My first Qtel Group Keynote address at the Telecoms World Middle East 2012 conference in Dubai. Its been great fun to do this parting with Europe analysis and the Outlook for the next 8 years. As I will not be totally retired by 2020 please remember that you will be able to hold me accountable for some of my predictions ;-) The Good Ones, The Bad Ones and for sure The Ugly Ones ... Enjoy and shoot back!

1. Telco 2020 – A Mature Market Outlook
Telecoms World ME, October 2nd 2012, Dubai.
Dr. Kim Kyllesbech Larsen, Technology Transformation,
Technology, Qtel Group.

2. Changing business models …

3. EU Broadband Ambition …
Digital Agenda Europe 2020.
Closing +
>20% coverage gap
<95% 100% LTE All have
DSL
<80% coverage + access to
HSPA pop 30 Mbps
coverage All FTT-eNB or higher.
Europeans
have access
60% 3G to
adaptation <50% cable Broadband
coverage (wireless)
+ 50+% HH
subscribe to
>50% 100 Mbps.
<20% HSPA FTTH
adaptation &
FTTx
DOCSISx
2012 2014 2020 + IoT 1
now +2 yrs +8 yrs
1 IoT = Internet of Things.

4. Digital Agenda Europe 2020 ... What does it mean?
By 2013 at least 30k additional radio nodes to cover the EU 20+% population gap.
By 2020 most (if not all) base stations support LTE advanced (ca. 200+k nodes ).
Internet-of-Things1:15+ Billion Devices of which 3.5+ Billion on mobile networks.
More than 100MM Households connected to Fibre.
Total FTTH Investment >15 today’s fixed broadband earnings.
1 In Europe for every mobile device there will be 5+ IoT devices in 2020. 70% of IoT devices short-range nature primarily assumed to be connected to WiFi.

5. Dreaming … “that’s the easy part” … now the challenge!
Mega Hz

6. The Past & Future…. Europe 2020 vis-à-vis 2011
2002 - 2011 2011 - 2020
+2.8%
pa
+6.8%
pa
Past 10 years added Next 10 years will add
245+ MM Subs & 150+ MM Subs &
PROFITABILITY
$85Bn of Revenues ONLY $13Bn of Revenues
+7.0%
pa +0.7%
pa
Inflation
Inflation
2.1% pa
2.0% pa

7. New business!
Europe 2020 … A soft landing? QoS, IoT,, Media, FMC, …
Defend philosophy!
Stop / Slow Revenue Decline
2020
2008 +15%
CAGR 0.8% 1.9% + New Revenue?
Total Revenue
The Hunt for $30+Bn − Usage Cost
2002 Efficiency game − Market Invest SAC & SRC
Europe Mobile Revenue Defend / Slow Ebitda Decline
− Personnel Cost
Just prior to crisis − Technology Cost (ca. 15% – 20%)
CAGR 1.9% 0.8%
− Other Cost
-15% = EBITDA (WEU ca. 37% 1)
2005
2010 Increased cash pressure − Network Depreciation
Europe Mobile Opex New technology /
Modernize − Spectrum Amortization
38%
37% − Spectrum invest (0.8 – 0.05 € per MHz-Pop)
38%
31% − Capex (new rollout < +10+% of Revenue)
35%
Red color represent Technology driven cost
Europe Mobile Ebitda
1 BoA ML Global Wireless Matrix 1Q11, margin data for 4Q 2010.

8. New mobile revenue opportunities … 2020.
How big could the piece of the cake be?
Sources: Apps from Berg Insight
(2011), Social Media from Gartner
(2011), Mobile Entertainment from
Juniper Research (2011), Online
Adds from MagnaGlobal (2011),
Handsets from Markets (2011),
Internet of Things from GSMA (2011)
and Machina Resarch (2011).

9. Internet-of-Things (IoT) & Web-of-Things (WoT)
Europe 2020 Projections
$250 Billion revenues.
$50 Billion attributed to mobile.
3.4 Billion IoT (incl. M2M) devices.
5 - 20 IoT devices for every mobile.
70% short-range devices (e.g., WiFi)
New topline source for MNOs.
Question! are our people-centric mobile networks the best to serve IoT?

