Materi - Dirk Wolter (Alcatel Lucent)

NationalBroadbandNetwork
Indonesia
MASTELconferenceJakarta
DirkWolter
CTONSEARegion
July 2010
Agenda
1. Introduction
2. OpenAccessBusinessModel
3. Technologychoiceandnetworkeconomy
4. Summary:proposalforregulatoryinitiatives
Introduction
3 |TMTFinance&InvestmentConference DirkWolter|April2010
Copyright 2010AlcatelLucent.Allrightsreserved.
Emergingmarketsseepentupdemandforconnectivity
withcurrentserviceavailabilitywoefullyinadequate
andincumbentfixedinfrabeingofpoorqualityand
onlyavailableinurbanareas
makingmobileaccessthe
preferredoptionforusers
Convenience
Availability
Affordable
andforoperators.
Businesscase
Rolloutspeed
Uptake
Emergingmarketoperatorshavethreeopportunitiesforgrowth
Poverty
Threekeymarketsegmentsforgrowthin
emergingmarkets:
Othersubspriorities
1.LowerARPU(average revenue per

user),3US$/month
Potentialsubscribersalreadycoveredbutcantaffordthe
service
MajorityofUpcoming
Subscriber
Real
access
gap
2.RuralAreas
Potentialsubscribersoutsidenetworkreach
Telecom
Access
Today
3.Advanced/broadbandusers
Affluenturbansubscribersdemandingricherservices
(broadband,entertainment,personalisedservices)
Urban
Suburban
Rural
Accessibility
Growthfromconnectingtheunconnected andupselling broadbandmultimediaprimarilyin

