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

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Proprietary & confidential
CARRIER HETNET MARKET ANALYSIS –SNAP SHOTNov 2014
G W PRICE-JONES
DIRECTOR AND OWNER PJP LTD

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WHY CARRIERS ARE INVESTING IN NEXT GEN HOTSPOT TECHNOLOGYKey reasons to include carrier Wi-Fi services in a portfolio
3.5
5.9
33.9
56.7
Important
Somewhat Important
6.9
12.6
36.8
43.7
23.5
36.5
32.4
7.6
Improve customer experience and retention
Reduce network costs by offloading data
Generate new revenue streams (advertising, analytics, M2M)
Not Important
Figure 1.1 What do you consider to be the main driver for investing NGH –Compliant networks? ( please rank your top three, 1 being most important and 3 being least important)?
Very Important
Not Important
Very Important
Important
Somewhat Important
Not Important
Very Important
Somewhat Important
Important
Source:WBA –Maravedis-Rethink, Nov 2013

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“Wi-Fi IS NOW THE PRIMARY MEANS OF CONNECTIVITY. MOBILE IS SECOND”
DIXON DOLL DCM –WBA 2014

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A LOOK AT THE TOP LTE/4G MARKETS AROUND THE WORLD SHOW A CONTINUED RELIANCE ON Wi-Fi BY SMARTPHONE USERS.
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Germany
Brazil
UK
Canada
Mexico
USA
RussianFederation
South Korea
Japan
Source: Mobidia

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BUT QOESTILL A MAJOR ISSUE AS USAGE DRIVES CONGESTION
0
0.5
1
1.5
2
2.5
3
3.5
4
Connction Cost
Traffic Type
Connection Quality
Connection Speed
Figure3-1 What will be the most important factor to consider when managing connection decisions between Wi-Fi and other access networks?
Source:WBA –Maravedis-Rethink, Nov 2013

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S Proprietary & confidential
SK TELECOM QOS AP SELECTION
• SK Telecom developed Hotspot 2.0 AP selection based on QoS of the available AP’s.
• Better Wi-Fi user experience and load balancing of 2.4 and 5Ghz was also achieved.
Source: SK Telecom, WBA presentation2014

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CARRIERS ARE INVESTING TO SUPPORT THIS USE PATTERN

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Deployment of hotspots for MNO or MSO networks
5.2m
2012
6.5m
2013
7.1m
2014
7.9m
2015
8.3m
2016
9.6m
2017
10.5m
2018
MNO’sandMSO’swill deploy 10.5 million hotspots a year by 2018, directly or with partners.
Cumulativebase of carrier Wi-Filocations 55 million by 2018
Source:WBA –Maravedis-Rethinks, Nov 2013

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BUT AGGREGATION IS ALSO A BIG NEED IN BUILDING THE FOOTPRINT
Source: WBA –Maravedis-Rethink, Nov 2013
Build own carrier-grade Wi-Fi in selected areas
64.5%
Partner with other service providers such as cable companies or WISPs
43.7% Use Wi-Fi aggregators for national coverage & services41.6% Use Wi-Fi aggregators for international coverage & services32.0%
Use so called crowd sourced hotspots to leverage free & open Wi-Fi services
20.3%
Consider acquiring one or more WISPs
16.8%
Other
1.5%

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CARRIER Wi-Fi TODAY
(VALUE CHAIN)
Carrier
Aggregator
Service Provider
Wi-Fi Access Point
Device Provider
Carrier may play all of these roles or none
Clearing

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WHAT ARE THE ECONOMIC DRIVERS FOR CARRIER Wi-Fi TODAY?
THE ROI FROM OFFLOAD (REDUCED RAN CAPEX/OPEX)

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BUSINESS CASE HETNET VS LTE ONLY

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$/Mbps/KM²
0
2000
4000
6000
8000
10000
12000
14000
16000
Dense Urban
Urban
Suburban
Rural
Cost Of Capacity Density Varies
HSPA
LTE
802.11 n
$
Source: Ruckus Wireless

