How does voice fit into future operator business model?

Ove Andreasen

Director Mobile Systems

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Agenda

• Marked situation in Denmark for TDC

• Status and forecast for mobile voice

• What can/should operators do to maintain business

• Conclusion

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• Marked situation in Denmark for TDC

• Status and forecast for mobile voice

• What can/should operators do to maintain business

• Conclusion

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TDC is the Danish incumbent (fixed, cable & mobile) focusing on the Nordic markets…

TDC's present focus

TDC Nordic

(Business only)

Key Financials • Revenue 2010: DKK 26,167m • EBITDA 2010: DKK 10,772m • % margin: 41.2%

Core Business

Divested Fixed Voice PSTN >1.1 mio ISDN >100.000

VoIP subscribers SIP ID's >350.000

Convergence subs Duét >370.000 Mobile flex >500.000

TV subscribers YouSee >1.1mio TDC >120.000

Mobile subscribers Voice >2.5mio Data >200.000

Messaging/month SMS >800 mio MMS >3mio

Subscribers

TDC Denmark

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TDC has competitive pressure from both Fixed-only and Mobile-”only” oriented players

Fixed focus Fixed and Mobile Mobile focus*

* Both Telia and Telenor also offer fixed services, but the main focus seems to be on the mobile network going forward – especially with their mobile network partnership announced recently. 3 is a mobile-only player aside of Skyline who is a Wimax operator.

Fiber (Utilities) and Coax players

Focus on very high-speed internet (>100Mbit/s for Fiber) as well as digital TV

Fiber companies also focus on up-load speed

Focus on Mobile Voice and Mobile Broadband

Mobile BB as Fixed BB substitution (mainly “3”)

Aggressive LTE roll-out (Telia)

Use all access technologies

Position MBB as complementary for Fixed BB

Focus on Dual/Triple/Quad play services and convergence

Cover the different market segment with various brands

To Many Mobile Operators are leading to ”price war”

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All players have launched bucket products with free SMS/MMS and variable data and voice buckets. For 20€ at month can you get:

6 Hours of voice 6 GB data

Double up on volume at same price over 6-12 months!

Good message is that Voice and Data is bundled. Bad message is that data is perceived for free leaving the possibility for OTT player to provide value added services!

• Marked situation in Denmark for TDC

• Status and forecast for mobile voice

• What can/should operators do to maintain business

• Conclusion

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Trend towards”All IP” Convergens & Mobility

Home Work

Transport

Public Digitization

Cloud

mVoIP

Mobile payment

OTT

M2M

HAP

UC

Triple Play

Is there a Future for Voice Business ?

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Even that not all analysis's are agreeing on the future, is it clearly that voice is and will be the most used service! But who will provided the service?

Source: Internal Ericsson

This slide contains forward looking statements

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200

400

600

800

1 000

1 200

1 400

1 600

1 800

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2008 2009 2010 2011 2012 2013 2014 2015 2016

BU

SD

Mobile data, incl. mobilePC access & SMS

Mobile voice

Fixed corporate dataservices

Fixed broadband

IPTV

Fixed VoIP

Fixed narrowband voice

Source IDC

• Marked situation in Denmark for TDC

• Status and forecast for mobile voice

• What can/should operators do to maintain business

• Conclusion

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Operator vs. OTT Voice and messaging services

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Operator based Voice

Advantages Ease of use Controlled (Voice) QoS

CSFB SRVCC

Support for legacy Voice services MSISDN and thereby interconnect with all subscribers in the world!

Subscription relationship

Disadvantages Traditionally based business case before innovative development

Competitive environment between Operators

OTT Voice Advantages ”Free” usage (Incl. international calls) Dynamic service implementation

Instant messaging Video call’s Etc.

Interaction to PC based applications

Disadvantages Best effort service ”Only” data barer Expensive at roaming Community based Receiving party on data

The main advantages for Operator may cease to exist when LTE deployment have reached an level where need for ”legacy” voice services are limited!

Which tools do Operators have to maintain Voice Services

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Protective strategy Block/limit Voice services for OTT player (incl. Verticals)

Operator Consolidation

Keep high roaming cost for data

No flat rate Data subscriptions

Offensive strategy Always included Voice in data bundles

Ensure superior Voice quality

VoLTE and communication as a service (e.g. RCSe)

Ease of use Terminal support Industry standard

Challenges

(National) Operator corporation

Service launch e.g. RCSe (before VoLTE)

Limit Halve rate usage HD voice launch Etc.

Role of GSMA?

• Marked situation in Denmark for TDC

• Status and forecast for mobile voice

• What can/should operators do to maintain business

• Conclusion

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Conclusion

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Operator do have the option to maintain control of voice services but it requires that: Voice services are constantly developed and Interconnection with other operators are ensured.

But When LTE is ”fully” deployed are operator advantages limited

Timing is critical if OTT’s and verticals voice business should be limited if “Kodak moment” should be avoided..

Thank you! Questions?

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Back-up

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Permitted:

Blocking applications ⊘

Slowing down applications ⊘

Charging a premium for applications ⊘

Charging for different bandwidths or data limits

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