Global Trends In Mobility - Cisco

NEXT GEN MOBILE NETWORKSDirk Wolter, Managing Director, Mobility, APAC29th January 2016

Content1.Global business and technology trends in Mobility2.Implications for the Indian/SAARC market3.Technology enablers for network evolution4.Round table discussion

Global Trends in Mobility

Market Transitions for Mobile Network OperatorsNewBusiness ModelsNewCompetitors Flexible, usage-based pricing Faster time to revenue Direct, In-direct and Passthrough Global market reach over thetop (OTT) Reduced barriers to entry Accelerating pace of innovationNewTechnologies Nimble software definedplatforms in the Cloud System on a chipcommoditization Emergence of M2MAdapt or Be Left Behind

APAC Mobile SP Profitability60%ARPU (US )Emerging MarketsTelkomsel 40 35GrameenphoneEBITDA Margin (%)GlobeDeveloped MarketsDialog 20 15CelcomCMCC 5StarHub 0SingTelCT2010NTT DCMM1OptusSpark NZSKTKDDISoftbankVHAVF NZ20%50.0%20132014India/SAARCEmerging Markets40.0%35.0%True 5201245.0%KT 02011EBITDA MarginLG U 10%Developed 10TelstraChina UVoda India30% 25DiGiAISSmartMobilinkBanglalinkIndosatXLRobi MobitelAirtel AISDTAC40% 30Maxis50%30.0% 10 15 20 25ARPU (US )Source: Cisco analysis, from 2014 annual reports. 30 35 40 4525.0%20.0%2010Low ARPU doesn‟t mean low margin: Some emerging market SP‟s enjoy 50% EBITDA.Developed markets managing business transition to Data.Emerging are still challenged with declining ARPU and Profitability.2011201220132014

Innovation in OTT Strategies China Mobile Jego App provides free calls,messages and cheap international calls. Indian cross-platform messaging App Hike is a jointventure between Bharti Enterprises and Softbank European operators offer RichCompeteCommunication Services formessaging EU regulator: “Mobile companies regularlyblock VoIP and prevent services such asSkype from functioning on their networks”APACFocusPartner Free Basics in „Free Zone„ Search,18 SPs in 14countriesEnableGmail, G Video stream bundles,add-ons, zero ratingGain SubscribersProtect Revenue Plan add-ons for unlimitedcollection of OTT apps Music Streambundles or add-onsIncrease APRUMVNO Direct operator billing forSkype credits Cloud based RCS app Jibe Sponsored Datawith network QoS App APIs to manage NW QoSNew Revenue OTT Google and WhatsApp offer directservices as MVNOs Wyless global M2M solutions Apple MVNO RumoursImplications of OTT Partnerships: Encryption (dark pipe), Net-neutrality

Protecting and Enhancing VoiceVoice over WiFi to fix coverage & protect from OTTsStarted with US Cable Operators, but now mass MNOs adoption driven by Apple T-Mobile,USA offers -blog/welcome-to-wi-fi-calling.htmiOS 8 brings Wi-Fi calling for iPhones on T-Mobile 3,UK launches VoWiFi wifi-momentum-app-launch EE,UK plans VoWiFi to boast indoor coverage“The aim of VoWiFi is to improve in-building coverage. Calls will be automatically routed via WiFi, for instance in a user‟s home oroffice, where there is an absence of cellular hes-WiFi-Calling-to-combat-poor-reception.html i/Challenges: Limited Mobility, High Density QoS, Enterprise IT, Regulatory.Network(Client Appor OS)prioritizes voice-over-Wi-Fi over VoLTEFour Sprint devices with the client pre-loaded. When the user connects to a WiFi hotspot, calls are automatically routed to the Wi-Finetwork until the user leaves the Wireless LAN,IPsec)(Evolved PacketData Gateway:Terminate IPsec toconnect UE to EPC)VoIP CallManagementIMS/SIPIMS/SIP

Bottom-line ChallengeOperating Costs Reducing Margins and Stifle Innovation Network complexities contributing toOPEX growth:OPEXCAPEX Legacy technologies Purpose-built hardware hardwired Multiple OS Multiple points of failure Increasing provisioning and managementcosts Rigid Architecture: inefficient transportroutingSource: GSMA Intelligence Slow to introduce: New capacity andservicesNeed to reduce overall expenditure, especially OPEXSimplification and speed “is” innovation

