Atte Te t l h ec nd Tot is N o m ov Wo ember al r ld

Business analysis for telecoms professionals september 2011

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news in brief SPECTRUM SPATS 5 Timeline A round-up of some of the The battle for scarce spectrum is intensifying as regulators major stories reported in our daily news service gear up for auctions and operators eye up valuable assets www.totaltele.com

technology trends pectrum is at the top of the become is reflected in some emerg- agenda right now for regula- ing confrontations. There are fears 8 IP multimedia Stors and operators as service that UK auctions, due in the first subsystem (IMS) providers look to the next genera- half of 2012, could be delayed due to iMS is finding favour tion of mobile broadband services potential legal action by some oper- among mobile operators and at how to ease network conges- ators which argue they are not moving to LTE that want tion. Across the globe timetables getting a fair crack at the whip in to protect voice revenues as well as introduce new are being set for spectrum auctions; broadband/LTE spectrum auctions Ian Kemp converged services. But Editor in many countries the process is (see Network Strategies p.12). they face technology Total Telecom+ already underway. And in the US, AT&T is finding and process challenges, as Throughout Europe, for example, to its cost that too much in the way well as competition from regulators are in the process of of frequency assets and coverage free applications.

auctioning off spectrum that can be can make the competition watchers network strategies used for LTE services (Timeline twitchy. Now that the Department p.5). And there is another reason of Justice has moved to block its 12 Operator LTE why this is a critical time for spec- acquisition of T-Mobile USA, AT&T business models trum allocation: many of the original could face a break-up fee of up to $6 spectrum will have a big mobile licences that were awarded billion that would include losing impact on the LTE some 10–20 years ago are soon due valuable spectrum. If the deal is to business models of mobile succeed, AT&T could still be forced operators, and some say they are not getting a fair to divest a large chunk of T-Mobile’s There is simply not crack at the whip in subscribers and spectrum. upcoming auctions. enough spectrum But others are making good use of their gains. Operators which have content strategies to go round been successful in LTE auctions are 16 Over-the-top giving IP multimedia subsystem content strategies to expire and are up for renewal, (IMS) a new lease of life as they turn operators are starting to points out Coleago Consulting. to the technology to deliver voice embrace over-the-top Many argue that there is simply services and protect precious content as a way to expand not enough spectrum to go round, revenue streams (Technology services and reach out to although governments are taking Trends p.12). In future they plan to new audiences, developing steps to free up capacity. This use the platform to deliver a whole new business models. month UK regulator Ofcom host of new converged services. statistics followed the lead of the US in And reminding us that it isn’t all Prime numbers approving the use of white space about ownership of assets, over- 20 spectrum—unused airwaves in the-top content service providers worldwide mobile device sales in Q2, mobile bands reserved for broadcast TV are enticing operators into new operator capex and opex signals—for services such as broad- partnership deals (p.16). With spec- trends, and enterprise band and M2M communications. trum scarce, there could be a whole voice equipment revenues. Just how precious spectrum has lot more sharing in future. n How do you meet the increasing expectations of your customers?

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A roundup of the major stories in telecoms in the past month, as reported in our daily news service www.totaltele.com

Business US. Later Clearwire’s biggest E100 million to roll out fibre to policy changes, including a limit shareholder, Sprint Nextel, began 100,000 homes and businesses to the maximum amount of Google buys Motorola unit talks with cable companies that by mid-2012, in phase 1 of a frequencies a mobile operator Google agreed to acquire could lead to the acquisition of multi-year operation. Eircom can hold and the introduction of Motorola Mobility for around the WiMAX wholesaler. will launch IPTV services on a uniform licence fee across all US$12.5 billion in a deal it hopes the infrastructure which will telecoms service areas. will bolster its Android strategy. Sprint-Lightsquared deal ultimately reach 1 million The purchase is expected to be Sprint Nextel agreed a premises in Ireland. Vodafone set for Wind Hellas completed by early next year. deal to deploy and operate Vodafone began talks to merge Lightsquared’s planned America Movil to buy Telmex its mobile business in Greece Telefonica restructures nationwide wholesale LTE Wireless operator America Movil with rival Wind Hellas. A merger Spain’s Telefonica announced a network in the US. Lightsquared plans to buy the 40% of Mexican would unite the country’s second- significant restructuring of its will pay about US$9 billion over fixed-line operator Telmex that it and third-largest operators to organisation to focus on digital 11 years. doesn’t already own, for around challenge market leader Cosmote. services, including the creation US$6.5 billion. of a new unit, Telefonica Digital, France Telecom to sell assets Skype gets group messaging to be headquartered in London. France Telecom plans to sell its Vodafone sells India stake Skype bought group messaging The unit will become one of assets in Switzerland, Portugal Vodafone agreed to sell a 5.5% application company GroupMe three principal business divisions and Austria. It has a 20% stake in stake in its Indian operation Essar for an estimated US$85 million. alongside Europe and Latin fixed-line operator Sonaecom in to medical services provider America, with its home market Portugal, a 35% stake in Orange Piramal Healthcare for £400 US cable acquisition operations rolled into Europe. Austria, the country’s third- million, reducing its holding to Time Warner Cable signed a largest mobile operator, and 69.8% and paving the way for a deal to buy rival cable company US blocks AT&T/T-Mobile deal last year was prevented by the possible IPO. The threshold for Insight Communications for The US Justice Department regulator from merging wholly- foreign investment in a company US$3 billion. began a lawsuit to block AT&T’s owned Orange Switzerland with in India is 74%. proposed US$39 billion takeover TDC’s Sunrise. NETWORKS of T-Mobile USA. If the deal does India policy changes not go through AT&T could Eircom invests in fibre India’s Telecom Commission, Spectrum auctions be liable to a break-up fee of $6 Irish operator Eircom will invest reached decisions on some major Telefonica, Vodafone and France billion in cash and spectrum. Telecom were among operators Developing countries drive mobile growth to win spectrum in the 800-MHz, HP exits hardware market n Developed n Developing 1,057 900-MHz and 2.6-GHz bands in 1,013 Hewlett-Packard announced 1,000 960 an auction in Spain, for a total of it will stop making computers 885 E1.65 billion. Another auction and mobile products, closing 800 is expected in the autumn which 410 its webOS devices unit in the 290 344 382 could raise a further E2 billion. 600 process. The restructuring plans Telecom Italia Mobile, Vodafone will see H-P focus on software 400 Italy, Wind, 3 Italia and WiMAX and services, and the company operator Linkem are taking part also announced the acquisition R evenue (US$ billions) 200 in auctions of LTE spectrum of database search company 595 616 631 646 in Italy to be completed in 0 Autonomy for US$10.2 billion. 2007 2008 2009 2010 September. And in South Korea Source: Wireless Intelligence LG U+ won 20 MHz of spectrum Clearwire confirms LTE plans Revenues from mobile operators worldwide will reach US$1.1 trillion in 2012, with in the 2.1-GHz band, SK Telecom developing markets the primary engine of growth and contributing over 40% of WiMAX operator Clearwire the total, according to a new study by Wireless Intelligence. Mobile operators in acquired 20 MHz of 1.8-GHz the BRIC countries—Brazil, Russia, India and China—are set to exceed US$200 confirmed it will roll out LTE in billion in revenues, overtaking the US in terms of market size by 2012. Global spectrum and KT Corp picked up densely populated areas of the operator revenues reached US$1.057 trillion in 2010. 10 MHz of 800-MHz frequencies.

