IMT-2000 Workshop, 10-11 November 1998 UMTS Forum 1

U M T SF o r u m

IMT-2000The business case and Key

Markets

IMT-2000 Workshop, St Helier, Jersey, 10-11 November 1998

A presentation from UMTS Forum, Market Aspect Group

IMT-2000 Workshop, 10-11 November 1998 UMTS Forum 2

U M T SF o r u m

Content

• 2G Experience

• Challenges

• 2G versus 3G

• 3G at the beginning

• Framework for commercial case

• conclusion

IMT-2000 Workshop, 10-11 November 1998 UMTS Forum 3

U M T SF o r u m

2G ExperiencePhasing the Mobile Evolution in Western Europe

Medium Market driver Phase Action Competition MobilePenetration

GSM

phase 1

Voice centric Infancy Attracting

subscribers

1 or 2operators

Marginal

GSM

phase 2

Services

- voice mail

- pre paid

- messaging

- pre-data

Sophistication

Differentiation

Keeping subscribers,

IncreasingTraffic

2 or 3operators

10 to 30%

GSM

phase 2+

-Data (64 kb/s)

-Internet

Maturation

andTechnological

limits

Increasing traffic

Developing dataapplications

PreparingNext Step

3 or 4operators

30 to 40%

UMTS

3rdGeneration

Mature Multimedia

Content (2Mb/s) New Age

Developing the market

40 to 50%

IMT-2000 Workshop, 10-11 November 1998 UMTS Forum 4

U M T SF o r u m

2G ExperienceCompetition at Operator Level

Operator 1

Operator 2

Operator 3

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Million Subscribers

IMT-2000 Workshop, 10-11 November 1998 UMTS Forum 5

U M T SF o r u m

2G ExperienceThe future will very likely be Service Driven

Time

Infra.Capex Coverage

CapacityQoS Services

Packet Data capability

Deep Indoor Coverage

Approach per Segment

A typical investment profile from Operator’s perspective, in 2G packet data capability is an issue.

Was National

in 2G

IMT-2000 Workshop, 10-11 November 1998 UMTS Forum 6

U M T SF o r u m

ChallengeDelivering information services over mobile

Informing Searching Banking & Transacting

Travelling and Scheduling Weather Publishing

IMT-2000 Workshop, 10-11 November 1998 UMTS Forum 7

U M T SF o r u m

ChallengeThe value proposition to the end user must be obvious(and affordable)

21 3

4 5 6

87 9

+3312567889Phone Number

&

0# *

Voice centric

command

Voice …and more

IMT-2000 Workshop, 10-11 November 1998 UMTS Forum 8

U M T SF o r u m

3G at the beginningEarly Adopters likely to be Business Users

Mass Market

Business

Starting point of mobile businessVIP

Penetration Process over

Time

Solution for Corporates

Pre-paid

Data Services

IMT-2000 Workshop, 10-11 November 1998 UMTS Forum 9

U M T SF o r u m

3G at the beginningNon voice adoption over mobile (Western Europe)

50

100

150

200

250

300

350

1995 2000 2005 2010 2015

10%

20%

30%

40%

50%

60%

70%Million Subscribers Multimedia Penetration

among mobile users

IMT-2000 Workshop, 10-11 November 1998 UMTS Forum 10

U M T SF o r u m

ChallengeIndustry relationships

• End user categories in different contexts

– Value Proposition (Voice and Non Voice based services)

• Operators

• Service Providers

• Value Added /Content Service Providers

• Vendors (Infrastructure, Terminal, Software Application, Components…)

IMT-2000 Workshop, 10-11 November 1998 UMTS Forum 11

U M T SF o r u m

ChallengeNew relationships

Content Providers

Value AddedService Providers

Service Broker

Service Providers

ISP or Corporate

Access Network Operator

Core Network Operator

Subscriber/User

Usage

Billing

Payment New for Mobile Networks

Note: this is a logicaldiagram and do notaddress the possibilitiesof integrations.

IMT-2000 Workshop, 10-11 November 1998 UMTS Forum 12

U M T SF o r u m

2G versus 3G

New productExisting Product

Existing Market

New Market

Where 2G is = Mobile Voice

Where 2G will be = Information Service on mobile with data

bearer service

Where 3G will be

IMT-2000 Workshop, 10-11 November 1998 UMTS Forum 13

U M T SF o r u m

2G versus 3GExpanding The market

Voice Multimedia

Fixed

Mobile 3G

3G will enable a wide range of services and combinations with fixed

IMT-2000 Workshop, 10-11 November 1998 UMTS Forum 14

U M T SF o r u m

3G at the beginningIMT-2000 is likely to emerge in a strong 2G installed base

• UMTS will emerge as islands in an ocean of GSM

• Dual mode terminals will be key

0

50

100

150

200

250

98990001020304050610%

20%

30%

40%

50%

60%

70%UMTS

GSM

analogue

Penetration

Million SubscribersPenetration (%)

• Western Europe case

IMT-2000 Workshop, 10-11 November 1998 UMTS Forum 15

U M T SF o r u m

3G at the beginningRevenue Side

0

10

20

30

40

50

60

70

80

90

1994 1995 1996 1997 1998 1999 2000 2001

Data-Professional

Data Corporate

Voice-Corporate

Voice-Consumer

Voice-Professional

Billion $

Mobile market prediction for Western Europe by 2005

0%0% 50%50% 100%100%

Mobile Multimedia Mobile

200 millions

104 billion ECU

6.3 billionMbytes/month

Users

ServiceRevenues

Traffic

The likely traffic Revenue picture in Western Europe before 3G

Source: UMTS Forum 97

IMT-2000 Workshop, 10-11 November 1998 UMTS Forum 16

U M T SF o r u m

Framework for commercial case

• Business versus mass market

• Services what are they?

• How different from 2G Services?– Business, Social, Entertainment

• Timing-time to market dates

• Basic relationship of Service Charge

Revenue = Volume users x Traffic mix x Charge per Service

Less Cost of Distribution and Delivery of Service

Equals Margin/Profitability of Services

IMT-2000 Workshop, 10-11 November 1998 UMTS Forum 17

U M T SF o r u m

Business Case for IMT-2000

• Will vary among operators

• Need full industry support to meet a scale effect (vendor concerns)

• Need new relationships and content player to bring information services on mobile (Challenge)