presentation name nortel networks confidential pg 1 metro wireless mark morell february 3, 2004

presentation name NORTEL NETWORKS CONFIDENTIAL PG 1

Metro Wireless

Mark Morell

February 3, 2004


What’s Driving Wireless Today?

• The Wireless Lifestyle has become mainstream– Call the person, not the place

• Traffic is shifting to the Wireless Network– Fixed Voice migration in the home and office– Wireless as first infrastructure in developing markets

• Data traffic is a growing profit driver– Already dominates fixed networks, emerging in Wireless

Users are driving services to Wireless


0

400

800

1,200

1,600

2,000

2,400

Global Subscribers

Americas EMEA Asia

1,149

Source: EMC Q1/03

Traditional Market Growth Metrics

Subscriber Growth continues to drive Revenue

2,007

2002 2006E

$0

$10

$20

$30

Monthly ARPU - Global Avg.

Data

Voice

Global Monthly MOU

0

100

200

300

400

2002 2004E 2006EMO

U/M

on

th (

Bill

ion

s)

2002 2004E Source: IMS Q1/032006E

Nortel Estimate

309

1998

July ’03 - 1,256


Wireless Today and in Five Years

Wireless is 34% of GlobalTelecoms Service Revenue …growing to

50%

$0

$400

$800

$1,200

$1,600

Mil

lio

ns

Global Telecom Service Revenue

Local Fixed International Data, Other Mobile

ITU, 2003

19% of U.S. Voice Traffic is Wireless …growing to 50%

0

1,000

2,000

3,000

4,000

5,000

US Voice Traffic(Billions of Minutes/Yr)

Wireline Wireless

4%

Source: FCC / CTIA / Nortel estimates

19%

1998 2002E

Packet

2008E

50%

1998 2002E 2008E


The US Wireless Players

Market Share

15%

10%

5%

5%

19%

26%

20%

Verizon

Cingular

AT&T

Sprint

T-Mobile

Nextel

Others

Forrester – December 11, 2003

3Q03 ARPU- Avg Revenue Per User

$61

$63

$54

$71$50

$51

Verizon

Cingular

AT&T

Sprint

T-Mobile

Nextel

Company Reports, financial analyst

3Q03 MOU - Minutes Of Use

553

830

778

740483

456

Verizon

Cingular

AT&T

Sprint

T-Mobile

Nextel


3Q03 Revenue

$4,374

$3,340

$1,934

$2,887

$5,942

$3,954

Verizon

Cingular

AT&T

Sprint

T-Mobile

Nextel



Data Bolsters Revenue

Steady Global Data GrowthRevenues increasing

% of Revenue increasing

Traffic increasing


Wireless Networks Evolution

19 sec19 sec 2.1 sec2.1 sec

CDMA IS95

384kbps

2000 2001 2002 2003

GSM

TDMA IS136

CDMA1xEV-DV

3G Evolutionary steps timed to meet market demands for high speed data and

increased voice capacity

GSMGPRS170 kbps

CDMA1xEV-DO

2.4 Mbps

3G Standards

Pea

k D

ata

Rat

e

2 min2 min

1 min1 min

< 1 sec< 1 sec

< 1 sec< 1 sec

< 1sec< 1sec

6.7 sec6.7 sec

1 sec1 sec

< 1 sec< 1 sec

30 sec30 sec

4.2 sec4.2 sec

< 1 sec< 1 sec

MovieMovie

Music VideoMusic Video

Audio SongAudio Song

PicturePicture

Web PageWeb Page

E-MailE-Mail

SMSSMS

1 hr1 hr

3G3G

26 hr26 hr

1 hr1 hr

19.5 min19.5 min

2.5G2.5G

118 hr118 hr

5 hr5 hr

42 min42 min

23 min23 min

2G2G

Source : Reed Hundt, McKinsey and Co Source : Reed Hundt, McKinsey and Co

GSMEDGE

CDMA1xRTT

307kbps

UMTS

2004


Assorted Devices

Source: 3GToday.com

GTRAN DotSurfer

6000

GTRAN DotSurfer

6200

LG KH-5000 LG SV-110 LG KV-1100 SK Teletech IM-6100

Fujitsu F2611 (FOMA)

Panasonic P2402 (FOMA)

Sharp SH2101V (FOMA)

Motorola A835

Motorola A920

NEC e808Y Nokia 7600 NEC e808

Many different stylesNot just typical handsets


GPRS Summary

• 16.7M active GPRS subs. globally at end of 2Q03– 37% increase from 1Q03– 4.5M added in 2Q03

