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Celia Desmond World Class Telecommunications

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Trends in CommunicationsTrends in Communications--An Environment OverviewAn Environment Overview

Celia DesmondPresident

World Class –Telecommunications

IEEE Secretary (2007)Vice President – IEEE Technical Activities (2006)

President IEEE Communications Society (2002-2003)President IEEE Canada (2000-2001)

Celia Desmond IEEE Communications Society

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So what will we talk about?So what will we talk about?

What is the telecom environment?Telecom• “ancient” history till today

WirelessInternet• “ancient” history till today

BroadbandAnd where are things going?


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Value Chain and Main Categories Value Chain and Main Categories of Players in Telecom Industryof Players in Telecom Industry

Material Suppliers

Electronic Comp.

Provider

OriginalEquipment

Manuf.

EquipmentVendor

ServiceProvider

End User

Electronic component Provider:•Intel•Qualcomm•Broadcom

Original Equipment Manufacturer:•Flextronics•Celestica

Equipment Vendor:•Nokia•Cisco•Alcatel•Ericcson•Motorola•Nortel•Lucent•Siemens•NEC

Service Provider:•Bell Canada•China Unicom•Verizon•SBC•NTTDoCoMo•Deutsche Telekom•Vodafone

AddAdd--on on serviceservice



Provider Provider networknetwork


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Global Telecom MarketGlobal Telecom Market

Local Services DLD ILD

Mobile Services

Global Market Size(US$B) 308 205 91 227

North America 35% 42% 31% 28%Asia Pacific 21% 19% 18% 30%

Europe 29% 25% 32% 31%CALA 12% 10% 11% 8%RoW 3% 4% 8% 3%

2000 Market Size of US $880B

Asia Pacific23%

RoW4%

North America34%

CALA9%

Europe30%

2000 Market Share by Services

Mobile27%

Local37%

ILD11%

DLD25%

2000 Global Telecom Market Share Breakdown:


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Global Telecom Market: Early 2000`sGlobal Telecom Market: Early 2000`s

“We built it, and they didn’t come”


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Telecommunications Equipment Telecommunications Equipment ManufacturersManufacturers

Orders for communications equipment • peaked at about $13.3 billion in June 2000• Declined steadily to about $3.6 billion in September 2001.

Industry operation dropped from 87% to 55% of capacity in 2001 Sales revenues for telecom equipment declined in 2001 by nearly 28% from the prior yearRevenues fell further in 2002Profits were down in 2001, and remained weak in 2002

Headcount in top 10 companies was 1/2 that 10 years ago


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By 2003By 2003

Telecom Service Industry was a Trillion Dollar Industry – 1,300 billion at end of 2002With IT included this was 2.200 Trillion

Overall this industry represented 3% of GDPAmericas 43%, EMEA 34% and Asia Pacific 24%

• Telecom industry was still a large and very viable industry


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2004 Update 2004 Update ------ changechange

US unemployment in computing at 5.2% in 2003, as compared to 2% in years in last decade – as compared to 6% rate in all jobs, compared to an earlier 4%

Causes: outsourcing, automation and business strategyCompanies using the investments they made in the 90’s rather than researching, developing and deploying new technologiesTotal focus on cost cutting

80% of CEO’s surveyed in 2004 said they would shift focus to newgrowth projects

Source: International Herald Tribune, March 10, 2004


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2005 Update2005 Update

But…What we are seeing today is a revolution - a

true transformation. Since the autumn of 2005, we have seen the

definition of what is telecom and who plays in this market change beyond recognition.


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Impact of Disruptive TechnologiesImpact of Disruptive Technologies

Clayton Christensen writes about disruption in The Innovator’s DilemmaTechnologies that totally disrupt the current balance – Automobiles, airplanes, digital pictures, personal computersDo we have disruption today?How do incumbents fare?


