3g users and revenue

8/9/2019 3g Users and Revenue

1/27

U M T SF o r u m

www.www.umtsumts--forum.orgforum.org UMTS 2001 UMTS 2001

DRAFT

Realistically Forecasting 3G UsersRealistically Forecasting 3G Usersand Revenuesand Revenues

PaolaPaola TonelliTonelli

UMTS Forum Operators GroupUMTS Forum Operators Group

ChairpersonChairperson

UMTS 2001, Barcelona, 17 October, 2001UMTS 2001, Barcelona, 17 October, 2001


2/27

U M T SF o r u m

22 UMTS 2001 UMTS 2001

The UMTS Forum has just updatedThe UMTS Forum has just updated

3G demand forecasts3G demand forecastsTo account for recent dramatic changesTo account for recent dramatic changes

!!General worldwide economic downturnGeneral worldwide economic downturn

!! Telecom sectorTelecom sector--specific downturnspecific downturn

!!Delays in delivery of new technologiesDelays in delivery of new technologies

!!Delays in operator trials and launch datesDelays in operator trials and launch dates

Some baseline assumptions were changed from the AprilSome baseline assumptions were changed from the Aprilanalysis based on market evidence and factanalysis based on market evidence and fact--basedbased

rationale onlyrationale only


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U M T SF o r u m

33 UMTS 2001 UMTS 2001

Original assumptionsOriginal assumptions

!! Growth in 3G subscribersGrowth in 3G subscribers validated against other forecasts byvalidated against other forecasts byreputed analystsreputed analysts

!! Worldwide 3G service subscriptionsWorldwide 3G service subscriptions determined using adoptiondetermined using adoption

rates, based on percentage of mobile subscribers with access torates, based on percentage of mobile subscribers with access to 3G3Gsystemssystems

!! Service revenue forecastsService revenue forecasts determined from known willingnessdetermined from known willingness--toto--paypayfor analog servicesfor analog services

!! No additional operatorNo additional operator--retained revenueretained revenue included for those servicesincluded for those servicesand applications users will expect as part of their future serviand applications users will expect as part of their future servicecepackagepackage

!!

Average worldwide pricingAverage worldwide pricing assumedassumed!! Significant price declinesSignificant price declines assumed over the forecast period for eachassumed over the forecast period for each

serviceservice

!! Country level service demandCountry level service demand determined considering current mobiledetermined considering current mobile

penetration levelspenetration levels and other economic, social and regulatory factorsand other economic, social and regulatory factors


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U M T S

F o r u m

44 UMTS 2001 UMTS 2001

Realistic forecast:Realistic forecast:3G subscribers example3G subscribers example

Worldwide 3G Subscribers

2009

493

1,100

-

500

1,000

1,500

UMTS Forum HSBC

Subscribers(M

)

Worldwide 3G Subscribers

2009

493

1,100

-

500

1,000

1,500

UMTS Forum HSBC

Subscribers(M

)

* Derived from HSBC Global Wireless, Q3 2001* Derived from HSBC Global Wireless, Q3 2001Source: UMTS Forum andSource: UMTS Forum and TelecompetitionTelecompetition Inc., August 2001Inc., August 2001

**


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U M T S

F o r u m

55 UMTS 2001 UMTS 2001

Changes to assumptionsChanges to assumptions

!! 3G adoption rate3G adoption rate lowered to account forlowered to account for

!!

Slower startSlower start

--up in early yearsup in early years

!!More gradual rampMore gradual ramp--up of countries new to 3G in laterup of countries new to 3G in later

yearsyears

!!Network availabilityNetwork availability dates moved outdates moved out

!! Worldwide 3G services demandWorldwide 3G services demand modified slightly tomodified slightly to

reflect technical and market complexity to offer somereflect technical and market complexity to offer some

of the servicesof the services!! Video component within Rich Voice and MultimediaVideo component within Rich Voice and Multimedia

MessagingMessaging

!!

