3.3. Evolution of mobile communications

Source: ITU

Beginning ofBeginning of 2G

Source: ITU

Source: ITU

Source: ITU

Ovum

Source:

2000

2000

2002

GSM Today Basic Telephony Circuit Data 28.8 kbps

(HSCSD) Standardised bearer &

suppl. services

GSM Basic telephony Circuit data 28,8 kbps,

(HSCSD) Standardised bearer &

supplem. services

UMTS Basic Telephony Mobile Multimedia and

Asymmetric Services Circuit / Packet Data

Rural <= 384 kbps(Sub-)Urban <= 512 kbpsLow Range <= 2 Mbps

Standardised Capabilities Virtual Home

Environmentin addition

New Capacity (Spectrum)

UMTSBasic telephonyMob. multimedia & asymmetric servicesCircuit/packet data

Rural <=384 kbps

Low range <= 2 Mbps Standardized capabilities

Virtual Home Environment

GSM Enhancements Packet Data

(GPRS <= 180 kbps, +EDGE <= 500 kbps)

Circuit Data(+EDGE < 300 kbps*)

CAMEL home servicessupport

SIM Toolkit, MobileExecutionEnvironment

GSM enhancementsPacket data (GPRS <= 180 kbps)

Circuit data (+ EDGE <=500 kbps)

CAMEL home services support

SIM toolkit, Mobile execution environment

HSCSD: High Speed Circuit Switched Data

GPRS: General Packet Radio System

EDGE: Enhanced Data Rates for GSM Evolution

CAMEL: Customised Applications for Mobile Enhanced LogicSIM - Subscriber Identity Module

R R

UMTS +

3-4 years – transition period

2004+

(Sub-)Urban <= 512 kbps

GSM GSM

Service evolution from GSM to UMTS

UMTS Development• 1995 - Inception of concept• January 1998 - standardization by ETSI• First quarter of 2003 - commercialized launch FOMA (Freedom of

Mobile Multimedia Access) network (i-mode) in Japan by NTT DoCoMo

and • Phase 1 trial launches in nine other countries • June 2004 - UMTS (WCDMA) has grown to be used by more than 5 million

customers worldwide and is growing faster than GSM at the same point in its development timeline history (3G Americas Report, June 2004)

• December 2004 - ten million customers worldwide (3G Americas Report, June 2004)

• End of 2006 – 63 million customers in Europe (Ovum)• To 2009 – 270 million customers in Europe (Analysis Research)

Global UMTS Network Status

From EMC World Cellular Database & UMTS Forum (June, 2004)

• No. of 3G Networks in Service - 57 (in 21 countries)• 93 operators in 37 other countries now in pre-commercial

status of planning, trialing, or awarded UMTS licenses for their 3G deployments.

UMTS Deployment

NORWAY

NETWORK LICENSES AWARDED (License has been awarded, but licensee currently shows no inclination to deploy network)• Hi3G Access Norway - Q4 2005

LICENSES REVOKED OR SOLD (Licensee/operator involuntarily/voluntarily hands back license)• Broadband Mobile - Nov 2002 (Declaration of bankruptcy)• Tele2 Norway

LICENSES TENDERED (Government has set a time schedule with proposed tender dates and number of licenses)• -tba- License Tender - Dec 2004

NETWORKS PLANNED OR IN DEPLOYMENT (Licensee is in planning stages of deploying network or is actually building the network)

• Norway Netcom - Q4 2004• Norway Telenor Mobil - Q3 2004

2010•video traffic – 7.7 Mbit/s•data traffic – 6.8 Mbit/s•voice traffic – five-fold increase•In 1991 typical user of wireline data used only 1 Mb/month•In 1999 - around 200 Mb/month

Source: Dresdner Kleinwort Wasserstein (DrKW) Equity ResearchThe Growing Demands for Wireless Data

Growth in UMTS Terminal Availability

Source: “The Evolution of UMTS – 3GPP Release 5 and Beyond”(3G Americas Report, June 2004)

Innovative mobile devices ...

