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4G: If you build it, will they come?

4G: If you build it, will they come?. Bassam Hajhamad inCode Telecom www.incodetel.com September 2 nd , 2009. inCode is a management consulting firm focused entirely on the Telecom World. Industry Segments. Service Offering Areas.

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4G: If you build it, will they come?

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  1. 4G: If you build it, will they come? Bassam Hajhamad inCode Telecom www.incodetel.com September 2nd, 2009

  2. inCode is a management consulting firm focused entirely on the Telecom World Industry Segments Service Offering Areas To deliver innovative solutions and effective strategies at the intersection of business and technology. • Business Strategy Group (BSG) • Corporate / Business Strategy- new market entry, mergers and acquisitions, divestment strategy, strategic planning, risk assessment, business cases development • Financial Analysis and Modeling - business case and pro forma financial development • Market Analysis– market research, market trial and launch planning, segmentation approaches and channel strategies • Business Formation and Launch–growth strategies and product and service planning and development • Strategic Sourcing – procurement strategies, RFP strategies, vendor management strategies • Advanced Technology Group (ATG) • Technology Strategy – spectrum strategies, migration strategies, architectural roadmap options, technology evaluations and operational requirements • Program Management Office (PMO) • Innovative Process & Tools – packaged and customized solutions to benefit customers with Wireless Networks; such as Wireless Pro, network optimization, quality assurance, and benchmark testing Mission: Customers: Wireless & Wireline Carriers Cable MSOs / Media Players Infrastructure Vendors Device OEMs Private Equity Emerging Players

  3. 4G network deployment is gaining momentum worldwide Technology: LTE Trials: Now Launch: 2012+ Technology: LTE Trials: Now Launch: 2010 Technology: LTE Trials: Now Launch: 2011 Technology: LTE Trials: Q4 09 Launch: TBA Technology: LTE Trials: Now Launch: Q4 2010 Technology: LTE Trials: Now Launch: 2010 Technology: WIMAX Trials: 2007 Launch: 2008 Technology: LTE Trials: Now Launch: 2010 Technology: LTE Trials: Now Launch: 2010 Technology: LTE Trials: Now Launch: 2012 Technology: WiMAX Trials: Complete Launch: 2007 Technology: LTE Trials: Now Launch: 2010 Technology: WIMAX Trials: Now Launch: 2009 With support from major operators and ecosystem players worldwide, LTE will become the mainstream technology by 2013, with WiMAX becoming more of a niche technology.

  4. 4G is more of a technology push than market pull Supply Side Policy & Regulation Demand Side • Regulator • Re-allocation of older spectrum for 4G technologies • Open access & net neutrality • Wireless Carriers • Delivery of higher bandwidth services and capacity • Addressing the trend of declining ARPU • Reducing OPEX & Cost/MB • Leveraging existing 3G infrastructure • Consumer Segment • Anywhere, anytime, any device, any application • High-speed, Internet-like, user-controlled experience • Bandwidth-intensive apps • Seamless and personalized mobility 4G Launch • OEM Vendors & • Application Providers • Time to market advantage • Proliferation of emerging devices, with rich mobile applications and video • Business Segment • Emergence of machine-to-machine (M2M) applications • Feature-rich mobile business solutions (e.g. video-conferencing) Ultimately 4G will be a win-win scenario for carriers and consumers. It will enable advanced mobile internet applications at lower cost.

  5. 4G subscriber growth forecast hinges on many factors 4G Subscribers Forecast By Region LTE vs. WiMAX Market Adoption Forecast 210 5,045 20,644 64,501 162,124 • Factors that will impact 4G subscriber growth forecast: • Carriers’ capital investment decisions and available funding • Overall economic recovery and broadband stimulus outcome • Suppliers’ roadmap, chipset/device availability, and ecosystem support • Product and service rationalization, including pricing • National/regional government policies and funding 4G is about technology evolution and not revolution. A pragmatic approach to forecast 4G subscriber growth is more realistic than an overly optimistic approach. Sources: iSuppli, ABI Research, Analysis Mason, Light reading, Alcatel-Lucent

  6. New initiatives & government policies are making 4G more attractive to consumers and driving adoption Stimulus Package U.S. economic stimulus package to support the deployment of wireless broadband to rural and underserved areas. Open Access Facilitate competition through the gradual removal of the walled-garden. Non-traditional operators to serve the wireless market with open devices and mobile applications. Bundled Services Telcos and Cablecos will leverage 4G to enhance its quad-play bundle and multiple screen offerings. Wholesale & CE Devices Clearwire’s wholesale model will encourage new players/MVNOs to enter the market with new type of devices. One key value of 4G is the way it can be used as a catalyst to stimulate innovation, competition, and new market development.

  7. Time Real Shifted 4G enables multiple high-speed data applications across multiple devices 2010-2011 2012-2014 2014+ 1st Wave (Early Adopters) Low Bandwidth Devices 2nd Wave (Early Majority) High Bandwidth Devices 3rd Wave (Late Majority) Next-Gen & M2M Devices Internet Multimedia Home Automation Fixed TV In-Car Laptop MID Navigation UMPC Surveillance • HD video streaming, video calling, push-to-video • In-Car data applications, • 3D Navigation • Over-The-Top video streaming and home monitoring • Remote-access of M2M device • Mobile high-speed internet • Location based services • Road warriors focus Still Camera Music Networked Gaming Health Monitoring Video conferencing Camcorder Smartphone • Video-on-demand, video sharing • HD Networked gaming, DVR • Photo and music upload and download • Upload of patient info • Telepresence

  8. Uncertainty about the readiness and timing of voice applications (over 4G) • LTE was designed to handle heavy data traffic and not optimized for voice or SMS • Voice-over-WiMAX is not yet figured out from a device & infrastructure perspectives Potential Support of Voice over LTE Short-Term Mid-Term Longer Term • IP Multimedia System • (IMS) • IMS for wireless is still being defined: Voice is not yet a mandatory requirement ? • Circuit-switch-over packet • VoLGA: based on UMA and adoption is low • 2G/3G likely to continue to support voice and SMS ? • Circuit Switch (CS) Fallback • IP-based LTE doesn’t support legacy CS • Leverage 2G/3G for traditional voice 2010 2011 2012 2013 Time With high 4G capital cost and declining voice ARPU, Voice-as-an-application is not a priority for carriers today and will not likely be available until 2012.

  9. Carriers’ strategic options will drive various business models Strategic Options Business Model Approach Key Target Markets Other carriers, MVNOs, content providers, device vendors and Internet portals 1. Carrier’s Carrier • Most Cost Effective Network (Wholesale Model) 2. Embedded Device Electronics manufacturers, high-end & mass consumers and vertical enterprises • My Network, Your Device (Network-Inside Model) 3. Convergence Play Consumer/Residential (family oriented) and SMBs • Bundled Services Focus (Three-Screen Model) Underserved and unserved markets 4. Rural Broadband • Customized Offerings (Low-Cost Model) 4G will enable carriers to pursue multiple strategic options at once. However, new pricing models are expected to emerge based on multi-tier QoS.

  10. Q&A Thank you! bhajhamad@inCodetel.com (858) 539.3801

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