NETWORK & INFRASTRUCTURE. Lisbon, 29 & 30 October 2012 Portugal Telecom Technology & Innovation Conference 0

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1 NETWORK & INFRASTRUCTURE Lisbon, 29 & 30 October 2012 Portugal Telecom Technology & Innovation Conference 0

2 LEADING IN FTTH Pedro Falcão Head of network planning Portugal Telecom Technology & Innovation Conference 1

3 DATA EXPLOSION Data rate at peak hour Gbps transport network. DL Usage daily profile Gbps transport network. DL Internet traffic per customer Gbyte per month. UL+ DL Internet IPTV 25x 46% 76% 100% 43% 47% 51% 54% IPTV Internet GB 26 GB 62% 42 GB FTTH ADSL Wireless Broadband Only one year after its launch (2007), IPTV surpassed the Internet traffic. This tendency was only reversed in 2011 due to internet video streaming. Portugal Telecom Technology & Innovation Conference 2

4 REASONS FOR DEPLOYING FIBRE Almost no civil work is needed: widely spread duct infrastructure RF-Overlay: Not possible with copper Street cabinets require municipal licenses in Portugal Fibre has attractive cost structure (Capex and Opex) Portugal Telecom Technology & Innovation Conference 3

5 SUSTAINABILITY AND SPEED Energy consumption Indexed Maximum bandwidth Mbps -4/5x 1, xdsl Physical space needs Indexed -4/6x GPON ADSL 2+ Symmetry Uplink/downlink x12 VDSL 1 50% GPON 50% 4% xdsl GPON ADSL 2+ VDSL 1 GPON 1VDLS2 with vectoring Portugal Telecom Technology & Innovation Conference 4

6 HIGHER TAKE UP AND HIGHER QOS Higher take up Indexed Service faults 2012YTD. Per customer +22% -40% Copper Fibre Copper Fibre Portugal Telecom Technology & Innovation Conference 5

7 PT BUILT A FUTURE PROOF ACCESS NETWORK GPON today allows for 2.5Gbps per PON NGPON2 will allow in the future for 40Gbps per PON Portugal Telecom Technology & Innovation Conference 6

8 TO CHALLENGE AN FTTH NETWORK YOU NEED FTTH Cable spectrum limitation Upstream Downstream Data Analogue TV 120 Mbps Trade-off Speed per customer Digital TV IP services 1.5 Gbps # customers # digital channels # analog channels 862 MHz Typical residential scenario GPON DOCSIS 3.0 # customers IP bandwidth available Gbps Average bandwidth per customer Mbps Downstream Upstream Portugal Telecom Technology & Innovation Conference 7

9 PT HAS A COMPREHENSIVE FTTH COVERAGE 1.6 million of homes passed with 890 thousand km of fibre 46% of the population covered with fibre, which represents approximately 74% GDP Portugal Telecom Technology & Innovation Conference 8

10 FTTH ENABLES THE CONNECTED HOME Fibre is the future proof solution to cope with truly Connected-Home and nextgeneration services. Copper based technologies are limited solutions that will be decommissioned in the longterm Portugal Telecom Technology & Innovation Conference 9

11 FIBRE AND RADIO ARE BOTH COMPLEMENTARY AND ALTERNATIVE 4G FTTH Fibre provides radio backhaul Fibre with WiFi and radio can act complementary Fibre and radio can be alternative broadband accesses Portugal Telecom Technology & Innovation Conference 10

12 FTTH FUTURE ROLLOUT PLANS PT has a long term programme to move towards all-fibre central offices: Technical survey Measures to an all fibre environment: All IP Fibre services at fibre CO s only. Only sell fibre 3-Play bundles at Fibre areas. Network survey Real Estate value NPV ranking Final map New fibre-based services for all market segments 1900 copper central offices Opex costs 500 fibre central offices Use fibre wholesale offers in rural areas Promote a smooth migration from wholesale copper based offers (ULL and co-location) in a regulatory framework Portugal Telecom Technology & Innovation Conference 11