urbanareas
withstrongprofitabilitydespitelowARPU.
EmergingMarkets
DevelopedMarkets
Source:Frost&Sullivan,March2010
ChallengesofWirelessBroadbandinEmerging Markets andSolutions
BroadbandCapacity
Howtoimprovebroadband
experienceandQoS?
Fixedbroadbandinfrastructureforresidentialusertooffload
mobilenetworks
QoS mechanismsfordifferentiatedserviceoffering
BroadbandoptimizedRANbasedonHOM(16QAM,64QAM),
MIMO,IP(eg.HSPA+,LTE,WiMAX)
Morespectrum
Smallercellsizes microcells
Datacentric(IP)backhauling
Marketdefragmentation
Lowfrequencybands:450/700/850/900MHz
BroadbandCoverage
Howtoextendbroadband
coverageintoruralareas?
Digitaldividend,LTE700MHz
Refarming(e.g.UMTS900)
Lowpowerconsumptionandalternativepowersolutions
Satellitebackhaulorlongrangemicrowavesolutions
Governmentincentiveprograms(USO/USF)
OpenAccessBusinessModel
Introduction
Governmentsarelookingforwaystoincreaseproductivity,nationalcompetitive
advantageandgrowGDP.
Withinthiscontext,Regulatorsareexaminingwaystorestructuretheinfocomm
industrytostimulateinnovativeservicedevelopmentandenablecommerciallyviable
openaccesshighspeedbroadbandnetworks.
Highcostoflastmileinfrastructureandregulatoryuncertainty aremajorobstaclesforthe
widedeploymentofbroadbandnetworkinfrastructure.
Governmentprojects(NBN)andlongtermregulatoryinitiatives(suchasOpenAccess)
helpovercomingtheseissues.
Governmentsoftensubsidizethebuildoutofnationalizebroadbandinfrastructure
throughaPPP(PublicPrivatePartnership)
OpenAccessModel
PrinciplesandEconomicalBenefits
OpenAccessModel=Separationofphysicalinfrastructurefromserviceprovisioning
Allowssharingoftheexpensivephysicalinfrastructureacrossmultipleoperatorsi.e.
improvescosteffectiveness
Nondiscriminatorytermsforserviceproviders(equalaccessandcharges)
Networkowner(N.O.orNetCo)focusesoninfrastructure,typicallyaimingfora
maximumofcoverage
MultipleServiceProvider(CommunicationsOperator,C.O.,OpCo)ride ontheNetCos
infrastructureandfocussolelyonattractiveserviceoffering
Optionsforimplementation
#1
#2
#3
#4
#5
Optionsforimplementation
GeneralObservations
Noonesizefitsallmodel dependsongeographic
complexityandstateofcompetitiveness
Regulatorsmustbeguidedbyanunderstandingof
desiredcoverage,pricepointandqualityofservice
o Thiswillidentifysubsidyrequired(topdown)
#1
#2
#3
Model#1
o Statusquoinmany
countries,suchasIndonesia
o Localloopunbundling
normallyaprecursorto
separation
#4
#5
Consensusexistsacrossallmodelsthatcompetition
doesnotexistatthebottompassivelayer
Model#5
Model#2
o AustraliasNBNCo (A$43b)
o NewZealand(still
evolving)(NZ$1.5b)
o UK(BThasoperationalseparationofBT
Openreach (level0,1)offeringservicesto
customersincludingBTWholesale)
o Citybycityinitiativesinplaceslike
AmsterdamandNordiccountries
o SingaporesOpennet andNucleusConnect
(S$4b)
Singapore Next Gen NBN Industry Structure
Operational
Separation
Structural
Separation
Blazing the Trail: Singapores Next Generation National Broadband Network (Next Gen NBN)
SingaporesNationalBroadbandNetwork(NBN)
TheTransformationoftheTelecomLandscapeinSingapore
SingaporesNewIndustryStructure
RSPs
Packagesandsellsbroadbandservicestocorporate,
government&consumerendusers
IncumbentssuchasStarHubareexpectedtobecomeRSPs,
aswellasrumoured newentrantssuchasBT&NTT,aswell
asOvertheTopplayers
OpCo
LicensetooperateandS$250msubsidyawardedinApril
2009toSharHubs Neucleus Connect.
OperationalSeparation
WholesalesbroadbandconnectivitytoarmslengthRSPs on
openaccessterms
GreenfieldbuildofactivenetworkcomprisedofFTTx (GPON,
AE),optical,IPCoreandOSS/BSS
StructuralSeparation
NetCo
LicensetooperateandS$750msubsidyawardedinSept
2008toSingTelledOpenNet Consortium,comprisedof
SingTel,Axia,SPH&SPTel
Greenfieldbuildofpassivenetworkcomprisedmostlyofcivil
works(ducts),darkfiberandOSS/BSSsystem
FTTx networkrolledoutstartinginlate2010throughto2013
SingaporeNextGenerationNationalBroadbandNetwork(NBN)
Residential
Nonresidential
RetailsServices
(SetbyeachRSP)
(SetbyeachRSP)
OpCo
100/50Mb/sforSG$21/month
1.0/0.5Gb/s forSG$121/month
100/100Mb/sforSG$75/month
1.0/1.0Gb/s forSG$860/month
(includeNetCo Wholesaleprice)
(includeNetCo Wholesaleprice)
SG$15/month
SG$50/month
NetCo
Asymmetrical offers for residential or business users with GPON

Symmetrical offers for business users with GPON and P2P/Active Ethernet, up to 1/1 Gb/s
Wholesale Service Offerings from OpCo to RSPs
Class A: real-time (video conferencing, premium VoIP, gaming)
Class B: near real-time (IPTV, video streaming, gaming, video conferencing)
Class C: mission critical (ATMs, data centres, control systems)
Class D: best effort (Internet surfing, VoIP)
18 | Open Networks for Industry & Public Sector | Florian DAMAS |
18 |TMTFinance&InvestmentConference
DirkWolter|April2010
September
2008
Technologychoiceandnetworkeconomy
Economicsofbroadbandworksagainstoperators
Vastincreaseoftrafficthroughdataapplications
Trafficincreaseisnolongermatchedbyproportionalrevenueincrease
Drivesaneedtotransformnetworks
Conventionalnetworksnotreadyfordata
traffic:
DataCentricNetworksflattencostcurve:
Traffic,Capacity
Traffic
Cost
VoiceEra
Capacity
VoiceEra
Revenue
Revenue
Cost
DataEra
ServiceAwareDataEra
Source:Unstrung
Source:AlcatelLucent
This presents challenges inlowARPU emerging markets

