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					Trends in
Telecommunications


ANDICOM’2004 Cartegena de Indias
           October 2004


               Celia Desmond           1
         IEEE Communications Society
Trends in Communications
-An Environment Overview

                 Celia Desmond
                     President
         World Class –Telecommunications

   Past President IEEE Communications Society
        President IEEE Canada (2000-2001)


                 Celia Desmond                  2
           IEEE Communications Society
                  Value Chain and Main Categories
                  of Players in Telecom Industry

                          Electronic     Original          Equip.
              Material                                                Service
                              Comp.        Equip.         Vendor
              Suppliers                                              Provider
                           Provider       Manuf.


          Electronic       Original                Equipment        Service
          Component        Equipment               Vendor:          Provider:
          Provider:        Manufacture:

          Intel            Flextronics             Cisco            Verizon
          Qualcomm         Celestica               Alcatel          SBC
          Broadcom                                 Ericsson         NTT DoCoMo
          JDSU                                     Motorola         Deutsche Telekom
                                                   Nortel           Vodafone
                                                   Lucent           China Telecom
          …                …                       Siemens          Bell Canada …
                                                   NEC      …
ANDICOM’2004                           Celia Desmond                             3
Cartegena de Indias              IEEE Communications Society
October 2004
                 Telecommunications Service Industry
                 Key Players in Canada
                                              Satellite & Other Telecom Providers

                                                         Satellite
            Wireline
                                                 e.g.,      Telesat Canada
       Incumbent Carriers                  TMI communications, Stratos Global Corp.                     Wireline
                                                                                                   Competitive Providers
        Major Telephone                                    Resellers
            Companies:                      e.g.,       Primus Telecommunications                 Alternative Providers of
          Bell Canada                                                                             Long-Distance Services
                                                         $1.6 Billion
             Telus
             Aliant                                                                              e.g., Allstream (June 2003)
              MTS                                        2001                        $2.7
                                                                                                  Call-Net (Sprint Canada)
           Sask Tel              $21.8                 Revenue                      Billion
                                 Billion                                                        Competitive Local Exchange
         Northwest Tel                               $32.8 Billion                                         Carriers
                                                                                              e.g., Futureway Communications
      Independent Telephone                                                                           GT Group Telecom
                                                         $6.6 Billion
            Companies
   e.g., Thunder Bay Telephone                      Wireless Providers                           Competitive Pay Telephone
                                                                                                          Providers
       Incumbent Overseas
                                     Bell Wireless Alliance Paging Companies                   e.g., Canadian Payphone Corp.
               Carrier              Telus Mobility            e.g., PageNet Canada
                                    Rogers Allstream Wireless Other Radio Common
            Teleglobe
                                    Microcell Telecommunications           Carriers
                                                                                              Source: Statistics Canada and
ANDICOM’2004                                        Celia Desmond                             company annual reports 4
Cartegena de Indias                        IEEE Communications Society
October 2004
                  Global Telecom Market
                                                                                             2000 Market Share by Services
                      2000 Market Size of US $880B


                                                Asia Pacific
                 Europe                                                                      DLD                         Mobile
                                                   23%
                  30%                                                                        25%                          27%


                                                       RoW
                                                        4%                             ILD
                  CALA
                                                                                      11%
                   9%                      North America                                                        Local
                                                34%                                                             37%




         2000 Global Telecom Market Share Breakdown:
                                                                Local                                                    Mobile
                                                                                DLD                ILD
                                                               Services                                                 Services
        Global Market Size
                                                                 308            205                 91                       227
               (US$B)
           North America                                         35%            42%                31%                     28%
             Asia Pacific                                        21%            19%                18%                     30%
               Europe                                            29%            25%                32%                     31%
                CALA                                             12%            10%                11%                      8%
ANDICOM’2004    RoW                                               3%
                                                                Celia Desmond    4%                8%                       3%     5
Cartegena de Indias                                  IEEE Communications Society
October 2004
                  Global Telecom Market: Since 2000




            “We built it, and they didn’t come”

