Monetizing LTE How LTE can help operators become more profitable
José Villalobos Senior Consultant, Latin America & Caribbean
Public | © Ericsson AB 2013
LTE Growth and Drivers
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fastest developing Technology
Source: GSA, May 2013
146
46162
175
73
2013
+30
+102
+100
+14
248
2010 2012 2011 2009
+132%
Commercial LTE network launches - cumulative totals Forecasted
› Latin America LTE
subscriptions (Pop Coverage) › 2012: 200k (5%) › 2018: 95M (over 50%)
› Early adopters:
› Puerto Rico › Dominican Republic › Antigua and Barbuda
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better devices and cool apps
Other Encrypted Software download & update
Social Networking
Web browsing Audio Video File Sharing
X2 MOBILE DATA TRAFFIC DOUBLED BETWEEN Q4 2011 AND Q4 2012
Source: Ericsson Source: Ericsson
Mobile data traffic breakdown, 2012
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Exploring the Drivers
Source: Infonetics Research, LTE Deployment Strategies: Global Service ( n = 19, July 2012)
Source: Informa Telecoms & Media. 52 operators with live LTE networks globally (as at April 24, 2012)
5%
Offer LTE as fixed broadband service 16%
Lack of spectrum 26%
Denser network coverage 32%
Natural evolution of existing generation to the next one
11% Ability to run single network for voice and data
Opportunity to build a more efficient mobile packet network 37%
Current data network exhaustion 58%
Higher peakrate 58%
Increase ARPU 63%
Lower Latency 68%
Better spectral efficiency 79%
7%
31%
35%
24%
3%
Create new revenue streams based on LTE
Other
Current networks do not offer sufficient capacity To enter mobile data market for the first time
Build brand value through technology leadership
What is your primary motivation for deploying LTE?
Percent of respondents Rating 6 or 7
HOW IS LTE impacting Profitability??
1 LTE launched (LGU+ & SKT)
~11% LTE penetration
~28% LTE penetration
2
3
SKT LGU+ KT KOSPI
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107 Million (>1M TDD)
LTE SUBSCRIPTIONS May 2013
Source: WCIS
2 Billion
LTE SUBSCRIPTIONS END 2018
Source: Ericsson
Dec 2010
34%
SK
T
NTT
LG U
+
KT
Spr
int
32%
Met
roP
CS
53% 29%
AT&
T
13%
Sof
tban
k
11%
Tels
tra
5%
10%
19%
22%
Veriz
on
LTE Subs (M) Non-LTE Subs (M)
Dec 2010
Sep 2011
Jul 2011
Jul 2012
Jan 2012
Sep 2011
Sep 2010
Sept 2011
Feb 2012
USA
54
Korea
22
Japan
16
Australia
5
Rest of World
10
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ARPU Uplift due to LTE
-15
-10
-5
0
5
10
15
20
3Q11 4Q11 2Q11 1Q11 1Q12 2Q12 3Q12 4Q12 1Q13
SKT KT LGU+
3Q11
3Q11
1Q12
Service ARPU, % Change YoY
First LTE Smartphone
Source: Operator Quarterly Reports
5041
34 +21%
+48%
LTE Smartphone Blended ARPU
ARPU 4Q12 (KRW ´000)
Source: SKT IR 4Q.2012
› 8X (SP) › 1.5X (SP)
› 2-5X (LTE users)
Source: Disclose by Operators
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LTE DATA Monetization Data Allowance
3G LTE
No Change
550MB
1.1GB
2GB
5GB
9GB
13GB
@ Launch Q2 2012 Removed unlimited plan
Higher Tariff Plan with
understanding of 3G ave
data.mth/subs + trends
Increase the bucket size
SKT Smartphone Plan (3G vs LTE)
Monthly (USD) Data Allowance
3G LTE 3G LTE
All-in-one 34 vs LTE34 30 30 100MB 350MB
All-in-one 44 vs LTE42 38 37 500MB 700MB
All-in-one 54 vs LTE52 47 45 Unlimited 1.2GB
All-in-one 64 vs LTE62 56 54 Unlimited 3GB
All-in-one 79 vs LTE72 69 63 Unlimited 5GB
All-in-one 94 vs LTE85 82 74 Unlimited 7GB
LTE based residential Broadband
Caribbean Residential Internet
Source: Pyramid Research, 2012 Source: Disclose by Operators
Source: Operator Web Page
9%9%
51%
1%
27%
3%
Cable FTTX Narrowband xDSL FWA WiMAX
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customer loyalty
Drivers of loyalty to operator brand (NPS)
LTE
LTE
Source: LGU+ Analysis
Aiming for LTE monetization
Spectrum and Network
Branding and
Marketing
Service and Device
Portfolio
Positioning and Pricing
Strategy
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LTE ecosystem
316 Smartphones Source: GSA, Jul, 2013
USA US700 AWS
Mexico AWS
Colombia 2600
Uruguay AWS
Paraguay AWS/1900
Brazil 2500/2600
Chile 2600
Europe 2600 1800
Puerto Rico US700/2100
Antigua & Barbuda US700
Dominican Rep. 1800/1900
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GSM
Macro
LTE WIFI
850 900
1800 1900
AWS
2100 2600
700
Indoor
Micro Pico
HSPA
Data Voice
CDMA
Application coverage concept
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Boosting the need for LTE
Source: Wireless Intelligence, September 2012
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positioning and Pricing
PREMIUM PRICING
MBB EXTENSION
BRAND REFRESH
2
14
3
MBB Ext Brand Refresh
1
LTE Smartphone Data Plan (Top 20 LTE Subs Operators)
Speed-Consumption Hybrid Consumption-based
Unlimited
Source: Operators Web Pages, Jul 2013
Source: Wireless Intelligence, Analysis Mason
Dongle tariff › 49% speed-based (Aug 2012) › Western Europe (2Q12 to 4Q12)
› 33% operators merged 3G/LTE › Price decreased by 6%
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CLEAR value benefits
User z (Germany)
Source: Speedtest.net
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LTE Monetization LTE Growth and Drivers - Fastest Adoption
- MBB Demand
- Video Apps
- Revenues Brand Spectrum Performance
How is LTE Impacting profitability? - Subs
- ARPU
- Better Pricing
- DSL-liked
- Customer loyalty
Aiming for LTE monetization - Ecosystem
- App Coverage
- Smartphones
- Clear Value Proposition
- Price levels
- Transparency
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