TOE: a theory of everything An integral vision of fixed and mobile broadband

Transcription

1 TOE: a theory of everything An integral vision of fixed and mobile broadband Daniel Collico Savio - collicod@telefonica.com.ar Telefonica de Argentina Sept 2004 ITS Berlin conference

2 Index 01 Frameworks 02 Elements of a broadband framework - Customer perspective -Telcos, Cellcos, 3rdCos. 03 Broadband dynamics in Argentina - Survival, competition, acquisitions 04 Trends -P2P vs QoS. - (Fixed vs Mobile) broadband -The Higgs Boson of Broadband 2

3 Preface: The hidden plot of Broadband Picasso vs. Velazquez: a Framework effect. Source: A. Slywotzky / A. Piscitelli 3

4 TOE for Physics Classic world : some causes ==> some effects. Math is more complex in small distances and high speed. TOE is an almost consistent set of particles and forces. Higgs boson: Why matter has mass? c Q + R Relativity Speed Quantum Mechanics Classical World Distance 4

5 TOE for Broadband Choose some pieces of the puzzle. Variables: reach of broadband and mobility. Consider equally valid Customer perception Telcos and Cellcos actions. Customers DSL, HFC Wi-Fi, Wi-Max Price Culture Broadband Technology Fixed Telephony MobileTelephony 3rdCos Telcos Cellcos Mobility 5

6 TOE for broadband in detail Customers Price Culture Technology Telcos Cellcos 3rdCos 6

8 Broadband TOE Elements Customers Price Culture Technology Telcos Cellcos 3rdCos 8

9 Customers - What do they want? ADSL Mega Most valuable attribute Always-On Speed Fixed price Ns/ Nr 40% 36% 24% - 36% 39% 24% 1% 38% 39% 22% 1% 34% 39% 27% - 45% 33% 22% 1% Universe Related cellco Movicom Unifón CTI Personal 38% 33% 30% 21% 41% 34% 28% 19% 39% 33% 25% 20% 44% 34% 34% 17% 38% 27% 35% 24% Universe P: 1.23/ NSE12/NSE13 9

10 Customers - P2P traffic Let there be music vs reasonable QoS Copyright and download abuse. P2P represents about 85% of broadband traffic. Sure, with flat tariffs Telcos would have a problem. 72% genuine P2P traffic 13% TCP = undercover P2P traffic 12% HTTP traffic 10

11 Customers - Usage Pattern 5% of the customers downloads 40% of the traffic. 95% of the remaining customers suffer bandwidth congestion. Heavy users Low users GB 70,00 60,00 50,00 40,00 30,00 20,00 10,00 0,00 63,52 54,1% 60% Traffic (Download) per user % users 50% 40% 34,37 30% 22,80 16,6% 20% 15,86 11,18 9,8% 0,6% 1,1% 1,6% 2,3% 7,83 5,36 10% 3,1% 4,4% 6,5% 3,48 2,02 0,56 0% Decil Source: Telesp Users 11

12 Telcos - Rationale Fact: broadband has not reached maturity. Mantra: Critical Mass, Triple Play, reach Mainstream So: Capex, Opex Economic and cultural barriers Mass of customers ARPU increases Triple play and content business are possible. But... Some QoS problems. 12

13 Telcos - Night valley Night valley ISP T elefonica - Traffic 31/5/ kbps 512 kbps TOTAL 0 0:00 2:00 4:00 6:00 8:00 10:00 12:00 14:00 16:00 18:00 20:00 22:00 13

14 Telcos - Off with the P2P traffic The Queen turned crimson with fury, and, after glaring at her for a moment like a wild beast, screamed: Off with her head! `Nonsense!' said Alice, very loudly and decidedly, and the Queen was silent. The King laid his hand upon her arm, and timidly said Consider, my dear: she is only a child! Alice's Adventures in Wonderland by Lewis Carroll 14

15 Telcos - Traffic management P2P / VoIP VoIP Provider 9 to 5 Cap P2P / VoIP VoIP Provider 3Mb/s Best effort QoS Reasonably High Premium QoS 1Mb/s 15

16 Telcos - Critical Mass # ADSL-ready sw itches DSL Media budget (M USD) % DSL income 7% 6% 5% % 3% 2% 1% 0 ene- 02 may- 02 sep-02 ene- 03 may- 03 sep-03 ene- 04 may- 04 sep-04 0% Source: Telefonica de Argentina 16

