lte world summit 2012 day 1 t1 bienaime umts forum & orange

WRC 15 Project Kick-off Meeting, Brussels - 9 May 2012 1

LTE: wholesale business model

& MVNO opportunities

Jean-Pierre Bienaimé

SVP Strategy and Communications Wholesale, Orange

& Chairman, UMTS Forum

LTE World Summit, 22-24 May, Barcelona

LTE World Summit, Barcelona – 22-24 May 2012 2

• 3G/3G+/4G LTE global market

overview

• the wholesale business model –

is this the future for LTE ?

• MVNO opportunities in a LTE

world

Summary


Setting the scene Mobile broadband snapshot: 3G/4G subscriptions and

commercial networks (mid-May 2012)

Data: UMTS Forum, Wireless Intelligence and other industry sources

Global 3G subscriptions (UMTS/WCDMA + EVDO + TD-SCDMA) 1.4 billion

Global 3G/UMTS (WCDMA/HSPA/HSPA+) subscriptions 1.15 billion

Global HSPA/HSPA+ subscriptions 870 million

Global 4G/LTE subscriptions 15 million

3

3G/WCDMA/HSPA networks 390

3G/HSPA+ networks 175

LTE networks 75


LTE subscribers

poised to ramp faster

than 3G in its

early days

The real ramp will

begin at YE’12 and

above all in 2013,

when LTE handsets

will be available at

lower price points

and with better

autonomy.


LTE 2015 Forecasts

By the end of 2015, we forecast over

400m LTE subscribers worldwide,

with around 180m in Asia-Pacific, 95m

in North-America, 85m in Western

Europe and 20m in Eastern Europe.

In Asia, Japan and South Korea,

leaders in terms of 3G penetration, will

dominate in LTE subs, whereas China

will drive the TD-LTE market.

Source: UMTS Forum/Idate


Orange LTE deployment strategy

Commercial launch when LTE end to end customer experience superior to the one

with HSPA+

LTE / EPC is the

new horizon for

mobile

technology

on going efforts

to cope with

remaining

challenges

Higher spectrum efficiency

Reduced latency

Compatibility with the GSM/UMTS family

Gradual roll out taking advantage of the HSPA+/LTE multimode operations

Technology adopted by both GSM/UMTS and EVDO worlds

Multimode and multiband device availability

LTE Performance in the DD band

Open interfaces

SON features availability

Easy roll-out of network equipment

LTE technology is ready to be deployed

and is compliant with the 3GPP requirements


LTE adopted Business Models • « Classic » LTE model - offloading/capacity requirement: JV

« Net4Mobility » Tele2 / Telenor: expanding network capacity

• Mobile broadband centric solution - Telia Sonera, Telekom Austria, Verizon: offering high speed mobile BB services

• FWA and substitution of Unbundling Local Loop - Vodafone Germany, O2 Germany: offering stationary BB via LTE modems (FWA)

• Phasing out DSL via more efficient networks - Deutsche Telekom: providing BB services in rural areas / small cities

• Niche services / Targeted B2B2C - WAN for backhaul solutions /offload data; solutions for automotive industry, travel & transportation,…

• Wholesale LTE model – for MNOs and SPs: Lightsquared (USA: LTE/satellite), Yota (Russia), Clearwire (USA): reselling data traffic to interested parties via LTE network; solutions for MNOs for access to rural areas and lower Capex, MVNOs, Service providers

Source: Orange/Sofrecom


LTE changing environment • New business segments – content, M2M, connected devices*

• New entrants – emergence of wholesale only or wholesale led operators

• Intensified regulatory interest and more requirements attached to rollout and

competition mandated MVNO support

• Less common than rural requirements but MVNOs being considered

as a way of promoting service competition beyond infrastructure

competition.

• France and Japan only regulators to include this with LTE licences so

far. South Korea is considering it following failure of a credible

applicant for a 4th LTE licence.

