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MONETIZE YOUR NETWORK
DIFFERENTIATE & CREATE VALUE FOR YOUR CUSTOMERS
Iulian COSTEA – Head of Customer Marketing Middle East, Alcatel-lucent
iulian.costea@alcatel-lucent.com



December 2012

                                                                        COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                                   ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                                             INSTRUCTION
AGENDA


1. TELECOM INDUSTRY TRENDS – OPPORTUNITY OR CHALLENGE

2. THE RIGHT STRATEGY TOUCHES BOTH DIMENSIONS OF YOUR BUSINESS –
   TOP LINE AND BOTTOM LINE

3. ADDRESS THE REVENUE DIMENSION BY CREATING VALUE FOR YOUR
   CUSTOMERS

4. CONTROL YOUR CAPEX/OPEX AND DECREASE PER-BIT DELIVERY COST

5. CONCLUSION




                                                     COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                          INSTRUCTION
INDUSTRY TRENDS

 FIXED BROADBAND               MOBILE                                                       WI-FI                                                   M2M
 CONNECTIONS                   CONNECTIONS                                                  PUBLIC SPOTS                                            DEVICES
 +30 %                        +32 %                                                        +346 %                                                   +990 %
                                                       7.3 Billion
            691                5.5 Billion
                                                                                                                      5.8 Million
   532      Million                                                                           1.3 Million                                                       12
                                                                                                                                                      1.1
  Million                                                                                                                                                      Billion
                                                                                                                                                     Billion



  2011      2015                   2011                     2015                                 2011                    2015                         2011      2015


 APPLICATIONS                  SMARTPHONE                                                   PUBLIC CLOUD                                            MOBILE VIDEO
 DOWNLOADS                     SALES                                                        REVENUE                                                 USERS
 +129 %                       +134 %                                                       +98 %                                                    +879 %
            41.7                                              1
                                   428                                                                                                                          2.4
  18.2      Billion                                        Billion
                                  Million                                                     89.4                  177 Billion                       429      Billion
  Billion
                                                                                              Billion                                                Million


  2011      2015                   2011                     2015                                 2011                    2015                         2011      2015



                                                           COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                      ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                                INSTRUCTION
BROADBAND AND INTERNET ACCESS
ARE DRIVING FIXED AND MOBILE CONNECTIONS
                                 GLOBAL CONNECTIONS 2010- 2016                                                                            MOBILE DATA TRAFFIC FOR NAR, EU & APAC                                       BY 2016
                                                                                                                                                        2011- 2016
                                                                                                                                  16000                                                                          MOBILE DATA TRAFFIC
BILLIONS OF CONNECTIONS




                             9                                                                                                                                                                                        25x TIMES
                             8                                                                                                    14000
                             7                                                                                                                                                              2016
                                                                                                                                  12000
                             6                                                                                                                                                                                   3G/4G CONNECTIONS




                                                                                                                       PB/MONTH
                             5                                                                                                    10000                                                                          99% OF TRAFFIC IN NAR
                             4
                                                                                                                                  8000
                             3
                             2                                                                                                    6000                                                                                 ON W i-Fi
                                                                                                                                               2011                                                               27% OF MOBILE DATA
                             1
                                                                                                                                  4000
                             0
                                  2009    2010     2011   2012    2013      2014      2015      2016
                                                                                                                                  2000                                                                            VIDEO STREAMING
                                  Fixed subscriptions                 Mobile connections                                                                                                                           50% OF TRAFFIC
                                                                                                                                     0
                                  Fixed broadband connections         Mobile broadband connections
                                                                                                                                     2011        2012             2013             2014            2015   2016
                                                 CAGR (2011-2015)                                                                         EU   APAC      NAR
                                          Fixed Broadband Connections: 9 %
                                          Mobile Broadband Connections: 32 %




                          INTERNET TRAFFIC DRIVEN BY SERVICES                                                                                           4.8 BILLION BROADBAND                             7 BILLION PERSONAL
                                                                                            REAL-TIME ENTERTAINMENT
                          LIKE NETFLIX, HTTP, YOUTUBE                                                                                                   CONNECTIONS BY 2015.                              MOBILE DEVICES BY 2016
                                                                                            ON MULTIPLE SCREENS
                                                                                                                                                        OVER 80% ARE MOBILE
                          Source: Sandvine, Gartner, Ovum 2012, Traffic Index, 2012 - Bell Labs Modeling

                                                                                                              COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                                                                         ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                                                                                   INSTRUCTION
COMMUNICATIO                                                         TRANZACTIONAL
                                                      N SESSIONS                                                            SESSIONS




                                     COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                          INSTRUCTION
THE NETWORK IS
THE LAUNCHING
PAD BUT THE
EXPERIENCE IS
THE PRODUCT.
        CONVERGENCE                                                                                                      COMPETE IN
                                                                                                                         QUALITY OF
                             OF EXPERIENCE
                                                                                                                         EXPERIENCE




Source: Strategy Analytics
                                                                     COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                                ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                                          INSTRUCTION
THE NETWORK AND BUSINESS MODEL ARE UNDER PRESSURE
DRIVEN BY MASSIVE GROWTH IN VIDEO, SIGNALING, AND OTTs

          • 25X DATA TRAFFIC BY 20161
                   2/3rd IS VIDEO STREAMING OR VIDEO
                    COMMUNICATION

          • SIGNALING TRAFFIC EXPLODING1                                                                                                           How to grow
                   DRIVEN BY 22.6% SMARTPHONE CAGR                                                                                                  and profit
                   46B APPLICATION DOWNLOADS THOUGH 2016                                                                                              in this
          • OTT MESSAGING WILL OVERTAKE SMS/MMS                                                                                                    environment?
            WITH 20B MESSAGES ANNUALLY BY 20162

          • 200B OTT VOIP MINUTES ANNUALLY BY 20163

    From 2012 to 2020, “OTT VoIP will cost the global telecoms                                                “In 2012, Ovum forecasts that mobile operators will lose
    industry $479bn in lost cumulative revenues, which represents                                             $23.2bn in SMS revenues to over-the-top (OTT) messaging
    6.9% of cumulative total voice revenues” - Ovum                                                           services. By 2016, Ovum expects this number to increase to
                                                                                                              $54.4bn.” - Ovum
Sources: 1 Bell Labs Research, 2 Portio Research, 3 Juniper Research

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                                                                                                       INSTRUCTION
EXPLODING DATA TRAFFIC AND LTE CREATE NEW
OPPORTUNITIES

 • ALIGN USAGE AND PRICE WITH NETWORK
  COSTS
                                                                                                                          How to make
 • BROADEN THE SUBSCRIBER BASE
                                                                                                                           the most of
 • INCREASE CUSTOMER LIFETIME VALUE
                                                                                                                              these
                                                                                                                         opportunities?
 • BOOST CUSTOMER QUALITY OF EXPERIENCE

 • CHANGE OTTs FROM COMPETITORS TO
  PARTNERS

 • OPTIMIZE NETWORK EFFICIENCY                     COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
              ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                        INSTRUCTION
AGENDA


1. TELECOM INDUSTRY TRENDS – OPPORTUNITY OR CHALLENGE

2. THE RIGHT STRATEGY TOUCHES BOTH DIMENSIONS OF YOUR BUSINESS –
   TOP LINE AND BOTTOM LINE

3. ADDRESS THE REVENUE DIMENSION BY CREATING VALUE FOR YOUR
   CUSTOMERS

4. CONTROL YOUR CAPEX/OPEX AND DECREASE PER-BIT DELIVERY COST

5. CONCLUSION




                                                     COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                          INSTRUCTION
TELECOM SERVICE PROVIDERS – DRIVING FORCES
 TOPLINE AND BOTTOM LINE PRESURES
                                        PROTECT YOUR REVENUE

COMPETITION PRESURE                                                                                                                  OTT PRESURE
 • PRICE EROSION                                                                                                                        • LOST REVENUE ON VALUE
                                                                                                                                        ADDED SERVICES
 • TECHNOLOGY LEADERSHIP
                                                                                                                                        • PER-BIT DELIVERED PRICE
 • INNOVATION AS
 DIFFERENTIATION FACTOR                                                                                                                 • VALUE CREATION
                                                            TELECOM
                                                            SERVICE
                                                           PROVIDERS

COST PRESURE                                                                                                                        REGULATORY PRESSURE
 • CAPEX & OPEX REDUCTION                                                                                                               • SPECTRUM REGULATION
 • PER-BIT DELIVERY COST                                                                                                                • LICENSING CRITERIAS


                                               REDUCE YOUR COST
                                                         COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                    ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                              INSTRUCTION
Over-The-Top THREAT
                               “10% POINT INCREASE IN SMARTPHONE PENETRATION COULD COST EUROPEAN OPERATORS
                                                                    BETWEEN
                                     0.5% AND 0.6% IN SERVICE REVENUES FROM VOICE AND MESSAGING” ( INFORMA)
OTT PLAYERS
                                                                             ONLINE
                                APPLICATION
                                                                            PORTALS                                   DEVICE AND OS VENDORS                                  SEARCH PROVIDRS
                               DEVELOPERS
                                                                        E.g. Tencent, MSN,                        E.g. Apple, Google, Samsung, Microsoft                       E.g. Google, Baidu
                           E.g. WhatsApp, Nimbuzz
                                                                              Yahoo!

