Techno-economical aspects of mobile broadband

From 800 MHz to 2.6 GHz.

LTE: new frequencies 2.6 GHz & 800 MHz a chance for a new image of mobile telephony?
Friday October 8th, Warsaw, Poland.

Dr. Kim (Kyllesbech Larsen)

Technology Economics, T-Mobile
1

Story..

Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

Changing market.

Social trends and technological indicators.

Digitize

Socialize

Individualize

2 x as
active !
as fixed
users
1.60+ bn internet users.
Next 1+ bn by 2015.

4.1+ bn mobile users.

<10% on mobile internet.

250+ bn e-mails per day.

40+% more than 5 MB.

400+ mn active users.

100+ mn mobile users.

25+ mn Mobile-TV users in APAC

2.5+ bn photos per month

20+ hrs video per day

400+ mn registered users.

$4.5+bn mobile gaming revenue

10+bn mobile apps downloads.

4
86+ mn17active
Juneebay users

2010

2009: 45M Mobile users, 2.8M mobile broadband users, 21M internet users,.3.6M Facebook users (56% female, 65% 18-35),
Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

The incumbent mobile operators near-future it aint pretty!

The 3G traffic jam!

3G capacity crunch.
Re-farming existing spectrum.
New spectrum demand.

Empty 2G roads - in time?

Re-farming GSM!
HSPA+ versus LTE ?
Technology timing!

Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

The Greenfield spectrum happy short-term, a tougher future.

Tougher future growth limitations.

Fixed-like demand!
Dramatic Hz / customer drop!
Additional spectrum and/or
technology needs!
Happy startup plenty of quality.

Lots of Hz per customer!

High speed mobile broadband!
Great customer experience!

Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

Telco Europe is all about efficiency

avoiding shareholder unhappiness
EBITDA GROWTH

REVENUE GROWTH

Growth markets
OPEX GROWTH

Western Europe
REVENUE PRESSURE

2010 2015 ILLUSTRATION

Source: Pyramid Research 2010 & BoA Merrill Lynch 2010 Mobile Matrix.
Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

The Poland 2015

broadband everywhere?, for everyone?
Almost all house-hold will have a PC.

430+%

Population
38mn

Trend 1 mobile internet devices will exceed PCs.

6 out of 10 house-hold with (fixed) broadband 1.

Mobile
PCs
Broadband
(85%
HH)
(50%)
Fixed
broadband
(60% HH)

Trend 2 demand for always best connected.

1 out of 2 people will have mobile broadband 2.

Trend 3 geometrical growth in data traffic.

Fixed broadband: xDSL, Cable, FTTx, 2 HSPA, LTE.

Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

Source: Pyramid Research 2010.

Spectrum benchmarking
2.6 GHz requires least 9 times the site density to match 800MHz.
DL power

2.6
GHZ

UL power (typical limitation for

coverage)

850 MHz

Very small

Large
Coverage area

9
2.6 GHz
190 MHz

6
4.5
2.1 GHz 1.8 GHz
260 MHz

275 MHz

1
900 MHz

235 MHz

High

800 MHz (digital dividend)

230 MHz

Low
Available bandwidth for LTE

Illustration
Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

Poland Spectrum1 overview.

(Dense) Urban.

High capacity.

Poor coverage

Urban/Sub-urban.

Very good capacity.

Ok coverage.

Rural Urban

Low capacity

Very good coverage..

Illustration

2500 - 2700
MHz

20 (UL) + 30 (DL) MHz TDD-LTE

30
2.1

30
2.1

30
2.1

30
2.1

1700 2100
MHz

700 900
MHz

50
TDD

220 MHz FDD-LTE

19*
1.8

19*
1.8

18*
0.9

18*
0.9

Era

Plus

20
1.8

19*
1.8

14*
0.9

Orange

67 to 62 MHz

20
1.8

10
0.9

10
0.9

Play

CenterNet Aero2 Sferia

40 MHz

112 MHz

12
0.8

* Bands broken up 1 Total view of UL + DL 2 Based on 2009 actual customers.

Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

Poland New spectrum opportunities.

2500 - 2700
MHz

(Dense) Urban / City coverage.

2 70 MHz @ 2.6 GHz

High capacity

1:30+

Relative poor propagation.

High-frequency spectrum can be valuable as capacity or for wireless DSL-business models.

Bandwidth below 30 MHz is of lower value than higher bandwidths.

Only urban population should be used for valuation.
TDD spectrum is in general of lower value than FDD (i.e., due to propagationn characteristics).

700 900
MHz

2 30 MHz
@ 800 MHz

Rural - urban coverage.

Very good propagation.

Lower capacity.

Low-frequency spectrum ( 2.1 GHz) is more valuable than higher-frequency spectrum

Initial coverage is more valuable than limited coverage and high capacity.
Low frequency spectrum can capture more population for significantly less cost.
Below 20 MHz spectral capacity limitation will limits the overall spectrum value.

Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

Spectrum pricing & perceived value.

2.6 GHz is perceived to be of very low value compared to lower frequency
spectrum that offers economical and efficient coverage.
Average spectrum price
in US$/MHz/Pop.

UMTS2.1 hyper-hyped value

Log-scale

10

US

Economical
coverage
1

UK
CAN
US

D2

NL

Artificial scarcity
Very dense, small area coverage, high GDP.

India 3 Max
India 3
NL

US
CAN

0.1

HK
DK
SE

Very dense, small area coverage (HK).

Low absolute price compared to GDP.
Perceived value add (DK, SE).

D2

Capacity
enhancement

0.01

NOR
AT 5
D2

India 3 Min

FI

Capacity overlay.
No (real) demand.
Government push for new entrant.

Large area, low pop density, very low GDP

0.001
0.5

NL4

1.0

1.5

2.0

2.5

3.0

1
2

Auctioned spectrum in GHz

3
4
5

Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

US 700 MHz auction 2008,

German 800 MHZ 2.6 GHz
auction 2010
Indian 3G / BWA 2.3GHz
auction 2010.
Dutch 2.6 GHz auction 2010.
Austrian 2.6 GHz auction 2010.

The beauty of the beast

Our customer, the smart-phone and its apps.

Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

13

1 + 1 = 2 (yesterdays communications).

.
.

.....

Mobile network

Illustration
Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

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1 + 1 is no longer just 2 (1 device - multi-tasking).

Mobile network

Apple push
notification
service (APN).

Web 2.0

Illustration
Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

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Mobile broadband versus fixed broadband demand.

Lots of small volume events

High volume / P2P / streaming

&
100+

very high signaling load due to

mobile apps notifications

70+

20

700 MHz 2.1 GHz

2.3 2.5+
GHz

Mobile broadband

BWA
Mobile industry: hardly any QoS pricing
mainly based on volumetric FUP.

Fixed
with
WiFi

1/3

Wireless & Fixed Broadband business

model uses QoS-based pricing.
Note: In relative usage

Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

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3G on vitamins, HSPA on steroids with HSPA+ & ++.

HSPA roadmap offers substantial speed and ecosystem scale effects.

Network

HSPA

HSPA+

14.4 Mbps

21- 28 Mbps

5 MHz
1H 2009

Data Sticks /
Netbooks

84+ Mbps

10 MHz
1H 2011

Huawei Data
Stick
Nov. 09

HSPA++

42 Mbps

5 - 10 MHz
1H 2010

Huawei
Data Stick

HSPA+

15 - 20 MHz
2012+

Huawei Data
Card

Netbook
(June 2010)

1,000+
Devices 1

Chipsets
Qualcomm
MDM 8200

31 / 11

Samsung

Nokia

Android

Motorola

Qualcomm
MDM 8200

July 2010

ST Ericsson M570-V3

ST Ericsson M570 & U8500

Qualcomm

Qualcomm MDM8220

MSM 7230
QSC6295
1

iPhone 3Gs supports HSDPA 7.2 Mbps for iPhone 4 & iPAD HSDPA 7.2 Mbps/ HSUPA 5.76 Mbps.

Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

17

Current mobile broadband option space.

Blocks
Spectrum

Total
bandwidth

DL Speed
Era
Plus
Orange
Play
CenterNet,
Aero2 & Sferia

FDD 67 MHz
(5 Hz per cust)

FDD 67 MHz
(5 Hz per cust)

FDD 62 MHz
(5 Hz per cust)

FDD 40 MHz
(11 Hz per cust)

FDD 62 MHz
TDD 50 MHz

25 MHz
HSPA+

210 15 MHz
HSPA+ (LTE)

220+ MHz
LTE (HSPA+)

21 42 Mbps

42 84+ Mbps

168+ Mbps

(0.9), 1.8 & 2.1

GHz

2.1
GHz

None

0.9, 1.8 & 2.1

GHz

2.1
GHz

None

0.9, 1.8 & 2.1

GHz

(1.8), 2.1
GHz

None

0.9 & 2.1 GHz

2.1
GHz

None

0.8, 0.9, 1.8

GHz

1.8
GHz

1.8 GHz
2.5 GHz TDD

For 3 major operators little existing LTE optionality.

4 top players lack optimum LTE spectrum conditions (i.e., 40 MHz).
C+A+S have (currently) the strongest LTE spectrum position in Poland.
Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

18

How to perfect existing legacy spectrum part 1.

Re-farm own spectrum is complicated, costly and prone to be service affecting.
Migration & re-farming to 3G & LTE.

3G

Customer
migration from
3G LTE

3G

(215 @ 2.1 GHz)

3G

2G

After some
time 2G
Free

2G

to 4G
migration.

LTE

2G LTE
(210 MHz @ 1.8 GHz)

2G
(210 MHz @ 1.8 GHz)

ILLUSTRATION

LTE

New
Customers
Note: 3G includes R99, HSPA, HSPA+, similar 2G includes Voice, GPRS & EDGE

Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

19

How to perfect existing legacy spectrum part 2.

Re-farming GSM to UMTS in rural area accelerate penetration of mobile broadband.
Rural migration & re-farming to UMTS900.
Today there are more than 400+ UMTS900 devices.

3G

3G

(215 @ 2.1 GHz)

3G

2G

Free

New
Customers

2G
(210 MHz @ 1.8 GHz)

UMTS900

3G @ 900

2G @ 900

3G

3G

Rural UMTS

2G 3G
(900 MHz)

ILLUSTRATION
Note: 3G includes R99, HSPA, HSPA+, similar 2G includes Voice, GPRS & EDGE

Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

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New spectrum allows more efficient technology migration.

Balancing demand & quality.

3G LTE
Migration
LTE
3G
3G

2G

Dense &
Urban
Areas

(220 @ 2.6 GHz)

3G

(215 @ 2.1 GHz)

LTE

Free

2G
2G
(210 MHz @ 1.8 GHz)

LTE

ILLUSTRATION

New
Customers

Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

(210 @ 800 MHz)

Rural
to
Urban
Areas

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Why should we care?

Macro economical benefits of broadband internet access everywhere.
Un-economical spectrum pricing will delay and limit such benefits.

Mobile broadband smart phones will increase spectrum demand rapidly.

Without access to new spectrum resources operators will be growth limited.

Re-farming legacy spectrum will be complex, costly and impact quality.

Access to new spectrum paramount to ensure existing customer quality.

Kim Kyllesbech Larsen, Technology T-Mobile, Warsaw, Poland, 8 October 2010

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Thank you very much!

Contact:

kim.larsen@t-mobile.nl
Tel: +31 6 2409 5202
http://nl.linkedin.com/in/kimklarsen

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