3G for allWhite paper

How 3G is set to transform communications across emerging markets

3G for all2

Contents

3 Executive summary3 The 3G opportunity in emerging markets

4 Market drivers4 Any market is now ready for 3G5 Broadband connection to the Internet6 CSPs in emerging markets are already

harvesting the rewards6 3G is great for voice, too6 Mobility offers compelling benefits7 Option for added revenue: value added services8 3G offers tangible social and economic benefits9 It is happening on all continents

10 Key enablers for CSPs’ business success10 Declining cost of deployment and ownership11 3G breathes new life into existing GSM

deployments

12 CSP strategies and their building blocks12 Services strategy: Ford Model T or Rolls Royce

– or both?12 How to define your 3G strategy?12 The fundamentals of a CSP strategy14 There is a first-mover advantage for CSPs

15 Evolution15 The building blocks of future technology are

available today15 Answering tomorrow’s business needs

3G for all 3

Future evolution. As emerging markets see more 3G market penetration, the focus in customer offerings will change from rapid subscriber sign up to addressing increasing competition. Emphasizing a quality user experience, advanced customer relationship management and finer segmentation will be key in those segments that already have access to 3G.

Another source for growth will be expanding the 3G service to segments with an even lower income. On this front, the ever-declining prices of low-end 3G devices will continue to provide new opportunities.

Executive summary

Key cost factors are converging to make 3G deployments possible in emerging countries. These are:• Greatly reduced prices of 3G

phones and USB dongles • Substantial falls in costs of 3G

infrastructure • Mobile charging and billing

solutions are making 3G service affordable to people with a low income

• Innovative solutions enabling shared access make services affordable to low-income users.

CSP strategies. Some CSPs are targeting wider mass markets with low cost, high volume 3G broadband offerings, while others are pursuing premium pricing strategies offering higher service quality, perhaps with a range of value-added services. More often than not, a CSP will adopt a dual-market approach that encompasses both of these strategies.

Key market conditions need to be considered when launching sustainable services in emerging markets. Providing users with affordable access to services, and helping them to achieve the motivation and competence to use those services, are all critical. Solving these issues will provide an effective way to overcome the affordability barrier for the next billion Internet users.

The 3G opportunity in emerging markets

3G1) is a feasible, cost-effective way to bring Internet access to emerging mass-markets, particularly in areas where the costs of implementing fixed line access are too high. 3G also provides extensive amounts of new voice capacity in the cities of countries such as India, where communication service providers (CSPs) are running out of 2G spectrum.

In this paper, we discuss four aspects of 3G deployments in emerging markets: market demand, key cost factors, CSP strategies and future evolution.

Market demand. 3G broadband access to the Internet is proving to be a major success for CSPs in emerging markets, including TEF in Chile, MTN and Vodacom in South Africa and Smart Communications in the Philippines.

1) In this paper, we use 3G in a broad sense that also covers its subsequent software-upgradeable evolution steps, which radically improve its performance. These include HSPA and HSPA+ for maximum peak data rates of 42 Mbit/s on the downlink and 11.5 Mbit/s on the uplink.

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Market drivers

There is a substantial market demand for 3G all over the world. Many people in emerging countries are waiting for their first basic connections in areas where the complexity and cost of rolling out fixed line communications over a wide area is prohibitive. In urban centers, there are also many relatively high income subscribers willing to pay for more sophisticated service packages and the benefits mobility brings on top of fixed line Internet access.

According to www.internetworldstats.com, there are 1.5 billion Internet users in the world today, a figure which includes those who share Internet use. This represents only 21.9 percent of the global population. We predict that 87 percent of the new subscriber growth in the mobile sector will come from emerging markets, while as much as 57 percent of broadband growth will come from this source.

Any market is now ready for 3G

Many factors are converging to make 3G in emerging markets a commercially sound proposition for both CSPs and subscribers.

According to analysts Informa and Yankee group, 2009 will see the number of mobile broadband customers overtake fixed-line broadband users globally. The markets showing high growth for voice services are clear candidates for transformation to the Internet and multimedia world. The obstacles to profitable, powerful, flexible and cost-effective offers based on 3G broadband technology are disappearing and there is real demand for 3G Internet services.

CSPs in China, Latin America, Africa, India and other regions are finding that the complexity commonly associated with 3G roll outs is not nearly as great as they first thought. Network and terminal costs have also been driven down substantially. According to Strategy Analytics, low-end 3G handheld devices now trade at 100 USD (80 Eur) or even lower, while cheap 3G USB terminals (or ‘dongles’) are available to give PC users a broadband connection to the Internet.

