LTE & 4G: end of mobile telephony? Mobile Broadband Ecosystem: the Global Market Opportunity & Challenges -

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1 LTE & 4G: end of mobile telephony? Mobile Broadband Ecosystem: the Global Market Opportunity & Challenges - Jean-Pierre Bienaimé Chairman, UMTS Forum

2 Summary (1)3G/3G+ Mobile Broadband worldwide deployments (2) Mobile broadband evolution towards LTE (3) Shaping LTE mobile broadband ecosystem

3 UMTS Forum 2010 Work program Key focus areas Spectrum & Regulation Advice to industry and administrations on 3G/LTE licensing & regulation Global spectrum and spectrum arrangements for UMTS/IMT-2000 and IMT-Advanced Global Broadband/LTE Ecosystem Study of LTE in conjunction with the Digital Home and Consumer Electronics Roadmap and competitive benefits for HSPA, LTE and beyond Key Growth Markets Studies and workshops on mobile broadband and technical choices Promotion of the use of mobile service allocations and Digital Dividend Main activities Studies, Reports and White papers Communication and Promotion Visibility and participation at conferences, exhibitions, seminars and workshops Relationships with regulators, administrations, international media and financial community Contributions to international organizations (ITU, EC, CEPT/ECC, 3GPP) Partnerships with international bodies (ETSI, NGMN, GSMA, ICU, COAI, APT, 3GAs )

4 3G/UMTS mobile broadband: a global mass market More than 700m 3G subscribers (UMTS + EVDO) worldwide in which over 550m UMTS/WCDMA subs, inc. around 250m HSPA subs Over 3.5 times as many UMTS/WCDMA subscribers as CDMA2000 EV-DO Over 340 WCDMA networks (inc. 160 in Europe) in 135+ countries......in which over 320 HSDPA networks, 170 HSUPA networks, and over 40 HSPA+ networks launched Around 15 UMTS 900 networks launched And over G/UMTS/HSPA devices

5 Mobile broadband network deployments Source: Sofrecom

6 Mobile broadband subscriber base and market share Source: Informa

7 The challenges of the Wireless Industry Support the fast increase of the data traffic Provide uniform QoE to end users While allowing operators to remain profitable 3GPP and the industry are working on technical solutions to these challenges

8 What is Long Term Evolution (LTE)? The next step in the evolution of 3GPP radio interfaces to deliver Global Mobile Broadband : Mobile broadband is an evolutionary process to optimise current assets, before moving towards new systems, network radio interfaces and spectrum LTE protects operator investments in GSM/WCDMA/HSPA systems, allowing smooth migration according to market requirements while retaining the benefits of 3GPP family technologies (security, worldwide coverage, roaming, etc) LTE is a cost-effective solution, as smooth evolution from legacy system, offering close interworking with legacy systems & high inter-working performance, re-use of current roaming agreements, and smooth upgrade from current CN products. LTE has the potential to become the next GSM Bill Huang, CTO, China Mobile (Nov.2008) Standardization based on improved use of the radio spectrum and on simplified system design Source: 3GPP & UMTS Forum 8

9 Radio Evolution Data rates LTE Mainstream global choice for next generation 3GPP GSM EDGE WCDMA TD-SCDMA HSPA LTE FDD and TDD 3GPP2 CDMA1X EV-DO IEEE WiMAX e 1 Mbps 1 40 Mbps Mbps Source: Ericsson

TX TX Spectrum flexibility variable channel bandwidth Simplicity:

10 LTE main features OFDM Radio Technology larger peak & average rates Multi-antennas transmission powerful MIMO algorythms OFDM (DL) SC-FDMA (UL) TX TX Spectrum flexibility variable channel bandwidth Simplicity: Self-Organizing Networks & All-IP RAN ultra-low latency 1.4 MHz FDD IP transport 20 MHz TDD

LTE & LTE-Advanced Terminal capabilities peak rates 150 Mbps 50 Mbps 300 Mbps 75 Mbps LTE Advanced Release 10 and beyond 600 Mbps 150 Mbps 20+20 MHz BW 64 QAM UL MU-MIMO (DL) 1000 Mbps 500 Mbps 100