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SMALLCELL DEPLOYMENT TCO
0%
20%
40%
60%
80%
100%
120%
LTE
LTE-A
Wi-Fi n
Wi-Fi ac
Per-bit TCO: LTE-Advanced and Wi-Fi ac
22%
100%
50%
43%
0%
50%
100%
150%
200%
250%
300%
3G
LTE
LTE-A
Wi-Fi n
Wi-Fi ac
Peak Data Rates
Peak Data Rate
% Of LTE Peak Data Rate
Wireless Technology
Peak Rate Assumptions
3G –HSPA
5 MHz
4G –LTE (Base Case)
10 MHz, 2x2 MIMO
4G –LTE Advanced
10 MHz, 4x4 MIMO
Wi-Fi CERTIFIED n (Base Case)
40 MHz, Single Stream
Wi-Fi Certified ac
80 MHz, Single Stream
Figure 6. Peak data rates for Wi-Fi and LTE.
Sources: Equipment Vendors, IEEE,4G Americas, 3GPP, SenzaFili.

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HOWEVER LACK OF CLEAR ‘ROI’ IS STILL THE MAIN PERCIEVED OBSTACLE
0
50
100
150
200
250
300
350
400
450
500
Cost of NGHDeployment
Lack Of Clear ROI ForNGH Investments
Handset Availability
Change To PassportCompliant Equipment
Other - Please Specify
Most Important
2ND
3RD
Figure 1-3 What do you perceive aa the main obstacles to deploying an NGH compliant network? (please rank your top three, 1 being most important)
Source: WBA –Maravedis-Rethink, Nov 2013

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MONETIZATION STRATEGIES FOR TOMORROW?

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BUSINESS MODEL CLARITY A KEY ISSUE
0%
10%
20%
30%
40%
50%
60%
70%
Clarify BusinessModel
ClarifyTechnologyRoadmap
DeploymentIssues: Ex: SiteAcquisition, Permits
Availability OfWi-Fi EnabledHandsets
EnsuringQuality OfService
Other
Series 1
Series 2
Series 3
Figure 4-2 What do you see as the key challenges faced by mobile operators if they are to deploy and monetize seamless Wi-Fi Services?
Source:-Maravedis-Rethink, Nov 2013

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35.0%
Enterprise Services
36.5%
ROI From Wi-Fi Offload
35.0%
Location Based Services
31.5%
Wi-Fi Offload Wholesale
26.9%
Wi-Fi Analytics
31.0%
Wi-Fi As A Metropolitan Service
10.2%
Wi-Fi Roaming
25.4%
Advertising
17.3%
Marketing Deals In Retail
Figure 4-1 Are you implementing Wi-Fi monetization strategies? If so, which ones? (multiple responses are allowed)
Source: WBA –Maravedis-Rethink Nov 2013
4.6%
OtherNEW GROWTHAREAS

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Operator Wi-Fi monetization strategies
Simple
Offload
Community
Wi-Fi
SMB/Vertical
Pub. Indoor
Public
Outdoor
Venues/
Events
OTT Services
(e.g. VoWi-Fi)
Source: AT Kearney, WBA, PJP analysis
Cost reduction,
Bundle to Customer
Bill to Enterprise/Municipality/Venue/Casual user.
Starting to see Advertising, Engagement and Analytics
Bundle

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SK TELECOM AD PLATFORM
V-1. BizWisePlatform
Wi-Fi has the advantage for zone-based service due to its small coverage compared to cellular network .
•SK Telecom enables shop owners to provide the contents service in the limited area.
•BizWisePlatform collects Wi-Fi network information and manipulates them to provide the various types for zone-based service by means of open Api.
Source: SK Telecom, WBA presentation 2014