Total WCDMA broadband connectionsTotal fixed line broadband connections

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For many communications service providers (CSP), there is a significant opportunity to expand their mobile business in emerging countries by rolling out 3G infrastructure. Not only will they benefit from the additional voice capacity that the technology brings, but they will be able to offer their customers the benefits of mobile broadband.

Figure 1. Mobile broadband connections are predicted to overtake fixed connections in 2009 (source: Yankee Group and Informa, 2008).

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Broadband connection to the Internet

During the early years of its commercial deployment in established markets, 3G was already seen as a necessity for mobile CSPs in the long term. However, its reputation soon became overshadowed by its initial high deployment costs, the perceived complexity of the business models for end-user services and the organizational complexity it brought for CSPs.

Fundamentally, 3G was seen as a vehicle for CSPs to expand their businesses into providing value added services such as games, navigation services, content platforms such as Mobile TV, news and sports portals and over-the-air music shops, as well as rich communication services such as video calls.

2005

Proportion of browser users (%)0 20 40 60 80 100

Operators

Google

BBC

Nokia

Microsoft

Yahoo!

Lonely Planet

Webmails

TagTag

Bango

45%

42%

33%

28%

12%

11%

9%

9%

7%

7%

2006

Proportion of browser users (%)0 20 40 60 80 100

Operators

Google

BBC

Nokia

Microsoft

Webmails

Yahoo!

ebay

TagTag

59%

41%

38%

29%

14%

8%

7%

5%

5%

5%

2007

Proportion of browser users (%)0 20 40 60 80 100

Operators

Google

BBC

Nokia

Yahoo!

ebay

Webmails

Amazon

Wikipedia

57%

44%

34%

24%

15%

11%

11%

10%

7%

7%

2008

Proportion of browser users (%)0 20 40 60 80 100

Google

BBC

Nokia

Facebook

Webmails

YouTube

Bango Microsoft Microsoft

Wikipedia

Yahoo!

Operators

82%

56%

56%

40%

31%

30%

28%

27%

25%

22%

The generic name for these offerings was ‘Mobile Internet’. Back then, Mobile Internet was considered to be separate from the fixed Internet, controlled by mobile CSPs and typified by a ‘walled-garden’ approach. In other words, the services for end users were provided by mobile CSPs and accessible by users only on the CSPs’ own portals, at prices that were perceived to be high.

However, the Mobile Internet as a separate platform from the generic (fixed) Internet failed to bring the anticipated returns to most CSPs. A few years ago, many of them started to pursue new strategies and opened their 3G networks for generic Internet access, whether via mobile phones or laptop computers equipped with 3G USB dongles for over-the-air connectivity. They also started to use the high capacity of 3G to provide

cheap voice services. As a result, the number of 3G users, their usage of Internet services and CSPs’ revenues started to surge. 3G had come into its own.

Today, 3G offerings from CSPs are increasingly centering on packaging these basic applications – Internet access and voice – in a variety of ways to various user segments. This is a common trend both in established and emerging markets. Figure 2 shows how Internet services surpassed CSP portals in popularity in 2008.

Figure 2. Key Internet services are now more popular than CSP portals with mobile phone users. Source: Nokia Siemens Networks and Nokia UK Smartphone Study, 2005–2008.

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CSPs in emerging markets are already harvesting the rewards

For many people in emerging countries, a 3G connection on a smart phone or desktop PC may well be their first ever experience of the Internet. In Peru, for example, with a GDP per head of less than USD 4000 a year, in 2007 12.9 percent of the population had access to a PC, but only 2.5 percent had Internet access – 3G can rapidly unlock this potential.

Broadband access for people starved of the Internet is certainly proving to be a major success for CSPs in emerging markets. Take TEF, the most successful 3G CSP in Chile – after deploying 3G technology it saw traffic soar to 4 TB a day from 450 GB in just 60 days, with the majority of this new data traffic coming from outside urban areas. Indeed, the number of mobile Internet connections between all CSPs in Chile increased by 315 percent in 2008 to 233,011 up from 56,156, according to the Chilean mobile telephony association (Atelmo).

In South Africa, MTN’s and Vodacom’s launch of 3G in 2006, followed by a push to promote wireless broadband in place of the expensive fixed broadband, has led to more than two million 3G customers across both networks.

In the Philippines, mobile CSP Smart Communications has had a 3G network for some time, yet after introducing a USB broadband dongle, subscriber numbers shot up six fold in just nine months, to some 750,000.

