Today’s Products Addressing Tomorrow’s Needs Scott Wickware Director, UMTS Product Solutions Nortel Networks scotware@nortelnetworks.com ITU Seminar on IMT-2000 and systems beyond, Ottawa, 28 May 2002 Agenda • Market situation • Technology Requirements — Access Network Requirements — Core Network Requirements — Service Requirements — System Requirements • Conclusion ITU Seminar on IMT-2000 and systems beyond, Ottawa, 28 May 2002 Today’s Market Reality Global Subscriber Growth Global Voice Revenue Decline 1,800 $40 1,600 $35 1,400 $30 1,200 $25 1,000 RoW NA W Europe Asia 800 600 $20 $15 $10 400 $5 200 $0 0 2001 2005E 2001E 2005E More and more paying less and less ITU Seminar on IMT-2000 and systems beyond, Ottawa, 28 May 2002 Operator Revenue Opportunity SKT (Korea) Average Revenue per User SK Telecom $25 10000 $20 8000 $15 6000 4000 $10 2000 $5 0 $0 1998 1999 2000 2001 2002E 1999 2000 2001E M ar '0 1 1997 9.2% 9.0% 8.8% 8.6% 8.4% 8.2% 8.0% 7.8% 7.6% 60 '0 1 12000 pt $30 Se 14000 Previous 12 months - Vodafone, 2001 '0 1 DoCoMo Vodafone Non-Voice Revenue Ju n I-mode Average Revenue per User 50 ARPU Growth Model 40 Voice Data 30 20 10 0 1999 2001E 2003E 2005E Data ARPU will grow Significantly with 3G Source: Nortel Forecasts ITU Seminar on IMT-2000 and systems beyond, Ottawa, 28 May 2002 The New Market Reality 2G 3G Circuit Voice Circuit Data Voice only Subscription driven Time Division Low Speed Symmetric Traffic Significant increase in network load Revenue Voice ARPU dropping, data filling the gap Access Massive investment shift to Code Division Packet Voice Packet Data Multiple applications Margin driven Code Division High Speed Asymmetric Cost Structure lower, revenue potential higher ITU Seminar on IMT-2000 and systems beyond, Ottawa, 28 May 2002 Agenda • Market situation • Technology Requirements — Access Network Requirements — Core Network Requirements — Service Requirements — System Requirements • Conclusion ITU Seminar on IMT-2000 and systems beyond, Ottawa, 28 May 2002 Today’s Network – GSM/GPRS HLR MSC GMSC Circuit Network GSM/GPRS PSTN GGSN SGSN Packet Network Internet SIP Server/Enablers Separate Networks for low data penetration ITU Seminar on IMT-2000 and systems beyond, Ottawa, 28 May 2002 Rel4/Rel5 All IP/Packet Network HSS Wireless GTW PSTN GTW Voice, DSL, Cable Modems… Packet Network ATM/MPLS/IPv6 GSM/GPRS/ EDGE/UMTS Tandem MSC SIP Server Server/Enablers CS GGSN Internet W-LAN Single Network for voice and data ITU Seminar on IMT-2000 and systems beyond, Ottawa, 28 May 2002 Key UTRAN requirements IP in the UTRAN • Reduce Cost in Transport • Simplify operations Node-w • Secure “WLAN type” technology • Cost effective Hot-spot coverage solution HSPDA • Increase peak data rate throughput beyond 2 Mbps • Increase overall capacity per carrier UTRAN developments essential for reducing cost and driving revenue ITU Seminar on IMT-2000 and systems beyond, Ottawa, 28 May 2002 Network Reliability Data Networks 80% Reliability Downtime: Average 4 Hours Telecom Networks 99.999% Reliability Downtime: <Milliseconds UMTS Must Approach Carrier Grade Performance ITU Seminar on IMT-2000 and systems beyond, Ottawa, 28 May 2002 (Pre-) Release 4 to Drive Down the Cost Cost Reduction • Transmission costs for voice can be reduced by 30% • Network operations are simplified Packet Investments • Build a common Packet core for Voice & Data • Rationalise investments in single technology Multimedia Preparation • R5 Multimedia domain requires some R4 features • Enable an early multimedia offer Deployment of R4 is dependant on Cost Structure R3 and R4 can co-exist ITU Seminar on IMT-2000 and systems beyond, Ottawa, 28 May 2002 (Pre-) Release 5 to Drive the Revenue Multimedia Services • Standard set of defined multimedia services defined • Improved user interfaces Quality of Service • Mechanisms to deliver realtime services over Packet • Services to be available when roaming Cap TDM Investments • All new services can be developed in Packet domain • TDM switching can be capped or phased out R5 is focused on driving revenue R3, R4 and R5 can co-exist ITU Seminar on IMT-2000 and systems beyond, Ottawa, 28 May 2002 Service Layer Requirements Open Systems • Independent applications and service enabler layers Architecture • Goal is to reduce Time To Revenue (TTR) Simplified APIs • Development must not be complex • Need to leverage “web based programming” world Rich Enabling Network • Enabler layer must provide “detail” for apps layer • Billing systems must be flexible Operators must be able to make money from data services in a simplified way ITU Seminar on IMT-2000 and systems beyond, Ottawa, 28 May 2002 What are the Services? Intranet (Corporate) Location Presence Messaging Internet (Consumer) Collaboration Real time Services Wireless Applications New Revenue Opportunities using existing business models ITU Seminar on IMT-2000 and systems beyond, Ottawa, 28 May 2002 System Requirements Infrastructure IOT • Vendors must work together • Operators must help facilitate Device IOT • Devices are key to success of any mobile standard • Standards must be flexible, yet strict! Applications IOT • Applications will be the key to UMTS success • Ease of 3rd party service introduction is essential IOT is essential for industry to grow – sounds obvious, but it can be difficult ITU Seminar on IMT-2000 and systems beyond, Ottawa, 28 May 2002 Agenda • Market situation • Technology Requirements — Core Network Requirements — Access Network Requirements — Service Requirements — System Requirements • Conclusion ITU Seminar on IMT-2000 and systems beyond, Ottawa, 28 May 2002 Conclusions • 3G is real – it will happen, it must happen • For 3G to be successful, we must learn our lessons from WAP and GPRS – sell value, not technology • Standardization is key to ensure competitiveness — To drive down cost — To drive up revenue • Vendors must work together, leveraging the standards, to push the industry forward ITU Seminar on IMT-2000 and systems beyond, Ottawa, 28 May 2002