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The Future of Mobile Broadband Cellular Subscriptions Subscriptions & Penetration per Region - End Q2, 2006E* Japan (excl. PHS) 93 M, 73% North America 240 M, 73% Global users 2464 M, 38% Asia Pacific 851 M, 24% Latin America 275 M, 49% Western Central & Europe Eastern Europe 423 M, 106% 354 M, 74% Middle East and Africa 228 M, 20% * As reported by operators Source: Estimates based on EMC, Wireless Intelligence, MII & TRAI 2 Broadband Everywhere the starting point and the potential FTTH WCDMA Cable xDSL 204 million subscribers 400 million subscribers 2005 2009 WiMax 3 CDMA2000 Broadband data landscape... Currently un-served market? PC´s and Laptops without broadband connection Residential broadband industry Mobile industry ”Mobile broadband data” WiMAX (Dial up) DSL Fibre 3G Evolved EDGE/WCDMA/ CDMA CDMA Many PC´s yet to be connected: different enabling technologies 4 Wireless Technologies Overview WiFi – Unlicensed short range radio Main usage as a cable replacement by consumers and enterprises Don’t expect contineous coverage with WiFi Expensive and very hard to manage End-user bit rate 1 Gbit/s WiMAX – Licensed radio 100 Mbit/s OFDM based radio in TDD and/or FDD bands In higher frequecies than currenty used allocations 10 Mbit/s Due to higher frequencies WiMAX will be more expensive than HSPA for same coverage 802.11g,a,n 802.16d,e HSPA 802.11b Still immature – Products, valuechain and technology options 1 Mbit/s 3G HSPA – Licensed radio 100 kbit/s WCDMA based radio within already available allocations 2G 10 kbit/s Fully integreted step in GSM evolution Supported by more than 2 Billion subscribers and 8 out of 10 largest operators has already choosen WCDMA Mature technology with unbeatable Economy of Scale LAN MAN WAN Coverage 5 WiMAX Forecast 2005-2010 WIMAX Subscriber Forecasts 35 30 25 20 15 10 5 0 2005 2006 2007 ABI TOTAL Moderate ABI TOTAL Aggressive Pyramid High total Maravedis 2008 2009 2010 Pyramid Main total Source: Various analyst firms 6 Global Cellular Active Subscriptions Global Cellular Active Subscriptions by System Standard (03-11) 4000 active subscriptions (million) 3500 WCDMA/GSM 3000 GSM 2500 PDC 2000 1500 TDMA 1000 CDMA 500 Analogue & Other 0 2003 2004 2005 2006 Year End 7 2007 2008 2009 2010 2011 WCDMA Market Outlook Nov 2006 • 123 WCDMA operators in commercial service in 55 countries • 407 WCDMA terminals launched in the market • 70 operators deploying combined WCDMA-EDGE networks; 46 launched • Over 80 million WCDMA subscribers • 130 HSDPA network deployments in 60 countries; 74 launched • 81 HSDPA Devices launched, 22 suppliers 8 Issues in Brazil Anatel issues public consultation for new 3G spectrum: i) 10 MHz in 1.9 Ghz band previously assigned to fixed WLL; mobile operators reject proposal ii) 40 MHz in 1.8 GHz band VIVO (largest operator of the region with 25 million CDMA users) announces deployment of a GSM overlay for the end of 2006 LNP being promoted by regulator for 2007 Court suspended temporarily WiMax bidding in 3.5 GHz and 10.5 GHz due to conflicts establishing the minimum bid Growing interest in UMTS/WCDMA in 850 MHz 9 Latin America Concerns/Issues 3G spectrum: “In-band” versus new frequency bands (1700/2100 MHz, 1900/2100 MHz) Low ARPUs (US $ 13 average) pressures operators to look for economies of scale and reduce costs Due to a high prepaid