10/04/23 1

The growth market broadband business model5th Annual Mobile Network Evolution Conference, Singapore 23 March 2010.

Dr. Kim Kyllesbech LarsenInternational Network Economics,Technology, T-Mobile.

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 2

Story.

Broadband evolution.

Europe usage trends.

Growth markets.

Demand and spectrum.

NGMN business models.

Key messages.

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 3

High-speed internet access everywhere.

CS Voice

1980 1990 2000 2010 2020

Note Ultimate performance will depend on available spectrum bandwidth, carrier-aggregation and link-budget.

3GUMTS/HSPA NGMN

The mobile broadband evolution

Voice GPRS UMTS HSDPA HSPA+ NGMN

< 0.128 < 0.384 < 14 1 < 48+ 1 < 200+ 10.014

101 27 1,000 4,000 14,000

Speed in Mbps

GPRS

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 4

Major NGMN Success Factors.Complete eco-system needs to be ready in time.

High throughput &

capacity 150

Low latency

120

100

80

60

40

20

140

Performance delivery on today’s network grid

Mobile high speed requires high speed backhaul

“Killer” experience.

Legacy compatibility. Efficiency increase

Backhaul. Eco system.

Spectrum.

1400 MHz

1700 MHz 2700 MHz

Sufficient and suitable spectrumfor coverage & capacity

400 MHz

OptimizationPlanning

Operations

I&CPotentialsavings

Illustration

?

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 5

NGMN a natural evolution for legacy operators.The 3G legacy network.

NGMN all-IP, NGMN 3G evolutionary.

PS CN

NB

NB

GGSN

HLR

SGSN

IP networks

SIM

Backhaul

IP and/or ATM

PDN

eNB

eNB GW

HSS

MME

IP networks

SIM

IP Backhaul

IMS

NGMN is evolutionary, with much higher capacity (per Hz).

Backwards compatible and interoperable with legacy. All-IP with new possibilities for legacy mobile operators (e.g., IM and VoIP). Higher spectral efficiency, better quality and much more capacity (per Hz).

Air: UL=SC-FDMA & DL=OFDMA

Air: UL=BPSK & DL=QPSK

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 6

NGMN similar to, but also very different from WiMax.

NGMN is all-IP and SIM-based

WiMax is all-IP and SIM-less.

IP Core

RN

IP Backhaul

RN

Internet

ASN GW

AAAHA

PDN

eNB

eNB GW

HSS

MME

IP networks

SIM

IP Backhaul

IMS

NGMN for WiMax players is not obvious.

NGMN different QoS and security mechanisms than WiMax. NGMN architecture more complex (and costly) than WiMax. NGMN introduces SIM-based authentication, WiMax is SIM-less.

Air: UL=DL=OFDMA

Air: UL=SC-FDMA & DL=OFDMA

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 7

Mobile broadband traffic trends in (iPhone) Europe.Dongles amount to ca. 5% of 3G active base and drives up-to 70% of the data volume.

Terminal type & usage. 3G traffic per (active) terminal.

1

1/3

250

3 main categories of terminals & usage

Dongle/laptop (heavy fixed-like usage). iPhone/Google phone (with supporting

service ecosystem). “Handset-like” mobile multimedia-enabled

devices (Nokia, Sony-Ericsson, LG, etc.).

In relative usageActive terminals%

Usage% (total volume)

Dongles iPhone-like

HandsetsiPhone-like

Dongles

Handsets

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 8

Why NGMN in growth markets (and anywhere else).

Higher efficiency.Better connected.

New business.Mitigate 3G capacity crunch.

Growth markets in Asia.HH

1 2008: 30+%, 200+ mn and 2014: 50+% and 500+ mn.

2G 3GPC penetration

Broadband access

GPRS EDGE UMTS HSPA LTE

1

1:31:5

<1:300

<1:3000

today1

Cost per Mega Byte.

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 9

Broadband wireless access vision.Technology enables Connected Life and Work …

At home. On the move. At work.

Connecting the next 1 billion un-connected.

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 10

Asia growth markets at a glance.

Growth markets double digit growth. Technology adaptation.

Until 2014 it is expected that:

Mobile revenue growth 10% pa.

Data revenue growth 20% pa.

Subscriber growth double digit.

2G at around 50% in 2016.