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September 2005September 2005

eBay (the online auction company) bought SkypeGoogle (the Internet portal) announced plans to provide WiFi service in the San Francisco areaSprint Nextel now offers Rhapsody (a radio

service) to its mobile customersSkype reached an agreement to offer services with German mobile operator e-Plusand Cingular announced plans to offer Yahoo! Instant Messaging over mobile


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November 2005November 2005

Four major US cable operators (Comcast, Time Warner, Cox Communications and Advance/ Newhouse Communications) formed a joint venture with Sprint Nextel to address the convergence of video entertainment, wireline and wireless data and communications servicesSBC (the US regional operator) completed the purchase of AT&T (the US long-distance, global service provider, and iconic telecoms brand); andVodafone broadcast the Holland versus Italy soccer game live to mobile handsets.


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Line Loss Hits Telcos Hard Line Loss Hits Telcos Hard A three percent loss in the number of traditional residential phone customers served caused an overall 2.2% loss in revenueamong incumbent telephone companies in the third quarter of 2005There were 12.2 million traditional residential telephone lines at the end of the third quarter of 2005, down 3% from the same period in 2004"This was the largest year-over-year drop since the end of 2001 when the erosion of this market began. The entry of a few cable television companies into the local telephony market largely explains the acceleration of the downward movement in 2005Operating profits plunged 31.4% to $900 million, compared to $1.3 billion in the previous quarter. The market for business lines has remained stable

Reference: March 07, 2006 (cartt.ca)


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Line Loss Hits Telcos Hard Line Loss Hits Telcos Hard (cont’d)(cont’d)

Wireless attracted more than 500,000 new customers between June and September of 2004Total number of wireless subscribers more than 16 million at the end of third quarter 2005, up 12.4% from the third quarter of 2004Operating revenues climbed to $2.9 billion, up 16% from the third quarter of 2004Operating profits rose 15.7% to $868.9 million


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Assessing 2006 In TelecomAssessing 2006 In Telecom

“The primary theme for 2006 is that existing trends intensify and gain momentum” Real-time collaboration goes mainstream Voice commoditizes - Carriers have been girding for years for their core services to crater - all signs say 2006 is the year it happens.Nontraditional voice players emerge as a major force. E.g. Microsoft's stated direction is to incorporate voice into its conferencing and collaboration services. Google's getting into the network business (via wireless infrastructure, see prediction below) and eBay bought Skype. Voice providers are increasingly something other than the traditional telcos.Convergence keeps going strong – VoIP continues to escalate in consumer and enterprise acceptanceThe wireless revolution continues

Reference:Network World, 01/09/06


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20052005--20092009Market size

North America2005 2006 2009$856.9B $944.7B $1.2T

Fastest growth – Middle East and Africa 18.4% to $66.7B in 2005

International size $2.7 T in 2009- gaining back what it lost

Patrick Barnard, TMCNet, Feb 2006


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Growth breakdown by Market SectorGrowth breakdown by Market Sector

US Equipment and Software - $165.7B in 2005Wireless devices - $15B

Network Equipment up 5.2% in 2005 (as opposed to down 71% 2000-2003)

Fiber in 2006 - more than ½ of 2000 levelNetwork equipment and facilities – $20.9B in 2006,

$24.4B in 2009US Enterprise market $98.3B in 2005, $104.5B in 2006

Patrick Barnard, TMCNet, Feb 2006


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What does all of this mean?What does all of this mean?

The list of telecoms service providers now (even in 2006) comprises traditional telcos, software companies, a range of new service providers, portals and media companies in addition to the established cable-TV companies. This amounts to a step-function increase in the number of competitors in this already crowded marketplace.So the number of providers has expanded, but so has the definition of what a telco actually does


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So let’s look at wirelessSo let’s look at wireless


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Cellular Growth in the USCellular Growth in the US

Yes, there was still some good news:

~141M subscribers as of Dec 2002

10% Y/Y growth in subscriptions

36% Y/Y growth in minutes

20.8% Y/Y growth in capital investment

Forecast data revenues was for ~$1B in 2003

Cell phones, PDA’s and PC all on growth curve

Source: CTIA Wireless Industry Survey, Mar 2003


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2003 Update in Wireless 2003 Update in Wireless TelephonyTelephony

Total Service Revenues rose nearly 13 percent by mid 2003.

Data Service Revenues were up 70 percent to $700 million in the first six months of 2003

Minutes of Use were up 30 percent -- over 380 billion for the first half of 2003.

