evolution to 3g : financial and technical perspectives
TRANSCRIPT
Evolution to 3G :Evolution to 3G :Financial and Technical Financial and Technical PerspectivesPerspectives
March 29, 2000March 29, 2000
Myungsoon ParkMyungsoon Park
SK TelecomSK Telecom
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Contents
1.1. SK Telecom and Korean Wireless MarketSK Telecom and Korean Wireless Market
2.2. 2G Network Architecture2G Network Architecture
3.3. IS-2000 NetworkIS-2000 Network
1.1. Objectives & Benefits, Market Forecasting, etcObjectives & Benefits, Market Forecasting, etc
4.4. Network Evolution PlanNetwork Evolution Plan
1.1. Evolution Scenario, Rollout Plan, etcEvolution Scenario, Rollout Plan, etc
5.5. SummarySummary
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SK Telecom
17 17 years of cellular and paging operationyears of cellular and paging operation
CDMA commercial service in Jan. 1996CDMA commercial service in Jan. 1996
World’s largest CDMA cellular service providerWorld’s largest CDMA cellular service provider
Subscriber base (as of Feb, ‘00)Subscriber base (as of Feb, ‘00) Cellular : 10.2MCellular : 10.2M
Operation scale (as of Feb, ‘00)Operation scale (as of Feb, ‘00) Cellular : over 40 MSCs, over 3,000BTSsCellular : over 40 MSCs, over 3,000BTSs
SubsidiarySubsidiary SK Teletech : Mobile & multimedia handsets manufacturerSK Teletech : Mobile & multimedia handsets manufacturer SK Telink : International call serviceSK Telink : International call service Netsgo : Internet service providerNetsgo : Internet service provider
Strategic allianceship with STIStrategic allianceship with STI
4
Korean Cellular Penetration
0
10
20
30
40
50
60
1996 1997 1998 1999E 2000E
2,000
4,034
1,395
1,680
12,000
10,000
5,966
4,571
2,891
0
2000
4000
6000
8000
10000
12000
1996 1997 1998 1999 2000E
(‘000)
Korean Cellular Penetration
SKT’s Subscribers
[%] Cellular Penetration surpass Fixed line in Aug. 99
Cellular
Fixed line
5
CDMA Operators in Korea
SystemsSystemsLGIC
SamsungHyundai
SamsungHyundaiLucent
SamsungMotorola(Daewoo)
SamsungLucent
LGIC
SKT
CDMA(Cellular)CDMA(Cellular) CDMA(PCS)CDMA(PCS)
OperatorOperator STI KTF HS LGT
10,110Subs.Subs.(thousand)(thousand)
3,238 4,267 2,741 3,085
TotalTotal
23,441
SamsungLGIC
HyundaiLucent
Motorola
SK TelecomShinsegi Telecom
KT FreetelHansol
LG Telecom
SamsungLGIC
HyundaiSK Teletech
HanhwaMaxsonAppeal
Infrastructure VendorsInfrastructure Vendors OperatorsOperators Handset ManufacturersHandset Manufacturers
(Dec 1999)(Dec 1999)
Source : SK TelecomSource : SK Telecom
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2G Network Architecture
T1/E1T1/E1
R2R2
T1/E1T1/E1
ISUPISUP
IS41IS41
IS41IS41IS41IS41
WorldWorld
TCP/IPTCP/IP
COISCOISTCP/IPTCP/IP
ISUPISUP Paging NetworkPaging Network
ITU-TITU-TITU-TITU-TITU-TITU-T
CDMA (IS-95A/B)CDMA (IS-95A/B)
Intelligent Network & Intelligent Network & VASVAS
External External NetworksNetworks
InternationalInternational Roaming Roaming
Under developmentUnder development
E1E1
UWCNUWCN
LGLG SamsungSamsung HyundaiHyundai
FLEXFLEXPOCSAGPOCSAG
TMSTMSPMSPMSFMSFMS CMSCMS CDCD
PSTNPSTN
STI/PCSSTI/PCS
GSMGSMWorldWorldIridiumIridium
BillingBillingRTMSRTMS
Cellular NetworkCellular Network
E1E1
LAPDLAPD
IS41IS41
E1E1
IS41/ISUPIS41/ISUP
E1E1
IS41/ISUPIS41/ISUP
IS41IS41
IS41IS41
IS41IS41
E1E1
IS41IS41
AUCAUC
IPIP
NMSNMS
VMSVMS
SMSSMS
PPSPPS
VPNVPN
HLRHLR
RFCRFC
IWFIWF
E1E1
IS658IS658
CDMA (IS-2000)CDMA (IS-2000)
STPSTP
ITU-TITU-T
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IS-2000 Network
IS-2000IS-2000 Network Network
Objectives & BenefitsObjectives & Benefits
Market ForecastingMarket Forecasting
