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Broadband with no Boundaries

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Presentation on theme: "Broadband with no Boundaries"— Presentation transcript:

1 Broadband with no Boundaries
www. Broadband with no Boundaries Expocomm, Buenos Aires September 2008 © Nokia Siemens Networks Author Presentation Department

2 Our market vision of 2015 – the World connected
www. Applications pre-dominantly in Internet Broadband Everywhere 5 Bn people connected Multitude of business models Applications predominantly in Internet wichman7Key points to remember: Today there are approximately 3 billion people connected to each other, be it over a fixed of mobile connection. Interesting to note that it took from 1876 (when Alexander Graham Bell invented the telephone) until now to get to that number. We think that within the next 7-8 years, another 2 billion people will get connected. Pretty incredible to think how rapidly that timeline has changed Because of this rapid change, we will see a lot of various business models succeed. Applications will come from a variety of sources from all over the world. Micro-economies will pop up, allowing many different business models to thrive in an open internet New growth markets will be connected to developed economies, what will that mean? People in developing countries will use a mobile device as their wallet, their Identification, their communication and web device Are we ready to support this change? © Nokia Siemens Networks Author Presentation Department

3 What trends are currently changing our industry? From Voice to data
www. Economic trends Price erosion New service Strategy Traffic ARPU Cost Technological trends Penetration of Internet Broadband access Requirements for higher profitability in the world of communication Cheap voice for the mass market Multimedia applications as a commodity, and mobility High bandwidth and capacity at low cost Social trends Mobile communication everywhere Richer communication The current trends put operator demands in conflict with subscriber requirements: Profitability vs. The market wants ‘more for less’ © Nokia Siemens Networks Author Presentation Department

4 Content Service trends End-user insights
www. Service trends End-user insights Broadband service strategy development Broadband service examples & success stories Broadband Solutions & Evolution Summary © Nokia Siemens Networks Author Presentation Department

5 Broadband data is the growth segment in the telecommunications market
www. Worldwide Service Provider Revenues (bn €) CAGR 1.180 1.230 1.080 1.130 178 1.020 154 Broad-band 130 Mobile Data 18,6% 107 85 118 126 95 109 79 38 44 50 56 31 Fixed DSL+Internet 10,1% 44 40 35 31 28 Fixed Data IP/Enet 14,9% 436 452 468 482 495 Fixed Data Legacy -11,1% Mobile Telephony 3,1% Total Telecom Service Revenues grow at more than 4 %, voice revenues at 2 % p.a.. In developed markets, both fixed and mobile voice service revenues are becoming commoditized; revenues and margins decline Fixed telephony service revenue decline. FMS and VoIP may have a higher impact as currently estimated. The change to low/no cost VoIP services is driven by Google/Yahoo/Skype and other ISP s. Telcos e.g. Orange, KPN, KT start to compete Legacy data revenue (ATM, FR, leased lines) declines. Enterprise subscribe to IP/Ethernet services which grow double digit. Worldwide mobile voice revenue growth is mainly in developing countries while in many developed nations revenues decline. Overall fixed network service revenue growth is about 1.7%. Talk is that IPTV + advertisement revenue can improve growth. Both fixed and mobile operators seek new revenue in the media/entertainment/advertisement/online sales sector Mobile voice and mobile internet will be the affordable choice for developing countries 352 348 343 340 336 Fixed Telephony -1,1% 2006 2007 2008 2009 2010 Source: Nokia/Nokia Siemens Networks July 2007, Yankee Group Fixed Revenue © Nokia Siemens Networks Author Presentation Department

6 3G Subscriber Market Share
Mobile internet access is taking off - Worldwide 3G Penetration is hitting 15% www. 3G Subscriber Market Share 70% 60% Japan 50% Korea Italy 40% UK France 30% Australia 20% Portugal US 10% 0% 2 4 6 8 10 12 14 16 18 20 22 Quarters after Launch Source: Strategy Analytics 2007 3G relates to WCDMA and CDMA2000 1xEV-DO © Nokia Siemens Networks Author Presentation Department