Monthly SMS Traffic rose over 31 percent

Digital Subscribership reached 92 percent -- The number of digital subscribers topped 128.3 million

Wireless Investment rose over 13 percent

Total Wireless Subscribership went up 10 percent

Ref: CTIA


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One illustration One illustration ––Cellular Local Number Portability Cellular Local Number Portability

• FCC Mandate in 2003 for LNP between US Cellcos

• US Cellular service commoditized-

Few differentiators:• Price• Bundled cell phone• Technology transparent to

users

Retention factors today:• Contract termination

penalty• Need to change phone #

when changing carriers

Impact on Cellular carriers: Increased Churn Rate


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Broadband Wireless in the U.S.Broadband Wireless in the U.S.320 US cities planning ubiquitous broadband wireless

Initial municipal applications • public safety, automated utility meter reading and inspection

services• help the public deal with inclement weather eg. track of

"breadcrumbs" on the city Web site to show which streets have been plowed. Similarly, children could watch the progress of school buses from the warmth of their homes and emerge no sooner than necessary.

• High-speed mobile access to streamlining building inspection services. Philadelphia CIO Dianah Neff reckons it can save her city about two hours per day, per inspector, which will clear permits faster.

• Or, telemetry systems for controlling and monitoring pump houses, water towers and electrical substations, more flexible and cost-effective platform for prisoner-release programs that utilize ankle-bracelet monitoring.

Reference: Network World, 03/06/06


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Industry TrendsIndustry Trends2.6 billion mobile phone users worldwide today• vs. 1.3 billion fixed landline phones• vs. 1.5 billion TV sets in use

Expected to grow to 4.1 billion by 201437% increase in users over next 6 years

Source: Telecom Trends International Inc. (February 2008)

Worldwide RFID revenues estimated to reach $1.2 billion in 2008 • 31% increase over 2007 revenues• Estimated to reach $3.5 billion by 2012

Source: Gartner Research Firm report cited in RFID World February 26, 2008


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Wireless PossibilitiesWireless Possibilities

Many technologies have been developed for different specialized applications• 3G• WiFi• Ultrawideband• Bluetooth• WiMAX• Satellite• RFID…..


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Comparison of Wireless Data Comparison of Wireless Data TechnologiesTechnologies

Cost, Simplicity

Cost,Low Power, Flexibility

Cost, Speed, Flexibility

Throughput, Coverage

Coverage, Cost, Quality

Key Attributes

1 - 10+1 - 100+1 - 1001000-20001,000+Typical Range (m)

72020 - 2501K-11K (b)1k-54k (g)

~10k (DS)~3K (US) 100-2000Bandwidth

(KB/s)

1 - 7100 - 1,000+N/AN/A1-7Battery Life (days)

Cable Replacement

Control & Telemetry

Data/Voice LANWide Area DataWide Area

Voice & DataTypical Application

Bluetooth™(802.15.1)

ZigBee™(802.15.4)

Wi-Fi™(802.11b/g)

WiMAX™(802.16e)3G CellularTechnology


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Update on China Update on China

China is investing billions of dollars on a massive upgrade of its cellular-phone systemThis is fueling intense competition among global telecommunications-equipment vendors.Beijing is awarding licenses for so-called third-generation, or 3G, networksThe upgrade is creating what is likely to become the world's biggest 3G wireless network.In 2005, China added nearly 59 million new wireless subscriptions, more than the entire population of Italy.China's adoption of 3G will bring cutting-edge wireless technology to a market that already boasts more mobile phone users than any other --398.8 million subscriptions at the end of January 2007, far more than the population of the U.S – and their explosive growth rate continues even mid 2008

Feb 27, 2006 Wall Street Journal and ICC 2008 Feb 27, 2006 Wall Street Journal and ICC 2008 takkstakks


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InternetInternetWhere is it going?