América Móvil’s Telcel in Mexico is yet another CSP to report success with 3G. This year Marco Quatorze, Director of Value Added Services for América Móvil, noted that: “There has been an explosion in the use of mobile Internet access [in Mexico]. Mobility plus data is what customers want and we are seeing very good results with 3G.” He added that, “The Internet is a necessity in the 21st century, not a luxury.”

For many users, the key to 3G take-up is not mobility but simply access. Handheld devices can satisfy this demand for the mass market. As Abdul Razzak, CTO of Egyptian provider, Etisalat, has commented: “The mobile handset is becoming the most important means of accessing the Internet in Egypt.”

3G is great for voice, too

Another main driver for 3G in emerging countries is offloading voice traffic. With the massive uptake of mobile phones – and the vast populations of cities in countries such as India – CSPs are running out of 2G spectrum. They are facing the need to install 3G overlay networks that can handle much more voice traffic cost-effectively. Indeed, spectral efficiency provided by 3G’s HSPA evolution is five times that of GSM’s Adaptive Multi-Rate (AMR) coding technology2).

Mobility offers compelling benefits

For many users who already have fixed line access, 3G is attractive as complementary services due to the six key benefits it offers:• Access everywhere. 3G makes

broadband connection to the Internet available outside their homes and public Internet access points – even while on the move.

• Enhanced service experience. Some of 3G’s inherent features can enhance basic Internet services – for instance, adding users’ location information to a map service makes the service much more exciting and useful.

• Data speeds. The high performance provided by 3G’s latest evolutionary steps makes it comparable to fixed ADSL and WLAN technologies in terms of the data speeds available to an individual user.

• Ease of use. 3G makes it easy to activate a broadband connection for a subscriber – much easier than with fixed technologies like ADSL and WLAN. There is no installation work to be done in the customer premises, which lowers the entry barriers to offering the service.

• Simplicity. It is very easy for the user to log on to the network using 3G. While WLAN offers ‘nomadic’ mobility, connecting to the network, especially when on the move, can require a much more complex procedure than with 3G. The simplicity of 3G lowers the entry barriers for users to adopt the Internet/broadband service.

2) Nokia Siemens Networks

3G for all 7

• Privacy. Although mobile phones are often used as shared devices in emerging countries, many individuals use their own devices privately, in contrast to computers which are often used by several family members. Privacy has proven to be a key benefit that is highly valued by many users of handheld devices.

Option for added revenue: value added services

There are certainly CSPs who are not content with the role of plain access provider but who are looking to move up the value chain and gain revenue from the Internet and mobile services sector. They have two key opportunities to do so:• Gain higher value from their

customers through providing a better user experience of services from key Internet Service Providers by using the capabilities of their own network infrastructure. For example, T-Mobile’s Web’n’walk service in the US and Europe provides different broadband price options combined with a personalized one-touch access to preferred Web2.0 partner services. As a result, 2.8 million subscribers out of 86.1 million customers in Europe subscribed to the service (September 2007), accompanied by a more than 40 percent year-on-year increase of Internet revenues. In 2008, Ovum observed that: “Mobile broadband is T-Mobile International’s fastest growing product category”.

• Provide their own value added services either alone or in partnership with content providers and/or application developers. In the established markets, multinational CSPs like Vodafone and Hutchison Whampoa’s 3 have taken this path with some success. Vodafone’s MusicStation music downloads service, for instance, topped UK digital music downloads by June 2008 and overtook PC–based services in number of subscriptions.

However, the deeper CSPs get involved with the value added services business, the more complex will be their relationships with partner companies and within their own organizations. They will typically also need to acquire new skills, for example in the fields of service and product management and marketing. In contrast, providing a simple broadband and voice service has a sound business case and has the benefit of being easier to manage.

CSP’s business and technical difficulty level

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Internet on laptop

Internet on handset

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Figure 3. Internet services have a strong market impact coupled with straightforward business models (source: Nokia Siemens Networks).

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3G offers tangible social and economic benefits

If the argument for rolling out 3G is making increasing sense for CSPs, the complementary driver from international agencies of connecting more people to the Internet and to voice communications is also more important than ever. Mobile technology – and increasingly 3G – will be the solution of choice to bring widespread social and economic benefits.

A prime example is the International Telecommunication Union’s Wireless Broadband Partnership project, which is the flagship of its Connect the World initiative. Another is the GSM Association’s Development Fund for promoting mobile solutions for people living on under USD 2 a day.

