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1 Techno-economical aspects of mobile broadband From 800 MHz to 2.6 GHz. LTE: new frequencies 2.6 GHz & 800 MHz – a chance for a new image of mobile telephony? Friday October 8th, Warsaw, Poland. Dr. Kim (Kyllesbech Larsen) Technology Economics, T- Mobile

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Tekno Ekonomi Mobile

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Techno-economical aspects of mobile broadband From 800 MHz to 2.6 GHz.LTE: new frequencies 2.6 GHz & 800 MHz – a chance for a new image of mobile telephony? Friday October 8th, Warsaw, Poland.

Dr. Kim (Kyllesbech Larsen)Technology Economics, T-Mobile

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010 2

Story…..

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010 3

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010

17 June 2010

4

Changing market.Social trends and technological indicators.

Digitize Socialize Individualize

1.60+ bn internet users.

Next 1+ bn by 2015.

4.1+ bn mobile users.

<10% on mobile internet.

250+ bn e-mails per day.

40+% more than 5 MB.

20+ hrs video per day

400+ mn registered users.

25+ mn Mobile-TV users in APAC

$4.5+bn mobile gaming revenue

10+bn mobile apps downloads.

86+ mn active ebay users

400+ mn active users.

100+ mn mobile users.

2.5+ bn photos per month

2 x as active ! as fixed users

4

2009: 45M Mobile users, 2.8M mobile broadband users, 21M internet users,.3.6M Facebook users (56% female, 65% 18-35),

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010 5

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!

HSPA+ versus LTE ?

Technology timing!

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010 6

The Greenfield spectrum… “happy” short-term, a tougher future.

Lots of Hz per customer!

High speed mobile broadband!

Great customer experience!

Happy startup … plenty of quality.

Fixed-like demand!

Dramatic Hz / customer drop!

Additional spectrum and/ortechnology needs!

Tougher future … growth limitations.

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010 7

Telco Europe is all about efficiency … … avoiding shareholder unhappiness …

2010 – 2015 ILLUSTRATION

Western Europe

Growth markets

EBITDA GROWTH

OPEX GROWTH

REVENUE PRESSURE

REVENUE GROWTH

Source: Pyramid Research 2010 & BoA Merrill Lynch 2010 Mobile Matrix.

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010 8

The Poland 2015 …broadband everywhere?, for everyone?

Almost all house-hold will have a PC.

1 out of 2 people will have mobile broadband 2.

6 out of 10 house-hold with (fixed) broadband 1.

PCs

(85% HH)Fixed

broadband(60% HH)

MobileBroadband

(50%)

430

+%

Source: Pyramid Research 2010.1 Fixed broadband: xDSL, Cable, FTTx, … 2 HSPA, LTE.

Trend 2 demand for always best connected.

Trend 1 mobile internet devices will exceed PCs.

Trend 3 geometrical growth in data traffic.

Population38mn

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010

Spectrum benchmarking2.6 GHz requires least 9 times the site density to match 800MHz.

850 MHz

DL power

Coverage area

UL power (typical limitation for coverage)

Illustration

×9 ×6 ×4.5 ×1 900 MHz – 800 MHz (digital dividend)

2.6GHZ

2.6 GHz

Available bandwidth for LTE

LargeVery small

LowHigh

190 MHz

2.1 GHz 1.8 GHz

2×60 MHz 2×75 MHz 2×35 MHz 2×30 MHz

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010

Poland … Spectrum1 overview.

14*0.9

19*1.8

302.1

18*0.9

19*1.8

302.1

18*0.9

19*1.8

302.1

100.9

302.1

201.8

201.8

100.9

50TDD

700 – 900MHz

1700 – 2100MHz

2500 - 2700MHz

Rural – Urban

Low capacity

Very good coverage..

Urban/Sub-urban.

Very good capacity.

Ok coverage.

(Dense) Urban.

High capacity.

Poor coverage

Era OrangePlus Play CenterNet Aero2

67 to 62 MHz 40 MHz 112 MHzIllustration

* Bands broken up 1 Total view of UL + DL 2 Based on 2009 actual customers.

120.8

Sferia

20 (UL) + 30 (DL) MHz TDD-LTE

2×20 MHz FDD-LTE

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010

Poland … New spectrum opportunities.

2 × 30 MHz@ 800 MHz

2 × 70 MHz @ 2.6 GHz2500 - 2700MHz

(Dense) Urban / City coverage.

High capacity

Relative poor propagation.

700 – 900MHz

Rural - urban coverage.

Very good propagation.

Lower capacity.

Low-frequency spectrum (≤ 2.1 GHz) is more valuable than higher-frequency spectrum Initial coverage is more valuable than limited coverage and high capacity. Low frequency spectrum can capture more population for significantly less cost. Below 20 MHz spectral capacity limitation will limits the overall spectrum value.

High-frequency spectrum can be valuable as capacity or for wireless DSL-business models. Bandwidth below 30 MHz is of lower value than higher bandwidths. Only urban population should be used for valuation. TDD spectrum is in general of lower value than FDD (i.e., due to propagationn characteristics).

1:30+

1

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010

UK

D 2

D 2

Spectrum pricing & perceived value.2.6 GHz is perceived to be of very low value compared to lower frequency spectrum that offers economical and efficient coverage.

Average spectrum price

in US$/MHz/Pop.

0.001

0.01

0.1

1

10

0.5 1.0 1.5 2.0 2.5 3.0

US 1

US

US

HK

SE

NOR

FI

NL

CAN

CAN

Auctioned spectrum in GHz

UMTS2.1 “hyper-hyped” valueLog-scale

India 3 Max

India 3 Min

NL

NL4

D 2

D

DK

1 US 700 MHz auction 2008,2 German 800 MHZ – 2.6 GHz

auction 20103 Indian 3G / BWA 2.3GHz

auction 2010.4 Dutch 2.6 GHz auction 2010.5 Austrian 2.6 GHz auction 2010.