                                                                                                            SOCIAL                                  CONTENT
                           INTERNET TV                              ONLINE                               NETWORKS                                 PRODUCERS                      CE VENDORS
                            PROVIDERS                             RETAILERS                              E.g. Facebook,                        E.g. Disney, Universal,         E.g. Sony, Samsung
                           E.g. Hulu, Netflix                 E.g. Amazon, Alibaba                           Cyworld                              Warner Brothers


                                             CONSUMER SERVICES
                     VOICE, MESSAGING, TV AND VIDEO, GAMES, MUSIC, COMMERCE, SOCIAL MEDIA

TELCO RESPONSE
       VALUE ADDED                 SERVICE                                            BECOME AN ventures,
                                                                                               Joint                                    SMART
         SERVICES                PARTNERSHIPS                                         OTT PLAYER
                                                                                              acquisitions, and                       ENABLEMENT                             CONNECTIVITY
                                                                                            investments in OTT
                           • PARTNER TO OFFER                              • JOINT VENTURES,        services      • SMART ENABLEMENT                                     • MANAGE CONNECTIVITY TO
• DIFFERENTIATE WITH VAS   THIRD-PARTY OTT SERVICES                        ACQUISITIONS, AND integration with and OTT SERVICES
                                                                                                                  OF                                                     OTT SERVICES AND PLAYERS
                                                                                          Deep
• USE TELCO NETWORKS TO    • PROVIDE THIRD-PARTY OTT                       INVESTMENTS INadoption of OTT services,
                                                                                           OTT                    • LEVERAGE TELCO ASSETS                                • DEFENSIVE STRATEGIES –
 PROVIDE VAS               SERVICES AS PART OF THE                         SERVICES                               SUCH AS BILLING, NETWORK                               CAPPING OR “OTT TAXES”
                                                                                          distribution, and business
• HARNESS THE WEB FOR      TELCO OFFERING                                  • DEEP INTEGRATION WITH                APPLICATION                                            • OFFENSIVE STRATEGIES –
                                                                                                     models
OTT SERVICES               • ENGAGE WITH OTT                               AND ADOPTION OF OTT                    PROGRAMMING                                            MANAGED CONNECTIVITY/
                           PLAYERS TO INTEGRATE                            SERVICES, DISTRIBUTION,                INTERFACES, CUSTOMER                                   WHOLESALE
                           SERVICES                                        AND BUSINESS MODELS                    INSIGHTS/ANALYTICS, AND
                                                                                                                  SECURITY TOOLS

                                                                        COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                                   ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                                             INSTRUCTION
TWO BUSINESS DIMENSSIONS – DEMAND & SUPPLY
CREATE VALUE BY ADDRESSING THEM BOTH THROUGH AN ORCHESTRATED
STRATEGY
               SUPPLY                    DEMAND
       • INTANGIBLE ASSETS                                               • VALUE CREATION
       • AIRTIME                                                         • REAL TIME SERVICES
       • SPEED                                                           • FLEXIBILITY
       • CAPACITY                                                        • RELIABLE SERVICE
       • CONNECTIVITY                                                    • USER EXPERIENCE
       • CUSTOMER                                                        • REWARD
         EXPERIENCE

                                                                                 VOLATILE




          PERISHABLE


                                                       COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                  ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                            INSTRUCTION
AGENDA


1. TELECOM INDUSTRY TRENDS – OPPORTUNITY OR CHALLENGE

2. THE RIGHT STRATEGY TOUCHES BOTH DIMENSIONS OF YOUR BUSINESS –
   TOP LINE AND BOTTOM LINE

3. ADDRESS THE REVENUE DIMENSION BY CREATING VALUE FOR YOUR
   CUSTOMERS

4. CONTROL YOUR CAPEX/OPEX AND DECREASE PER-BIT DELIVERY COST

5. CONCLUSION




                                                     COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                          INSTRUCTION
DESIGN AND DELIVER A MARKET-
LEADING CUSTOMER EXPERIENCE



                CUSTOMER                                                     ANALYTICS                                               EXPERIENCE
               MANAGEMENT                                                                                                            OPTIMIZATION




                                                                          CONSULTING



                                            COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
       ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                 INSTRUCTION
CUSTOMER
MANAGEMEN
T: SIMPLIFY
CUSTOMER
INTERACTIONS
TO IMPROVE
PROFITABILITY.                                   TOUCHPOINTS                                            SERVICE                             FUNCTION




                                                        MODEL                                                                     CHANNEL




                                              COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
         ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                   INSTRUCTION
ANALYTICS:
USE
CUSTOMER
INSIGHTS TO
IMPROVE                                          Quality                               Care                            Value          Customer
                                                                                                                                     Satisfaction

BUSINESS
PERFORMANCE
.



                                            COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
       ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                 INSTRUCTION
OPTIMIZATION
: CREATE AN
EXPERIENCE
THAT
POSITIVELY
INFLUENCES
USAGE
BEHAVIOR
TOWARDS
STATES OF
HIGHER
PROFITABILITY
                                             COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
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                                                                  INSTRUCTION
CONSULTING: DEVELOP A PRIORITIZED ACTIONABLE
PLAN TO IMPROVE THE CUSTOMER EXPERIENCE.




     Deep Expertise                                    Patented Methodology for CSPs                                                  A Prioritized, Actionable Plan




                                                           COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
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                                                                                INSTRUCTION
MOBILE MONETIZATION
FRAMEWORK


                                        COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
   ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                             INSTRUCTION
MOBILE MONETIZATION FRAMEWORK


                                                                                 1 ST STEP: VOLUME BASED - ASSIGN VALUE TO
                                                                                 BANDWIDTH


                                                                                 2 ND STEP: VALUE BASED - START TO MEASURE
                                                                                 AND ACCOUNT FOR DATA, BASED ON THE
                                                                                 APPLICATION THEY ARE USING (DPI, POLICY)


                                                                                 3 RD STEP: SEGMENTATION/DISCRIMINATION -
                                                                                 USING SMARTS FROM POLICY AND CHARGING TO
                                                                                 CREATE SERVICE BUNDLES AND PERSONALIZED
                                                                                 OFFERS THAT CAN ENCOURAGE MORE USAGE OF
                                                                                 THE INFRASTRUCTURE


                                                                                 4 TH STEP: NETWORK APIS - ACCESS NEW
                                                                                 BUSINESS MODELS


                                                 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
            ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                      INSTRUCTION
AGENDA


1. TELECOM INDUSTRY TRENDS – OPPORTUNITY OR CHALLENGE

2. THE RIGHT STRATEGY TOUCHES BOTH DIMENSIONS OF YOUR BUSINESS –
   TOP LINE AND BOTTOM LINE

3. ADDRESS THE REVENUE DIMENSION BY CREATING VALUE FOR YOUR
   CUSTOMERS

4. CONTROL YOUR CAPEX/OPEX AND DECREASE PER-BIT DELIVERY COST

5. CONCLUSION




                                                     COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                          INSTRUCTION
TRAFFIC VS REVENUE DICHOTOMY


HOW CAN OPERATORS MANAGE
DATA GROWTH AND INCREASE
REVENUE?
        INCREASE REVENUE:
     • Deliver personalized services
     • Accelerate time to market
     • Develop new business models


