20090407 wireless market trends

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Wireless Market Trends

Iman Hirawadi

7 April 2009


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2 | Wireless Market Trends | 07 April 2009 All Rights Reserved Alcatel-Lucent 2008

Agenda

1. Updates on Indonesian Wireless Market

2. Market Evolution3. Technology Trends

4. Conclusions


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Updates on Indonesian Wireless Market

1


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Wireless Market Outlook in 2008: Strong Growth, Tougher Competition

157 Million wireless subscription (E/2008) vs 101 Million (E/2007)

55% Growth

17 Million FWA subscription (E/2008) vs 10 Million (E/2007)

70% Growth

85% GSM market share (2008) vs 86% (E/2007)

GSM-CDMA Share Remain Unchanged

66% wireless subscription. As some people hold multiple subscriptions,actual penetration is estimated 45-50%

2 cents $/MoU vs 18 cents $ in 2006

Dropped 90% in the past two years


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Wireless Market Outlook in 2008: GSM Operators

NTS: 0%

Telkomsel

45%

Indosat

25%

XL16%

HCPT: 1% NTS: 0%

Telkomsel

42%

Indosat

23%

XL17%

HCPT: 2.2% NTS: 1.3%

Two biggest players had lost market share slightly.Excelcom/HCPT/NTS grew market share appx. 1% for each players

Operator SubsciberE/2008

(million)

SubsciberE/2007

(million)

Telkomsel 66 46

Indosat 36 25

Excelcom 26 16

HCPT 3.5 1

NTS 2 0

2007

2008


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Wireless Market Outlook in 2008: CDMA Operators

Telkom: 5.9%

2007

M8: 2.9%

Bakrie: 3.4%Smart: 0.5%

Indosat: 0.5%STI: 0.2%

Telkom: 6.0%

2008

M8: 2.2%

Bakrie: 4.5%Smart: 1.6%

Indosat: 0.5%

STI: 0.2%

Two biggest players gained market share slightly. Progress made bySmart Telecom. M8 & STI lost market share

Operator

Subsciber

E/2008

(million)

Subsciber

E/2007

(million)

Telkom 9.5 6

Mobile-8 3.5 3

Bakrie 7 3.5

Smart 2.5 0.5

Indosat 1 0.6

Sampoerna 0.3 0.2


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Wireless Market Prediction (BMI Report 1Q2009)

Agressive pricing scheme proved to significantly increase overallsubscriber base, and continue to remain the main reason for strong

growth (though it will be slower than 2007/2008 growth)

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

2006 2007 2008e 2009f 2010f 2011f 2012f 2013f

0

20

40

60

80

100

120

140

160

180

200

Number of Mobile Subscriber('000)

Number of 3G Subscriber

('000)

Number of Mobile Phone/100

Inhabitants

278 Million additional subscription in the coming 5 years!!! Probably need torevisit once market situation settles


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Internet/Broadband Market Prediction (BMI Report 1Q2009)

Strong growth of broadband market, to reach appx.10Million subscriberin the next 4 years. Brighter future is predicted when government

allows WiMAX deployment

0

2,000

4,000

6,000

8,000

10,000

12,00014,000

16,000

18,000

20,000

2006

2007

2008

e

2009

f

2010f

2011f

2012f

2013f

0

2,000

4,000

6,000

8,000

10,000

12,000

Number of Internet

Users ('000)

Broadband Subscriber

('000)


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Current Cellular Spectrum Allocation in Indonesia

UMTS

Operators 900 1800 2100 450 850 1900 Total

Indosat 10 20 5 2.5 37.5Telkomsel 7.5 22.5 5 35

Excelcom 7.5 7.5 5 20

HCPT 10 10 20

NTS 15 10 25

Telkom 3.75 3.75

Bakrie Telekom 3.75 3.75

Mobile 8 5 5

Smart 6.75 6.75

Sampoerna 7.5 7.5

GSM CDMA

Allocated Bandwidth (MHz)

56% of cellular spectrum allocated to top three players, while theremaining shared by other 7 operators

82% of cellular spectrum allocated to GSM/UMTS operators, while theremaining shared by 6 CDMA operators


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Market Evolution

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Focus to Tap New Market Segments and Increase User-Experience