ANDICOM’2004                      Celia Desmond           6
Cartegena de Indias         IEEE Communications Society
October 2004
                 Out of business
                     Teleglobe                    Storm Telecommunications
                                    Globalstar
        Aleron                                       Omnisky
                                 Convergent Com                                     Zephion
                 Rhythms                                  Yipes        Iridium
    Impsat
                                  FLAG Telecom       Global Crossing                PSINet
           360Networks             StarBand                                Digital Teleport
                                                     NetConnections
      Ardent         ICG Comm                     KPNQwest                  Excite@home
                                        iBeam
               GST                                                       XOCommun
                            Telergy             Enron Broadband
          Sphera      Teligent      Metromedia                         OnSite
                                                                                  NextWave
                    Sigma Networks                       North Point
                                          Velocita
        Covad                                                                McLeodUSA
                                                              Ebone/GTS
                                   Broadband Office
                                                                                 ART
             Viatel Adelphia                      FastComm          NetRail
                                 WinStar
      Motient          Williams Communications                                   WINfirst
ANDICOM’2004                                              Global Telecom
                                        Celia Desmond                                7
Cartegena de Indias    Exodus     IEEE Communications Society               Metricom
October 2004
                Telecommunications Equipment
                Manufacturers
                     Orders for communications equipment reached a peak
                      at about $13.3 billion in June 2000, steadily to about
                      $3.6 billion in September 2001.
                     Industry operating at about 55% of capacity, down from
                      87% in May 2000.
                     In 2001, sales revenues for telecom equipment, declined
                      by nearly 28% from the prior year.
                     Revenues fell further in 2002.
                     Economy.com forecasted revenue to decline 19% in
                      2002
                     Profits were down in 2001, and remained weak in 2002.
          
ANDICOM’2004          Headcount in top 10 companies is 1/2 that 10 years ago
                                         Celia Desmond                       8
Cartegena de Indias                IEEE Communications Society
October 2004
                ICT Market (1999-2002)
                      Value in Millions of Dollars

                                                                 0.7%
                                             4.9%                           2.23
                               13%                2.218                     4
                                        2.115
                        1.872                            323.1            337.9       Rest of World
                                        293.4   10.9%             4.6%
                                20.8%                                                 Asia – Pacific
                       242.8                                                          (Japan, Singapore, Hong
                                        435.3            474.5            483.2       Kong, Taiwan, Korea and
                                11.2%             9%               1.8%               Asia Pacific countries)
                       391.4
                                12.3%
                                        625      5.8%   661.3     -0.4%   658.6        Europe
                      556.5

                                11.7% 761.2 -0.3%        759.2    -0.6%    754.6      North America
                      681.7
                                                                                      (Canada & USA)


                      1999           2000               2001              2002
                                                                            Fonte: Assinform / NetConsulting
ANDICOM’2004                                  Celia Desmond                                           9
Cartegena de Indias                     IEEE Communications Society
October 2004
                 TLC market
                      D% 2002/2001

                                                                                 6.5%



                                                                   3.4%
                                                                                         3.6%
                      1.9%
                                             0.9%




                                     -2.2%                -1.7%
                         -2.8%                                             Rest of the world
                                 Europe                   Asia
           North America
                                                    IT   TLC
ANDICOM’2004                               Celia Desmond                                        10
Cartegena de Indias                  IEEE Communications Society
October 2004                                                              Fonte: Assinform / NetConsulting
                  So where are we now?
                 Telecom Service Industry is a Trillion Dollar
                  Industry – 1,300 billion at end of 2002
                 Telecom services make up 75% of the industry,
                  with Telecom Equipment broken into 13%
                  infrastructure equipment, 7% mobile handsets, 5%
                  enterprise equipment
                 Overall this industry represents 3% of GDP
                 Americas 43%, EMEA 34% and Asia Pacific 24%
                      • Telecom industry is still a large and very viable
                        industry
ANDICOM’2004                              Celia Desmond                     11
Cartegena de Indias                 IEEE Communications Society
October 2004
                  If we add the IT market
               2002 Market Size in Revenue is
                $2,200B
               Telecom makes up 57%
               46% in the Americas, 22% Asia
                Pacific, 34% EAME
               IT services are 57%, hardware 33%,
                software 10%

ANDICOM’2004                   Celia Desmond           12
Cartegena de Indias      IEEE Communications Society
October 2004
                  2004 Update
                 US Dept of Commerce – only 21,000 jobs added in Feb
                  2004, despite economic growth since summer 2003
                 Unemployment in computing at 5.2% in 2003, as
                  compared to 2% in years in last decade – as opposed to 6%
                  rate in all jobs, compared to an earlier 4%
                 Causes: outsourcing, automation and business strategy
                 Companies using the investments they made in the 90’s
                  rather than researching, developing and deploying new
                  technologies
                 Total focus on cost cutting
                 80% of CEO’s surveyed recently say they will shift focus
                  to new growth projects
ANDICOM’2004                          Celia Desmond
                                                              Source: International Herald
                                                              Tribune, March 10, 200413
Cartegena de Indias             IEEE Communications Society
October 2004
                  PC, PDA, Cell Phone sales
                  (2000-2002)
               Millions of Units

