ITU / BDT Regional Seminar Guidelines on the smooth transition of existing mobile networks to IMT-2000 ARB Region

Transcription

1 ITU / BDT Regional Seminar Guidelines on the smooth transition of existing mobile networks to IMT-2000 ARB Region Damascus, Syria, June 2005 Convergence Strategy for Universal Operators and role of Business Planning Oscar González Soto ITU Consultant Expert Strategic Planning and Assessment June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 1 Content Key factors in Evolution Convergence domains Cost structure and Economies of scale Competition Level A stair case strategy for a universal operator Business trends per category Migration steps towards universal operation Convergence at Network, Services and IT platforms Architectures for convergence per domain Business planning and impacts of competition level June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 2

2 Convergence domains Convergence may follow many directions At Service level (Fixed and Mobile, Interactive and Broadcasting, etc.) At Network level (One network for all service types: NGN ) At radio Access level (DECT, WiMax, 3G, etc.) At Operational level (OSS, Billing, etc, for all customer classes) At Terminals level (2G, 3G, PDA, etc.) Which one will happen? Driven by Market, Economy of scale and competition June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 3 Key Factors: Cost structure and savings High cost impact of network infrastructure layer: > 60% in Greenfield areas of which > 70% in access segment. Dimensioning and cost evolving in 3 phases through time: A) Accessibility due to Geo coverage either physical or radio B) Equipment in Ports/users as customers grow C) Capacity in Traffic due to increase of multiservice applications Significant savings by resources and equipment sharing within an operator due to convergence at network layers : i.e.: 30% Additional savings inter-operators due to cost sharing of noncore equipment (buildings, towers, etc.) > 20% June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 4

3 Key Factors: : Economies of scale Economies of scale are an inherent characteristic to the telecom technologies that impacts on solutions, evolution and also now survivability in competition The five dimensions of the economy of scale: By Size of the systems By Technology capabilities Larger systems cheaper per unit New technologies with higher capacity By Traffic efficiency with the occupancy Higher utilization for a given GoS when more servers By customers Density By Volume of purchasing Quadratic increase with coverage radio Discount per volume in log scale June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 5 Cost per line ( Monetary units) Key Factors: : Economies of scale by density Metropolitan and suburban scenarios Density (subscribers per KM²) High impact of customer density in cost per line and higher impact on Rural (up to 20 to 1) Metropolitan total Metrop. infrastructure Suburban total Sub. infrastructure June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 6

4 L1) Monopoly for all geographical areas, customer classes and service types L2) Limited monopoly per area and/or service types while free operation for niche operators Key Factors: Competition level Different Levels of Competition L3) Moderate competition for all network segments and services L4) High competition for high revenue customers and services L5) Aggressive competition for all areas, customers and services Efficient telecom implies different competition levels as a function of country size and development status June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 7 Key Factors: Competition level Key factors for survivability in competition Push for new services Imaginative pricing strategies and bundles Actions for market share capture and better take-up rate Actions do minimize churn Actions to decrease Cost of Ownership and share common resources Business profitability positive and within or better than indicators benchmark June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 8

5 Key Factors: Competition Business feasibility space as a function of volume and ARPU Revenues per customer/year (ARPU) Non feasible by lack of payment capability, churn or regulation constraints r2 $ n2 Volume of Customers/type ARPU is limited by the economical development level and fixed costs June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 9 Key Factors: Competition Business feasibility space as a function of volume and ARPU Revenues per customer/year (ARPU) r2 $ r1 $ Non feasible by low NPV and IRR n1 Volume of Customers/type Business feasibility limitted by positive NPV June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 10

6 Key Factors: Competition Business feasibility space as a function of volume and ARPU Revenues per customer/yea (ARPU) Non feasible by lack of payment capability, churn or regulation constraints Feasibility area: users range r2 $ r1 $ Non feasible by low NPV and IRR Feasibility area: tariff range n1 n2 Volume of Customers/type Feasibility space highly dependent on country size and economical level June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 11 Content Key factors in Evolution Convergence domains Cost structure and Economies of scale Competition Level A stair case strategy for a universal operator Business trends per service categories Migration steps towards universal operation Convergence at Network, Services and IT platforms Architectures for convergence per domain Business planning and impacts of competition level June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 12

7 Business domains and trends Illustration case for customer categories and revenues Growing Volume 0.5-1% 3-8% 8% 10-20% 60-70% Large Corporations Small& Medium Enterprise SOHO (1-2 people) High-End Residential L-E Residential > Growing revenues Operator business feasibility as a function of mix of categories Classes Of Customers Revenues/Month (Euro) Customer stratification should be analyzed per country June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 13 Business domains and trends Trends for new application revenues in the future xsp Application Management and Operation Services and customization (integration and personalization) Growing importance for % revenue with time ~ 45% ~ 30% Network Connectivity (and value added nodes) ~ 25% Source Ovum, IDC June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 14