7 Services become network independent
www. mobile networks PLMN broad- band traffic fixed networks Data and IP WLAN VoIP mobile devices (device FMC) device FMC PSTN broad- band VoIP time VoIP is the first service to become network independent Broadband enables VoIP … and finally mobile broadband support VoIP as well Mobile devices support VoIP over WLAN and affect mobile networks WLAN unwires VoIP © Nokia Siemens Networks Author Presentation Department

8 Benchmark of active user bases (subscribers in million)
Major internet portals offer VoIP to their large active user base, threatening traditional telcos www. Benchmark of active user bases (subscribers in million) Top 5 internet portals (# IM and VoIP subscribers) Top 5 fixed operators (# subscribers) China Netcom 127 4) AT&T 76 4) Google 4672) Google alone has as many users as the top 5 fixed operators. Google is very successful, translating into a stunning profit margin of 25-30%, while revenue and profit have grown at 143% CAGR Google achieves an ARPU of about €5,000m/450m site users in 2005 = €12/y = €1/month Skype has already 136m VoIP subscribers, however thereof only some 15% are active. Uncertain regulation regarding VoIP: will operators be forced to let pass VoIP traffic over their networks? (hence operators will not be allowed to hinder VoIP traffic?) You may say: these are only internet players, where is the overlap with operators? Of course churn is much higher and no close user relation, no billing, … On the other hand, ISP’s do not have to invest in network infra NTT Corp 55 5) Verizon 53 4) T-Com 50 5) eBay/Skype ) Top 5 mobile operators (# subscribers) 5) China Mobile 296 Vodafone 192 AOL 533) China Unicom 163 MSN 273) Telefonica Móviles 118 1) Members + VoIP users, 10/06 2) Site users, 10/06 3) Active IM users, 03/06 Yahoo 223) T-Mobile 92 4) Status: , source: company pages 5) Status: Q3/2006, source: company pages Source: Nielsen/Netratings 03/06, Nokia Siemens Networks 2007 © Nokia Siemens Networks Author Presentation Department

9 Expansion towards Quadruple-Play Offers
Market boundaries are diminishing – different players are increasing their addressable market www. Typical strategies Expansion towards Quadruple-Play Offers Mobile Voice Fixed Voice Broadband Internet TV Fixed and mobile Broadband Internet Bundling with VoIP and home multimedia Unification of Customer Relationship Management Hybrid provider Mobile only broadband on the move and at home Hybrid strategy with additional fixed broadband offer PSTN substitution with home zone or VoIP on top of DSL Mobile provider MVNO launch Fixed broadband with VoIP on top as complementary voice product IPTV based home multimedia Fixed provider Boundless competition A clear trend can be seen in commercially packaging broadband access, VoIP, mobile telephony to triple play bundles or even to quad play bundles, if TV – as traditional TV or new IPTV - is also included. Such bundles are offered from all types of provides like MNOs, FNOs or ISP independent from which market segment they are coming from. Broadband access can be offered in different ways: Via DSL and PON technologies, providing superior data rates or via HSDPA and WiMAX providing superior mobility. At the same time content providers, retailers and other organizations are entering the communications industry. Some of them target at the low end user segments by offering cheap and basic services. Others are placing service innovations like many Internet players who are constantly launching new applications. Most of those market players are establishing large user communities which form the basis for accelerated communication within these groups. Once a critical mass has been reached, advertising revenues and further usage of community related applications like file shares, video streaming and office collaboration provide additional revenue sources. ISP MVNO launch Fixed boadband Internet with voice flat rate on top Own community setup Multi-play providers are often only virtually integrated, owning no or just one network, and offering services on the other side by utilizing others’ wholesale capacity. © Nokia Siemens Networks Author Presentation Department

10 Content Service trends End-user insights
www. Service trends End-user insights Broadband service strategy development Broadband service examples & success stories Broadband Solutions & Evolution Summary © Nokia Siemens Networks Author Presentation Department