Indeed, wireless is now seen as a critical engine for bringing new economic avenues to people in these difficult financial times. Economists have directly linked mobile numbers to Gross Domestic Product (GDP) growth. Figures produced by the OECD in 2006 show that countries with a high broadband penetration (up to 3.9 subscribers per 100 head of population), have a higher GDP than those with lower broadband figures.

A report published by economic consulting firm LECG outlines the possible gains that could be seen: “… the [long-term] productivity gains from the increased use of mobile broadband technologies [in emerging markets] are likely to be very significant. For example, we calculate that the Net Present Value (NPV) of the current and future economic benefits from Chinese CSPs’ proposed investment of $59 billion is likely to exceed $110 billion.”3)

3) Connectivity Scorecard, Study created by Professor Leonard Waverman, London Business School, and economic consulting firm LECG, commissioned by Nokia Siemens Networks, 2009

At Mobile World Congress 2009, GSMA chief Rob Conway echoed this line of thinking, saying that: “Mobile broadband in particular can be an engine for growth if governments set the right framework.”

3G for all 9

It is happening on all continents

3G is a commercial reality in many parts of Asia, Eastern Europe, Latin America, the Middle East and sub-Saharan Africa. Also, most of those countries that have so far missed the 3G train are working on proposals to get on board.

In China, the main CSPs, China Mobile, China Telecom and China Unicom are now investing billions of dollars this year in 3G infrastructure, including rollouts to rural areas, such that as much as 70 percent of this vast population could be covered.

In India, an auction for 3G frequencies has been delayed, but several 3G services have been launched by CSPs already allocated spectrum. BSNL, for example, has started small with a 3G service in Chennai, but is said to have plans for a very ambitious rollout in several hundred cities.

Countries with 3G WCDMA licenses and networks in deploymentCountries with commercial 3G WCDMA operators

GSM markets expected to evolve to 3G WCDMA

Figure 4. Countries with commercial 3G networks.

Vietnam has seven applications for licenses on the table and even North Korea has a new 3G network. This is reported to have attracted several thousand subscribers in the few weeks after people were able to apply for the service.

All this means that little short of global 3G coverage is already on the horizon.

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Key enablers for CSPs’ business success

Declining cost of deployment and ownership

Key cost factors are converging to make 3G deployments possible in emerging countries. These are:• Low cost terminals – prices of

3G phones are dropping below the 100 USD (80 Eur) mark and deals for low income users – who may share handsets and SIM cards – can now be as low as five Euros a month.

• Prices of personal computers have come down and are declining further. In early 2009, the Indian government announced that it will support a plan to mass-produce a USD 20 laptop with scaled-down features in their Sakshat project. The laptop is to be built by the Vellore Institute of Technology; scientists in the Indian Institute of Science, Bangalore; and IIT-Madras and Semiconductor Complex. The first units are expected to ship in 2009.

• Costs of 3G infrastructure, notably radio access technology, have also fallen substantially due to increased delivery volumes and the economies of scale that follow, as well as technical advances and deployment innovations. And they continue to do so. In many regions – especially sparsely populated ones – the cost of deploying 3G/HSPA is much lower than for fixed broadband, while also offering good-quality connectivity both for mobile customers and desktop PC users in homes and offices.

• The introduction of lower 3G frequencies in the 850/900 MHz field allows a four-fold increase in the cell radius compared to the cell coverage provided by the original 3G specification. This means that only a quarter of the number of base stations are needed for the same coverage, although there is a trade-off in data capacity.

• Mobile charging and billing solutions have evolved to support a variety of charging schemes, so that the 3G service can be provided at the right price using relevant payment methods for a variety of user segments. As many as 80 percent of subscribers in new growth markets have a prepaid plan, compared to 60 percent in Europe. For low-income users, prepaid access can be offered in time increments as low as, say, half an hour, with a capability for micro-payment top-ups. Users with a higher income can be provided with other types of pre-pay or even monthly contracts.

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• Shared access for affordability. CSPs in emerging markets have already implemented a variety of business models which allow a single phone to offer connectivity to many users. They are typically based on franchising, with CSPs allowing individual entrepreneurs to make a business out of the sale of service access to their customers. The options include Internet cafés and kiosks equipped with a computer or a phone and a 3G connection. The users can buy air time for connectivity from the entrepreneur using credit top ups in small increments. They key is to ensure users have full knowledge of the costs, so they can be confident of not exceeding their call budget. For example in India, 38 percent of consumers use Internet cafés4). In Brazil, 32 percent of people use community or commercial access facilities for Internet access5).