Financial ValueFinancial Value
Rollout PlanRollout Plan
Network ConfigurationNetwork Configuration
2G Interworking2G Interworking
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Objectives & Benefits
ObjectivesObjectives Secure data market leadershipSecure data market leadership Cost effective network investmentCost effective network investment
– Capacity : larger than IS-95A/BCapacity : larger than IS-95A/B
– Compact : more reliable and better quality systemCompact : more reliable and better quality system
Enhanced quality & service capabilityEnhanced quality & service capability– Standby time, enhanced featuresStandby time, enhanced features
BenefitsBenefits First mover into high speed wireless data marketFirst mover into high speed wireless data market Smooth migration to 3G network (IMT-2000)Smooth migration to 3G network (IMT-2000)
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Market Forecasting
Thousand Thousand SubscribersSubscribers
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
95A
Total subscribers
IS-2000
95B
SKT’s Cellular Penetration
Market trendsMarket trends Penetration almost saturatesPenetration almost saturates Wireless internet & data Wireless internet & data
market will supercede voicemarket will supercede voice
Subscribers requirementsSubscribers requirements various data services in various data services in
higher speedhigher speed lower pricelower price
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Financial Value
Revenue : Revenue : $Mil$Mil
0
200
400
600
800
1,000
1,200
1,400
1,600
Voice
Total
Data
Revenue Forcecasting
Profit ValueProfit Value Total Expense : $1.2BTotal Expense : $1.2B IRR : 28%IRR : 28% NPV : $520MNPV : $520M
AssumptionsAssumptions Data market will supercede Data market will supercede
voicevoice In 2002, IMT-2000 (3G phase 2) In 2002, IMT-2000 (3G phase 2)
service will be launchedservice will be launched
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Rollout PlanRollout Plan
Cities/TownsCities/Towns 79/23479/234 73%73% 100%100%
--
Highways (Km)Highways (Km) 2,5002,500 65%65% 89%89%
100%100%
Coverage (% of Pop)Coverage (% of Pop) -- 75.3%75.3% 88.4%88.4%
100%100%
TotalTotal 20002000 20012001 20022002CoverageCoverage
System developmentSystem development Technical trial : ‘99. 9Technical trial : ‘99. 9 Requirement : ‘00. 1Requirement : ‘00. 1 Pilot test : ‘00. 4Pilot test : ‘00. 4 Field test : ‘00. 6 ~ 9Field test : ‘00. 6 ~ 9
Network implementationNetwork implementation Installation : ‘00. 6 ~ 8Installation : ‘00. 6 ~ 8 Optimization : ‘00. 9Optimization : ‘00. 9 Trial/commercial svc : ‘00. 10Trial/commercial svc : ‘00. 10
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Network ConfigurationNetwork Configuration
PSTN
IP Fax
PDSN
HA
MSC/VLR
RADIUS Server
HLR
IWF
Gateway Router
ManagedWAN
BTS
PDA
MTIP Phone Notebook
BSC
BTSMTNotebook
BSC
BTSMTIP Fax
VMS/FMS
SMSCSCPSCE/SMS
Maintenance Console
Internet
IP Phone
MSC/VLRBSC
BTSMTIP Fax
22G(95-A/B)G(95-A/B)
IS-2000IS-2000
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2G Interworking
Backward compatibilityBackward compatibility HandoffHandoff
– 2G-3G soft handoff2G-3G soft handoff– Data handoff : 2G->3G ,3G-> 2GData handoff : 2G->3G ,3G-> 2G
Roaming to 2G networkRoaming to 2G network
Service differentiation depends on networkService differentiation depends on network 2G network : low speed data services (14.4k, 64k)2G network : low speed data services (14.4k, 64k) 1X network : high speed data services(144k)1X network : high speed data services(144k)
– Packet mode : fast internet accto for N-generationPacket mode : fast internet accto for N-generation