September 2011 www.totaltele.com 5 TIMElInE

Virgin wins MBNL contract Network sharing in Poland New Zealand CEO to leave Virgin Media business won an Polish operators Ptc—owned by telecom new Zealand ceo, Paul eight-year contract worth in t-Mobile—and tPsA—owned reynolds, will leave after the excess of £100 million to upgrade by orange—signed a deal to company undergoes structural the backhaul infrastructure for share their radio access networks. separation next year. Mbnl, the network joint venture of mobile operators everything Zain upgrades in Saudi Arabia FT appoints Europe head everywhere and 3Uk. Zain has selected Alcatel-lucent france telecom appointed benoit to implement a new iP/MPls- scheen as its vice president of BSNL upgrades broadband based mobile backhaul solution europe excluding france. scheen bsnl signed a deal for Zte to in saudi Arabia. was ceo of Mobistar in belgium. JoBS STEPS doWn deploy Adsl2+ and Vdsl2+ Steve Jobs in August an- equipment in 15 telecoms circles 3G launch in Kenya Tellabs job cuts nounced that he would step in india. orange-owned telkom kenya tellabs will cut about 330 jobs, or down from his role as CEO of Apple and will be replaced launched 3g services in nairobi, 10% of its workforce, by the end by chief operating offi cer Tim China Telecom eyes Europe Mombasa and kisumu. of the second quarter of 2012. Cook. In a letter to the board, china telecom is planning its Jobs admitted that he can first mobile operations in europe, Power company targets telcos Clearwire’s new head no longer fulfi l the duties and expectations required of the aiming to launch an MVno in state-owned hungarian power clearwire promoted erik Prusch CEO role, but he will continue the Uk early next year and then wholesaler MVM plans to enter to president and chief executive, to serve the company as in other european countries. the telecoms market. with interim ceo John stanton chairman of the board. now board executive chairman. Apple co-founder Jobs was diagnosed with pancreatic Dish plans LTE network PEOPLE cancer some eight years ago Us satellite tV company dish Deutsche Telekom cuts and in 2009 underwent a liver filed plans with the Us regulator New Verizon CEO deutsche telekom reportedly transplant during a lengthy to build a hybrid satellite and lte lowell McAdam is the new ceo will cut around 400 jobs a year, leave of absence from work, during which time Cook mobile network. dish plans to use of Verizon communications, up to 1,600 in total, at its bonn fulfi lled his duties. In August the 20-Mhz frequencies in the replacing ivan seidenberg who headquarters through to 2015. Apple became the world’s 2-ghz spectrum band it acquired retired in August. largest company by market capitalisation. The previous when it bought terrestar in July. Huawei appoints UK head month it reported record RIM job cuts as COO retires chinese vendor huawei fi nancial results, with revenues LTE launches in Spain riM is planning to cut 2,000 jobs appointed simon culmer in for its 2011 third quarter telefonica and Vodafone are set across its global workforce. don the newly-created role of vice increasing 82% year-on-year to US$28.57 billion and profi t to launch lte services in spain Morrison, its coo, is also set to president of enterprise in the Uk up 125% to US$7.31 billion. this month. the former selected retire after 10 years working for and ireland. Apple sold 20.34 million Alcatel-lucent to deploy two the blackberry maker. iPhones in the quarter. Jobs lte networks in Madrid and Batelco replaces CEO co-founded Apple with Steve Wozniak in 1976, but was barcelona later this year. Yahoo changes leadership bahrain-based operator batelco ousted from the fi rm follow- yahoo dismissed ceo carol bartz replaced long-time group ceo ing a board power struggle Telstra sets separation plan and appointed cfo timothy Peter kaliaropoulos with deputy in 1984. His return in 1997 Australian regulators raised Morse as its interim head while chairman of the board, shaikh prompted Apple’s revival and a series of ground-breaking concerns over the details of it searches for a permanent Mohamed bin isa Al khalifa. products: imac (1999), iPod telstra’s plans to undergo replacement. bartz had led the (2001) and iPhone (2007). structural separation and migrate company since January 2009. NSN job cuts “I believe Apple’s brightest services to the new national nokia siemens networks will cut and most innovative days are ahead of it. And I look forward broadband network by July 2018. UK operator shakeup about 1,500 jobs related to the to watching and contributing olaf swantee, who took over former Motorola solutions unit to its success in a new role,” Pakistan, Albania 3G licences from tom Alexander as ceo of it acquired this year. Jobs said in his resignation letter. Cook, in his role as Pakistan plans to issue the everything everywhere in the COO, has been responsible country’s first 3g licences in Uk at the start of september, New head for GSMA for Apple’s worldwide sales october, hoping to raise up to announced a shakeup of the the gsM Association appointed and operations, including sup- Us$1 billion. And AMc won the senior management team. six orange executive Anne bouverot ply chain, sales, service and support management. He also second 3g licence in Albania; executives will leave the company as director general, taking over headed up the company’s Vodafone launched services in the including richard Moat, the from ceo rob conway who macintosh computers division. country in January. current cfo and deputy ceo. resigned in June.

6 www.totaltele.com July/August 2011

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IP MULTIMEDIA SUBSYSTEMS MULTI TASKING IMS is finding favour among mobile operators moving to LTE that want to protect voice revenues, but there are technical and process challenges ahead. By Roy Rubenstein

confluence of events surrounding have to worry about fallback to the circuit- while the likes of Vodafone and A1 the deployment of Long Term switched domain or interconnect to other Telekom Austria (formerly Mobilkom AE volution (LTE) wireless technol- players, he says. “All of that stuff will be Austria) have launched enterprise serv- ogy is finally placing IP Multimedia taking place while mobile operators are ices. But the main IMS deployments to Subsystem (IMS) at the core of the getting onto the VoLTE page.” date have been in the fixed network. network. IMS will add voice and multi- IMS was envisaged a decade ago as an “What IMS has become is the next- media telephony services to LTE using over-arching core signalling and control generation VoIP platform,” says Diane Voice over LTE (VoLTE), helping mobile architecture upon which new services Myers, directing analyst, VoIP and IMS, operators to ward off competition for would be developed and delivered across at Infonetics Research. In part that is their core revenue-generating services. various access networks. In reality, opera- because vendors have adopted IMS for But mobile operators also face a tors reacted cautiously to the technology. their voice products. dilemma: while they implement IMS and “The general problem was that IMS France Telecom has used IMS for voice VoLTE, the communications providers required a significant reworking of the as part of its triple-play services, respond- whose services run over their networks network,” says Dimitris Mavrakis, senior ing to competitive operators’ offerings, will benefit from LTE broadband without analyst, networks, at Informa Telecoms and now has several million VoIP the challenges associated with IMS & Media. “It involved replacing or subscribers. “France Telecom started to deployment. Mobile operators adopting refreshing services that generated reve- decommission its service-switched lines IMS-based VoLTE will need to ensure nues.” Operators had no reason to replace as subscribers began actively moving that the resulting services match the infrastructure that was working well and from their traditional phone line to their quality of circuit-switched voice, and generating revenues even if IMS prom- bundled service,” says Myers. while they take time to do this over-the- ised greater efficiencies. Other operators are moving to VoIP top providers can advance their offerings, And while operators grappled with how using IMS switches to achieve opera- says Dan Warren, senior director of tech- to make money from services such as tional savings as they replace their Class nology at the GSM Association (GSMA). instant messaging and video telephony, 5 PSTN switches. China’s operators “The challenge is that the length of time Internet-based services came along to including China Telecom have been it takes to generate sufficient inter-opera- deliver such services cost-effectively or mandated to do this, says Myers, as the tor interconnect and roaming, as well as even for free. Chinese government looks to reduce the the handsets, is time during which the Some mobile operators such as Japan’s country’s power requirements. “Class 5 likes of Skype, Google, Viber and Fring NTT DoCoMo and Korea’s SK Telecom switches are large, monolithic boxes that are developing new things.” These Internet (see box p.10) have continually developed consume a lot of power. You have to have players move quickly because they don’t enhanced multimedia services using IMS, them located in different points of pres- ence; they can’t be run off one central Worldwide IMS equipment revenues location,” she says. Yet operators do have the option of $1.6 billion staying with a next-generation network (NGN) softswitch architecture, rather than adopting IMS, when delivering VoIP. “There are operators where deploying IMS makes sense, but if your first step is VoIP, deploy NGN, and deploy IMS only when you need to offer multimedia serv- ices,” says Ali Kafel, product marketing & business development, Sonus Networks.