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3G breathes new life into existing GSM deployments

In general, 3G networks are deployed as overlay systems on 2G networks, with many of the existing components reused for a converged 2G/3G network, for example backhaul, switching, packet core and transmission. Current technologies even allow the use of a single base station for shared 2G/3G connectivity. However, some additional investment in extra capacity will be necessary, especially when the number of users and service usage increases.

It is important to note that, particularly on 850/900 MHz frequencies, the bulk of existing 2G base station sites can be readily used for additional 3G installations. This allows CSPs to keep radio network deployment costs low. Site acquisition or rental costs typically make up the biggest cost item in radio installation, surpassing the total capital expenses from equipment for a site.

4) Nokia Siemens Networks Study on broadband usage, 20085) Rural Marketing Practices for Telecom Services Report, conducted by the Center for Knowledge Societies (CKS), commissioned by Nokia Siemens Networks, 2008

Figure 5. Latest 3G evolution steps have low implementation costs (source: Ovum, Telstra, 2008).

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Services strategy: Ford Model T or Rolls Royce – or both?

Large cities also have many subscribers from higher income brackets, including government and enterprise customers, as well as lower income users. Thus, they provide major opportunities for pricier service packages combining large download limits and targeted content. While many users will want access to the same kind of Internet applications as those in developed markets – e-mail, web browsing, video and so on – there are also many applications likely to prove vital to social and economic wellbeing, such as healthcare, banking and farming systems.

A key decision is whether to provide a ‘Model T Ford’ service – low cost, high volume broadband connections with little technical and organizational difficulty, providing ‘just sufficient’ service quality – or a ‘Rolls Royce’ premium pricing strategy with an extra investment in high service quality, perhaps with a range of value-added services. While the low cost, high volume strategy is widely used, it is notable that several CSPs in regions such as Africa and the Far East have initially targeted premium users for their 3G rollouts, as licence costs have been high and fixed-line Internet is also costly. However, a dual-market strategy – targeting both high-end urban subscribers with a quality offering and lower-income urban and rural subscribers with basic coverage – can be highly desirable.

There are several effective ways to move forward. An example is Indosat, a fixed line CSP in Indonesia. It is offering an HSPA service in addition to fixed broadband and achieving a high ARPU for its mobile broadband product that is many times the ARPU of its prepaid voice subscribers. In Peru, the mobile player Claro launched a separately branded 3G service last year with broadband and multimedia applications aimed largely at the youth market and with prepaid tariffs that include just a day’s use. Vodacom and MTN in South Africa have had major success by promoting prepaid and post paid broadband and multimedia applications form the start of 3G operations.

How to define your 3G strategy?

Any CSP with a firm basis as a voice connectivity provider can expand its offering into providing Internet access relatively easily and without extensive organizational changes. The two services are very similar, especially in the sense that both are about packaging a fairly simple product in such a way that it is attractive and affordable to the target market.

However, for CSPs that are ready and willing to transform their business and operations fundamentally, 3G provides a platform to gain new revenue through value added services such as mobile TV, social networking, various local and regional information services and business communications.

The fundamentals of a CSP strategy

Every market is different and each CSP has its own targets, which makes creation of 3G strategy an individual proposition. However, there are some key market conditions that set the fundamental framework for a CSP strategy6). These are:

1) Affordability• Spending power of users.

The number and average income of business users and high-income (essentially urban) consumers defines the addressable market for any high-end (‘Rolls Royce’) offerings such as post-paid Internet access and mobile TV. In the mean time, the number of low- and medium-income urban and rural users defines the potential for mass-market (‘Ford Model T’) services such as pre-pay Internet. Entrepreneurial business models like Internet cafés and kiosks, as well as the village phone concept are vital in bringing the service to low-income suburban or rural users.

CSP strategies and their building blocks

6) We have discussed this topic in more detail in our white paper ‘Making the Internet relevant in emerging markets’

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2) Access to services• Internet and broadband

penetration in the market. These are typically low in emerging markets, with Internet penetration the slightly higher of the two. In such a situation, the market is probably ripe for using 3G to expand the Internet and broadband footprint to new geographic areas and new segments. For those users who already have fixed Internet access, the CSP has an opportunity to market the benefits of mobility that 3G offers and promote it as a complementary means of connectivity.