• Single LTE network for multiple access

• Kenya – public private partnership for a national LTE network.

• Australia – LTE as an extension to the fiber National Broadband

Network (NBN) to cover 400,000 rural homes. Services to be offered

at the same price as fixed rural and urban services. Source: Orange/Ovum


The LTE wholesale model (Source: Idate)


Interest is growing worldwide

in LTE wholesale model (source: Idate/Orange)

• In the USA, newcomers such as LightSquared, Dish and Clearwire have based their strategy upon the availability of new spectrum which can provide capacity in a context of growing saturation of the mobile networks.

• LightSquared have also put considerable effort in very quickly signing deals with resellers in order to strengthen its business case. Among them are MVNOs, regional mobile operators, cable TV operators and electronic goods distributors. Nevertheless Lightsquared is now out of the game (temporarily ?...) since the FCC rejected its disruptive wholesale LTE capacity plans, due to the interference problem with GPS

• Countries such as Kenya and perhaps Mexico seem to be considering a regulatory obligation for LTE wholesale operation. The objective is to enable the provision of LTE services in markets where it would not be sustainable for existing mobile operators to implement separate LTE infrastructures. The French regulator has imposed wholesale agreements and MVNOs hosting conditions at the occasion of the recent 4G auctions.


Wholesale mobile services become more relevant with

high speed data and LTE (Source: Orange/Ovum)

Regulation

•Rural rollout

•Mandated MVNO support

Increased data usage

•Backhaul

•Offload

Convergence

•Triple/quad play capabilities from all players

Connected devices

•M2M

•Embedded

Wholesale

demand

500%

increase in

data traffic in

next 5 years?

Few have the

capabilities to

deliver mobile

themselves

50 billion

connected devices

by 2020?

LTE a credible high

speed broadband

technology and being

regulated as such


European MVNO Market Update

Regulators, Sofrecom estimates Penetration are at end 2011

France

Poland

Spain Italy

Nb Subscribers

MVNO Penetration

~ 26 MVNOs + BL

4 MNOs

Spain

Nb Subscribers

MVNO Penetration

MVNOs + BL

4 MNOs

Spain

9.5 / 6 Nb Subs in (M)

12 / 7.5 MVNO Pen. rate

~ 39 MVNOs + BL

MNOs

France

Nb

MVNO Pen. rate

MVNOs + BL

MNOs

France

10 Nb Subscribers

11.5 MVNO Penetration

55 MVNOs + BL

4 MNOs

UK

Nb Subscribers

MVNO Penetration

MVNOs + BL

4 MNOs

UK

2.23M Nb Subscribers

17 / 13,5 MVNO Pen. rate

MVNOs

3 MNOs

Belgium

Nb Subscribers

MVNO Pen. rate

MVNOs

3 MNOs

Belgium

3 M* (+1.9%

)