        REDUCE COSTS:
     • Scale and manage capacity
     • Reduce cost of operations
     • Environment Sustainability


DATA TRAFFIC GROWTH AND DECLINING OR FLAT ARPU PUTS SERVICE PROVIDER PROFITABILITY
                                     AT RISK

Source: Informa Global mobile network traffic and ARPU Forecast (2011)
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                                                                                                 INSTRUCTION
HIGH LEVERAGE NETWORK
A PLATFORM FOR INNOVATION THAT REALIZES THE VALUE OF THE
NETWORK            • CREATE VALUE
                                      • PERSONALIZATION
                                                                                                       INCREASE REVENUE
                                     VOLATILE
                                                                                                       • DELIVER PERSONALIZED
                                                                                                       SERVICES
   Revenue                                                                                             • ACCELERATE TIME-TO-MARKET
                                                                                                       • DEVELOP NEW BUSINESS
                                                                                                       MODELS


                  PERISHABLE                                                                           REDUCE COSTS
                                                                                                       • SCALE AND MANAGE CAPACITY
   Cost
                   • HIGH COST                                                                         • REDUCE COST OF OPERATIONS
                   • LOW UTILIZATION
                                                                                                       • REDUCE FOOTPRINT
 A CONVERGED, SCALABLE, INTELLIGENT EFFICIENT ALL-IP NETWORK THAT DELIVERS BANDWIDTH AT THE LOWEST COST
 PER BIT.

                                                              COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                         ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                                   INSTRUCTION
NETWORK
CONVERGENCE
STRATEGY

                                        COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
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                                                             INSTRUCTION
BUSINESS CASE OVERVIEW

PURPOSE
 ­ A generalized service provider business model that evaluates an Alcatel-Lucent IMS overlay onto an existing
   LTE network, inclusive of a full range of IMS services such as VoLTE, RCS, messaging, and video
   communications. This is compared to a network which overlays Circuit Switched Fallback (CSFB) for voice.

 OBJECTIVES
 ­ Two primary modes are evaluated.
   1.   Mode 1: Launch with LTE laptops, then add smartphones and mobile internet devices (e.g., tablets) in Year 3
   2.   Mode 2: Launch with all 3 types of devices – LTE laptops, smartphones, and mobile internet devices


   In addition to IMS versus CSFB, a migration from CSFB to IMS in Year 3 was studied


 SERVICE PROVIDER
 ­ A Tier-1, French service provider who already has an LTE network or who has decided to use LTE, which is
   considering whether to use IMS’ full suite of services or CSFB’ voice-centric service.




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                                                                                           INSTRUCTION
DEMAND: MODELING WILLINGNESS-TO-PAY BASED ON PRIMARY
MARKET RESEARCH
                                Converged Comm.                      LTE/IMS                 LTE /CSFB                                   Video Comm. & Location                     LTE/IMS   LTE /CSFB
                          Messaging                                       √                         √                             Enhanced Mobil Video                                √
                          Multi-Screen                                    √                         √                             Multi-Party Video Call                              √
                          Mobile/PC Synch                                 √                         √                             Mobile Video Monitoring                             √
                          One-number Voice                                √                                                       Location-based Services                             √          √
                          Enhanced NAB                                    √                                                       Live Messaging                                      √
                          Presence enabled Calendar                       √                                                                           Relative Market Value           5x         1x
                          Video share & calling                           √
T E K R A M RE MUS N OC




                                   Relative Market Value                16x                        1x


                                Converged Comm.                      LTE/IMS                 LTE /CSFB                                   Video Comm. & Location                     LTE/IMS   LTE /CSFB
                          Unified Messaging                               √                        √                              Mobil Collaboration                                 √
                          Mobile Extension                                √                                                       Multi-Party Video Call                              √
                          Video Conferencing                              √                                                       Wireless BB Branch Office                           √
                          Video Mail                                      √                                                       Location-based Services                             √          √
                          Web Conferencing                                √                                                       Interactive Mobile Kiosk                            √
                          Location Services                               √                        √                                                  Relative Market Value           7x         1x
                          Enhanced NAB                                    √
   RP RET NE




                                   Relative Market Value                 7x                       1x                                         Source: ALU Primary Market Research, 2009

                                                      IMS enables a richer set of services with a higher market value
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                                                                                                                INSTRUCTION
PROVIDING A NEW CONVERSATION EXPERIENCE FOR 4G LTE
SUBSCRIBERS




                                                    versus




  CSFB:                                                                     IMS:
  LEGACY VOICE, MESSAGING                                                   IMS VOICE, VIDEO, RCS, MESSAGING;
                                                                            APIS FOR MANY APPS, QUICKLY



 DIRECTLY LAUNCHING IMS ONTO AN EXISTING LTE NETWORK PROVIDES SUPERIOR ECONOMIC RESULTS,
                     WHEN COMPARED TO CSFB OR A CSFB-TO-IMS MIGRATION

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                     ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                               INSTRUCTION
COMPETITIVE TRANSFORMATION – IMS versus CSFB



                                  TELCOS NOW DRIVEN BY
                                  COMPETITION FROM ADJACENT
                                  MARKETS
                                                                                                                                                Customer experience
                                 NEW METRICS ARE NEEDED
                                 (EXPERIENCE, INNOVATION,                                                                                   IMS
                                 EFFICIENCY) BECAUSE ONLY
                                 FINANCIAL, TECHNICAL, AND                                                                        Innovation                               Efficiency
                                 NETWORK METRICS NO LONGER                                                                  IMS                                         IMS
                                 PAINT THE COMPLETE PICTURE
                                                                                                                                                                         CSFB

                                   IMS ENABLES COMPETITIVE                                                                    THE “TRANSFORMATION TRINITY” (1)
                                    TRANSFORMATION;
                                   CSFB TAKES CARE OF ONLY
                                    THE NETWORK’S EFFICIENCY

 (1)   “What do transforming telcos measure?” Ovum, 30 June 2010 {includes BT, DT, FT, KPN, Telefonica, TNZ, Telstra

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                                                                                                    INSTRUCTION
HOW IS 4G LTE USED?


OPERATORS USE LTE’S …                                                                    … TO PROVIDE MOBILE DATA SERVICE WITH

 High bandwidth with low latency                                                         Faster speed
 Per-service QoS                                                                         Improved experience
 Spectral and CapEx efficiency improvement                                               Multiple concurrent sessions
           THAT’S THE DATA STRATEGY, BUT WHAT ABOUT COMMUNICATION SERVICES?

                         IMS provides
                                                                                                                              CSFB provides
 Voice and beyond
                                                                                                            Voice, only voice
 Connect, share, & organize conversations
                                                                                                            Minimizes near-term spending
 Full LTE utilization: all-IP, multi-application concurrency,
                                                                                                            Perpetuates 2G/3G’s CS + PS duality
  video, …
                                                                                                             Cost-centric strategy
  User-centric strategy


                                            IMS PROVIDES COMMUNICATIONS THAT FULLY UTILIZE 4G LTE’S PERSONAL,
                                                               UNTETHERED BROADBAND

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                                                                                         INSTRUCTION
WHY IS VoLTE ESSENTIAL FOR 4G LTE?

                                                                                                                                                                             OTT/ACP
                                                                                                                             VoLTE                            CSFB
Subscriber’s service                                                                                                                                                         Providers
                                                                                                                        New conversations                    Voice-centric   Many servi ces


               Global roaming w/ full feature suite                                                                                                                             X
Standards’
value
               Global interoperability w/ full feature suite                                                                                                                    X
               End to end QoS; also Emergency calling                                                                                                                           X
               All-IP path enables video-comms, etc.                                                                                                             X               
Multimedia     Multiple concurrent services enabled by 4G LTE                                                                                                    X               
               Blend voice with video, web, RCS-like, etc.                                                                                                       X               
               Simultaneous voice and 4G LTE data service                                                                                                        X               
Voice          Minimal voice call setup delay                                                                                                                    X               
               Evolved voice: HD, new features, clickable URL, etc.                                                                                              X               

        VOLTE ENABLES COMPETITIVE VOICE AND IS FOUNDATIONAL FOR FURTHER SERVICES


                                                                    COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                               ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                                         INSTRUCTION
GO TO MARKET, QUICKLY: A COMPETITIVE LAUNCH STRATEGY

   2011                    2012                                            2013

                                                       Entice subscribers to IMS/LTE, because the service is not available in 3G.
                 LTE video                             Video calls, sharing, storage lockers, social networking, multiscreen, etc.
                                                       Across LTE, fixed, and web portals.
                 communications

                                                                                                                   2nd line VoLTE. Price low or free; no incentive to switch to alternative voice
                                                                                                                    providers.
             VoLTE: 2nd line                                VoLTE: mass market                                     Mass market VoLTE. When ready, sell at a premium. Unbeatable appeal the
                                                                                                                    OTT can’t match due to geographic coverage (legacy handover), global
                                                                                                                    service via roaming, global service inter-operability for all-IP services (HD
                                                                                                                    audio, video), QoS, etc.


