1. Wir stehen für Wettbewerb und Medienvielfalt. Fixed and mobile broadband convergence Dr. Po-Wen Liu International Affairs and Information and Communication Technology RTR-GmbH

2. We are at the start of a tremendous development in the telecommunication sector Content of this presentation 31/10/2013Fixed and mobile broadband convergence 2 What is the current situation? Mobile broadband development What is to be expected? Future trends What are the main drivers? Parameters of mobile broadband Case Study Austria

3. The potential in the Arab States is enormous; the growth rate shows the increasing popularity of mobile handsets Overview of mobile subscriptions worldwide 31/10/2013Fixed and mobile broadband convergence 3

4. Focusing on mobile broadband, developing countries have accelerated the take-up of this technology Mobile broadband penetration in developed and developing countries Mobile broadband penetrationGrowth rate of mobile broadband penetration 31/10/2013Fixed and mobile broadband convergence 4

5. Although the mobile penetration rate in Arab States is low, this technology is growing fast Mobile broadband penetration analyzed by regions Regional mobile broadband penetrationGrowth rate of regional mobile broadband penetration 31/10/2013Fixed and mobile broadband convergence 5

6. The growth rate of mobile broadband exceeds the growth rate of fixed broadband Comparing fixed and mobile growth rate penetration for developing countries 31/10/2013Fixed and mobile broadband convergence 6

7. Experts expect 30% of internet traffic next year will result from mobile usage Expected growth of mobile traffic 31/10/2013Fixed and mobile broadband convergence 7

8. Trend 1: People want to work together and create together anywhere and anytime Collaboration 31/10/2013Fixed and mobile broadband convergence 8 From anywhere = mobile Co-workingParticipationSocialising Crowd funding Source: Stephanie Hofschlaeger on PixelioPixelio

9. Trend 2: People want to share; they need information anywhere and anytime Sharing 31/10/2013Fixed and mobile broadband convergence 9 Key to sharing = mobile Desk- sharing Transport: Bicycles, cars, … Information / Money Private sharing Source: Abigail Christiana on PhotobucketPhotobucket

10. Trend 3: People want personalized information anywhere and anytime Wearables 31/10/2013Fixed and mobile broadband convergence 10 Wearables = mobile SensorsMedicineShoes Google Glass Source: pauline on PixelioPixelio

11. Trend 4: People want locally relevant information anywhere and anytime Location based 31/10/2013Fixed and mobile broadband convergence 11 Information depends on location = mobile WikitudeLiving mapsTourismNextdoor Source: Thomas Siepmann on PixelioPixelio

12. The framework decides whether mobile broadband is regarded as a substitution for fixed broadband Reasons for substituting fixed with mobile broadband subscriptions 31/10/2013Fixed and mobile broadband convergence 12 Why substitute fixed broadband? Price Bandwidth/ Coverage DevicesUsage

13. Competition Universal Service Policy/ Strategy Substitution influences competition, universal service and policy Impact of substituting fixed with mobile broadband subscriptions 31/10/2013Fixed and mobile broadband convergence 13 Impact of substituting fixed broadband

14. 31/10/2013Fixed and mobile broadband convergence 14 Case Study Austria

15. Mobile broadband is the most popular broadband access in Austria Subscriptions 31/10/2013Fixed and mobile broadband convergence 15 Why subs titute fixed ? Price Bandwidth/ Coverage Devices Usage

16. The most popular services do not require high bandwidth Usage 31/10/2013Fixed and mobile broadband convergence 16 Why subs titute fixed ? Price Bandwidth/ Coverage Devices Usage

17. Prices for private customers are similar for fixed and mobile broadband Hedonic price development (based on 11/2006) – Products for private customers ≤ € 35 31/10/2013Fixed and mobile broadband convergence 17 Why subs titute fixed ? Price Bandwidth/ Coverage DevicesUsage

18. Comparison of parameters 31/10/2013Fixed and mobile broadband convergence 18 Fixed BroadbandMobile Broadband Price DSL: 8 Mbit/s: from € 17.90 on, 20 Mbit/s: from € 24.90 on (each price includes a landline for a phone) Cable boradband: 10 Mbit/s from € 15.90 on, 35 Mbit/s from € 22.90 on, 100 Mbit/s from € 49.90 1 GB: from € 4 on 9 GB: from € 8.80 on 20 GB or flat rate: from € 15 on Why subs titute fixed ? Price Bandwidth/ Coverage DevicesUsage

19. Only mobile broadband is increasing – an important indicator for substitution Usage of fixed and mobile broadband by private customers (01/2011, n=1462) 31/10/2013Fixed and mobile broadband convergence 19 Why subs titute fixed ? Price Bandwidth/ Coverage Devices Usage