• 8.9M active GPRS subs in WE at end of 2Q03• 4.7M active GPRS subs in AP at end of 2Q03• 2.0M active GPRS subs in NA at end of 2Q03• >200 GPRS networks worldwide have been commercially launched

– Another 33 GPRS networks are in deployment and another 26 are planned• >156 GPRS terminals made by more than 38 manufacturers available

– 47M GPRS devices were produced in 2002 and 95.7M expected in 2003• GPRS growth driven by better terminals, improved coverage and content

– 3M Vodafone Live! subscribers by Oct. 2003, just one year after launch– Over 1M subscribers outside Japan on i-mode over GPRS as of Sep. 2003– RIM had 711K subs as of Aug 2003 and is targeting 1M by 5/04 (growth driven

by RIM on GPRS in Europe and NA)

Sources: EMC Data Metrics Sep. 2003, GSM Association


Data ARPU Progress – T-Mobile NA

$1.44

$1.24

$1.01

$0.76$0.90

0.00

0.30

0.60

0.90

1.20

1.50

3Q02 4Q02 1Q03 2Q03 3Q03

2.92.5

3.5

4.04.4

0.0

1.0

2.0

3.0

4.0

5.0

3Q02 4Q02 1Q03 2Q03 3Q03

3.4

2.0

1.3

0.7 0.7

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

3Q02 4Q02 1Q03 2Q03 3Q03

Source: T-Mobile USA

Data ARPU/Postpaid Subs. SMS Customers (M)

Paid Downloads (M)

Dat

a A

RP

U $

US

# D

ow

nlo

ads

(M)

Cu

sto

mer

s (M

)

3Q03 data ARPU: 2.7% of postpaid ARPU1.1B billable SMS messages in 3Q03

Over 75% buy downloads using wireless handset

RIM Subscribers (K)

60

31

18

510

0

10

20

30

40

50

60

3Q02 4Q02 1Q03 2Q03 3Q03

International roaming capabilities

90% increase in data ARPU year-over-year

Su

bs

crib

ers

(K)


1xRTT Summary

Sources: CDG 12/01/03, EMC, Company reports

Global Summary

Asia

NA Top 7 1xRTT Operators

Operators 3Q03 1xRTT Subs

Sub Penetration

SK Telecom Korea 13,476,000 75%

KDDI Japan 10,203,000 67%

KT Freetel Korea 7,002,000 67%

Sprint PCS USA (PCS Vision) 2,700,000 14%

LG Telecom Korea 2,526,000 53%

China Unicom (2Q03) 600,000 1%

Telesp Brazil (2Q03) 540,000 8%

• There were 64.6M 1xRTT subscribers at end of Sep. 2003 representing 37% of CDMA subscriber base of 174.1M

• 23.4M active data 1xRTT subscribers globally end of 2Q03 with growth of 27% from 1Q03

− 21.0M active data subs. in AP− 1.6M active data subs. in NA− Almost 1M active data subs. in CALA

• 63 CDMA2000 1X commercial networks launched

• 14 CDMA2000 1X networks are scheduled to be deployed in the next 12 months

• More than 422 devices are available with color displays, cameras, and GPS capabilities

• Sprint PCSs Vision subscribers were 2.7M in 3Q03, up 29% from 2Q03

• Vision subscribers made up>40% of gross adds in 3Q03

• Data ARPU now >$2

• Verizon is experiencing increased demand for its data services

−Test messaging usage was >400M text messages/month and >1B for 3Q03, up 24% from 2Q03

−BREW-based downloadable ringtones, games, and exclusive content grew to 4M downloads/month, up 47%

−Picture messaging grew to 2M picture messages/month in 3Q03, in less than 3 months after launch

• Korea and Japan most advanced 1xRTT markets

• More than 25M 1xRTT subs (~56% of mobile subscribers) in Korea

• KDDI Japan has now surpassed 11M 1xRTT subscribers (11/03)

• At the end of Sept., China Unicom announced a deal to purchase 1M 1x color display handsets

• Korea and Japan success attributed to:− Low-cost terminals− National coverage− Multi-media content

* All of these subscribers are not necessarily users of 1xRTT data services


EV-DO Status

Sources: CDG, company websites

• 8 commercial networks launched by end of 3Q03− APBW (Taiwan)− Brasil Telecom (Brazil)− KT Freetel (Korea)− Monet Mobile Networks (USA)− PT Wireless (Indonesia)− SK Telecom (Korea)− Verizon Wireless (USA)− Vesper (Brazil)