Nb Subscribers

14.3* (+14%) MVNO Pen. Rate

47+ - 11 MVNOs + BL

3 MNOs

Netherlands

Nb Subscribers

MVNOs + BL

3 MNOs

Netherlands

2.3 M Nb Subscribers

26% MVNO Pen. rate

24 MVNOs

MNOs

Norway


MVNO Pen. rate

MVNOs

MNOs

Norway


2 - 3% MVNO Pen. rate

~20 MVNOs + BL

3 MNOs

Sweden



~20 MVNOs

3 MNOs

Sweden


1.5 / 1.2 MVNO Pen. rate

13 + 3 MVNOs + BL

3 + 2 (Centernet+Mobiland) MNOs

Poland

Nb Subscribers

MVNO Pen. rate

MVNOs + BL

MNOs

Poland

Sweden

Norway

na Nb

na MVNO Pen. rate

2 MVNOs + BL

3 MNOs

Romania

22.7 / 14.4 Nb


95 + 10 MVNOs + BL

4 MNOs

Germany


0.3% MVNO Pen. rate

5 MVNOs + BL

3 MNOs

Slovakia


0.3 / na MVNO Pen. rate

3 + 2 MVNOs + BL

3 MNOs

Slovakia

Romania

Slovakia

0.95 / 0.35 Nb Subs in M

.5% MVNO Pen. rate

8 + 5 MVNOs + BL

3 MNOs

Switzerland

Nb

8,5 / 3 MVNO Pen. rate

MVNOs + BL

3 MNOs

Switzerland

Nb

MVNO Pen. Rate

5+1 MVNOs + BL

4 MNOs

Austria

0.2 / 0.16 Nb Subs M

1.5 / 1.35 MVNO Pen. Rate

MVNOs + BL

4 MNOs

Austria

Austria Switzerland

Germany

UK Netherlands

na

<5%

5<10%

10<15%

15<20%

>20% 2.7M Nb Subs in M

3 MVNO Pen. rate

MVNOs + BL

4 MNOs

Italia

Nb

MVNO Pen. rate

MVNOs + BL

4 MNOs

Italia

+ BL

Including BL

Sources: are at

France

Poland

Spain Italy

3.6 M (+44%) Nb Subscribers

6 (+30%) MVNO Penetration

MVNOs + BL

4 MNOs

Spain

Nb Subscribers

MVNO Penetration

MVNOs + BL

4 MNOs

Spain

9.5 / 6 Nb Subs in (M)


MVNOs + BL

3 + 1 (Free Mobile) MNOs

France

Nb

MVNO Pen. rate

MVNOs + BL

MNOs

France

10 Nb Subscribers

11.5 MVNO Penetration

MVNOs + BL

4 MNOs

UK

Nb Subscribers

MVNO Penetration

MVNOs + BL

4 MNOs

UK

Nb Subscribers

17 / 13,5 MVNO Pen. rate

26+10 MVNOs

3 MNOs

Belgium

Nb Subscribers

MVNO Pen. rate

MVNOs

3 MNOs

Belgium

Nb Subscribers

MVNOs + BL

3 MNOs

Netherlands

Nb Subscribers

MVNOs + BL

3 MNOs

Netherlands


26% MVNO Pen. rate

24 MVNOs

MNOs

Norway


MVNO Pen. rate

MVNOs

3 + 1 (Ice.net

) MNOs

Norway



~20 MVNOs + BL

3 MNOs

Sweden


6% MVNO Pen. rate

~21 MVNOs

MNOs

Sweden

Nb Subscribers

1.5 / 1.2 MVNO Pen. rate

MVNOs + BL

MNOs

Poland

Nb Subscribers

MVNO Pen. rate

MVNOs + BL

MNOs

Poland

Sweden

Norway

na Nb

na MVNO Pen. rate

2 MVNOs + BL

3 MNOs

Romania

22.7 / 14.4 Nb Subs in M

MVNO Pen. rate

MVNOs + BL

4 MNOs

Germany


0.3% MVNO Pen. rate

5 MVNOs + BL

3 MNOs

Slovakia

0.05M Nb Subs. (M)

0.3 / na MVNO Pen. rate

4 + 2 MVNOs + BL

3 MNOs

Slovakia

Romania

Slovakia

0.95 / 0.35 Nb Subs in M

.5% MVNO Pen. rate

MVNOs + BL

3 MNOs

Switzerland

Nb

8,5 / 3 MVNO Pen. rate

MVNOs + BL

3 MNOs

Nb

MVNO Pen. Rate

6+1 MVNOs + BL

4 MNOs

Austria

0.2 / 0.16 Nb Sub

MVNO Pen. Rate

MVNOs + BL

4 MNOs

Austria Austria Switzerland

Germany

UK

na

<5%

5<10%

10<15%

15<20%

>20% 2.7M Nb Subs in

3 MVNO Pen. rate

14 + 2 MVNOs + BL

4 MNOs

Italia

Nb

MVNO Pen. rate

MVNOs + BL

4 MNOs

Italia

+ BL

Poland

Netherlands

Belgium

Switzerland

22 / 14.7

95 + 10

* Netherlands: 3Q 2011

3 + 2 (Ice.net+Hi3G)