                                                                                                RCS spans 3G, fixed, and the web; also LTE.
                   Collaboration & messaging                                                    Wraps comms with collaboration and messaging.




     Application Enablement                        Quickly create and deploy many apps
                                                   Innovative apps for the network                                           Convergence
                                                                                                                                                                  Fully embrace the subscriber,
                                                                                                                                                                   everywhere



                      Use IMS to define the early LTE communications market, fueling profits.
                      Then expand into mass services, having won the initial battles.

                                                           COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                      ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                                INSTRUCTION
COMPARING THE TOTAL COST OF OWNERSHIP
                                                                                                                                                 Total Investments Comparison
                                  Investments Comparison
      25                                                                                                                     80
            LTE IMS
                                                                                                                             70
      20    LTE CSFB                                                                                                         60

                                                                                                                             50
      15
                                                                                                                             40




                                                                                                                   M
                                                                                                                   O
                                                                                                                   U
                                                                                                                   R
                                                                                                                   E
                                                                                                                   S
 M
 O
 U
 R
 E
 S




      10                                                                                                                     30

                                                                                                                             20
       5
                                                                                                                             10

       0                                                                                                                      0
           Year 1        Year 2         Year 3           Year 4            Year 5            Year 6                                               LTE IMS                          LTE CSFB


                                                                                                                                                       Total Expenses Comparison
                                                                                                                            1,200


                                  Expenses Comparison                                                                                                                       Device Subsidies
                                                                                                                            1,000
     400                                                                                                                                                                    Opex

     350                                                                                                                                                                    Sales & Marketing
            LTE IMS
                                                                                                                              800
                                                                                                                                                                            General & Administrative
     300    LTE CSFB
     250




                                                                                                                        M
                                                                                                                        O
                                                                                                                              600




                                                                                                                        U
                                                                                                                        R
                                                                                                                        E
                                                                                                                        S
     200
M
O
U
R
E




                                                                                                                              400
S




     150

     100
                                                                                                                              200
     50

      0                                                                                                                           0
           Year 1        Year 2         Year 3           Year 4            Year 5            Year 6                                                 LTE IMS                           LTE CSFB




                       IMS’ TCO IS MODERATELY HIGHER                                                                                     Pro-rated Device Subsidies dominate any other
                                                                                                                                         investment or expense


                                                                             COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                                        ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                                                  INSTRUCTION
NETWORK COST
OPTIMIZATION


                                        COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
   ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                             INSTRUCTION
CAPACITY IS WASTED IN MOBILE NETWORKS TODAY


 • A study Alcatel-Lucent conducted for a major Tier-1 operator in North America revealed:
  ­ 68% average base station busy hour utilization
  ­ The busy hour is unpredictable. It differs from base station to base station and even differs day to day
    for the same base station
  ­ 13% daily traffic in busy hour
  ­ 27% base station average utilization
    outside the busy hour during the                                                                           Percentage of daily load in busy hour of cell
    productive day (8 a.m. to midnight)                                                                 30%
                                                                                                        25%
                                                                                                        20%
  UNPARALLELED DEGREE OF WASTE                                                                         15%

  LOTS OF CAPACITY FOR LOW PRIORITY TRAFFIC
                                          10%




                                                                                                                          8


                                                                                                                                    9


                                                                                                                                             0
                                                                                                                 7




                                                                                                                                                     11


                                                                                                                                                            12


                                                                                                                                                                   13


                                                                                                                                                                           4


                                                                                                                                                                                  5


                                                                                                                                                                                         6
                                                                                                                         0


                                                                                                                                   0


                                                                                                                                            1
                                                                                                                0




                                                                                                                                                                         01


                                                                                                                                                                                01


                                                                                                                                                                                       01
                                                                                                                        0


                                                                                                                                  0


                                                                                                                                           0


                                                                                                                                                    0


                                                                                                                                                           0


                                                                                                                                                                  0
                                                                                                              20


                                                                                                                       2


                                                                                                                                 2


                                                                                                                                          2


                                                                                                                                                   2


                                                                                                                                                          2


                                                                                                                                                                 2


                                                                                                                                                                        2


                                                                                                                                                                               2


                                                                                                                                                                                      2
                                                                COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                           ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                                     INSTRUCTION
CONSIDERATIONS FOR YIELD MANAGEMENT IN MOBILE
NETWORKS
1. CELL IS THE CRITICAL RESOURCE TO CONSIDER FOR YIELD MANAGEMENT
­       80% of network cash cost is in the Radio Access Network                                                                                                                                                            Distribution of resource consumption
                                                                                                                                                                                                                                       whole network

­       Radio Frequency is generally a scarce resource
                                                                                                                                                                                                          7%




                                                                                                                                                                                    % Daily consumption
                                                                                                                                                                                                          6%



­       Core Network peaks are long (8am – midnight) and flat
                                                                                                                                                                                                          5%

                                                                                                                                                                                                          4%
                                                                                                                                                                                                                                                                              Bytes


         Contrary to cell peaks
                                                                                                                                                                                                          3%
    ­                                                                                                                                                                                                     2%
                                                                                                                                                                                                                                                                              Airtime

                                                                                                                                                                                                                                                                              Signalling

    ­    Offering less interest for Yield Management then                                                                                                                                                 1%

                                                                                                                                                                                                          0%
                                                                                                                                                                                                                   1   2   3   4       5   6   7   8   9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
                                                                                                                                                                                                                                                              Hour




2. CELL LOAD SHOULD BE CONSIDERED AT EACH CELL INDIVIDUALLY
                                                                                                                                                                                                          Traffic Distribution of 20 Busiest Base Station




                                                                                                                                                   (% of daily base station load)
­       Each cell has a different traffic profile                                                                                                                                   25%

                                                                                                                                                                                    20%

                                                                                                                                                                                    15%

                                                                                                                                                                                    10%

3. CELL LOAD SHOULD BE CONSIDERED DYNAMICALLY                                                                                                                                       5%

                                                                                                                                                                                    0%

­       There is no static traffic profile for a given cell                                                                                                                                               1    2   3   4   5       6       7   8   9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
                                                                                                                                                                                                                                                    (hour 24 hour clock)
                                                                                                                                                   (Done for a Tier-1 mobile operator, using the Alcatel-Lucent 9900
    ­    Trends can be observed but cell load is mostly unpredictable                                                                                             Wireless Network Guardian – WNG)

­       There is a great deal of free capacity in each cell even when people are active
    ­    70-90% of the time between 8AM and midnight

                                                                         COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                                    ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                                              INSTRUCTION
UNUSED ACCESS NETWORK CAPACITY
 PLENTY OF NETWORK RESOURCES AVAILABLE FOR MONETIZATION AT
 VIRTUALLY NO INCREMENTAL COSTDemand (as % of capacity)
                     Cell Data Traffic                                                              *
                           100%
                                                "Spoilage" (unsold)                                 Traffic demand (sold)
                            80%
                                                                                           Decreased cost
                            60%                                                          Reduced congestions

    In one Radio Cell
                            40%                                  Increased Revenue

                            20%


                             0%
                               8:00                                                  16:00                                                  0:00

           RADIO ACCESS NETWORKS                                                                                               OBJECTIVES:
                  RESOURCES:                                                             • Reduce overall network costs by lowering cell peak traffic.
     • Abundance of unutilized capacity                                                  • Realize the value of spoiled capacity: Introduce offers that
      • Meets basic Yield Management requirements:                                         increase RAN usage during off-peak hours at virtually no
        Limited and “perishable” capacity with dynamic                                     incremental cost.
        demand
YIELD MANAGEMENT IS THE PROCESS OF UNDERSTANDING, ANTICIPATING AND INFLUENCING CONSUMER
BEHAVIOR IN ORDER TO MAXIMIZE YIELD OR PROFITS FROM A FIXED, PERISHABLE RESOURCE (SUCH AS AIRLINE
SEATS, HOTEL ROOM RESERVATIONS OR NETWORK RESOURCE/CAPACITY)