11 The next step for applications is going mobile
www. Content Self-created Online distribution Mobile portals Mobile broadband Communities Contact networks Blogs Recommending, tagging, swapping content Information Search, maps Creation Publishing Virtual environments Gaming Dating Etc… WAPEDIA The addictive Internet applications are now really going mobile. All the biggest Internet services have mobile versions, like Google Mobile, eBay Mobile, second life mobile… On the other hand, wireless broadband technologies have developed so that even if there was no mobile-specific content, web pages can now be accessed with mobile terminals. Latest examples of mobile applications by Internet Service Providers include these: Google’s YouTube launching a mobile portal where you can both download and view videos and also shoot them and upload them Windows Live Mobile (has IM, Nokia co-operation – TeliaSonera already advertises the service in Finland with certain Nokia phones) Yahoo!Go is Yahoo’s mobile portal with the Yahoo! Go widgets: your own personal channels for , local info & maps, news, sports, finance, entertainment, weather, Flickr™ photos and search. AOL India has a mobile portal as well with AOL mobile and AOL Mobile Messenger (IM) plus ringing tones, wallpapers, and themes for mobile phones And then there is of course the newly launched Nokia OVI service with music, photos and whatever to follow Also traditional service companies like travel agencies, banks, online trading and others are seeking ways to extend their reach to people´s pockets with mobile services. Operators can help to bring these local brands closer to the local user base. Commerce Online commerce of physical and digital goods Work Mobile push © Nokia Siemens Networks Author Presentation Department

12 The users become active part of the Web2.0
Large user segments change from being a passive consumer to an actively participating “prosumer“ www. Web2.0 is deeply collaborative Intensive communication over various channels Media discovery Search and social interaction are replacing media company control Terms of consumption Consumers can time-shift, place-shift, and device-shift content User-generated and selected content Value of blogs, wikis, video clips and podcasts etc) increases by tags and comments of others Consumers are becoming producers and consumers at one and the same time. The former supremacy and authority of the classic media are being increasingly splintered by greater ease of access to publication and they are experiencing a shift to becoming recipients. The model is turning into a dialogue and finally into co-production. The user is demanding participation at all levels of media content production. He is becoming the media institution in his own right and thereby the owner of the medium. The users become active part of the Web2.0 © Nokia Siemens Networks Author Presentation Department

13 User loyalty is strongly decreasing
www. Likelihood of changing operator/ provider within next three months % Full question wording (Mar 04-Jul 07) Q20/ R2/ R2a/ K8 How likely, or unlikely, are you to switch your network operator in the next 3 months? Prompted list: Certain to change operator Very likely to Fairly likely to Fairly unlikely to Very unlikely to Certain not to change operator Base: All main mobile phone users © Nokia Siemens Networks Author Presentation Department

14 Data service quality, service portfolio and service bundles are major sources of subscriber dissatisfaction www. Satisfaction Top 2 boxes (4-5) % Satisfaction level with current mobile operator overall and with respective aspects % Overall satisfaction Voice/ reception quality Network coverage Brand/ image of network operator Handset offerings Tariff structure and bundle offerings Customer care/ after sales service Service offerings Call cost Quality of data service (including speed) Data cost 31 39 21 5 3 1 70 74 71 65 60 57 55 53 49 40 33 41 17 4 1 3 33 38 17 6 2 3 31 34 27 2 1 5 28 32 22 5 2 11 26 31 25 6 3 8 26 29 23 9 4 9 23 32 27 5 1 11 Full question wording Overall satisfaction (Jul 07) K3 Overall, how satisfied are you with your current main network operator on a scale of 1-5 where 1 is not satisfied at all and 5 is very satisfied? Satisfaction on other aspects K4 And how satisfied are you with your current main network operator in the following aspect on a scale of 1-5 where 1 is not satisfied at all and 5 is very satisfied? Prompted list: - Call cost - Data cost - Network coverage - Voice/ reception quality - Quality of data service (including speed) - Brand/ image of network operator - Handset offerings - Mobile service offerings - Tariff structure and bundle offerings - Customer care/ after sales service 5- Very satisfied 4 3 2 1- Not satisfied at all 22 31 29 10 4 3 21 28 25 5 1 19 17 22 26 9 4 21 N=603 5 - Very satisfied 4 3 2 1 - Not satisfied at all Don’t know/ refused Base: All main mobile phone users © Nokia Siemens Networks Author Presentation Department

