How to differentiate with 3G, attract subscribers and grow revenues Portugal Telecom Inovação Experiences and Perspectives João Paulo Firmeza P T Inovação São Paulo, 24 May 2006 1
:: Agenda Portugal Telecom Inovação Overview Mobile Broadband: Some issues EV-DO and Services: Our Experience Some standing issues Final Remarks 2
Portugal Telecom Inovação Overview The strategic research and innovation company from Portugal Telecom Group Founded in 1999, from the former PT R&D labs, Marconi Labs and INESCTEL (a Portuguese telecom research institute) Former companies with more than 50 years of experience on telecommunications in Portugal and abroad Key company in the group, present in most of the innovative services and technologies developed internally Has developed the world first commercially successful mobile prepaid service based on IN standards (and the first prepaid service in Latin America also) PT Inovação technologies are present in every PT group operation in the world (Europe, Africa, Asia and Latin America) PT Inovação has a huge experience in developing advanced 3G and B3G services, performing wireless technology evaluation and network planning 3
:: Agenda Portugal Telecom Inovação Overview Mobile Broadband: Some issues EV-DO and Services: Our Experience Some standing issues Final Remarks 4
P T Inovação Bandwidth: Is only important if customers can do something with it Selected cellular data applications Likely user receiving experiences (seconds) GPRS EDGE 1xRTT WCDMA 1x/EVDO Basic text (email) 8 3 3 1 1 Enterprise dispatch MMS with picture (eg. news, entertainment) Synchronised PIM (eg. Calendar) 14 14 14 6 6 6 6 6 6 2 2 2 1.5 1.5 1.5 DoCoMo proved - it s not about speed! [9.6 kb/s] Field workforce automation Download video (sport, trailers) Video telephony 22 9 10 107 40 46 N/A N/A N/A 3 2 14 Real time 480 KB/min 9 Real time 2004/2005 [85% data penetration & 25% ARPU] Polyphonic ringtones 3 1.5 1.5 0.5 0.5 Online shopping (to get to for 1 page view) Web browsing (1 page view) 21 14 9 6 6 9 3 2 2 1.5 * Source (Telstra, Nortel) 5
P T Inovação Technology evolution and Pricing: One key to attract subscribers and to create real revenue The past years shown a relatively poor adoption of IP based Wireless Data Services Main reasons Small Bandwidth and low performance of enhanced services compared to the evolutions on the fixed side (xdsl, Cable, etc) Lack of functionality on the mobile devices to make attractive and user friendly the usage of this kind of services Cost per bit high compared to fixed networks, pushing operators to practice less proper prices Complex plan and tariff schemas, confusing costumers (pay per byte, pay per time, pay per event, combination of those, etc) The exception were the SMS based services, mainly because Very few bandwidth is required almost no price per byte Support in almost every device Proper and simple pricing schemas were adopted by operators 6
P T Inovação Technology evolution and Pricing: One key to attract subscribers and to create real revenue 3G technologies and how they affect pricing and as consequence the success of the new mobile services 1xEVDO (and W-CDMA) with its recent bandwidth upgrades are reducing a lot the former Cost per byte on traditional cellular access networks Mobile devices are becoming more and more powerful Great processing and memory/storage capabilities User friendly user interfaces Adoption of industry standards making interoperability between services, service delivery platforms and devices easier (eg. OMA standards, and 3GPP/3GPP2 convergence) Operators (starting in Europe and North America) have initiated an huge change in its traditional pricing models for wireless data services Adoption of flat rate plans not dependent on bytes consumed or time spent Access pricing that can compete with the fixed broadband access practices, not forgetting the implicit value of mobility not possible for the fixed competitors Aggregation of value on selling content, where costumer pays for what it gets Simple payments per purchase event, Complex plan and tariff schemas are phasing out, and as consequence customer is becoming more confident and is starting using the services, creating real revenue What about voice (VoIP)? Today the existing charging principles for voice can be kept Be aware of free/flat rate VoIP services becoming available on the Internet 7