                                                                  COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                             ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                                       INSTRUCTION
YIELD
MANAGEMENT


                                        COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
   ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                             INSTRUCTION
BUILDING BLOCKS OF YIELD MANAGEMENT

                                                                                                                                                       VENDORS &
    SUBSCRIBER                                                SERVICE PROVIDER
                                                                                                                                                       PARTNERS
    •USER INTERFACES                   DATA COLLECTION                                                                                                •APPLICATION
    •DEVICE                                                                                                                                          ENABLEMENT
   ANALYTICS                              •NETWORK USAGE ANALYTICS
    •CONNECTION                           •MARKET ANALYTICS
   MANAGEMENT                             •DEVICE-CLIENT STATISTICS


                                       CAPACITY & PRICING DECISION

                                        •USER BEHAVIOR PREDICTION & SCORING
                                       (SEGMENTATION)
                                        •NETWORK CAPACITY ALLOCATION &
                                       PRIORITIZATION
                                        •DYNAMIC PRICING


                                       EXECUTION

                                          •POLICIES & CONTROL
                                          •RULES ENFORCEMENT
                                          •BILLING
                                          •CUSTOMER RELATIONSHIP MANAGEMENT

                                                            COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                       ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                                 INSTRUCTION
INTELLIGENT TRAFFIC MANAGEMENT
LEVERAGING NETWORK INTELLIGENCE WITH POLICY                                                                               Customer Analytics



            9900 Wireless
            Network Guardian                                                                                       5780 DSC
                                                                                                                   (Dynamic Services
                                             Anomaly Notification                                                  Controller)


                                                                                                             Process and
                                     Monitor and                                                             Trigger
                                     Analyze




                                                 Enforce and Deliver

                                                           COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                      ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                                INSTRUCTION
AGENDA


1. TELECOM INDUSTRY TRENDS – OPPORTUNITY OR CHALLENGE

2. THE RIGHT STRATEGY TOUCHES BOTH DIMENSIONS OF YOUR BUSINESS –
   TOP LINE AND BOTTOM LINE

3. ADDRESS THE REVENUE DIMENSION BY CREATING VALUE FOR YOUR
   CUSTOMERS

4. CONTROL YOUR CAPEX/OPEX AND DECREASE PER-BIT DELIVERY COST

5. CONCLUSION




                                                     COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                          INSTRUCTION
OPERATOR NETWORK STRATEGY CONSIDERATIONS

1. CUSTOMER EXPERIENCE SHOULD BE AT THE CORE OF YOUR BUSINESS
  I.    CUSTOMER INTIMACY IS THE MOST VALUABLE ASSET FOR AN OPERATOR

  II.   CUSTOMER EXPERIENCE IS THE SECRET WEAPON TO DEFEND THE OTT THREAT

2. PROTECT YOUR REVENUE BY DEPLOYING REAL-TIME CHARGING
   CAPABILITIES INSIDE YOUR NETWORK

3. DEPLOY ONE CONVERGED, SCALABLE, INTELLIGENT ALL-IP
   NETWORK THAT DELIVERS BANDWIDTH AT THE LOWEST COST
   PER BIT

4. CONTROL YOUR NETWORK COSTS BY MANAGING PROPERLY THE DATA
   TRAFIC INSIDE YOUR NETWORK THROUGH YIELD MANAGEMENT


                                                            COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                       ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                                 INSTRUCTION
OPERATORS BUSINESS STRATEGY CONSIDERATIONS
MAINTAIN A STRONG MARKET PRESENCE
  Service providers will have to develop services and applications
  that may well cannibalize their existing revenue streams. While
  this may affect their bottom lines, it well help them to defend                                                                                              IMPROVED
  against new disruptive players and remain relevant to their                                                                                                  CUSTOMER
  customers.                                                                                                                                                  EXPERIENCE


CREATE NEW PARTNERSHIPS
  Forming partnerships will help service providers to increase
  innovation and time-to-market, which will enable them to exploit                                BEST-OF-BREED                                              NEW REVENUE
  new gaps in the market.                                                                        DATA MINING AND                                             OPPORTUNITIES
                                                                                                    ANALYTICS

LOOK FOR NEW WAYS TO MONETIZE
  Existing business models will be hard to maintain, so service
  providers will need to work hard to find new innovative ways to
  monetize their services.                                                                                                                                   INFRASTRUCTURE
                                                                                                                                                                 AND COST
                                                                                                                                                               OPTIMIZATION
TURN CUSTOMER DATA ASSETS INTO REVENUES
  Service providers will need to leverage customer data by
  investing in best-of-breed analytics platforms and capabilities.
                                                                    COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
                               ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                                                         INSTRUCTION
Q&A

                                     COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                          INSTRUCTION
COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY
                                                          INSTRUCTION

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Monetize diferentiate and create value for your customers short version