17 Cellcos: beyond the core business Expected speeds vs Real Speeds Table 1: Bandwidth expected for outstanding mobile technologies Generation Mobile technology Theor. Data Speed (Kbps) Actual Data Speed (Kbps) Forecast data speed (2006) (Kbps) Comments 2G GSM Vanishes in G HSCSD G CDMA Not available in G GPRS G EDGE G UMTS 2 M G OFDM 20 M -? Not expected until 2008 Source: Siemens, Durlach report 17

18 Cellcos: trade-off between BW and Reach 100 BW Mb/sec 10 WLAN 1 Wi-Max 0.1 Wi-Fi EDGE 3G 3G 0.01 GPRS GSM GPRS Reach In the Hot-spots Cities Suburbs, Country- Developing Entire office central towns side countries planet Source: Stockholm School of Economics 18

19 3rd Cos: everything but Telcos and Cellcos 3rdCo = a given unexpected technology or application. An expensive technology may grow only in the spaces left by dominant, cheaper technologies. Wi-Fi slowly may find its way only in certain niches left by conventional fixed broadband Wi Max (in theory) seems better. Examples = f(time) AirData in Stuttgart Wi-Fi islands in Buenos Aires suburbs. Wi-Fi applications instead of GPS developments. 19

20 3rd Cos: Wi-Fi deployment in Buenos Aires PARQUEND PILAR BENAVIDEZ COOP FATIMA GARIN COOP LA LONJA COOP DEL VISO LOPEZ CAMELO EL TALAR SAN FERNANDO BECCAR SAN ISIDRO PILAR COOP DERQUI COOP TORTUGUITAS YAPEYU COOP GRAND BOURG HORACIO QUIROGA DON TORCUATO BOULOGNE MARTINEZ OLIVOS LOS POLVORINES JOSE C PAZ VICENTE LOPEZ VILLA DE MAYO MUNRO CHURRUCA CARAPACHAY VILLA BALLES TER VILLA MARTELLI NAMUNCURA VILLA ALTUBE SAN MIGUEL BELLA VISTA LOMA HERMOSA VILLA BOSCH Capital Federal TRUJUI SAN MARTIN JUNCAL HURLINGHAM MITRE REPUBLICA TAL CAHUANO CUYO AVENIDA LA FRATERNIDAD GENERAL RODRIGUEZ ALMAFUERTE LAS CATONAS MARILO EL PALOMAR CASEROS JONTE LEZICA RIVADAVIA CABALLITO LORIA PIEDRAS PARRAL INCLAN BUEN ORDEN FRANCISCO ALVAREZ MOLINA CAMPOS LELOIR MADAME CURIE CIUDADELA LINIERS RAMOS MEJIA HAEDO VERNET FLORES FLORES TA CULPINA CORRALES RODO BARRACAS AVELLANEDA POMPEYA MORENO NUEVA CHICAGO ITUZAINGO L DEL MIRADOR PIÑEYRO MORON SARANDI MERLO VILLA LUGANO RECONQUIS TA JORGE LUIS BORGES INGENIERO BRIAN WILDE TABLADA SAN JUSTO ALMIRANTE BROWN EL PROGRESO PARQUE SAN MARTIN ITUZAINGO SUR BARRIO PAZ LANUS ISIDRO CASANOVA REGIMIENTO GABRIELA MISTRAL LIBERTAD VILLA PALITO VILLA CARAZA MERCADO MONTE CHINGOLO COOP MARIANO ACOSTA VIEJOBUENO BERNAL QUILMES VILLA MARGARITA EL CORTIJO RAFAEL CASTILLO SAN AL QUINQUELA BERTO MARTIN GENERAL GUEMES VILLA ALBE RTINA BANFIELD PASCO BARRIO BENQUEZ F SOLANO VILLA SOBRAL BERAZATEGUI JACARANDA PONTEVEDRA ROBERTO ARLT LAFERRERE ALEJANDRO BUSTILLO TRANSRADIO SANTA CATALINA LOMAS SAN JOSE F SOLANO OESTE RECREO SAN FRANCISCO EL DORADO VILLA ALFONSO TOLEDO MARCOS PAZ GONZALEZ CATAN MIGUEL CANE EL CEIBO EL RINCON EL TRIANGULO LLAVALLOL RANELAGH VILLA SANTO DEL PLATA TOMAS GUADALUPE VILLA CALZADA SANTOS VEGA ZEBALLOS FLORENCIO VARELA ADROGUE EL ROCIO AEROPUERTO MONTE GRANDE DON ORIONE BARRIO LINDO BURZACO JOSE DE AMENABAR JOSE HERNANDEZ P PUEYRREDON PARANA COOP VIRREY DEL PINO EZEIZA ALTO ALEGRE ORTEGA LA SOFIA LONGCHAMPS CORIMAYO EL REFUGIO LA UNION GLEW TRISTAN SUAREZ GUERNICA COLONIA LA CAPILLA COOP EL PATO CARLOS SPEGAZZINI Source: Telefonica, Dirección de Red Source: courses/335/fractals 20