$176 million Colt Technology Services is one fixed- line operator that has adopted Sonus’ softswitch platform for VoIP, but it is also 2008 2009 2010 2011 2012 2013 2014 2015 incorporating elements of IMS. “What we do with IMS is slightly different to Source: Infonetics Research what others do with IMS,” says Nicolas

8 www.totaltele.com September 2011 TECHNOLOGY TRENDS

Top drivers for moving to IMS (left); leading carrier VoIP and IMS vendors by revenues, Q2 2011 (right)

Legacy equipment obsolescence Genband

Other Ability to offer Huawei converged services

Alcatel- LTE network Lucent deployment

Nokia Acme 0% 20% 40% 60% Siemens Packet

% of service providers rating Combined worldwide trunk media gateway, softswitch, definitely a driver SBC, media server, VAS and CSCF server market share Source: Infonetics Research

Fischbach, Colt’s network strategy and solutions, he says. and enable it on several systems in the architecture director. IMS deployments But Michael Clever, head of voice and IP right way,” says Fertl. “All these things typically are subscriber-centric and transformation at Nokia Siemens are big challenges.” require elements such as the home Networks, says the motivation for IMS But if the fixed network is where IMS subscriber server (HSS) for user authenti- deployment goes beyond voice: “It is being has been successful, the biggest recent cation, but Colt has used only the IMS driven for voice services, but if it was just IMS development is the adoption of elements needed to enable VoIP access for VoIP no one would implement this.” VoLTE, which uses a stripped down services for its enterprise customers. One example of other drivers is version of IMS to deliver voice and multi- “The platform we chose is flexible, so converged fixed-mobile enterprise serv- media for LTE. “Mobile is where the you don’t have to deploy all the compo- ices. “The enterprise market is one that is stickiness is for IMS,” says Mavrakis. nents that make up an IMS architecture relatively unexploited by telcos,” says “And it is the mobile operators that are but [rather] start with a softswitch that Informa’s Mavrakis, who highlights the cash cow for IMS vendors.” also delivers SIP and has whatever you Vodafone Spain’s IMS-enabled Oficina According to Infonetics Research, need around it for business VoIP serv- service. Oficina provides users with a global IMS equipment manufacturer ices,” says Fischbach. fixed number on their mobile handsets revenue was up 87% in the second quarter But while there is a place for interim while delivering advanced capabilities on compared to the same quarter last year. strategies, full-blown IMS will be the their fixed phones. Voice is only part of Asia Pacific accounted for 68% of all IMS long-term solution as operators replace the package which includes ADSL and equipment spending in the second their PSTN networks. “From real [opera- mobile broadband. The merits of the quarter, driven primarily by activity in tor] feedback, the cost of operating an service include a single bill and phone China, Japan and South Korea. The IMS network is now lower, from an opera- number, and converged pricing plans. research company says mobile IMS-based tion and maintenance perspective, than A1 Telekom Austria launched its unified spending will be a strong contributor to managing the PSTN,” says Cassidy Shield, voice service in 2010, a converged mobile market growth in the second half of this global solutions marketing, content, cloud and fixed business service based on IMS year, particularly in North America as and communications, at Alcatel-Lucent. that includes short number dialling and operators increase LTE deployments and Vendors say IMS has been simplified as user presence. But according to Franz prepare for VoLTE services in 2012. it has matured. “Whereas before we had Fertl, director of service network at A1, Infonetics in a recent survey found that multiple platforms and multiple middle- implementing the service and interfacing LTE is now the main driver for nearly half ware, we have now consolidated the it to the company’s existing operations (48%) of the 23 operators questioned that technology,” says Ed Elkin, director, IMS support system proved challenging. Not are implementing or have deployed IMS. solutions marketing at Alcatel-Lucent. only did it involve one IMS box but also “This is a big jump from a year ago; LTE is “We can put two million subscribers into several servers and software elements. now a primary driver,” says Myers. In a a single chassis.” The result is a 95% “That made it very complicated to separate LTE survey, the research company reduction in power consumption and implement a process…to offer the service, found that operators’ plans to deploy floor space compared to circuit-switched giving customers the ability to order it VoLTE are ahead of where they were a

September 2011 www.totaltele.com 9 technology trends

IMS pioneer: how SK Telecom has blazed a trail most important business: voice and SMS services that still typically represent 75% South Korean operator SK Telecom has been providing IMS-based multimedia services of their revenues. Operators must grapple since 2005. Having started with a video call service, the operator has launched a steady with how to advance their services in a stream of IMS services including mobile messaging, fixed Internet telephony, a converged fixed-mobile service, high-definition video calling and a social networking talk service. world where all sorts of communications SK Telecom has also joined with Korean mobile carriers KT and LG U+ to enable applications can be downloaded in a subscribers to use the mobile messenger service across networks. The operator claims second, says Furustam: “That is becom- such interconnection of IMS services between operators remains the only example to date. ing more of a real, real concern.” It has resulted in the mobile messenger service being used by 14 million subscribers. One of the strengths of IMS is that it allows for experimentation and customisation, says Another important component that Woo-Yong Choi, senior manager of the core network development team at SK Telecom. builds on IMS and which will play its part For example, the operator conducted a study and found that some users felt uncomfortable alongside VoLTE is an enhanced version being seen on a video call. With SK Telecom’s RCS-based HD video calling service, a user starts a circuit-switched voice call and can choose from a list of multimedia features such as of the Rich Communication Suite (RCS- real-time video, photos, a sketch book and location information. The user can also choose e), defined by five European operators whether to just receive video or use two-way video sharing. and which is being promoted by the For 3G circuit-switched video calls, voice and video traffic are transmitted at 64 kilobits- GSMA. RCS-e will enable users to send per-second (Kbps). SK Telecom’s HD video calls use the 3G packet network and WiFi to transmit at 100-200 Kbps, resulting in a fourfold improvement in video resolution. instant messages, video and files, making use of the handset’s address book. year ago. “One year ago it was still circuit- connection first. Such a connection has Deutsche Telekom, Orange, Telecom switched fall-back,” says Myers—in other sufficient bandwidth to support the IP Italia, Telefonica and Vodafone announced words, voice implemented not on LTE but bearer, allowing the handover to circuit- at Mobile World Congress earlier this using the existing 2G/3G circuit-switched switched infrastructure to occur later. year plans to launch RCS-e services by the infrastructure. “Now operators are accel- A1 is considering such issues. “We think end of this year or in early 2012. erating their plans, launching VoLTE it is important to implement VoLTE,” says “The things that have stopped RCS much more quickly once LTE is in place.” Furtl. “And if you implement VoLTE, [is it happening are the business case, and in But operators face significant challenges necessary to have] a fallback solution for some areas the complexity of the service as they move to implement IMS for mobile. GSM or is it possible to start the call in itself,” says Warren at the GSMA. Indeed, They will also need to ensure interopera- LTE and finish it in HSPA?” work is about to start to harmonize RCS-e bility between their IMS-enabled core SK Telecom is still undecided about its with the latest version of RCS to create communications services. plans to adopt VoLTE. But Woo-Yong the functionality required using a reduced There are two approaches for adopting Choi, senior manager of the core network set of protocols. But for RCS/RCS-e VoLTE. A minority of operators plan to development team at SK Telecom, enabled services to be used across opera- have sufficient LTE coverage such that a believes the implementation would be tor boundaries in the same way as voice user can remain using VoLTE without straightforward. “The VoLTE implemen- calls and SMS, it is essential for the oper- needing to hand over to any other cellu- tation will not be difficult as our company ator community to develop around lar voice technology. This is the strategy can use its existing IMS infrastructure VoLTE and RCS, says Warren. “All the of two US operators, Verizon Wireless and technology,” he says. while, the Internet players will be further and MetroPCS, for example. Magnus Furustam, vice president, developing their offerings.” Other operators will need to keep the product area core & IMS at Ericsson, says SK Telecom highlights the threat posed voice call active as a user moves from an getting such coexistence to work between by free smartphone applications that LTE cell to a 3G or 2G cell. “This is tech- the circuit-switched and packet-switched directly compete with IMS-based serv- nically tough, and it has exercised the cores will be challenging, but that it is ices provided by mobile carriers. “This is minds of the operators, vendors, the less a technical problem than one of the biggest challenge to IMS,” says Choi, 3GPP and the GSMA,” says Warren. project planning. who says that mobile operators’ future The challenge is that two events must Clever at NSN highlights another business models will be shaped on devel- be supported simultaneously. As the radio networking challenge operators face when opments based on RCS. interface is handed over, the nature of the moving to IMS. In time-division multi- But Choi implies that success will voice bearer changes from IP to a circuit- plexed networks a peak load might be largely be down to the operators. “The switched one. This requires a handover three times the regular load; in IP networks biggest strength of IMS is that after it is from the IMS domain to the mobile the surge can be 100 times the load. The launched the development of additional switching centre server, says Warren. IMS core needs to be designed to tackle services becomes very simple,” he says. One solution operators are investigat- such unpredictable traffic, he says: “It is a “The return-on-investment will be high ing is to separate the two events by huge effort and does not come for free.” if one decides to adopt IMS and develop delaying the bearer handover, in this case What is of more concern for operators, many additional services instead of stop- moving from LTE to a 3G HSPA says Furustam, is how they protect their ping at just one or two.” n

