2015 M.Ergen
MustafaErgen
KoçUniversity
5G:Telecommunication, Intellectual Property, Entrepreneurship and Academia
2015 M.Ergen
5G... Telecommunication, Intellectual Property, Entrepreneurship and Academia Mustafa Ergen IP2016 - Istanbul @mstfrgn
3 2016 M.Ergen #GirişimciKapital
Benchmark – Turkey and many others...
• s/llfragmentthelocalmarketwithlocalholdings...
IndustrialRevolu/on
• notsuccessfultobuildmul/-na/onalfirms.
Informa/onEconomy • candocatchup
withentrepreneurialeconomy.
EntrepreneurialEconomy
GlobalfirmsareflaEeningtheworldalmostwithoutanylocalbarriers.
Ifnotsuccessfultobuildaglobalmonopole,localfirmswillbesoldout.Convergetoall-employeena6on.
Before1980
ANer1980
ANer2000
4 2016 M.Ergen #GirişimciKapital
Today, dynamics...
1 2 3
Entrepreneurship&VentureCapitalmindset.
TechnologyandR&Dtogofullpowerandfocus.
Leverageoflocalmarketandresourcestodebut.
5 2016 M.Ergen #GirişimciKapital
Technology Entrepreneurship
1 2 3
Entrepreneurship&VentureCapitalmindset...
6 2016 M.Ergen #GirişimciKapital Source:SteveBlank
VacuumTubes
TestEquipment
MicrowavesIntegratedCircuits
PersonalComputers
Internet
1910 1956 1995GoldRush RadioEra SiliconEra Internet
Era
HP...
Intel,...Raytheon,Lockheed...
Apple,MicrosoN,Oracle,Cisco,...
Google,Facebook,Amazon,Uber,....
Technology Entrepreneurship = Silicon Valley History
DeForestCompany
LinearGrowth
Exponen/alGrowth
7 2016 M.Ergen #GirişimciKapital
Twouniversi/es–Onehourdrive
Istanbul:Morethan70Universi/es:lessthan
hourdrive
Synergywithacademia
8 2016 M.Ergen #GirişimciKapital
First Techno Park – Stanford Research Institute
1946 –
VarianAssociates
HewleE-Packard
EastmanKodak
GeneralElectric
LockheedCorpora/on NASA
SylvaniaDefense Raychem IBM,etc..
Sputnik1
Source:GirişimciKapital
VacuumTubes>TestEquipments>Microwaves>IntegratedCircuits>PersonalComputer>Internet>...
Market:Hollywood>SecondWorldWar>ColdWar>ConsumerElectronics>Worldwide
Synergybyco-loca/on
InventorLeeDeForest:SteveJobsofthat/me
• InspiredhisstudentstostartcompaniessuchasHPandothers.• HeadofHarvardRadioLabinWW2thatinnovatedtobeatNazis.• DeanofStanfordwhenestablishedthetechnopark.
9 2016 M.Ergen #GirişimciKapital
1853 – Gold Rush
• BoughtfromMexicans.
• 300thousandpeoplecametodiggold.
• ResultedauniqueemploymentlawforCalifornia.
Introduc/onof• At-Will,• NDA• NCA
Synergywithdiversityandemploymentlaw.Source:GirişimciKapital
1872 Law
10 2016 M.Ergen #GirişimciKapital
Gold rush is still on...
$2B:NPVoftotalgolddug.
$40B:AnnualrevenueofIntel.
$60B:2010revenueofApple–TheyintroducediPhone3.
GoldRushEra
IntegratedCircuitEra
PersonalComputerEra
Synergybyempoweringordinarypeople:SecondRenaissance
11 2016 M.Ergen #GirişimciKapital
1879 – 1982 AT&T Monopole
SiliconValleyPersonalComputer Opera/ngSystem OpenSource Broadband
AT&TboughtVacuumTubepatentsfromDeForestfor$50K.
Fiber Cellphone
1996BellLabs->Lucent2006Lucent->Alcatel-Lucent2015Alcatel-Lucent->Nokia
Synergyfrommonopolepower
Source:GirişimciKapital
12 2016 M.Ergen #GirişimciKapital
Monopole Economy seen from Draper Cycle
WarrenBuffet,M&A,WallStreet,InvestmentBanking,Funds,etc.
• HighMargin• Art• $1Btostart.
• LowMargin• CraUsmanship• $1Bislowto
start.
