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XIII Cumbre REGULATEL-BEREC Desafíos de Internet y retos reguladores

Buenos aIRES, ARGENTINA / July 2014

Network Performance

Facundo Fernandez Begni - Ericsson

Trends and challenges for the mobile broadband in LATAM Region.

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Content of presentation

Background and introduction: Network Society / Mobility Report 1

ConsumerLab, Global studies: Network Performance & Value of Network Performance 2

Conclusions 3

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CAPITALS

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In the networked society people, knowledge, devices, and information are networked for the growth of society, life and business.

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Mobile subscriptions Q1 2014

www.ericsson.com/ericsson-mobility-report

http://www.ericsson.com/ericsson-mobility-report





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Public | © Ericsson AB 2012 | 2012-06-05 |

5.6 Billion smartphone Subscriptions end 2019

› 5.6 B smartphone subscriptions by the

end of 2019

› 65% of phones sold during Q1 were

smartphones

› By 2019 the average smartphone

subscription will use 2.5 GB of data per

month

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9.2 billion Mobile subscriptions end 2019

M2M subscriptions not included

› LTE is now growing strongly, with 35 million new

subscriptions added in Q1 2014

› LTE reached 240 million subscriptions in Q1 2014

› LTE to reach 2.6 billion subscriptions by 2019

› WCDMA/HSPA added around 70 million new

subscribers, i.e. 2X more than LTE in Q1 2014

Mobile subscriptions by technology, 2010-2019

› Penetration 118%

› Subscriptions 720 M

› Prepaid 79%

› Smartphone penetration 20%

923 m SUbsCRIPCIONs

latam 2019

140% PENETRAtion

latam 2018

LATAM 2013:

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10 times Mobile data Traffic by end of 2019

3.3 GB

1.4 GB

0.65 GB

Monthly consumption per device type Global mobile traffic: voice and data 2010-2019

13 GB

6.3 GB

2.5 GB

2013 2019

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Mobile application Traffic outlook, 2013 and 2018

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population Coverage

› Around 90% of world´s population covered by WCDMA/HSPA in 2019

› LTE network deployments continue in all regions of the world, as LTE population coverage doubled in 2012 compared to 2011 (10% vs. 5%)

› More than 65% of world’s population covered by LTE in 2019

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© Ericsson AB 2013 | 2013-12-11 | www.ericsson.com/consumerlab |

10 HOT CONSUMER TRENDS 2014

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Background and introduction: Network Society / Mobility Report

1


Conclusions 3

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NETWORK Performance

Keeping Smartphone

users loyal

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Consumer survey details Smartphone owners who use web browser or applications to access content and services on the

Internet at least once a week. 20 minute interview.

Survey details (Jan 2013)

US, Mexico, Chile, Brazil, UK, Sweden, Russia, Turkey,

China, Japan, South Korea, Indonesia

1000 online interviews per market age 18-69

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› Telecommunications trails behind other industries in brand loyalty/Net Promoter Score (NPS)

Telecom struggles

Retailing

Online services

Technology

Travel/Hospitality

Financial services

Insurance

Telecommunications

NPS Benchmarks for US Industry groups 2012- Satmetrix 2012 net promoter benchmark study

“How likely you are to recommend your operator to a friend, family or colleague” Scale: 0-10

Net Promoter Score (NPS) = % of Promoters (9-10) - % of Detractors (0-6)

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Customer experience

Source: Ericsson ConsumerLab

Initial

Purchase

Billing

& Payment Account

Management

Service

& Support

Network & Service

Performance

Tariff plans/

Offers Smartphone

Apps/Eco system

Customer Relation

Service Usage

Loyalty

building

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what drives loyalty in latam?

Marketing Customer service Offer Network

Network performance and Value for money are the key drivers of operator recommendation

Base: Smartphone users in BR, CHL, MX

Shapley regression analysis, showing the relative impact between each driver and loyalty to operator brand (NPS)

Source: Ericsson ConsumerLab Network Performance Study 2013

Base: 12169 Smartphone users in BR, CHN, INDO, SK, JP, US, UK, SE, RU, TUR, CHL, MX

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Latam overall: network performance advocacy

Voice

Data

Derived importance:

Derived importance

Sa

tisfa

ction

Sustain Strengths

Concern? Areas to focus

Data Reliability is the key factor that drives network performance advocacy, followed by Voice quality

Base: Latam Smartphone users Source: Network Performance study 2013

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Sustain

Areas to focus Concern?

Strengths

Sa

tisfa

ction

Derived importance

Indoor Outdoor Transport Densely Populated

Latam: network performance advocacy by location

Data Coverage Outdoors and Transport are areas to focus on as importance is high but rates low on

satisfaction

Voice Quality

Data

coverage

Data Speed

Base: Latam Smartphone users Source: Network Performance study 2013

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The value of performance

Capital investment in network quality leads to improved financial performance

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CAGR

2009-2013 12.9%

2.6%

Source : Ericsson analysis – operator reporting (12 leading operators)

*) Compound Annual Growth Rate based on analyzed operators’ development

Figures have been adjusted for inflation per country.

80%

90%

100%

110%

120%

130%

140%

150%

160%

170%

180%

190%

2012 2011 2010 2009 2008 2Q07 2013

Competitors’ revenue growth

Best in class’ revenue growth

Percent of 2Q07 levels

In the mobile data era, Some operators are growing faster

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Performance drives revenue growth

Lead by Superior Network

Performance

Lead by Innovative Marketing &

Offering

Highly performing operators have a quality-driven

investment strategy …

… and leverage performance to drive revenue by

innovative market initiatives

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Overview of study

a) Statistical analysis (3 years of history)

b) Simulation model (projections)

North American

country

Latin American

country 2 Latin American country 1

North American

operator

Latin American

operator 2 Latin American operator 1

c) Validation through case

studies

North American operator

Latin American operator

European operator

Asian operator

The econometric analysis underlying the simulation model and the case studies support the concept that investment in network

performance yields superior market and financial benefits

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Statistical model

Capital expenditures Operational performance Market performance Financial performance

To find the main drivers of performance the model interlinks the

different drivers in each part of the chain

Capacity upgrades

Network modernization

Product/service development

Accessibility & data completion

rate

Percent connections higher than 1

Mbps

Speech call quality index

Market Share

ARPU increase

Churn reduction

Revenues

EBITDA

Free cash flow from operations

Latency reduction

Throughput

Model aimed at defining the causal relationship from capital expenditures to financial

performance

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To sum up

Capital

expenditures

Operational

performance

Market

performance

Financial

performance

Appropriately targeted capital expenditure leads to improved network performance which translates into better market

performance and financial returns

Network performance creates new opportunities and bring value to both consumers and operators

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Background and introduction: Network Society / Mobility Report

1


Conclusions 3

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