ma
AirInterface/Standardsevolutions
AlltechnologieshaveNOWanupgradepathtoLTE
TDMA
3GPP
GERAN
Evolutions
EDGE
GSM
TDSCDMA
Evolution
TDSCDMA
HSDPA
WCDMA
HSUPA
HSPA+
LTER8/R9
FDD/TDD
CDMA
3GPP2
EVDO
CDMA1X
BWA
IEEE
Deployed
4GITU
100Mbps
(fullmobility)
1Gbps
(hotspot)
StillOFDM!
Arriving
UMB
RevA/B
WiMAX16e
WiMAX16d
WiMAX16m
TDD/FDD
TDD
Nextstep
LTER10
FDD/TDD
Recent updates
NewProposal
Impactofstandards&frequencyonnetworkeconomy
Frequencyimpactdominatestechnologychoice
Wimax 2300
UMTS 2100
UMTS 900
GSM/EDGE 900
LTE 700
Typical Cell Radius
Radius (km) 4
3
1
0
Inrural areas,network
economy is driven by radio
propagation,andtherefore
cell radius
RU
SU
LTE 700
GSM/EDGE
900
UMTS 900
DU
UMTS 2100
Allocation oflow frequency

bands is critical for rural areas
Technology
Morphology
MU
Wimax
2300
Notes:Wimax,UMTSandLTEbasedon
128kbpsULatcelledgewithmobile/USB
device.GSM/EDGEatbesteffortdatawith
mobiledevice.Antennaheights30m
DU/MU;40mSU/RU
LowerbandssuchasDigitalDividendbands(700MHz)offermuchbettersystemeconomics
Impactofstandards&frequencyonnetworkeconomy
Anillustration:800MHzvs 2.6GhzinRuralEnvironment
2.6GHz
800MHz
RelativeCAPEXandtypicalcellradiustocoveracertain
areainsuburbanenvironmentasafunctionofthe
frequencybandusedfordeployment
1400%
10
1230%
1300%
8.9
1200%
RelativeCapex (%)
Betterindoorpenetration
12
1500%
10
1100%
1000%
900%
800%
5.5
4.7
700%
675%
3.9
600%
455%
500%
2.9
328%
400%
300%
200%
CellRadius(km)
TypicalCellRangesforLTEshowasignificant
advantageofusinglowerfrequencies
100%
126%
700MHz
850MHz
100%
0%
1900MHz
2500MHz
3500MHz
5800MHz
FrequencyDeployment
Source:BusinesscasesummaryforNGMN MilanSallaba
Thetype&amountofspectrumavailabletoanoperatordeterminesitsabilitytocompeteinthefuture.
IMTDigitalDividendspectrumblocksaccordingtoWRC2007
Region2:698806MHz
Region1:790862MHz
Region3:majorityfollowregion1
9countriesfollowregion2
Althoughmobileisthepreferredbroadbandtechnologyinemerging
markets,itwilleventuallyneedtobecompletedwithfixedtechnologies
Bandwidthperuser(Mbps)
Density(users/sqkm)
0.1
2
8
16
64
100
0.2
0.3
Broadband
0.4
0.5
SDTV
Wirelessonly
HDTV
7.5
10
12.5
Wireless+Satellite
200
Fibre+FTTN
400
800
DSLCO+
Wimax/FTTN
1000
MobileBroadbandisaquickandeasyapproachtoaddressbroadbanddemand butflatrate
dataoffersnotsustainable
Fixedtechnologiesscalebetterforhighdensityareasandgreaterbandwidthdemand
Optimumsolutionisacombinationofmultipletechnologies
withtherighttechnologymixbeingacombinationoffixed&wireless
Wireline complements Wireless

inUrban Areas
Extreme Rural
Dense
Urban
Rural
Urban
Fixed (egFTTx,DSL,GPON)andCellular (HSPA,