10 www.totaltele.com September 2011 World Communication Awards For global communications providers 7 November 2011 The London Hilton on Park Lane 2011

World Communication Awards 2011...... The Shortlist

Best Brand Campaign Best New Service: Consumer The Alireza Mahmoodshahi Technology • Idea Cellular • Banglalink Foresight Award • Mobile TeleSystems • Orange • Movirtu • Orange Business Services • Roshan • PCCW Global • Orascom Telecom Bangladesh (Banglalink) • Turkcell • Smart Communications • TELUS Best New Service: Enterprise The Green Award Best Cloud Service • Orange • Colt Group • Content Guru • SingTel • Grameenphone • fonYou Telecom • Virtela • Orange Business Services • iPass • Vodafone • Smart Communications • Orange Business Services The New Shores Award • Telstra Enterprise & Government Best Operator in a Developing Market • Virtela • Axis • BT Global Services • CVT Group • China Telecom (Europe) Best Content Service • Orange • Orange Business Services • Hutchison Telecom Hong Kong • Viettel The Social Contribution Award • Maxis • Orange Best Wholesale Carrier • Etisalat • SingTel • Colt Group • Roshan • TE Data • Interoute • Turkcell • Turkcell • Orange • Viettel • Tata Communications CEO of the Year Best Customer Care • TeliaSonera International Carrier • Bharti Airtel Limited • Gökhan Bozkurt: Türk Telecom • Orange Business Services Project of the Year • Ibrahim Al-Omar: VIVA Bahrain • Tata Communications • BT Group • Karim Khoja: Telecom Development Company • UPC Austria • Maxis Afghanistan Ltd. • Orange Business Services • Mehboob Chowdhury: Pacific Bangladesh Best Global Operator • Turkcell Telecom • BT Global Services • Zain Jordan • Mohammad Omran: Etisalat • Orange Business Services • Rakesh Bhasin: Colt Technology Services • Verizon Business Team of the Year • Randall Stephenson: AT&T • Virtela • CITIC Telecom International CPC • Stéphane Richard: France Telecom-Orange • Orange Business Services • Sunil Bharti Mittal: Bharti Airtel Group Best Mobile Operator • UPC Austria - Churn Busters • Zeinal Bava: Portugal Telecom • Bharti Airtel • UPC Austria - UPC Gold Cup • France Telecom-Orange • Verizon Wireless To book your table visit www.worldcommsawards.com or email [email protected]

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LTE BUSINESS MODELS MIXEd SIGNALS Spectrum allocation will have a big impact on mobile operators’ LTE business models, and some believe they are not getting a fair crack at the whip. By Ken Wieland

pectrum for high-speed mobile data digital television—is of particular value Mhz) of digital dividend spectrum. it is a services is in short supply, frustrat- to operators and regulators. the 800-Mhz small amount compared with the 190 sing operators eager to roll out lte band enables mobile network operators Mhz typically available in the 2.6-ghz technology and enjoy better operational (Mnos) to cover suburban and rural band also suited to lte services. and spectral efficiencies on increasingly areas more cost-effectively than higher goldenits says contiguous 2x10 Mhz overloaded networks. frequencies which have shorter signal blocks are the minimum requirement to national regulatory authorities (nrAs) ranges. And for nrAs and governments run efficient lte services. if so, nrAs are also concerned: A lack of spectrum aiming to extend access to broadband will have a hard time slicing and dicing could lead to congested networks that services nationwide—often placing obli- 2x30 Mhz if they want to attract more adversely impact broadband performance gations on spectrum winners as a result than three players to this frequency band for businesses and consumers; and it (see box p.13)—the digital dividend makes and maintain effective national mobile could lead to digital divides, with rural that goal much more achievable. broadband competition. areas in large part underserved by new the european commission also sees in addition, wireless intelligence says lte broadband services. the value in the switchover and has set a 14 of the eU27 countries do not yet have the upshot is that some operators are target of the end of 2012 for auctions. targets to auction spectrum in the going head to head with nrAs over According to analyst company wireless iMt-extension band—2.5 ghz–2.6 ghz . restrictions on the allocation of spectrum intelligence, 11 countries within the As a result the 900-Mhz and 1800-Mhz and how it could impact their lte busi- eU27 have already switched off analogue frequency bands, initially limited to 2g ness models, as well as over obligations broadcast services and 10 plan to do so services, are being liberalised across being placed on how quickly and exten- between 2011-12 (see table p.14). but a europe for use for 3g and lte services— sively services should be implemented. further six will not do so until 2013-15 so-called spectrum refarming. A growing “the problem is that when regulators and will therefore miss the ec deadline. number of Mnos can now use their start to tinker they have an impact on An added bonus of 800-Mhz spectrum 900-Mhz assets to provide 3g services, operators’ economic business models, is that it can provide better indoor cover- and the ec is calling on all nrAs in the and there is always the danger that regu- age than higher frequency bands. “800 european Union to free up the spectrum lators don’t get the outcome they hoped Mhz is an essential part of the lte for ‘4g’ lte by the end of this year. for,” says terry norman, a lead analyst at success story,” says walter goldenits, given the similar signal propagation Analysys Mason. cto at A1 telekom Austria. characteristics between 800-Mhz and in europe, spectrum from the so-called but one snag with 800-Mhz spectrum 900-Mhz spectrum, and the growing digital dividend—occupying the is its relative scarcity. nrAs in europe, in prospect of allowing lte at 900 Mhz, 800-Mhz frequency band vacated by discussions with broadcasters, typically nrAs increasingly are starting to see the broadcasters switching from analogue to are attempting to clear 60 Mhz (2x30 two frequency bands in the same light. but that is causing some operators to show ‘When regulators start to tinker they have an concern over the potential impact on their mobile broadband business models. impact on operators’ economic business models’ consultancy dotecon published a benchmarking report in september 2010 on the possible value of 800-Mhz and LTE connections forecast by region 900-Mhz spectrum in ireland. one 2009 2010 2011 2012 2013 2014 2015 conclusion of the study, commissioned by africa — — 9,030 128,220 689,210 2,073,505 4,369,461 ireland’s regulator comreg, was that americas — — 28,841 141,560 1,107,458 4,482,432 11,834,565 there was no significant difference in the Asia Pacifi c — 5,561 1,425,225 9,646,840 30,770,659 69,960,638 131,936,330 long-term worth of 800-Mhz and Europe: Eastern — 4,907 330,728 1,341,630 3,101,296 7,491,129 16,244,241 900-Mhz spectrum. Meanwhile Uk Europe: Western 2,000 58,225 715,806 4,254,921 19,297,314 41,515,154 70,436,094 regulator ofcom describes 800 Mhz and Middle East — — 77,299 684,183 3,841,603 8,798,932 15,589,270 900 Mhz as “broadly equivalent”. the US/Canada — 126,163 2,329,400 7,336,464 17,747,562 34,114,630 54,203,339 concern for some operators that hold World 2,000 194,856 4,916,329 23,533,818 76,555,102 168,436,420 304,613,300 900-Mhz spectrum is that they may be Source: Wireless Intelligence capped on the amount of digital dividend