Mergers
LeverageBuy-outs
Acquisi/ons
Recession Recession Recession
VS:VentureCapitalPE:PrivateEquity
Synergywithfinancialindustry
Source:GirişimciKapital
14 2016 M.Ergen #GirişimciKapital
Mobile cellular generations
Voice,Analog,NoRoaming
Voice:Roaming,Global,Dijital,StartofData
Voice+DATA:PerfectRoaming,GlobalRadio,HighSpeed
DATA:AllIPNetwork,Convergence
DATA:TrueGlobal
Harmoniza/onInternetWiFi
0km
/hr
500km
/hr
0.1Mbps 1000Mbps
LowCostDSPandFEC
CDMAReuse1andTurboCoding
MIMO,OFDMA,SDR,SpectrumSensing
Source:MobileBroadband
15 2016 M.Ergen #GirişimciKapital
Data tsunami when?
Year Speed Popula6on Device Usage RequiredCapacity2012 0.3Mbps 4984/km2 1.2 15% 0.26Gbps/km22016 2.9Mbps 5191/km2 1.4 20% 4.2Gbps/km22020 30Mbps 5477/km2 1.7 25% 69.8Gbps/km2
317MHz
5000MHzRequiredspectrum
LTE–Advanced500mradius–London
16X16X
16X
4Year4Year
16 2016 M.Ergen #GirişimciKapital
Change in technology and business...
1G 2G 3G 4G
5G
TDMA WCDMA OFDMAFDMA
Mobile operators has to redefinethemselves:• eithercost-cupng,• orinnova/on&newmarkets,• otherwiseconsolida/on.
17 2016 M.Ergen #GirişimciKapital
League of legends in telecom
India KoreaTaiwan
ChinaJapan
USAEU
By2020,theydecidedtomakecommunica/onequipmentinhouse.
Korea,star/ngfrom1980,theyhaveinvestedshortcycle6metechnologieswithgovernmentgameplan.
Chinausestheirlocalmarketadvantageandusethispowertograsprightsinstandardiza/onac/vi/es.
TheywantopenmarketanddicatatebyWTO.USispushingmonopolecompanieswithitspowerfulventurecapital.
Koreahasglobalbrands.Taiwanhasmonopolecompanies.
Noglobalbrands.
SuccessofKoreaistermedasSchumpeterianCatchUp.
18 2016 M.Ergen #GirişimciKapital
5G – Virtual layers of new communication infrastructure
Optical Core NetworkOptical Metro Network
Core Cloud
Infrastructure Layer
Optical Access Network
Satellite Network
RAN and wireless backhaul
Edge Cloud
Network Function Layer
Multi-service Control Layer
Business Function Layer
Edge Cloud
Business Service Layer
Network Function
Repository
Vertical #1 Services(e.g., Factory of the Future)
Mobile broadband Services Vertical #2 Services (e.g,, Automotive)
Service #1
Service #2
Service #3
Service #1
Service #2
Service #3
Service #1
Service #2
Service #3
Net
wor
k-ce
ntric
ser
vice
sVe
rtic
al-c
entr
ic s
ervi
ces
Northbo
undInterfaces
Southb
ound
Interfaces
Vertical #1 Function
Repository
Vertical #2 Function
Repository
Vertical #3 Function
Repository
OpticalWireless SatelliteAbstract resources:
MobilAccess DigitalFactory SmartCars
Opera6ngSystem
SoUware
Hardware
Source:5G-PPP
19 2016 M.Ergen #GirişimciKapital
Venture Capital investment in telecommunication – Reduced...
Investments
Ra/o
Source:PWC
Opportunityforindigenousscenarios...
20 2016 M.Ergen #GirişimciKapital
Turkish government intervention for mobile ecosystem: 4.5G and 5G...
Local4GBaseSta/onProject:ULAK• fundedover$70Mbygovernment.
• Target4.5G:LTE-AdvancedTechnology
4GSpectrumAuc/on• DictatedonlyLTE-AdvancedTechnology
• Upto40%mandatetooperatorsforlocalprocurement.
5GVision• Targetofpublicandprivatesector.
• Setbygovernment.
• R&DResourcesarebeingharmonized...
2013 2015
21 2016 M.Ergen #GirişimciKapital
4.5G entrepreneurial ecosystem & 5G Intellectual Property
1 2 3
Leverageoflocalmarketandresources
Localmarket,localtalent,localIP,localregula/onstocreatesynergy.
22 2016 M.Ergen #GirişimciKapital Source:NetWorld2020
5G-PPP of Europe – more than 1000 members: Research
5G-PPPisaEuropeanorganiza/onto
establishstrategyandcoordina/ontoleadEUin5G.Turkeyisselectedtobeinthefoundingboard(M.Ergen)viaTurk
Telekom.Fundingtotalis3.5BEuro.
