Advanced Mobile Data and Multimedia Communications

1
Advanced Mobile Data and Multimedia Communications

• Cap Gemini Group's Market Vision and Service
  Offering

October 1999
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Agenda

• Overview
• Market Developments
• Market Potential
• Applications
• Licensing scheme
• Technology
• Network
• Terminals
• Application platforms
• Implications for Operators
• Strategy and Market positioning
• Services
• Tariffs and billing
• Customer adoption
• Technology implementation and migration
• Network technology
• Network architecture
• System architecture
• Organization and processes

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Overview
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Emerging Third Generation mobile technology
promises to revolutionise mobile data
communications . . .
OVERVIEW
Mobile Communications Networks
First GenerationYesterday
Second GenerationToday
Third GenerationTomorrow

• Analogue
• Basic voice telephony
• Low capacity
• Limited local and regional coverage
• E.g. NMT, AMPS, TACS

• Digital
• Circuit switched
• Voice plus basic data applications
• Fax
• SMS (small message services)
• Circuit-switched data
• Low data speed
• Regional coverage, with trans-national roaming
• E.g. GSM, D-AMPS, PDC, CDMA

• Digital
• Packet and circuit switched
• Advanced datai.e. multimedia applications
• Fast data access
• Global coverage
• E.g. UMTS (W-CDMA)

But Wireless data can be introduced without third
generation mobile.
Source Mobile data feels pressure from the
need for speed, Network News, 2 June 1998.
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. . . by enabling a variety of multimedia
content and services to be delivered over mobile
networks
OVERVIEW
MultimediaContent
Multimedia Services

• TV programmes
• Films/video
• Music
• Electronic games
• Educational material
• Reference material
• Banking and shopping
• Map information
• Virtual office
• Corporate databases
• Stock records
• Business news and reports

• Video-on-demand
• Interactive games
• Video telephony
• Interactive
• Home shopping
• Banking
• Business TV
• Training
• Information retrieval services
• Video-conferencing
• LAN-to-LAN interconnection
• Internet/intranet access
• Application sharing

Source UMTS Forum, The Future Mobile Market
Global trends and developments with a focus on
Western Europe, March 1999.
6
The development of advanced mobile data and
multimedia communications will be driven by four
factors
OVERVIEW
Growth in Mobile Communications and Internet

• Mobile revenue growth rate is 10 times that of
  PSTN revenue growth rate
• Mobile penetration has reached 50 in the most
  advanced market
• Internet usage is growing rapidly
• Use of wireless connections to access data will
  increase dramatically

Development of Advanced Mobile Data and
Multimedia Communications
Technology Development
Content Providers Push

• Network GSM enhancements and Third Generation
  open standard
• Protocol Sim ToolKit, WAP
• Operating Systems Symbian (EPOC), Microsoft
  (Windows CE, 3Com (PalmOS)
• Connectivity Bluetooth, Wireless Knowledge
• IP explosion world-wide data traffic on the PSTN
  networks growing at 1000 per year
• Continuous increase in processing power doubles
  every 18th month

• Content providers are looking for new channels to
  reach customers
• Mobile is the natural extension of the evolution
  from high street to telephone to Internet
  commerce
• Banks, in particular, are actively experimenting
  with mobile services

Regulatory / Standards Initiative

• ITU has defined a framework for standardisation
  (IMT-2000)
• Standards bodies have agreed to support an
  umbrella standard unifying various CDMA proposals
• The industry is actively defining the Wireless
  Application Protocol
• Regulators are in the process of allocating
  licences for Third Generation mobile networks