Local Implications

APAC Region Mobile 5-Year DynamicsDiverse growth drivers based on market maturityMobileNo. ofAvgMobileMobile Users No. of ConnectionsSpeed2019REGIONUsersDevices / M2M(inc M2M)ForecastNo. of UsersperTraffic/Device2GB / per MonthAPAC2,800 M (5% YoY)5,400 M (8% YoY)8 Mbps1.8 GB (48% YoY)9,500 PB (58% YoY)China1,050 M (4% YoY)2,200 M (9% YoY)9 Mbps1.0 GB (51% YoY)2,200 PB (67% YoY)India900 M (9% YoY)1,200 M (6% YoY)3 Mbps1.0 GB (58% YoY)1,100 PB (67% YoY)Indonesia195 M (5% YoY)385 M (3% YoY)2 Mbps1.6 GB (54% YoY)610 PB (59% YoY)57 M (3% YoY)134 M (3% YoY)5 Mbps1.8 GB (51% YoY)240 PB (57% YoY)450 M (4% YoY)840 M (4% YoY)6 Mbps3.4 GB (66% YoY)2,900 PB (70% YoY)22 M (2% YoY)76 M (14% YoY)25 Mbps2.4 GB (26% YoY)166 PB (41% YoY)Japan115 M (0% YoY)380 M (18% YoY)17 Mbps5.0 GB (26% YoY)1,500 PB (40% YoY)Korea46 M (1% YoY)190 M (21% YoY)19 Mbps4.5 GB (24% YoY)670 PB (43% YoY)PhilippinesRest of APACAustralia13x GrowthEmerging Asia:More users andSmartphone adoptionANZ: More BW andricher servicesDeveloped Asia:More connectionswith IoTSource: Cisco VNI Global Mobile Data Traffic Forecast, 2014–2019Note: The numbers above pertain to 2019, and the CAGR‟s are for 2014–2019 period.

Dynamics of Mobile Business Growth in India Tailwinds––––Spectrum ChallengeSubscriber growth (highest in APAC 9% CAGR)Early in Smartphone adoption cycle (pent up demand)Market consolidationMobile first innovation (inc OTTs) Headwinds––––Spectrum – low supply, high demandInfrastructure; backhaul/fibre, site acq, indoor coverage, powerFinancial constraints – CapEx and borrowingRegulatory – ambiguity on net-neutralitySource: Cisco, GSMA, 2016

QUESTIONS1.What are the biggest challenges facing you in your networks today?2.India is the most spectrum constrained country in the world, as a result we haveseen a lot of innovation in spectrum efficiency here. What other areas are youconsidering to get more capacity out there?3.How do you see the relationship with OTTs developing from here?4.Do you think virtualisation and automation holds the key to lower TCO in the future?5.How important do you see the IoT opportunity? What are your biggest concerns withaddressing this segment?6.What other areas should Cisco be helping to meet your business objectives?

Technology Enablers

The Evolution of Mobile Technology1980R&D19902000201020201G – TACS. AMPSR&D20305G Era2G – GSM/GPRS/EDGE. DAMPS/CDMAR&DDigital3G WCDMA/HSPA. CDMA1x/DOR&D4G – WiMAX. LTE/LTE Advanced?R&DVoice5G – DataIPIoE

Radio Access EvolutionConverges to LTE and Wi-FiLicensed Spectrum60 MHz90 MHz120 MHz200 MHz300 MHzTD-SCDMA3GPP3GPP2GSM&EDGEUMTSHSPA LTE (FDD/TDD)CDMA1xEVDOEVDO Rev. censed Spectrum80 MHzWiFi802.11b2000400 MHzWiFi802.11a/gLTE-A6000 MHzWiFi802.11n2010LTE-M5GLAA, LWAWiFi802.11ac/ad/afWiFi 802.11ax802.11ah (IoT)2020

Polling question What role does Wi-Fi play in your mobile network strategy?Wi-Fi is an important element in our access network strategy - this alsoincludes VoWiFi2. Wi-Fi is a complementary technology for some hotspots3. We consider only minor Wi-Fi investments – where useful in some nichecases4. We do not see any use for Wi-Fi as a complement for mobile networks1.