13 FROM FTTH TO FIBRE EVERYWHERE Residential 1.6 million of homes passed >46% of Portuguese population Business and enterprises New attractive offers are increasing the fibre share Local community: >40% of schools connected with fibre Mobile backhaul: 92% of PT cell sites already have fibre for backhauling WiFi backhaul Migration to fibre in progress Portugal Telecom Technology & Innovation Conference 12

14 4G LTE MOBILE NETWORKS Portugal Telecom Technology & Innovation Conference 13

15 DATA CONSUMPTION IS SURGING Strong momentum in mobile broadband Tablets = x Number of devices in Portugal Million Other handsets Smartphones CAGR Smartphones = 35 1 x +0.3% % 90% +55% % Laptop = x 51% 10% E Handsets E Tablets E Data cards 1 Montlhy basic mobile phone data traffic Source:Cisco VNI Mobile 2012 Portugal Telecom Technology & Innovation Conference 14

16 4G LTE IS THE MOST EFFICIENT DATA NETWORK Coverage (Average area ratio vs 800MHz) Capacity (Mbps) Spectrum(MHz) All-IP technology Ratio 4G/3G X (LTE) 10 (LTE) 10 (HSPA +) Very low Latency More efficient network High spectral efficiency LTE capacity and coverage 13% 17% 22% 100% LTE peak data rates Portugal Telecom Technology & Innovation Conference 15

17 COMPARATIVE ANALYSIS FOR 2G, 3G AND 4G LTE Voice customers per MHz 1 Customers Relative cost per bit 2 Percentage 100% 80% X 60% 40% 5 X 10 X % 5 0 2G 3G 4G 0% 3G 4G Freq 800 4G Freq 2,6 1 Estimated values 2 Estimated values, only considering the radio component (enb, NB and RNC) Portugal Telecom Technology & Innovation Conference 16

18 USE OF DIFFERENT FREQUENCIES Coverage 800 MHz 900 MHz 1800 MHz Dense Urban/ Urban Sub Urban LTE 2 x 10MHz GSM and GSM LTE 2 x 8MHz GSM GSM and LTE 2 x 20 MHz Rural Frequency / Technology combinations: 2G technology in 900 (national coverage) and 1800MHz bands 3G technology in 2100MHz band 4G LTE technology in 800 (national coverage) and 1800MHz bands Capacity 2,1 GHz 2,6 GHz LTE 2 x 20MHz UMTS 2 x 20MHz 4G LTE technology in 2.6GHz band preferred for dense urban areas Portugal Telecom Technology & Innovation Conference 17

19 PT HAS A CLEAR MOBILE EVOLUTION STRATEGY Voice From Medium Term (>2015) Long Term (>2020) Extra 1800 spectrum Start migration of 2G/3G to improve GSM voice VoLTE quality Migration to VoLTE Rationalise 2G/3G Data Start migration of data traffic to 4G Complementary WIFI coverage for tablets/ smartphones Maintain 3G QoE Migration of 3G Smartphone s and MBB to 4G Leverage on LTE to increase capacity Maintain 3G QoE Rationalise 2G/3G Portugal Telecom Technology & Innovation Conference 18

20 90% OF POPULATION WITH 4G COVERAGE TMN s 4G LTE network coverage Percentage population At launch pp +20 March12 April12 December12 Up to 150Mbps Portugal Telecom Technology & Innovation Conference 19

21 MORE EFFICIENT NETWORK Minimise traffic signalling in network Increasing battery time Modernisation of all 2G network in % reduction of aggregation nodes Consumption efficiency Watts 100% 80% 60% 40% -30% 66% reduction of 800MHz sites when compared with UMTS 2100 MHz 20% 0% Old Generation Equipment New Generation Equipment Portugal Telecom Technology & Innovation Conference 20