3G to reach more up-to 40%.

NGMN high capacity solution for Asian growth markets.

2G

3G

NGMN

0%

20%

40%

60%

80%

100%

2008

2010

2012

2014

2016

2018

2020

2022

2024

Countries included: China, India, Indonesia, Malaysia, Pakistan, Philippines, Thailand & Vietnam.Source: until 2014 based on Pyramid Research Dec 2009 projections. After 2014 technology diffusion modeling applied to the market dynamics consistent with previous period and user terminal adaptation rates. Note NGMN=LTE in Pyramid nomenclature.

ILLUSTRATION

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 11

Speeding towards a 3G traffic jam?

Customer adaptation.

215 MHz @ 1800 MHz spectrum.

210 MHz @ 2.1 GHz spectrum.

2G

3G

4G

0%

20%

40%

60%

80%

100%

2008

A

2010

F

2012

F

2014

F

2016

F

2018

F

2020

F

2022

F

2024

F

Asian mobile operator with 13 million customers and ca. 15%

market share. 0

10

20

30

0

5

10

15

-40

-20

0

20

2010

2012

2014

2016

2018

2020

2022

2024

-20

-10

0

10

DL+UL DL / UL

DL+UL DL / UL

3G capacity crunch

4G

2010

2012

2014

2016

2018

2020

2022

2024

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 12

The 3G traffic jam!

3G capacity and quality crunch within the next 2 – 3 years.

Slow down migration from 2G3G, migrate to NGMN instead.

New spectrum demand.

Re-farming existing 900/1800 MHz spectrum if possible (in time).

Empty 2G roads - in time?

5 MHz in 3G will only take up ca. 1 MHz in NGMN.

NGMN could mitigate the 3G capacity crunch.

NGMN re-farmed 2G spectrum might be too late or too little.

The growth-market legacy mobile operator near-future.

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 13

How to perfect existing legacy spectrum.Re-farm own spectrum and/or acquire new spectrum for NGMN.

Spectral efficiency & capacity.Migration & re-farming.

3G is 3 – 5 more effective than 2G per Hz.

The 3G usage per Hz is at least 6 times (and growing) higher than in 2G.

Most mobile operators have less 3G spectrum than 2G spectrum, e.g.:

Sun Cellular (Philippines) 215 MHz @ 1800 MHz vs 210 MHz @ 2100 MHz.

T-Mobile (UK) 230 MHz @ 1800 MHz vs 210 MHz @ 2100 MHz.

3G spectrum will congest faster than might be expected from pure spectral efficiency considerations.

NGMN is at least 5 more effective than 3G per Hz (for broadband data).

Illustration

3G(210 @ 2100)

2G(215 @ 1800)

3G

2G

Customer migration from

3G NGMN

Free

2G NGMN(215 @ 1800)

NGMN

New Customers

After some time 2G

to 4G migration.

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 14

Legacy mobile operator

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 15

Legacy mobile operator migrating to NGMN.

Business model – legacy.Saturation economics.

Mobile (legacy-like) network.Top-line & margin pressure.

Revenue

Opex

Ebitda

SATURATION MODE

0

Legacy sites locations pre-LTE

Radio nodes (GSM & UMTS)

Mobile (everywhere) coverage philosophy.

Mitigating 3G capacity crunch.

Providing high-speed mobile internet access.

Replacing existing legacy business.

Interoperable with legacy (2G, 3G) networks.

Voice ARPU

Data ARPU

Subscriptions

- 6%

+ 8%

+ 10%

Radio nodes (NGMN)

Additional site locations due to capacity and NGMN.

10th of thousands of radio nodes andmix of technologies, coverage driven.

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 16

Legacy mobile operator migrating to NGMN (cont’).

Threats.Opportunities.

Weakness.Strength.

In-sufficient 2G & 3G spectrum for NGMN.

Loosing high ARPU market share to more flexible Greenfield operators.

Un-managed broadband demand driving spectrum assets into exhaustion.

Mitigating 3G crunch by migrating traffic.

Better broadband data quality & services.

Higher ARPU potential by addressing poor fixed broadband availability.

Synergy in business model and network.

Market share scale, purchasing power and strong cash-positions.

Strong spectrum position and variation.

New spectrum needed (added cost).

Networks optimized for ultra-low ARPU, incompatible with mobile broadband.