20. USB-modems and data cards are significant indicators for substitution Device used to access 31/10/2013Fixed and mobile broadband convergence 20 Device used to access mobile broadband – Comparing housholds with mobile braodband only and households with fixed and mobile broadband (01/2011, mobile broadband only: n=350; fixed and mobile broadband: n=133) Why subs titute fixed ? Price Bandwidth/ Coverage Devices Usage

21. The development of devices shows a clear trend to mobile usage Technology Cycles 31/10/2013Fixed and mobile broadband convergence 21 Why subs titute fixed ? Price Bandwidth/ Coverage Devices Usage

22. Mobile broadband attracts narrowband and DSL users Change of internet access 31/10/2013Fixed and mobile broadband convergence 22 Customer Stream Mapping: Private Customers who changes their type of internet access within the last two years (01/2011; Percentage of all the changes; n=168; Streams <1% are not indicated) Why subs titute fixed ? Price Bandwidth/ Coverage Devices Usage

23. Comparison of parameters 31/10/2013Fixed and mobile broadband convergence 23 Fixed BroadbandMobile Broadband Bandwidth Maximum bandwidth (according to providers) ADSL 2+: standard product of 8 Mbit/s; up to 20 Mbit/s VDSL/FTTC: up to 30 Mbit/s Cable Network: for the most part up to 100 Mbit/s In reality the bandwidth lies below the given maximum value Maximum Bandwidth HSPA: up to 7.2 Mbit/s HSPA+: up to 42 Mbit/s Actually achieved bandwidth: 3-13 Mbit/s within urban regions/in cities** LTE: up to 100 Mbit/s Coverage DSL: >99% of the population Cable Broadband: about 50% of the population UMTS/HSPA: A1 Telekom: > 90% Hutchison (Drei): > 90% T-Mobile: approx. 75% Orange: approx. 70% LTE: big cities (NGA)- expansion DSL: FTTB/H up to 100 Mbit/s, 2011 in Vienna 15 and 19 Cable broadband: DOCSIS 3.0 for the most part already in use Further expansion of HSPA+ and LTE Why subs titute fixed ? Price Bandwidth/ Coverage DevicesUsage

24. Theoretically mobile broadband offers bandwidth beyond the usual requirements of private users Theoretical maximum speeds for various wireless technologies 31/10/2013Fixed and mobile broadband convergence 24 StandardPeak downlink rate (Mbps)Peak uplink bit rate (Mbps) GSM EDGE Evolution1.89 *0.947 * CDMA Ev-DO Rev B.4.91.8 Wi-Fi 802.11b11 UMTS/W-CDMA (3G) HSPA7.2, 14.4 *5.7 UMTS/W-CDMA (3G) HSPA+21.6, 28, 42 *11.5, 11.5, 22 * Wi-Fi 802.11g54 WiMAX 802.16e46 *4 * Wi-Fi 802.11n288, 600 * LTE (3GPP Rel 8.)300 *75 * LTE (3GPP Rel 8.)365 *376 * LTE-Advanced (3GPP Rel. 10)1200 *568 * Wi-Fi: 802.11ac1730 * *Depending on standards version and/or equipment configuration Source: Wireless Gigabit Alliance and FTTH Council Europe various Wireless technologies Why subs titute fixed ? Price Bandwidth/ Coverage DevicesUsage

25. The largest spectrum auction in Austria took place in September/October 2013 Fact Sheet AuctionMultiband-auction 2013 Bands800/900/1800 MHz Spectrum2x140 MHz Spectrum blocks28 blocks (2x5 MHz) Categories/qualities9 Reservation2x10 MHz im 800 MHz-band for a new entrant Minimum offer526,5 mill. Euro Auction formatCombinatorial Clockauction (CCA) DateSeptember/October 2013 Three essential bands for the mobile operators have been auctioned 31/10/2013 25 Why subs titute fixed ? Price Bandwidth/ Coverage DevicesUsage Fixed and mobile broadband convergence

26. The auction‘s revenue was more than € 2 billion, all 28 spectrum blocks were sold SpectrumA1 TelekomT-MobileHutchison 800 MHz (5 blocks)3 blocks2 blocks- 800 MHz Supplementary block 1 block-- 900 MHz (7 blocks)3 blocks 1 block 1800 MHz (15 blocks)7 blocks4 blocks Sum2x70 MHz2x45 MHz2x25 MHz Price1.029.895.738 Euro654.482.816 Euro330.082.913 Euro All three operators were successful in gaining spectrum 31/10/2013 26 Why subs titute fixed ? Price Bandwidth/ Coverage DevicesUsage Fixed and mobile broadband convergence

27. Wir stehen für Wettbewerb und Medienvielfalt. Fixed and mobile broadband convergence Dr. Po-Wen Liu International Affairs and Information and Communication Technology RTR-GmbH