Sidney  Kriger  and  Dan  KurschnerSP  MarketingJuly  2016

A  Look  at  IDC’s  white  paper  analysis

Economic  Benefits  of  Mobile  Network  Transformation

Agenda

Market  context

Key  operator  motivations

IDC  white  paper  – technology  and  economics

5G-­ready  with  Cisco  Ultra

Market  Context

By  2020,  global  mobile  data  traffic  will  reach  an  annual  run  rate  of  

367 exabytes per  year,  up  from  44  exabytes in  2015  

(8-­fold  growth,  53%  CAGR)

367X  More  than  all  IP  traffic  generated  in  2000

81  Trillion  images  (e.g.,  MMS  or  Instagram)  

7 Trillion  video  clips  (e.g.,  YouTube)

Source:  Cisco  VNI  Global  Mobile  Data  Traffic  Forecast,  2015–20205©  2016    Cisco  and/or  its  affiliates.  All  rights  reserved.      Cisco  Public

Global  Mobile  Data  Traffic  Drivers

Source:  Cisco  VNI  Global  Mobile  Data  Traffic  Forecast,  2015–2020

2015 2020

4.8  Billion

5.5  Billion

More  Mobile  Users

More  Mobile  Connections

Faster  Mobile  Speeds

More  Mobile  Video

7.9  Billion

11.6  Billion

2.0  Mbps 6.5  Mbps

55%  of  Traffic

75%  of  Traffic

Mobile  Momentum  Metrics

Source:  IDC,  Economic  Benefits  of  Virtualized  Evolved  Packet  Core,  June  2016

Forecast  for  SP  Voice  and  Data  Revenues

Expanding  to  Adjacent  Industries  with  Verticalized  Services  Offers  a  Key  Revenue  Opportunity

Millions  of  M2M  

Connections

38%  CAGR  2015–2020

-­

500  

1,000  

1,500  

2,000  

2,500  

3,000  

3,500  

2015 2016 2017 2018 2019 2020

Other*  (58.1%  CAGR)Energy  (44.1%  CAGR)Manufacturing  &  Supply  Chain  (43.2%  CAGR)Retail  (15.4%  CAGR)Connected  Cities  (42.3%  CAGR)Connected  Health  (52%  CAGR)Connected  Car  (32%  CAGR)Utilities  (33.8%  CAGR)Connected  Work  (Ent  Mgmnt)  (46.6%  CAGR)Connected  Home  (41%  CAGR)

Global  Mobile  M2M  Connections  By  VerticalBy  2020,  M2M  modules  will  be  26%  of  total  global  devices/connections

Source:  Cisco  VNI  Global  Mobile  Data  Traffic  Forecast,  2015–2020*Other  includes  Agriculture,  Construction  &  Emergency  Services

Motivations  for  NFV

To  Compete,  SPs  Must  Become  More  Lean  on  Connectivity,  More  Agile  on  Services

Customers

Connectivity

Services

Transport  &  Smart  Enablement

Broad-­band Voice TV/  

VideoBusi-­nessMobile VAS …

Future  Role  of  Integrated  Service  Providers

SPs

OTTs

Differentiation

Agile

Lean

Agility  and  FlexibilityEasily  tear  down,  move,  scale  and  configure  services  

as  the  demands  of  customers  or  the  business  changes  

gives  organizations  the  ability  to  bring  up  services  anywhere  in  the  world,  any  time.  

Drivers  for  NFV

Source:  SDx Central    NFV  Mega  Report

Drivers  for  NFVCisco  Limited  Survey  of  SP  Tier  1  Customers

• Top  motivations:  service  agility,  operational  efficiency  and  new  revenue  streams

• Mobility  use  case  identified  as  #1  to  drive  operational  efficiency  (not  shown)

OpEx Consumes  a  Significant  Part  of  SP  RevenuesFor  Many,  It’s  Still  Growing

Service  Provider  OpEx Efficiency(OpEx/Revenue,  CY  2015) Evolution  CY  2011-­15

Better

x 1.5  %  points

• On  average,  SPs  added  +1.5%  OpEx/revenue  over  the  last  4  years• Most  SPs  who  have  addressed  OpEx have  created  significant  shareholder  value

0% 20% 40% 60% 80% 100%

VerizonComcast

BT  Telecom  ItaliaChina  Mobile

TWCAT&TBharti

America  MovilOrange

SoftBankNTT

TelefónicaDT

China  TelecomChina  Unicom

Vodafone

-­40%

-­20%

0%

20%

40%

-­15 -­10 -­5 0 5 10 15

Market  Cap  CAGR

Change  In  Opex/Revenue  (%  Points)Verizon Comcast BT   Telecom  ItaliaChina  Mobile TWC AT&T BhartiAmerica  Movil Orange SoftBank NTTTelefónica DT China  Telecom China  UnicomVodafone

IDC  White  Paper

MNOs  are  actively  transitioning  to  a  software-­controlled  programmable  environment  with  focus  on  EPC

Transformation:    Impact  of  New  Technologies

Virtualization  and  automation

• Elastic  capacity  – responsiveness,  scale

• Service  and  network  orchestration  –flexibility  and  agility

• Higher  utilization  – greater  efficiency

5G-­ready

• Control-­ and  user-­plane  separation  (CUPS)  – efficiency,  low  latency

• Network  slicing  – higher  utilization,  efficiency,  new  revenues

• Based  on  MNO  interviews• Actual  experiences  with  virtualization  and  automation