15 User experience in terms of simplicity, quality, speed and ubiquitous availability is key
www. Prompted – Top mentions Top 3 most influential factors for using broadband content services % Pricing of services Ease of access Speed of downloading Quality of image and sound Speed of browsing Up-to-date service content Popularity of services Network quality or reception Variety of content service category/ topics Knowledge of the benefits/ information of the service Speed of video/ audio streaming Variety of information within content service category Word-of-mouth of services Ability to download to phone and PC at same time/ cost 66 45 31 26 25 21 15 15 15 Full question wording Top 3 influential factors for using content services E18c Talking about overall usage of any content services, of the following, can you please tell me the TOP THREE influential factor in determining your use of these content services we have just been talking about? Prompted list: Pricing of services Variety of content service category/ topics Variety of information within individual content service category/ topics Up-to-date service content Ease of access Speed of browsing Speed of downloading Speed of video/ audio streaming Quality of image and sound Network quality or reception Popularity of services Word-of-mouth of services Knowledge of the benefits/ information of the service Able to download to phone and PC at the same time/ for the same cost 9 7 4 3 2 Base: All who have ever used any content service (184) © Nokia Siemens Networks Author Presentation Department

16 Content Service trends End-user insights
www. Service trends End-user insights Broadband service strategy development Broadband service examples & success stories Broadband Solutions & Evolution Summary © Nokia Siemens Networks Author Presentation Department

17 The user‘s „why, where and how“ questions have to be answered convincingly
www. User desired benefits Key success factors for provider differentiation „Why should I use it?“ Premium interactive multimedia services Enhanced Web2.0 Premium VoIP Converged IPTV Staying connected with peers and personal content „Where can I use it?“ Ubiquitous high speed access Always best connected - wireless and wireline Bandwidth evolution from xDSL towards xPON Bandwidth evolution from HSPA towards LTE & WiMAX Best available quality and speed on most appropriate device „How complicated is it?“ Access independent service availability Common access method and feature set Call continuity between stationary and on the move Convenient usage avoiding cognitive effort © Nokia Siemens Networks Author Presentation Department

18 Providers competitive advantage – providing premium services ubiquitously and simply
www. How to gain competitive advantages? „How complicated is it?“ „Why should I use it?“ Access independent service availability Premium interactive multimedia services Multi-play Ubiquitous high speed access „How fast is it? Where can I use it?“ © Nokia Siemens Networks Author Presentation Department

19 Different broadband use cases have to be covered to maximize share on subsriber‘s wallet
www. Broadband multiplay arena At home / office Stationary Internet (incl. basic VoIP) IPTV home infotainment 40€ Inner multiplay area - Differentiation & Up Sell 20€ Internet Web2.0 communities Premium VoIP Premium content TV 10€ 2€ 8€ Mobile Internet Mobile TV Broadband ARPU estimate for active users of the service Average Western Europe values Only direct revenues, no advertising considered On the move © Nokia Siemens Networks Author Presentation Department

20 Content Service trends End-user insights
www. Service trends End-user insights Broadband service strategy development Broadband service examples & success stories Broadband Solutions & Evolution Summary © Nokia Siemens Networks Author Presentation Department

21 Quadruple play packaging is a megatrend in the market
www. Source: DTAG, 2006 Source: Wanadoo, 2006 Source: BT, 2005 Source: Cascade- A PCCW NGN Asia, 2006 © Nokia Siemens Networks Author Presentation Department

22 Content Service trends End-user insights
www. Service trends End-user insights Broadband service strategy development Broadband service examples & success stories Broadband Solutions & Evolution Summary © Nokia Siemens Networks Author Presentation Department

