ITU Regional Seminar
on IMT-2000 for the Arab Region
Doha (Qatar) 29 Sep. - 1 Oct. 2003
3G Mobile Services in the Arab Markets
- Regional Issues and Challenges
Dr. Ibrahim A. Kadi
Professor of Communication & Electrical Engineering,
King Saud University, Riyadh, KSA
Senior Member IEEE
Ikadi@ksu.edu.sa
3G Regional Issues & Challenges
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Topics
F Mobile Telecommunication
F Mobile Communications in the Region
F Mobile Data Services
F Regional Issues for 3G
F Conclusions
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1
Mobile Communications
F FASTEST GROWING SECTOR (1991-2003):
n
Users : (16? 1329) 83 fold
(45% AAGR)
n
Revenue s : ($19B ? 414B) 22 fold (30% annually)
F DIFFERENT SERVICES/SYSTEMS:
n
Land Mobile
(e.g., GSM, IS-95)
n
Satellite Mobile
(Thuraya)
n
Voice & Data
(GSM, 3G)
n
Data only
(INMARSAT-C)
n
n
Paging only
Positioning
(ERMES, FLEX)
(GPS, Glonas)
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3G Regional Issues & Challenges
The Market Just keeps Growing
ICT USERS (millions)
2,500
2,000
June 2002:
Mobile surpasses fixed
Internet surpasses PC’s
> 50% of countries
have more mobile than
fixed phones (2002)
1,500
1,000
Mobile
500
PC
Fixed
0
1982 84
86
88
90
92
Internet
94
96
98 2000 02
04
Source: ITU
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Mobile Comm. History
1946
First Mobile Service (USA)
(FM, One Base Station, 80 Km area, 120 KHz BW)
1965
MTS (Bell) : l Direct Dialing
1970’s
Cellular Concept
1980’s
First Generation (1G) Systems (AMPS, NMT)
1980’s
Development of First Digital System (2G): GSM
1991
GSM enters Service
1998
First Mobile Satellite Service (Iridium!!!!)
1998-….
3G System Standardization (ITU: IMT2000)
2001
First 3G Services launched (Korea, Japan)
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l Full Duplex
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Mobile Overtakes Fixed
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Mobile World Growth
As % of fixed
Subscribers (M)
1400
110%
102%
91%
1200
1000
1329
1155
955
38%
27%
20%
9% 13%
740
400
54%
490
600
215
200 2% 3% 4% 6%
0
1990 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03
Ikadi@ksu.edu.sa
1
0.8
(Source: ITU & EMC)
318
800
75%
1.2
0.6
0.4
0.2
0
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3G Regional Issues & Challenges
Mobile World Indicators (May 2003)
F Total Subscription …………… 1217 million
ð 2 % Analog ……… 24 m ò ò
ð 98 % Digital ………. 1195 m ñ ñ ñ
ð 71 % GSM ………. 863 m ñ ñ ñ
ð < 1 % UMTS ………. 1 m ñ
FGSM Data Subscribers (MMS & GPRS) … 25 million
(3% of GSM, 2% of all Mobile)
(Source: EMC)
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Mobile Systems Market Shares
1218 Million (May 2003)
D-AMPS (111
M)
9.1%
CDMA (156 M)
12.8%
GSM (864 M)
70.9%
Source:EMC
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PDC (62 M)
5%
Analog (24.5)
2.0%
W-CDMA
(0.53 M)
0.04%
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3G Regional Issues & Challenges
Major Issues / Challenges
n
Frequency Spectrum Shortage
n
Difficult Mobile Channel Environment
n
Growing Demands / Market Pressure for :
è Subscription / Air Time (Capacity)
è Better Service
Ikadi@ksu.edu.sa
(Quality / Coverage)
è Newer Services
(Data, Messages)
è Security / Privacy
(SIM, Encryption)
è Lower Prices
(Competition)
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Spectrum Shortage
n Single Most Critical Issue in Mobile Growth / Performance (QoS)
n Limited Allocations for Land Mobile l Non-mobile Services Allocated Most of Spectrum Below 1 GHz
l GSM Spectrum 890-960 MHz, 1800 MHz , 1900 MHz
l New 3G Allocations (160 + 200MHz) - WRC 2000, Istanbul
n Spectrum License Costs
n Need to Maximize Spectrum Utilization Efficiency
n Basic Law of Economics: Limited Supply, Growing Demand
n Basis for any Meaningful Pricing Strategy:
- Set Tariffs / Air Time Cost as per Spectrum Used
Ikadi@ksu.edu.sa
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Topics
F Mobile Telecommunication
ü Mobile Communications in the Region
F Mobile Data Services
F Regional Issues for 3G
F Conclusions
Ikadi@ksu.edu.sa
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6
World GSM Subscribers
864 Million (May 2003)
Rest Of
Asia (43)
Europe
(400 M)
Americas
(32)
Asia Pacific
(333 M)
Africa (28)
Arab World
(28 M)
Source:EMC
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3G Regional Issues & Challenges
ICT -- How do we compare?