Market for LocationMarket for Location--Based Services reduced slightlyBased Services reduced slightly


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U M T S

F o r u m

66 UMTS 2001 UMTS 2001

New results for 3G demandNew results for 3G demand

!! Worldwide 3G subscribers in 2010 will beWorldwide 3G subscribers in 2010 will be 28%28% of all mobile subscribersof all mobile subscribers

!! $320.5B$320.5B in revenues in 2010 (down from $322 billion)in revenues in 2010 (down from $322 billion)

!!Cumulative revenues of aboutCumulative revenues of about $1T$1T from 2002 until 2010 (down less thanfrom 2002 until 2010 (down less than1%)1%)

!! IIn 2010 the average 3G subscriber will generate aboutn 2010 the average 3G subscriber will generate about $30$30 per monthper monthon 3G data serviceson 3G data services

!! NonNon--voice service revenues will dominate voice revenues by 2004 andvoice service revenues will dominate voice revenues by 2004 andcomprisecomprise 66%66% of 3G service revenues by 2010of 3G service revenues by 2010

!! Asia Pacific represents the single largest total revenue opportuAsia Pacific represents the single largest total revenue opportunitynity approachingapproaching $120B$120B in 2010in 2010

!! Europe and North America will provide the highest annual revenueEurope and North America will provide the highest annual revenue perperPOPPOP..

The key change is the slower uptake in early years, due toThe key change is the slower uptake in early years, due to

supply constraints, but the pentsupply constraints, but the pent--up demand is still there!up demand is still there!


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U M T S

F o r u m

77 UMTS 2001 UMTS 2001

The 3G advantageThe 3G advantage

!! Even though 3G services will beEven though 3G services will be an evolution ofan evolution ofcurrent services, users perceptioncurrent services, users perception will changewill change

!! AlwaysAlways--onon

!! PersonalisedPersonalised

!!Location awareLocation aware

!! RealReal--time and flexibletime and flexible

!! Easier, better and fasterEasier, better and faster

Users will see a radical and fundamental changeUsers will see a radical and fundamental changein the way they experience servicesin the way they experience services


8/27

U M T S

F o r u m

88 UMTS 2001 UMTS 2001

The 3G advantage (2)The 3G advantage (2)

This is because 3G will take full advantage of IP solutions andThis is because 3G will take full advantage of IP solutions andhigher network capacityhigher network capacity

!! IP transport in access and core networksIP transport in access and core networks

!! Separation of control and transport functionalitiesSeparation of control and transport functionalities

!! QoSQoS mechanisms and architecturesmechanisms and architectures

!! IP Multimedia Subsystem (IMS) to enable provision of IP multimedIP Multimedia Subsystem (IMS) to enable provision of IP multimediaia

services to mobile devicesservices to mobile devices

The users will seeThe users will see

!! Greater range ofGreater range of enriched multimedia servicesenriched multimedia services

!! Fixed Internet services will be easily and quickly adapted to moFixed Internet services will be easily and quickly adapted to mobilebile

!! Higher data ratesHigher data rates for a greater number of usersfor a greater number of users

!! Lower costsLower costs in the long term because of network efficienciesin the long term because of network efficiencies


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U M T S

F o r u m

99 UMTS 2001 UMTS 2001

Service categoriesService categories

VOICEVOICE

CONTENTCONTENTCONNECTIVITYCONNECTIVITY

(Internet)(Internet)

MOBILITYMOBILITY

PERSONALPERSONALPEOPLEPEOPLE

CONNECTIVITYCONNECTIVITYLOCATIONLOCATION

Direct LinkDirect Link

to a Personto a PersonAlways on,Always on,

IPIP--basedbasedKnowledgeKnowledge

of Locationof Location

RichRich

Voice andVoice and

SimpleSimpleVoiceVoice

MobileMobile

InternetInternet

AccessAccess

MobileMobile

Intranet/Intranet/

ExtranetExtranetAccessAccess

CustomisedCustomised

InfotainmentInfotainment

MultimediaMultimedia

MessagingMessaging

ServiceService

LocationLocation

--basedbased

ServicesServices

INFORMATION AND CONTENT (NonINFORMATION AND CONTENT (Non--Voice)Voice)

Source:Source: TelecompetitionTelecompetition,Inc August 2000,Inc August 2000


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U M T S

F o r u m

1010 UMTS 2001 UMTS 2001

Business modelsBusiness models

Mobile Specialised ServicesMobile Specialised Services

VoiceVoiceInformation andInformation and ccontentontent

((nnonon--vvoiceoice))

CONTENT CONNECTIVITYCONTENT CONNECTIVITY

(Internet)(Internet)MOBILITYMOBILITY

MobileMobileInternetInternet

AccessAccess

MobileMobile

Intranet/Intranet/

ExtranetExtranet

AccessAccess

PortalPortal

FocusedFocused

ApproachApproach




MessagingMessaging

ServiceService

(MMS)(MMS)