Operation of multiple technologies.

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 17

Greenfield attacker business model

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 18

Greenfield BWA operator’s NGMN deployment.

Business model - opportunistic.Growth economics.

Broadband wireless access.Wireless DSL & nomadic growth.

Revenue

Opex

Ebitda

GROWTH

0

Subscriptions

2 – 4 Mobile ARPU

0

Wireless DSL and nomadic services.

Demand driven deployment.

No ambition to provide 100% coverage.

VoIP and IM services as well as broadcast.

Substitute CS voice and SMS.

eMBMS broadcast options.

- 2% to 4%

2mn+

LTE Nodes = site locations

Capacity nodes & sites (LTE)

Thousand radio nodes, 1-single technology covering urban areas, demand driven.

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 19

Greenfield BWA operator migrating to NGMN (cont’).

Threats.Opportunities.

Weakness.Strength.

Too many players with more or less same spectrum position and business model.

Priced out of the market by financially stronger legacy operators.

Growth limitation due to limited spectrum assets.

Business model (wireless DSL) not (yet) captured by legacy mobile operators.

Providing wholesale access and legacy traffic off-loading.

Consolidation with other Greenfields securing stronger spectrum position.

One single technology to optimize.

Fast rollout supporting wireless fixed-like broadband market.

Better wireless broadband network than legacy operator’s 3G networks.

Scale and limited spectrum depth & type.

Migration to NGMN (from WiMax) will be complex, costly and with customer impact.

No SMS and VoIP-only options available.

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 20

Legacy Mobile vs. Greenfield BWA business model.

Legacy mobile operator.

Mature and emerging markets. Near 100% pop & geographical

coverage. FDD-based with strong spectrum

position. Multiple access technologies. Mobile voice primary revenue

stream and broadband data secondary.

Macro-mobility main value add.

High Opex and very high Capex pressure due to country-wide coverage.

NGMN migration likely within FDD domain and possibly on legacy spectrum

Attractive in emerging markets. Urban city-based coverage,

demand-based rollout. TDD-based with limited spectrum

position. 1-single access technology. Broadband data primary revenue

stream with premium ARPU. Voice (VoIP) can be offered as add-on.

House-hold based wireless DSL with nomadic mobility.

Lower overall Opex & Capex due to significant reduced rollout footprint.

NGMN migration likely within TDD domain and with new spectrum requirements.

BWA Greenfield operator.

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 21

Summary.

NGMN can mitigate the 3G traffic jam.

NGMN attacks (poor) fixed broadband serviceswith wireless DSL, nomadic & mobile services.

Greenfield operators likely to become growth limitedwithout additional spectrum.

10/04/23 22

Thank you very much!Acknowledgement: Michael Lai (P1 Malaysia), Minoo Abedi, Dirk Schöneboom, Stefan Wilhelm, Zhou Yi, Alan Yeo, Jordan Yeo, Denis Gautheret and many other talented colleagues in DTAG.

Contact:

kim.larsen@t-mobile.nlTel: +31 6 2409 5202http://nl.linkedin.com/in/kimklarsen

23 March 2010 Kim Kyllesbech Larsen, Technology - T-Mobile. 23

Backup … mobile economics in Asia growth markets.

Is a profitable NGMN business viable with very low ARPU conditions?Asia growth markets trends. South-East Asia ARPU.

Mobile ARPU is ca. 3.5 % of GDP/Capita.

DSL ARPU is ca. 10% of GDP/Capita.

High prepaid share with an average of 87% with some markets above 90%.

Pyramid Research projects the annual blended ARPU decline at least until 2014.

However, nominal GDP expected to grow with more than 10% pa until 2014.

By 2014 more than 420 mn mobile broadband users (in APAC) projected to generate more than 140bn US-dollars in data-related revenues.

ARPU Zone

Nominal GDP per capita per month

$0

$10

$20

$30

$40

$600India China

Nominal GDP per capita per month

$0

$10

$20

$30

$40

$0 $200 $400

Countries included: China, India, Indonesia, Malaysia, Pakistan, Philippines, Thailand & Vietnam.Source: Pyramid Research Dec 2009.

BWA ARPU Zone

DSL / Cable

Mobile Prepaid Mobile Contract

Mobile blend

$36 EU mobile blend 2008

Ph