Key Attributes of 1xEV-DO Speed: The real Wide Access Wireless Broadband Today, but you need to have high bandwidth requirements; not every service has those requirements Easy Deployable: If you are already a CDMA operator Rational technology investment: If you are already a CDMA operator Not an option if you are a GSM operator High Security: Using the inherent CDMA security Ideal for connectivity based services Wireless Internet Wireless VPN access Large file transfers and e-mail attachments/sync services High bit-rate multimedia (video streaming, video telephony) 8
:: Agenda Portugal Telecom Inovação Overview Mobile Broadband: Some issues EV-DO and Services: Our Experience Some standing issues Final Remarks 9
1x EV-DO: PTI vision on Target Services Connectivity Services Wireless Internet Access Rural Areas where fixed BB access is expensive High populated Urban Areas with high connectivity needs (corporate market) Remote office services Wireless E-Mail and Sync services High bandwidth mobile VPN Access Multimedia Services Content Delivery (Video and High Quality Audio/Music download, streaming and broadcast) IMS/MMD Multimedia communication services (AV telephony, AV conferencing, AV messaging) For most of the rest 1xEV-DO bandwidth contributes only for a slightly better user experience (reduced transfer times) 10
1xEV-DO: Connectivity Services Connectivity Services From our experience, 1xEV-DO (rel. 0 and rel. A) and other similar access technologies (like HSDPA) allow finally the implementation of the true WISP Cost per bit finally became attractive to operators and costumers Mobility is the key differentiator from fixed Internet or VPN access In PT Group operations were flat rate plans at reasonable prices became available, the usage of the network for this kind of services exploded What about WiMAX? QoS? Bandwidth at high speeds? Very promising but still to prove Converging WiMAX to 3GPP/3GPP2 network architecture would help 11
Video Streaming Experience In our European Operator (TMN/Portugal) one of the top services involve streaming of media content (mostly video content) Several types of clips (Sports, weather forecast, adult content, comics, etc) TV content (a wide offer of live channels and on-demand) Video streaming is a very challenging service A real Differentiating service for 3G Networks Different QoS levels and user expectations Different levels of maturity on the device side Different options in terms of charging models In PT Group CDMA operation (VIVO/Brazil), video services were launched 1 year ago supported in a platform delivered by PTI also with very good results Despite the fact that fewer CDMA streaming compliant handset models are available compared to the W-CDMA world 12
P T Inovação Media Streaming Services over 1xEVDO Service Evolution Live broadcasting services are a very appealing service, but before rel. A they could be expensive to delivery (over Unicast or even MCBCS rel. 0) Advantages of moving to 1xEVDO rel. A Platinum Multicast support Great advantage for Media Streaming services QoS allowing the differentiation of traffic types on the network Increased bandwidth (up to 3,1 Mbps Downlink and 1,8 Mbps Uplink) Evolution of the 3GPP2 Multicast and Broadcast Service (MCBCS) today definitely requires the new features of rel. A 13
1x EVDO rel. A: Important new features Priority based QoS Platinum Multicast More Capacity Better air channel management * Source (Qualcomm) 14
Download Services: Music Downloads The increased bandwidth of EVDO enables the deployment of real Mobile Music Download services Full MP3/AAC tracks with CD quality Reduced download times making the service very user friendly Direct delivery to MP3 enabled handsets PTI is providing a strong platform (MMBox/DiNO Framework) to handle this kind of services to PT Group operators allowing them to have: Very Flexible content management Mechanisms and content ingestion interfaces OMA DRM compliant digital rights management and strong revenue protection mechanisms Very rich business models that take advantage of OMA DRM mechanisms like OMA DRM Separate Delivery with Super Distribution Support of Multimodal Content Discovery Interfaces WAP, WEB, Voice, SMS, etc In CDMA Arena, handsets still lack some important features compared to the GSM/W-CDMA world Eg. Lack of wide spread Full DRM support MediaFLO s CA (proprietary Qualcomm DRM)?? 15