LocationLocation--

BasedBased

ServicesServices

RichRich

VoiceVoice

andandSimpleSimple

VoiceVoice

Access Focused ApproachAccess Focused Approach



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U M T S

F o r u m

1111 UMTS 2001 UMTS 2001

LLongong--term revenue growthterm revenue growth to 2010to 2010

Source: UMTS Forum andSource: UMTS Forum and TelecompetitionTelecompetition Inc., August 2001Inc., August 2001

Worldwide Revenues - All Services

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

S

erviceRevenues($M)

Simple Voice

Rich Voice

Location-Based Services

Mobile Internet Access

Multimedia Messaging Service

Mobile Intranet/Extranet Access

Customised Infotainment


$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

ServiceReven

ues($M)

Simple Voice

Rich Voice







$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

ServiceReven

ues($M)

Simple Voice

Rich Voice







$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

ServiceReven

ues($M)

Simple Voice

Rich Voice







12/27

U M T S

F o r u m

1212 UMTS 2001 UMTS 2001

LongLong--term revenue opportunities forterm revenue opportunities for

operatorsoperators!!CustomisedCustomised InfotainmentInfotainment will be the largestwill be the largest

revenue opportunity for the consumer segmentrevenue opportunity for the consumer segment

!!Mobile Intranet/Extranet AccessMobile Intranet/Extranet Access is the largestis the largest

revenue opportunity for the corporate sectorrevenue opportunity for the corporate sector

!!MMSMMS is the second largest revenue opportunityis the second largest revenue opportunityfor the business sectorfor the business sector::

!!Managed corporate services will serve to retainManaged corporate services will serve to retain

customers, but will not be a significant revenuecustomers, but will not be a significant revenuestreamstream

!!LocationLocation--based services may not be a significantbased services may not be a significantrevenue opportunity for operatorsrevenue opportunity for operators


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U M T S

F o r u m

1313 UMTS 2001 UMTS 2001

LongLong--term revenue opportunities forterm revenue opportunities for

operatorsoperators (cont(cont''d)d)

!!For both sectorsFor both sectors ""simplesimple"" voice will remain a vitalvoice will remain a vital

component of operators service portfoliocomponent of operators service portfolio::

!! In 2010 subscribers using a 3G device willIn 2010 subscribers using a 3G device will

generate almost $88B revenues from simple voicegenerate almost $88B revenues from simple voiceservices, compared to $233B for all other servicesservices, compared to $233B for all other services

!!From now to 2010 3G services will generateFrom now to 2010 3G services will generate

around onearound one trillion dollarstrillion dollars of additional revenue forof additional revenue foroperators aloneoperators alone


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U M T S

F o r u m

1414 UMTS 2001 UMTS 2001

Revenues by segmentRevenues by segmentWorldwide 3G Revenues - Consumer and Business

(excluding Simple Voice)

$0

$50,000

$100,000

$150,000

$200,000

$250,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Revenu

es($M)

Business

Consumer



15/27

U M T S

F o r u m

1515 UMTS 2001 UMTS 2001

Revenues:Revenues: ddataata and voiceand voice

Worldwide 3G Revenues - Data and Voice

(including Simple Voice)

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Revenues($M)

Data

Voice

Worldwide 3G Revenues - Data and Voice

(including Simple Voice)

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Revenues($M)

Data

Voice



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U M T S

F o r u m

1616 UMTS 2001 UMTS 2001

Revenues by revenue typeRevenues by revenue type

Worldwide 3G Revenues by Revenue Type

$0

$50,000

$100,000

$150,000

$200,000

$250,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Revenues($M)

Messages, Airtime, and Subscriptions

Advertising

Transactions

Worldwide 3G Revenues by Revenue Type

$0

$50,000

$100,000

$150,000

$200,000

$250,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Revenues($M)

Messages, Airtime, and Subscriptions

Advertising

Transactions

Includes Operator Retained Revenue Only.Includes Operator Retained Revenue Only.