Source: Siemens

i-mode – an example of 3G network

Open standards

Java

IMT 2000 (3G)

Feb.1999

Fall,1999

Fall,2000

Spring, 2001

i-m

od

e la

un

ch

Home-page

Home-page

e-maile-mail

PicturesPictures

VideoVideo

MusicMusic

GameGame

Colored LCD

Winter,1999

Source: NTT DoCoMo, Siemens

Increasing bandwidth

Mobile TVMobile TV

VideoTelephone

VideoTelephone

VideoConference

VideoConference

i-mode – subscriber and information site evolution

Number of subscribers raised from 0 to

5.6 million within one year

Number of sites increased to 7.000 sites

within one year

Number of subscribers raised from 0 to

5.6 million within one year

Number of sites increased to 7.000 sites

within one year

Success in mobile data is driven by open accessSuccess in mobile data is driven by open access

Source: Goldman Sachs, ING Barings, Communications International; Siemens

i i-mode information sites (absolute)i i-mode information sites (absolute)

i-mode subscriber growth & percentage of DoCoMo subscribers (‘000 / %)

i-mode subscriber growth & percentage of DoCoMo subscribers (‘000 / %)

312 470 501 519 578421341

5.052

6.357

8.224

10.000

12.940

15.609

18.273

0

5.000

10.000

15.000

20.000

Jan 00Feb 00Mar 00Apr 00Mai 00Jun 00Jul 00

# of Voluntary Sites

# of Official Sites

37434463

5603

65107114

8289

26,8%

23,4%21,7%

19,1%

15,6%

13,3%

0

2000

4000

6000

8000

10000

Jan. 00Feb. 00Mar 00Apr 00Mai 00 Jun 000%

5%

10%

15%

20%

25%

30%

UMTS Standardization (3GPP)• 3GPP, the 3rd Generation Partnership Project (established in

December 1998) is the international standards body that develops, publishes and maintains standards for third generation wireless.

• The current Organizational Partners are ETSI (Europe), ARIB (Japan), ETRI (Korea), CWTS (China) and others. As well as the standards bodies, 3GPP is attended by all of the major manufacturers and operators (“Market Representation Partners”, all 200 members), including NTT DoCoMo, Alcatel, Cingular Wireless, Ericsson, Lucent, Motorola, Nokia, Nortel, Qualcomm, Siemens, T-Mobile and Vodafone - the work will include of the 3GPP.

UMTS Standardization (3GPP) – Cntd.

• The original scope of 3GPP was to produce globally applicable Technical Specifications and Technical Reports for a 3rd Generation Mobile System based on evolved GSM core networks and the radio access technologies that they support (i.e., Universal Terrestrial Radio Access (UTRA) both Frequency Division Duplex (FDD) and Time Division Duplex (TDD) modes). 

Evolution of UMTS Technical Specifications to Release 5 (Rel’5) of the 3GPP

Release 1999 (R’99) in April 1999 - the initial standards for UMTS were completed by 3GPP. These standards are the basis for a majority of the current commercially deployed UMTS systems

Release 4 (Rel’4) in April 2001 was standardized in 3GPP, which provided some improvements of the UMTS transport, radio interface and architecture.

Rel’5 of UMTS was completed in March 2002 - next significant evolution phase of UMTS. UMTS Rel’5 will provide higher speed wireless data services with vastlyimproved spectral efficiencies through the High Speed Downlink Packet Access (HSDPA) feature.

In addition to HSDPA, UMTS Rel’5 introduces the IP Multimedia System (IMS) architecture for integrated multimedia applications UMTS Rel’5 also introduces the IP UTRAN concept to realize network efficiencies and reduce network costs.

June 2004 - Cingular Wireless (USA) has announced a UMTS trial in Atlanta which includes a testing of HSDPA

2005 - NTT DoCoMo is already planning to launch HSDPA in FOMA (Freedom of Mobile Multimedia Access) network

Release 5 (Rel’5) of the 3GPP

High Speed Downlink Packet Access (HSDPA) offerssignificantly higher data capacity and data user speeds on the downlink (theoretically up to 14 Mbps peak) compared to R’99 UMTS through the use of very dynamic adaptive modulation, coding and scheduling with Hybrid Automatic Retransmission Request (H-ARQ) processing.