10. We are getting older, live longer and more separated…
65+ in 2020
Share of 65+ in EU25 100+MM (20+%) above 65 years.
Age group 55+ in 2011.
More 25% will live alone.
26% Many will have no children (at all / near)
21% 36+ Will have large social media network.
in 2011
17% 56+
16% in 2011
14% 75+ Connected at all times everywhere
in 2020
Health aspects very important.
IoT will play important role.
Wearable/bio-integrated devices.
Mobile Health Apps.
Health care spend of GDP 10% 16% 20+% Monitoring, automation & alarm.
Pharmaceutical sales in $Bn 240 360 700!? Security, etc….

11. Is internet worth massive lifestyle changes?
What would you give up for 1 year of internet access.
80 80
75 74
68
48
30
27
22
Source: The Boston Consulting Group Report on “The Internet Economy in the G-20”, March 2012.

12. The customers perspective.
Need, Love and then Taken for Granted…
Perceived Value of Internet
(relative to GDP per Capita)
40%
30% Taken for granted!
20%
10%
!
0%
0% 25% 50% 75% 100%
Internet Penetration
The perceived value of internet drops as internet becomes a commodity
Source: Analysis based on The Boston Consulting Group Report on “The Internet Economy in the G-20”, March 2012.

13. The success of smartphones and mobile data ...
Acceleration towards spectrum shortage.
Tougher future … growth limitations.
 “Exponential” growth.
 Dramatic drop in Hz per customer.
 Demand more for efficient access.
 Demand for more capacity.
Happy beginning … plenty of quality.
 Lots of Hz per customer.
 Higher speed.
 Great Quality of Experience.

14. When data demand exceeds spectral efficiency gains.
”Houston, we have had a problem”.
Illustration of a European market
Total spectrum in use for mobile data Mitigating “spectrum crunch”.
10 20 40 60 85 120 120 120 120 120 120
15
Spectral Efficiency (*)
Leapfrog network capacity, e.g.,
Spectral demand (limited) Small cells topologies
Spectral demand (unlimited)
Increase over 2010
10 Smart antennas
3G LTE LTE-a Early LTE deployment
substitution
Off-loading via Femto incl. WiFi
5
NOT Price, Control & Policy.
GOOD
AT ALL More spectrum.
0
2010 2012 2014 2016 2018 2020
Spectral demand could
A lot more Complexity &
exceed spectral efficiency
between 2016 - 2020.
Higher Capex & Opex demand.
(*) “realWireless” report for Ofcom,: “4G Capacity Gains”, Final Report, January 2011.

16. … The answer may be
Note: The reference to 42 comes
from “Hitchhiker's Guide to the
Galaxy” as being “the answer to
Life, the Universe and Everything” it
should not be taken more serious
than the 1,000x.
Source: Qualcomm

17. Leapfrog cellular network capacity by 2020 (illustration).
@ 2011 In MHz In Mbps per MHz per Cell #
Supplied (max)
10×10 MHz HSPA+ 42 DC Urban “hot” zone
DL ca. 10 Gbps @ 2.1GHz DL 0.97 / UL 0.34 1,000 Macro Cells1
UL ca. 3 Gbps
×15 ×4 LTE ×1.5 LTE ×2.5 LTE
@ 2020
Demand 20×20 MHz LTE 2x2 (cat. 3) Urban “hot” zone
@ 1.8GHz DL 1.45 / UL 0.86 Up-to 2,500 Cells 2
DL 100 Gbps 20x20 MHz +1,500 on-top
UL 30 Gbps @ 2.6GHz of macro
CAGR ca. 35% 2 Small cells required!!!
Femto cell off-load!!!
1 Urban “hot” zone cell is defined as a cell with a range less than 500 meter, 2 Assuming 70% load as design rule.

