generic – carrier hetnet external market analysis issue 1 2 12-11_2014

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CARRIER HETNET MARKET ANALYSIS – SNAP SHOT

Nov 2014

G W PRICE-JONESDIRECTOR AND OWNER PJP LTD

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WHY CARRIERS ARE INVESTING IN NEXT GEN HOTSPOT TECHNOLOGY

Key reasons to include carrier Wi-Fi services in a portfolio

3.5 5.9

33.956.7Important

Somewhat Important

6.9

12.6

36.8

43.7

23.5

36.5

32.4

7.6

Improve customer

experience and retention

Reduce network costs by offloading

data

Generate new revenue streams

(advertising, analytics, M2M)

Not Important

Figure 1.1 What do you consider to be the main driver for investing NGH – Compliant networks? ( please rank your top three, 1 being most important and 3 being least important)?

Very Important

Not Important

Very Important

Important

Somewhat Important

Not Important

Very Important

Somewhat Important

Important

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PARTNERS Source: WBA – Maravedis-Rethink, Nov 2013

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“Wi-Fi IS NOW THE PRIMARY MEANS OF CONNECTIVITY.

MOBILE IS SECOND”

DIXON DOLL DCM – WBA 2014

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A LOOK AT THE TOP LTE/4G MARKETS AROUND THE WORLD SHOW A CONTINUED RELIANCE ON Wi-Fi BY SMARTPHONE

USERS.

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

Germany Brazil UK Canada Mexico USA RussianFederation

South Korea Japan

Source: Mobidia

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BUT QOE STILL A MAJOR ISSUE AS USAGE DRIVES CONGESTION

0 0.5 1 1.5 2 2.5 3 3.5 4

Connction Cost

Traffic Type

Connection Quality

Connection Speed

Figure3-1 What will be the most important factor to consider when managing connection decisions between Wi-Fi and other access networks?

Source: WBA – Maravedis-Rethink, Nov 2013

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SK TELECOM QOS AP SELECTION

• SK Telecom developed Hotspot 2.0 AP selection based on QoS of the available AP’s.• Better Wi-Fi user experience and load balancing of 2.4 and 5Ghz was also achieved.

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PARTNERS Source: SK Telecom, WBA presentation2014

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CARRIERS ARE INVESTING TO SUPPORT THIS USE PATTERN

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Deployment of hotspots for MNO or MSO networks

5.2m

2012

6.5m

2013

7.1m

2014

7.9m

2015

8.3m

2016

9.6m

2017

10.5m

2018

MNO’s and MSO’s will deploy 10.5 million hotspots a year by 2018, directly or with

partners.

Cumulative base of carrier Wi-Fi locations

55 million by 2018

Source: WBA – Maravedis-Rethinks, Nov 2013

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BUT AGGREGATION IS ALSO A BIG NEED IN BUILDING THE FOOTPRINT


Build own carrier-grade

Wi-Fi in selected

areas

64.5%

Partner with other service

providers such as cable

companies or WISPs

43.7%

Use Wi-Fi aggregators for national coverage &

services

41.6%

Use Wi-Fi aggregators

for international coverage &

services

32.0%

Use so called crowd sourced

hotspots to leverage free &

open Wi-Fi services

20.3%

Consider acquiring

one or more WISPs

16.8%

Other

1.5%

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CARRIER Wi-Fi TODAY(VALUE CHAIN)

Carrier

Aggregator

Service Provider

Wi-Fi Access Point

Device Provider

Carrier may play all of these roles or none Clearing

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WHAT ARE THE ECONOMIC DRIVERS FOR CARRIER Wi-Fi

TODAY?

