uk short mobile 2008

8/14/2019 UK Short Mobile 2008

1/22

ap ng regu a on or amobile wireless world

David Stewart Com etition Polic Director

20 March 2009


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Content

Ofcoms Mobile Sector Assessment - scope

The UK mobile sector today in 7 slides

The UK mobile sector tomorrow in 5 slides

Ofcoms Mobile Sector Assessment emer in findin s

1


3/22

Ofcom is re-assessing our approach to mobile issues

Principal Should Ofcom revise its approach to regulation of the mobile sector, in order to

question

Primaryuestions

What are the How are What is the scopeWhat are themp ca ons o

market changefor mobile and

wireless

consumers andcitizens affected

by developments

in the mobile

forderegulation, com

petition and

innovation in the

purposes of

mobileregulation, and

where should itsserv ces sector? mobile sector?focus lie?

2

Phase I consultation focused on these three questions Phase II


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Content

Ofcoms Mobile Sector Assessment in 5 slides

The UK mobile market today in 7 slides

The UK mobile market tomorrow in 5 slides


3


5/22

Total UK mobile take-up

82.688.0

99.5109.1

127.2116.3 122.0

80

100

lions)a

100 ion

65.5 69.8 73.276.340

60

iptions(m

il

50100popu

lat

Contract

Connections

49.5 52.8.

0

20

Subsc

0

per per 100

population

Source: Ofcom / operatorsMobile: 92%

By household (Q4 08)

4

Note: Includes estimates where Ofcom does not receive data from operators

Internet: 67%

Broadband: 60%


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UK telecoms industry retail revenue

2.6 2.72.8 2.826.2

27.6 28.429.1 30.4 30.5

30bn)

3.1%

CAGR

4.1%

10.5 11.9 13.0 13.8 15.0 15.3

2.22.6 3.0 3.3

. .2.3 .

20

ailr

evenu

e( .

7.8%

11.2 10.6 9.8 9.4 9.3 9.1

0

2003 2004 2005 2006 2007 2008*

Ret

-4.1%

Fixed calls & access Mobile voice & data Internet & broadband Corporate data services

Source: Ofcom / o erators

5

2008 data includes estimates for 2008

Some historic figures have been revised due to reallocation of revenues


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Share of total UK fixed and mobile telecoms connections

15.6 15.1 14.9 14.8 14.6 14.6

3.5 3.7 3.7 4.5

15.314.814.17.5 8.7 11.1

80%

100%

ections

-1.31%

CAGR

5.3 5.0

13.7 14.0 14.5 13.9 14.8 14.8

13.8 14.1 15.0 15.9 16.0 16.9

. . 10.5

10.6 10.9 10.9

40%

60%

ion

ofco

n

4.21%

1.48%

- 0.37%

32.7 29.4 26.0 22.8 20.8 18.8

. 4.2 4.2 4.2

0%

20%

Propor

- 10.46%

BT Cable Vodafone O2 T-Mobile Orange 3UK Other

Source: Ofcom / operators

6

Note: Includes estimates where Ofcom does not receive data from operators; other includes CPS, WLR,

Mobile ISP and MVNO subscribers in additional to fixed OLOs. Some historic figures have been reviseddue to reallocation of connections.


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Comparison of wholesale and retail market shares2004 - 2008

Retail market share of base(Pre and post pay)

Wholesale market share of base

25%

30%

O2

Vodafone

25%

30%

O2

Vodafone

T Mobile

15%

20%

areofsubscrptions

Orange

T Mobile15%

20%

re

ofsubscriptions Orange

5%

10%Sh

Virgin

Three

Tesco

5%

10%Sha

Three

0%

2004

Q1

2005

Q1

2006

Q1

2007

Q1

2008

Q1

BT 0%

2004

Q1

2005

Q1

2006

Q1

2007

Q1

2008

Q1

7

ource: com opera ors



9/22

xe an mo e ca vo umes

226 228 231 233247 255

300

ons)a 2.5%

15 15 17 21 27 31

61200

nutes(b

illi .