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Mobile is fast outgrowing PSTN communications and
reaching high penetration levels
OVERVIEW
Mobile Penetration Rates in Europe1 July 1999b
World-Wide Mobile vs. PSTN Revenue, 19922005a
Region Mobile Revenue PSTN Revenue Mobile
Revenue as of PSTN revenue
CAGR 20.9 2.1
Revenue ( billion at 1998 prices and exchange
rates)
Mobile Revenue as of PSTN Revenue
Operators are looking for new revenue sources, as
mobile penetration has reached half of the
population in some countries.
Source a. Observatoire Mondial des Systèmes de
Communication, Key Figures and Indicators for the
World Telecommunications Market, 19981999. b.
Mobile Communications guide to West European
cellular subscribers, Financial Times Mobile
Communications, 22 July 1999.
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When strong Internet growth is combined with
mobile penetration, demand for mobile data
appears inevitable
OVERVIEW
Method of Remote Data Access Used by US Remote
Professionals in 1998 and Expected in 2000b (
of 300 telephone interviewees)
Growth of Global Dial-up and Permanent Internet
Connections 1998-2005a
CAGR 20.5 66.2
Connections (million)
By 2000, 63of remote workers in the U.S. expect
to use wireless connection to access data,
compared to only 16 in 1998.
Source a. www.gsmdata.com, citing Ovum,
Internet Market Forecasts Global Internet
Growth 1998-2005, December 1998. b.
www.wirelessdata.org, citing Cahners In-stat
Group, Access Requirements The Growing Demands
of Remote and Mobile Users, September 1998.
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At the same time, content providers are looking
to extend channels to reach customers
OVERVIEW
Evolution of Channels
Banks Examples of Push by Content Providers

• Banks in Hong Kong and Singapore are especially
  active in launching mobile banking services
• HSBC and Hang Seng bank are launching mobile
  banking services, including securities trading,
  in Hong Kong in July 1999.
• American Express Bank plans to launch services in
  Hong Kong at the end of 1999 that allow
  customers to trade stocks and foreign exchange,
  shop, and move money between various banks.
• Standard Chartered Bank formed alliances with
  telecom firms, universities, mobile phone
  manufacturers, and smart card operators to
  develop mobile services in Hong Kong and
  Singapore.
• Citibank also offers mobile banking services in
  Hong Kong and Singapore.
• Banks in UK and France are also trialing mobile
  banking services
• Barclaycard is teaming with Cellnet to launch
  mobile phone ATMS.
• Banque Nationale de Paris, Crédit Commercial de
  France, Crédit Mutuel and Société Générale have
  linked up with SFR to experiment on mobile
  banking services.
• Crédit Agricole offers infomobis, which sends
  daily account messages to mobile phone
  subscribers.

High Street
Telephone
Internet
Mobile
Perhaps the net is already in danger of becoming
old-hat as banks consider the potential of
mobile phone banking. A. Kahler, Australian
Financial Review
Source Textlines.
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Substantial progress is being made in mobile
network, terminal, and application enabling
technology
OVERVIEW
Network

• GSM enhancements HSCD, GPRS, EDGE
• Third Generation IMT-2000/UMTS (W-CDMA)

Consortiums small numberof open standards
facilitateworld-wide adoption
Application enablers
Terminals

• Improvements in performance/costs of
  semiconductors
• Reduced size, cost and power consumption of
  mobile devices
• Improvements in user interface and display
  technologies
• Protocols WAP
• OS EPOC, Windows CE, Palm OS
• Connectivity Bluetooth (wireless radio links
  between devices)

• Internet, intranet
• Web platforms
• SimTool Kit, Java-like technology
• Service creation technology
• Billing technology, payment technology
• Voice handling and recognition technology

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For mobile data, as for the Internet,
technological developments and user demands
reinforce each other
OVERVIEW
Lower pricesBigger ChoiceEasier Buyingetc.
Fuels
Technological Developments
Abundant BandwidthComputing PowerDigitisationet
c.
Technology and application development interact
in a virtuous circle
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Government regulators and industry groups are
actively promoting Third Generation mobile
technologies
OVERVIEW