12 www.totaltele.com September 2011 network strategies

HeadlineEconomic balance: regulators impose obligations on LTE coverage that LTE services require, they argue. There have been similar ructions in the Regulators and governments increasingly are imposing LTE coverage obligations to prevent UK. Nick Blades, head of regulatory affairs national digital divides emerging. Winners of spectrum in the 800-MHz spectrum auctions at O2 UK, argues that Ofcom’s conclu- in Germany, for example, must roll out services in rural areas first and aim for nationwide coverage by 2013; and when Austria allocated 2.6-GHz spectrum in September 2010 the sions about the true worth of 900-MHz regulator ruled operators should provide 25% of the population with mobile broadband spectrum for the delivery of LTE services coverage by the end of 2013. Many other countries are planning to set out similar obligations, has led to an unfair set of proposals for particularly in the lower frequency bands (800 MHz and 900 MHz) which are more suited to auctions set for next year. Ofcom is treat- wider coverage: Wireless Intelligence says Denmark, France and the Czech Republic have already expressed their intentions to set coverage targets for rural and remote areas. ing 800 MHz and 900 MHz the same, with In the UK the Communications Consumer Panel—an independent group formed to each bidder required to have a minimum provide advice to the regulator—in July called on Ofcom to enforce coverage obligations amount of sub-1GHz spectrum to provide on operators taking part in next year’s LTE spectrum auction. “The forthcoming auction presents an opportunity to address the fact that GSM coverage has largely stood still high-quality data services. since the arrival of 3G,” it said in response to Ofcom’s consultation on the auction. “Most “According to Ofcom, we and Vodafone coverage not-spots ten years ago are still not-spots today. For the first time in over 25 years UK already pre-qualify as having enough significant spectrum is about to be released that is lower frequency than any that is currently spectrum holdings to provide a high- deployed…800 MHz is a good solution for rural coverage and presents the opportunity…to correct the adverse coverage position.” speed LTE service,” says Blades. “That Spectrum caps are also favoured by NRAs as a way to promote competition. UK regulator means we’re not guaranteed any 800-MHz Ofcom favours “spectrum floors” for the auction of 800-MHz, 1800-MHz and 2.6-GHz spectrum, whereas 3UK and Everything spectrum next year. By setting minimum amounts of spectrum for bidders as well as Everywhere would be if they placed imposing spectrum caps—and taking into account MNOs’ existing spectrum—Ofcom says it is aiming for at least four “credible” national providers capable of delivering “high-quality reserve bids on each of the spectrum data services” in the UK. “One question regulators have to grapple with is whether or not it floors outlined by Ofcom.” is socio-economically effective to hobble operators by forcing them to roll out networks into O2 and Vodafone UK each have 2x17.4 rural areas,” says Norman at Analysys. “It might be that the cost of rural rollout is passed on MHz of 900-MHz spectrum, which under to the customer, which would have a negative socio-economic effect. Another unknown is how much of a positive socio-economic effect there is from rural broadband connectivity.” Ofcom’s sub-1GHz cap of 2x27.5 MHz means they would be restricted to acquir- spectrum they can acquire. alone. “LTE provides operators with the ing 2x10 MHz of 800-MHz spectrum. It is a worrying prospect for Goldenits opportunity to experiment with new and Everything Everywhere and 3UK, which at A1, which holds 2x17 MHz of 900-MHz innovative pricing models, which allows don’t have any 900-MHz assets, would be spectrum. Austria plans to auction digital them to find the best way of deriving able to bid for much more. dividend spectrum in the first quarter of revenues from the premium service. “Ofcom says that if you have got 2x15 2012, and Goldenits strongly opposes any However, most operators have not grasped MHz of 900-MHz [spectrum] you can a links being made between 900 MHz and t h i s o p p o r t u n i t y,” s a y s N i c o l e M c C o r m i c k , run a high-speed LTE service,” says 800 MHz. “We serve more than five Ovum senior analyst, in a new report LTE Blades. “The one rather large flaw in that million subscribers on our network, so Tariff Comparison: Europe, Asia-Pacific and argument is that LTE 900 MHz is only we need the capacity based on existing the US. The report also found that charg- standardised for 10-MHz carriers because frequencies to provide good quality serv- ing high premiums for LTE is there are so few 900-MHz operators that ices with national coverage including unsustainable in the long term due to have more than that. There isn’t an 2G,” he says. “800 MHz is new spectrum competitive pressures in the industry. ecosystem to support a high-speed service and LTE is a new business. Everyone “Operators will need to be careful not to at 900 MHz using 2x15 MHz and there should have the same right to apply for alienate high-end customers that have won’t be. We can’t understand why Ofcom 800-MHz frequencies.” paid a premium for a fast, high-quality hasn’t picked up on that important fact.” The stakes are high for A1 and other service by reducing LTE tariffs too By contrast, LTE 800 MHz is standard- operators looking to develop their LTE quickly or drastically,” adds McCormick. ised for larger carriers—2x15 MHz and business models. Goldenits suggests that As well as 800-MHz caps potentially 2x20 MHz—which enable higher speeds if the operator does not acquire as much weakening the LTE business case, 900 than 2x10 MHz. Moreover, O2 maintains 800-MHz spectrum as it needs to provide MHz-owning MNOs argue that lumping that it needs 900 MHz to support its 2G a high-performing and nationwide mobile together 900-MHz and 800-MHz spec- and 3G customers. broadband network, it may be necessary trum as sub-1GHz spectrum is a flawed “We are not yet in a position to give a to pool spectrum resources through notion. For one thing, 2G services will view on the relative merits of the differ- network-sharing. In such an event, A1’s have to be maintained for some time at ent arguments,” says Graham Louth, LTE strategy to differentiate on network 900 MHz, so that spectrum will not be Ofcom’s spectrum policy director. performance could be compromised. immediately available for LTE. Neither is The caps and conditions that NRAs Certainly, operators appear to be 900-MHz spectrum necessarily split into impose on auctioned spectrum, as well as finding it hard to differentiate on tariffs contiguous 5-MHz blocks, the minimum their judgement on the future use of