22 Argentine post crisis Peso arg / U$ dolar relation changed from 1 to ~0.3 Broadband CAGR ~ 80%-90%, in 2003 and 2004 (e). ADSL became predominant GDP expected ~ 5% Market for 4-5 competitors. Source: The Economist 22

23 Broadband correlation with PPP (1) South Kor USA* Neth Canadá Japan Germany France Spain Chile Sao Paulo Argentina Brasil México Venezuela Perú PCs penetration 2002, PCs/100 hab. 16,8 11,9 12,5 8,2 7,5 6,9 5,3 4,8 55,6 62,5 42,8 48,7 38,3 43,5 34,7 Internet penetration 2002, Users/100 hab. 55,2 53,8 53,0 48,4 44,9 42,4 31,4 19,3 20,1 14,1 11,2 8,2 4,6 5,0 7,7 ADSL penetration 2002, Users/100 hab. 14,0 2,4 2,8 5,4 5,5 4,4 3,0 2,9 0,8 NA. 0,2 0,3 0,1 0,2 0,2 Source: Telefonica SA 23

24 Broadband correlation with PPP (2) 6,00 R 2 = 0,71 5,00 ADSL Penetration per 100 habs (Dic 2002) Japón Canadá 4,00 Singapur Noruega 3,00 España Francia US 2,00 Italia 1,00 0,00 Chile Co lo mbia Brasil Perú India UK Hungría P ortugal A rgentina República Checa Filipinas MéxicoPolonia PPP (U$) Source: Telefonica SA 24

25 Broadband competition in Argentina 3 technologies, 5 players Wireless 21% 9% 7% 5% 42% 42% 39% 3% 29% HFC 76% 49% 51% 56% 68% ADSL 3% E DSL share 50% 45% 46% 52% 55% Customers (MM)

26 Mobile competition in Argentina Customers (MM) Unifón Bell South Personal CTI 2 technologies, 3 players 4,0 22% 30% 28% 20% 6,3 26% 26% 33% 15% 6.7 6,5 27% 24% 32% 17% 27% 20% 33% 18% 7,3 25% 20% 36% 19% Customers MM) 2,1 3,2 3,4 3,1 3,3 ARPU ($)

27 Competition of three Operator Shareholders Core + Zone Target Strategy Cointel 64.8% Telefónica Int 32.3% All services South Household SMEs Corporate DSL expansion Mix of technologies (Bell South) Werthein 48% France Telecom 2% Telecom Italia 50% All services North Household SMEs Corporate DSL: keep the move. Mobile: no acquisitions Telmex América móvil Techtel, y Techint Main cities Household (with CTI) SMEs Corporate Becoming 3rd operator. New technologies. Unique mobile technology for the whole region. 27

28 Market dynamics Shareholders strength Telmex 900MM$ AT&T CTI Techtel Metrored Telefonica 4.800MM$ Unifón Speedy Movicom Bellsouth Telefónica x Broadband ISP y Cellco Telecom 3.800MM$ AT&T Coop Bellsouth Prima Personal Arnet Telecom Argentina Fibertel Impsat UOL. Debt 28

30 4 Broadband TOE and trends 1 Customers Price Culture Technology Telcos Cellcos 3rdCos

31 Channel / Medium Customers - Communication trends Table 2: Cultural Evolution of speech modes (Ref. 11, 12) Mode Innovation / Result Year (aprox) Comments Primary Speech Language Information exchange Here and now. Orality Literacy Writing Writing Info exchange beyond the here & now. 1 Alphabetic Literacy Writing Phonetic writing -700 Greek phonemes made writing easier. However, for centuries writing and reading was still an elite privilege. Silent Literacy Writing Silent, private reading Print Literacy Teleliteracy - Phase 1 Teleliteracy Phase 2 Teleliteracy Phase 3 Movable type Electronic, audiovisual Multimodal Multimodal Mass literacy (books) Mass communication (TV, Radio) Nonlinearity (Hipertext, ) Nonlinearity (Messaging, Texting, Blogging) 600 British monks added punctuations signs to Scriptura continua. Reading aloud became possible Gutenberg s printing press invention made books less expensive. Reading became popular Birth of true mass communication. Orality came again, but in the form of waves of electromagnetic energy Information available at one click. The text abandon linearity (there is no beggining and end in a text). Writing returns via s Both messaging and texting are writing-like speech, both are very cheap. Blogs arrival. 31

