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Key note presentation at the LTE World Summit 2010 in Amsterdam.
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Examine the economics of rolling-out LTELTE World Summit 2010, Wednesday May 19th, Amsterdam, The Netherlands.
Dr. Kim (Kyllesbech Larsen)International Network Economics,Technology, T-Mobile
2Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010
Story…..
3Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010
4Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010
The 3G traffic jam!
3G capacity crunch. Re-farming existing spectrum.
New spectrum demand.
Empty 2G roads - in time?
The incumbent mobile operator’s near-future … “it aint pretty”!
Re-farming GSM!1 MHz in LTE ≈ 5 MHz in 3G.
Too little too late?
5Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010
The Greenfield … “happy” short-term, a tougher future.
Lots of Hz per customer!Higher speed than HSPA+?
ROI optimized?
Happy startup … plenty of quality.
Fixed-like demand!Dramatic Hz / customer drop!Limited free cash for growth?
Tougher future … growth limitations.
6Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010
The mobile broadband traffic jam … Turnaround?… avoiding customer dissatisfaction …
7Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010
Telco Europe is all about efficiency … … avoiding shareholder unhappiness …
2010 – 2014 ILLUSTRATION
Western Europe
Growth markets
EBITDA GROWTH
OPEX GROWTH
REVENUE PRESSURE
REVENUE GROWTH
8Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010
The Netherlands 2014 …broadband everywhere, for everyone.
Every house-hold has at least 2 PCs.
Population
16.7mnHouse-holds
7mnFixed
broadband
6 out of 10 people will have mobile broadband.
Every house-hold has (fixed) broadband.
MobileBroadband
PCs 201
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9Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010
The Dutch 2.6 GHz auction …is c$ 0.15 / MHz / pop cheap?
€2.6mn for 130 MHz FDD.
“cabled” entrants with wireless ambition.
Is there (economically) room for 2 more?
10Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010
2.6GHz mobile coverage range is poor … the business model could mitigate this … “forced” focus on wireless DSL?
Propagation Loss + Link Budget + In-Building
Penetration Loss =- 3 dB 0 dB up-to: - 2 dB
- 5 dB
distance
DL power
3 dB2.6 GHz 1800 MHz 850 MHz
10 dB
Digital dividend
2.6 GHz needs 2 more sites to match 1800 MHz mobile coverage.
11Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010
Greenfield minimum requirements by 2012 … 80 km2.
75 – 125 LTE nodes.
max. 460,000 (3%) pop.
1 mn (4%) LTE devices.
$3.3 bn mobile data top-line.
Greenfield operator
Market projections
Note: there are many ways to deploy the Greenfield network and ultimately will depend on the chosen business model.
Illustration
Cash required ca. €150 mn.
100% coverageNo (0%) coverage
12Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010
Greenfield minimum requirements by 2016 … 800 km2.
750 – 1,250 LTE nodes.
Ca. 2.3 (14%) mn pop.
5 mn (20%) LTE devices.
$4.5 bn mobile data top-line.
Greenfield operator
Market projections
Note: there are many ways to deploy the Greenfield network and ultimately will depend on the chosen business model.
Illustration
Cash required ca. €400 mn.
100% coverageNo (0%) coverage
13Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010
Partnership with an incumbent operator will provide the Greenfield much better economics and market timing.
BTS / NODE-B
eNodeBBSS
BSS
GreenfieldCore
Site(acq. + build)
Radio(electronics)
Backhaul(transport)
Backbone(transport)
Core
BSS
Capex prevention 50%-70% min 35% up-to 50% up-to 50% Partly
possibleLess likely
Opex prevention min. 35% ca. 35% scale
discountscale
discountPartly
possibleLess likely
IncumbentCore
14Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010
Is the service worth paying for ? …(it is in fixed broadband!)…
11/3
20
In relative usage
70↑+
100+
Mobile broadband850 MHz – 2.1 GHz
BWA2.3 – 2.5+
GHz
FixedwithWiFi
Mobile industry: hardly any QoS pricing mainly based on volumetric FUP.
Wireless & Fixed Broadband business model uses QoS-based pricing.
15Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010
Always best connected with QoS-based pricing.
Mobile, Nomadic & In-door broadband850 MHz – 2.5+ GHz with Cable/DSL
HIGH QoS REQUIREMENTAND HIGH VOLUME
MEDIUM QoS REQUIREMENT
Bandwidth
e.g.<14 MbpsEtc…e.g. < 2
Mbps
BEST EFFORT
Illustration
$$
$
$
16Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010
2.5 GHz Greenfield LTE deployment appears un-economical.
Partnership model (e.g., network sharing) is essential.
Managing broadband demand is a critical success factor.
Why should we care?
17Kim Kyllesbech Larsen, Technology – T-Mobile, 18 May 2010
“Cabled” 2.6 GHz Greenfield – does it make sense?
Threats.Opportunities.
Weakness.Strength.
Mobile competition better spectrum position.
Growth limitation due fixed-like demand.
Lack of mobile broadband scale.
Fixed-like strategy mitigate poor propagation.
Network sharing on 1800 MHz best-fit grid.
Partnership reducing total cost pressure.
Existing fixed broadband customer base.
Leverage on own backhaul & backbone.
One single (mobile) technology to optimize.
Almost all house-holds have fixed broadband.
Negative 10 year standalone NPV.
2.6 GHz is coverage in-efficient .
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Contact:[email protected]: +31 6 2409 5202http://nl.linkedin.com/in/kimklarsen
Thank you very much!Acknowledgement: Denis Gautheret and many other very talented colleagues in T-Mobile & DTAG. Furthermore, many thanks to Michael Lai, CEO P1 Malaysia, for allowing re-use of their great ad campaign of „cut the wires“.