September 2011 www.totaltele.com 13 nETWoRK STRaTEgIES

900-Mhz and 1800-Mhz spectrum, will Price per megahertz per pop (US$), selected auctions all have a bearing on how Mnos value 800-Mhz and 2.6-ghz spectrum. “in 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 finland and the netherlands 2.6-ghz Germany 800 mHz (may 2010) prices were extremely low, but that won’t Sweden 800 mHz (mar 2011) necessarily be repeated elsewhere as a Hong Kong 2.6 GHz (Jan 2009) limited number of bidders and high avail- Sweden 2.6 GHz (may 2008) ability of 1800 Mhz for lte [in finland] Denmark 2.6 GHz (may 2010) and tight spectrum caps [in the netherlands] were big factors in those Norway 2.6 GHz (Nov 2007) auctions,” says iain Morris, technology Austria 2.6 GHz (Sep 2010) editor at the economist intelligence Unit. Germany 2.6 GHz (may 2010)

but prices can increase drastically when Estonia 2.6 GHz (Dec 2010) demand exceeds supply. “in hong kong’s Finland 2.6 GHz (Nov 2009) 850-Mhz and 900-Mhz spectrum auctions earlier this year the prices per Netherlands 2.6 GHz (Apr 2010) megahertz per pop paid by smartone and Source: Economist Intelligence Unit hutchison were more than six times greater than the sums paid by hong ‘If rapid growth in mobile data traffi c continues kong’s operators in the 2.6-ghz auction [in January 2009],” says Morris. “if rapid it may well start to drive spectrum prices up’ growth in mobile data traffic continues, and networks become congested, it may EU27 implementation deadlines and auction timetable well start to drive spectrum prices up, digital digital Spectrum IMT extension even if regulators do impose some switchover dividend re-farming onerous bidding conditions.” deadline auction frequency (Mhz) Timeframe auction in ireland comreg intends to auction Austria Q3 2011 Q1 2012 900 Q4 2010 Q3 2010 off 28 blocks of spectrum, each consist- belgium Q1 2010 - 1800 Q2 2011 - ing of 2×5 Mhz of spectrum, in the 800-, bulgaria Q1 2015 - 900/1800 Q4 2010 2012 900- and 1800-Mhz bands. it plans to Cyprus 2011 2012-13 900/1800 - - have a cap to ensure that no company can Czech republic Q4 2011 Q2 2010 900/1800 2012-13 2012-13 win more than ten blocks of spectrum. Denmark Q4 2009 2012 900/1800 Q2 2011 Q2 2010 in dotecon’s benchmarking study the Estonia Q3 2010 - 900 Q1 2014 Q4 2010 consultancy concluded that a 2x5-Mhz Germany Q4 2008 Q2 2010 900 Q4 2009 Q2 2010 block of sub-1ghz spectrum was worth Greece 2013 - 900/1800 2013-14 - between €18 million and €26 million. A Finland Q3 2007 Q3 2011 1800 Q4 2009 - reserve price tag of €26 million would France Q3 2011 Q1 2012 900 2010 Q4 2011 work out at €0.58/Mhz/Pop, close to the Hungary Q4 2014 - - - - €0.7/Mhz/Pop finally paid for by opera- Ireland Q4 2012 2012-13 900/1800 Q3 2011 - tors in germany, which has a much Italy Q4 2011 2012-13 900 2013 - stronger economy than ireland. Latvia Q2 2010 - 900/1800 Q4 2009 2013 setting high reserve prices would be a Lithuania Q4 2012 - 900/1800 - - dangerous game for comreg to play, Luxembourg Q2 2006 - 900 2011 - warns stefan Zehle, ceo of coleago malta Q2 2011 - 900/1800 2011 - consulting. “Prices paid elsewhere are Netherlands 2012 2012-13 900/1800 Q3 2010 Q2 2010 not an indication of how operators value Poland Q3 2013 - 900/1800 Q3 2010 - the spectrum in ireland,” he says. “if the Portugal Q2 2012 - 900/1800 Q1 2010 - regulator sets high reserve prices, there romania 2013 - 900/1800 Q1 2010 - may in effect not be much of an auction as Spain 2014 Q3 2011 900/1800 Q4 2011 Q4 2011 the regulator is setting the price for spec- Slovakia Q4 2010 - 900/1800 2010 2011 trum… there are ample studies that show Slovenia Q4 2010 - 900 Q2 2010 - that high prices for spectrum are counter- Sweden Q4 2007 2011 900/1800 - Q2 2008 productive in terms of overall economic United Kingdom Q2 2012 2012 900/1800 Q1 2010 2013 gain. ireland is running that risk.” n Source: Wireless Intelligence (June 2011)

14 www.totaltele.com September 2011 WORLDORLD

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OVER-THE-TOP CONTENT ToP SLICING Operators are starting to embrace over-the-top content as a way to expand services and reach out to new audiences, developing new business models. By Ingrid lunden

perators traditionally have services—defined as content and services hulu has forecast revenues of $500 million viewed over-the-top (ott) delivered over networks not owned by this year, having launched in 2008. ocontent players as adversaries content/services companies themselves— telcos are also starting to accept that that hogged network and stole customers still are encroaching on the iPtV in order to target users who increasingly from their own paid-for services. but now offerings telcos are trying to grow to are watching content on different screens, we are starting to see an evolution in that offset other declining areas of their busi- they need to partner with those providers relationship as ott companies and ness. Analysts at informa telecoms and that have carved out new audiences . “we service providers look to bridge the gap Media forecast that by 2015 some 380 see that the tV is no longer the only between their two business models: huge million people worldwide will be consum- outlet. it’s becoming a more open ecosys- audiences but limited revenues on the ing ott content—more than double the tem,” says Paul-francois fournier, one hand; and ArPU-uplifting network 163 million iPtV subscribers by that executive director, technocentre, at subscriptions but threatening commodi- time—with growth driven by providers france telecom. the operator recently tisation on the other. such as streaming service netflix (see pie launched a new tV service for tablets— “two years ago most telcos delivering chart) and the bbc’s iPlayer. ott content currently only available on the iPad—and video were perceiving ott as a threat, will be accessed via connected tVs, has invested in france’s most popular but there has been a huge mindshift. now games consoles and set-top boxes , as well online video company, dailymotion . it is viewed as an added feature to the as through Pcs, tablets and smartphones, france telecom, which has its own service offering,” says steve Mccaffery, says informa. branded tV content business, also has general manager and VP of home busi- ArPU for ott service providers been positioning itself as an ott player ness, eMeA, at Motorola. he says the currently is low compared to cable and of sorts. it has signed deals with lg and bbc iPlayer—which in July finally made iPtV customers. Ad little, for example, samsung to preload its orange portal on its debut as an international, paid-for estimates that ArPU for netflix custom- their connected tVs, including content product—is the third most-watched ers is around Us$12 per month while iMs from dailyMotion as well as Vod services channel on service provider Virgin research says ArPU for comcast video and other orange tV content. the idea Media’s network in the Uk, for example. customers is about Us$133.yet the oppor- is to use it to drive new users to the there is no doubt that ott tunity is growing: Us online video service service, as well as make it easier for exist- ing customers to get extra content. ‘Telcos now view over-the-top content as “the portal is available to everyone, but when you are an orange customer an added feature to the service offering’ you get access to more services—for

Netfl ix subscribers in thousands (left) and BBC iPlayer monthly requests in millions (right)

