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Airvana Proprietary & ConfidentialPage 1
The Future of All-IP Broadband Wireless
Mobile Networks
ASWN 2004 PresentationAugust 11, 2004
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 2
Outline
§ Market Trends§ Technology Evolution§ Emerging Services and Applications
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 3
Market Trends
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 4
The Growth of Data Traffic
ASWN 2004 Presentation
Source: KDDI Q2’03 Investor PresentationA KDDI Packet = 128 bytes
§ Data Traffic is Growing. Voice Traffic is Stabilizing.
§ It is not all about voice !!
Airvana Proprietary & ConfidentialPage 5
The Growth of Data Traffic (Cont’d)
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 6
The Growth of the ARPU
ASWN 2004 Presentation
§ Average Revenue Per User (ARPU) is Growing.§ But: ARPU/MByte is declining.§ While: Data Traffic Per User is Growing.
èWireless Network Cost-Effectiveness is Key.
Airvana Proprietary & ConfidentialPage 7
The Growth of the ARPU (Cont’d)
ASWN 2004 Presentation
Source: Company websites and Q4’03 Investor presentations. ARPU converted to USD.• High-Speed (1xEV-DO) ARPU of SKT, KTF and KDDI compared to each company’s Low-Speed (1xRTT) data service.
20
3.7
5.07
40
12.5
15.5
0 20 40 60
KDDI
KTF
SKT
High-SpeedLow-Speed
Airvana Proprietary & ConfidentialPage 8 ASWN 2004 Presentation
High-Speed Delivers 4-5X ARPU of Low-Speed Subscribers
Source: 2003 SKT Company Presentation
Airvana Proprietary & ConfidentialPage 9 ASWN 2004 Presentation
High-Speed Delivers 4-5X ARPU of Low-Speed Subscribers
Source: KTF Q4’03 Earnings Release
Airvana Proprietary & ConfidentialPage 10
The Effect of High-Speed on Subscriber Growth
ASWN 2004 Presentation
48% of subs come from
competitors!
*Source: KDDI Financial Results of the Fiscal Year ended March 2004, presented on Apr 28,2004
§ High-Speed data is attracting subscribers.§ High-Speed data is a major competitive advantage.
Airvana Proprietary & ConfidentialPage 11
The Effect of High-Speed on Subscriber Growth (Cont’d)
ASWN 2004 Presentation
Highlights• Almost 7 million by March 31, 2004.• KDDI added 350,000 subscribers within 4 months of launch.
Global 1xEV-DO Subscribers
0
1000000
2000000
30000004000000
5000000
6000000
7000000
8000000
Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04
Airvana Proprietary & ConfidentialPage 12
0
50,000
100,000
150,000
200,000
250,000
300,000
May. 2003 Jun. 2003 Jul. 2003 Aug. 2003 Sep. 2003 Oct. 2003 Nov. 2003 Dec. 2003 Jan. 2004 Feb. 2004
Net
Add
s
KDDI DoCoMo
Total Subscribers
16,483,100
45,514,000
EV-DO Launch
ASWN 2004 Presentation
The Effect of High-Speed on Subscriber Growth (Cont’d)
Airvana Proprietary & ConfidentialPage 13
Technology Evolution
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 14 ASWN 2004 Presentation
3G Technology Summary
5MHz
CS, No VoIP
384 Kbps
2 Mbps
WCDMA (Rel-99)
VoIPCS, VoIPVoIPNo VoIPVoice Support
1.25 MHz
1 Mbps
5 Mbps
CDMA (1xEV-DV)
1.25 MHz
300 Kbps
2.4 Mbps
CDMA (1xEV-DO
Rel-0)
1.25 MHz
1.8 Mbps
3.0 Mbps
CDMA (1xEV-DO
Rel-A)
5 MHzSpectrum Used
384 KbpsUplink Speed
14.4 MbpsDownlink Speed
HSDPA (Rel-5)Description
CS: Circuit Switched
Airvana Proprietary & ConfidentialPage 15 ASWN 2004 Presentation
The All-IP Architecture
§ The traffic on broadband wireless networks is increasingly IP.§ A huge number of companies develop IP software.§ Standardization yields cost effectiveness.§ No single company can or needs to develop all the software
needed for a broadband wireless network.