23 2016 M.Ergen #GirişimciKapital
5G in the world... ITU-RVisionsGroup
5G-PPP
ETSI3GPP
5GLabGermanyatTUDresden
5GInnova/onCentre(5GIC)atUniversityofSurrey
US4GAmericas
ChinaIMT-2020(5G)Promo/onAssocia/on
Japan5GPromo/onForum
Korea5GForum
TaiwanMinistryofScienceandTechnology,MinistryofEconomicAffairs
Russia5GRUSbyRussia’sIcom-Invest
5G-PPP
5GUSA
5GJAPAN
5GKOREA
5GCHINA
5GTR
2016:5G-TRfounded.
24 2016 M.Ergen #GirişimciKapital
Importance of patenting and Essential IPR
$400AndroidPhone
$120IntellectualProperty
$504GPatents
$50WiFiPatents
$120Produc/onCost
Source:Intel
25 2016 M.Ergen #GirişimciKapital
4G patent map...
Ericsson,Nokia,HuaweiandCiscoaretopinEssen/alIPRlist.• Ericsson37Kpatents|Huawei36.5Kpatents
Huaweiforinstanceinlastthreeyears,won14Kpatents.
• Huaweiclaimstheyhold20%of4Gpatents.
Qualcommasks3.25%royaltyfromthesaleprice.
Nokiaasks1.5%.
Ericssonasks1.5%.
Huaweiasks1.5%.
ZTEasks1%.
Motorolaasks2.25%.
• Ericsson• ETRI• Freescale• Huawei• Innova/ve
Sonic• InterDigital• LG• Motorola• NEC• Nokia• Nortel• NSN• Qualcomm• RIM• Samsung• Sharp• TI• ZTE
Qualcommearnsaround$8Bper
yearfromlicensing...
Source:Webandverbal
FRAND
Thesearesubjec/ve
numberscanchangeforeach
customer.
Fair,reasonable,non-discriminatorycommitment
26 2016 M.Ergen #GirişimciKapital
4G standard applications – Essential IPR acceptance ratio
Accepted
Rejected
NotRelated
9%Acceptance
Rate
Source:SignalsRLLC
3GPP
27 2016 M.Ergen #GirişimciKapital
National Target
%0.1
• $25B
%0.5
• $125B
%1
• $250B
• Assump/ons:• In2020,therewillbe70Bequipmentaround$500perdeviceand%7essen/alIPR• Ifweassume100Bdevicearound$100thennumbersare$7B,$35Band$70B.• Ra/osaredistribu/onof%7.• Total20yearrevenue.Annuallyaround$1-10B• Thereare200universi/esand300companiesandresearchcenters.Itwillbearound10patentsperins/tu/on.• Normally,peopleareassuming7trilliondevicefor7billionpeople.
Ifwecangraspfollowingra/osfromourpatentsthatform5Gstandard.Ourrevenuewillbe...
20200patents
by2020
28 2016 M.Ergen #GirişimciKapital
Dilemmas• Totalfundingfromgovernmentoveryearisthesameandnumberofuniversi/estocontentforthesameareincreasing.
• Digitaltechnologiesandonlinecoursesaredestroyingthemainofferings.
• Informa/onisfree.• Researchersareevalua/ngthatpublishingatwebpagehaswiderimpactthanChineseinvaded!3-reviewerjournalsystem.
• Journalmeansnothingifithasnotbeenrealizedinanapplica/onoracompany.Opportuni/esinresearchisprolifera/nghencesystemhavebeenforcingresearchertogofull-roundtoseeitsimpact.
• Demandforentrepreneurshipisincreasingfromundergrads–universityisnotaguaranteedemployeeopportunityanymore.
• Technologyischangingrapidlyandspeedofadapta/oninhumancapitalisslowerinuniversi/esthancompanies.
• Unfortunately,homesmoretoxicpeopleandnomechanismforde-toxica/on.Thispoisonsthesystem.
Universi/escansustainiftheycancreateaself-feedingaEachedeconomicalecosystem.Ac/onsindiscussion:
• Whiterobescien6sttoflipflopdentmakers...
• Nostartupnotenure!• Ex:UofSouthernCalifornia,UofVirginia,etc.
• FreeIPRlicensing• Ex:Cornell,Stanford...
• Nophysicalgates–anyonejoinlectures• AllUSandEUUniversi/es
• Entwinedwithsurroundingecosystem• Ex:Purdue,UofKansas,UofGeorgia
• Payforwardculture• Togetback
Entrepreneurial University
Source:GirişimciKapital
$
WalledGardentoOpenGarden
29 2016 M.Ergen #GirişimciKapital
We need to synergize these earlier than others...
4Technologists,Investors,EntrepreneursandGovernment.
ThankYou!