32 Customers - Usability trends 3G Fixed Broadband vs Mobile broadband Display = 100 vs Display = 1 BW = 100 vs BW = 1 (GSM) Leisure vs Pieces of relevant info Quietness vs Any mobility situation 32

33 P2P management Handle different QoS levels according to distinct groups 2 P2P Caching P2P Blocking Traffic Capping/Shaping P2P Policy Management From ISP view Copyright problems Increases Churn Solve some BW problem. Stops abusive downloads of heavy users Tech difficults Cost reduction. Satisfaction of customers Customer perspective Better perfomance Bottleneck Negative impact. Increases Customer claims. Negative impact. 2% customers involved, but about 25% complaining Transparent. P2P Content developer perspective Uncertainty. ISP takes control of P2P content? Wouldn t do any P2P development. Wouldn t do any P2P development. P2P business may grow. 33

34 Trends in mobile broadband 3 Open questions: Is broadband the core business? The fight CDMA vs GSM-GPRS is over? In Argentina both answers are NO. In addition: Not enough bandwidth More investment needed 2005: Edge islands around Buenos Aires, Córdoba and Rosario (main cities). Next move: broadband regional acquisition by Telmex 34

35 Pricing broadband services Prices shown for a 256 kbps flat service. 20% gap 256 ==> % gap 100 km ==> 500 km ==> 1000 km. Variables No gap between hoseholds and SMEs. General trend: 10% declining in 1st semester Fee ($arg) Fee (USD) USD ($arg) Ene-02 May-02 Sep-02 Ene-03 May-03 Sep-03 Ene-04 May ,5 3 2,5 2 1,5 1 0,5 0 35

36 The Higgs Boson of Broadband P2P is a driver, not a threat. Set QoS to certain targets. Pay-as-you-go tariffs. Blogging + Mesagging Content context-oriented Broadband penetration = an effect of all the precedent. Thank you! Daniel Collico Savio - collicod@telefonica.com.ar Telefonica de Argentina Sept 2004 ITS Berlin conference 36

37 Backup 01 Frameworks 02 Elements of a broadband framework - Customer perspective -Telcos, Cellcos, 3rdCos. 03 Broadband dynamics in Argentina - Survival, competition, acquisitions 04 Trends -P2P vs QoS. - (Fixed vs Mobile) broadband -The Higgs Boson of Broadband 05 Backup (any questions?) 37

38 Tendencias en 3rdCos Wi-Fi: Mobile context. Cellcos customers? Broadband given by a Telco. Los terminales son variados. El ingreso es mínimo. Air Data (Stuttgart): 3G adaptado a acceso DSL. Terminal portátil pequeño. El resultado: hotspot portátil. 38

39 America Móvil: converging in xxx tech 39

40 Figs Source: Telefonica, DW 40

41 Variable services: per time and per byte Esp Price per bytes Price per time (1) 41

42 Products per time: Night and Week End Keep the always on spirit within frontiers. Flat Pay as you go Week End M Tu W T h F S a S u M

43 Broadband per byte products Enhancing speed with low traffic boundaries. Price / month (EUR) High Speeds Charge for extra GB 500 full Speed 2000/250 Home /250 Sug 3G 256/128 Low Speeds. Somewhat low Traffic boundary (3 GB). Charge for extra BG or speed reduction Telekom New Zaland Surf flat rate (256/128) (2) 0 0, Max 10 GB GB/month 43

44 Broadband correlation with PP Low penetrations (about 5% ) Strong correlation with purchase power. 35% 30% 25% Dialup Broadband Dialup + Broadband 22% 24% 28% 26% 31% 25% 30% 20% 15% 10% 5% 0% 5% 6% 7% 8% 10% 11% 12% 0% 1% 1% 1% 13% 15% 2% 17% 20% 3% 4% 5% 5% Segment Source: Telefonica, DW 44

45 Wireless developments and Fractals Source: Fractal Cities 45