India 3

AT 5

Economicalcoverage Artificial scarcity

Capacityenhancement Capacity overlay.

No (real) demand. Government push for new entrant.

Very dense, small area coverage (HK). Low absolute price compared to GDP. Perceived value add (DK, SE).

Very dense, small area coverage, high GDP.

Large area, low pop density, very low GDP

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010

The beauty of the “beast”Our customer, the smart-phone and its apps.

13

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010

1 + 1 = 2 (yesterday’s communications).

Mobile network

……

.....

…………

…………….

…….

14

Illustration

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010

1 + 1 is no longer just 2 (1 device - multi-tasking).

Web 2.0

Mobile network

15

Apple push notification

service (APN).

Illustration

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010 16

Mobile broadband versus fixed broadband demand.

11/3

20

Note: In relative usage

70↑+

100+

Mobile broadband700 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.

Lots of small volume events

&

very high signaling load due to mobile apps notifications

High volume / P2P / streaming…

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010 17

3G on vitamins, HSPA on steroids with HSPA+ & ++.HSPA roadmap offers substantial speed and ecosystem scale effects.

HSPA

14.4 Mbps

HSPA+

21- 28 Mbps

HSPA+

42 Mbps

Data Sticks / Netbooks

Devices 1

Chipsets

Huawei Data StickNov. 09

Netbook (June 2010)

Samsung

Android

Nokia

Motorola

Qualcomm MDM 8200

ST Ericsson M570-V3

Qualcomm MDM8220

ST Ericsson M570 & U8500

Huawei Data Card

Qualcomm

MSM 7230

QSC6295

Network

Qualcomm

MDM 8200

Huawei Data Stick

1H 2009 1H 20111H 2010

HSPA++

84+ Mbps

2012+

5 MHz 5 - 10 MHz 10 MHz 15 - 20 MHz

1 iPhone 3Gs supports HSDPA 7.2 Mbps for iPhone 4 & iPAD HSDPA 7.2 Mbps/ HSUPA 5.76 Mbps.

31 / 11 5 July 20101,000+

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010 18

Current mobile broadband option space.

BlocksSpectrum

Total bandwidth

2×5 MHzHSPA+

2×10 – 15 MHzHSPA+ (LTE)

2×20+ MHzLTE (HSPA+)

DL Speed 21 – 42 Mbps 42 – 84+ Mbps 168+ Mbps

Era FDD 67 MHz(5 Hz per cust)

(0.9), 1.8 & 2.1 GHz

2.1 GHz None

Plus FDD 67 MHz(5 Hz per cust)

0.9, 1.8 & 2.1 GHz

2.1GHz None

Orange FDD 62 MHz(5 Hz per cust)

0.9, 1.8 & 2.1 GHz

(1.8), 2.1GHz None

Play FDD 40 MHz(11 Hz per cust)

0.9 & 2.1 GHz 2.1GHz None

CenterNet, Aero2 & Sferia

FDD 62 MHzTDD 50 MHz

0.8, 0.9, 1.8 GHz

1.8GHz

1.8 GHz2.5 GHz TDD

For 3 major operators little existing LTE optionality.

4 top players lack optimum LTE spectrum conditions (i.e., 40 MHz).

C+A+S have (currently) the strongest LTE spectrum position in Poland.

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010 19

Migration & re-farming to 3G & LTE.

(215 @ 2.1 GHz)

2G(210 MHz @ 1.8 GHz)

3G

2G

Customer migration from

3G LTE3G

Free

2G LTE(210 MHz @ 1.8 GHz)

New Customers

After some time 2G

to 4G migration.

LTE

How to perfect existing legacy spectrum – part 1.Re-farm own spectrum is complicated, costly and prone to be service affecting.

2G

3G

Note: 3G includes R99, HSPA, HSPA+, similar 2G includes Voice, GPRS & EDGE

LTE

ILLUSTRATION

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010 20

(215 @ 2.1 GHz)

2G(210 MHz @ 1.8 GHz)

3G

2G

3G

Free New Customers

ILLUSTRATION

How to perfect existing legacy spectrum – part 2.Re-farming GSM to UMTS in rural area accelerate penetration of mobile broadband.

2G 3G(900 MHz)

3G3G @ 900

2G @ 900

UMTS900

Today there are more than 400+ UMTS900 devices.

3G

Rural migration & re-farming to UMTS900.

Note: 3G includes R99, HSPA, HSPA+, similar 2G includes Voice, GPRS & EDGE

Rural UMTS3G

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010 21

Balancing demand & quality.

(215 @ 2.1 GHz)

2G(210 MHz @ 1.8 GHz)

3G

2G

3G LTE

Migration

3G

Free

New CustomersILLUSTRATION

(220 @ 2.6 GHz)

New spectrum allows more efficient technology migration.

Dense &Urban Areas

(210 @ 800 MHz)

LTERuraltoUrban Areas

LTE

2G

3G

LTE

Kim Kyllesbech Larsen, Technology – T-Mobile, Warsaw, Poland, 8 October 2010 22

Macro economical benefits of broadband internet access everywhere.

Mobile broadband smart phones will increase spectrum demand rapidly.

Re-farming legacy spectrum will be complex, costly and impact quality.

Why should we care?

Un-economical spectrum pricing will delay and limit such benefits.

Without access to new spectrum resources operators will be growth limited.

Access to new spectrum paramount to ensure existing customer quality.

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Contact:

[email protected]: +31 6 2409 5202http://nl.linkedin.com/in/kimklarsen

Thank you very much!