Experience voice in 4G Cartagena , 27 August 2013 Dario Talmesio Principal Analyst Operator Strategy
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About Informa Telecoms & Media Informa Telecoms & Media delivers strategic insight, key market data and forecasts. We’ve been helping our clients make better business decisions for more than 25 years. Our aim is to be accessible, responsive and connected both to markets we serve and our clients’ business goals.
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Our analysts
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Where is LTE today?
LTE connections by geography, 3Q12 ~90% of total global connections
•
182 live networks in 75 countries (August 13)
•
Reaching almost 1 billion people
•
~125 million connections to LTE networks at 2Q13end
•
Over 948 LTE-enabled devices, according to GSA US
Global commercial LTE network deployments, August 2013
LTE Cumulative Live Networks 200 150
100 50 0 2009
2010
2011
Source: Informa Telecoms & Media
2012
2013
Japan
Korea
Rest of the world
Number of LTE-enabled smartphones by operator, 2012-end 2012
Today LTE is still a USA & Asia (success) story 140.000.000
120.000.000
100.000.000
80.000.000
60.000.000
40.000.000
20.000.000
3Q11
4Q11 Africa
9/2/2013
Americas
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1Q12 Asia Pac
2Q12 Eastern Europe
3Q12 Western Europe
4Q12 Middle East
1Q13
2Q13
US / Canada
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But LTE is at the top of everyone’s priorities What will be the single most important area of focus for telecoms and TV operators in 2013?
Which technologies and strategies will drive profitable top-line growth in your organization in 2013?
4G / LTE
Network deployments and developments (NGN and LTE)
Cloud computing Superfast fixed-line broadband
Customer experience management
Apps and app stores Converged billing
New digital service developments (digital services)
On-demand video Machine to machine (M2M)
Efficiencies, cost control and best practice
Multiscreen video
Partnerships with other operators and Internet players
High-definition video
Wi-Fi Ethernet SDN
Other (please specify)
Other (please specify) 0%
5% 10% 15% 20% 25% 30% % of respondents
0% 10% 20% 30% 40% 50% 60% 70% % of survey respondents
Source: Informa’s Industry Outlook Survey 2013, Oct 2012, CSP respondents only, n=280 9/2/2013
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What are the main challenges?
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And what opportunities?
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LTE to reach almost 16% Global penetration by 2018-end LTE Forecast By region Technology Market Share, 2018
1.600
LTE 15.8% W-CDMA 49,8%
Others 6,3% CDMA 5,9% GSM 22.2%
Subscriptions (millions)
1.400 Africa
1.200
Americas
1.000
Asia Pacific
800
Europe: Eastern
600
Europe: Western
400
Middle East
200
USA/Canada
0 2013
2014
2015
Africa
73m
Americas
82m
2016
Asia Pacific Europe: Eastern
USA/Canada
2018
685m 63m
Europe: Western Middle East
2017
182m 14m
260m
Cellular subscription forecast - technology split for 2018
9/2/2013
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LTE: Which operators have had the most success? Top 10 largest LTE operators by connections, 2Q13 Operator
LTE connections
% of total base
Current premium v 3G (%)*
Verizon Wireless
31.1m
26
0
AT&T Mobility USA
17.3m
16
0
NTT DoCoMo
14.2m
23
0
SK Telecom
11.0m
41
0
Sprint Nextel USA
9.2m
17
0
KT Corp
6.0m
37
0
LG U+
5.9m
50
0
KDDI
5.3m
14
0
Softbank Mobile
5.3m
16
0
T-Mobile US
4.7m
11
0
• Not charging a premium for LTE over 3G is used by some of the most successful LTE operators, measured by subscriptions. • Main strategic LTE tariffing choice facing operators is: charge a premium over 3G (if so, how much?) or price LTE on a par with 3G? • LTE operators that charged a clear premium over 3G are adjusting their prices to bring them in line with 3G rates.
*Lowest-priced LTE monthly subscription compared with lowest price 3G subscription Source: Operators, Informa Telecoms & Media
9/2/2013
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What are the lessons learned in how to position and market LTE to consumers?
Source: AT&T
Speed Coverage Latency demos on operator websites
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What can users DO with 4G? What are the end-user benefits? How will their experience change?
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Are any “LTE services� emerging?
Vodafone Sky Sports & Spotify
Popular services used to promote LTE benefits Consumer
Business
High-definition video streaming and VoD
High-speed file transfers
Upload
Personal content sharing; consumer cloud applications
Enterprise cloud applications
Latency
Online gaming; realtime voice and video communications
Real-time voice and video communications; corporate VPN
Download
EE Film EE (UK)
Source: Informa Telecoms & Media
joyn MetroPCS (US)
9/2/2013
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How are consumers using LTE? How much data are they consuming?
