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Building a Compelling Business Case For Providing Advanced and Value-Added Services on an All-IP Mobile Network

Swissotel, Geneva, SwitzerlandMonday 10th – Thursday 13th June 2002

Thomas Scheffler T-Systems Nova GmbH

Berkomthomas.scheffler@t-systems.com

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Agenda

Determining the profitability of delivering All-IP services:� Assessing the business opportunities and revenue generating

streams from enhanced services� Identifying and meeting the challenges of delivering multiple

services over an all-IP network� Tracking and predicting demand for IP services from consumer

and business markets� Examining application and service trends to determine whether

there is a 'killer application' for all-IP mobile services to ensure profitability and maximise ROI

� Examining the viability of IP services in terms of:-user demand-technology-ROI

Current activities to enable All-IP services

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Who is T-Systems?

T-Systems is part of Deutsche Telekom Group � T-Systems provides IP/data

and systems solutions for major corporations

� Solution provider for the Mobile and Internet Businessof Deutsche Telekom

� Europe's No. 2 systems house� Approximately 40,000

employees worldwide� Annual revenues of

approximately 11 billion Euro

www.t-systems.com

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Position of the Market (The Gartner Group Hype Cycle)

3G Mobility today3G Mobility today

3G Licence Auctioning3G Licence Auctioning

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Arguments for going All-IP

� Allways on - constant IP-connectivity enables new services

� Cheap infrastructure based on standard products

� Multitude of existing IP-services

� Availability of service developers

� Increased revenues from Multimedia Type Services

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Position the 3G KILLER Application

User Benefit

TechnologicalAdvantage

high

highlow

low

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Look at the ISP Scene

Big hype every 6 to 12 Months in Services� ...� E-Commerce� (personalised) Portals� Revenue generating Services� ...

Business Models for IP-Services� Cross subsidising� Monthly fee� Usage based billing� Selling add-space

Current revenue comes from providing access!

Hard to do on an 2x2 inch display

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The 3G Network Architecture

UTRAN

SGSN GGSN

Internet

IP Core IMS

Design PhilosophyInternet: � Dumb Network, Fast Forwarding � Services and Intelligence at the Edges� Services provided by dedicated Service Providers

3G Networks:� Intelligent Network, QoS in Core� Intelligence and Services in the Core � Services provided by the Operator

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The IP-Services Value Chain

Chances when moving up the value chain:� value adding: revenue generating, differentiating from

competitorsRisks:� higher complexity, higher risk of failure, exposure to new

markets

ContentContentContentContentProviderProviderProviderProvider

ContentContentContentContentProviderProviderProviderProvider

MobilityMobilityMobilityMobilityenabledenabledenabledenabled

ApplicationApplicationApplicationApplication

MobilityMobilityMobilityMobilityenabledenabledenabledenabled

ApplicationApplicationApplicationApplication

ThirdThirdThirdThirdPartyPartyPartyParty

InterfacesInterfacesInterfacesInterfaces

ThirdThirdThirdThirdPartyPartyPartyParty

InterfacesInterfacesInterfacesInterfaces

IPIPIPIPNetworkNetworkNetworkNetwork

AccessAccessAccessAccess

IPIPIPIPNetworkNetworkNetworkNetwork

AccessAccessAccessAccess

EndEndEndEnd----UserUserUserUserBillingBillingBillingBilling

EndEndEndEnd----UserUserUserUserBillingBillingBillingBilling

MobileMobileMobileMobileNetworkNetworkNetworkNetwork

AccessAccessAccessAccess

MobileMobileMobileMobileNetworkNetworkNetworkNetwork

AccessAccessAccessAccess

Pure Mobility Provider

Portal- focused-Provider

Provider of mobility integrated services

PortalPortalPortalPortalAccessAccessAccessAccess

PortalPortalPortalPortalAccessAccessAccessAccess

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User demands

Greedy Animal - want it all, at no cost, right now� Expectations of the Mobile Internet (Email, Web, Video)� User experience of Mobile Applications so far limited to WAP

How to grow the pie� Satisfying/generating needs will force user to pay

this needs joint effort (at least for P2P like services)� Mass market vs. business users� Perceived QoS at User Level � QoS at Network Level

(Ease of use, Content, Price vs. Delay, Jitter, Loss)

Be prepared to be surprised !

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� Core network is complex in UMTS (to many boxes)� Costly QoS implementation

� Service development needs to be duplicated for every Mobile Operator and Application

� No standardised interfaces and procedures for external Service Providers on service/application Level

Implementing Release 5 is a costly business!