22 MOBILE NETWORK SHARING Alternatives: infrastructure, equipment and national roaming tmn PT currently has 31% of sites already sharing infrastructure vs. 28% of European average 1 (15%-50%) Other 1 average with Austria, Germany, Romania, Italy and UK Source: Berec Portugal Telecom Technology & Innovation Conference 21

23 EVOLUTION WITH LTE ADVANCED (LTE-A) Peak Rate (Mbps) Spectrum band 300 LTE-A 150 LTE 75 LTE 42 HSPA+ 2x5 MHz 10 MHz 20 MHz 40 MHz Spectrum bandwidth 2.6 GHz 1800/ GHz 1.8 GHz 800 MHz 2.1 MHz LTE LTE-A Releases 8-9 Release 10 Peak data rates up to 3Gbps DL, 1.5Gbps UL, achieved with 100MHz bandwidth Portugal Telecom Technology & Innovation Conference 22

24 HETEROGENEOUS NETWORK WITH SMALLCELLS Better quality of experience to the user with low power smallcells and advanced interference management Portugal Telecom Technology & Innovation Conference 23

25 SELF ORGANISING NETWORKS (SON) ARE SIMPLE AND EASY TO OPERATE Self-configuration tasks Self-optimisation tasks Planning Implementation Optimisation O&M Better Quality of Experience and Cost reduction (30%) Benefit for customer: Self-optimisation and selfhealing Portugal Telecom Technology & Innovation Conference 24

26 PT IS PREPARED FOR GROWTH IN MOBILE 92% of sites connected with fibre and 100% of 4G LTE sites with IP/Ethernet technology Best national 2G and 3G national coverage >90% of population covered with 4G LTE in the end of 2012 IMS powered advance services like Rich Communication Suite (RCS) and VoLTE TMN s 4G LTE network is a quality reference Portugal Telecom Technology & Innovation Conference 25

27 FIXED MOBILE NETWORK INTEGRATION Portugal Telecom Technology & Innovation Conference 26

28 DRIVING SYNERGIES FROM CONVERGENCE Network Application Shared infrastructure Common service platforms Unified network planning and operations Seamless service delivery PT WIFI Terminal TMN 4G Home Lifestyle Work Anywhere Same user quality of experience Cross network optimisation User traffic profile Network data mining Coverage / Location Portugal Telecom Technology & Innovation Conference 27

29 WIFI AS AN OPPORTUNITY FOR TRAFFIC OFFLOAD 3G/4G-like experience to WiFi WiFi PT PT WIFI TMN 4G Seamless subscriber authentication (EAP-SIM) Automatic 3G/4G LTE offload to WIFI PT Hotspot Seamless handover between hotspots Enhances customer mobility Increases customer loyalty and satisfaction Portugal Telecom Technology & Innovation Conference 28

30 WIFI OFFLOAD EVOLUTION Upgrade hotspots to fibre Outdoor WiFi coverage on public phone booths WiFi residential community Managed seamless mobility between 3G/4G LTE and WiFi Portugal Telecom Technology & Innovation Conference 29

31 TOWARDS A CONVERGED ALL-IP INFRASTRUCTURE Services All IP based architecture Control & Connectivity Converged All-IP network Ultra high speed IP Backbone Support for different service characteristics Leveraging IP costefficiency Access Fibre Flat, reliable, scalable and high availability network Portugal Telecom Technology & Innovation Conference 30

32 MONETISING THE NETWORK INVESTMENT Monetise fibre deployment Fibre to cope with data explosion Fibre to all cloud applications and services Fibre as a premium network backhaul solution Explore network unused capacity Happy hours and QoS data plans M2M on low load network hours Smart transparent cache of most popular content Leverage fixed mobile convergence Fixed services over 4G LTE WiFi Offload Fixed + Mobile convergent Cloud services Embrace technology evolution NGPON2 on existing fibre outside plan SON to optimise radio network resources LTE Advanced to increase throughput (>300Mbps) Portugal Telecom Technology & Innovation Conference 31

