private and confidential new technology platform and

Private and Confidential

New Technology Platform and Service Fragmentation of

Personal Wireless Communication

Sonny WuSloan Fellows 2001

Email: [email protected]: 617-818-5698


Motivations

1. What is 3G ?2. What is a “cell phone” like in 2-3 years?3. Is it possible to make a “cell phone” for $10-$20 ?4. Wireless WAN/LAN/VPN roaming ?5. What is the wireless service supply chain like?6. Pricing Models for Wireless Services?7. What are critical technologies ?


New classes of wireless devices are arising that New classes of wireless devices are arising that deliver a real mobile multimedia experience.deliver a real mobile multimedia experience.

emailemail

Wireless Multimedia World


2GCircuit Switched

(1999)

2.5 G Packet Data

Overlay(2000-01)

3GIntegratedMultimedia(2001-02)

4G ?(2003+)

GPRSup to 170kbps

UMTS

GPRS/EDGEup to 384 kbps

EDGE

Wireless Technology Evolution

GSM1999 - 239M Subs2004 - 909M Subs

CAGR - 31%

GSM1999 - 239M Subs2004 - 909M Subs

CAGR - 31%

TDMA IS-1361999 - 36M Subs

2004 - 190M SubsCAGR - 39%

TDMA IS-1361999 - 36M Subs

2004 - 190M SubsCAGR - 39%

CDMA IS-951999 - 39M Subs

2004 - 265M SubsCAGR - 47%

CDMA IS-951999 - 39M Subs

2004 - 265M SubsCAGR - 47%

3xRTT1xRTT

up to 144 kbps

End-to-endIP-based WirelessInternet

End-to-endIP-based WirelessInternet

Up to 2Mbps

* Courtesy of Nortel Networks


Wireless Operators Territory subscribers Minority Holdings Technology AT&T wireless USA 27M J-phone TDMASprint Wireless USA 30M CDMAVodafone Europe 60M* Asia, Verizon GSM/UMTSTelefonica Spain/Latin America 18M TelmexNTT DoCoMo Japan 30M AT&T/Asia PDC/W-CDMAChina Mobile PRC 50M n/a GSMChina Unicom PRC 30M n/a CDMA/GSMFrance Telecom Europe 26M OrangeDeutche Telecom Europe 29M VoiceStream USA GSM/UMTSBellSouth+SBC US/Latin America 31M Israel/Europe TDMA/GSM

*Vodafone has installed base of 110M users if all minority holdings are included. (Verizon etc.)

Wireless Operator Competitive Landscape

1. Average Cost/POP for 3G license: $60-5052. Vodafone and NTT DoCoMo most aggressive with expansion3. Hutchinson with $60B cash war chest


NTT DoCoMo iMode Story

* Source Yankee Group report

25 M wireless internet subscribers in Japan today !


European Wireless SMS Story

* Source Yankee Group 2000

SMS accounts for ~30% of European Operator Revenue


Moving beyond voice

to Interactive multimedia applications

MobilityMobility Mission CriticalMission Critical

PersonalizationPersonalization Buy NetCardioBuy NetCardio

Personalization, Interoperability and Security are the Missing elements of the wireless Stories!

Wireless Critical Success Factors

MultimediaMultimedia


Network Service and Structure Diag ram Voice Services

Data

TCP/IP

ATM MPLS

PDH ========== è SDH/SONET

Core Network Physical Layer: Optical ======è DWDM

Access Layers: Wireless: Analog/TDM/CDMA/W -CDMA/ W -LAN/Bluetooth Wireline: Copper Loop/DSL/Cable Modem/Giga-Ethernet

VoIP Multimedia Streaming

Network Structure and Services


Today’s Corporate Network

Corporate Network Challenges

1. TDM/IP Convergence2. Cost3. Security4. Corporate VPN5. Wireless WAN/LAN6. Internet/Storage/Voice

- 10G Ethernet


New Intelligent Wireless Module

Mobility

Personalization

Internet Service Providers

Unified messaging Inch-Sq size briefcase P2P Cash

Certification Authentication Personalized services

End to End Client-ServerEncryption with NetCardio

High Bandwidthconnection

Multimedia

Multimedia file exchange MP3 download Family Pictures Celebrities Posters and Music

Wireless Module


Factory Type Capital Al Processes Cu ProcessesInvestment 0.18 micron 0.13 micron___

8 Inch Factory $1.2 B USWafer Price $1697 $2122Cost per mm2 die[1] 5.4 cents 7.0 cents 12 inch Factory $3.6 B USWafer Price $2663 $3328Cost per mm2 die 3.77 cents 4.71 cents

[1] Notice the cost metric is cents/mm2 of die, which is the typical size of an embedded processor.

Silicon Foundry Economics


2G Terminal 3G Terminal

System Spec 1998 2002 2002 Memory Size 4 Mb 16 Mb 64 Mb Radio Channel 30 MIPS 30 MIPS > 200 MIPSSpeech Coding 3-20 MIPS 3-30 MIPS 30 MIPSVoice Control - 50 MIPS 50 MIPSVideo Coding -- -- > 200 MIPSProcessor 8-16 bit 10 Mhz 16-32 bit ARM

[1] Source: Nokia announcement, Electronics Times, March 12 2001,page 65.