18. Distribute mobile broadband traffic differently
Natural convergence of fixed & mobile by 2020.
Illustration
LTE provides up-to 100 Mbps
AP (Femto: Cellular or WiFi)
per sector
eNode-B
FTTS 100+ Mbps
100+ to
40 Mbps
Up-to 7,000 active devices Home Environment
per macro-cellular node with ca. 2.3 people per Home
(i.e., urban hot zone) in-home backhaul Cable, VDSL or Fiber.
100+ Mbps Up-to 100+ Mbps
shared with shared by
up to 7,000 devices. 2+ people.

19. LTE Backhaul requirements will pressure the Economics.
LTE air-interface
30mean to 100+peak Mbps
100 Gbps Evolved
eNode DWDM Packet
Core
100
GbE
FTTS1 100+ Mbps
Illustration

20. Quantum leap in network efficiency …
Cloud & virtualization and all that Jazz …
Network business model 2020
3rd party, media companies,
MNO/MVNO CDN & SDNs.
3rd parties delivers 3rd parties delivers core
BSS / OSS cloud network functionality.
(off-the-shelf) services (i.e., HSS, PCRF, etc..)
Ultra-efficient network factory. Drivers
• Data-only + VoIP QoS-transparent network. • Regulatory support (& drive).
• Dedicated OTT network services. • Spectrum sharing (demand for efficiency).
• New partnership business models. • Vehicle for multi-party sharing.

21. Stages of sharing benefits.
The best sharing strategy depends on the business cycle and technology age.
< 5 years 5+ years > 5+ years
LTE GSM – UMTS
UMTS UMTS - GSM
(LTE piggybacking)
Rollout Phase Steady State Modernization
UK: 3G T-Mobile – 3 UK UK. T-Mobile UK – Orange JV (EE Ltd). Poland: PTC – Orange incl. LTE
Passive sharing: Site Lease & Civil Works, Illustration
Mast/Tower sharing, Ancillary & Rack sharing, and Backhaul Sharing.
Active sharing: e.g., Frequencies, TRXs, PAs, Baseband, CPU, ports, ….
 High Capex prevention.  Little Capex benefits.  High Capex prevention.
 Opex prevention.  Opex savings.  Opex savings.
 Cash optimized startup.  Significant write-off.  Minor write-off.
 Best network.  High re-structuring cost.  Re-structuring cost.
 Extended coverage.  Instant cell split.
 Better network.

22. Network Sharing can provide better economics,
improved market timing, and a much better network.
Frequency Site Radio Backhaul Backbone Core BSS
(MHz) (acq. + build) (electronics) (transport) (transport) (switch & control) (bill & care)
plmn 1
plmn 2
MNO 1
Core BSS
plmn 1 + plmn 2
(optional) BTS &
NODE-B
MNO 2
eNodeB Core
BSS
Capex Efficiency Partly
40%-60% < 35% up-to 50% up-to 50% Less likely
prevention enabler possible
Opex Efficiency scale scale Partly
< 35% ca. 35% Less likely
prevention enabler discount discount possible
Regulatory
HIGH LOW LOWER LOWER LOWER HIGH HIGH
complexity

23. 2020 Western Europe.
Prediction 1 Prediction 2
2 mobile network infrastructures Tier-2, 3 (& 4) MNOs have spun-off
(per country) connected to their mobile networks.
1 Fiber or DOCSISx network. (mobile-fixed-media JVs, sharing partnerships
(Only 1 GSM infrastructure per country) and mergers).
Prediction 3 Prediction 4
Most mobile devices will be Application-oriented
thin-client based. business models rules across all
(more than 50% mobile data traffic being platforms & channels.
off-loaded to fixed, cloud storage/computing) (dominated by GSPs, i.e., Amazon, Google, Apple, ..)

24. How to manage spend
Monetize social media
Vis-à-vis profitability
Transform
New partnership models
Business Model
Internet of Things

25. Thank you for your interest!
For further interest or contact please check out:
Acknowledgement: Dr. Larsen acknowledge the Qtel Group’s support and
http://nl.linkedin.com/in/kimklarsen
interest in developing this presentation. I am indebted to my wife Eva Varadi
http://www.slideshare.net/KimKyllesbechLarsen
for her great support and understanding during the creation process. http://techneconomyblog.com/