• International Telecommunications Union (ITU) has
  defined a framework (IMT-2000a) for
  standardization, and regional bodies have
  developed proposals
• Europe the European Telecommunications
  Standards Institute (ETSI) has adopted Universal
  Mobile Telecommunications System (UMTS), based on
  W-CDMA, as the new standard.
• Japan the Association of Radio Industries and
  Businesses (ARIB) has also adopted UMTS as the
  new standard.
• US the Telecommunications Industry Association
  (TIA) has endorsed cdma2000, while the Universal
  Wireless Communication Consortium (UWCC) has
  endorsed a standard based on TDMA.
• In June 1999, the Operators Harmonization Group
  (OHG)an international ad hoc group of cellular
  operators and manufacturersrecommended an
  umbrella standard unifying W-CDMA and cdma2000
  proposals
• ITU has endorsed the OHG recommendation.
• In July 1999, Third Generation Partnership
  Project (3GPP)a group formed by regional
  standards bodies including ETSI and ARIBhas
  agreed to align its standards to the OHG
  recommendation.
• Industry is actively defining the Wireless
  Application Protocol
• The WAP Forum gathers more than 100 players.
• WAP v. 1.0 was released in April 1998, and WAP v.
  1.1 was approved in May 1999.
• WAP enabled servers, applications and devices are
  expected to be released later this year.
• Government regulators are in the process of
  allocating licenses for Third Generation mobile
  networks.

These bodies see Third Generation standards as
the key to achieving a truly global wireless
network.
Source Standards body OKs harmonised 3G
technical changes, 9 July 1999,
www.totaltele.com Ericsson buries hatchet with
CDMA group, 15 June 1999, totaltele.com
Operators propose 3G compromise, 7 June 1999,
www.totaltele.com www.itu.int ITU gives up on
single 3G standard, 22 March 1999,
www.totaltele.com www.wapforum.org. a. IMT
International Mobile Telecommunications.
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Third Generation mobile developments will create
significant new revenue opportunities for
operators ...
OVERVIEW

• The mobile voice market exploded, and growth may
  slow unless new value-added revenue sources are
  found.
• The familiarity with and reliance on the Internet
  and multimedia is increasing.
• The market for mobile data and multimedia
  communications is forecasted to grow
  substantially over the next decade.
• Content providers are looking to mobile as
  another new channel to customers.
• Development of bandwidth enhancing technology
  will enable delivery of multimedia applications
  over mobile telecom networks.
• Standardization of technology will facilitate
  global adoption of new applications.
• Innovation in facilitating ease-of-use will
  encourage trial and, more importantly, acceptance.

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however, the advent of mobile Internet forces
operators to reassess their business approach
OVERVIEW

• Players need to define their precise positioning
  in the connectivity, hosting, aggregation, and
  content creation segments of the Industry.
• Various players will need to form partnerships
  and alliances to bring products to market
• Operators will need to share revenues with
  content providers.
• Content providers may become a revenue source for
  operators as they pay operators to deliver their
  services to end consumers.
• The move from circuit to packet switching means
  users will have a permanent web-tone instead of
  minutes of connection
• Tariff schemes will need to reflect this new
  measure of usage.
• Commodity services will face heavy price
  pressure
• Tariff schemes will need to differentiate between
  services that are commodities and services that
  provide significant value.

Major Internet players are already developing and
implementing these business models.
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Operator revenue from mobile data is forecasted
to grow to 80 billion world-wide by 2010
DEVELOPMENTS IN MOBILE DATA COMMUNICATIONS MARKET
European and US Mobile Data Revenue 1998, 2003 (
billion)b

• World-wide Mobile Data Revenue
• 19982010 ( billion)a

Region W Europe US
CAGR 78 44
CAGR 59
Mobile Data Revenue as of Total Mobile Revenue,
19982003b
Revenue ( billion)
Region W Europe US
Western Europe is forecasted to experience
substantially higher mobile data revenue growth
than the US.
Source a. www.analysys.com/news/dom.htm,citing
Data over Mobile Commercial Strategies for
Mobile Operators, 22 April 1999. b.
www.mda-mobiledata.org/news/eurous.htm, citing
Strategic Analytics, European and US Cellular
Data Market Forecast (19982003).
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In Europe, mobile multimedia could account for
nearly 25 of total mobile revenue and 60 of
total traffic by 2005
DEVELOPMENTS IN MOBILE DATA COMMUNICATIONS MARKET
Penetration of Future Mobile Services in EU 2005,
2010
EU Mobile Revenue, 2005
Billion Euro
EU Mobile Traffic, 2005
Million
Million Mbytes/Month
Mbytes/Users/Month
Mobile multimedia users are expected to reach 23
of the population in the EU by 2010.
Source UMTS Forum, Report on UMTS/IMT-2000
Spectrum, December 1998 (using Analysys/Intercai
study).