• The number of users with 3G-capable terminals already in the market. 3G devices have been commercially available for more than five years. Many units in emerging markets have been acquired by users who have only a 2G connection that is supported by 3G terminals. The key attractions to the buyers may be the advanced capabilities such as cameras and media players in phones or indeed the status value of a high- or mid-tier phone. Users who already have a 3G device are likely to be able to adopt the 3G service immediately.

3) Competence• User capabilities. The population’s

average literacy level is a serious consideration when launching 3G to the mass market. Low literacy skills hinder many users’ ability to benefit from 3G broadband. But experience has also shown that many users who do not fully qualify as literate in official terms may have practical skills good enough to benefit from the Internet.

• Technological skills of users. Many potential users have little experience of using technology, so it is important to make the services as easy to adopt and use as possible. It is vital to ensure that user terminals are correctly set up for the required connectivity. Today’s care solutions simplify the task by automatically providing the correct settings over the air to the user’s device.

4) Motivation• User knowledge. The primary

motivation to use a service comes from understanding its benefits. Many potential users may not know what the Internet is or how it can help them in their everyday lives. Education on the benefits and fundamentals of the Internet can be important in many markets. In Internet cafés and kiosks, entrepreneurs have the local knowledge to help educate people. For example, in Indonesia, around 90 per cent of Internet café visitors learned how to use the Internet from their peers or Internet café staff7). CSPs have also often used education as a cornerstone of their 3G marketing campaigns.

• Ease of use. Experience shows that services that are complex to activate or use discourage people from using them, even for those with higher technical skills. It pays for a CSP to walk the extra mile and ensure that services are easy to find, access and use, for example by ensuring that a user has the right terminal settings before they use the service for the first time.

Competence

Affordability

Access

Motivation

7) Nokia Siemens Networks research based on data from Economist, World Bank and Merill Lynch (2006)

Figure 6. The key elements affecting 3G user takeup and to consider when planning any 3G strategy. Source: Marja-Liisa Viherä 1999 (adapted).

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FollowersFirst wave 3G launch

Late entrants

Relative Promotion Investment

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Orange France3 Italy

SFR France

VoD Germany

Elisa Finland

O2 Germany

TIM Italy

Orange UK

VoD UKVoD Italy

Orange Spain

VoD Spain

Wind Italy

T-mobile UK

3 UKMobistar Spain

T-mobile Germany

E-plus Germany

O2 UK

Yoigo Spain

There is a first-mover advantage for CSPs

The latest round of 3G activity suggests that many more countries will have faster and more flexible connections for much of their populations. What’s more, if the experience of CSPs and 3G in developed countries is replicated, it is those providers that move first that will tend to do best even if initial business models are not optimal.

But with substantial experience now available around the globe, and with much more sophisticated solutions for managing subscriber data, and for billing and charging, CSPs going for 3G now should be able to make the right business decisions first time.

Statistical data from Informa Telecoms & Media and Oliver Wyman indicates clearly how those CSPs who first launched 3G now dominate the market. The first wave companies have achieved market share of over 60 percent in some cases, while those who waited longer to make their entry have had to resign themselves to a share of around 10 to 30 percent. Companies who entered the market later still have found their market share to be 5 percent or less.

Figure 7. CSPs first to launch 3G dominate the European 3G market (source: Informa Telecoms & Media, Oliver Wyman Analysis, 2007).

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Evolution

Answering tomorrow’s business needs

As the emerging markets see greater 3G market penetration, the focus in customer offerings will gradually change from signing up subscribers as rapidly as possible, to addressing increasing competition. Offering a quality user experience, advanced customer relationship management and finer segmentation will be the key to those segments that already have access to 3G.

Meanwhile, another source for growth will be expanding the 3G service to segments with an even lower income, with appropriate charging, billing and data management solutions. On this front, the ever-declining prices of low-end 3G devices will provide new opportunities.

The 3G market in emerging countries offers great potential to be in the driving seat in one of the true growth markets in 2009 and beyond.

The building blocks of future technology are available today

On the technology side, the next step for 3G, Long Term Evolution (LTE), is being standardized in parallel with a new end-to-end network architecture known as System Architecture Evolution (SAE).

It represents the natural evolution of existing WCDMA/HSPA networks towards high-speed mobile broadband applications. LTE combines radio access technology based on Orthogonal frequency-division multiplexing (OFDM) with a flat, all-IP based network architecture. This allows it to support broadband multimedia services with peak data rates of up to 173 Mbps on the downlink and 58 Mbps on the uplink.

Thanks to its high data rates and low latency, LTE will support all broadband multimedia services including voice and rich calls, Internet access, multimedia, video streaming, video conferencing and mobile TV.

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