                                                                                    410

           Cell Phones                                                          390
                                                                                  405

                             11
                                                                                          2000
                  PDA's      12.8
                                                                                          2001
                             11.7
                                                                                          2002

                                             130

                      PC's                   123
                                             128

ANDICOM’2004                              Celia Desmond                                 14
Cartegena de Indias                 IEEE Communications Society
October 2004                                                      Source: Assinform / NetConsulting
                      Cellular Growth in the US
                      Yes, there is still some good news:


                       ~141M subscribers as of Dec 2002
                       10% Y/Y growth in subscriptions
                       36% Y/Y growth in minutes
                       20.8% Y/Y growth in capital investment
                       Forecast data revenues ~$1B in 2003

                                                                 Source: CTIA Wireless Industry Survey,
ANDICOM’2004                             Celia Desmond
                                                                 Mar 2003
                                                                                              15
Cartegena de Indias                IEEE Communications Society
October 2004
   Cellular Local Number Portability

  • FCC Mandate in 2003 for LNP between US Cellcos
  • US Cellular service commoditized-
     Few differentiators:             Retention factors today:
     • Price                          • Contract termination
     • Bundled cell phone               penalty
     • Technology transparent to      • Need to change phone #
       users                            when changing carriers

Impact on Cellular carriers: Increased Churn Rate



                         Celia Desmond                           16
                   IEEE Communications Society
                  Wireless Possibilities
               3G
               WiFi
               Ultrawideband
               Bluetooth
               WiMax
               ZigBee



ANDICOM’2004                    Celia Desmond           17
Cartegena de Indias       IEEE Communications Society
October 2004
                  Wi-Fi is Driving Rapid Change
                       Wi Fi is today’s “hottest” new technology
                       Allows users to create Wireless Local Area
                        Networks (WLANS) with high speed internet
                        service
                       Analysts predict 700 million users and a
                        nearly U.S. $3 billion worldwide market by
                        2007
                       54 million laptops, PDAs, televisions and
                        other devices with Wi Fi will be sold in 2004
                          4 times as many as in 2002
ANDICOM’2004                            Celia Desmond                18
Cartegena de Indias               IEEE Communications Society
October 2004
                    IEEE 802.11 “WiFi” LAN
                    Properties
                      The WiFi Alliance is an organization of vendors and users, that
                      provides interoperability standards and testing to equipment
                      compliant with IEEE 802.11 standards
                Properties
                     Power: 100 mW max
                     Configuration: Hierarchical or Ad-Hoc
                     Spectrum: 2.4 and 5.8 GHz Unlicensed bands
                     Channel BW: 20 MHz (Overlapping)
                     Two modulation technologies are available:
                             CDMA: 802.11b @ 2.4 GHz
                             OFDM: 802.11a @ 5.8 GHz, 802.11g @ 2.4 GHz
                     CSMA/CA LAN Protocol
                        (Carrier Sensing Multiple Access/Collision Avoidance)
                     Security via station authentication
                     Data rates up to 11 MB (b), 55 Mb (a and g)
                     Actual data rates are usually much lower
                     Maximum range ~100M with clear LOS in LAN configuration
                        Some specialized point-point applications up to 20 km.
ANDICOM’2004                                 Celia Desmond                              19
Cartegena de Indias                    IEEE Communications Society
October 2004
                  Wi Fi Standards
                  Wi Fi = IEEE 802.11 WLAN standards--Compete with
                      each other for market share
                     IEEE 802.11a -- data rates to 54 Mb/s in the 5 GHz band
                     IEEE 802.11b – 11 Mb/s in 2.4 GHz band
                        Today’s leading Wi Fi technology
                     IEEE 802.11g – 54 Mb/s in 2.4 GHz band
                        Backwards compatible with .11b at higher speeds–
                         Opens possibilities for wireless multimedia video
                         transmission and broadcast MPEG. Catching on
                         quickly.
                     IEEE 802.11n – work just starting – plans to increase
                      data rates to over 100 Mb/s
ANDICOM’2004                           Celia Desmond                    20
Cartegena de Indias              IEEE Communications Society
October 2004
                      802.11 and a Double Latte, please…..