THE ROI FROM OFFLOAD (REDUCED RAN CAPEX/OPEX)

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BUSINESS CASE HETNET VS LTE ONLYPJP

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$/Mbps/KM²

0

2000

4000

6000

8000

10000

12000

14000

16000

Dense Urban Urban Suburban Rural

Cost Of Capacity Density Varies

HSPA LTE 802.11 n

$

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Source: Ruckus Wireless

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SMALLCELL DEPLOYMENT TCO

0%

20%

40%

60%

80%

100%

120%

LTE LTE-A Wi-Fi n Wi-Fi ac

Per-bit TCO: LTE-Advanced and Wi-Fi ac

22%

100%

50%

43%0%

50%

100%

150%

200%

250%

300%

3G LTE LTE-A Wi-Fi n Wi-Fi ac

Peak Data Rates

Peak Data Rate % Of LTE Peak Data Rate

Wireless Technology Peak Rate Assumptions

3G – HSPA 5 MHz

4G – LTE (Base Case) 10 MHz, 2x2 MIMO

4G – LTE Advanced 10 MHz, 4x4 MIMO

Wi-Fi CERTIFIED n (Base Case)

40 MHz, Single Stream

Wi-Fi Certified ac 80 MHz, Single Stream

Figure 6. Peak data rates for Wi-Fi and LTE.

Sources: Equipment Vendors, IEEE,4G Americas, 3GPP, Senza Fili.

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HOWEVER LACK OF CLEAR ‘ROI’ IS STILL THE MAIN PERCIEVED OBSTACLE

0

50

100

150

200

250

300

350

400

450

500

Cost of NGHDeployment

Lack Of Clear ROI ForNGH Investments

Handset Availability Change To PassportCompliant Equipment

Other - Please Specify

Most Important 2ND 3RD

Figure 1-3 What do you perceive aa the main obstacles to deploying an NGH compliant network? (please rank your top three, 1 being most important)


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MONETIZATION STRATEGIES FOR TOMORROW?

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BUSINESS MODEL CLARITY A KEY ISSUE

0%

10%

20%

30%

40%

50%

60%

70%

Clarify BusinessModel

ClarifyTechnologyRoadmap

DeploymentIssues: Ex: Site

Acquisition,Permits

Availability OfWi-Fi Enabled

Handsets

EnsuringQuality Of

Service

Other

Series 1

Series 2

Series 3

Figure 4-2 What do you see as the key challenges faced by mobile operators if they are to deploy and monetize seamless Wi-Fi Services?

Source: - Maravedis-Rethink, Nov 2013

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35.0%

Enterprise Services

36.5%

ROI From Wi-Fi

Offload

35.0%

Location Based Services

31.5%

Wi-Fi Offload

Wholesale

26.9%

Wi-Fi Analytics

31.0%

Wi-Fi As A Metropolitan

Service

10.2%

Wi-Fi Roaming

25.4%

Advertising

17.3%

Marketing Deals In

Retail

Figure 4-1 Are you implementing Wi-Fi monetization strategies? If so, which ones? (multiple responses are allowed)

Source: WBA – Maravedis-Rethink Nov 2013

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4.6%

Other

NEW GROWTHAREAS

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Operator Wi-Fi monetization strategies

SimpleOffload

CommunityWi-Fi

SMB/VerticalPub. Indoor

PublicOutdoor

Venues/Events

OTT Services(e.g. VoWi-Fi)

Source: AT Kearney, WBA, PJP analysis

Cost reduction, Bundle to Customer

Bill to Enterprise/Municipality/Venue/Casual user.Starting to see Advertising, Engagement and Analytics

Bundle

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SK TELECOM AD PLATFORMV-1. BizWise Platform

Wi-Fi has the advantage for zone-based service due to its small coverage compared to cellular network .

• SK Telecom enables shop owners to provide the contents service in the limited area.• BizWise Platform collects Wi-Fi network information and manipulates them to

provide the various types for zone-based service by means of open Api.

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PARTNERS Source: SK Telecom, WBA presentation 2014

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SK TELECOM Wi-Fi ANALYTICS

• Wi-Fi AP in a store collects MAC addresses and RSSIs from visitor’s devices regularly and sends them to BizWise Platform server.