• 4 commercial networks to be launched in next 12 months− KDDI (Japan) launched on November 28, 2003− TELECSA (Ecuador)

• >45 EV-DO devices shipping or announced for 1H04• 1x EV-DO has reached about 3M subscribers in S. Korea by Oct 2003

− SK Telecom’s 1xEV-DO subscribers exceeded 2.5M by end of 3Q03• 1X EV-DO “killer apps” in S. Korea are video on demand services accounting for

over 50% of total downloads− Other hot applications are ringtone and character downloads, karaoke, and TV broadcasting

• 2003 results in Korea expected to lay the groundwork for future revenue generation from these services worldwide


EV-DO Data Uptake – SK Telecom

0

10,000

20,000

30,000

40,000

50,000

Sep-02 Dec-02 Mar-03 Jun-03 Sep-03

AR

PU

(W

on

)

Data ARPU by Handset Type (Sep 2003)

AR

PU

(W

on

)

Data ARPU %: 9% 12% 12% 13% 15%

Data ARPU

Total

Data

EV-DO Contents Usage

43,767

• >2.5M EV-DO customers by end of 3Q03• >1.2M June customers by end of 3Q03

3,934

46,501

5,569

25,838

39,322

58,031

67,845

1,3064,936

16,483

23,102

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

95AB 1xRTT 1xEV-DO June EV-DO

43,788

5,325

44,150

5,657

44,486

6,604

Total

Data

Video-On-Demand (VOD )56%Picture/

Sound 16%

Jukebox11%

Games8%

Karoake5%

Other4%

EV-DO Tariffs by Application6.5

2.5

1.3

0

1

2

3

4

5

6

7

SMS/E-mail Ring tones/Stillpictures

TV/VOD

Wo

n p

er

pa

ck

et

Data ARPU %: 5% 13% 28% 34%


Where Does WLAN Fit? Technology Comparison

CDMA2000 1X 1xEV-DO WLAN

Throughput Up to 153.6 kbps per user Up to 2.4 Mbps per user 802.11b - up to 11 Mbps802.11a - up to 54 Mbpsper access point

Subscriber Usage Wireless Internet Wireless Internet & Streaming Audio/Video

Wireless Internet & Streaming Audio/Video

Mobility Full Mobility Full Mobility Limited Mobility; Portable

Coverage Macro; Wide Area coverage (WAN),

Macro; Wide Area coverage (WAN),

Pico ~300 ft range; Limited coverage areas (LAN); Public or private networks,

Applications Data and voice Data Data

Devices Handset, PC Card, PDA Handset, PC Card, PDA, laptop Laptop, PC Card, PDA

Spectrum Licensed 800 MHz & 1900 MHz

Licensed 800 MHz & 1900 MHz

Unlicensed (except UK, HK); RF spectrum at 2.4GHz for 802.11b; 5 GHz for 802.11a

Current Providers Mobile operators Mobile operators Wayport, T-Mobile

Security High High Low


Public WLAN Global Status

Europe:• BT Openzone announced reseller relationships with Vodafone

and Orange, and Orange offers trails immediately• SFR France announced Paris railway hotspot award to Alcatel• Wind Italy certified Novatel’s Merlin PC card

Asia:• Globe Philippines launches PWLAN, mostly in shopping malls

and hotels• KT now over 8K hotspots, world’s largest

– launching an integrated PWLAN and EV-DO service. • NTT DoCoMo has introduced a dual-mode 3G/WiFi handset

NA:• T-Mobile announced deal with Texaco to install several

hundred drive-up hotspots• Verizon launches a competitive data service in Washington

and San Francisco, CDMA 1x EV-DO for PC card and PDA access at $79/month with $150 PC card.