25
Penetration (%), 2002
20
18.7
17.8
Sub-Saharan Africa
South-central Asia
South-eastern Asia
Arab region
Latin America & Caribbean
WORLD
15
8.7
10
9.7
9.3
8.0
2.6
5
2.9
0
Main lines
Cellular
PC
Internet
Source: ITU World Telecommunication Indicators database
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Topics
F Mobile Telecommunication
F Mobile Communications in the Region
ü Mobile Data Services
F Regional Issues for 3G
F Conclusions
Ikadi@ksu.edu.sa
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Mobile Evolution (1/2)
F First Generation (1G)
(1980s)
n Analog - voice only
n FDMA:
AMPS, NMT, TACS
F Second Generation (2G)
(1990s)
n Digital (voice, Data, SMS)
n TDMA (GSM, PDC, DAMPS)
n CDMA (IS-95)
F Data-Enhanced Second Generation (2.5G) (2000s)
n Wireless Access Protocol (WAP)
n General Packet Radio Service (GPRS): 171 Kb/s (Max)
n Enhance Data GSM Evolution (EDGE): 384 Kb/s (Max)
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Mobile Evolution (2/2)
F Third Generation (3G)
n ITU Standardization IMT-2000
(2000s)
(1998 - ……)
n Mostly CDMA (UMTS = W-CDM0A, CDMA2000)
n 384 Kb/s - 2 Mb/s
n Multimedia, Mobile Internet
n First Service Launch in Japan and Korea
» NTT DoCoMo - Sept. 2001 (delayed from May)
» Competitors (DDI & J-phone) - Q1 2002
» dual-mode Hansets (PDC + 3G)
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3G Regional Issues & Challenges
SMS : the Success Story!
n Simple, limited, But Exceptionally popular.
n Standard GSM Service:
“m-mail”
n Worldwide - Dec 2002:
30B g-mails (1SMS/user/day)
or
“g-mail”
n Offered by nearly all Regional GSM Operators:
ð Very Popular especially among Youth
ð Expanding Revenue Source
n Regional Limitations:
ð Language Barriers / Arabic SMS length / Handsets
ð Voice Centric Societies
ð Reading / Typing Skills
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SMS : the Success Story!
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SMS: Build on the Success…(MMS etc.)
n Enhance SMS Revenues to Boost ARPU
n MMS the next wave – Logical extension of SMS
n Innovative SMS (&MMS) Services, e.g.:
ð Ring Tones, Logos and Caricatures
ð Instant SMS vs. delayed SMS (off peak at lower rate)
ð Market Segmentation
ð SMS Commercial Ads. (local, metropolitan, National)
ð Local and Culture-Specific Messages
ð SMS-to-Email & vice-versa, Email Message Notification
ð SMS-to-Voice (Reading Problems, Arabic Screen) - Net2Voice
ð Voice-to-SMS (Typing Problems, Non-Arabic Keyboard)
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GSM Data Services
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3G Regional Issues & Challenges
Multimedia Revenue Growth
Forecast average revenue per user, Europe (Euro)
Advertising
80
60
3
1
40
20
44
8
4
m-Commerce
21
33
0
Events (email,
music,
download,etc.)
Speech
2000
2008
Source: Wireless Internet Report, Morgan Stanley Dean Witter
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Wireless Access Protocol (WAP)
n WAP (introduced in Europe in 2000) was a disappointment:
ü Poor data speeds / Shortage of handsets
ü Limited Useful Content / Service Providers
ü Enhanced by GPRS
n Additional limitations in the Region:
ü Low Penetration (Mobile & Internet)
ü Language Barriers: Content and Arabic Handsets
ü Voice Centric Societies
ü No Real Consumer Demand
n Bleak Future for WAP (alone) in the Region
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General Packet Radio Service (GPRS)
n Introduced in limited markets in Europe (2002) :
ü Improved Data Services / Speeds
ü A Step on GSM Migration Path to 3G
ü Shortage of Handsets / Applications
ü Uncertain Commercial Success
n Same Additional limitations in Arab World: Penetration,
Language, Voiced-Centric, illiteracy, Content, Demand
n Questionable Future in the Region but necessary for:
image and eventual (?) migration to 3G
n Recommendation for Regional Operators: limited targeted
pilot deployment
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Topics
F Mobile Telecommunication
F Mobile Communications in the Region
F Mobile Data Services
ü Regional Issues for 3G
F Conclusions
Ikadi@ksu.edu.sa
3G Regional Issues & Challenges
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3G Issues/Challenges
for Regional Operators
¥ Market Issues – Is the Market Ready
¥ Business Case / Business Issues
¥ Service Issues
¥ Regulatory Issues
¥ Deployment Issues
¥ Technology Issue
¥ Consumer / Cultural Issues
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Market Issues
þ Is the Market Ready
þ Demand (current and future, Real vs. perceived)
þ Geo-market Studies,
þ Customer profiles:
D >50% of current Arab subs are prepaid (low ARPU)
D Data Users are Youth/Students with low budgets
þ Internet Penetration in the Arab World
þ Affordability of 3G Services
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3G Regional Issues & Challenges
IT Digital Divide
PCs and Internet (per 100 inhabitant)
