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DigiWorld Summit Mobile Services forum 3G
evolution Economy of new services
14/11/2006
Contact IDATE Frédéric Pujol, BP 4167 34092
Montpellier Cedex 5 33 (0)4 67 14 44 46 Mob
33 (0)6 82 80 46 20 f.pujol_at_idate.org
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Presentation

• 1. Mobile trends
• 2. Mobile broadband
• 3. New mobile services
• 4. MVNOs
• 5. Spectrum issues

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Mobile trends the 100 penetration rate today in
W. Europe

• Threats - Western Europe
• Decreasing ARPU
• MNO revenues and EBITDA margins under pressure
• Data services growing slowly voice SMS still
  represent the lions share of revenues
• Regulatory pressure

• Opportunities
• M2M a penetration rate ?200 tomorrow?
• Increasing voice usage
• 3G development, HSDPA launch
• Fixed Mobile Convergence (FMC)

Voice traffic share of mobile networks in 2005
Mobile growing fast on a worldwide basis
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2. Mobile broadband innovation is here

• Increasing data rates

• From  broadband  to very high data rates
• Demos in Japan and in Europe
• 4G, LTE, IMT-Advanced

Mobile BWA technological positioning

• Mobile WiMAx an accelerated product roadmap

Source IDATE in BWA report

• Broadband Wireless Access Mobile WiMAX
• Complement to existing mobile networks in
  developed countries
• A solution in developing countries?

Source IDATE in BWA report
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2. WiMAx A shift towards mobility

• Fixed and Mobile WiMAx incompatibility
• 802.16e MTG standard is not backward compatible
  with OFDM 256, which is the basis of most pre-
  WiMAx and certified fixed WiMAX equipments
• Major deployments recently announced are based on
  Mobile WiMAx
• Sprint Nextel
• Korea Telecom and SK Telecom
• Late comers might skip fixed standard to focus on
  mobile markets
• Motorola
• Samsung
• Sprint Nextel
• First tier vendors will really enter WiMAx market
  with mobile products ranges

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2. Mobile WiMAx Positioning

• 3G and Mobile WiMAx complementary service
  offerings

Source IDATE in BWA report

• Overlay of cellular (2G/3G) networks with Mobile
  WiMAx technologies wireless data networks

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3. New mobile services
Future growth generators ?
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3. Mobile TV services in broadcast mode are
already here
DVB-H services ITALY Tre has launched the first
commercial DVB-H service together with
broadcasters RAI, Mediaset and Sky Italia (July
2006) Walk TV Inlimited access to mobile
TV 13 channels - Series A competition of Italian
football 3 EUR for 24 hours, 12 EUR for one
week, 29 EUR for one month and 99 EUR for 12
months. Only one handset was available (LG
U900), priced between zero and 249 EUR 150 000
subscribers (Sept. 2006)
At the same time TIM launched its DVB-H service
TIM TV comprising 11 channels including La7 and
MTV Italia The Samsung handset SGHP920 comes free
with a subscription. TIM TV ? UMTS subscribers
(starting at 49 EUR a month) Includes access to
Series A and the Champions League

• Real cost of a DVB-H network?
• If indoor coverage needed ? same of base
  stations as a mobile network (in the same
  frequency band)
• MBMS mobile networks strike back?
• Services operate on 3G frequency bands. Same
  network antenna masts, additional cards in base
  stations

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3. Mobile TV - Projects in the USA

• National mobile TV networks
• Qualcomm/MediaFLO
• Aloha Partner's Hiwire / DVB-H
• SPRINT-NEXTEL (Mobile WiMAX)
• Crown Castle's Modeo / DVB-H
• Crown Castle has acquired a license to broadcast
  DVB-H nationwide at 1.672 GHz. A trial has been
  set up by Crown Castle in Pittsburgh, PA for more
  than one year with successful results
• This trial has shown that DVB-H can use different
  frequencies such as UHF, L-Band and higher. This
  trial has involved major players in the industry
  Microsoft, Nokia, Intel, etc.

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3. Technologies for mobile TV
Synthesis
Nokia, Motorola, Samsung, Siemens, Crown Castle
50mW(time slicing)
1-3
30
DVB-H
Qualcomm (proprietary)
?
No time slicing
?
120mWNo time slicing
gt15
250mWNo time slicing
6-10
?
?
Source DibCom
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4. MVNO Development room for under-served
markets (low-cost micro-segmentation

• Several root trends are leading to profound
  changes in the mobile industry
• Mobile markets concentration
• Consolidation in mature markets (Europe, USA)
• Organization in emerging markets (India e.g.)
• Growth slow-down
• Market saturation
• Prepayment diffusion
• 3G is a reality
• 35 millions 3G subscribers in Western Europe as
  at mid-2006
• Content-based services are also a reality
• Media/entertainment companies involvement in the
  market
• FMC/FMS
• Complementary role of mobile telephony
• Migration from fixed telephony to mobile
  telephony

• Regulation is a key driver for MVNO
• A favorable context in the UE
• Identification of operators with SMP
• Transparency and non-discrimination requirements
• Cost-related pricing
• A 38 decrease in the UE
• Roaming tariffs decrease
• Different national transcriptions (Danish
  regulator in favor of MVNO or on the contrary
  against in Italy) but situation is evolving
• A neutral or unfavorable context outside the UE
• Regulatory leverage
• Wholesale, roaming, SMS pricing
• SIM-Lock
• Contract life spans
• Mobile number portability
• Handset subsidies

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4. MVNO Development

• A worldwide phenomenon with major differences in
  terms of market shares
• Europe first region in terms of providers
• Broad definitions of MVNO/ESP and SP
• Contrasts between Northern and Southern Europe
  (Advanced in Denmark, emerging in Italy)
• The USA Nbr 1 country in terms of MVNO/ESP/SP
  subscribers
• gt30 millions MVNO subscribers in Western Europe
  60 up in two years
• Major impacts of the low-cost/no-frills option in
  WE
• ARPU erosion 14 in Denmark
• Price fall 50 for SMS, 40 for voice (1H2003,
  Denmark)

Markets shares of new mobile service providers ()
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4. MVNOs Towards Higher Sophistication,
Customization and ARPU
Communities
Distribution brand extension
Heavy data users
Content/Media
ARPU
No-frills
Sophistication
Voice and SMS
Increasing data
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5. Spectrum issues

• Digital dividend broadcast mobile services in
  UHF bands
• 3G  extension band  (2.6 GHz)
• Refarming UMTS in 2G frequency bands
• IMT advanced bands ( 4G )
• Dynamic access to spectrum

• Short term

• Long term

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5. Spectrum issues
?Spectrum issues are strategic in the mobile
sector
New comers in Northern and Eastern Europe

• Digital dividend

4G spectrum?
Mobile TV?
No harmonisation at European level
Fixed nomadic applications generally authorized
- Future evolution of the regulatory constraints
(service neutrality)?