1

Business Implications of Business Implications of Digital ConvergenceDigital Convergence

Lee, SanghoonLee, SanghoonKTKT

2007. 2. 82007. 2. 8

: A Telco Perspective: A Telco Perspective

2

I

II

Digital Convergence

From Technology to Value

III Telco Business Direction

IV Network & Platform

V Concluding Remarks

3

Digitized Information Explosion

Source : UC Berkeley, School of information management and systems

Cave paintings,Bone tools 40,000 BCE

Writing 3500 BCE

Paper 105

Printing 1450

Electricity, Telephone 1870

Transistor 1947Computing 1950Internet (DARPA) Late 1960s

The Web 1993

2000: 3B

2001: 6B

2002: 12B

2003: 24B

Volume of data(Gigabytes)

57 Billion Gigabytes in 2005

93% of all data is born digital

17 Billion devices will be connected by 2012

Time

4

Convergence: The Natural Next Step

NewsNews

EditionEdition

DeliveryDelivery

SubscribeSubscribe

VideoAudioVideoAudio

EditionEdition

CableCable

viewingviewing

DesignDesign

MakingMaking

MarketMarket

PurchasePurchase

FinanceFinance

OperationOperation

FinancialNetworkFinancialNetwork

DepositDeposit

VoiceVoice

ConnectionConnection

NetworkNetwork

SubscribeSubscribe

Terminal

ServiceProviding

Delivery

Packaging

Producing News, Movies, Music, Finance News, Movies, Music, Finance

Media ConvergenceMedia Convergence

Broadband InternetBroadband Internet

Subscribe, Purchase, DepositSubscribe, Purchase, Deposit

Digitalization

Terminal

ServiceProviding

Delivery

Packaging

Producing

Being Digital: All information having the common format

Service Convergence Network Convergence Terminal Convergence

They can easily mixThey can be delivered using

the common mechanismThey can be easily used

in the same terminal

5

Impacts on the Industry

Traditionally separate market boundaries blurred

Competition horizon expanded almost without limit

Opportunities or threats: which is bigger?

* Source: ITU-T July 2006

6

Impacts on the Value Chain

Competition within the same value chain boundary

Competition beyond the traditional value chain boundary

Producing Packaging Delivery Window /Service Providing

Past

Now

7

Google (16.2)

2.0

3.0

4.0

5.0

> 5.0Yahoo (7.9)

Value in-flow

Value out-flow

High

Low

Market ValueSales

Value dragging

0.5

1.0

0.0

1.5

High LowOperating Profit Growth

Microsoft (5.2)

Disney (2.0)

KT (1.4)KTF (1.4)

* Source: Mercer Value Migration Database

Producing Packaging Delivery Window /Service Providing

Value Migration

Packaging or Window/Service Providing

Delivery(Traditional Comm.domain)

Ebay (9.5)

TW (2.2)

Verizon (1.8)

8

Share of overall

value(in %)

Converged Communications global value migration

Wireless

WirelineTraditional Carriers

WirelineNon-Traditional CarriersISPs

Cable / Satellite

0%

20%

40%

60%

80%

100%

1990 1995 2000 2005

Delivery Segment

Producing Packaging Delivery Window /Service Providing

* Source: Mercer Value Migration Database

9

From Technology to Value

10

IT evolution = better convenience and more functions at lower price.

Evolution of Technology

80

7065

60

45

30

20

0

10

20

30

40

50

60

70

80

90

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Gate

Leng

th(n

m

1588

529

272

2.523.437.5

19941995199619971998199920002001200220030

3

10

20

50

100

(Mbps)

56KD/U

ADSL VDSL 50MVDSL

100MVDSL

FTTH(x-PON)

Internet connection fee

(won/Mbps)

Evolution of Access Network

Convenience

Function

Price

Convergence Devices(Mobile+Camera+MP3)

But, IT evolution does not guarantee Telco’s revenue increase.

ASIC Tech. prospect(source:ITRS)

Internet connection Fee per 1Mbps

11

Creating Value Out of Technology

Communication

Content/Application

Intelligence

Secure

User Interface

Design

crystal clear voicecrisp videoubiquitous connectivity

personalizationlocation/device-aware

identity protectiontheft-free

Technology

Valueeasy & intuitive

art

informationeducation, health, …

Computing high processing powerlarger/faster storage

Σ CustomerValueInnovation

=

12

•Interesting News•Today’s schedules •Real-time traffic information

•Multimedia contents

• Various information for business use

Morning

Working

Dinner time

Going to work

•Suggesting menu & restaurant considering participants’ taste, schedule, and weather.

“How about ‘MiSS &Mr.’ today at 63 Tower?”

Change of Life Style

CustomerValue

(Technology + Emotion)

13

A Key Factor for Future Business

Identity & Privacy Protection

Big brother ?

Wonderful Life ?

<KBS News : whole day captured by CCTV 2006.04.12>

Going to Work by Elevator, Walking Street,Taking a Subway, Studying at institute,Using ATM, Eating meals in restaurant, Coming back home by bus …

Eyes watching me in everywhere2005.4.20

14

MasterCard

Telecom

Leisure

Travel

Shopping

Work

Payment

Health Care

HealthStatus

CreditRating

Age

DrivingLicense

TaxStatus

Name

Birthday

Birthplace

Insurance

PhoneNumber

BloodGroup

ForeignLanguages

Income

PictureAddress

Likes &Dislikes

Internet

InternetID

Socialnetwork

CommunityRole 1: ID & Privacy protection

Secure/Trusted Activities in the On/Offline World

Make Life Simple and Secure

secure transaction

trusted brokering

social networking

credential protection

Interests

Reputation &Trust System

Role 2: Trusted Agent for the User

Government

15

Telco Business Direction

16

- Leverage Telco's connections with the customers

- Expand the ability to manage Telco's facilities to u-Thing

Provide Ubiquitous Total Care Service based on NM Capacity

Regular Maintenance

•Monitoring•Preventive

Maintenance

In Emergency,• Automated dispatch• Auto. Job Allocation• Tech. Support

Centralized Control

Dispatch MOS Team

Residents/Managersi-Frame

Internet

ElevatorControl

···

PowerControl

CCTV

Telemetering

EntryControl

Expand to Neighboring Fields

17

Expand Core Competency

- Deliver diverse multimedia content including images and videos

- Provide diverse image delivery services including u-Theater, u-Ad., IP-TV, i-Frame