                      WiFi HotSpot service is a major growth area

                      • Leading providers, T-Mobile, Boingo, Wayport
                        Access, Megabeam (UK)
                      • Service by subscription or open (e.g. hereUare)
                      • Important partnerships developing
                               – T-Mobile / Starbucks (subscription)
                               – Cometa / McDonalds (open)
                               – Holiday Inn / Megabeam (open)
                      • Valid 3G alternative for portable services
                               – Ubiquity of 802.11 interface- being built into new
                                 laptops
                               – Unbeatably low equipment costs
                               – Low capitalization, no incremental spectrum
ANDICOM’2004                            Celia Desmond                                 21
Cartegena de Indias               IEEE Communications Society
October 2004
                 Wi Fi Faces Fierce Competition
                 from Other Technologies
                  Limited range:  only about 50 meters from
                   base station; hundreds of base stations
                   needed to match coverage of single cell
                   phone station
                  Addressing security concerns
                       Next generation security solution in
                        development: IEEE 802.11i
                       Will include new encryption, keys exchange and
                        authentication methods
                  Development of Ultrawideband could
                      impact Wi Fi
ANDICOM’2004                           Celia Desmond                     22
Cartegena de Indias              IEEE Communications Society
October 2004
                      Ultrawideband to Offer Full
                      Mobility
                  UWB is super high speed, low power personal area
                      networking technology suited for wireless multimedia
                      applications
                     High data rate of 1 gigabit per second allows
                      movement of massive files over short distances
                     Short range of 30- 60 feet -- an advantage if operating
                      multiple independent links at one location
                     UWB transmits low power streams of extremely short
                      pulses over a huge section of radio frequency spectrum
                        Uses either orthogonal frequency division
                         modulation or direct sequencing

ANDICOM’2004                            Celia Desmond                     23
Cartegena de Indias               IEEE Communications Society
October 2004
                      Ultrawideband
                  Many potential revolutionary consumer and specialized
                      business uses:
                       For example, at home: wireless users could move data from
                          PC to stereo, from DVD to TV
                         On road: might transfer data from laptop in truck to handheld
                          computer; send email
                         In business: doctors could look at patients charts and view
                          digital xrays
                  Expected to grow from 0 now to 6 million UWB nodes
                      embedded in devices by 2007
                     No standard yet: IEEE 802.15.3a in development--high
                      speed, physical layer
                       Market is not waiting: Motorola already selling chips based on
ANDICOM’2004
                          early version
                                           Celia Desmond                             24
Cartegena de Indias                  IEEE Communications Society
October 2004
                  Bluetooth “Wireless Cables”
                            The Bluetooth SIG is an industry association dedicated to
                            the development and application of equipment based on the
                            IEEE 802.15.1 spec.

                      • Bluetooth is a low power, short range data transfer
                          technology
                      •   Moderate date rates
                      •   Applications primarily as cable replacements
                      •   Support of mesh network configurations
                      •   Frequency-hopping spread spectrum technology in the
                          2.4 GHz ISM band

ANDICOM’2004                                 Celia Desmond                      25
Cartegena de Indias                    IEEE Communications Society
October 2004
                   WiMax Ideal for Rural Areas
                WiMax will use either licensed or unlicensed parts of
                      the radio spectrum
                     As fast as traditional broadband but potentially less
                      expensive; relatively easy to create
                     Well suited to rural areas as those found in Russia- no
                      need for wired “last mile”
                        British Telecom testing an 802.12a product now in
                          small, remote Northern Ireland village; if successful,
                          may roll out across UK
                     In addition to Internet access, WiMax can also carry
                      voice over Internet Protocol--another technology I’ll
                      address shortly
ANDICOM’2004                              Celia Desmond                       26
Cartegena de Indias                 IEEE Communications Society
October 2004
                  WiMax Faces Some
                  Obstacles
                Many proprietary systems- affects device interoperability
                       systems from Cisco, Motorola, Tsunami
                Other systems based on IEEE 802.16 standard or
                      corresponding one from the European
                      Telecommunications Standards Institute
                       Intel, Nokia, Alvarion Ltd among about 40 companies in
                         WiMax Forum working to eliminate barriers to adoption
                         of standard, such as interoperability and cost of deployment
                No mobile version yet

