Mobile-Fix convergence Mobile Network evolution

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Mobile-Fix convergence Mobile Network evolution
Youssef Chraibi Date 04.10.2004
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Content

• Fixed-to-mobile substitution
• Life goes mobile!

• Reasoning behind fixed-to-mobile substitution

Network evolution
Summary
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Life goes mobile!Nokia vision on voice market
development
Next major growth phase is the Fixed-to-mobile
substitution
Originating voice traffic 20 mobile 80 fixed
Reverse the mobile/fixed rule to 80/20 by 2013
Western Europe TB
250 000
Fixed mobile substitution is a clear trend
happening today, subscribers are increasingly
using mobile phones for voice a services that
were previously provided by fixed devices and
connections
200 000
Mobile Voice
150 000
100 000
Fixed Voice
50 000
0
2003
2004
2005
2006
2007
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Mobile Voice High growth potential
Mobile Voice Market Opportunity (2008)
71 of total mobile revenue will come from
voice 28 increase in mobile voice revenue from
2003, plus the
fixed-to-mobile substitution opportunity
Source ITU, Gartner and Nokia estimates, June
2004
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Mobile voice revenues surpassed those generated
by fixed telephony in 2003
In the future most of the world will put its new
voice traffic onto mobile networks In Asia
mobile revenues outpaced Fixed voice revenues by
61 and in Western Europe by 25 in 2003 Over
2003 2008 period fixed voice revenues are
expected to generate A CAGR of under 1, while
mobile revenues will grow at an annual rate of
over 5
Pyramid Research , September 2003
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Evidence for fixed to mobile substitution in
mature markets
France France Telecom also believes that an
increasing proportion of calls that would
previously have been made over the fixed network
are now being made on wireless telephones, a
process known as fixed-wireless substitution.
(France Telecom, Form 20F 2001)
UK While internet-related local calls are
growing very strongly, traditional fixed-network
local calls are declining in volume, which we
attribute partly to mobile phone substitution...
(British Telecom, Five Year Financial Summary)
Switzerland Swisscom estimates fixed-to-mobile
displacement accounted for approximately 1.5
percent of all fixed disconnections during 2002.
This was equivalent to the loss of 66,000 lines
and annual traffic of 79 million minutes.
Soft mobile substitution (Yankee Group 8/2003)
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Fixed-to-mobile substitution is reality in voice
telephony
Fixed to mobile substitution patterns have to be
considered in the context of each individual
market. Service innovation and tariff adjustments
drive substitution patterns

• Fixed-to-mobile substitution takes place in two
  key forms

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Voice traffic distribution is driven by traffic
and usage substitution
mobile
fixed
Total traffic
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Content
Fixed-to-mobile substitution

• Mobile Network Evolution
• Increase the Revenue
• New Service Enabling
• Lower the costs

Summary
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Data service revenue is increasing globally
Global revenue totals ( bn)
340
383
400
455
513
570
621
Source Nokia Mobile Service Forecast December
2003
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Operators benefit from the data growth already
Average of top 20 operators Data as of Revenue
(includes all radio technologies)
24.00
22.00
20.00
18.00
Data as of Revenue
16.00
14.00
12.00
10.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2002
2002
2002
2002
2003
2003
2003
2003
Source of data EMC World Cellular Data Metrics,
March 2004
Note Top 20 operators is the 20 highest
percentages of data revenue among operators
during the quarter.
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3G users have higher data ARPU than 2G usersAlso
total ARPU higher than in 2G
JPY
12000
3G

• WCDMA as a tool to gain high ARPU early adopters
  from competitors or keep them in own network
• Long term service strategy needed for maintaining
  the trend as new user segments come in the
  picture

3G
3G
3G
10000
2G
2G
2G
2G
8000
6000
4000
2000
Voice ARPU
Data ARPU
0
2003/4-6
2003/7-9
2003/10-12
2004/1-3
Source NTT DoCoMo
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Service Evolution

• Short lifecycle of services
• New services frequently introduced
• Service variables are not fixed
• Big variety of service packages

• Long lifecycle of services (Voice, SMS, MMS..)
• New services seldom introduced
• Service variables fixed
• Only few service packages

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New services are demanding more from the network

• WCDMA and HSDPA are required for better end user
  experience
• New data hungry services
• Added capacity to the network
• Mass services with a lower cost per bit

100
90
GPRS 32
80
EDGE 32
70
WCDMA 384 kbps
HSDPA (3.6Mbps)
Seconds
60
WLAN .11b
50
40
30
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Fast download of very large content
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0
30 kB digital image
300 kB Symbian application
100 kB video clip
4 MB MP3
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It doesnt mean you install it all in one day!
Step-by-step implement the strategic architecture
Openness solution integration services as
integral of the vendors offering
OSC
NSM
IMs
PoC
OSC
NSM
PoC
NSM
ISN
ISN
Additional functionality
ISN
Additional functionality
Entry solution
Additional capacity
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The various business models
Promote
Strategic decision Choose the right architecture
for your machinery
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Content
Fixed-to-mobile substitution
Mobile Network Evolution
Summary
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Summary
Fixed-to-mobile substitution

• The next major growth phase is from fixed to
  mobile substitution
• by 2007 over 70 of mobile revenue comes from
  mobile voice

• Mobile revenue surpassed those generated from
  fixed telephony already 2003

• Enterprise benefits from reachability,
  infrastructure simplicity and cost savings of
  full mobility

Mobile Network Evolution

• Mobile Network Evolution is driven by revenue
  Increase (ARPU) low cost per bit

• New Service Enabling is Network demanding

• Open Architecture built as you grow is the key
  for Network Evolution

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