports-and-presentations/presentations/