60
World
50
Arab
40
Africa
30
Asia
20
8
10
Europe
3
2.6
0
N. Am.
Hosts per
1000
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Internet
Users
PCs
3G Regional Issues & Challenges
Latin Am.
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14
Internet users per 100 people
30
20
9.7
10
2.6
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Bahrain
Qatar
3G Regional Issues & Challenges
Lebanon
Kuwait
World
Saudi Arabia
Source: ITU World Telecommunication Indicators database
Oman
Jordan
Tunisia
Palestine
Arab
Egypt
Libya
Morocco
Algeria
Syria
Djibouti
Comoros
Sudan
Mauritania
Yemen
0
UAE
penetration
2002
40
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Business Issues
F Is there a Business Case for 3G Service
F Is it VIABLE?
FCompeting Solutions:
e.g. Broadband, WLL (Wi-Fi or 802.11x)
F Capital Expenditure (CAPEX),
F Operating Expenditure (OPEX),
F Financing, Revenue Growth
F others: Competition, Pricing, market
segmentation, Promotion / marketing
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Regulatory Issues
F Licensing
F Spectrum Availability / Cost
F Interconnection / Roaming
F QoS Requirements
F Content Monitoring / Control
F Competition Policy
F Others
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Service Issues
¥ Service Portfolio
¥ Content
¥ Coverage
¥ Handover
¥ Roaming
¥ QoS / Priorities
¥ Third Party Services
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Deployment Issues
F Which Standard:
W-CDMA (UMTS) vs. CDMA-2000?
F Migration Strategies
F Co-siting
F Dual or Tri-Service (2G/2.5G/3G)
F Handover
F CAPEX / OPEX
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Technology Issues
F Standards
F Mature Products / solutions
F System Integration / Support
F Proprietary Solutions
F Rapid Technological Advance
F Falling Cost of technology solution
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Consumer/Cultural Issues (1/2)
F Regional Consumers:
è High Illiteracy Rate
è poor typing inclination / Skills
è are Voice Centric
F Leisure/casual Use in the Region rather than Business:
è Busy Hours in the evening and week-ends rather
than during business hours
è SMS popularity / heavy use thru forwarding (jokes/
greetings) rather than typing new messages
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Consumer/Cultural Issues (2/2)
F Local content (info + Language/presentation)
F English language limitations
F Arabic Language Peculiarities
F User Equipment / mobile sets:
è Data enabled (for 3G)
è Arabic enabled
è Availability / desirability / Affordability
F Consumer Awareness / Education
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Factors on Internet Use
Soft factors
•Language/content
•Education
•Literacy
Hard factors
•Infrastructure
•Pricing/affordability
Internet use =
+
Infrastructure
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+
Affordability
Human skills
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Topics
F Mobile Telecommunication
F Mobile Communications in the Region
F Mobile Data Services
F Regional Issues for 3G
ü Conclusions
Ikadi@ksu.edu.sa
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Conclusions (1/2)
n Build on the Success of SMS: & MMS
è enhanced SMS-Services
è Multi-media Message Services (MMS)
n Mobile Data: Regional Markets not Ready
n 3G is the Future on the long term (8-10 yrs), but:
too many Uncertainties in the ShortMedium Term
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Conclusions (2/2)
n Recommendation for Regional Operators:
üGPRS gradual deployment targeting specific
customer segments
üAdopt UMTS (GSM success globally & regionally,
interoperability, easier migration, roaming, economy
of scale)
üKeep Close Watch,
üPush for 3G Spectrum,
üMinimum Investments
üReassess position in 3-5 years
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Acknowledgements to
P
P
P
ITU, QTEL, Seminar Organizers/Sponsors
King Saud University (KSU)
?Advanced Electronics Co. (AEC)
JJJ
THANK YOU
JJJ
for your attention
……… and QUESTIONS ……..
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