Mobility 2020: PillarsTechnology EnablersRAN Diversity(HetNet) Serve new segmentsOptimise for M2MMass connectivityInternet of Things “5 Bars” ServiceServe 1000x Traffic in 10 yearsCost effective accessVirtualisation Lower TCOIncrease AgilityCreate a service platform

KEY THOUGHTS1.Globally we see more innovation in OTT partnerships and newsegments like IoT for revenue growth2.Bottom-line TCO, especially OpEx, impacts profitability andconstrains growth3.Indian/SAARC market has great potential, but faces challenges;Spectrum, regulation uncertainty and high OpEx4.Technology enablers are maturing to meet the growth andprofitability challenge: RAN Diversity, NFV, IoT

Round Table Discussion

QUESTIONS1.What are the biggest challenges facing you in your networks today?2.India is the most spectrum constrained country in the world, as a result we have seen a lotof innovation in spectrum efficiency here. What other areas are you considering to get morecapacity out there?3.How do you see the relationship with OTTs developing from here?4.Do you think virtualisation and automation holds the key to lower TCO in the future?5.How important do you see the IoT opportunity? What are your biggest concerns withaddressing this segment?6.What other areas should Cisco be helping to meet your business objectives?

Back Up

Cisco Mobile Internet ArchitectureServicesTelco CloudUnified Data CentreNFV InfrastructureVoice & MessagingvIMSMobile Service EnablersPolicy Suite, Gi-Services, AnalyticsBackboneIP/MPLSVirtual Packet Core NEW(VPC)2G, 3G, LTE, WiFi, Femto GW, inline ServicesASR900 & 9000 Series Unified Mobile BackhaulTDM, ATM, IP, GE, 10 GE, L3VPN, SecGW, etcUniversal RAN OrchestrationNEWWi-Fi SON ANDSFUniversal Small CellsWi-Fi, 3G/LTE Small Cell, dSONHeterogeneousIoT Cloud ConnectHosted Collaboration Suite (HCS)ASR5000 Series Packet CoreHetNetAccessIoTNFV Management & Orchestration (MANO)NetworkIntelligentEnterpriseNEW3G, LTE cSONMacro CellsAny G / Any Vendor

India: Mobile Device Growth by TypeBy 2019, Smartphones Will Attain Largest Share to Reach Nearly 54%6% CAGR 2014–2019Millions ofDevices* Figures (n) refer to 2014, 2019 device shareSource: Cisco VNI Global Mobile Data Traffic Forecast, 2014–2019

India: IoT Connections by Network TypeMulti-Technology Access GrowthIoT Proportion ofIndia totalConnectionsData Traffic (Mobile)201520201%5%0.2%1.2%45% CAGR 2015–2020(Low Power Wide Area)Millions ofIoTConnectionsRevenue0.7%1.6%* Figures (n) refer to 2015, 2020 shareSource: Cisco VNI Global Mobile Data Traffic Forecast, 2014–2019

India: Mobile Data Traffic Growth / AppsVideo to Account for 66% of Mobile Data Traffic by 201913x (67% CAGR) 2014–2019Petabytesper Month* Figures (n) refer to 2014, 2019 mobile data traffic shareSource: Cisco VNI Global Mobile Data Traffic Forecast, 2014–2019

India: Mobile Data Traffic Offload*31% of Mobile Traffic to be Offloaded by 2019Petabytesper Month*Offload includes traffic from dual-mode devices (i.e., supports cell & Wi-Fi, excl. laptops) over Wi-Fi/small cell networksSource: Cisco VNI Global Mobile Data Traffic Forecast, 2014–2019

India: IP Traffic by Local Access TechnologyMobile Traffic Grows 3.8x Faster than Fixed Access34% CAGR 2014–2019Petabytesper MonthSource: Cisco VNI Global Mobile Data Traffic Forecast, 2014–2019

India: Mobile Data Traffic GrowthIn India, 3G will still support 50% of Mobile Traffic in 2019Exabytesper MonthSource: Cisco VNI Global Mobile Data Traffic Forecast, 2014–2019

3GPP2 EVDO EVDO Rev. A/B UMB WiMax WiMax 802.16d 802.16e WiMax 802.16m IEEE 2000 GSM&EDGE UMTS HSPA LTE (FDD/TDD) LTE-A 3GPP TD-SCDMA 2010 WiFi 802.11a/g WiFi 802.11ac/ad/af WiFi 802.11n WiFi 802.11b LTE-M 5G WiFi 802.11ax LAA, LWA 2020 802.11ah (IoT)