23 Price per Mbyte has to be reduced to remain profitable
www. Traffic volume Traffic volume Revenue Network cost (€/bit) Time Voice dominated Data dominated Source: Light Reading (adapted) © Nokia Siemens Networks Author Presentation Department

24 Availability of access highways Innovating wired and wireless access technologies and standards
www. GERAN evolution / HSPA & LTE  Towards cost efficient high speed mobile access Radio technologies for IMT-Advanced  Increased spectral efficiency, link capacity and coverage DSL and fiber evolution  Towards cost efficient high speed fixed access GERAN evolution / HSPA & LTE HSPA/LTE will provide DSL like wireless connectivity and will they be dominant broadband wireless technology globally I-HSPA is pre-LTE and provides significant cost reduction to deploy large scale mobile data EDGE evolution increases current EDGE performance 2-3 fold and will provide seamless application coverage between HSPA – EDGE layer Radio technologies for IMT-Advanced Radio performance evolution based on antenna technologies like beam forming and MIMO Enables increased spectral efficiency, link capacity and coverage within limited available bandwidth DSL and fiber evolution Enable new revenue creating services (e.g. IPTV, VoD): significant market growth for fixed operators offering bandwidth ≥ 24Mps Hybrid solution with optical front-end to CO and VDSL2 to subscriber (last 100m) Push seamless optical WDM and PON interfaces, delivering up to 1Gps+ to fixed subscribers © Nokia Siemens Networks Author Presentation Department

25 Availability of access highways … in terms of bit rate, coverage, quality, security
www. 1990 Time 1995 2000 2005 2010 100k 1M 100M 1G 10G 10M GSM 9,6 Kbps ISDN-BRI 2x64+16 Kbps ADSL 3-8 Mbps Cable Mbps GPRS Kbps EDGE Kbps WCDMA 2 Mbit/s HSDPA 10 Mbps Fixed Access Mobile Access VDSL 50 Mbps FTTH 155 Mbps LTE 100 Mbit/s 4G 1 Gbit/s Bandwidth (bps) [peak user data rates] DSL is the benchmark for end-user experience today Requirements on network set by Innovative services with high volume traffic (e.g. IP TV) Interactive Web2.0 based applications Increase bitrates on copper cables utilizing the existing infrastructure Improve fiber optics to maximize performance-to-cost-ratio Drive radio access evolution addressing performance and cost challenges Build-up powerful and flexible backbones for high-volume traffic at high quality The situation is characterized by the following issues: Rapid increase of new, affordable and innovative services and service packages for end-users and enterprises Extremely bandwidth hungry services, such as IP TV and Video on Demand DSL is the benchmark for end-user experience today, similar experience users expected for wireless access. Increasing traffic in all communications network To manage these issues, technology development must focus on: Develop copper cable access based technologies utilizing existing infrastructure Improve fiber optics Drive radio access technologies evolution addressing performance and cost challenges Build-up powerful and flexible backbone networks in order to carry all required services in high quality manner with quality of service Standardization provides building blocks for vendors to develop new high performing radio access solutions. © Nokia Siemens Networks Author Presentation Department

26 Content Service trends End-user insights
www. Service trends End-user insights Broadband service strategy development Broadband service examples & success stories Broadband Solutions & Evolution Summary © Nokia Siemens Networks Author Presentation Department

27 Broadband everywhere….
www. Enforced competition is re-defining the market Market boundaries are diminishing, Major internet players are threatening telcos With broadband access, services become network independent. User loyalty is strongly decreasing Data service quality, service portfolio and bundles are major sources of dissatisfaction Speed, ubiquitous availability, quality of content presentation and simplicity is key Premium interactive services Premium VoIP to address the Web2.0 paradigm shift IPTV with personalized and interactive content Strong user, ARPU and loyalty growth Ubiquitous high speed access Fast rollout of sufficient DL and UL capacity needed: VDSL/fiber and HSPA/WiMAX) Hybrid fixed and mobile strategy for maximum revenues Access independent service availability User is always best connected No complexity challenges for the user Service continuity and simple access to personal service suite © Nokia Siemens Networks Author Presentation Department

28 Thank you !


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