Estimating Costs (Core and Services)

Source: 3GPP

Gf GiIu-ps'

Iu

GiMr

Gi

Ms

Gi

R UuMGW

Gn

Gc

TE MT UTRAN

Gr

SGSN GGSN

EIR

MGCF

R-SGW

MRF

MultimediaIPNetworks

PSTN/Legacy/External

Mm

Mw

Mc

Cx

R UmTE MT GERAN

Mh

CSCF

CSCFMg

T-SGW *)

T-SGW *)

HSS *)

HSS *)

MSC server GMSC server

McMc

MAPMAP

MGWNb

Nc

Iu

Iu

R-SGW *)Mh

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Applications - Benefits from All-IP

Proven Services:VoiceMessagingInformation browsingPremium content

Future:� VPN� Location Based and

Presence� Video (Streaming,

Telephony)� Games

Revenue:highhighmediumlow

mediumlow

low

low

Demandfrom Network:

highlowlowhigh

highhigh

high

high

Benefitfrom All-IP:

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Arguments for going All-IP (revisited)

� Allways on - constant IP-connectivity enables new services

� Cheap infrastructure based on standard products3G network design makes it costly even when based on IP

� Multitude of existing of IP-services closed nature of network hinders access to existing services

� Availability of service developersworking for other companies, no clear interfaces for 3rd parties

� Increased revenues from Multimedia Type Servicesdo not yet exist, only expectations

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New market conditions� Licensing of spectrum has changed markets

� new operators need return fast (offer raw bandwidth – cheap)� existing operators have a legacy to fulfil

� Revenue per bit is sinking � there will be no other application that reaches the price per bit ratio of

SMS (a 6 minute MP3 streamed at 64kBit would otherwise cost the user 3.600 Euro)

� surging costs for Service development and provisioning

� Sophisticated services only work if handsets are supporting it� standardised services make deployment (phased) and prediction of

demand very hard� high risk to fail (WAP 1.0)

� Inflated user expectations� Video (streaming/telephony)� High Speed Internet

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Recommendations for successful IP Services-(disruptive)

•Keeping it simple - keeps it cheapDo it the Internet-Style (dumb network) for Packet Switched dataBuild interfaces to 3rd party provider to offload development and riskCreate alliances with content providers (win-win)

•Keep the CS – Domain for the time being and fast change between PS-/ CS-Domain using ‘Softswitch’ technology

•Crank up innovationSupport the world of Personal Networks (the handset is a mobile

router connecting to the Internet) Issue cheap (U)SIM-Cards for data communication (Remote

Service: Cars, Vending Machines, etc…)

•Focus on what you are good onMobility, Reachable, Always-On/Always connected,

Authentication, Presence, Localisation

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Recommendations for successful IP Services-(disruptive)

•Build a powerfull, open and flexible Network InfrastructureApply success criteria of existing networks:

� Build local – deliver global� The network is the enabler (no network, no service)� Embrace WLAN� Keep it simple for the user� Design for growth – go IPv6 NOW!

Stop wishing for the Killer-ApplicationStart laying the foundation for it!

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The 3G Standardisation Scope Laying the foundation for successful services

3rd PartieService Provider

ServerGateways

Core Network UTRAN MobileTerminal

PersonalAreaNetwork

PersonalGadgets

Scope of 3 G Standardisation

Scope of Imode Service

Extending the Scope through IPv6 and Service Integration

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Current activities and experiences

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Topics in 6WINIT

Validate introduction of Wireless Internet in Europe

� Based on IPv6 + GPRS and UMTS/3GPP� Both personal and terminal mobility� Full range of IPv6 Facilities� Procedures for IPv6-2-3G Nets

� Including IPv4/IPv6 network and application integration

� Investigate problems providing a trans-national wireless delivery service

� Early IPv6-ready applications testing

� Implement handsets and edge devicesValidate the feasibility of running real applications

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6WINIT Application Demonstration

GPRS / UMTS

LAN “docking station”

“UKT-Hospital”

6bone

Access router

CN

DNS

IPv6

IPv4IPv6 in IPv4 tunnel

Other partner connections via 6bone

EricssonRouter (HA)

GGSNSGSN

6boneedge router

6boneedge router

Tübingen

Düsseldorf

Internet

WLAN

Access router

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Foundation for All-IP: IPv6

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Thank you for your interest!

Thomas Scheffler

T-Systems Nova GmbHBerkomNext Generation NetworksGoslarer Ufer 3510589 Berlin

Tel. +49 30 3497 2274Fax +49 30 3497 2275thomas.scheffler@t-systems.com