Current Battery Technology -> Power Requirement: < 200-250 mW

3G System Specification for DSP/Memory[1]


Low Power System on a Chip Design

* source: http://www.berkeley.edu/bwrc


Time to Market

Java Card

E2PROM Card

FeRAM RISC Card

S Curves for Smart Cards

Technology Curves for Smart Cards

Critical Technologies:1. FeRAM2. Embedded Low Power System on a Chip Design3. Encryption


Metric E2PROM Java Card NetCardio Module Memory FLASH Embedded Flash FeRAMSize 8-30KB 64KB 4-8MBAccess Time 100mSec 100mSec 100 nSecEnergy per 32b write[2] 1J 2J 1nJR/W Cycle 500K 500K 1010

Voltage 5 V 3.0 V 1.5 VCPU None 8-16 bit ARM/MIPS 32bit ARMClockSpeed 5-10 Mhz 50Mhz 100MhzCurrent Cost $0.50 $3-5 $10*[3]

[1] NetCardio is an MIT start up by the Author and other Sloan and EECS students working on next generation Smart modules for wireless applications using low power Encryption and FeRAM technology.[2] Data Source: “A survey of Circuit Innovation in Ferroelectric RAM” by A. Sheikholeslami, Proceedings of The IEEE, Vol.88,No 5, May 2000[3] Cost estimated by David Lim of Sloan ( from Chartered Semiconductors) using Flash memory processing data.

Technology Curves for E2PROM, Java Card and NetCardio[1] Module


Wireless Service Pricing Models

1. Pre-Paid Most Popular (eg: New Orange Customer all in Pre-Paid)

2. Flat Rate better than Differentiated (eg: AOL and AT&T)

3. Fragmented Model (eg: NTT DoCoMo)


Proposed Pricing Plan Scenario for 3G services:

VoIP $15

Entertainment $20

Personal Information

$5

Second Degree Pricing for Value Added Service @ $0.20/Mb

Flat Rate Parts

ARPU of $85 Corporate Services

ARPU of $40 Basic Services

1. Price goes Down NOT UP2. Marginal Cost for VoIP and Data critical to Pricing Design3. Market Elasticity with subscription NOT with ARPU4. 3 Billion wireless users instead of 1.5 B by 2004 ??5. Wireless Corporate VPN service IS ONLY revenue for higher ARPU

3G Pricing Scenarios


$0.04

$0.10

$0.37

1998 1999 2000 2001 2002 2003 2004$0.04

$0.10

$0.37

$0.04

$0.10

$0.37

1998 1999 2000 2001 2002 2003 20041998 1999 2000 2001 2002 2003 2004

Cost/MbLogarithmic Scale

1xRTT/EDGE Voice1xRTT/EDGE Voice

Voice-only Efficiency via Network fill

Current Avg Network

IP-based network and new OAM

UMTS/3xRTT

GPRS data overlay: 2000 - 1XRTT / EDGE voice & new data traffic: 2001

Voice-only Efficiency via Network fill

Current Avg Network

IP-based network and new OAMIP-based network and new OAM

UMTS/3xRTTUMTS/3xRTT

GPRS data overlay: 2000 - 1XRTT / EDGE voice & new data traffic: 2001

Event: -“Switchless” data overlay network

- 2.5G GPRS data network- Common packet backbone for voice & data traffic

Result: - Increasing wireless Internet data services further increases network efficiency- Overlay for wireless data reduces cost per Mbit vs.voice to $0.07

Products: GPRS, GGSN/SGSN, RIM email, Shasta VPN

Event: “Switchless” IP-based network for voice & data introduced -WIPN

Result: An IP network architecture and Internet style OA&M further

drops the cost per Mbit to $0.05

Products: IP-based BTS; WAG; mobility server; IP as a call control mechanism

Event: - 3G air interfaces (UMTS/3XRTT) introduced- IP-based network and new OA&M

Result: Increased spectral efficiency achieves $0.04 per Mbit

Products: UMTS, 3XRTT

Event: Increasing voice traffic & on-going evolution of radio infrastructure products

Result: Increase in economies of scale due to network fill, eventually lowers the cost per Mbit to about $0.10 - $0.16

Products: 1) cost effective radio coverage: ???2) core network modernization & cost reduction: PVG, Succession gateways

Event: Intro of 2.5G voice prods incl. 1XRTT voice

Result: Improved spectral efficiency combined with lower OAM cost reduces cost per Mbit to $0.09

Products: Next gen BTS: CDMA/GSM/1XRTT/UMTSTDMA/EDGE, Preside

$0.37 per Mbit represents the average cost for a medium-sized circuit voice network

In 2004, $0.01 /Mbityields an incremental $5

margin/sub/month

Wireless Network Cost Trends


Subsystem Spec Radio/DSP Encryption FeRAMDie Size: 10 mm2 50 mm2 100 mm2

Performance: 1000 MIPs 1024 bit RSA 4 MBPower: 100 mW 100 mW 50 mWDie Cost: $5Packaging: $2Testing: $3Overhead:[1] $2-$5Subtotal Cost $12-15 Pricing of Module $20-25 each

[1] assume volume scale of 200M to 500M units/year: equivalent to $1.0 B US of amortization of R&D and Mfg O/H

Intelligent Wireless Module®

1. Low Cost Single Chip Module2. Interoperate with wireless appliances3. Enabler for Customized wireless services

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