penetration (80%), users always expect a high subsidy in handsets Voice still the “killer app”; operators trying to launch VAS to postpaid users first Regulators involved in many issues: Fixed-Mobile Convergence, Triple Play, WiMax, LNP, Interconnection fees, Quality Service plans 10 Technology Evolution 11 Technology Evolution Complementary solutions Cellular technologies become more and more broadband Alternative wireless technologies become more and more mobile Several technologies for Broadband access: • HSPA (HSDPA+HSUPA) and WiFi / WiMAX 12 Multi-Service Ericsson Vision Always Best Connected” and IMS Concepts Service Layer Service Layer Messaging USM Charging Content & Application Other enablers B2B control IMS Internet GRX TeS MSC Server TeS Rede Core BGW PSTN IP Backbone MSG Rede de Acesso IP Rede de Acesso A-GW Packet A-GW Delivery Control WLAN xDSL PLMN MGW IP RNC Rede de Acesso BSC 2/3G/ HSPA WiMAX Banda Larga Common Network Core. Different access options. 13 EDGE Evolution requirements Extend throughput further out in cell – Increase peak bit rate > 1Mbps – To improve service experience when moving between 2G and 3G Reduce latency (back to back pings) – – Increased coverage for a given bitrate, e.g. 128 kbps Mobile-TV at cell border Latency today: ~150 ms Goal: Reduce e2e latency to 50-100 ms Reduce access time (first ping) – – Today: ~700 ms Goal: Reduce e2e access time to 500 ms 14 Better Peak Throughput Better Coverage Today Future Bad Radio Quality Good EDGE Evolution has broad support Features are being standardized in 3GPP R7 to lift GSM/EDGE to a higher level Operator Value – – – Increased end-user data rates Improved data capacity and spectrum efficiency Reduced latency Dependencies – Terminal support is required – – – – – – – – Ericsson Nokia Siemens Motorola Panasonic Philips Intel Qualcomm GPRS 48 kbps EDGE 180 kbps 600 kbps 1,2 Mbps WCDMA – R99 384 kbps 1,8 Mbps Contributing companies in 3GPP WCDMA –Evolved (HSPA) 3,6 Mbps 14 Mbps 28 Mbps 40 Mbps 100 Mbps 3G-LTE 2005 2006 2007 15 2008 2009 3GSM Evolving WCDMA/HSPA High Speed Downlink Packet Access in Rel 5 Enhanced Uplink in Rel 6 ”High Speed Packet Access+” in Rel 7 e.g.: – Multiple Input Multiple Output (MIMO) – Higher order modulation DL/UL – MultiMedia Telephony (MMTel) enhancements – Broadcast/Multicast enhancements Long Term Evolution in Rel 8 3GPP Rel 99/4 WCDMA Rel 5 Rel 6 WCDMA Evolved Enhanced Uplink MBMS HSDPA Rel 7 Rel 8 HSPA Evolved MBMS+ LTE LTE 16 HSPA Improving the WCDMA downlink/uplink (vs R99) Higher bit rates: up to 14 Mbps downlink SPEED Higher bit rates: up to 5.8 Mbps uplink 2 - 5 times improved system capacity downlink CAPACITY 1.5 - 2 times improved system capacity uplink REDUCED DELAY Quicker response time with interactive services STANDARDIZED Integral part of WCDMA (3GPP Rel.5/6) Network Coverage Short time to market with existing sites 17 HSPA Evolution Improving the HSPA downlink/uplink (targets vs R99) Higher bit rates: up to 40 Mbps downlink SPEED Higher bit rates: up to 10 Mbps uplink CAPACITY 6 - 8 times improved system capacity DL 2.5 - 3 times improved system capacity UL 2 times improved Broadcast/Multicast capacity REDUCED DELAY Quicker response time with interactive services STANDARDIZED Integral part of WCDMA (3GPP Rel 7) Network Coverage Short time to market with existing sites 18 Long-Term Evolution Targets on a 20 MHz bandwidth Higher bit rates: at least 100 Mbps downlink SPEED Higher bit rates: at least 50 Mbps uplink 7 - 9 times improved system capacity DL CAPACITY 3 - 4 times improved system capacity UL REDUCED DELAY Quicker response time with interactive services STANDARDIZED Part of 3GPP Rel.8 Network Coverage Short time to market with existing sites Focus on services from the packet-switched domain ! 