•
25% of LTE usage is video, 15% music
•
43% of users use less or not public Wi-Fi
•
Users on MetroPCS unlimited LTE data plans consume 2-2.5GB on average per month
•
Customers on Vodafone’s fixed-broadband replacement service use 11.5-12GB per month
•
LTE accounts for 35% of total data traffic
•
LTE will surpass 3G traffic in early 2013
•
LTE smartphone users consume ~50% more data versus 3G smartphones
•
LTE smartphone users consume 8x more data compared to 3G users
•
Average monthly LTE smartphone usage is 1.6GB vs 1.1GB on 3G
Source: All data as reported by operators directly 9/2/2013
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But consumers are also using IP-Voice and IP-Messaging service
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Selection of options available for LTE voice
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Will LTE rejuvenate the voice market?
Voice “for” LTE, VoLTE & the prospects for voice revenues Selected early conclusions on voice for LTE •
User perception of interim voice for LTE solutions has been “surprisingly” positive
•
Clear evidence of a shift to unlimited voice, e.g Verizon Wireless, EE, Swisscom
•
There is a deep level of scepticism about the ability to monetise VoLTE/RCS
VoLTE branding in Korea Live VoLTE deployments • • •
SK Telecom (Korea), August 2012 LGU+ (Korea), August 2012 MetroPCS (US), August 2012
Potential scenarios for voice Best case scenario
•
“Rich” and “HD” voice services are “table stakes”, not premium services
•
The “business case” for VoLTE appears to be based primarily on spectrum usage efficiency
•
Operators are generally committed to VoLTE, but will not feel rushed to launch
•
Operators that begin to approach nationwide coverage will move quickest to VoLTE 9/2/2013
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•Operators will be able to charge a premium for VoLTE/RCS services •Operators will begin to win-back traffic lost to alternative providers •Operators will see some incremental increases in voice revenues Worst case scenario
•VoLTE/RCS will have no impact on traffic erosion to alternative providers •Operators will be unable to charge any premium and prices will continue to decline •Voice revenue declines will continue and, potentially, accelerate Likely scenario •VoLTE/RCS will help slow the decline of traffic loss to alternative providers •Operators will not be able to charge any premium •Voice revenues will continue to decline, but at a slower rate
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Metro PCS: first US operators to introduce VoLTE services in mid-2012
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SK Telecom: largest VoLTE deployment to date HD Voice: Service name for VoLTE - 4.5 Million Users (May 2013)
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Verizon: Roadmap to VoLTE’ s launch in 2014 Completed LTE Rollout (June 2013) 500th U.S. market covered with 4G
Verizon LTE now covers 298 million people across the U.S., reaching 99% of its 3G footprint LTE network is handling 57 percent of its total data traffic. Deployment of small cells on late 2013 Now focussing on adding voice capabilities to the 4G network. (VOLTE) VOLTE to commercially launch in early 2014 with a more widespread rollout and not a series of market-by-market launches 9/2/2013
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Operators Survey: Primary voice solution for LTE? What do you think will be the primary solution for voice over LTE for the next 2-3 years?
0,7% VoLTE
9,7% 0,0%
Circuit-switched fallback
7,6% 41,0%
Dual radio Unmanaged OTT VoIP (e.g. Skype, Viber, etc) Operator-managed OTT VoIP
41,0% Other (please specify)
Source: The status of the LTE ecosystem 2013, Informa Telecoms and Media
9/2/2013
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Operators Survey: When is VoLTE going live? When do you plan to go live with VoLTE services?
13,4%
6,7%
2013
15,4%
29,5%
2014 2015
2016 2017+
34,9%
Source: The status of the LTE ecosystem 2013, Informa Telecoms and Media 9/2/2013
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Primary voice solution for LTE? What do you think will be the primary solution for voice over LTE for the next 2-3 years?
0,7% VoLTE
9,7%
0,0%
Circuit-switched fallback
7,6% 41,0%
Dual radio
Unmanaged OTT VoIP (e.g. Skype, Viber, etc)
Operator-managed OTT VoIP
41,0% Other (please specify)
Source: The status of the LTE ecosystem 2013, Informa Telecoms and Media 9/2/2013
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Concluding remarks LTE is an evolution, not a revolution VoLTE will gradually happen as a barer technology Barriers are still there: coverage, penetration, roaming Business case for VoLTE as a rich-communication enabler is still unproven but further developments are expected in 2014-15 OTT-communication services are well established and will wok on parallel with operators’ services
9/2/2013
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Questions?
9/2/2013
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Informa Telecoms and Media dario.talmesio@informa.com @dariotalmesio http://www.linkedin.com/pub/dario-talmesio/0/950/2a Dario Talmesio Principal Analysts M: +440794907031 F: +442070175077