Through HSDPA, operators will benefit from a technology that will provide improved end-user experience for web access, file download and streaming services. Wireless Broadband access to the Internet, intranet and corporate LAN will benefit greatly from HSDPA.

Release 5 (Rel’5) of the 3GPP (Cntd.)

In addition to HSDPA, UMTS Rel’5 introduces the IP Multimedia System (IMS) architecture that promises to greatly enhance the end-user experience for Integrated multimedia applications and offer the mobile operator an efficient means for offering such services. The IMS enables new and more advanced multimedia applications for operators (including VoIP), the ability for these services to interact and the ability to fully integrate real-time, near real-time as well as non-real time services.

UMTS Rel’5 also introduces the IP UTRAN concept to realize network efficiencies and reduce network costs. IP UTRAN uses IP as a transport protocol to realize network efficiencies that reduce the cost of delivering traffic and can provide wireless traffic routing flexibility.

Technology Challenge for Mobility

Source: Siemens 100Mbit/s

Vehicular

2G

GSM

0.1 1 10

FWA (Fixed Wireless Access)

Mobility

Fixed

Pedestrian

Portable CordlessDECT

UMTS FDD

Deployment2000-2006

Large Area coverageup to 384

kbit/s

GPRSEDGE

2.5G

Bluetooth

FutureDeployment

IEEE 802.16/a/e WiMax

BRANs

BWAUMTS TDD

Indoorup to 2 Mbit/s

Beyond 3G

MMAC

Wireless LANIEEE 802.11a/b/g

Wi-Fi

Various wireless technologies with their bit rates and suitabilityfor users moving at different speeds

Evolution of mobile networks from 2G to B3G

Mobile messaging market Increasing importance of multimedia applications

0

500

1000

1500

2000

SMSC 253 460 679 984 1246 1196 943 698 457

MMSC 10 69 184 460 805 1100

1998 1999 2000 2001 2002 2003 2004 2005 2006

• SMSC/MMSC supplier revenues [€m], worldwide

Source: UBS Warburg, 2002

SMSC:Short MessagingService CenterMMSC:Multimedia MessagingService Center

Mobile access will dominate

0

200

400

600

800

1000

1200

1400

1600

1800

1995 2000 2005 2010

Subscriptions worldwide (millions)

Mobile internetsubscriptions

Mobilesubscriptions

Mobile

Fixed

Mobile Internet

Fixed Internet

Source: Siemens

Mobile Average Revenue Per User (ARPU) potential

0

5

10

15

20

25

30

35

40

YE01 YE02 YE03 YE04 YE05

Year

AR

PU

(E

uro

/mo

nth

)

Western European ARPU(Euro/ Month)

Western European ARPU(Euro/ Month)

MMC

SMS Data (excl. SMS)Voice Enterprise Applications

23%Enterprise

Applications

15% other services

14% Internet Browsing

6% Mobile Banking

14% Map-based Local Info

12% Map-based Traffic Info

77%Individual

Applications11% Booking & Reservation

9% Multimedia Messaging

9% Video Telephony/Conf.

5% Mini Newspaper5% Personal Organizer

Source: Siemens

Mobile Data23%

Applications are critical

Voice onlyMobile Portal

Mobile Internet

Business Solutions

Location ServicesEntertainmentM-commerce

Op

erat

ors

’ AR

PU

t

NetworkMobile

networkaccess

Internetaccess

End-userlocation

Paymentservices

Content-Indep.-

Services

Applica-tions

Contentcreation

Contentmgmt &

publ.

M-Com-merce &

interactiveservices

Contextestablish-

ment(Portal)

Source: Siemens, Durlacher Research

European Average Revenue Per User for mobile voice and mobile data

European Average Revenue Per User for mobile voice and mobile data

Advertising ARPU M-Commerce ARPU Mobile data ARPU Voice ARPU

Advertising ARPU M-Commerce ARPU Mobile data ARPU Voice ARPU

Mobile Data

Mobile Voice

€ / month

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

0

10

20

30

40

50

60

70

Source: Credit Suisse First Boston, Siemens