180 25,000 — Subscribers — Net additions 3,500 n Online, radio n Online, TV n Virgin Media TV 160 3,000 20,000 140 2,500 120 15,000 2,000 100 1,500 80 10,000 1,000 60 500 5,000 40 0 20

0 -500 0 Jul 09 Jul 10 Jan 09 Jan 10 Jan 11 mar 09 mar 10 Sep 09 Nov 09 Sep 10 Nov 10 may 09 may 10 Q12007 Q22007 Q32007 Q42007 Q12008 Q22008 Q32008 Q42008 Q12009 Q22009 Q32009 Q42009 Q12010 Q22010 Q32010 Q42010

Source: Arthur D Little / Exane BNP Paribas estimates

16 www.totaltele.com September 2011 ConTEnT STRaTEgIES

Peak Internet downstream traffi c European Pay-TV penetration, primary and secondary services, by platform Top applications by downstream bytes share, North America, fi xed access, peak period, March 2011 n Analogue cable n Digital cable n IPTV n Pay DTT n Satellite n Over-the-top services 100% 90% Hulu 1% 80% SSL 2% Other Facebook 15% 70% 2% Netfl ix 60% 30% RTMP 3% 50% iTunes 3% 40%

Flash 30% video 5% BitTorrent 20% 10% HTTP

18% Penetration of households (%) 10% YouTube 11% 0% Primary 2011 Primary 2016 Secondary 2011 Secondary 2016 Source: Sandvine Source: Analysys mason

example, Vod billed directly to your bill, be accessed from any device connected to has built a new ott service for turk or catch-up tV,” says fournier. the internet including smartphones, telekom, which runs as a web tV offer- in italy iPtV service provider fastweb tablets and tVs from lg and samsung. ing. “it went to a million subscribers in in May launched a tV and video ott now operators are exploring ways to six months. now the plan is to put that on service called chili, having signed content increase ArPU from such services in top of its iPtV offering, to pull through agreements with companies including conjunction with their iPtV platforms. audience onto the higher-ArPU service.” warner and Paramount. the service can Mccaffery at Motorola says his company in the Us, comcast is also extending

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Total IPTV and OTT bandwidth demand Set-top box (STB) unit shipment share

250,000 — France — China — US — South Korea 100% — Japan — Germany — UK — Canada Hybrid (OTT) STBs 200,000 75% IP STBs

150,000 50% M bps Satellite STBs 100,000

25% 50,000 Cable STBs

0 0% 2010 2011 2012 2013 2014 2015 2011 2015 Source: IMS Research (July 2011) Source: Infonetics Research the synergy between operator and OTT new content to the accessible archive, TV content as well as films on an OTT player. The cable operator, which last courtesy of its NBC purchase, working in basis—as these services increasingly year bought TV broadcaster and content partnership with vendors Elemental and move to more platforms. Part of Comcast’s producer NBC Universal, has launched ThePlatform. regulatory agreement to buy NBC its own XFinity app to offer selected Comcast is in part reacting to competi- Universal included the provision that it content on tablets and smartphones. Now tion from Netflix and Hulu—the joint has no say in the operations of Hulu, it is aiming to add some 10,000 hours of venture from ABC, Fox and NBC offers although it still owns a share. Hulu last

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By the numbers: the value and impact of over-the-top content line with the services of IPTV and pay-TV players. In China, the video delivery • IMS Research forecasts that paid-for OTT subscription services will generate a cumulative specialist Kit Digital is working with the US$32 billion in revenues worldwide over the next five years, and will account for the majority Shenzhen Media Group and 19 TV broad- of revenues when compared to pay-per-view video services. OTT service revenues will reach US$16.4 billion in 2016, it estimates in its new report Over-the-Top Video—Service casters and newspapers across the country Delivery & Business Models (2011). Households viewing just free videos accounted for 77% on the China United Television (CUTV) share of the total OTT market at the end of 2010, but that will decline to 69% by the end project. The companies say this will be a of 2016. Internet-based OTT service providers—broadcasters offering content online, DVD new media platform that will offer OTT rental companies that have expanded into streaming services, and retailers that offer online video—will continue to generate the largest proportion of OTT service revenues, although content on an IPTV-style basis to homes their share is forecast to decline from 90% of worldwide OTT video revenues in 2010 to 69% across the country. in 2016. IMS says the North American VOD market generated $1.98 billion in revenues in “With just one click viewers can watch 2010, while the European VOD market totalled $1.11 billion. The two regions combined live TV programmes, video-on-demand comprise 46.1 million pay-TV subscriber homes that are using VOD services. or catch-up video on computers and • Another new report, from Analysys Mason, says while OTT services will not displace mobile devices including Apple i-devices traditional pay-TV services—cable, IPTV, pay-DTT or satellite—as the main provider of video and Android handsets,” claims Kit Digital services to primary TV sets in Europe, there will be much stronger growth for OTT services in its promotional material. as a complementary, or secondary service, mostly on additional TV sets. It forecasts 14.6 million households in Europe will be using over-the-top services as a secondary TV service In return, video is not the only kind of by 2016. The report, Pay TV in Europe: forecasts and analysis 2011–2016, says only 2.58 content that telco service providers are million households will be using an OTT service as a primary service for their main TV set in eyeing up. In July 2010, Orange invested Europe in 2016, representing 1.4% of the 185.2 million pay-TV households. in a minority stake in the music stream- • Today, downstream traffic from Netflix accounts for some 30% of all peak Internet traffic ing service Deezer which it plans to in the US, according to network traffic solutions company Sandvine (see pie chart p.17). This launch in the UK this month; and in July month Netflix is expanding into 43 countries in Latin America and the Caribbean, and plans this year, Virgin Media signed a deal with to launch in Europe starting in Spain next year. The company now claims over 24 million subscribers in the US making it the biggest pay-TV/video company surpassing Comcast. Spotify to bundle that music streaming service with its triple-play subscriptions • SNL Kagan analysts have estimated how much over-the-top substitution will erode in the UK. Although Virgin Media has multichannel subscriptions in the US, with 4.5 million households predicted to opt for not yet launched its service or pricing Internet video instead of subscribing to a multichannel video package by the end of 2011. details, the operator says it hopes to • Strategy Analytics forecasts worldwide connnected TV device revenues will reach US$95 deliver Spotify at a discounted rate rela- billion by 2015. It says connected TVs and other Internet-ready devices—such as set-top tive to current offerings. boxes and DVRs—will reach 2 billion units worldwide this year. And In-Stat says worldwide But some analysts believe service streaming media player—also known as OTT set-top boxes—unit shipments in 2011 will reach just over 3.6 million. providers could be barking up the wrong tree. “I think that operators should be • Analysts at Gartner forecast that consumers worldwide will spend $2.1 trillion on all investing in application-oriented OTT digital content, devices and services this year, rising to $2.8 trillion by 2015. OTT content plays, not content-oriented OTT plays,” will account for 10%, or $200 billion, of that $2.1 trillion total: Purchased, rented, streamed or downloaded video content, as well as pay-per-view and video-on-demand (VoD), and says independent telecoms analyst Dean licensing fees from pay-TV services account for $100 billion; while PC and gaming software, Bubley. “I really don’t know where digital music, digital books and mobile apps make up the other $100 billion. Gartner says Orange’s DailyMotion stake will take it, that some 62%, or $1.2 trillion, will be spent by consumers on subscription-based services, which include fixed voice, mobile voice and data, broadband and pay-TV subscriptions. The but I do know that it should have been an remaining category, devices, accounts for 28% of consumer spend, or $600 billion. operator buying Skype, not Microsoft.” What’s more, in future operators will face competition from other quarters month announced it will expand outside to its 2007 purchase of Sling Media which including large retail companies. In April the US, initially in Japan, and according enables it to deliver online and mobile UK retail giant Tesco bought an 80% stake to reports during the summer has been in video to its subscribers. in Internet TV service Blinkbox, for talks with companies interested in Indeed, established OTT services “single-digit millions”. As well as being purchasing the venture including Google, increasingly have started to appear on accessed through the Internet, the service Yahoo, Amazon, Microsoft and broadcast other platforms worldwide: the BBC is available on PS3 games consoles and in satellite service provider Dish Network. iPlayer has expanded from a Web-based future on Internet-ready TVs from compa- All the while, operators are developing service to pay-TV delivery including nies including Samsung and Sony. IMS business models with the aim of tying through BT’s IPTV offering Vision and Research forecasts that retailers will grow together a mix of content and delivery Virgin Media’s cable service. their share of the OTT market, account- media. Dish Network in April acquired In some regions OTT players are ing for 13% of worldwide OTT service DVD rental company Blockbuster to add aiming to deliver broader offerings in revenues of US$16.4 billion in 2016. n