Voice/Fax

Expand Controllability of POTS to Display Devices

Tomorrow

Content Production

Now

Multimedia On demand Delivery ofImage/video

Home(TV, PC, i-Frame)

Theater(Screen)

Entertainment(Karaoke, DVD Room)

Restaurant(Menu)

Delivery(Taxi, Cart,

u-Billboard, e-Paper)

Image Delivery Platform

Large-capacityMultimediaData

18

Total Care Service

u-Office

u-Healthu-Traffic

Navi. Manage car stateControl Weight

Custo

mer C

ontext an

alysis platfo

rm

Privacy pro

tection p

latform

man

agem

ent/co

ntro

l

24hours

*365days

CustomersNavigation

Manage

Emergence

WeightDiagnose

Diabetes HeartBlood

ManageVideo Conf.

VoIPPortal

Mobility

Total Care Total Care ServicesServices

VariousVariousServicesServices

Customer Customer NeedsNeeds

u-Health + u-Traffic+ u-Office + u-Edu

u-Health + u-Home + u-Traffic

An integrated service set that suits varying customer demands.

Safe, secure, & uninterrupted service.

u-Home

MeteringAppliance

VisitorViewer

Manage Invasion

u-Edu.

ManageCounsel

LanguageMobile Edu.

Remote diagnoseRemote metering

Remote Foreign Lang. conversation

Control weight Mobile Office

NavigationControl

sugar diabetes

19

· · ·

1St Tier

2nd Tier

3rd Tier

KT Ubiquitous Network InfraKT Ubiquitous Network Infra

24*365 Monitoring24*365 Monitoring

Broadband

PSTN Leasedline WiBro

WiFi

Manpower Technology Infra. System & Culture

Security

Revenue Mgt.

Shop Mgt. FinancialMgt.

CustomerMgt.

Approval Mgt.

- Provide solutions for u-Health, u-Building, u-School, u-Shop

- Enhance customer value by offering appropriate solution at the right time

Requires big changes in the business nature & culture

Develop new solutions tailored to individual customer’s needs based on u-Block concept

Change the Way of Doing Business

20

The Network & Platform

21

Why the Network & Platform Again?

Broadcast

Voice

App

Delivery

Broadcast

Voice

App

Delivery

Broadcast

Voice

App

Delivery

Broadcast

Voice

App

Delivery

App

BroadcastVoice/Video

Delivery

Present: Separate Service Competition Bundle Competition Converged Service Competition

Marketing Competition Marketing Competition Innovation Competition

t

Innovation competition is awaiting

Differentiation in the network capability

Fast service creation/delivery platform

Integrated platform for the upcoming converged services

Holistic management & maintenance capability

22

Regain Bandwidth Controllability

Premium network with the high level of QoS & security

- High-value service through bandwidth control of wire & wireless networks

- Offer various differentiated service based on Premium network

BestEffort

Services

PCNon-PC Edge Router

Best effortNetwork

PremiumNetwork

Access Network

(Wire & Wireless)

Premium Services IP-TV,

Video-Conferencing,Video-Learning,

etc..

RGW

23

Managed Broadband Network & Deployment

TGWPremium-Network

(All-IP)

AGW

PSTN

MediaGateway

AGW : access gateway, TGW : trunk gatewayRGW : residential gatewaySER : service edge router

QoS Manager

Best-EffortNetwork

Access Network

VDSL,LAN,

FTTH,

WiBro

RGWPC

BestEffort

Services

Non-PC

Premium Services

IP-TV,Video-Conferencing,Video-Learning,Robot

etc..

111

222

333

444

Managed access & backbone network as the major leverage

- Strengthen bandwidth control of wire & wireless networks

- Offer various differentiated services based on the Premium network

222

555

111 New authentication Platform

222 Premium Network

333 FTTH(Wired Access)

444 WiBro(Wireless Access)

555 Home Network with RGWControl/DHCP/Web System

111

SER

24

Platform as Another 1st Class Asset

CAPEX/OPEX efficiencyFast service creation/deliveryEasier 3rd party integrationMulti-terminal supportEnabling integrated/blended service

EdgeServiceNode

ManagedIP core

Best EffortInternet

EdgeServiceNode

fixed/wirelessaccessnetwork

Control Layer (AAA, QoS, Security, Mobility)

Integrated Service Platform

App App App…응용 서비스

fixed/wirelessaccessnetwork

Integrated Service Platform

The past is re-appearing (with wider acceptance now)

- Telecom Information Networking Architecture (TINA) in the ATM+Corba era

- Integrated Service Platform in the IP+Web Service era

25

Re-Shaping the Telco Business in theDigital Convergence Era

Value-focused business design

Big changes in the business nature and culture

• Total Care Services : An integrated service set that suits varying customer demands

Expansion from the core competency to neighboring fields

• Telephone PC ComputingPowerHosting/Image

• On-offline service binding with holistic management capability

Right Infra for the right business

Network

• Premium network: QoS, New authentication platform, FTTH

• Customer premise network: RGW-based home network

Integrated service platform

• Basic asset for the upcoming service innovation

26

Thank You !