  • 1. MONETIZE YOUR NETWORK DIFFERENTIATE & CREATE VALUE FOR YOUR CUSTOMERS Iulian COSTEA – Head of Customer Marketing Middle East, Alcatel-lucent iulian.costea@alcatel-lucent.com December 2012 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 2. AGENDA 1. TELECOM INDUSTRY TRENDS – OPPORTUNITY OR CHALLENGE 2. THE RIGHT STRATEGY TOUCHES BOTH DIMENSIONS OF YOUR BUSINESS – TOP LINE AND BOTTOM LINE 3. ADDRESS THE REVENUE DIMENSION BY CREATING VALUE FOR YOUR CUSTOMERS 4. CONTROL YOUR CAPEX/OPEX AND DECREASE PER-BIT DELIVERY COST 5. CONCLUSION COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 3. INDUSTRY TRENDS FIXED BROADBAND MOBILE WI-FI M2M CONNECTIONS CONNECTIONS PUBLIC SPOTS DEVICES +30 % +32 % +346 % +990 % 7.3 Billion 691 5.5 Billion 5.8 Million 532 Million 1.3 Million 12 1.1 Million Billion Billion 2011 2015 2011 2015 2011 2015 2011 2015 APPLICATIONS SMARTPHONE PUBLIC CLOUD MOBILE VIDEO DOWNLOADS SALES REVENUE USERS +129 % +134 % +98 % +879 % 41.7 1 428 2.4 18.2 Billion Billion Million 89.4 177 Billion 429 Billion Billion Billion Million 2011 2015 2011 2015 2011 2015 2011 2015 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 4. BROADBAND AND INTERNET ACCESS ARE DRIVING FIXED AND MOBILE CONNECTIONS GLOBAL CONNECTIONS 2010- 2016 MOBILE DATA TRAFFIC FOR NAR, EU & APAC BY 2016 2011- 2016 16000 MOBILE DATA TRAFFIC BILLIONS OF CONNECTIONS 9 25x TIMES 8 14000 7 2016 12000 6 3G/4G CONNECTIONS PB/MONTH 5 10000 99% OF TRAFFIC IN NAR 4 8000 3 2 6000 ON W i-Fi 2011 27% OF MOBILE DATA 1 4000 0 2009 2010 2011 2012 2013 2014 2015 2016 2000 VIDEO STREAMING Fixed subscriptions Mobile connections 50% OF TRAFFIC 0 Fixed broadband connections Mobile broadband connections 2011 2012 2013 2014 2015 2016 CAGR (2011-2015) EU APAC NAR Fixed Broadband Connections: 9 % Mobile Broadband Connections: 32 % INTERNET TRAFFIC DRIVEN BY SERVICES 4.8 BILLION BROADBAND 7 BILLION PERSONAL REAL-TIME ENTERTAINMENT LIKE NETFLIX, HTTP, YOUTUBE CONNECTIONS BY 2015. MOBILE DEVICES BY 2016 ON MULTIPLE SCREENS OVER 80% ARE MOBILE Source: Sandvine, Gartner, Ovum 2012, Traffic Index, 2012 - Bell Labs Modeling COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 5. COMMUNICATIO TRANZACTIONAL N SESSIONS SESSIONS COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 6. THE NETWORK IS THE LAUNCHING PAD BUT THE EXPERIENCE IS THE PRODUCT. CONVERGENCE COMPETE IN QUALITY OF OF EXPERIENCE EXPERIENCE Source: Strategy Analytics COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 7. THE NETWORK AND BUSINESS MODEL ARE UNDER PRESSURE DRIVEN BY MASSIVE GROWTH IN VIDEO, SIGNALING, AND OTTs • 25X DATA TRAFFIC BY 20161  2/3rd IS VIDEO STREAMING OR VIDEO COMMUNICATION • SIGNALING TRAFFIC EXPLODING1 How to grow  DRIVEN BY 22.6% SMARTPHONE CAGR and profit  46B APPLICATION DOWNLOADS THOUGH 2016 in this • OTT MESSAGING WILL OVERTAKE SMS/MMS environment? WITH 20B MESSAGES ANNUALLY BY 20162 • 200B OTT VOIP MINUTES ANNUALLY BY 20163 From 2012 to 2020, “OTT VoIP will cost the global telecoms “In 2012, Ovum forecasts that mobile operators will lose industry $479bn in lost cumulative revenues, which represents $23.2bn in SMS revenues to over-the-top (OTT) messaging 6.9% of cumulative total voice revenues” - Ovum services. By 2016, Ovum expects this number to increase to $54.4bn.” - Ovum Sources: 1 Bell Labs Research, 2 Portio Research, 3 Juniper Research COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 8. EXPLODING DATA TRAFFIC AND LTE CREATE NEW OPPORTUNITIES • ALIGN USAGE AND PRICE WITH NETWORK COSTS How to make • BROADEN THE SUBSCRIBER BASE the most of • INCREASE CUSTOMER LIFETIME VALUE these opportunities? • BOOST CUSTOMER QUALITY OF EXPERIENCE • CHANGE OTTs FROM COMPETITORS TO PARTNERS • OPTIMIZE NETWORK EFFICIENCY COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 9. AGENDA 1. TELECOM INDUSTRY TRENDS – OPPORTUNITY OR CHALLENGE 2. THE RIGHT STRATEGY TOUCHES BOTH DIMENSIONS OF YOUR BUSINESS – TOP LINE AND BOTTOM LINE 3. ADDRESS THE REVENUE DIMENSION BY CREATING VALUE FOR YOUR CUSTOMERS 4. CONTROL YOUR CAPEX/OPEX AND DECREASE PER-BIT DELIVERY COST 5. CONCLUSION COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 10. TELECOM SERVICE PROVIDERS – DRIVING FORCES TOPLINE AND BOTTOM LINE PRESURES PROTECT YOUR REVENUE COMPETITION PRESURE OTT PRESURE • PRICE EROSION • LOST REVENUE ON VALUE ADDED SERVICES • TECHNOLOGY LEADERSHIP • PER-BIT DELIVERED PRICE • INNOVATION AS DIFFERENTIATION FACTOR • VALUE CREATION TELECOM SERVICE PROVIDERS COST PRESURE REGULATORY PRESSURE • CAPEX & OPEX REDUCTION • SPECTRUM REGULATION • PER-BIT DELIVERY COST • LICENSING CRITERIAS REDUCE YOUR COST COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 11. Over-The-Top THREAT “10% POINT INCREASE IN SMARTPHONE PENETRATION COULD COST EUROPEAN OPERATORS BETWEEN 0.5% AND 0.6% IN SERVICE REVENUES FROM VOICE AND MESSAGING” ( INFORMA) OTT PLAYERS ONLINE APPLICATION PORTALS DEVICE AND OS VENDORS SEARCH PROVIDRS DEVELOPERS E.g. Tencent, MSN, E.g. Apple, Google, Samsung, Microsoft E.g. Google, Baidu E.g. WhatsApp, Nimbuzz Yahoo! SOCIAL CONTENT INTERNET TV ONLINE NETWORKS PRODUCERS CE VENDORS PROVIDERS RETAILERS E.g. Facebook, E.g. Disney, Universal, E.g. Sony, Samsung E.g. Hulu, Netflix E.g. Amazon, Alibaba Cyworld Warner Brothers CONSUMER SERVICES VOICE, MESSAGING, TV AND VIDEO, GAMES, MUSIC, COMMERCE, SOCIAL MEDIA TELCO RESPONSE VALUE ADDED SERVICE BECOME AN ventures, Joint SMART SERVICES PARTNERSHIPS OTT PLAYER acquisitions, and ENABLEMENT CONNECTIVITY investments in OTT • PARTNER TO OFFER • JOINT VENTURES, services • SMART ENABLEMENT • MANAGE CONNECTIVITY TO • DIFFERENTIATE WITH VAS THIRD-PARTY OTT SERVICES ACQUISITIONS, AND integration with and OTT SERVICES OF OTT SERVICES AND PLAYERS Deep • USE TELCO NETWORKS TO • PROVIDE THIRD-PARTY OTT INVESTMENTS INadoption of OTT services, OTT • LEVERAGE TELCO ASSETS • DEFENSIVE STRATEGIES – PROVIDE VAS SERVICES AS PART OF THE SERVICES SUCH AS BILLING, NETWORK CAPPING OR “OTT TAXES” distribution, and business • HARNESS THE WEB FOR TELCO OFFERING • DEEP INTEGRATION WITH APPLICATION • OFFENSIVE STRATEGIES – models OTT SERVICES • ENGAGE WITH OTT AND ADOPTION OF OTT PROGRAMMING MANAGED CONNECTIVITY/ PLAYERS TO INTEGRATE SERVICES, DISTRIBUTION, INTERFACES, CUSTOMER WHOLESALE SERVICES AND BUSINESS MODELS INSIGHTS/ANALYTICS, AND SECURITY TOOLS COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 12. TWO BUSINESS DIMENSSIONS – DEMAND & SUPPLY CREATE VALUE BY ADDRESSING THEM BOTH THROUGH AN ORCHESTRATED STRATEGY SUPPLY DEMAND • INTANGIBLE ASSETS • VALUE CREATION • AIRTIME • REAL TIME SERVICES • SPEED • FLEXIBILITY • CAPACITY • RELIABLE SERVICE • CONNECTIVITY • USER EXPERIENCE • CUSTOMER • REWARD EXPERIENCE VOLATILE PERISHABLE COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 13. AGENDA 1. TELECOM INDUSTRY TRENDS – OPPORTUNITY OR CHALLENGE 2. THE RIGHT STRATEGY TOUCHES BOTH DIMENSIONS OF YOUR BUSINESS – TOP LINE AND BOTTOM LINE 3. ADDRESS THE REVENUE DIMENSION BY CREATING VALUE FOR YOUR CUSTOMERS 4. CONTROL YOUR CAPEX/OPEX AND DECREASE PER-BIT DELIVERY COST 5. CONCLUSION COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 14. DESIGN AND DELIVER A MARKET- LEADING CUSTOMER EXPERIENCE CUSTOMER ANALYTICS EXPERIENCE MANAGEMENT OPTIMIZATION CONSULTING COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 15. CUSTOMER MANAGEMEN T: SIMPLIFY CUSTOMER INTERACTIONS TO IMPROVE PROFITABILITY. TOUCHPOINTS SERVICE FUNCTION MODEL CHANNEL COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 16. ANALYTICS: USE CUSTOMER INSIGHTS TO IMPROVE Quality Care Value