ANDICOM’2004                              Celia Desmond                         27
Cartegena de Indias                 IEEE Communications Society
October 2004
                  IEEE 802.16 “WiMAX” WAN
                  Properties
                    The WiMAX Forum is an organization of vendors and users, that
                    will provide interoperability standards and testing to WAN equipment
                    compliant with IEEE 802.16a/d/e standards. It is described as “WiFi
                    on steroids”.
                 Properties
                     Power: Varies with band. Profiles from 100 Mw up to 2W
                     Configuration: P-P and P-MP Cellular
                     Spectrum: Initially 3.5 GHz licensed and 5.8 GHz unlicensed bands
                     Radio interface: OFDM, using 256 tones
                     Access Protocols:
                        Downstream: TDM (Broadcast)
                        Upstream: TDMA with access contention
                     Security via station authentication and encryption
                     Data rates variable with channel bandwidth 3.5 MHz in 3.5 GHz band, 20 MHz in
                      5.8 GHz band
                             Actual realizable data rates are ~ 2b/Hz
                     Maximum range ~2Km for indoor Non-LOS cellular service at 3.5 GHz
                     Indoor NLOS 2nd Gen interoperable products in 2006
ANDICOM’2004                                Celia Desmond                                  28
Cartegena de Indias                   IEEE Communications Society
October 2004
                   ZigBee:
                   Ultra-low power Telemetry
                                 The ZigBee Alliance is an industry association
                                 dedicated to interoperability of equipment
                                 conforming to the IEEE 802.15.4 spec.
               •   802.15.4 is a simple data protocol for low-capacity wireless
                   networks intended for telemetry and control
               •   Optimized for very low power, extremely long battery life
               •   Applications as Active RFID tag
               •   Support of mesh network configurations
               •   Direct Sequence Spread Spectrum technology
               •   Three unlicensed bands, 27 channels specified
                          – 868.3 MHz      1 Channel   20 Kb/sec
                          – 902-28 MHz     10 Channels 40 Kb/sec
                          – 2.4 GHz        16 Channels 250 Kb/sec
ANDICOM’2004                                Celia Desmond                         29
Cartegena de Indias                   IEEE Communications Society
October 2004
                  Comparison of Wireless Data
                  Technologies
                                                 WiMAX™        Wi-Fi™         ZigBee™        Bluetooth™
                 Technology     3G Cellular
                                                 (802.16d/e)   (802.11b)      (802.15.4)     (802.15.1)


                 Typical        Wide Area        Wide Area     Data/Voice     Control &      Cable
                 Application    Voice & Data     Data          LAN            Telemetry      Replacement


                 Battery Life
                                1-7              N/A           N/A            100 - 1,000+   1-7
                 (days)

                 Bandwidth
                                100-2000         1K-40K        11,000+        20 - 250       720
                 (KB/s)

                 Typical
                                1,000+           1K-30K        1 - 100        1 - 100+       1 - 10+
                 Range (m)


                 Key            Coverage,        Throughput,   Cost, Speed,   Cost, Power,   Cost,
                 Attributes     Quality          Coverage      Flexibility    Flexibility    Simplicity

ANDICOM’2004                                     Celia Desmond                                         30
Cartegena de Indias                        IEEE Communications Society
October 2004
                  2004 Update
                 Total Service Revenues Rise Nearly 13 percent -- U.S. carriers
                  earned service revenues of $41.4 billion in the first six months of
                  2003, up from $36.7 billion in the first six months of 2002.
                 Data Service Revenues Up 70 percent -- Total reported data
                  service revenues reached $700 million in the first six months of
                  2003, up 70 percent from $411 million in the first six months of
                  2002.
                 Minutes of Use Up 30 percent -- Total billable minutes of use
                  (MOUs) for the first half of 2003 were over 380 billion -- up more
                  than 30 percent from 292 billion for the first half of 2002.
                 Monthly SMS Traffic Up Over 31 percent -- Reported SMS traffic
                  for the month of June 2003 was over 1.2 billion -- up more than
                  31 percent from 930 million in June 2002.