33 PT S FUTURE PROOF NETWORK State-of-the-art Access Network High Capacity Transport Network Leading-Edge Storage and Cloud Single Edge 100 Gbps IP/MPLS Datacentre Internet Any Service Any Place Any Device! Portugal Telecom Technology & Innovation Conference 32

34 LEADING EDGE DATA CENTRE José Pedro Salas Pires Head of IT and data centres Portugal Telecom Technology & Innovation Conference 33

35 INFRASTRUCTURE IS KEY TO OFFER CLOUD SERVICES Cloud Requirements Transport networks and high capacity access PT Status Quo PT backbone capacity of 40 Tbps and speed up to 100 Gbps Over 1.6 million FTTH homes passed Leading 4G LTE covering 90% of the population in the end of 2012 Storage and compute capacity Largest national data centre network Largest in Portugal and 6 th largest data centre in the world Capacity to house over 50,000 servers and 30 PB of storage Portugal Telecom Technology & Innovation Conference 34

36 BIG DATA GROWTH IS EXPECTED Better connectivity Mbps x 200 Video virtualisation growth Percentage Global data centre capacity Thousand TB ~6x TV PC Smartphone Global data traffic growth E 66x 5x Fixed Mobile Portugal Telecom Technology & Innovation Conference 35

37 PT S NEW GENERATION DATA CENTRE 12 thousand sqd meters of white space 4 data centre blocks 40 MW of power capacity Innovative free cooling solution Connected to 100Gbps PT backbone Portugal Telecom Technology & Innovation Conference 36

38 LOW ENERGY CONSUMPTION... Sustainability Consolidation Certifications Target of a PUE below 1.25 (PUE global average ~2) Green Power Over 70% use of renewable energy resources Consolidation allowing cost reduction and efficiency improvement Energy cost reduction over 40% Operations running cost reduction over 20% LEED Platinum (support services building) & Gold (data centre block) Tier III certified data centre by the Uptime Institute ISO20000 and ISO27001 Portugal Telecom Technology & Innovation Conference 37

39 ...AND A BENCHMARK IN THE INDUSTRY Communications network High speed and capacity fibre optical network available Network redundancy and resiliency Data centres network Human capital Disaster recovery / Business continuity processes implementation Cutting-edge technology Highly skilled, trained and motivated teams (>2000 IT professionals) Expertise and experience on the development, implementation and management of end-to-end cloud services and products Collaboration agreements with the top Portuguese Engineering University Portugal Telecom Technology & Innovation Conference 38

40 EXTENSIVE CONNECTIONS TO STRATEGIC TERRITORIES TAT-14 COLUMBUS III WEN AMERICAS -2 EIG ATLANTIS-2 WACS SAT-3 SAFE SEA-ME- WE-3 Portugal Telecom Technology & Innovation Conference 39

41 TRANSFORMATION JOURNEY TO THE CLOUD Consolidation : Reduction from 5 to 2 DC, Lisbon and Covilhã Virtualisation: Up to 8 Virtual Machine per physical server 56% PT servers virtualised Shared Storage Standardisation: From Dedicated, Vertical Stacks to Dynamic Pools of Compute and Storage Cloud to Cloud Connectivity, Public-Private and hybrid cloud Portugal Telecom Technology & Innovation Conference 40

42 NETWORK & INFRASTRUCTURE Lisbon, 29 & 30 October 2012 Portugal Telecom Technology & Innovation Conference 41

43 NETWORK & INFRASTRUCTURE Lisbon, 29 & 30 October 2012 Portugal Telecom Technology & Innovation Conference 42

44 NETWORK & INFRASTRUCTURE Lisbon, 29 & 30 October 2012 Portugal Telecom Technology & Innovation Conference 43

45 NETWORK & INFRASTRUCTURE Lisbon, 29 & 30 October 2012 Portugal Telecom Technology & Innovation Conference 44

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