LTE,EVDO,WIMAX)
Suburban
Cellulartechnologiesatlowfrequency
bands(eg HSPA,LTE,EVDO)
Satellite?(USO
funds?)
Summary
TelecommarketinIndonesiahasstillexcellentopportunitiesforgrowth
o connecttheunconnected byimprovingaffordability,extendingreachanddifferentiatedquality(SLA)
o pentupdemandforbroadband&multimedia
Butfacedistinctchallenges
o lowARPU(below$3permonth)
o geographiccomplexity&diversity(extremeurbantoextremerural)
o regulatoryambiguities&fragmentedcompetition
Keytechnologyconsiderations
o specifictechnologymixneededtoovercomeuniquechallenges
o allmajorlegacyradiotechnologies(GSM,CDMA,WiMax,UMTS)willevolvetoLTE
o therightamount&typeofspectrumiscriticaltocompeteinthemarket
ruralmarketsneedlowfrequencybands(forbettercoverage)
urbanmarketsneedaquantityoffrequency(forsufficientcapacity)
o althoughmobileisthepreferredbroadbandtechnologyinemergingmarkets,itwilleventuallyneedtobe
complementedwithfixedtechnologies
Summary:
Proposalforregulatoryinitiatives
RegulatoryInitiatives(1/3)
Lackoftelecomanddatacoverageinruralareas:
Businesscasefortelecomservicesinruralareasischallenging needtobestimulated
throughcrosssubsidies(USO/USFfunds,NBNprojects)
Availabilityofadditionalradiospectrum,suitableforruralareas
700MHz,DigitalDividendallowswidercoveragebutthisspectrum ismostlyassignedfor
broadcastingservices.
Rebalancespectrumassignmentsforbroadcastingandtelecommunicationservicesneeded
(DigitalDividend).
Managingtheupsurgeofbandwidthdemandinurbanareas
y InIndonesia,wirelessbroadbandservesasasubstituteforlackingfixedinfrastructure
butisfacingcapacitylimits
y MobileNetworks:AdditionalSpectrumneeded
2.5GHzbandgraduallytobefreedupforLTE(Band7andBand38).
2.3GHzband allowsLTETDDoption(Band40)
Investmentsinfixed,fibrebasedinfrastructureneededtooffloadwirelessnetworks
fromresidentialbroadbandtraffic.However,Investmentsinfixednetwork
technology typicallyhaveaslowerpaybackpattern.
NationalBroadbandProjectswithinvestmentsintosharedfixednetworks
infrastructure(OpenAccessModel)areaneffectivestimulus.
RegulatoryinitiativestoimproveTelcoeconomics:
EncourageadherencetoIndustryStandards
FixedNetworks:Restructuringfromverticallytohorizontallyintegratedoperators
Allowing/promotinginfrastructuresharing
StructuralSeparation
Subsidized,regulatedOpenAccessModel
MobileMarket:OvercomeMarketandSpectrumfragmentation
4to6operatorscouldbeanoptimum
www.alcatellucent.com
www.alcatellucent.com
DirkWolter
CTONSEARegion
dirk.wolter@alcatellucent.com
+6596506928

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Materi - Dirk Wolter (Alcatel Lucent)

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NationalBroadbandNetwork

1.LowerARPU(average revenue per

Growthfromconnectingtheunconnected andupselling broadbandmultimediaprimarilyin

ChallengesofWirelessBroadbandinEmerging Markets andSolutions

Singapore Next Gen NBN Industry Structure

Asymmetrical offers for residential or business users with GPON

This presents challenges inlowARPU emerging markets

Typical Cell Radius

Allocation oflow frequency

Wireline complements Wireless

Fixed (egFTTx,DSL,GPON)andCellular (HSPA,

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