              Ref: CTIA
ANDICOM’2004                            Celia Desmond                          31
Cartegena de Indias               IEEE Communications Society
October 2004
                  2004 Update (Continued)
                 Digital Subscribership Reaches 92 percent -- The
                  number of digital subscribers topped 128.3 million, an
                  increase of nearly 17 percent since June 2002.
                 Wireless Investment Up Over 13 percent -- Wireless
                  carriers reported over $134 billion in total cumulative
                  capital investment in the first six months of 2003 -- up
                  from $118.4 billion in the first six months of 2002.
                 Total Wireless Subscribership Up 10 percent --
                  Overall wireless subscribership increased to 148.1
                  million by June 2003, from 134.6 million as of June
                  2002.

ANDICOM’2004                         Celia Desmond                   32
Cartegena de Indias            IEEE Communications Society
October 2004
                                          The Growth of Internet
                                                                    Internet 2000
                                                                     Over 300 million users online
             Growth in the Number of Internet Hosts
                                                                      Worldwide
                           (1991-1999)
                                                                     Internet Users (3Q’2000):
                                     50                               North America - 147.48 M
          Number of Internet hosts




                                     45
                                                                      Europe - 91.82 M
                                     40
                                     35
                                                                      Asia/Pacific Region - 75.5 M
                                                                      Latin America - 13.19 M
                (millions)




                                     30
                                     25                               Africa - 2.77 M
                                     20                               Middle East - 1.9 M
                                     15
                                     10                              Growth estimated over 500,000
                                     5
                                                                      new users per month
                                     0
                                                                     Business is the fastest
                                                                      growth area
         (Source: Microsoft)
ANDICOM’2004                                            Celia Desmond                            33
Cartegena de Indias                               IEEE Communications Society
October 2004
                  IP Telephony Market Opportunity


             From $314 million (U.S.) in 2000 to
              $4.02 billion (U.S.) in 2007              “Web Talk” revenues, US$bn
             IP Telephony as % of all
              int’l calls in 2004
             IDC forecasts that “Web Talk”             20                 16.5
              revenues will reach US$16.5 bn by
              2004 with 135 billion mins of traffic     15
                Tarifica forecast 40%
                Analysys forecast 25%                  10
             In developing countries, the
              majority of IP Telephony calls are         5
              incoming
                                                                 0.208
                       (Source: IDC)
                                                         0
                                                                 2000       2004

ANDICOM’2004
                                                             But it didn’t take off yet!
                                         Celia Desmond                             34
Cartegena de Indias                IEEE Communications Society
October 2004
                  Electronic Commerce
                  - Growth of E-commerce
                         Growth of E-commerce (in billions)

                      3,500
                      3,000
                      2,500
                      2,000
                      1,500
                      1,000
                       500
                         0
                              2000      2001       2002       2003   2004
ANDICOM’2004                               Celia Desmond                              35
                                                                            (Source:IDC)
Cartegena de Indias                  IEEE Communications Society
October 2004
                      The Next Generation Network:
                      Internet2
                                                Mission Statement
             Facilitate and coordinate the development, deployment, operation and technology transfer of
             advanced, network-based applications and network services to further U.S. leadership in
             research and higher education and accelerate the availability of new services and applications
             on the Internet

                                         Internet Vs. Internet 2
                         low bandwidth                               high bandwidth
                         best effort                                 quality of service
                                                                         middleware
                             transport protocols                        user authentication
                             low security                               cost-allocation
                             no allocation                           Real time applications
                         Static applications                            interactive client server
                             e-mail                                     teleconferencing
                                                                         telepresence
                             file transfer                              virtual environments
                             browsing                                   collaboratories
ANDICOM’2004                                    Celia Desmond                                                 36
Cartegena de Indias                       IEEE Communications Society
October 2004
                  Impact of Applications
                 DSL expecting solid growth
                 Fast ethernet to gigabit crossover in 2004
                 E-business applications more bandwidth intensive

                 Implies tremendous growth for internet

                 Network doubling each year implies 1000 times
                  the traffic in 10 years
ANDICOM’2004                        Celia Desmond             37
Cartegena de Indias           IEEE Communications Society
October 2004
                  Value Proposition
              In total, service providers of revenue generation network services can provide
                  systems that have 5 basic pieces:
               A variety of access systems ranging from wireless to circuit to packet
                  systems
               A set of transport switching and routing systems that has an optical core
               A set of network services that build on top of the transport to make them
                  useful
               A layer of network management to perform element and multi-element
                  network management
               A layer of service provisioning systems performing customer care, billing,
                  trouble tracking/dispatching, etc.