16.3%

167 164 160 151 148 145

0

Callm

i

-2.8%

2003 2004 2005 2006 2007 2008*

Fixed Mobile pre-pay Mobile contract

8

* 2008 data includes fixed-line estimates for Q4 2008


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u oun vo umes

94100

billions)

SMS volumes(billions)

84.5

60

undSMS

(

Monthlyoutbound SMSper connection

17.6 22.226.8 35.2

45.862.3

0

20Outbo

Monthlyoutbound SMSper capita

2002 2003 2004 2005 2006 2007 2008

Source: Ofcom / operators

9


Some historic figures have been revised due to new data received.


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The changing consumer behaviour

A significant proportion of consumers uses content ontheir phone

% of people using mobile functions

13%

15%

17%

34%

41%

Diary or organiser

Upload pictures to PC

Games

Store photos

Camera

9%

9%

11%

11%

12%

FM radio

Send and receive video clips

Internet access

Video camera

MP3

4%

7%

8%

4%Download applications

Doanload video clips

Email access

Instant Messenger

1%

2%

2%

0% 10% 20% 30% 40% 50%

Podcasts

Walkie-talkie

Video calling

10

Source: Ofcom research, Feb/Mar 2008Base: All who own a mobile phone


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Content





11


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The underlying networks are moving towards NGNov ng rom convergence a e core, owar s en o en ne wor s

Phase I:Core convergence

Phase II:Edge convergence

Phase III:Full convergence

Fixed worldTDM voicexDSL data

AccessIP over

IP extending to

TDM voice

xDSL data

High-capacityIP/MPLS core

Core

Converged core

LE/node (21 CN)

Circuit switched voicePacket switched data

CoreLTE/WiMAX

IP over air radio

networks

Mobile world

GSM / GPRSUMTS

Access

HSDPAHSUPA

interface)

12

Today 2011-2014 2015+


14/22

The mobile value-chain is changing

NetworkEquipment MobileNetworkDevice Distributor

Vendor

Tower &Backhaul

Operator

MobileService

ContentProvider

Geo

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Internet brands are increasing their presence in themobile market

Online brands in the mobile space Mobile internet brands

14


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Mobile will be more like fixed internet, but also different

Future: separation of content and pipe?Today: mobile network at the centre

ApplicationsServices

All applications (includingvoice, SMS ringtones etc) aredelivered using networkintelligence via the mobileoperators network

Applications are able to emulatenetwork functions eg: Mobile VoIP,Apple app store billing to credit card

ApplicationsServices

Mobile Network Billing is managed by thenetwork

End-users are able to choose and pay

for different elements separately: Pay the network provider foraccess

Pay application provider forcontent or service rovided or

Mobile Network

End-userdevice

End user devise is locked tospecific configurations that thenetwork can control

advertisers pay)

Any USB device

End-userdevice

Regulation focused on mobile

15

Customer relationship / service delivery

operators,

Payment flow


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For consumers, this could mean more choice but alsomore complexity

Possible Implications for consumers

Consumer outcomesNetwork

competition maybe less intense

Retail competition

remains fierce

+ More complextariffs, devices, services

and services inc.mobile internet

Larger bundles for

- Mobile remains but servingdifferent needs, with more

vo ce a a

Services split fromdevices (SIM-only, new

non-handsets)

Bundling and

complexityincreases

switching costs

Confusion for others

More scope formis-selling and

scams from wider

pool of suppliers

More informationavailable to consumers

increase, but competitiveimpact of fewer networksunclear

16


18/22

Content





17


19/22

Emerging findings

Overall

Role of competition

Role of regulation

Innovation

Investment

18


20/22

Actions and implications

Competition

Consumers

Access

S ectrum

Coverage

Termination rates

19


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We are consulting on options for reform of MTRs

Current charge control ends in 2011

MSA sees increasing pressure after 2011 from: Convergence Competition (including spectrum release)

Commissions Recommendation issued

6 options considered:

Complete de-regulation LRMC (similar to Recommendation) Capacity-based charging (similar to internet access) Reciprocity btw fixed and mobile (similar to US)

20

True bill-and-keep (similar to internet peering)


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uk short mobile 2008

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