• Focus  on  vEPC

• Operator  expectations  for  increased  OpEx efficiency  from  5G  architectural  impact  (e.g.,  CUPS)

• Broad  cross-­IDC  expertise  from  mobility,  network  and  operations  analysts  and  their  accumulated  data

IDC  AnalysisA  Different  Approach

2016 2017 2018 2019 2020

OpEx  Cost  Efficiency

Traditional  vEPC Distributed  Architecture

IDC  AnalysisA  Different  Approach

Efficiencies  in  the  top-­down  model  are  not  complete  from  day  one  but  rather  grow  over  time,  as  operators  extend  changes  into  their  networks  and  continue  to  optimize  them

Scenarios  compareda) Virtualization  of  EPC  footprintb) Virtualization  year  1,  then  deploying  distributed  architecture

Source:  IDC,  Economic  Benefits  of  Virtualized  Evolved  Packet  Core,  June  2016

• Facilities

• Power  /  cooling

• Change  management

• System  management

• Network  management

• Transmission  /  interconnect  costs

• Custom  software  development

• Traffic  optimization

• Network  function  tuning

• Network  monitoring  (assurance)

• Process  improvement

• Maintenance  planning

• Benchmarking

• Operations  assessment

Operations  Cost  Areas

©  2016    Cisco  and/or  its  affiliates.  All  rights  reserved.      Cisco  Public

Annual  OpEx savings• Scenario  a)  savings  increase  but  flatten  at  25%

• Scenario  b)  savings  accelerate  through  2020  growing  to  greater  than  45%,  84%  better  in  2020

Cumulative  OpEx savings• Scenario  a)  20%  savings  over  5  years• Scenario  b)  30%  savings  over  5  years,  50%  greater

IDC  Economic  AnalysisGreater  Operational  Savings  with  Distributed  Architecture

0%

10%

20%

30%

40%

50%

2016 2107 2018 2019 2020

OpEx Savings  (YoY)

Traditional  vEPC Distributed  (CUPS)  Architecture

Source:  IDC,  Economic  Benefits  of  Virtualized  Evolved  Packet  Core,  June  2016

Accelerating  Time-­to-­Market  for  New  ServicesDistributed  Architecture:  Up  to  34%  Better  Than  Just  Virtualizing

Source:  IDC,  Economic  Benefits  of  Virtualized  Evolved  Packet  Core,  June  2016

• Number  of  subscribers

• Cellular  coverage  area

• Number  of  eNodeBs

• Avg busy  hour  traffic

• Backhaul  technologies

• Number  of  aggregation  points

• Number  of  data  centers

Key  Influencers

What  and  When  is  5G?  ITU  is  defining  IMT-­2020  requirements  for  “5G”

Source:  ITU    http://www.itu.int/en/ITU-­R/study-­groups/rsg5/rwp5d/imt-­2020/Pages/default.aspx

• ITU  defined  processes  for  3G  (IMT-­2000)  and  4G  (IMT-­Advanced)• Performance  requirements• Evaluation  criteria• Submission  and  evaluation  process

• Standards  organizations  proposed  to  ITU  technologies  and  features  to  meet  these  requirements  

• Ultimately,  the  operators  decided  what  was  marketed  as  3G  and  4G

• Expect  the  same  to  occur  for  5G  based  on  IMT-­2020

©  2016  Cisco  and  Ericsson.  All  rights  reserved.

Cisco  Strategy

Aligning  solutions  for  business  outcomes  you  need  today  and  in  the  future.

Ultra  Services  Platform  is  the  Agile  Platform  to  deliver  5G  applications  and  services  

today  and  in  the  future.

©  2016    Cisco  and/or  its  affiliates.  All  rights  reserved.      Cisco  Public

Cisco®  Ultra  Services  PlatformManagement  Plane

VM VM

Control  Plane

VM VM

ServiceComponent

ServiceComponent

ServiceComponent

User  Plane

VM VM

Central  Data  Center

ServiceComponent

ServiceComponent

ServiceComponent

User  PlaneVM VM

ServiceComponent

ServiceComponent

ServiceComponent

User  PlaneVM VM

Remote  Data  Center Remote  Data  Center

Cisco  Ultra  Services  PlatformCo-­Located  Network  ArchitectureCisco  Ultra  Services  PlatformRemote  Network  Architecture

Radio  access  technology  agnostic  

Control  and  user  plane  separation

Geo-­distributed  architecture

Network  slice  construct

Ultra-­scalable  – 20  M sessions,  2-­Tbps  throughput

Ultra-­high  availability  – 1:n  geo  high  availability

Ultra-­low  latency  – co-­locate  user-­plane  and  services  near  users

Supports  5G  Industry  Requirements  – Today

✔

✔

✔

✔

✔

✔

✔

Cisco®  UltraServices  Platform

Cisco  Ultra  Is  Open  and  Extensible

Open  APIs

Open-­source  NFVI  (OpenStack®,  Red  Hat,  Intel,  …)

Proven  interworking  with  multivendor  (E///,  Openwave,  F5,  HP,  and  more)

Ecosystem  of  vendors  with  a  uniform  framework

Highly  customizable

Cisco®  UltraServices  Platform

http://www.cisco.com/c/m/en_us/offers/sp04/ultra-­services-­platform/index.html

Get  more  information  on  Cisco  Ultra  Services  Platform:    http://cisco.com/go/ultra

Read  the  IDC  White  Paper  Yourself