              In providing any portion of these services, the basic value proposition should
                  include reliability, manageability, and multiservice
ANDICOM’2004                              Celia Desmond                                38
Cartegena de Indias                 IEEE Communications Society
October 2004
                  One Proposition - Broadband
                  Services
                 Mobile services, local loop unbundling and VOIP
                  causing decline in fixed market
                 In Hong Kong, voice services and broadband
                  services are saturated
                 PCCW now offering TV, aiming for broadband
                  data
                 With over 30 channels of TV, they attracted
                  100,000 customers within 2 months
                                                       Reference: Infocom 2004 - Dr. Liang Wu, PCCW


ANDICOM’2004                       Celia Desmond                                          39
Cartegena de Indias          IEEE Communications Society
October 2004
                  Another Approach
                 SK Telecom has 55% of the Korean mobile market (47M people, 70%
                  penetration)
                 They offer fixed and wireless internet and even handsets
                 Offered 2G in 1999, 2.5G in 2001, 3G November 2002
                 Subscriber base growing rapidly with 3G offerings
                      • Services
                         – Ring tones         23%
                         – Games               8%
                         – Chatting                       4%
                         – Shopping                       2%
                 SK Telecom has a joint venture with China Unicom
                 Not all Korean experience will transfer directly to Chinese market -
                  need to study it
ANDICOM’2004                                  Celia Desmond                                  40
                                                                      Source: Infocom 2004, John Liu,
Cartegena de Indias                     IEEE Communications Society   CEO SK Telecom in China
October 2004
                                A Network Vision
                      Multi-Media
                                                          Network Services                      •   Billing Servers
                                                                                                •   Name Servers
                       Resource                  Service and Session    Mobility      Feature   •   Messaging Servers
                                                                                                                         Network
                        Server                    Business              Server        Servers                           Databases
                                                             Managers                           •   Data VPN
                                                 Management
                                                                        Application
                                                                        Processor




           Business Access                                                                                       Residential Access
                  POTS                                                                                  Packet
                   ISDN                                                                                Gateway
 POTS                     OC3                                                                                                          NIU
  ISDN
                                                               ATM Switches
                                                                                                                    POTS
                                 Packet                        & IP Routers                                                Fixed Wireless
 xDSL                                                                                                               ISDN
              Remote            Gateway
usiness                                                                                                          xDSL           POTS
Wireless                                                                                                                        ISDN
                                                                                                                                Cable Modem
                                                                                                                  Residential
  NIU                                                                                                              Gateway
   Voice
   ATM                                                                                                         Mobile
   LANs                                                                                                   Wireless Access
       Firewall
                                                                   Gateway          Packet
                  Business
                    MUX
                                                         PSTN                      Gateway
                                                       Signaling                                    Wireless
                                                       Gateway                                      Access
                                                                                                    Gateway (

                                      Internet
  Wireless,
  Comm Sftw
                                                               PSTN
  ANDICOM’2004                                               Celia Desmond                                                          41
  Cartegena de Indias                                  IEEE Communications Society
  October 2004
                  New Trends in Telecommunications
             Convergence of telecommunications, computation and
              entertainment, leading to innovative new services
             Bandwidth expansion
             The great rates war
             Migration of intelligence
             Globalization
             Create need for both technical skills and personal management skills
             Emerging role of consumer electronics
                 Sony announced new line of television and appliances with WiFi
                 Intel supports WiFi in domestic environment
                 Centrino and various chip for enabling WiFi on appliances
                 Trend toward non-hierarchical networks, wireless routers, hot spot
                 Software radio
ANDICOM’2004                             Celia Desmond                            42
Cartegena de Indias                IEEE Communications Society
October 2004
                  What about the business
                  perspective?
                 Since 1993, major mainframe/server manufacturers
                  changed - only 1 of 18 major manufacturers left today
                  (Kevin Kalkhoven OFC 2003)
                 PC’s replaced mainframe - market shift - financed by
                  individuals rather than corporations
                 Grew as % of GDP from 2% in 1991 to 10% in 2001
                 US business and consumer expenditures flat at 2% - so
                  telecom needs to find a similar new market in order to
                  grow more than the GDP



ANDICOM’2004                          Celia Desmond                    43
Cartegena de Indias             IEEE Communications Society
October 2004
                  Top Companies
              1997          Revenues $M                         2002       Revenues $M

