2G, 3G and Beyond

An Understanding of Technology and Services

Agenda

Wireless Cellular Technology Overview

2G, 3G and Beyond

Market Segmentation

Network Convergence
Services

Market Trends

2G: Technology Summary

TDMA: Time Division Multiple Access

Standardized in 1990 as IS-54 Provides 3-6 times capacity increase over AMPS (1G) Peak data rate of 14.4kpbs (can bundle up to 8 channels) Introduced authentication and encryption for security Standardized in 1992, based on TMDA technology Improved battery life over TDMA GPRS peak data rates of 140 kbps; EDGE data rates of 180kbps

GSM: Global System of Mobile communications

CDMA: Code Division Multiple Access

Standardized in 1993 as IS-95 Provides 1.5-2 times capacity increase over TDMA Peak data rate of 14.4kpbs (can bundle up to 8 channels)

2G: Winners & Losers

TDMA

Marginally better capacity than GSM, marginally worse battery life No evolution path beyond 2G DEAD END !!

CDMA

Lots of hype on capacity, delivered on upwards of 2x capacity improvement over TDMA/GSM Clear evolution to 3G International Roaming and Compatibility Clear evolution to 3G Defacto Global Standard

GSM

GSM: A Success Story

Growth in China
GSM subscribers in Asia Pacific reached 650 million in March 2006
(521 million March 2005 = 24.7% annual growth)

China
GSM grew over 54 mil subs in past 12 months = over 1 million/week
Cdma added under 5 mil subs in the same period

GSM growth exceeded CDMA by 11x from March 05 to March 06

GSM: A Success Story

Growth in India
India reached almost 64 million GSM subscribers at 31.03.06

GSM has 77.5% market share

GSM additions = 22.7 million in 12 months = over 55% growth

Cdma added 8 million in same period

GSM: A Success Story

Growth in Rest of World
Africa: 146 million (62.6% annual growth)
Americas: Canada and USA 85 million (35% annual growth) Latin America and the Caribbean 144 million (92.6% annual growth) Europe: Eastern Europe 289 million (48.9% annual growth) Western Europe 426 million (8.1% annual growth)

Middle East: 51.4 million (63.5% annual growth)

Evolution to 3G
Drivers: Capacity, Data Speed, Cost
Expected market share

TDMA GSM PDC GPRS

EDGE
3GPP Core Network

EDGE Evolution

90%
HSDPA/HSUPA

WCDMA

cdmaOne

CDMA2000 1x
First Step into 3G

CDMA2000 1x EV/DO
3G phase 1

CDMA2000 EV/DO Rev A Evolved 3G

10%

2G

3G: Technology Summary

Technology Convergence on Wideband-CDMA CDMA 2000

Successor to CDMA IS-95, 4 core standards 1xRTT, 1x EV-DO, 1x EV-DV, 3xRTT 1xRTT provides 2x voice capacity increase over IS-95 and a peak data rate of 144kbps EV-DO Rev A provide peak data rates of 3.1 downlink / 1.8 uplink (800kbps typical) Successor to GSM, based on W-CDMA Peak data rates of up to 1920kbps (384kbps typical) HSDPA peak data rate of up to 14.4Mbps

UMTS

3G: Winners & Losers ??

UMTS

Huge delays (terminals availability) Exorbitant license fees Confusing pricing strategies & lack of compelling services Clear evolution path

HSxPA (Peak Data Rates), LTE (Network Simplification)

CDMA2000

Early adoption (Korea) Compelling peak data rates (EV-DO) Unclear evolution path

3xRTT? WIMAX?

UMTS Growth
Devices Penetration

315 Devices
38 Suppliers

Source: GSA survey published February 28, 2006

UMTS Growth
Subscriber Penetration
Over 55 million WCDMA subs at 31 March 06

Approaching 140% yearly growth

Over 3 million adds monthly in last 6 months

WCDMA gained over 10% share of mobile growth in Asia Q1 06

WCDMA gained 1 in 3 new connections in Western Europe in Q1 06

Global Subscriber Counts

2.5 Bn GSM 2 Bn

1.5 Bn

Note: GSM Emerging Market Handset (EMH) initiative = 80% of Global Population with Wireless Service by 2010, based on sub $30 handsets 17 countries targeted = 1.8 Bn people ; not included in current sub counts
W-CDMA

1 Bn

0.5 Bn CDMA PHS

0

2006

2007

2008

2009

2010

2011

and Beyond

Technology Convergence on OFDM (Orthogonal Frequency Division Multiple Access) WIMAX

Standardized by IEEE 802.16, evolution of 802.11 (Wi-Fi) Improved bandwidth, encryption and coverage over WiFi

Theoretical peak data rates of 70Mbps (practical peak ~2Mbps)

Improved QoS better enables applications such as VoIP or IPTV Ideal application is for last mile connectivity to the home or business Intel plans to embed WiMAX chips as part of Intel Inside
Early standardization work starts in 3GPP R8 Improved bandwidth, latency over UMTS/HSxPA Radio technology based on MIMO-OFDM, peak data rates of up to 70Mbps Network simplification

L3GTE/HSOPA

Wireless Access Evolution

Subscribers Broadband Broadband New Services Efficiency Voice Quality Portability Network Simplification Cost of Ownership