Customer Satisfaction BUSINESS PERFORMANCE . COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 17. OPTIMIZATION : CREATE AN EXPERIENCE THAT POSITIVELY INFLUENCES USAGE BEHAVIOR TOWARDS STATES OF HIGHER PROFITABILITY COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 18. CONSULTING: DEVELOP A PRIORITIZED ACTIONABLE PLAN TO IMPROVE THE CUSTOMER EXPERIENCE. Deep Expertise Patented Methodology for CSPs A Prioritized, Actionable Plan COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 19. MOBILE MONETIZATION FRAMEWORK COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 20. MOBILE MONETIZATION FRAMEWORK 1 ST STEP: VOLUME BASED - ASSIGN VALUE TO BANDWIDTH 2 ND STEP: VALUE BASED - START TO MEASURE AND ACCOUNT FOR DATA, BASED ON THE APPLICATION THEY ARE USING (DPI, POLICY) 3 RD STEP: SEGMENTATION/DISCRIMINATION - USING SMARTS FROM POLICY AND CHARGING TO CREATE SERVICE BUNDLES AND PERSONALIZED OFFERS THAT CAN ENCOURAGE MORE USAGE OF THE INFRASTRUCTURE 4 TH STEP: NETWORK APIS - ACCESS NEW BUSINESS MODELS COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 21. AGENDA 1. TELECOM INDUSTRY TRENDS – OPPORTUNITY OR CHALLENGE 2. THE RIGHT STRATEGY TOUCHES BOTH DIMENSIONS OF YOUR BUSINESS – TOP LINE AND BOTTOM LINE 3. ADDRESS THE REVENUE DIMENSION BY CREATING VALUE FOR YOUR CUSTOMERS 4. CONTROL YOUR CAPEX/OPEX AND DECREASE PER-BIT DELIVERY COST 5. CONCLUSION COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 22. TRAFFIC VS REVENUE DICHOTOMY HOW CAN OPERATORS MANAGE DATA GROWTH AND INCREASE REVENUE? INCREASE REVENUE: • Deliver personalized services • Accelerate time to market • Develop new business models REDUCE COSTS: • Scale and manage capacity • Reduce cost of operations • Environment Sustainability DATA TRAFFIC GROWTH AND DECLINING OR FLAT ARPU PUTS SERVICE PROVIDER PROFITABILITY AT RISK Source: Informa Global mobile network traffic and ARPU Forecast (2011) COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 23. HIGH LEVERAGE NETWORK A PLATFORM FOR INNOVATION THAT REALIZES THE VALUE OF THE NETWORK • CREATE VALUE • PERSONALIZATION INCREASE REVENUE VOLATILE • DELIVER PERSONALIZED SERVICES Revenue • ACCELERATE TIME-TO-MARKET • DEVELOP NEW BUSINESS MODELS PERISHABLE REDUCE COSTS • SCALE AND MANAGE CAPACITY Cost • HIGH COST • REDUCE COST OF OPERATIONS • LOW UTILIZATION • REDUCE FOOTPRINT A CONVERGED, SCALABLE, INTELLIGENT EFFICIENT ALL-IP NETWORK THAT DELIVERS BANDWIDTH AT THE LOWEST COST PER BIT. COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 24. NETWORK CONVERGENCE STRATEGY COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 25. BUSINESS CASE OVERVIEW PURPOSE ­ A generalized service provider business model that evaluates an Alcatel-Lucent IMS overlay onto an existing LTE network, inclusive of a full range of IMS services such as VoLTE, RCS, messaging, and video communications. This is compared to a network which overlays Circuit Switched Fallback (CSFB) for voice. OBJECTIVES ­ Two primary modes are evaluated. 1. Mode 1: Launch with LTE laptops, then add smartphones and mobile internet devices (e.g., tablets) in Year 3 2. Mode 2: Launch with all 3 types of devices – LTE laptops, smartphones, and mobile internet devices In addition to IMS versus CSFB, a migration from CSFB to IMS in Year 3 was studied SERVICE PROVIDER ­ A Tier-1, French service provider who already has an LTE network or who has decided to use LTE, which is considering whether to use IMS’ full suite of services or CSFB’ voice-centric service. COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 26. DEMAND: MODELING WILLINGNESS-TO-PAY BASED ON PRIMARY MARKET RESEARCH Converged Comm. LTE/IMS LTE /CSFB Video Comm. & Location LTE/IMS LTE /CSFB Messaging √ √ Enhanced Mobil Video √ Multi-Screen √ √ Multi-Party Video Call √ Mobile/PC Synch √ √ Mobile Video Monitoring √ One-number Voice √ Location-based Services √ √ Enhanced NAB √ Live Messaging √ Presence enabled Calendar √ Relative Market Value 5x 1x Video share & calling √ T E K R A M RE MUS N OC Relative Market Value 16x 1x Converged Comm. LTE/IMS LTE /CSFB Video Comm. & Location LTE/IMS LTE /CSFB Unified Messaging √ √ Mobil Collaboration √ Mobile Extension √ Multi-Party Video Call √ Video Conferencing √ Wireless BB Branch Office √ Video Mail √ Location-based Services √ √ Web Conferencing √ Interactive Mobile Kiosk √ Location Services √ √ Relative Market Value 7x 1x Enhanced NAB √ RP RET NE Relative Market Value 7x 1x Source: ALU Primary Market Research, 2009 IMS enables a richer set of services with a higher market value COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 27. PROVIDING A NEW CONVERSATION EXPERIENCE FOR 4G LTE SUBSCRIBERS versus CSFB: IMS: LEGACY VOICE, MESSAGING IMS VOICE, VIDEO, RCS, MESSAGING; APIS FOR MANY APPS, QUICKLY DIRECTLY LAUNCHING IMS ONTO AN EXISTING LTE NETWORK PROVIDES SUPERIOR ECONOMIC RESULTS, WHEN COMPARED TO CSFB OR A CSFB-TO-IMS MIGRATION COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 28. COMPETITIVE TRANSFORMATION – IMS versus CSFB TELCOS NOW DRIVEN BY COMPETITION FROM ADJACENT MARKETS Customer experience NEW METRICS ARE NEEDED (EXPERIENCE, INNOVATION,  IMS EFFICIENCY) BECAUSE ONLY FINANCIAL, TECHNICAL, AND Innovation Efficiency NETWORK METRICS NO LONGER  IMS  IMS PAINT THE COMPLETE PICTURE  CSFB IMS ENABLES COMPETITIVE THE “TRANSFORMATION TRINITY” (1) TRANSFORMATION; CSFB TAKES CARE OF ONLY THE NETWORK’S EFFICIENCY (1) “What do transforming telcos measure?” Ovum, 30 June 2010 {includes BT, DT, FT, KPN, Telefonica, TNZ, Telstra COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 29. HOW IS 4G LTE USED? OPERATORS USE LTE’S … … TO PROVIDE MOBILE DATA SERVICE WITH  High bandwidth with low latency  Faster speed  Per-service QoS  Improved experience  Spectral and CapEx efficiency improvement  Multiple concurrent sessions THAT’S THE DATA STRATEGY, BUT WHAT ABOUT COMMUNICATION SERVICES? IMS provides CSFB provides  Voice and beyond  Voice, only voice  Connect, share, & organize conversations  Minimizes near-term spending  Full LTE utilization: all-IP, multi-application concurrency,  Perpetuates 2G/3G’s CS + PS duality video, …   Cost-centric strategy   User-centric strategy IMS PROVIDES COMMUNICATIONS THAT FULLY UTILIZE 4G LTE’S PERSONAL, UNTETHERED BROADBAND COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 30. WHY IS VoLTE ESSENTIAL FOR 4G LTE? OTT/ACP VoLTE CSFB Subscriber’s service Providers New conversations Voice-centric Many servi ces Global roaming w/ full feature suite   X Standards’ value Global interoperability w/ full feature suite   X End to end QoS; also Emergency calling   X All-IP path enables video-comms, etc.  X  Multimedia Multiple concurrent services enabled by 4G LTE  X  Blend voice with video, web, RCS-like, etc.  X  Simultaneous voice and 4G LTE data service  X  Voice Minimal voice call setup delay  X  Evolved voice: HD, new features, clickable URL, etc.  X  VOLTE ENABLES COMPETITIVE VOICE AND IS FOUNDATIONAL FOR FURTHER SERVICES COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 31. GO TO MARKET, QUICKLY: A COMPETITIVE LAUNCH STRATEGY 2011 2012 2013  Entice subscribers to IMS/LTE, because the service is not available in 3G. LTE video  Video calls, sharing, storage lockers, social networking, multiscreen, etc.  Across LTE, fixed, and web portals. communications  2nd line VoLTE. Price low or free; no incentive to switch to alternative voice providers. VoLTE: 2nd line VoLTE: mass market  Mass market VoLTE. When ready, sell at a premium. Unbeatable appeal the OTT can’t match due to geographic coverage (legacy handover), global service via roaming, global service inter-operability for all-IP services (HD audio, video), QoS, etc.  