Huawei Technologies

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1 Huawei Technologies

VOICE FROM OPERATORS We are confident in providing a pipe. It is a pipe, but it is a GREAT pipe. High speed, flat-rate mobile broadband data is in itself a differentiated service. Dr.

2 VOICE FROM OPERATORS We are confident in providing a pipe. It is a pipe, but it is a GREAT pipe. High speed, flat-rate mobile broadband data is in itself a differentiated service. Dr. Sachio Semmoto, EMOBILE Chairman and CEO Left: Dr. Sachio Semmoto, EMOBILE Chairman and CEO Right: Eric Gan, EMOBILE President and COO (Photo courtesy of EMOBILE) 7 Win-Win / FEB 2009

3 EMOBILE the mobile broadband revolutionist EMOBILE, Japan s newest and fastest growing mobile operator entered the market in March Skeptics thought they could not compete with the well-established and powerful big three operators NTT DoCoMo, KDDI and SOFTBANK MOBILE. Yet, in less than two years, it has already carved out a strong niche in mobile broadband, and at the same, dramatically changed the existing mobile landscape. In January 2009, EMOBILE attracted the second largest number of newly added mobile subscribers, bringing its total to 1.19 million customers. EMOBILE founder, Chairman & CEO, Dr. Sachio Semmoto and President & COO, Eric Gan unveiled their unique business model and future ambitions in an exclusive interview with Win-Win. By Julia Yao Dr. Semmoto can be proud of his record as an entrepreneur. He is one of the co-founders of DDI (today part of KDDI), and founded the ADSL provider eaccess in Japan. In 2005, when he founded EMOBILE the first new mobile operator in 13 years, Dr. Semmoto imbued the company with his entrepreneurial spirit and said, EMOBILE is totally different from the incumbents. We are entrepreneurs. We are a start-up. We are a venture. We are a totally different species. You have to change your mindset. Otherwise, you can not understand our company. A born revolutionist EMOBILE was a different species at birth. Unlike traditional operators in the market, EMOBILE started as a pure mobile data operator. With a strong belief that the whole broadband market in Japan would be the mobile broadband market in the future, EMOBILE focused solely on the 100 million user strong Japanese mobile broadband market. Eric Gan explained, We started off with data customers and slowly moved into the voice market. That s very different from traditional carriers for whom voice is the main business, and if they have some time, they do some data. The mobile data market is a very new area. We were very fortunate to have the new spectrum and to have built a new network with HSPA from scratch in record time. EMOBILE began offering voice services starting from March 2008, but it is not a pure voice strategy. He continued, We are focusing our voice service on the data product, like SmartPhone and PDA types, which FEB 2009 / Win-Win 8

4 VOICE FROM OPERATORS We started off with data customers and slowly moved into the voice market. It s not a pure voice technology. That s very different from traditional carriers for whom voice is the main business. people are willing to carry as a second handset. Voice will be included in the data service. Like our new data modem, it s a data card, but we put a voice function inside the data card. So, when people use it for data, if they lose the battery in the main handset, they can use the data card as the voice handset. When speaking of mobile broadband, content is often said to be king, and traditional wisdom warns operators not to become a dumb data pipe. Yet, EMOBILE deliberately adopts the open platform strategy for both devices and application. Customers can choose from a great variety of terminals that can serve all kinds of PC functions, at the same time, they are free to enjoy streaming content, financials, interactive game and security services etc. Regarding the open platform strategy, Dr. Semmoto said, We are confident in providing a pipe. It is a pipe, but it is a GREAT pipe. High speed, flat-rate mobile broadband data is in itself a differentiated service. Market leader in mobile speed and price The great pipe delivers the fastest speeds coupled with the lowest flat-rate plans in Japan. According to Eric Gan, EMOBILE s customers are very speed sensitive as they basically use the mobile for a PC connection. So EMOBILE positions speed as its biggest differentiator. We are ahead of our competition in 7.2Mbps HSDPA product. On Nov. 20, 2008, we launched our HSUPA product with speeds up to 1.4Mbps, which was the first time in Japan. We just have to be the first one in Japan to do all these new services, compared to the existing operators. EMOBILE offers not only the fastest speeds, but also the lowest price. We are also the first in Japan to launch flat-rate in The flat-rate plan Eric Gan mentioned is as cheap as USD10 a month, considerably less than its rivals wireless-broadband offerings which normally range from USD40 to USD80 for equivalent speeds. In addition to the lowest flat-rate, EMOBILE launched a revolutionary new data card bundling service with the UMPCs (Ultra Mobile PC) in July With a twoyear EMOBILE contract, the PC is priced at USD1 to USD200, compared with USD2000 to USD3000 for some big name brand PCs and customers can pay in installments for 24 months. This changes drastically the business model for selling PCs for first time in Japan. The market actually exploded. commented Dr. Semmoto, This is extremely good considering the financial crisis. Consumers spend less, our network has the cheapest flat-rate, and you can get PC for USD1, or USD100. This is perfect. To ensure EMOBILE s ability to always lead in mobile speed and price in the future, Dr. Semmoto maintains that it is important to go for the mainstream technologies. I doubt the future of CDMA2000, PHS and WiMAX, because major worldwide operators are moving to GSM/ WCDMA/LTE as the mainstream technology. We are now using HSDPA, and we just started with HSUPA. MIMO EHSPA (HSPA+) might join the stream, and LTE is coming, but the issue is when and how. Competitive price structure To provide the lowest price without sacrificing the 9 Win-Win / FEB 2009