Coverage
Mobility
Voice

Capacity

Broadband

Agenda

Wireless Cellular Technology Overview

2G, 3G and Beyond

Market Segmentation

Network Convergence
Services

Market Trends

Market Segments
Voice

Mobile

Broadband WiMAX 16e HSDPA to OFDM EV-DO to OFDM 802.11a/b/g 802.11n MIMO Mesh

Cellular

2.5G
Local

Cordless
Fixed

WiFi

POTS

Dialup

WiMAX 16d DSL / Cable

Operator Objectives
Voice+ Growth to Wireless

Mobile Operators

Subscriber growth Wireless Data / 3G Wireline Substitution

Drivers
Wireless Broadband Core IP Customer Lifestyle Search for Growth

Fixed Operators

Broadband Line Growth Revenue Protection

Data+ Growth to Broadband

Cable, Satellite, ISP

Network Leverage New Market Penetration Video Triple Play

Network Goals are Similar Differentiation on Access & Business goals

Network Convergence
Internet PSTN

SGSN PDSN
IP

GGSN HA PDG

DSLAM BRAS
IP

WIMAX WLAN

WLAN

PDG

Reliable, Scalable, Secure

Network Convergence - IMS

Access Network
PDG

Applications
Multimedia Services Messaging Services Web / WAP Services Streaming Services

Media Resources
Audio/ Video

WLAN
GGSN

MRF

GPRS UMTS
ASN CSN

Service Control
HSS/ AAA Presence / GLMS Call Session Controller
MGCF (CS2000)
MG15000

TDM & Packet Interworking

R4 CDMA PSTN

WiMAX

ASN
ASGW EASGW

PDF

HSOPA OFDM/MIMO

ASG

IP/MPLS Core
BRAS

Peer IP Network

Network Enablers

Charging

Ability to provide differentiated charging based flexible usage models, including time / data / volume Ability to provide differentiated service, e.g. Olympic levels: gold / silver / bronze Ability to make personalized policy decisions based on subscriber, access and content Ability to provide secure access and clean pipes for content delivery

Quality of Service

Policy Management

Security

Agenda

Wireless Cellular Technology Overview

2G, 3G and Beyond

Market Segmentation

Network Convergence
Services

Market Trends

Market Trends

Media Convergence Multiple Play

Dual Play: High-Speed Internet & Fixed Line Triple Play: Dual Play + TV Quadruple Play: Triple Play + Wireless Challenge: Consolidated Invoice and Price Points Dual Mode connectivity

Fixed Mobile Convergence

Cellular / Cordless (DECT, ADSL/Bluetooth) WLAN / WWAN

Challenge: Technology standardization

MVNO Mobile Virtual Network Operator

Wireless Service Reseller, wholesales access from wireless operators Discount & Lifestyle MVNOs Segment, Product, Utilization Driven Challenge: Market Saturation & Service Differentiation

Market Trends (continued)

M-Commerce Electronic Commerce using Mobile Phones

Leverage ubiquity of mobile phones to make transactions Current payment methods: premium calling #s, phone bill invoice, credit card Strong interest in key industries: banking, sports & entertainment, travel, retail Challenge: Security, Terminal Capabilities, Access Speeds Effective information delivery across many disciplines: art, education, telecommunications, medicine IMS enables multimedia services for mobile users

Multimedia use of several media types to convey information

VoIP

Challenge: User Interface, Form Factor, lack of killer app Combine Mobility & Reachability Effectively bring Popularity of IM to mobile phones (AOL, Yahoo!, MSN, Skype) Opportunity for standardization & interworking based on SIP/SIMPLE Challenge: Standardization & always on connectivity

Presence Always on, always connected

Market Trends
The next 5 years in North America

More substitution of mobile and wireless technologies for fixed lines

30% US homes will have only cellular or broadband access, driven by youth who see no value in fixed lines for telephony
Due to consolidation, better pricing and marketing plans, higher quality networks Driven by popularity, proliferation of smartphones, and ease of setup and use Defined as phones that run open OSs, e.g. Microsoft, driven by business users, Mobile advertising needed for added revenue generation; successful use will require balancing intrusive nature of unsolicited ads & value to the end user

Lower churn

More mobile e-mail

Greater adoption of smartphones Increased mobile advertising

Market Trends
The next 5 years in North America

The growth of mobile entertainment

Handsets are increasing designed for entertainment with integrated cameras, MP3 players trend will be to partner with content providers to drive usage (Google, Yahoo!, Apple)
North America will become increasingly saturated will drive price competition, flexible and targeted tariff plans, and differentiation Will become common network infrastructure, will enable fixed and mobile service bundles

Greater market penetration by mobile technologies and slower connection growth

More converged services based on the IP Multimedia Subsystem (IMS)

The rise of mobile virtual network operators (MVNOs)

Will add value by offering differentiation

Increased email, as well as presence and location functions, will drive up data usage

More mobile data applications for enterprises

Services

Prepaid

Segment driven, will increase with MVNOs

Remains extremely popular, key driver is use of short-code numbers Segment driven, slow take amongst general consumers Slow adoption due to user interface, will increase due to interoperability improvements and integration with m-commerce Ring-tones is #1 revenue generator but slowing, Gaming is on the rise Video clip services are emerging, pricing is typically subscription-based

SMS

Push-To-Talk MMS Downloads

Video

Music

Music stores increasingly common, need competitive pricing, will leverage MP3 integration
Satellite radio offers resell XM and Sirius CTIA recommendation for socially responsible access to content; penetration expected to start in 2008

Radio Adult