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The Growth of InternetThe Growth of Internet

05

101520253035404550

Num

ber o

f Int

erne

t hos

ts

(mill

ions

)

Growth in the Number of Internet Hosts (1991-1999)

Internet 2000 Over 300 million users online WorldwideInternet Users (3Q’2000): North America - 147.48 M Europe - 91.82 MAsia/Pacific Region - 75.5 MLatin America - 13.19 MAfrica - 2.77 MMiddle East - 1.9 M Growth estimated over 500,000new users per monthBusiness is the fastest growth area

(Source: Microsoft)


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Canada’s Internet penetrationCanada’s Internet penetration

40%35%22%12%10%7%High-speed access from home

68%62%58%52%48%40%Internet access from home

200520042003200220012000


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The New Generation Network The New Generation Network –– is is very different very different

low bandwidthbest effort

IP plus TCP or UDPStatic applications

e-mailfile transferbrowsing

high bandwidthquality of service

Using protocols such as MPLS and Autonomous Flow Scheduling (AFS)

Real time applicationsinteractive client serverteleconferencingtelepresencevirtual environmentscollaboratories

Early Internet Vs. Internet 2


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Internet ServicesInternet ServicesMany varied service types are available, and proliferation

continuesE-CommerceVoice over IPNetworked gamesE-LearningE-GovernmentE-newsWeb browsingAnd so on…. Many, many very new concepts are taking hold


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Electronic CommerceElectronic Commerce-- Growth of EGrowth of E--commercecommerce

Predicted Growth of E-commerce was in multiple billionsE-commerce services are proliferating, using many different service modelsGrowth is solid, but did not meet the initial steep predications

(Source:IDC)


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Internet Services PredictionsInternet Services Predictions

Predicted to rise from $314 million (U.S.) in 2000 to $4.02 billion (U.S.) in 2007IDC forecasted that “Web Talk” revenues would reach US$16.5 B by 2004 with 135 billion minutes of traffic

But this didn’t happenIP Voice services really started taking off in 2006 via both traditional and non-traditional providersTraditional telcos started to deploy these capabilities is earnest in 2005

IP TelephonyIP Telephony


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VoIPVoIP Market SegmentsMarket SegmentsToll bypass• Mature market• Incumbent competitive with new entrants

Enterprise• New and incumbent providers competing

Residential• Growth possibilities

Bell Canada, Telus, Sprint offering VoIP in Canada as of 2005Services such as Skype are everywhere


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One typical One typical VoIPVoIP ConfigurationConfiguration

IP Service EvolutionIP Service Evolution

Filter

Voice Over IP is completely separate and has no effect on your wireline service.

Standard Telephone on Sympatico Internet Voice service line

Acts as a second phone line with its own phone number!

Independent!Talk on both at same time!

Telephone jack with splitter Router

Standard Telephone

on your Home

wireline(POTS)

PC

Voice Adapter

Telephone

line

DSL Modem


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SkypeSkype Pushing To Win SmallPushing To Win Small--Business UsersBusiness Users

Skype, which was purchased by eBay in 2005, already boasted 75 million users in 2006 It charges cheap rates for a variety of other services such as Internet-based calls to non-Skype users' mobile phones.Skype lets Internet users of its software make free calls through their computers to other Skype users. New Web site dedicated to small companies at HYPERLINK www.skype.bizNew hardware, and improvements to a program that lets companies manage their employees' pre-paid SkypeaccountsEven today, in 2008, many are not yet ready to use this

Reference: March 9, 2006 (Wall Street Journal)


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Not a good deal?Not a good deal?Skype purchased for $2.5B in 2005E-Bay takes a $1.4B charge due to Skype, in Q3 2007Replaces CEO with internal E-Bay personDid not impact E-Bay share prices negativelyContributed $90M of E-Bay’s $1.83B revenue in 2Q 2007220M users in 2007, up from 75M in 2005

In 2007 Vonage shares down from $17 to below $12.5M subscribers in 2007Issues include high marketing costs and law suits (patents) by incumbent telcos

Wall St. Journal Oct 2, 2007


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VoIPVoIP Calling StatsCalling Stats

2005 2006 2007

Subscribers 4.2M 12.1M 16.3MRevenue/sub $42/mo $29/mo $29/mo

Wall St. Journal Oct 2, 2007


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New Services New Services -- FacebookFacebookCompetition for My Space (105 million visited MySpace in April 2007, 38.8 million visited Facebook)Launched new platform to allow others to to build on-line services to operate within Facebook web site

• Post 30 second music clips• Play full length songs on their portfolio

Helped Facebook grow from 24 million users to 27 millionOffered in June 2007 more than 800 new services, up from 100 in MayServices include:

• Slide Inc – highlight top friends ( recently had 6.3 million users)• RockYou Inc horoscope service (3.5 million users)• Flash Sudoku• Stress Meter – lets users chart their stress levels

These services allow Facebook to gain info about their clients, and to sell adsThey expected a profit of $30M on revenue of $150M in 2007, mostly from adsAdditional new services are being consideredWhen iLike launched a music provision service on the Facebook platform, they attracted hundreds of thousands of users and Facebook had thousands of users within days. They are attracting record labels and artists They plan to spend $200K on a marketing campaign to remain in the lead.iLike already gets more revenue from Facebook than from iLike.com though ads and commissions for selling songs and concert tickets via FacebookSome difficulty for the third party service providers to be able to keep up with the changes


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Established Businesses using Established Businesses using this tool (this tool (FacebookFacebook))

Toronto Dominion Bank is advertising to college age students and others (How to eat for $7 per day)Their reasoning:• Students do not walk into bank branches to

request loans• Students do perform their banking

electronically• Students communicate heavily on-line


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What is IEEE doing?What is IEEE doing?

IEEE is active in many of the new spacesIEEE has an Island in Second Life as of summer 2007• Has a visitors center• Activity locations• Maybe some technical tutorials to offer

Space is free on Second Life, but you pay to do anything with itOver 7 million people are already there in 2007Many companies already there (IBM, Toyota)


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YouYou--tube…tube…

Videos174,000

Russell Peters Indian Accent02:28From: whadevaViews: 594749

Russell Peters: Show Me The Funny (Part 1)10:04From: wajahatkhanViews: 1311093

Russell Peters -Asians05:32From: GforceRockViews: 715134

Russell Peters Part 109:45From:Meatwad206Views: 290654

russell peters comedy now

08:28From: ww420

But there are But there are IP issues in IP issues in 20082008$1B lawsuit $1B lawsuit re posting of re posting of owned owned materialmaterial


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A few stats on distance educationA few stats on distance education

Last decade has seen rapid growth in distance education enrolmentOne school has undergrad enrolment up 26%, grad enrolment grew 6% per yearUniversity consortium in Canada offers 300 programs with 2500 programs on line

National Post May 27, 2008


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And then there is the iAnd then there is the i--PhonePhoneA multimedia Internet enabled quad-band GSM EDGE-supported mobile phoneOwned and controlled by AppleMarketed by AT&T since June 2007 in the US, Nov in UK through O2, Nov in Germany through Deutsche Telekomand Nov in France through OrangeDeals are currently exclusive, AT&T for 5 yearsFeature rich with new features ie can see list of voice messages without calling mailbox, listen to later messages first, plus take pictures, upload them, view them, email them, web connectivity, etc.Issue - users want to write software for it, but Apple forbids this – and uses software upgrades to shut out the hackers.


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Opportunities for IT CompaniesOpportunities for IT Companies

Anyone can become a service provider• Peer-to-peer applications leverage the excess

storage and processing of computers• High bandwidth access is becoming prevalent


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Microsoft interested Microsoft interested –– but not too but not too interestedinterested

Microsoft offered to buy Yahoo for $47.5B ($33 per share)Yahoo rejected bid, wanting $37 per shareMicrosoft not interested – does not see that valueMicrosoft interested in joint deals to create value

May 22, 2008 China Daily


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Resurgence of the telecom Resurgence of the telecom industryindustry

In 2006 Google spent $1.9B capital on technology to processes search engine queries and videos for You-TubeHundreds of thousands of servers in numerous data centersIn early 2000’s telecom market value lost over $2T of valueIn 2006 market returned due to services such as YouTube, music and free phone calls via VoIPOn 2002 ½ transmission capacity was unused; 2007 a pipeline double the size in 70% in useMajor providers planning network expansions

Business Week June 25, 2007


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The Good News in 2007The Good News in 2007Industry is $900BPower lies with very new services such as YouTube and MySpaceExpected profits for 2007 are $72B – highest since $65B in 1998Stocks are trading again with large telco stocks in Telecom HOLDRS exchange traded fund rising 34%Communications are enabling businesses to cut their costs of doing businessWeb companies are introducing wireless services to diversify the internet distribution business Products like iPhone are causing customers to demand more services – pushing demand for associated service and network equipment

