Wireless Economics How cable will enable the tablet era

Arya MirNetworking and Communications

Mar 30, 2012 (5 years and 6 months ago)

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1

TM

Wireless Economics

How cable will

enable the tablet era

Roland Klemann

Internet Business Solutions Group (IBSG)


Brussels, March 7, 2012

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The first tablet: GRiDPad, 1989

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iPad

launch,
April 2010

Palo Alto

In the last two years, a new class of
devices have become ubiquitous

Frankfurt

Madrid

SoHo
, NYC

London

Paris

Sydney

Berlin

5
th

Ave., NYC

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4

Nomadic, IP enabled devices are bound
to complement and replace the TV set

Source: Screen Digest

TV Sets vs. IP Devices

(billions, worldwide)

0
0.5
1
1.5
2
2.5
3
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Non-connectable TV Sets
Smartphones, tablets, PCs, gaming consoles,
Blueray players, TV sets, OTT boxes
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Today’s

Experience

Future

Experience

They enable a new consumption model
for broadband and video services







Any Device




Connected TVs


Laptops/PCs


Tablets


Smartphones








Anytime




Linear Viewing


Catch
-
up


Time
-
Shift


OnDemand








Anywhere




Fixed and

mobile via IP


Satellite


Cable


Digital Terrestrial




Traditional

TV Experience


Linear lean
-
back


STB/Big Screen


Satellite/cable
/
analogue

Source: Cisco IBSG

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Brave New World




iPad

Kills The Video Star

Is the cable industry badly positioned

to benefit from the tablet era?


Shifts of consumer
time/money budgets


Services (e.g.,
VoD
)

go IP delivery


Point

of entry for

new players


Pressure on ad
-
funded
business model





User control


Content discovery


New advanced TV
services


Digital home control




Source: Cisco IBSG


Mobile/nomadic
access
opportunity

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7

New devices consume ever greater
amounts of data

* Monthly basic mobile phone data traffic

Source: Cisco VNI Mobile, February 2012

Growth
(2011
-
16 CAGR)


Data Traffic by Device

=

x

35*

=

x

60*

=

x

121*

=

x 498*

… in users

… in data traffic

17%

50%

56%

24%

119%

76%

129%

48%

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8

D
evices like tablets will contribute
significantly to total mobile traffic growth

Global Mobile Data Traffic

Exabytes

per Month, 2011
-
2016

Percentages in legend: share in 2016 mobile data traffic

Source: Cisco VNI Mobile, February 2012

0
2
4
6
8
10
12
2011
2012
2013
2014
2015
2016
Other Devices (2%)
M2M (5%)
Home Gateways (5%)
Tablets (10%)
Laptop/Netbooks (24%)
Smartphones (48%)
Non-Smartphones (6%)
78% CAGR

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Location of Mobile Internet Use

% of Time Spent

As most mobile Internet activity takes
place in fixed locations …

≈ 80% of
mobile
Internet
use* in
fixed
locations

Home

Other indoor
location


Base:
BB consumers engaged
in
activity; n
=3,641

* Via mobile device

Source
: Cisco IBSG Connected Life Market Watch,
2011/2012

Office

In transit

44

41

54

48

48

54

16

17

12

15

15

16

19

19

15

17

17

14

21

23

20

20

20

15

US
Canada
UK
Germany
France
Italy
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10

Willingness to Wait for
WiFi

% of Users

… people will happily use WiFi as a
substitute (and complement) to mobile


Base: EU BB Consumers using
smartphone;
n= 1043

Source: Cisco
VNI, IBSG
Connected Life Market Watch,
2011/2012

Offloaded
Traffic, W. Europe

% of Total Mobile Traffic

10%

25%

2011
2016
Might wait

29
%

Definitively
35
%

Don't
know
16
%

Will not
wait 6
%

Unlikely
13
%

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11

WiFi

creates a large value potential for
the communications industry


Economics of
traditional mobile
data delivery models
may break down


Strong economic
case for
WiFi
/small
cell offload


Integrated operators
in better position
than “mobile only”

Access Network Cost

W. European Country, 5 year NPV,


million

* Scaled from validated numbers from a European mobile network operator to total Western Europe, based on subscribers

Source
: Cisco
IBSG, 2011

Total Value Potential
W. Europe*: >10bn.


700

600

500

400

300

200

100

0



million

Mobile
Operator


Mobile
Operator


Integrated
Operator


Other

Power

Backhaul

Site Rental

Maintenance

WiFi

Equipment

4G Equipment

3G Equipment

Installation

Savings

16%

24%

W
ith
WiFi

Offload

Macro Cell Only

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Cable is advantaged to supplement
networks with
WiFi

capabilities

Home

Radio Access
Network

Aggregation

Network

SGSN

Mobile

Packet Core

3G
/
4G

CMTS

RNC

AAA

Server

Policy

Server

Web
Portal

DHCP
Server

MAP Gateway

SP
WiFi

Architecture

Source:
Cisco

HF
C

Subscriber Policy Layer

Mobile

Network
SP


Cable

Operator

Business

SP
WiFi

Controller

Public Venue

Outdoor

HLR

Internet

SCE

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13





Cable operators will make money from
wireless through multiple ways

* For example, subletting, advertising, embedded connectivity, retail store interactions

Source
: Cisco
IBSG

WiFi
-
Enabled Business Models for Cable Operators


Churn
reduction


Acquisition boost


Fees
for
services
(retail, wholesale)


Cost reduction


Alternative funding
models*

Smart Home/Office

Home Anywhere

Office
-
on
-
the
-
Go

Managed Hotspot for Retail/Commercials

Wholesale/Cellular Data Off
-
Load

WiFi

Roaming / Federation

Connected Venues

Enablement for Machines


1

2

3

4

8

5

6

7

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Mobility is an essential ingredient of
cable’s “
right to win” in the tablet era

Source: Cisco IBSG 2011

Content

Control points cable
already owns …

… and what cable will need

TV
experience

Customer

Multi
-
screen

Mobile connectivity

Homes

Businesses

Fixed connectivity

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Cable should extend mobile capabilities
now to enable the tablet era


There is a
new class of devices
with the
potential to
transform video
consumption …

… and to change the cable industry at large


As great amounts of
mobile data traffic
let

traditional networks reach limits, consumers are
ready for
WiFi

alternatives


Cable operators
have a
“right to win”
and
capture their share of the

>
10 bn.

*
WiFi

opportunity

* Approximate value for Western Europe