11 LTE & LTE-Advanced Terminal capabilities peak rates 150 Mbps 50 Mbps 300 Mbps 75 Mbps LTE Advanced Release 10 and beyond 600 Mbps 150 Mbps MHz BW 64 QAM UL MU-MIMO (DL) 1000 Mbps 500 Mbps 100 MHz BW 8x MIMO MHz 64 QAM UL MU-MIMO (DL) 4x MIMO 4xMIMO 4xMIMO MU-MIMO (UL) MU-MIMO (UL) MU-MIMO (UL) OFDM OFDM OFDM OFDM 64/16 QAM DL/UL 64/16 QAM DL/UL 64/16 QAM DL/UL 64/16 QAM DL/UL 2x MIMO 2x MIMO 2x MIMO 2x MIMO

12 Commitments to LTE More than 60 Operators in over 20 countries Vodafone and more to come Source: Press releases and GSA (15 April, 2009)

13 LTE deployment roadmap

14 The scope of the ecosystem LTE will be characterised by a complex, healthy ecosystem developed by a collaborative industry LTE will see the emergence of dynamic new business models not hitherto experienced in the mobile space Momentum group Business and general consumer markets Enabler group Standards bodies Regulator Foundation group Operators User device vendors Rich voice, VoIP. cct switch support Media access and internet TV Broadcast mobile TV Enterprise VPN Vertical-specific applications Home / consumer electronics Industry bodies Infrastructure suppliers Service / content providers Gaming Internet-based applications Test equipment manufacturers App ns software developers Improved mobile broadband Transport and logistics Chipset manufacturers Complements existing services Machine to machine apps The ecosystem will support new vertical and horizontal markets

15 The breadth and depth of the ecosystem Non-voice mobile services will be increasingly important: Evolution from traditional mobile network ecosystem to incorporate internet applications, new services, devices and content delivery mechanisms Wider and deeper ecosystem than for any previous mobile technology Complexity and size brings challenge for LTE: relationships and dependencies which have to work effectively for the full opportunities for LTE to be realised Major components of the Ecosystem: New end user communities; new industry verticals and M2M A greatly increased community of consumers, industry and vertical sector users Applications and services Devices evolution: handsets => smartphones => laptops, netbooks and application-specific devices Chipsets, client software, OS, user interfaces, displays, batteries Widening systems capability: network, IT, back-office LTE 3G 2G 3G LTE LTE 3G 2G 3G LTE LTE 3G 2G 3G LTE LTE 3G 2G 3G LTE LTE 3G 2G 3G LTE The ecosystem for each mobile generation has increased in breadth and scope

16 LTE: enabled services Mobile data applications will drive LTE Voice will remain the leading revenue generator for some time but solutions for the handling voice services over LTE are under consideration and in trial and will depend on operators strategies to retain and protect current voice revenues 80% Video services will enjoy the greatest benefits from LTE, but faces competition from Wi-Fi access, which in turn will also influence the operator strategy for inbuilding and hot-spot femtocell deployment. Real time/ interactive services: Network storage will become a commodity; social networking and mobile gaming will become more popular. Location based services will raise the possibility of new business models that can alleviate the ARPU decline. Machine to machine traffic is not foreseen to be a driver for LTE launch, but is perceived as a long-term strategic market opportunity for LTE. Many existing services will be enhanced by LTE; plus new service opportunities 60% 40% 20% 0% Hollywood TV film programme Sport Home movie Music video Adult Short clips TV device 63% 58% 33% 32% 27% 17% 10% PC 47% 43% 27% 28% 32% 19% 18% PMP 17% 16% 11% 10% 20% 6% 9% Mobile phone 9% 13% 11% 7% 15% 5% 9% Video Content and devices preferences Source: Ovum

17 End user survey: no killer app National market needs (as well as more narrow segments) will need to be understood by device vendors, application developer and service providers there is not a homogeneous world market With an improved mobile broadband experience, end users expect to: to do more of the same use mobile bb as they do their fixed service take advantage of the provision of their SP s applications an services Mobile TV, video-calls and video downloading are the top 3 services with the highest growth all bandwidth demanding will increase Information searching General online browsing Social networking Online shopping Music streaming Music downloading Video streaming Business use (e.g. VPN) Video downloading Online gaming Mobile TV Video call Mobile blogging Online betting / gambling Current preferred level Expected future increase Relative preference l Source: Ovum