              Alcatel                     30,880                Motorola        30,004
              Lucent                      30, 147               Nokia           27,763
              Motorola                    29,794                Ericsson        22,369
              Ericsson                    21,242                Alcatel         22,567
              Nortel                      15,475                Cisco           18,915

            Factset and Band of American Securities estimates
ANDICOM’2004                                 Celia Desmond                          44
Cartegena de Indias                    IEEE Communications Society
October 2004
                  2002 Year End Actuals
                 Americas
                      •   Motorola                           26.7
                      •   Cisco                              19.2
                      •   Lucent                             10.8
                      •   Nortel                             10.6

                 Europe
                                                             28.5
                      •   Nokia
                                                             18.5
                      •   Seimens
                                                             16.5
                      •   Alcatel
                                                             15.0
                      •   Ericsson
                 Asia                                       13.6
                      • Fujitsu                              11.3
                      • NEC
ANDICOM’2004                               Celia Desmond            45
Cartegena de Indias                  IEEE Communications Society
October 2004
                    Network Evolution
                     To survive, networks must be
                      Evolvable
                      Scalable
                      Flexible
                      Have open standards
                      Be easy to maintain and operate
                      Be open to rapid service development
                      Be priced competitively
                      Support multiple services

ANDICOM’2004                           Celia Desmond           46
Cartegena de Indias              IEEE Communications Society
October 2004
                      Where is Networking going?
                Future Internet will be the basis for high speed global
                 networking
                Security is very important for e-Business to take off
                Rapid growth and diversification of the ISP Market
                Upgrading the Local Access Infrastructure
                Growing Role for Wireless Services WAN, MAN, LAN,
                 CAN, HAN - 3G in NA???, 3G now in Asia
                Voice and data convergence generating new integrated
                 services




ANDICOM’2004                         Celia Desmond                         47
Cartegena de Indias            IEEE Communications Society
October 2004
                          Market Dynamics
                    2000 Market Size of US $880B                       Revenue of voice and data are split as
                                               Asia Pacific             80% and 20% in 2000
             Europe                               23%
              30%
                                                                       Local voice in single digit growth
                                                        RoW
                                                         4%
                                                                       Traditional data in single digit and
             CALA
              9%                          North America
                                                                        Internet services in double digit growth
                                               34%
                                                                       ILD and DLD voice flat to decline
                    2000 Market Share by Services
                                                                       Mobile in rapid growth
                                                                       Optical bandwidth glut is triggering
                    DLD
                    25%
                                               Mobile
                                                27%
                                                                        price declining in Data/Internet services

              ILD
             11%
                                       Local
                                       37%



ANDICOM’2004                                                    Celia Desmond                              48
Cartegena de Indias                                       IEEE Communications Society
October 2004
                  Competition
                  -the technology perspective

                 Transport
                      • T1, PRI, T3, Optical (SONET, SDH, DWDM), Microwave, and
                        Satellite
                 Access
                      • ISDN, DSL, Cable Modem, Broadband Fixed Access, Wireless
                        access, and Satellite
                 Switching
                      • Frame Relay, ATM, IP Routing, MPLS, and Gigabit Ethernet
                 Mobile
                      • GSM, TDMA, CDMA, GPRS, 1xRTT, WCDMA, and
                        CDMA2000


ANDICOM’2004                              Celia Desmond                            49
Cartegena de Indias                 IEEE Communications Society
October 2004
                  Conclusion

       Telecom                                               Internet
                                                             Technology Influences
        Internal Influences                                  •Speed – BW
        •Service definition
        •Service design
        •Network design
                                                 +           •Security
                                                             •Access terminal
                                                             •Standards         Service Influences
        •Customer service levels                                                •Intelligence move to edge
        •Special technology and vendors                                         •Peer-to-peer application
                                                                                •Free service model failed
                                                                                •New killer application
                                 •More content format
      Ext. Influences
                                 •More network-based services               New Influences
      •Regulatory
      •Technology                •More technology changes                   •Regulatory
      •Standards                                                            •Market
                                 •Changes in end user’s device              •Competition
      •Marketplace
                                 •…

                                                                                  Gradual
                        Future: Network-Centric Age                               fading
                                Content-Centric Age                               away of circuit
ANDICOM’2004                                    Celia Desmond
Cartegena de Indias
                                                                                  switching ... 50
                                          IEEE Communications Society
October 2004

				
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