September 2011 www.totaltele.com 19 PRIME nUMBERS ConTaCTS

EdIToRIal SMaRTPhonE SalES STIll RoCKETIng 4th Floor, Welken House, 1 billion 10-11 Charterhouse Square, London EC1M 6EH Worldwide sales of mobile devices to end users totalled 428.7 smartphones shipped +44 (0)20 7608 7030; [email protected] million units in the second quarter, a 16.5% increase from the annually by 2016, up from ToTal TElECoM+ second quarter of 2010, says Gartner. Sales of smartphones 302 million in 2010. Ian Kemp [email protected] were up 74% year-on-year and accounted for 25% of device (Juniper Research) Editor +44 (0)1626 835 703 Michelle young [email protected] sales, up from 17% in the second quarter of 2010. Nokia Art Editor continued to lose market share but held onto its lead in the WIMaX hITS 20 MIllIon smartphone market, largely due to channel partners reducing ToTal TElECoM infonetics research says Mary lennighan [email protected] the volume of Symbian-based smartphones in their invento- wiMAX subscribers passed 20 Editor +44 (0)20 7608 7069 ries. The combined smartphone operating system share of nick Wood [email protected] million worldwide at the end Assistant Editor +44 (0)20 7608 7046 iOS and Android doubled to nearly 62%, up from just over of the second quarter and are lewis dowling [email protected] 31% in the second quarter of 2010. In a separate report on track to exceed 25 million reporter +44 (0)20 7608 7089 Gartner forecasts there will be 5.6 billion mobile connections by the end of the year. the CONTRIBUTING EDITORS worldwide by the end of this year, up from 5 billion in 2010. Roy Rubenstein [email protected] research company noted Israel MoBIlE dEvICE SalES (ThoUSandS of UnITS) strong growth in the Us, the Ingrid lunden [email protected] indian sub-continent and London vendor 2Q11 2Q11 market 2Q10 2Q10 market Joanne Taaffe [email protected] share (%) share (%) latin America. sales of France Ken Wieland [email protected] nokia 97,869.3 22.8 111,473.7 30.3 wiMAX equipment world- London Samsung 69,827.6 16.3 65,328.2 17.8 wide reached $502.1 million in lg 24,420.8 5.7 29,366.7 8.0 the first quarter, according to advERTISIng apple 19,628,8 4.6 8,743.0 2.4 the wiMAX forum. HEAD OFFICE, LONDON nick Carter [email protected] ZTE 13,070.2 3.0 6,730.6 1.8 Sales Director +44 (0)20 7608 7065 Research In Motion 12,652.3 3.0 11,628.8 3.2 leonie holmes [email protected] hTC 11,016.1 2.6 5,908.8 1.6 Sales manager +44 (0)20 7608 7041 Motorola 10,221.4 2.4 9,109.4 2.5 60 million UNITED STATES AND CANADA huawei device 9,026.1 2.1 5,276.4 1.4 media tablets to be KCS International Sony Ericsson 7,266.5 1.7 11,008.5 3.0 shipped this year, up T +1 717 397 7100 F +1 717 397 7800 others 153,662.1 35.8 103,412.6 28.1 Karen C Smith-Kernc – East [email protected] from 17.4 million in 2010. alan Kernc – West & Canada [email protected] global Total 428,661.2 100 367,986.7 100 (IHS iSuppli) JAPAN hiroko Kujime [email protected] CaPEX REdUCTIonS Pacific Business T +81-3-3661-6138 F EnTERPRISE voICE EQUIPMEnT REvEnUES +81-3-3661-6139 A new report from wireless dEClInIng gloBally aS PoRTS RISE intelligence shows that mobile advERTISIng PRodUCTIon TeleGeography says new data from partner Synergy Please forward all advertising material directly to: operators reduced capital [email protected] Research Group shows that enterprise voice equipment expenditure during the aleisha Bryant +44 (0) 7608 7042 vendor revenues declined 4% globally between Q2 2010 and economic downturn in order Q2 2011, despite a 14% increase in port shipments. MaRKETIng to protect cash flows and Tally Judge [email protected] Revenues for the first half of this year declined 1% compared maintain profits. the study marketing manager +44 (0)20 7608 7076 to the same period in 2010. Asia-Pacific was the only region Ruth Clark [email protected] forecasts operator capex will marketing Executive +44 (0)20 7608 7047 that saw year-on-year growth in Q2, with enterprise voice remain stable at 16% of total revenues increasing 3%, while revenues in EMEA fell 9%. EvEnTS revenues in developed markets PBX/KTS (key telephone system) revenues experienced the Charles georgiou [email protected] and 23% in developing Project manager +44 (0)20 7608 7071 greatest decline year-on-year, falling 9% from Q2 2010, while markets in 2011-12, but shows the voice gateway and IP telephony segments showed SUBSCRIPTIon/CUSToMER SERvICES that total global mobile capex aleisha Bryant [email protected] modest declines. In a separate report, Infonetics Research peaked at Us$204 billion in Customer Services Executive +44 (0) 7608 7042 says revenues from global PBX/KTS phone systems alone or subscribe free at: www.subscription.co.uk/totaltelecom 2008, accounting for 21% of declined 2.3% sequentially in 2Q11 to $2.02 billion, but rose total operator revenues, and mANAGEmENT 3.9% compared to the same quarter in 2010, “continuing its Rob Chambers [email protected] fell to Us$197 billion (19% of path of slow and steady recovery on a year-over-year basis”. Publisher +44 (0)20 7608 7077 revenues) in 2010. in devel- greg hitchen [email protected] oped mobile markets, Chief Executive Officer EnTERPRISE voICE REvEnUES & PoRT ShIPMEnTS operators reduced capex by ToTal TElECoM EvEnTS 8% in 2008 and by 6% in 2009 World Communication awards 3.0 16 www.worldcommsawards.com but increased spend last year n revenue — Port shipments World vendor awards as they began investing in 2.8 15 www.worldvendorawards.com Total Telecom World lte. between 2007 and 2008, 2.6 14 www.totaltele.com/world operating expenditure as a 2.4 13 percentage of revenues Total Telecom Plus is published by declined from 65% to 61%. As 2.2 12 a result, ebitdA jumped 2.0 11 revenues (US$ billions) (US$ revenues from 35% to 39% of total Port shipments (millions) revenues . opex has risen 1.8 10 © 2011. All rights reserved.

slightly to 62% over the past Q111 Q110 Q211 Q410 Q310 Q210 Q109 Q209 Q409 Q309 Terrapinn Holdings Ltd registered offi ce: two years with ebitdA 4th Floor Welken House, 10-11 Charterhouse stabilising at 38% of revenues. Source: TeleGeography Square, London EC1M 6EH

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