18 Speed of end user transition Strong latent need for mobile broadband will stimulate interest at all levels of the value chain encouraging to rapid ecosystem development Could lead to in-building coverage, e.g. with LTE femtocells; metro femtocells; UMA devices Of current and active 3G users: 28% currently use mobile broadband exclusively as their consumer broadband service this will rise to 43% within 1 year after LTE introduction and to 51% within 3 years after LTE introduction Other users will use both fixed and mobile broadband services Adoption of higher speed broadband is seen as a compelling option

focus on data-only (USB, datacard); embedded (laptops, notebooks, PDAs ) (2010); handhelds

19 LTE ecosystem roadmap Chipsets: Initial focus on dual mode LTE/HSPA+ or LTE/EVDO; data-only; 2x2 MIMO; FDD (2008); TDD (2009); standard-compliant in 2010 Devices: Initial focus on data-only (USB, datacard); embedded (laptops, notebooks, PDAs ) (2010); handhelds ( ); consumer electronics (later) Infrastructure: Demos (2008), Trials (2009), Commercial (2010 )

20 Drivers for LTE Mobile data usage growth - iphone and similar Network efficiency: spectral efficiency and cost per bit Improved user experience: lower latency and higher throughputs Operator support. Lots of operators have made commitments since 2008 Multi-access Evolved Packet Core (EPC) Vendor community support Clear standards roadmap through 3GPP Rel 8, Rel 9 & future Rel 10 Regulation and availability of new spectrum Industry alignment and strong momentum - NGMN and LSTI Business model evolution and new revenue sources New services and web-based applications greater video orientation. Compelling support for LTE

21 Barriers and risks for LTE Challenges need attention, but are being addressed: no insurmountable LTE barriers Economic downturn and uncertainty of investment $s will impact the ecosystem speed and depth Investment cost vs sustaining legacy technology influence operator LTE rollout plans Network transition plans vary, impacting volume production economies End-user device availability. Initial device focus will be USB dongles, mass market devices will come later IPR effects on dual and multi-mode devices Early chipset / device compatibilities issues (prestandard equipment) Some interoperability of standards issues Regulation uncertainties: roaming difficulties if spectrum is not aligned among different regions Security and privacy in IP networks. New disruptive technologies?...

22 Rationale for a quick deployment of an LTE network The reasons for a quick deployment of an LTE network are multiple, and vary depending on the company: Reduce the data cost structure for operators already facing an explosion in mobile data traffic, especially owing to flat-rate or unlimited packages (this is the case for Telia in Sweden, in particular); Opt for a completely new network when the age and capacity of the core mobile networks would make expensive upgrades necessary; Differentiation from the competition on very active markets, rather like Verizon (USA), a CDMA EV-DO operator which needed to respond to competition from 3G+/UMTS (HSPA and HSPA+) Source: Orange Market Intelligence

23 LTE: spectrum choices for the operators LTE can be deployed in any of a wide variety of different spectrum bands. While GSM has typically been deployed at 900/1800/1900MHz, LTE can be rolled out across any of 21 different bands. However, 700MHz, 800MHz, 900MHz and 2.6GHz are likely to be the most common LTE bands. Here are the four choices given to operators: Roll-out using the digital dividend (700MHz in the U.S., 800 MHz in W. Europe); Deployment via new bands (2.6GHz IMT extension band); Use of re-farmed spectrum (850MHz/900MHz/1800MHz/1900MHz/2100 MHz etc); and/or New LTE spectrum bands could also emerge at 3.6GHz. In Europe and Asia, 2.6GHz has emerged as one of the key preferred LTE spectrum bands, while Verizon in the U.S. selected 700 MHz spectrum. Source: Orange

24 First TeliaSonera LTE Launch Stockholm LTE offering: - 60 per month for 30Go, up to 100Mbps - average throughput 30Mbps - same price as the best Telia fiber offer (unlimited 100Mbps) - 1.9x price of best 3G+ Telia offer (Fri+), but 10x speed

25 For more information

3G Technical Evolution as an evolving broadband solution

ITU-D Regional Development Forum for the Asia Pacific Region NGN and Broadband, Opportunities and Challenges Yogyakarta, Indonesia, 27 29 July 2009 3G Technical Evolution as an evolving broadband solution