19 Summary HSPA+ Benefits vs R99 – 100x SPEED CAPACITY – 5x COST – 1/5x LATENCY – 1/10x The WCDMA/HSPA evolution has only just begun! 20 Different types of Mobile Broadband segments Laptop mobility seekers Broadband performance everywhere, both indoor and outdoor Fixed Wireless Broadband Very cost efficient - ADSL/WiMAX alternative Enhanced handset services New multimedia services 21 Radio interface is not a limiting factor Daily capacity per WCDMA site with HSDPA: 1 carrier 4 carriers per sector 2.5 Mbps x 3 sectors x 3600 s x 16 h/8 ~ 54 000 Megabyte/Day ~ 216 Gigabyte/Day Fixed Mobile Broad Band subscription: 1 GB/month ~ 6 600 subscriber per site (in one RBS cabinet) With potentially 4 Mbps per cell carrier ~ 10 500 subscriber per site (in one RBS cabinet) 22 Mobile Broadband Cost efficient capacity for mass market services Network Service Financial € Site CAPEX WCDMA site ADSL equivalent 3 carriers 3 sectors Average capacity: 4Mbit/s per sector carrier Total Cost /GB = 50kbit/s per subscriber 12 Busy Hours/day UTRAN + Transmission: 140k€ Depreciation: 6 years Site OPEX 100% of annual CAPEX depreciation CAPEX depreciation [€/year] + OPEX [€/year] total delivered capacity [GB/year] (300k€ / 10years) + 100% x (300k€ / 10years) ((3carrier x 3sector x 4Mbit/s x 3600sec/hour x 10BH/day x 365days/year) / 8192Mbits/Gbyte) 23 = 1€/GB Mobile broadband terminals A 3G network is no longer just a mobile telephony network PC cards 3G Modems PC Integrated Phones & PDA’s 81 HSPA terminal models available , Nov 2006 24 Established end-user behavior Key success factor for building a mass market 25 HSPA in the laptop Strong industry commitment for embedded 3G Commercial 2006 Availability 3G Operators Vodafone, Cingular, T-mobile Terminal and chipset vendors Ericsson, Option, SierraWireless, Novatel PC manufactures Dell, HP, FujitsuSiemens, Lenovo (IBM), Sony It’s already a reality today 26 HSDPA in Laptops - examples Fujitsu Lifebook Q2010 Cat 12 HSDPA Laptop UMTS 2100 Quadband GSM Dell Latitude 820 Cat 12 HSDPA Laptop UMTS 2100 Quadband GSM Lenovo T60 Cat 12 HSDPA Laptop UMTS 1900/850 Quadband GSM Acer 5650 Cat 12 HSDPA Laptop UMTS 2100 Triband GSM 27 Dell Latitude 620 Cat 12 HSDPA Laptop UMTS 2100 Quadband GSM Lenovo X60 Cat 12 HSDPA Laptop UMTS 2100 Quadband GSM Strong growth in handset sales expected 28 WCDMA Handsets Prices 29 WCDMA Handset Prices Erosion Price of low-end WCDMA handsets 450 400 350 -12% per quarter 300 250 200 150 100 50 Q 40 3 Q 10 4 Q 20 4 Q 30 4 Q 40 4 Q 10 5 Q 20 5 Q 30 5 Q 40 5 Q 10 6 Q 20 6 Q 30 6 Q 40 6 Q 10 7 Q 20 7 Q 30 7 Q 40 7 0 Extrapolation based on Q403-Q106CAGR Source: Qualcomm 30 Vodafone D2 are already leveraging WCDMA cost-efficiency Vodafone “at home”: PSTN telephony line FAX line Internet Access, up to 384kbit/s Wi-Fi access point delivered to the home or office over WCDMA 1000 voice minutes 20 € / month 5 GB Internet access 17 € / month Note: in-door CPE makes capacity and cost similar as for ”mobile” case 31 32