Business Week June 25, 2007


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Gartner PredictionsGartner PredictionsNew approaches, using technologies such as mobile broadband and IP are driving companies to risk building non-core telecom business units and to over-invest in immature technologiesExamples in 2007 include: • Telecom Italia agreements with Fox, MGM, Sony to

be a content distributor• BT Global Services working with HP on application

and managed services• SK Telecom acquisition of largest music recording

label in Korea to move into content creationMore than ½ of these new ventures will fail

Predicts 2007: Carriers Will Spend Billions to try and Survive the IP Revolution


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Issues for CustomersIssues for Customers

Dumb network with smart edges means complexity for end userPossible security issues with info in edge devicesMultiple consumer/provider relationships not best for business customers


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The problem with technologyThe problem with technologyRemember when a phone had a dial on the front with numbers, a TV had a volume knob and a dial with channels on it, and a record player had two controls: volume and speed? Now: * I have six remote controls on the TV room table, with more buttons than a 747. * My deskphone has 25 buttons on it with four icons I don't even know and one called "R." * My PocketPC PDA/phone keeps it secret that Bluetooth headset mode is disabled. * There are five ways to connect a DVD player to a sound system but my sound system only has the four I don't need. * I need to navigate a menu just to watch a movie. * And my car needs a firmware upgrade.

July 11, 2007, By Rob England (Datamation)


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What people wantWhat people wantI want to pick the phone up, dial a number and talk to someone. When I'm done I will hang up. I want to turn on one device (or turn on all the devices at once) to watch Sky, DVD or video. I want to change channels, play/stop/rewind/forward/eject, adjust volume, and mute from one remote. (The mute button is the only valuable advance in user interface in fifty years of consumer technology.) The remote should park in a socket on the front of the box and recharge while it's there. I'm not going back into the TV room until the manufacturers get it together. I want "dial tone" functionality for all the devices in my life, meaning they're always on, and they work by engaging them physically, e.g., pick up the hand-piece or open the door or stick a disc in. I don't want all this other stuff. Do you? I'm not alone. A survey of 15,000 mobile phone users in 37 countries shows that "too many functions I did not use" is the number one device problem in all regions of the world. Of course manufacturers are not entirely to blame. As consumers we are naïve and childish, seduced by spec sheets and blinking lights. There are alternatives out there, if you can find them, such as Kyocera's A101k phone.


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Broadband Broadband vsvs DialupDialup

% of broadband subscribers exceeded dialup:In Canada, in 2003In US, in 2004

Broadband Penetration, new subscriptions, 2004*S Korea 97%Canada 84%Hong Kong 72%Japan 52%USA 38%Australia 21%New Zealand 16%

* Ovum


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It's a Broadband World After AllIt's a Broadband World After All

Worldwide, broadband penetration among Internet users grew by 24% in 2004. 62% use broadband as their primary Internet connectionThe fastest broadband adoption rates were found in France, Urban Brazil and the U.K., growing by 59%, 50%, and 45% respectively. However, the report found the world is still divided into haves and have nots. Dial-up regions include urban Russia, India, Mexico, and Brazil and the European regions of France and the U.K.Nearly 6 in 10 U.S. users access the Internet through a high-speed connection.

"The Face of the Web" survey by Ipsos-Insight.


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Broadband Connection Speed Trend Broadband Connection Speed Trend -- Home Users (US)Home Users (US)


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In Canada In Canada –– Cable Voice Cable Voice ––predictions in 2006predictions in 2006Cable Voice Will Grow Much Faster Than IPTV

Cable companies to capture in excess of 40% of all voice access lines by year-end 2010In first year of expansion to offering voice, Rogers was already the third largest residential telephone companyILECs stand to shed in the range of 10% of their access linesper year over the period. Non-facilities VOIP services (such as Vonage and Skype) have little traction overall in the Canadian marketHigh-Speed Internet services "are expected to remain the bright light of penetration and revenue growth”High-Speed Internet access services will be subscribed to by more than 80% of Canadian households in 2010Revenues are forecasted to grow by close to 60% over the same period