17/27

U M T S

F o r u m

1717 UMTS 2001 UMTS 2001

Revenue comparison by service byRevenue comparison by service by

regionregion 20102010

$0

$10,000

$20,000

$30,000

$40,000

$50,000

ServicesRevenue($M)

Customised Infotainment $42,636 $29,256 $5,994 $7,894

Mobile Intranet/Extranet Access $16,778 $17,175 $20,950 $5,759

Consumer MMS $6,681 $6,420 $2,849 $1,866

Mobile Internet Access $3,509 $4,008 $4,219 $2,418

Business MMS $8,170 $8,344 $4,434 $2,789

Location-Based Services $2,336 $3,252 $3,659 $372

Rich Voice $4,802 $7,134 $8,011 $886

Simple Voice $33,628 $27,386 $17,977 $8,851

Asia Pacific Europe North America Rest of World$0

$10,000

$20,000

$30,000

$40,000

$50,000

Serv

icesRevenue($

M)

Customised Infotainment $42,636 $29,256 $5,994 $7,894

Mobile Intranet/Extranet Access $16,778 $17,175 $20,950 $5,759

Consumer MMS $6,681 $6,420 $2,849 $1,866

Mobile Internet Access $3,509 $4,008 $4,219 $2,418

Business MMS $8,170 $8,344 $4,434 $2,789

Location-Based Services $2,336 $3,252 $3,659 $372

Rich Voice $4,802 $7,134 $8,011 $886

Simple Voice $33,628 $27,386 $17,977 $8,851

Asia Pacific Europe North America Rest of World



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U M T S

F o r u m

1818 UMTS 2001 UMTS 2001

ARPU trendsARPU trends

!!The introduction of new services on 2G networks isThe introduction of new services on 2G networks is

beginning to contribute to ARPUbeginning to contribute to ARPU stabilisationstabilisation byby

!! Gaining new customersGaining new customers

!! Generating incremental revenue growthGenerating incremental revenue growth

!! Providing additional revenue liftProviding additional revenue lift

!!The introduction of 3G will accelerate this trendThe introduction of 3G will accelerate this trend

!! Voice minutes will continue migrating from fixed to mobileVoice minutes will continue migrating from fixed to mobile

!! NonNon--voice services will provide the longvoice services will provide the long--term growthterm growth

!! Complemented by alternative technologiesComplemented by alternative technologies


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U M T S

F o r u m

1919 UMTS 2001 UMTS 2001

Impact of 3G on ARPU levelsImpact of 3G on ARPU levels3G Deployment Scenario Analysis(3G share of global mobile subscribers)(3G share of global mobile subscribers)

$0

$20

$40

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

WorldwideARP

UperMonth

($)

Voice Only - no 3G

(All Cellular)

28% 3G share(Report Forecast)

50% 3G share

70% 3G share



20/27

U M T S

F o r u m

2020 UMTS 2001 UMTS 2001

3G incremental revenues3G incremental revenues

3G Revenue per 3G Subscriber

(excludes Simple Voice)

$39

$45$44

$39

$34

$32 $32 $32 $31

$0

$20

$40

$60

2002 2003 2004 2005 2006 2007 2008 2009 2010

Revenues($p

erMonth)

3G Revenue per 3G Subscriber

(excludes Simple Voice)

$39

$45$44

$39

$34

$32 $32 $32 $31

$0

$20

$40

$60

2002 2003 2004 2005 2006 2007 2008 2009 2010

Revenues($perMonth)



21/27

U M T S

F o r u m

2121 UMTS 2001 UMTS 2001

Challenges for 3G operatorsChallenges for 3G operators

!!New business modelsNew business models

!! The business models which operators and their partners chooseThe business models which operators and their partners choose

will have a high impact on operator retained revenue streamswill have a high impact on operator retained revenue streams

!! Business models may vary by serviceBusiness models may vary by service

!!New operator rolesNew operator roles

!! Shift from a simple voiceShift from a simple voice--only, direct relationship with the user toonly, direct relationship with the user toan increasingly complex onean increasingly complex one

!! A portfolio of servicesA portfolio of services

!!

Multiple partners and revenue sharingMultiple partners and revenue sharing!! Increased competition with third parties also targeting the endIncreased competition with third parties also targeting the end--useruser

!! Shift to becoming a system integratorShift to becoming a system integrator

!! Coordination of the complete value chainCoordination of the complete value chain


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U M T S

F o r u m

2222 UMTS 2001 UMTS 2001

Challenges for 3G operators (2)Challenges for 3G operators (2)

!!Integration of Internet and mobileIntegration of Internet and mobile

!!At the device levelAt the device level

!!At the service levelAt the service level

!!

