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Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

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Page 1: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Monetizing LTEHow LTE can help operators become more profitable

José Villalobos

Senior Consultant

Region Latin America and the Caribbean

Page 2: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013

LTE Growth and Drivers

Page 3: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013

fastest developing Technology

Source: GSA, May 2013

146

4616

2

175

73

2013

+30

+102

+100

+14

248

2010 201220112009

+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

Page 4: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013

better devices and cool apps

Other

Encrypted

Software download &

updateSocial Networking

Web browsingAudio

Video

File Sharing

X2MOBILE DATA TRAFFIC

DOUBLED BETWEEN Q4 2011 AND Q4 2012

Source: Ericsson Source: Ericsson

Mobile data traffic breakdown, 2012

Page 5: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013

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 fixedbroadband service

16%

Lack of spectrum 26%

Denser network coverage 32%

Natural evolution of existinggeneration 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

Page 6: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

HOW IS LTE IMPACTING PROFITABIliTY?TODAY?

1 LTE launched (LGU+ & SKT)

~11% LTE penetration

~28% LTE penetration

2

3

SKT LGU+ KT KOSPI

Page 7: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013

107

Million(>1M TDD)

LTE SUBSCRIPTIONS May 2013

Source: WCIS

2Billion

LTE SUBSCRIPTIONS END 2018

Source: Ericsson

Dec 2010

34%

SK

T

NT

T

LG U

+

KT

 

Spr

int

32%

Met

roP

CS

53% 29%

AT

&T

13%

Sof

tban

k

11%

Tel

stra

5%

10%

19%

22%

Ver

izon

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

USA54

Korea22

Japan16

Australia5

Rest of World

10

Page 8: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013

ARPU Uplift due to LTE

-15

-10

-5

0

5

10

15

20

3Q11 4Q112Q111Q11 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%

LTESmartphoneBlended ARPU

ARPU 4Q12 (KRW ´000)

Source: SKT IR 4Q.2012

› 8X (SP)› 1.5X (SP)

› 2-5X

(LTE users)

Source: Disclose by Operators

Page 9: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013

LTE DATA MonetizationData Allowance

3G LTE

No Change

550MB

1.1GB

2GB

5GB

9GB

13GB

@ Launch@ Launch Q2 2012Q2 2012

Removed unlimited planHigher Tariff Plan with

understanding of 3G ave

data.mth/subs + trends

Increase the bucket size

Removed unlimited planHigher 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 FTTXNarrowband

xDSL FWA WiMAX

Page 10: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013

customer loyalty

Drivers of loyalty to operator brand (NPS)

LTE

LTE

Source: LGU+ Analysis

Page 11: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Aiming for LTE monetization

Spectrum and Network

Branding and

Marketing

Service and Device

Portfolio

Positioning and Pricing

Strategy

Page 12: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013

LTE ecosystem

316 Smartphones

Source: GSA, Jul, 2013

USAUS700AWS

MexicoAWS

Colombia2600

UruguayAWS

ParaguayAWS/1900

Brazil2500/2600

Chile2600

Europe26001800

Puerto RicoUS700/2100

Antigua & BarbudaUS700

Dominican Rep.1800/1900

Page 13: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013

GSM

Macro

LTEWIFI

850900

18001900

AWS

21002600

700

Indoor

MicroPico

HSPA

DataVoice

CDMA

Application coverage concept

Page 14: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013

Boosting the need for LTE

Source: Wireless Intelligence, September 2012

Page 15: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013

positioning and Pricing

PREMIUM PRICING

PREMIUM PRICING

MBB EXTENSION

MBB EXTENSION

BRAND REFRESH

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%

Page 16: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013

CLEAR value benefits

User z (Germany)

Source: Speedtest.net

Page 17: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013

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

Page 18: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean

Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013

JOIN THE CONVERSATION

EricssonCaribbean

EricssonCarib

Ericsson

Ericsson.com/jm

Page 19: Monetizing LTE How LTE can help operators become more profitable José Villalobos Senior Consultant Region Latin America and the Caribbean