P T Inovação 3GPP2 MMD (and 3GPP IMS): An Architecture to support Interactive Multimidia services on existing 1xEVDO Implementations 16
P T Inovação IMS/MMS VoIP and Video Telephony Services Advantages of 1xEV-DO rel. A 1xEV-DO rel. A: Advantages for VoIP and VToIP Priority based QoS Enables Voice traffic to be prioritized on the access network; Voice and VToIP are Real Time services, very sensible to delay, jitter and packet losses on the network Smaller latency than previous DO release In rel. 0 latency is always >100ms, not sufficient for high quality voice and VT services; Increased bandwidth on the Uplink Key issue, since VoIP and VToIP are symmetrical services Better handover times in packet mode In rel. A, handover latency was reduced to ~ 40ms in packet mode PTT Voice service over IP is very different from RT Voice/Video Telephony, and does not raise any of the upper issues PTToIP services are commercial in several PT Group operations for some years 17
P T Inovação Redes 3G 18
P T Inovação Example IMS/MMD Services Developed by PT Inovação: Vídeo Portal, FMFM Video Portal Video Telephony accessed portal (via SIP) that provides video based multimedia content Find Me Follow Me (FMFM) Rule based handling of VoIP Calls, supporting dynamic redirecting and rule based call forwarding 19
P T Inovação Example IMS/MMD Services Developed by PT Inovação: Video Conference, Unified Messaging Audio/Video Conference IMS based Conferencing application supporting real time group multimodal communications (voice, video, images, text, emoticons) Unified Messaging Universal access to a unique mailbox for all types of messaging Voice Mails Video Mails E-Mails SMS, MMS Voice/Video Mail Interface access via SIP/IMS 20
P T Inovação Example IMS Services developed by PT Inovação Interworking between 3G Videotelephony and PC based videotelephony Interworking between the Instant Messaging platform from a PT group ISP, SIP based Networks and IMS VT support on the IM client Interworking with 3G (W-CDMA) VT (H.324M) and IP VT (H.323 and SIP) 21
P T Inovação Example IMS Services developed by PT Inovação IMS Based vpabx/ip Centrex vpabx/ IP Centrex Software based application that replaces traditional fixed network based PABX systems and uses mobile devices Main Features Short number dialing Auto Attendant Attendant (call transfer, call reroute, sending SMS, sending e- mail, chat etc) Voice Activated Dialing (Yellow Pages) Automatic Call Completion (ex. location based) Explicit Call Transfer Do Not Disturb etc 22
:: Agenda Portugal Telecom Inovação Overview Mobile Broadband: Some issues EV-DO and Services: Our Experience Some standing issues Final Remarks 23
Some Standing Issues CDMA2000 technology is evolving fast on the network side. 1xEVDO recent evolutions are good examples But slower on handset development Less features and less models than in W-CDMA The bandwidth made available needs appropriate services, otherwise is poorly useful Video services are a very important aspect Broadcast services may tend to move to different bearer technologies (ex. DVB-H); Multicast over DO is assuming a very important role and should be commercially anticipated VideoTelephony services should be quickly made available on CDMA; VT is a basic W-CDMA service today Convergence and network level integration with IEEE 802.x standards should be a target for the industry 24
:: Agenda Portugal Telecom Inovação Overview Mobile Broadband: Some issues EV-DO and Services: Our Experience Some standing issues Final Remarks 25
Final Remarks 1xEVDO technology helped Vivo in a very efficient way to increase the bandwidth made available to its customers and to start deploying new services unavailable to the existing GSM based local competitors Recent evolutions on 1xEVDO are very promising (rel A, B and C) 1xEVDO is allowing PTI to develop innovative services that take advantage of this bandwidth Most of the available high bandwidth services available in W-CDMA (UMTS) networks and already deployed in Europe can be easily ported to CDMA 1xEVDO Real convergence between W-CDMA and CDMA2000 standards would bring huge benefits to mobile operators 26
:: Thank You João Paulo Firmeza: pfirmeza@ptinovacao.pt 27