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SK TELECOM Wi-Fi ANALYTICS
• Wi-Fi AP in a store collects MAC addresses and RSSIs from visitor’s devices
regularly and sends them to BizWise Platform server.
• Based on the collected information, store visitor Analysis server provides the
number of visitors by hour or day, the duration of the stay, the ratio of revsists
and visitors age/gender.
Source: SK Telecom, WBA presentation 2014

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CONCLUSIONS

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CARRIER Wi-Fi EVOLUTION SUMMARY
•HISTORY–OFFLOAD TO ADDRESS THE MOBILE DATA TSUNAMI CREATED BY iPHONEAND THE SMARTPHONE EVOLUTION.
•NO CONTROL OF USER EXPERIENCE
•OFFLOAD CONGESTED CELLS
•TODAY–HOMESPOTS AND NGH DEPLOYMENTS: DUAL SSID WITH SEAMLESS EAP-SIM CONNECTION & IN SOME CASES WITH Wi-Fi CALLING
•HETNET FOR CONTROLLED OFFLOAD AND QOE MANAGEMENT (HOTSPOT 2.0 ANQP)
•SEAMLESS EXPERIENCE
•STARTING–ADVERTISING-BASED (SPONSORED) NETWORKS (USUALLY WITH CONSUMER-GRADE, SMB SOLUTIONS)
•THE FUTURE –PUBLIC CARRIER Wi-Fi WITH A MIX OF ADVERTISING AND PAID SERVICES (FREEMIUM) AND VOLUME HOTSPOT 2.0

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CUSTOMER EXPERIENCE SEEN AS KEY BY MAJORITY
SEAMLESSNESS IMPORTANT
E.G. FREE MOBILE / ILIAD(FR), AT&T (USA), BT (UK)
QUALITY OF EXPERIENCE KEY
BOTH NATIONAL AND INTERNATIONAL (WHEN ROAMING)
EXTENDING SEAMLESS SERVICES TO VOICE OVER Wi-Fi
E.G. EE, 3 AND BT (UK), T-MO, SPRINT AND AT&T (USA), TELSTRA (AU)
ENABLED BY LIKES OF APPLE AND SOON SAMSUNG
MARKET REQUIREMENTS
EAP – AKA/SIM AUTH
PERFORMANCE MONITORING AND POLICY ENFORCEMENT FOR QOE
AGGREGATE ACCESS AND CLEARING
VOICE OVER Wi-Fi WITH QOS
CARRIER
SOLUTION
NEEDS

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REDUCED NETWORK COST
Market Requirements
ROI FROM OFFLOAD VS CAPEX/OPEX
ROI FROM REDUCED IOT ROAMING
Carrier Solution Needs
SCALABLE CLOUD BASED WIFI
LEAST COST CONNECTIVITY ANALYSIS
POLICY ENFORCEMENTFOR LEAST COST
DYNAMIC BANDWIDTH TRADING (E.G BANDWIDTH X)
CLEARING DATA AND PAYMENTS
PERFORMANCE MONITORING / ANALYSIS / BUILD / 4G VS Wi-Fi

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MONETIZATION
•Venue Based Wi-Fi
•Wholesale Access
•Neutral Wi-Fi
•Home Spots
•Advertising
•Social Spots
•Analytics
•Segmentation Analysis
•Historical Trend Analysis
•Location Based Services
Market Requirements
•EVENT AND VENUE BASED CHARGING MODELS
•E.G. BAR CODES ON TICKETS, SPONSORED DATA
•ENABLING LOCAL CONTENT –E.G. VENUE INFO
•CLEARING AND WHOLESALE BILLING
•SEAMLESS AUTHENTICATION
•CUSTOMER SEGMENTATION
•BSS DATA
•USAGE DATA
•LOCATION DATA FEED
•CLIENT/ANDSF
•FREE TO ACCESS IN EXCHANGE FOR RECEIVING ADVERTS
•CUSTOMER USE ANALYTICS
•FOOTFALL, REVISTS, DURATION/USAGE
Carrier Solution Needs

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

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