Accessibility

Poverty

Urban Suburban Rural

Telecom

Access

Today

Majority of Upcoming

Subscriber

Other subs priorities

Real

accessgap

Three key market segments for growth:

1. Lower ARPU-Potential subscribers already coveredbut cant afford the service

2. RuralPotential subscribers outside network

reach

3. Advanced broadband usersAffluent urban subscribers demandingricher services (broadband,

entertainment, personalised services)

Networks need to be optimised: TCO, Coverage, Broadband / Multimedia


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Wireless Trend towards lower frequency bands for wirelessbroadband: 450/700/900 MHz Deep indoor coverage with Femto cells

Next Generation Network to Answer Market Requirements

Market Key Challenge #1:Affordability

How to serve decreasing ARPUprofitably?

Improved network economy (TCO) Flat-IP architecture, IP transport (META) Infrastructure sharing i.e. RAN Sharing More efficient, higher-capacity network elements, use of openIT platform

Improved broadband performance New radio technologies offer DSL like data speeds

Optimized, flat architecture reduces latency

Data centric backhauling

Market Key Challenge #3:Versatility/Broadband

How to optimize the network forbroadband / multimedia?

Market Key Challenge #2:Accessibility

How to extend service into newmarket/area


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Technology Trends

3


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A base transmitter station covers big area, and the spectrum was quicklysaturated even with small number of users. Among first users were police

force

Beginning of Mobile Communication


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Evolution of Mobile Standards:

Characteristics of each generation

First Generation (1G)First Generation (1G)

Created for voice communication purpose Analog radio, inconsistent voice quality Lack of security: rampant cloning andeavesdropping Mainstream standard: Nordic Mobile Tele-phony (NMT), Advanced Mobile Phone System(AMPS), Total Access Communication System(TACS)

Mainly for voice communication with impro-ved data application (SMS, packet data) Digital radio Address main weakness of 1G system withbetter voice quality, robust security measures Relatively low packet data rate Mainstream standard: GSM/GPRS/EDGE,CDMA IS95, CDMA2000 1x

Second Generation (2G)Second Generation (2G)

Mutimedia communication (voice, video,data) Increased data rate, improved spectrumefficiency Suitable for broadband data applications Ready for IP Mainstream standard: UMTS FDD (WCDMA),UMTS TDD, CDMA2000 1xEV-DO Rev0/RevA

Third Generation (3G)Third Generation (3G) Flat Architecture Fully data, voice is just one data application Advance antenna techniques to furtherImprove capacity Low latency, suitable for demanding real-time applications such as gaming Mainstream standard: 3G LTE (Long TermEvolution), Ultra Mobile Broadband (UMB)

Next EvolutionNext Evolution


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Data Performance of Wireless Technology

10

Kbps

100

Kbps

1

Mbps

10

Mbps

100

Mbps

1000

Mbps

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

WiMAX

CDMA 2000GSM

GPRS

1xRTT

EDGE

UMTSHSDPA

EVDO HSUPA

LTE

Today

Voice

Web Browsing

Streaming Video

Email

Broadcast Video

Wireless VoIP /

Video Conferencing

Wireless technologies evolving to become more broadband. WiMAX asa disruptive technology benefiting from the first-mover effect

Source: Morgan Stanley Research & Company estimates

While 4G supports higher data rates, it is alsomore efficient and supports more users athigher quality

UMTS R99HSDPA

UMB


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Flat IP Architecture

Flat IP Architecture -> Introduced with LTE

TODAY

LTE/EPC

eNode B

IP channel MMEPCRF

PDN GW

SGW

IP channel Packet SwitchedCore

VoiceSMS

Email

VPN

Internet

VoiceChannels

GGSNSGSN

MGWMSC

BSC / RNC

Circuit SwitchedCore (Voice)GSM

GPRS

EDGE

UMTS

HSPA

BTS

Node B

Evolved Packet Core


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Traditional Telecom

Platform:

Telecom Platform is Moving Towards Open IT-based Platform i.e ATCA

Next-Generation

Server-Based Platform:

The trend can be seen for both core network (MSC, HLR etc) aswell as radio network (BSC)

Lower hardware cost Lower maintenance cost

Higher capacity

Higher flexibility to accommodate growth Reduce time to market for new features

Designed for 99.999% availability Future-proof investment

The trend can be seen for both core network (MSC, HLR etc) aswell as radio network (BSC)