• Intel’s dual band PC card (802.11b/a) is delayed to 4Q03• RIM announced it is developing a Blackberry that can roam

between WiFi and cellular networks

CALA:• Iusacell Mexico is planning service launch in 1Q04

0 5 10 15 20 25 30 35 40 45

2002

2003

Source: PyramidUnits(K)

• Global: analyst Disruptive Analysis predicts 25M cellular/WLAN multimode devices by 2006, starting in 2004• Slowdown seen in volume of market events (new services, consolidations, etc.) in 3Q, compared to the first half of the year

Global Hotspot Tracking: # of hotspots in-service


MSC

CS SS7

HLRHLR

PDSN

Data CenterData Center

WLAN Data WLAN Data CenterCenter

AAA Server(Bridgewater or Metasolv)

AAA Server / Radius Proxy

Terminals

WLAN

CDMA

Internet

• Single sign-on• Single bill• Single authentication

1X/DOMetro Cell

BSC/RNC

Nortel WLAN 2220 Access

Point

Nortel WLAN 2201 Mobile

Adaptor

Nortel WLAN2250 Security

Switch

Shasta BSN

Nortel “One-Bill” Solution with Seamless Mobile IP

Mobile IP allows seamless handoff between CDMA 1X/DO & WLAN

BirdStep Mobile IP

client

Mobile IP Home Agent for WLAN and CDMA 2000FA

Customers access WLAN network via Mobile IP client software to CDMA operator


Nortel “One-Bill” AAA-based Solution

AAA partners (Bridgewater and MetaSolv) integrates CDMA 1X/DO with WLAN authentication and billing

MSC

CS SS7

HLRHLR

PDSN

Data CenterData Center

WLAN Data WLAN Data CenterCenter

AAA Server(Bridgewater or Metasolv)

AAA Server / Radius Proxy

Terminals

WLAN

CDMA

Internet

• Single bill• Single authentication

1X/DOMetro Cell

BSC/RNC

WLAN provider and CDMA operator have a billing/roaming relationship that allows access to the CDMA AAA user authentication and RADIUS billing records

Nortel WLAN 2220 Access

Point

Nortel WLAN 2201 Mobile

Adaptor

Nortel WLAN2250 Security

Switch

Shasta BSN


Wireless Mesh Networks

• Key characteristics– Auto-discovery of

nodes and routes– Auto-configuration of

network components– Mesh topology– Wireless

interconnection

• Advantages– Rapid network

deployment– Reduced infrastructure

costs– Reduced engineering

and operational costs– Increased network

reliability


An innovative public WLAN access solution

• Reduces installation and commissioning costs by more than 75%

– Self-configuring, self-healing– No RF engineering required– Outdoor packaging and low power

consumption permits installation almost anywhere

• Reduces operating expenses by more than 70%

– Eliminates requirements for wired backhaul connection to every AP

– Basic router connection to backbone network, Packet Gateway manages mobility, roaming, and security

• Provides differentiated WLAN access in large areas

– Mobility within the CAN– Broadband access and transit remove network

bottlenecks

Enterprise / ISP / MetroDistribution Network

WirelessGateway

7250

CommunityArea Network

Wireless AP7220

WirelessGateway

7250

Enterprise / ISP Backbone Network

Layer 3Switch

Layer 3Switch

Border Gateway(NAT, Firewall, etc.)

Internetat large

Optivity NMS

AAA, DHCP,RADIUS

NOSS


Example – Downtown Core (Toronto)

• Situation– Dense urban area covering financial,

shopping, entertainment and government centers

– Today: Spotty hotspot coverage– With Nortel Networks PWLAN: High

capacity (200 Mbps), low cost data service throughout area

• Benefits– Lower OpEx – eliminate 133 T1’s;

replace with 5 T3’s– Add in-building coverage to adjacent

enterprises– Simplify deployment – fewer

connections to make and maintain

NAPWireless AP

Service Area ~ 1.5 km x 1.4 kmrequiring 133 Wireless APs and 5 NAPs


Internal Trial at Carling

Lab 5

Lab 8

Lab 9 Lab 7

Lab 6

To Corkstown(1km)

Additionally, 10 WARPs to be deployed inside


Data Access Landscape

Speed

Fix

edN

om

adic

Mo

bil

e

100 kbps 1 Mbps

Cable Modem

GPRS,Mobile Circuit Switch

1xRTT,EDGE

UMTS1xEV-DO

802.11 a/b/g

10 Mbps 100 Mbps

802.16a/d

802.16e802.20

IEEE is leading the wireless next generation OFDM standards

DSL


IEEE 802.16 WMANs

Wireless Metropolitan Area Networks (Chaired by NIST)Task Groups (TGs):

802.16a (completed 1Q03)New addition of MAC and PHY for 2-11 GHz, both licensed and unlicensedThis complements the original 802.16 (10 – 66 GHz) standard completed

previously802.16c (Chairs: Ensemble Communications, Nokia)

Developing a series of three conformance standards in support of the 10-66 GHz air interface specified in IEEE Standard 802.16