At the transport levelAt the transport level

Bringing together two different worlds to come up withBringing together two different worlds to come up withservices that the users will want to pay for!services that the users will want to pay for!


23/27

U M T S

F o r u m

2323 UMTS 2001 UMTS 2001

Business modelsBusiness models

Mobile Specialised ServicesMobile Specialised Services

VoiceVoiceInformation andInformation and ccontentontent

((nnonon--vvoiceoice))

CONTENT CONNECTIVITYCONTENT CONNECTIVITY(Internet)(Internet)

MOBILITYMOBILITY

MobileMobile

InternetInternetAccessAccess

MobileMobile

Intranet/Intranet/

ExtranetExtranet

AccessAccess

PortalPortalFocusedFocused

ApproachApproach




MessagingMessaging

ServiceService

(MMS)(MMS)

LocationLocation--

BasedBasedServicesServices

RichRich

VoiceVoice

andandSimpleSimple

VoiceVoice

Access Focused ApproachAccess Focused Approach



24/27

U M T S

F o r u m

2424 UMTS 2001 UMTS 2001

Business Models: Example 1Business Models: Example 1

Sources: The UMTS Forum andSources: The UMTS Forum and TelecompetitionTelecompetition Inc., September 2000Inc., September 2000

User ProfileUser Profile

CorporateCorporateportalsportals

NetworkS

ecurityFirewall

NetworkS

ecurityFirewall

BusinessBusiness

segmentsegment

SubscriberSubscriber

profilesprofiles

CustomersCustomers

MobileMobile iintranetntranet//extranet accessextranet access

BusinessBusiness mmodelodel: Access: Access ffocusedocused aapproachpproach

Billing forBilling for

air timeair time

Opportunities forOpportunities for

new servicesnew services

ISP orISP or

corporatecorporate

profileprofile

3G operators3G operators

ConnectivityConnectivity

ISPsISPs

RoamingRoaming

partnerspartners

Fixed lineFixed lineoperatorsoperators

33rdrd partiesparties


25/27

U M T S

F o r u m

2525 UMTS 2001 UMTS 2001

Business Models: ExampleBusiness Models: Example 22

Customized infotainmentCustomized infotainment

BusinessBusiness mmodelodel: Portal: Portal ffocusedocused aapproachpproach

Sources: The UMTS Forum andSources: The UMTS Forum and TelecompetitionTelecompetition Inc., September 2000Inc., September 2000

User ProfileUser Profile

CustomersCustomers

Billing forBilling for

serviceservice

Revenue sharingRevenue sharing

ConsumerConsumer

ssegmentegment

3G operators3G operators

MobileMobile

portalportal

CustomerCustomer

profileprofile

Affinity partnerAffinity partneror supplieror supplier

33rdrd partiesparties

ISPsISPs

BanksBanks

EntertainmentEntertainment

Etc.Etc.

MobileMobile

contentcontent

portalportal


26/27

U M T S

F o r u m

2626 UMTS 2001 UMTS 2001

ConclusionsConclusions

!! Prospects for 3G are very encouragingProspects for 3G are very encouraging

!! Supply and technology constraints will only slow down the uptakeSupply and technology constraints will only slow down the uptake in thein theearly yearsearly years

!! The demand is still thereThe demand is still there!! Over the long term, only 3G will be able to generate aOver the long term, only 3G will be able to generate a massmass

market for multimedia servicesmarket for multimedia services

!! Simple voice will remain a key source of revenueSimple voice will remain a key source of revenue

!! 3G data services will provide additional revenue lift and3G data services will provide additional revenue lift andincremental revenue growthincremental revenue growth

!! 3G will generate3G will generate significant longsignificant long--term revenue opportunitiesterm revenue opportunities forforoperators as well as for other players in the value chainoperators as well as for other players in the value chain

!! The biggest challenges will beThe biggest challenges will be

!! Shift from a oneShift from a one--service mindservice mind--set to a portfolio of services, new businessset to a portfolio of services, new businessmodels, multiple partnerships and complex relationshipsmodels, multiple partnerships and complex relationships

!!

Integration of Internet and mobile.Integration of Internet and mobile.


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U M T S

F o r u m

www.www.umtsumts--forum.orgforum.org UMTS 2001 UMTS 2001

DRAFT

The UMTS Forum has presentedThe UMTS Forum has presenteda realistic forecasta realistic forecastof 3G users and revenuesof 3G users and revenues

3g users and revenue

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