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AT&T Offering Service Outside AT&T Offering Service Outside Telco Traditional BoundsTelco Traditional Bounds

AT&T will offer a new internet based IPTV system, U-verse to 18 million homes in 13 statesThey plan to spend $6.5 billion between 2004 and 2008, $1.4 billion more than they anticipated initiallyIncreased costs are related to the cost of adding servers, plus a premium they will pay to ensure vendors will supply when equipment is needed

Wall Street Journal, May 7, 2007


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20082008Time Warner decides to spin off Time Warner Cable Inc for payment to Time Warner of $10.9BWill focus on entertainment and AOL Internet, as these are too different from cable access

AOL dropped 74% in Q1 ’08 despite 1% increase in ad revenueQ1 ’08 sales at Time Warner Cable rose 8% to $4.16B But net income dropped 12% to $242M due to increasing marketing costs

May 22, 2008 China Daily


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The Big PictureThe Big Picture


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CompetitionCompetition--the technology perspectivethe technology perspective

Transport• T1, PRI, T3, Optical (SONET, SDH, DWDM), Microwave, and

Satellite…

Access• ISDN, DSL, Cable Modem, Broadband Fixed Access, Wireless

access, and Satellite…

Switching• Frame Relay, ATM, IP Routing, MPLS, and Gigabit Ethernet…

Mobile• GSM, TDMA, CDMA, GPRS, 1xEVDO, WCDMA, and

CDMA2000, HSDPA…


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Top CompaniesTop Companies

1997

AlcatelLucentMotorolaEricssonNortel

2002

Motorola NokiaEricssonAlcatelCisco

Today?

Maybe Huawei is the largest supplier?


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Network EvolutionNetwork Evolution

To survive, networks must beEvolvableScalableFlexibleHave open standardsBe easy to maintain and operateBe open to rapid service developmentBe priced competitivelySupport multiple servicesOffer a value proposition


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What’s a telco now?What’s a telco now?

Until now, a telco provided to its customers -PSTN and private circuits i.e. 'calls and lines'. No longer! BT’s Q2 2006 results, included two inconspicuous but remarkable facts:• BT now earns more from networked IT services than it does

from calls (£1.822 billion 2006 versus £1.513 billion in H1 2005)

• BT now earns more from broadband than it does from private circuits (£664 million versus £616 million in H1 2005).

• To call BT a phone company that offers calls and lines is simply no longer an accurate epithet.


65

Company structures changingCompany structures changingInstead of selling to largest corporate customers Rogers Communications Inc plan to target small to medium sized businesses

BT is reinventing itself as an IT services company, now that they have shifted from narrowband to broadbandWant to move from hardware-based company to software based servicesCreating two new groups (moving in 20,000 existing employees) to create new IT products and reduce reliance on acquisitions to gain new services

• BT Design – design and development of new services• BT Operate – deployment and operation of new services

Suffered some failures in telecom:• BT Fusion fixed-mobile convergence product attracted only 40,000 users over 15 months• BT Movio – mobile TV standard using Digital Audio Broadcasting (DAB) failed – probably

wrong standard for Europe• BT Vision – IP TV offering free TV channels with the option of video-on-demand (competitors

dominate the 12M customers already) attracted only 2400 customers in 4 months

Financial Post June 22, 2007Global Insight April 25, 2007


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New Trends in TelecommunicationsNew Trends in Telecommunications

Convergence of telecommunications, computation and entertainment, leading to innovative new servicesBandwidth expansionThe great rates warMigration of intelligenceGlobalizationIP changing the architecture on incumbent telco networksCreate need for both technical skills and personal management skillsEmerging role of consumer electronics

Sony announced new line of television and appliances with WiFiIntel supports WiFi in domestic environmentCentrino and various chip for enabling WiFi on appliancesTrend toward non-hierarchical networks, wireless routers, hot spotSoftware radio


67

In conclusionIn conclusionNew services must offer value to end userServices more content centricIntelligence moving to the edgePeer to peer servicesPacket switching replacing circuit switchingRapid technology and network architecture changesCustomer service and customer understanding are key… will traditional telcos survive? … will new startups be successful?… will other utilities successfully incorporate voice and data services?

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