è The All-IP Architecture.
Airvana Proprietary & ConfidentialPage 16 ASWN 2004 Presentation
All-IP Architecture Benefits§ IP reduces the cost of the Data Backhaul Network
RN
RN
RN
RN
RN RN
RN
RN
RN
RN
RN
RN RN
RN
IPTransport
Airvana Proprietary & ConfidentialPage 17
§ IP Routing Increases Network Reliability/Availability
Dynamically connect to an alternate Radio Network Controller (RNC) if an RNC fails
RNRN
RN
IP Network
RNC 2
RN
RN
RN
RNC 1RNC 1
RN
RN
RNRN
RN
RN
All-IP Architecture Benefits (Cont’d)
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 18
§ An All-IP Architecture enables network operators to leverage existing IP-based QoS technologies.
All-IP Architecture Benefits (Cont’d)
RNC
EMS
AN-AAADiffServRouter
IPBackhaulNetwork
Public Internet
RN
QoS Config
PDSN
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 19
§ An All-IP Architecture enables network operators to leverage existing IP-Multicast technologies to provide Multimedia Services.
All-IP Architecture Benefits (Cont’d)
IP Network
RNC-1
RNC-n
RN
RN
RN
RN
Content Server
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 20
Technology Summary§ Allow the system to apply different treatment (e.g., retransmission
overload control and scheduling) strategies to different flows.§ Control latency during heavy load by prioritizing delay-sensitive traffic
over other traffic.§ A single subscriber can simultaneously use different applications with
different QoS rating.
Value Proposition• Enables operators to launch delay-sensitive services such as Push-to-talk
(PTT) and Push to Media.• Enables operators to launch carrier-grade VoIP.• Subscribers can simultaneously use PTT (or VoIP), access the web, and email.• Enables operators to offer preferential network performance to customers who
pay more (e.g. enterprise laptops over handsets).
QoS
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 21
QoS Benefits
§ Customer Segmentation• Deliver different services and network performance to different
customer segments.• Gain flexibility in creating data pricing plans.
ASWN 2004 Presentation
$50/month: Enterprise Plan•Unlimited data access•No Rate Limit•Priority in scheduler•Priority in overload conditions•Not delay sensitive
$15/month: Handset Plan•Unlimited data access•Max Rate = 300 kbps•Not delay sensitive•Low priority in scheduler•Low priority in overload conditions
$20/month: PTT and Multimedia Plan•Unlimited data access•Max Rate = 300 kbps•Support for PTT traffic
Airvana Proprietary & ConfidentialPage 22
QoS Benefits (Cont’d)
ASWN 2004 Presentation
§ Enables operators to introduce New Applications:• Industry-leading Push-to-talk• Voice over IP (VoIP):
– With performance comparable to that of circuit-switched voice – With capacity exceeding that of circuit-switched voice.
Airvana Proprietary & ConfidentialPage 23
Emerging Services and Applications
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 24
Evolution of Personal Communications
Telephony
Text Messaging
Push-To-TalkPicture Messaging
On-Line Gaming
Broadband PC Connectivity
Broadcast TV
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 25
Outlook: CDMA Applications & Services
Telephony Telephony
WebContent
NotebookPC Access
CameraPhone
Telephony
WebContent
NotebookPC Access
CameraPhone
Push-To-Talk
Push-To-Talk
FixedBroadband
VideoOn Demand
Telephony
WebContent
NotebookPC Access
CameraPhone
Push-To-Talk
FixedBroadband
VideoOn Demand
MultimediaMessaging
BroadcastVideo
On-LineGamingIS-95
1xRTT
1xEV-DO
Legend
Telephony
WebContent
NotebookPC Access
CameraPhone
Push-To-Talk
FixedBroadband
VideoOn Demand
MultimediaMessaging
BroadcastVideo
On-LineGaming
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 26
Why Push to Talk on 3G Wireless Networks?
§ Push-to-talk (P2T) is a differentiated service• Nextel, the only operator to have P2T for over 10 years, leads US Wireless
Industry in ARPU and churn.• P2T is being launched by operators worldwide as a packet data application on
2.5G (1x and GPRS) networks.
§ Push-to-talk over 2.5G Packet Data Networks• 2.5G networks have limited data capacity – insufficient if application takes off.• Consumers expect P2T calls to cost less than regular voice calls but 2.5G
networks deliver packet data at the expense of voice capacity.