MVNO development status

Different development stage

Maturity of the MVNO market in relation to number of players

% Penetration

1 %

5 %

15%

20%

5 100 Nb. of MVNOs

Norway

Germany

Netherlands Belgium

France

Switzerland

Spain

Italy

Sweden

Poland

Austria

Portugal

Romania

10%

10 20 50

Slovakia Atomized markets Advanced markets Nascent markets

+14%*

* Netherlands: 3Q 2011

+44%

End10 End 11


an operator serving other operators

Orange France wholesale

over 12 million

Fixed wholesale access points

2.2 million clients under brand licence

3,3 million MVNO end-clients

over 200 customers Fixed, Public Initiative

Networks MVNOs, Licences,


MNOs & MVNOs mutual interests

a contribution to the profitability of network CAPEX

major synergies in terms of Information System

a marketing feedback : communitarian, local, …

partnerships with new potential cooperation issues

Media & entertainment

Device and data management

Distribution, ethnics

Contactless, healthcare, transport, international travel

M2M platforms, connected devices

MVNO is an enabling partner that can complement MNO’s

horizontal scale with vertical reach & expertise

16


MVNO (3.3m) Licences (2.2m)

Licences MVNO SFR MVNO MVNO Licences

MVNO market in France (end 2011)

http://www.afone.com/index.html

http://www.futurtelecom.com/index.php

http://www.simyo.fr/telephonie-mobile/index.html

http://business.transworld.net/files/2008/03/07/quiksilver.gif


Orange is planning the progressive change of MVNO offers portfolio

from a all-inclusive offer with a single pricing

to a range of segmented services where all services will get a value

Readability of the offer

Simplified pricing strategy Simple

Segmentation & interoperability of the services and their value

Adapt our value proposition to current MVNOs and candidate MVNOs Flexible

Value proposition is changing

Current All inclusive

offer

MVNO Offer Portfolio with different potential

scenarios

Future Orange proposition


Mobile broadband enabled Consumer Electronics

devices: wholesale business model

The business of wholesaling capacity and traffic to specialised MVNOs is set to

become increasingly important to operators for CE enabled devices.

Some reasons:

Low traffic devices, which do not generate much revenue, and where the

operator may prefer a third-party to manage the customer, and the billing.

Examples include alarm systems or e-book readers such as Amazon’s

Kindle 3G.

Some operators favour letting specialised device vendors be MVNOs –

network transparent to users. Famous case to date is Amazon’s Kindle.

More generally, devices in large volumes using the same, well

defined, applications.

operators being armed with the best customer management systems,

MVNOs can bring there a synergistic range of services to their portfolio.


Future data MVNO trends • MVNOs in mature MVNO markets are about to embark on a new

growth wave driven by a more diverse and data-orientated range of

MVNOs:

- M2M/ Connected devices

- 4G LTE MVNOs: Japan (IIJ and Japan Telecom on Docomo’s LTE

network , home appliance shops on e-Access LTE network), Russia

(Rostelecom, Megafon and MTS on Yota LTE network), France ?...

• MNOs in Europe are committed to the wholesale model: now a

credible and important revenue stream

• There are still many new markets opening up to wholesale and

MVNOs: even if not so important than Europe was, there will be

opportunities in the right markets for the right players

Source: Orange/Ovum


thank you

merci

danke

obrigado

gracias grazie

Dziękuję

WRC 15 Project Kick-off Meeting, Brussels - 9 May 2012

twitter.com/umtsforum

For more information

www.umts-forum.org

lte world summit 2012 day 1 t1 bienaime umts forum & orange

Business

lte world summit

lte wholesale model

south korea

lte

mvnos

end

source

mnos