• Based on the collected information, store visitor Analysis server provides the number of visitors by hour or day, the duration of the stay, the ratio of revsistsand visitors age/gender.

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PARTNERS Source: SK Telecom, WBA presentation 2014

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CONCLUSIONS

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CARRIER Wi-Fi EVOLUTION SUMMARY

• HISTORY – OFFLOAD TO ADDRESS THE MOBILE DATA TSUNAMI CREATED BY iPHONE AND THE SMARTPHONE EVOLUTION.

• NO CONTROL OF USER EXPERIENCE• OFFLOAD CONGESTED CELLS

• TODAY – HOMESPOTS AND NGH DEPLOYMENTS: DUAL SSID WITH SEAMLESS EAP-SIM CONNECTION & IN SOME CASES WITH Wi-Fi CALLING

• HETNET FOR CONTROLLED OFFLOAD AND QOE MANAGEMENT (HOTSPOT 2.0 ANQP)• SEAMLESS EXPERIENCE

• STARTING – ADVERTISING-BASED (SPONSORED) NETWORKS (USUALLY WITH CONSUMER-GRADE, SMB SOLUTIONS)

• THE FUTURE – PUBLIC CARRIER Wi-Fi WITH A MIX OF ADVERTISING AND PAID SERVICES (FREEMIUM) AND VOLUME HOTSPOT 2.0

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CUSTOMER EXPERIENCE SEEN AS KEY BY MAJORITY

SEAMLESSNESS IMPORTANT

E.G. FREE MOBILE /

ILIAD(FR), AT&T (USA), BT (UK)

QUALITY OF EXPERIENCE

KEY

BOTH NATIONAL AND

INTERNATIONAL (WHEN

ROAMING)EXTENDING SEAMLESS

SERVICES TO VOICE OVER

Wi-Fi

E.G. EE, 3 AND BT (UK), T-MO, SPRINT

AND AT&T (USA),

TELSTRA (AU)

ENABLED BY LIKES OF APPLE AND

SOON SAMSUNG

MARKET REQUIREMENTS

EAP –AKA/SIM

AUTHPERFORMANCE MONITORING AND POLICY

ENFORCEMENT FOR QOE

AGGREGATE ACCESS AND

CLEARINGVOICE

OVER Wi-Fi WITH QOS

CARRIER SOLUTIONNEEDS

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REDUCED NETWORK COST

Market Requirements

ROI FROM OFFLOAD VS CAPEX/OPEX

ROI FROM REDUCED IOT ROAMING

Carrier Solution Needs

SCALABLE CLOUD BASED WIFI

LEAST COST CONNECTIVITY ANALYSIS

POLICY ENFORCEMENTFOR LEAST COST

DYNAMIC BANDWIDTH TRADING (E.G BANDWIDTH X)

CLEARING DATA AND PAYMENTS

PERFORMANCE MONITORING / ANALYSIS / BUILD / 4G VS Wi-Fi

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MONETIZATION

• Venue Based Wi-Fi

• Wholesale Access

• Neutral Wi-Fi

• Home Spots

• Advertising

• Social Spots

• Analytics

• Segmentation Analysis

• Historical Trend Analysis

• Location Based Services

Market Requirements

• EVENT AND VENUE BASED CHARGING MODELS• E.G. BAR CODES ON TICKETS, SPONSORED

DATA• ENABLING LOCAL CONTENT – E.G. VENUE INFO• CLEARING AND WHOLESALE BILLING • SEAMLESS AUTHENTICATION • CUSTOMER SEGMENTATION

• BSS DATA• USAGE DATA

• LOCATION DATA FEED• CLIENT/ANDSF

• FREE TO ACCESS IN EXCHANGE FOR RECEIVING ADVERTS

• CUSTOMER USE ANALYTICS• FOOTFALL, REVISTS, DURATION/USAGE

Carrier Solution Needs

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generic – carrier hetnet external market analysis issue 1 2 12-11_2014

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