§ Push-to-talk over 3G Wireless Networks• Offers a high-bandwidth, spectrally efficient, data channel to deliver P2T.• Enables operators to offer enhanced P2T services – like Push-to-Media – that
leverage the high-bandwidth and the proliferation of multimedia devices.
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 27
Voice over IP (VoIP)
§ QoS with Flexible Priority Scheduling§ Fast Physical Layer Retransmission for Reliability with QoS§ Fast Sector Switching for Mobility§ Efficient Multiplexing & Header Compression for high capacity
IPCore
SIPSERVER
MEDIAGATEWAY
QoS-AwareRadio
Access NetworkSIP Handset
PSTN
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 28
Why VoIP on Future Wireless Networks?
§ Carrier VoIP has very strong momentum on wire-line networks.• Enhanced Voice Services.• Common services platform across all markets.• Lower Operating Expenses.• Competition from Cable and Startups.
§ Operators want VoIP to work over Wireless • Operators with both wired and wireless networks want to offer unified
suite of enhanced voice features.• Operators with both wired and wireless networks reduce operating
expenses. • Wireless-only operators need VoIP, if their competitors launch it.
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 29
VoIP Delivers Feature-Rich Voice
§ Phone number independent of location.Number for Life
§ Network-assisted speed dial.Speed Dial
§ Conference call for up to 9 people (9-way calling).Personal Conferencing
§ Home phone will ring up to five phones in sequence to find subscriber.
Locate Me
§ No incoming calls.Do not Disturb
§ Online personal call manager.§ Remembers phone numbers, for organization.
Call Logs
§ Retrieve voicemail as email.§ Group voicemails and “talking emails”.
Enhanced Voicemail
Exemplary features enabled by VoIP
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 30
Broadcast Services
BroadcastEnabled WirelessNetwork
ASWN 2004 Presentation
ContentServer
Clients
Airvana Proprietary & ConfidentialPage 31
Broadcast Services Deployment
IPTransport
Radio Node
Internet
Radio Node Controller
PDSN
Turn on IP Multicast on Backhaul Routers Content Server
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 32
Why Broadcast on Future Wireless Networks?
§ Multimedia Traffic over High-Speed Networks increases the Average Revenue Per User.• SK Telecom: In 2003, Premium Multimedia increased 1xEV-DO
ARPU from $13.9 to $19.45.
• KTF: In 2003, Video on Demand (VoD) increased 1xEV-DO ARPU from $10.50 to $17.3
§ Multimedia brings Differentiation.
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 33
But Multimedia Downloads are Bandwidth intensive
ASWN 2004 Presentation
33.7%
22.6% 22.5%
12.9%
3.0% 2.3% 1.3% 0.2% 1.5%
30.0%
5.0%8.0%
51.0%
1.3% 1.0% 1.2% 0.3% 2.2%
Music TV AdultContent
PhoneDecoration
Movie -Animation
June Special Game Traffic Info Others
Montly Packet Occupation Rate Monthly Hit RateSource: SKT
In South Korea, Music, TV and Adult Content account for 43% of hits but 78.8% of network usage
Airvana Proprietary & ConfidentialPage 34
Broadcast Transforms Economics of Multimedia Business Model
§ Operators can push multimedia to mass audiences or large groups• Makes multimedia-content delivery over wireless links scalable,
provides Cable TV-like business model.
§ More efficient compared to unicast on-demand access• Efficient over the air.• Efficient in network nodes.• Efficient in backhaul. • Efficient in servers.
à Broadcast increases the profitability of the wireless multimedia delivery business model.
§ Instant delivery of event-triggered content (breaking news, sports, emergencies, weather advisories).
§ Store and Playback Content models in which time-insensitive content (Soap operas, music videos) is broadcast at off-peak hours.
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 35
The Future
§ ARPU:§ ARPU/Mbyte: § Circuit-Switched Voice Traffic:§ IP Traffic:
§ Services and Applications will become All-IP.§ Wireless Networks will become less Air-Interface-
Specific and more IP-based.
ASWN 2004 Presentation
Airvana Proprietary & ConfidentialPage 36
Thank you!
ASWN 2004 Presentation