802.16d (Chair: WiLan Inc)Ratifying set of 802.16a system profiles to reduce scope of standard to specific,

interoperable, subsets. Contributions for 256OFDM will be developed and brought in by WiMAX forum

for ratification by 802.16d.Targeting to add “hooks” to 802.16d for forward compatibility to 802.16e

standard802.16e (Chairs: InterDigital, WiLan Inc)

Mobile Wireless MAN PAR approved December 2002. Likely to proceed with deliberate speed Likely to be based on OFDM, potentially with MIMO

Potential Applications: Point-Multipoint backhaul, including Hotspot backhaulResidential and SOHO DSL-like service

Nortel Networks

participates in 802.16

One 802.16a chipset on the market today

Products expected to

reach market in 2004


WiMAX Forum

• Seen as analogous to Wi-Fi Alliance in WLAN space:– Being pushed hard by Intel and Fujitsu– Strong push to focus on base profile of 256 OFDM w/o many options– Promote interoperability, certify conformance – I.e. interoperability certification– Marketing, branding, build industry momentum

• WiMAX membership includes Intel, Fujitsu & several others:– New members include Motorola and Atheros

• 802.16 history is a hodgepodge of point to multipoint solutions for 2 to 66 MHz:

– The multitude of options result from an attempt to address several markets (with regulations specifics) and failure to reach a compromise

– No mandatory configuration makes interop difficult

• WiMAX aims to define a set of system profiles that:– Reduce scope of implementations– Target specific market segments– Guarantee interop– Allow higher volumes and a more competitive market– Are ratified by IEEE 802.16d


IEEE 802.20 MBWA

Mobile Broadband Wireless Access PAR was chaired by Flarion

PAR and separation from 802.16 driven by Mark Klerer (ex-Nortel, now Flarion)

Current leadership associated with Qualcomm, Lucent and NTT-DoCoMo

Goal is to develop low latency packet data “cellular-like” service

Technology direction unclear

Potential Threat to CDMA and UMTS?Target Bandwidth:1.5MHz and 5 MHz

Target Spectrum: PCS allocation

Snapshot from May 2003 and November IEEE 802.20 meetingWorking methods/processes - 3 new correspondence groups created:

channel/traffic model

system requirements

evaluation criteria

Requests for more time to create this standard

Some recognition of (Nortel’s view of) need for differentiation from 3G

To be useful, 802.20 must provide greater value than 3G standards

New leadership is not seen as favorable to Flarion technology

Nortel Networks participates in

802.20

Too soon to tell whether 802.20 will amount to

much

May be preempted by

802.16e


IPT Prioritized list of Security work1. OS Hardening, including documenting the ports and services used on the

element– OS hardening work completed for some NEs and EMSs. Work required to document ports

and services.

2. Data encryption. Methods include encrypting the protocol (SSH, SSL, SNMPv3) and/or encrypting the entire path (IPSec). Pros and Cons to both, and we believe both are required in some areas of the solution.

– Very few NEs have implemented encryption. Large amount of work/resources required.

3. Strong Passwords, centralized control– MFT Framework implementing a Radius based solution in FWK 3.3 (delivers with PWI V5 –

CuR 2005). A good starting point, but large amount of work/resources required to implement on the NEs, and integrate with all OAM applications. Work can be phased into multiple releases.

4. Secure Logs/Audit logs, support for security trouble shooting by maintaining an audit trail of user activities. Framework in place, but requires implementation on all NEs. Work can be phased into

multiple releases

Security


CTIA stated Priorities1. OS Hardening is considered fundamental - Customers want documentation

of valid services and ports, and want all unused services and ports disabled and closed

2. Authentication with strong passwords and centralized administration3. Encryption of credentials – don’t send passwords in clear text4. Authorization – multiple levels of user access depending on role5. Integrity of Data – ensure data received is the data sent6. Session Logging – generate audit trails to enforce user accountability7. Encryption of data – Prevent theft of data, fraudulent spoofing8. Don’t store session logs in clear text – again to enforce accountability

Security


In Closing…..

• 3G has arrived…• WLAN integration starting to take place with WWAN• Continued Development of Standards Continuing• Only Time will Tell on which standards are accepted by the Market• Many standards have come and gone in the past• Make no mistake – wireless access is a must!

presentation name nortel networks confidential pg 1 metro wireless mark morell february 3, 2004

Documents

gprs networks

active data

wireless slide

wireless networks evolution

3q03 data arpu

fixed networks

gprs growth

commercial networks