Business Implications of Digital Convergence
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1 Business Implications of Digital Convergence : A Telco Perspective Lee, Sanghoon KT 1
2 I Digital Convergence II From Technology to Value III Telco Business Direction IV Network & Platform V Concluding Remarks 2
3 Digitized Information Explosion Volume of data (Gigabytes) 2003: 24B 57 Billion Gigabytes in % of all data is born digital 17 Billion devices will be connected by : 12B 2001: 6B 2000: 3B Writing 3500 BCE Cave paintings, Bone tools 40,000 BCE Paper 105 Printing 1450 Electricity, Telephone 1870 Transistor 1947 Computing 1950 Internet (DARPA) Late 1960s The Web 1993 Time Source : UC Berkeley, School of information management and systems 3
4 Convergence: The Natural Next Step Terminal Service Providing Subscribe, Purchase, Deposit Service Providing Subscribe viewing Purchase Deposit Subscribe Terminal Delivery Delivery Cable Market Financial Network Network Digitalization Delivery Broadband Internet Packaging Edition Edition Making Operation Connection Packaging Media Convergence Producing News Video Audio Design Finance Voice Producing News, Movies, Music, Finance Being Digital: All information having the common format They can easily mix They can be delivered using the common mechanism They can be easily used in the same terminal Service Convergence Network Convergence Terminal Convergence 4
5 Impacts on the Industry Traditionally separate market boundaries blurred Competition horizon expanded almost without limit Opportunities or threats: which is bigger? * Source: ITU-T July
6 Impacts on the Value Chain Producing Packaging Delivery Window /Service Providing Past Now Competition within the same value chain boundary Competition beyond the traditional value chain boundary 6
7 Value Migration Producing Packaging Delivery Window /Service Providing High > Google (16.2) Ebay (9.5) Yahoo (7.9) Microsoft (5.2) Packaging or Window /Service Providing 4.0 Market Value Sales Value in-flow TW (2.2) Disney (2.0) Delivery (Traditional Comm.domain) Value dragging Verizon (1.8) KT (1.4) KTF (1.4) 0.5 Low 0.0 Value out-flow High Operating Profit Growth Low * Source: Mercer Value Migration Database 7
8 Delivery Segment Producing Packaging Delivery Window /Service Providing Converged Communications global value migration 100% 80% Wireless Share of overall value (in %) 60% 40% 20% 0% Wireline Traditional Carriers Wireline Non-Traditional Carriers ISPs Cable / Satellite * Source: Mercer Value Migration Database 8
9 From Technology to Value 9
10 Evolution of Technology IT evolution = better convenience and more functions at lower price. ASIC Tech. prospect(source:itrs) Gate Length(nm Evolution of Access Network (Mbps) Convergence Devices (Mobile+Camera+MP3) Internet connection Fee per 1Mbps 1588 Convenience Function Price Internet connection fee K D/U ADSL VDSL 50M VDSL 100M FTTH VDSL(x-PON) (won/mbps) But, IT evolution does not guarantee Telco s revenue increase.
11 Creating Value Out of Technology Technology Communication Computing crystal clear voice crisp video ubiquitous connectivity high processing power larger/faster storage Σ Content/Application Intelligence information education, health, personalization location/device-aware = Customer Value Innovation Secure identity protection theft-free Value User Interface Design easy & intuitive art 11
12 Change of Life Style Interesting News Today s schedules Real-time traffic information Multimedia contents Morning Going to work Dinner time Working Various information for business use Customer Value (Technology + Emotion) Suggesting menu & restaurant considering participants taste, schedule, and weather. How about MiSS &Mr. today at 63 Tower? 12
13 A Key Factor for Future Business Identity & Privacy Protection <KBS News : whole day captured by CCTV > Going to Work by Elevator, Walking Street, Taking a Subway, Studying at institute, Using ATM, Eating meals in restaurant, Coming back home by bus Eyes watching me in everywhere Big brother? Wonderful Life? 13
14 Make Life Simple and Secure Secure/Trusted Activities in the On/Offline World Work Health Care Telecom Leisure Health Status Blood Group Name Age Birthday Tax Insurance Status Foreign Address Picture Driving Languages Birthplace License Travel Phone Number Internet ID Internet Likes & Dislikes Credit Rating Income Shopping Payment Community Interests Social network MasterCard Government Role 1: ID & Privacy protection Reputation & Trust System secure transaction trusted brokering credential protection social networking Role 2: Trusted Agent for the User 14
15 Telco Business Direction 15
16 Expand to Neighboring Fields i-frame Power Control CCTV Residents/Managers Centralized Control Telemetering Elevator Control EntryControl Internet In Emergency, Automated dispatch Auto. Job Allocation Tech. Support Dispatch MOS Team Regular Maintenance Monitoring Preventive Maintenance Provide Ubiquitous Total Care Service based on NM Capacity - Leverage Telco's connections with the customers - Expand the ability to manage Telco's facilities to u-thing 16