Lower hardware cost Lower maintenance cost

Higher capacity

Higher flexibility to accommodate growth Reduce time to market for new features

Designed for 99.999% availability Future-proof investment

ATCA: Advanced Telecom Computing Architecture


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Radio Network Sharing

Two operators share physically the Radio Access Network (NodeB and RNC) from a common supplier, butdo not share any Core Network node

Each operator uses its own licensed spectrum, broadcasts its own PLMN id

Mobility is handled on separate layers

Mobile camps on appropriate cell, shows right operator logo

Handovers are directed to cells of the same operator (both 3G and 2G)

RNC supports multiple Ius to independent Core Networks

Routing to CN operator based on the current cell PLMN id

Full differentiation on network services

Iu

Iu

f1, PLMN1

f2, PLMN2

Operator ASubscriber

Operator BSubscriber

RNCNodeB

f2, PLMN2

Core NetworkA

Core NetworkB

Shared RAN

f1, PLMN1


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Small Base Stations

micro

Micro Pico Femto

10-6

10-12

10-15p f

Application Indoor/Outdoor Indoor Indoor

Main target Hotspot,Blank coverage

Office Home,

Office

Appx. Output Power 5W 200mW 20mW

Appx.Cell range 1 Km 200-300m 30m

Various solutions to address different segments. Femto is the smallest formof base station portfolio available today


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BSR-Femto: the Heart of the Converged House

A single unit enables multiple services

Power linePower line EthernetEthernet CoaxCoax

ADSL Router

1st Floor

2nd Floor

BroadbandBroadband

ConnectionConnection

Wide-Band

DECT

Wifi Tablet

Notebook

OutdoorArea

Connect to IP Camerafor surveillance

HomePlug Av/Coax

BSR-Femto

Handset


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Cellular-Broadcast Convergence

Over 220 operators have already launchedmobile video services, ~110 Live TV (+40 in 12 months)

KOREA (TU Media sources)

Launch May 05,

1.2M subs in Feb 07Average: 63 per day

Monthly subscription:

$10 basic + $4 option + $2 for VOD

KOREA (TU Media sources)

Launch May 05,

1.2M subs in Feb 07Average: 63 per day

Monthly subscription:

$10 basic + $4 option + $2 for VOD

Broadcast

ITALY (Tre sources)

Started June 06

1.1M subscribers (March 07)

~10/month (various packages)

ITALY (Tre sources)Started June 06

1.1M subscribers (March 07)

~10/month (various packages)

Broadcast

JAPAN

Launch March 06

May 07 On the next 12 new handsettypes by SoftBank, 7 include MTV

March 08: 22M phones

Broadcast

Activities in the SEA Region

Malaysia MiTV (December 2007)

Maxis (Q3 2008)

Singapore

M1 (1st of July)

Mediacorp (DVB-T network already in

place)

Philippines

Smart

Globe (Q3 2008) Vietnam

VTC


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Ku/SBand

Mobile Networks

(2.5/3G/HSDPA)

S/UHFBand

Terrestrial broadcast

Nationwide coverage:

Satellite broadcast

(DVB-SH)

9 channels*

SBand3

1

2

ServiceDeliveryPlatform

Unlimited channels,

interactivity

Integration of DVB Network with Cellular Network


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IP Multimedia Subsystem (IMS)

BB-Wireless IPExpanding to IP services on

Multi-access technologies BB-Wireline IP(DSL, FFTx)

SIP Phones

(VoIP & Video)POTS/ISDN

IAD

Triple Play

VoWLAN

(UMA/SIP)

IMS Services

IP Backhaul

IMS is the key for network convergence and critical to operator to avoidbecoming pipe provider


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Messaging

(IM/SMS/e-Mail)

IMS Enables True Rich Communication

The dumb dial pad

is past history

2G/3G Call

VoiceIP - VideoIP

Dynamic @ Book

Presence DrivenCommunication

VideoShare


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Conclusions

4


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Conclusion

Wireless communication has evolved fromsimply supporting voice services to richservices including video & data services. Itwill evolve further to greatly improve end-

user experience in terms of more speed, morereal time, more personalized services in morecost-efficient manner


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20090407 wireless market trends

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