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Network Evolution Plan
Network Evolution PlanNetwork Evolution Plan
Evolution ScenarioEvolution Scenario
Rollout PlansRollout Plans
3G System Technology3G System Technology
3G Network Deployment Strategy3G Network Deployment Strategy
3G Network Architecture3G Network Architecture
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Evolution Scenario to 3G
Reduce technological risks by phased enhancement ofReduce technological risks by phased enhancement of
network and servicesnetwork and services
Avoid uncertainties for 3G service marketAvoid uncertainties for 3G service market
Provide medium rate data services and create higherProvide medium rate data services and create higher
rate data service need with 3G phase 1 networkrate data service need with 3G phase 1 network
2G Network(IS-95A/B)
3G Network(phase 2)(IMT-2000)
3G Network (phase 1)(IS-2000)
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Rollout PlansRollout Plans
Jan 1996(IS-95A)Jan 1996(IS-95A)Aug 1999(IS-95B)Aug 1999(IS-95B) 2000 42000 4QQ 2002 22002 2Q Q
3G ph.1 3G ph.1 Network Network(IS-2000)(IS-2000)
22G NetworkG Network(IS-95A/B)(IS-95A/B)
22G NetworkG Network(IS-95A/B)(IS-95A/B)
33G ph.2 NetworkG ph.2 Network(IMT-2000)(IMT-2000)
2G 2G 2G3G ph.1
2G 2G 2G 2G
22G NetworkG Network(IS-95A/B)(IS-95A/B)
3G ph.1 3G ph.1 Network Network(IS-2000)(IS-2000)
3G ph.1
3G ph.1
3G ph.2
3G ph.2
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3G System Technology
Evolved GSMEvolved GSM
MSCMSC
Evolved ANSI-41Evolved ANSI-41
MSCMSC
IMT-DSIMT-DSIMT-MCIMT-MC
• Need to develop Need to develop
Hook & ExtensionHook & Extension
DS-41 SystemDS-41 System
Evolved from existing Evolved from existing CDMA technologyCDMA technology
Complementary Complementary method of MC and DSmethod of MC and DS
Advantage in global Advantage in global roamingroaming
IMT-MC to build upon IS-2000 networkIMT-MC to build upon IS-2000 network
DS-41 system to bridge existing CDMA technology with IMT-DSDS-41 system to bridge existing CDMA technology with IMT-DS
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3G3G Network Deployment Strategy Network Deployment Strategy
BTS
IWFHLR
MSC/VLR
BTS
BSC
800800MHzMHzIS-95CIS-95CSystemSystem
2GHzIMT-DS
2GHzIMT-MC
ANSI-41 MAP
PDSN
RADIUSServer
O&M Server
WAN
Gateway Router
HA
Minimize IMT-2000 investment cost by deploying IS-2000 network capable of Minimize IMT-2000 investment cost by deploying IS-2000 network capable of supporting IMT-MC/DS supporting IMT-MC/DS
Expand IMT-2000 upon IS-2000 core network to ensure call qualityExpand IMT-2000 upon IS-2000 core network to ensure call quality
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3G Network Architecture
BTSBTSMSMS
BTSBTSMSMS
BTSBTSMSMS
RNCRNC
RNCRNC
PSTNPSTN
InternetInternet
HAHA
GMSCGMSC
MSCMSC
RADIUSRADIUSServerServer
ServerServer
Service Service PlatformPlatform
MSCMSC
22G G CellularCellular
Develop core technologyDevelop core technology
VoiceVoiceNetworkNetwork
DataDataNetworkNetwork
HLRHLR
DNSDNSDirectoryDirectory
IMMCIMMCPortalPortalWeb ...Web ...
PDSNPDSN
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Summary
Benefits of IS-2000Benefits of IS-2000 MarketingMarketing
– Secure data market leadershipSecure data market leadership
TechnicalTechnical– Enhanced quality and service capabilityEnhanced quality and service capability
FinancialFinancial– Cost effective network investmentCost effective network investment
Network evolutionNetwork evolution– Smooth migration to IMT-2000Smooth migration to IMT-2000