17 Expand Core Competency Voice/Fax Now Multimedia On demand Delivery of Image/video Home (TV, PC, i-frame) Tomorrow Delivery (Taxi, Cart, u-billboard, e-paper) Entertainment (Karaoke, DVD Room) Large-capacity Multimedia Data Image Delivery Platform Content Production Theater (Screen) Restaurant (Menu) Expand Controllability of POTS to Display Devices - Deliver diverse multimedia content including images and videos - Provide diverse image delivery services including u-theater, u-ad., IP-TV, i-frame 17
18 Total Care Service An integrated service set that suits varying customer demands. Safe, secure, & uninterrupted service. Diagnose Weight Diabetes Heart Blood u-health Mobility Manage Video Conf. VoIP Portal u-office Various Services u-edu. Navigation Manage Emergence u-traffic Metering Appliance Visitor Viewer Manage Invasion u-home Manage Counsel Language Mobile Edu. Customer Context analysis platform Customer Needs Privacy protection platform 24 hours * 365 days management/control Total Care Services Customers Control Weight Navi. Manage car state u-health + u-home + u-traffic Control sugar diabetes Control weight Remote diagnose Remote metering Navigation Remote Foreign Lang. conversation u-health + u-traffic + u-office + u-edu Mobile Office 18
19 Change the Way of Doing Business Develop new solutions tailored to individual customer s needs based on u-block concept 3 rd Tier 2 nd Tier 1 St Tier Security Revenue Mgt. Approval Mgt. Shop Mgt. Financial Mgt. Manpower Customer Mgt. Broad band PSTN Leased line WiBro WiFi KT Ubiquitous Network Infra Technology Infra. System & Culture 24*365 Monitoring Requires big changes in the business nature & culture - Provide solutions for u-health, u-building, u-school, u-shop - Enhance customer value by offering appropriate solution at the right time 19
20 The Network & Platform 20
21 Why the Network & Platform Again? Innovation competition is awaiting Present: Separate Service Competition Bundle Competition Converged Service Competition App App App App App Broadcast Voice Broadcast Voice Broadcast Voice Broadcast Voice Voice/ Video Broadcast Delivery Delivery Delivery Delivery Delivery Marketing Competition Marketing Competition Innovation Competition t Differentiation in the network capability Fast service creation/delivery platform Integrated platform for the upcoming converged services Holistic management & maintenance capability 21
22 Regain Bandwidth Controllability Best Effort Services Access Network (Wire & Wireless) Best effort Network Non-PC PC Premium IP-TV, Services Video-Conferencing, Video-Learning, etc.. RGW Edge Router Premium Network Premium network with the high level of QoS & security - High-value service through bandwidth control of wire & wireless networks - Offer various differentiated service based on Premium network 22
23 Managed Broadband Network & Deployment 2 QoS Manager Best Effort Services Access Network 2 Premium-Network (All-IP) TGW PSTN Non-PC PC Premium Services IP-TV, Video-Conferencing, Video-Learning,Robot etc.. AGW : access gateway, TGW : trunk gateway RGW : residential gateway SER : service edge router RGW VDSL,LAN, SER FTTH, WiBro 23 1 Control/DHCP/Web System Best-Effort Network Media Gateway Managed access & backbone network as the major leverage - Strengthen bandwidth control of wire & wireless networks - Offer various differentiated services based on the Premium network AGW 1 New authentication Platform 2 Premium Network 3 FTTH(Wired Access) 4 WiBro(Wireless Access) 5 Home Network with RGW
24 Platform as Another 1 st Class Asset App App App Edge Service Node 응용서비스 Integrated Service Platform Platform Control Layer (AAA, QoS, Security, Mobility) Managed IP core Best Effort Internet Edge Service Node CAPEX/OPEX efficiency Fast service creation/delivery Easier 3rd party integration Multi-terminal support Enabling integrated/blended service fixed/wireless access network fixed/wireless access network The past is re-appearing (with wider acceptance now) - Telecom Information Networking Architecture (TINA) in the ATM+Corba era - Integrated Service Platform in the IP+Web Service era 24
25 Re-Shaping the Telco Business in the Digital Convergence Era Value-focused business design Big changes in the business nature and culture Total Care Services : An integrated service set that suits varying customer demands Expansion from the core competency to neighboring fields Telephone PC ComputingPowerHosting/Image On-offline service binding with holistic management capability Right Infra for the right business Network Premium network: QoS, New authentication platform, FTTH Customer premise network: RGW-based home network Integrated service platform Basic asset for the upcoming service innovation 25
26 Thank You! 26
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