5 Now aided by very small, briefcase-sized radio units, you can even hang the equipment on the wall. So the price to build is just one tenth of the traditional base station, and we can build them very quickly. fastest speed, Dr. Semmoto explained, We are very costconscious compared with the incumbent companies. We have a lot of wisdom in regard to cutting costs. That s why we have much lower costs and prices. One of the pearls of cost-saving wisdom is to keep the headcount as small as possible. You don t want to be a big company. Smaller is better. It s the leader s management philosophy. If you run the company like the incumbents, it s a group of bureaucrats like government or big telecom companies. EMOBILE has a surprisingly small headcount with only 560 employees, and new graduates comprise more than half of the total number. Eric Gan also highlighted the cost benefits by using small-sized Node B, I think capital spending is the function of how to build the network. The radio station is the major cost for a mobile carrier. When deploying base station, operators normally put a huge cabinet in a big room with air conditioning. Also, it incurs more running costs, uses more electric power, consumes more rent and requires a higher backbone as well. Now with the latest technology, aided by very small, briefcase-sized radio units, you can even hang the equipment on the wall. So the price to build is just one tenth of the traditional base station, and we can build them very quickly. In Japan, we have earthquakes. A lighter base station to put on the rooftop is always easier to negotiate than the traditional one. Running costs are much cheaper, because we pay less rent and use less electricity. Eric Gan added. The base station mentioned above is the distributed Node B designed and produced for EMOBILE by Huawei. A robust future Dr. Semmoto is quite positive about future market potential and said, Although more than 80% of the Japanese population owns a mobile phone, there is evidence of an increasing demand for second handsets. We estimate combined demand in Japan is about 30 million additional subscribers. EMOBILE is focusing on this growth opportunity. While the current financial crisis brings a lot of fear to the industry, EMOBILE actually sees great opportunity. We are very fortunate that we completed full funding of USD1.4 billion in 2006 for the following 5 years until 2011, before the current worldwide financial crisis. More importantly is that, because of the financial crisis, people tend to be more careful with their spending, which brings great opportunity for EMOBILE. Eric Gan added, People may not want to pay for an expensive fixed line. Instead, they may opt to use a mobile phone with a modem inside just to cut cost. This fits perfectly with our strategy to target at the price sensitive users. Operators can not succeed all by themselves. To form strong partnerships with capable and devoted partners is imperative for sustainable growth. Dr. Semmoto has appreciated the collaboration and cooperation with Huawei. Huawei from day one has been an excellent partner to us. In the past, Huawei was totally a stranger in the Japanese market. You have grown enormously in the last 20 years. You have now become one of the leaders in the telecom arena. I think that jointly EMOBILE and Huawei can be prosperous if we stay very entrepreneurial, very challenging and take risks. Editor: Gao Xianrui sally@huawei.com FEB 2009 / Win-Win 10

Huawei Technologies

Huawei Technologies 2005.10 8 VOICE FROM OPERATORS T-Mobile Czech: convergence, aggregation and evolution Technology Director of T-Mobile Czech Republic, Frank Meywerk, met with WinWin and explained the