RCS spans 3G, fixed, and the web; also LTE. Collaboration & messaging  Wraps comms with collaboration and messaging. Application Enablement  Quickly create and deploy many apps  Innovative apps for the network Convergence  Fully embrace the subscriber, everywhere Use IMS to define the early LTE communications market, fueling profits. Then expand into mass services, having won the initial battles. COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 32. COMPARING THE TOTAL COST OF OWNERSHIP Total Investments Comparison Investments Comparison 25 80 LTE IMS 70 20 LTE CSFB 60 50 15 40 M O U R E S M O U R E S 10 30 20 5 10 0 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 LTE IMS LTE CSFB Total Expenses Comparison 1,200 Expenses Comparison Device Subsidies 1,000 400 Opex 350 Sales & Marketing LTE IMS 800 General & Administrative 300 LTE CSFB 250 M O 600 U R E S 200 M O U R E 400 S 150 100 200 50 0 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 LTE IMS LTE CSFB IMS’ TCO IS MODERATELY HIGHER Pro-rated Device Subsidies dominate any other investment or expense COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 33. NETWORK COST OPTIMIZATION COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 34. CAPACITY IS WASTED IN MOBILE NETWORKS TODAY • A study Alcatel-Lucent conducted for a major Tier-1 operator in North America revealed: ­ 68% average base station busy hour utilization ­ The busy hour is unpredictable. It differs from base station to base station and even differs day to day for the same base station ­ 13% daily traffic in busy hour ­ 27% base station average utilization outside the busy hour during the Percentage of daily load in busy hour of cell productive day (8 a.m. to midnight) 30% 25% 20%  UNPARALLELED DEGREE OF WASTE 15%  LOTS OF CAPACITY FOR LOW PRIORITY TRAFFIC 10% 8 9 0 7 11 12 13 4 5 6 0 0 1 0 01 01 01 0 0 0 0 0 0 20 2 2 2 2 2 2 2 2 2 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 35. CONSIDERATIONS FOR YIELD MANAGEMENT IN MOBILE NETWORKS 1. CELL IS THE CRITICAL RESOURCE TO CONSIDER FOR YIELD MANAGEMENT ­ 80% of network cash cost is in the Radio Access Network Distribution of resource consumption whole network ­ Radio Frequency is generally a scarce resource 7% % Daily consumption 6% ­ Core Network peaks are long (8am – midnight) and flat 5% 4% Bytes Contrary to cell peaks 3% ­ 2% Airtime Signalling ­ Offering less interest for Yield Management then 1% 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Hour 2. CELL LOAD SHOULD BE CONSIDERED AT EACH CELL INDIVIDUALLY Traffic Distribution of 20 Busiest Base Station (% of daily base station load) ­ Each cell has a different traffic profile 25% 20% 15% 10% 3. CELL LOAD SHOULD BE CONSIDERED DYNAMICALLY 5% 0% ­ There is no static traffic profile for a given cell 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (hour 24 hour clock) (Done for a Tier-1 mobile operator, using the Alcatel-Lucent 9900 ­ Trends can be observed but cell load is mostly unpredictable Wireless Network Guardian – WNG) ­ There is a great deal of free capacity in each cell even when people are active ­ 70-90% of the time between 8AM and midnight COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 36. UNUSED ACCESS NETWORK CAPACITY PLENTY OF NETWORK RESOURCES AVAILABLE FOR MONETIZATION AT VIRTUALLY NO INCREMENTAL COSTDemand (as % of capacity) Cell Data Traffic * 100% "Spoilage" (unsold) Traffic demand (sold) 80% Decreased cost 60% Reduced congestions In one Radio Cell 40% Increased Revenue 20% 0% 8:00 16:00 0:00 RADIO ACCESS NETWORKS OBJECTIVES: RESOURCES: • Reduce overall network costs by lowering cell peak traffic. • Abundance of unutilized capacity • Realize the value of spoiled capacity: Introduce offers that • Meets basic Yield Management requirements: increase RAN usage during off-peak hours at virtually no Limited and “perishable” capacity with dynamic incremental cost. demand YIELD MANAGEMENT IS THE PROCESS OF UNDERSTANDING, ANTICIPATING AND INFLUENCING CONSUMER BEHAVIOR IN ORDER TO MAXIMIZE YIELD OR PROFITS FROM A FIXED, PERISHABLE RESOURCE (SUCH AS AIRLINE SEATS, HOTEL ROOM RESERVATIONS OR NETWORK RESOURCE/CAPACITY) COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 37. YIELD MANAGEMENT COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 38. BUILDING BLOCKS OF YIELD MANAGEMENT VENDORS & SUBSCRIBER SERVICE PROVIDER PARTNERS •USER INTERFACES DATA COLLECTION •APPLICATION •DEVICE ENABLEMENT ANALYTICS •NETWORK USAGE ANALYTICS •CONNECTION •MARKET ANALYTICS MANAGEMENT •DEVICE-CLIENT STATISTICS CAPACITY & PRICING DECISION •USER BEHAVIOR PREDICTION & SCORING (SEGMENTATION) •NETWORK CAPACITY ALLOCATION & PRIORITIZATION •DYNAMIC PRICING EXECUTION •POLICIES & CONTROL •RULES ENFORCEMENT •BILLING •CUSTOMER RELATIONSHIP MANAGEMENT COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 39. INTELLIGENT TRAFFIC MANAGEMENT LEVERAGING NETWORK INTELLIGENCE WITH POLICY Customer Analytics 9900 Wireless Network Guardian 5780 DSC (Dynamic Services Anomaly Notification Controller) Process and Monitor and Trigger Analyze Enforce and Deliver COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 40. AGENDA 1. TELECOM INDUSTRY TRENDS – OPPORTUNITY OR CHALLENGE 2. THE RIGHT STRATEGY TOUCHES BOTH DIMENSIONS OF YOUR BUSINESS – TOP LINE AND BOTTOM LINE 3. ADDRESS THE REVENUE DIMENSION BY CREATING VALUE FOR YOUR CUSTOMERS 4. CONTROL YOUR CAPEX/OPEX AND DECREASE PER-BIT DELIVERY COST 5. CONCLUSION COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 41. OPERATOR NETWORK STRATEGY CONSIDERATIONS 1. CUSTOMER EXPERIENCE SHOULD BE AT THE CORE OF YOUR BUSINESS I. CUSTOMER INTIMACY IS THE MOST VALUABLE ASSET FOR AN OPERATOR II. CUSTOMER EXPERIENCE IS THE SECRET WEAPON TO DEFEND THE OTT THREAT 2. PROTECT YOUR REVENUE BY DEPLOYING REAL-TIME CHARGING CAPABILITIES INSIDE YOUR NETWORK 3. DEPLOY ONE CONVERGED, SCALABLE, INTELLIGENT ALL-IP NETWORK THAT DELIVERS BANDWIDTH AT THE LOWEST COST PER BIT 4. CONTROL YOUR NETWORK COSTS BY MANAGING PROPERLY THE DATA TRAFIC INSIDE YOUR NETWORK THROUGH YIELD MANAGEMENT COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 42. OPERATORS BUSINESS STRATEGY CONSIDERATIONS MAINTAIN A STRONG MARKET PRESENCE Service providers will have to develop services and applications that may well cannibalize their existing revenue streams. While this may affect their bottom lines, it well help them to defend IMPROVED against new disruptive players and remain relevant to their CUSTOMER customers. EXPERIENCE CREATE NEW PARTNERSHIPS Forming partnerships will help service providers to increase innovation and time-to-market, which will enable them to exploit BEST-OF-BREED NEW REVENUE new gaps in the market. DATA MINING AND OPPORTUNITIES ANALYTICS LOOK FOR NEW WAYS TO MONETIZE Existing business models will be hard to maintain, so service providers will need to work hard to find new innovative ways to monetize their services. INFRASTRUCTURE AND COST OPTIMIZATION TURN CUSTOMER DATA ASSETS INTO REVENUES Service providers will need to leverage customer data by investing in best-of-breed analytics platforms and capabilities. COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 43. Q&A COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION
  • 44. COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED. ALCATEL-LUCENT — CONFIDENTIAL — SOLELY FOR AUTHORIZED PERSONS HAVING A NEED TO KNOW — PROPRIETARY — USE PURSUANT TO COMPANY INSTRUCTION