Monetizing LTE

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Monetizing LTE
How LTE can help operators become
more profitable
José Villalobos
Senior Consultant
Region Latin America and the Caribbean
LTE Growth
and Drivers
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
fastest developing
Technology
Forecasted
Commercial LTE network launches - cumulative totals
+132%
+102
248
73
+100
146
+30
+14
2
2009
175
46
16
2010
2011
2012
2013
Source: GSA, May 2013
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
› Latin America LTE
subscriptions (Pop Coverage)
› 2012: 200k (5%)
› 2018: 95M (over 50%)
› Early adopters:
› Puerto Rico
› Dominican Republic
› Antigua and Barbuda
better devices and
cool apps
Mobile data traffic breakdown, 2012
Other
X2
Encrypted
Software
download &
update
MOBILE DATA TRAFFIC
DOUBLED BETWEEN
Q4 2011 AND Q4 2012
Source: Ericsson
Web browsing
Audio
Video
File Sharing
Social Networking
Source: Ericsson
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
Exploring the Drivers
What is your primary motivation for
deploying LTE?
Create new revenue streams based on LTE
Build brand value through technology leadership
Current networks do not offer sufficient capacity
To enter mobile data market for the first time
Other
7%
3%
Percent of respondents Rating 6 or 7
Better spectral efficiency
79%
Lower Latency
68%
Increase ARPU
63%
Higher peakrate
58%
Current data network exhaustion
58%
Opportunity to build a more
efficient mobile packet network
35%
37%
Denser network coverage
32%
24%
Lack of spectrum
26%
Offer LTE as fixed
broadband service
Ability to run single network
for voice and data
31%
Source: Informa Telecoms & Media. 52 operators with
live LTE networks globally (as at April 24, 2012)
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
Natural evolution of existing
generation to the next one
16%
11%
5%
Source: Infonetics Research, LTE Deployment Strategies:
Global Service ( n = 19, July 2012)
HOW IS LTE
IMPACTING
PROFITABIliTY?
TODAY?
SKT
LGU+
KT
KOSPI
1
LTE launched (LGU+ & SKT)
2
~11% LTE penetration
3
~28% LTE penetration
22%
Rest of
World
Australia
10
5
10%
LTE Subs (M)
Non-LTE Subs (M)
19%
5%
34%
107
Jul
Jul
2011 2012
Telstra
SKT
Sep
2011
MetroPCS
AT&T
Dec
2010
LG U+
NTT
Dec
2010
Sprint
Verizon
Korea
22
53% 29% 13%
KT
32%
USA
54
Jan
2012
Sep
2011
Sep
2010
Sept Feb
2011 2012
Softbank
Japan
16
11%
2
Million
Billion
(>1M TDD)
LTE SUBSCRIPTIONS
May 2013
LTE SUBSCRIPTIONS
END 2018
Source: WCIS
Source: Ericsson
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
ARPU Uplift due to LTE
ARPU 4Q12 (KRW ´000)
Service ARPU, % Change YoY
+48%
20
50
41
SKT
KT
LGU+
15
10
Blended
ARPU
5
+21%
34
Smartphone
LTE
Source: SKT IR 4Q.2012
0
3Q11
-5
1Q12
-10
3Q11
First LTE Smartphone
-15
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Source: Operator Quarterly Reports
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
› 1.5X (SP)
› 8X (SP)
› 2-5X
(LTE users)
Source: Disclose by Operators
LTE DATA Monetization
@ Launch
SKT
Smartphone
Plan
Removed
unlimited
(3G vs LTE)
Monthly (USD)
plan
3G
Higher Tariff Plan with
30
All-in-one
34 vs LTE34of 3G ave
understanding
All-in-one 44 vs LTE42
data.mth/subs
All-in-one
54 vs LTE52+
All-in-one 64 vs LTE62
Data Allowance
Data Allowance
3G
LTE
3G
LTE
30
100MB
350MB
550MB
38
37
500MB
700MB
1.1GB
trends
47
45
Unlimited
1.2GB
56
Increase the bucket size
69
All-in-one 79 vs LTE72
All-in-one 94 vs LTE85
Q2 2012
82
LTE
2GB
No Change
54
Unlimited
3GB
63
Unlimited
5GB
9GB
74
Unlimited
7GB
13GB
5GB
Source: Operator Web Page
LTE based residential Broadband
Caribbean Residential Internet
9% 3%
9% 1%
51%
27%
Narrowband
Source: Disclose by Operators
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
Cable
FTTX
xDSL
FWA
WiMAX
Source: Pyramid Research, 2012
customer
loyalty
Drivers of loyalty to operator brand (NPS)
LTE
LTE
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
Source: LGU+ Analysis
Spectrum
and Network
Aiming for LTE
monetization
Service
and Device
Portfolio
Positioning
and Pricing
Strategy
Branding
and
Marketing
LTE ecosystem
Europe
2600
1800
USA
US700
AWS
Puerto Rico
US700/2100
Antigua & Barbuda
US700
Mexico
AWS
Dominican Rep.
1800/1900Colombia
2600
Chile
2600
Brazil
2500/2600
Paraguay
AWS/1900
Uruguay
AWS
316 Smartphones
Source: GSA, Jul, 2013
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
Data
Voice
Micro
Macro Pico
Indoor
900 AWS
850
2600
1900
1800 700 2100
Application coverage concept
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
HSPA LTE
CDMA WIFI
GSM
Boosting the need for LTE
Source: Wireless Intelligence, September 2012
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
positioning and Pricing
PREMIUM
PRICING
LTE Smartphone Data Plan (Top
20 LTE Subs Operators)
Source: Operators Web Pages, Jul 2013
Consumption-based
Speed-Consumption Hybrid
Unlimited
14
MBB
EXTENSION
BRAND
REFRESH
2
1
MBB Ext
3
Brand Refresh
Dongle tariff
› 49% speed-based (Aug 2012)
› Western Europe (2Q12 to 4Q12)
› 33% operators merged 3G/LTE
› Price decreased by 6%
Source: Wireless Intelligence, Analysis Mason
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
CLEAR value benefits
User z (Germany)
Source: Speedtest.net
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
LTE Monetization
How is LTE
Impacting
profitability?
LTE Growth and
Drivers
-
Fastest Adoption
MBB Demand
Video Apps
Revenues
Brand
Spectrum
Performance
-
Subs
ARPU
Better Pricing
DSL-liked
Customer
loyalty
Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
Aiming for LTE
monetization
-
Ecosystem
App Coverage
Smartphones
Clear Value
Proposition
Price levels
Transparency
JOIN THE
CONVERSATION
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Monetizing LTE | Commercial in confidence | © Ericsson AB 2013 | CANTO 2013
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