8 Business domains and trends Example of Value Added chain and operators movements to gain economy of scale and market Applications and Services Network nucleus Edge Metropolitan network Local Access Agreements with content providers and e-commerce Application Service Providers Internet Service Providers (ISPs) Backbone Service Providers (BSPs) Agreements and merging Agreements with wholesale operators Acquisition/merging of service providers Development of new access loops and Unbundling Access Providers (CAPs) Agreements with content providers New multi-service development Agreements with content and application service providers Mobile Service Providers (MSPs) Established Service Providers (ESPs( ESPs) June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 15 Migration steps staircase for leading growing alternatives Extension for new customer types Customers for connectivity Classic Telcos Upgraded Telcos Extension for new services domains Conventional voice and data services + Services of IN, VPN and Mobile June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 16

9 Migration steps staircase for leading growing alternatives + Customers for new services Extension for new customer types Extended Telcos Customers for connectivity Classic Telcos Upgraded Telcos Extension for new services domains Conventional voice and data services + Services of IN, VPN and Mobile + Internet and video Distribution (triple play) June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 17 Migration steps staircase for New Universal Telcos + Customers for end applications + Customers for new services Extension for new customer types ISPs New Universal Telcos Extended Telcos ASPs Customers for connectivity Classic Telcos Upgraded Telcos Extension for new services domains Conventional voice and data services + Services of IN, VPN and Mobile + Internet and video distribution (triple play) + e-applications and Hosting Specific migration and timeframe to be optimized for the country context and regulatory conditions June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 18

10 Migration steps Evolution of revenues with service domains Revenue level (ARPU) ASP Video and multiservice voice revenues IN and data Time and Extension for new services domains Conventional voice and data services + Services of IN, VPN and Mobile + Internet and video distribution (triple play) + e-applications and Hosting Convergence strategy is fundamental to be competitive and to grow June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 19 Content Key factors in Evolution Convergence domains Cost structure and Economies of scale Competition Level A stair case strategy for a universal operator Business trends per service categories Migration steps towards universal operation Convergence at Network, Services and IT platforms Architectures for convergence per domain Business planning and impacts of competition level June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 20

11 Network Layer Modeling IP Service and Control level SMP IN SCP SMS-C Voice Mail VoIP TVoDSL VOD UMS e-applications Functional level EIR HLR/AuC TSC BTS MSC SSP Int l BSC POP/LEX WLL/Mobile Fixed NB/BB NGN network SSP TEX GW SSW DATA/IP LL Transport/SDH/WDM Infrastructure and Cable level June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 21 Evolution towards NGN From initial networks towards target network SCP NMC OSS Services SS7 Mob Control Softswitch LEX/TEX LEX TDM NAS Data ATM/IP Transport/Media Access gateway Packet Network IP/MPLS/CAC Distributed Switching Trunk gateway Other Networks POTS RSU PCM ISDN MUX/DSLAM HDSL/XDSL Access gateway June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 22 DSL Wireless gateway Access gateway Migration steps and timeframe to be studied/optimized for each country context DLC

12 Towards Converged Platforms and Services Customers, Customer classes and Wholesale/Retail chain BSS Connectivity Voice/data fixed Voice/data mobile Portals CRM E-Business Office ERP, etc SLA Customer Perceived Services Telecom Service Enablers Network & Systems Infrastructure Applications Enablers Information Systems Enablers Servers & Storage Infrast. OSS Management Building and Physical Network Infrastructure June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 23 Towards Converged Platforms and Services Customers, Customer classes and Wholesale/Retail chain BSS Connectivity Voice/data fixed Voice/data mobile Portals CRM E-Business Office ERP, etc SLA Customer Perceived Services Telecom Service Enablers Applications Enablers Information Systems Enablers OSS Network & Systems Infrastructure Optical CxC, Switches and Mux SDH CxC, ADMs, Rings IP/ATMRouters and Switches BST, MUX, DSLAMs, NTs, etc. Servers & Storage Servers, LAN switches, LANs, Disks, etc. Management Building and Physical Network Infrastructure June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 24

13 Towards Converged Platforms and Services Customers, Customer classes and Wholesale/Retail chain BSS Connectivity Voice/data fixed Voice/data mobile Portals CRM E-Business Office ERP, etc SLA Customer Perceived Services Telecom Service Enablers Databases, OS, Telecom Platforms, Mobility platforms IN plat., Firewall Traffic shaping Applications Enablers DB, OS, App. Platf., Directory servers, Domain names, Transaction manag. Information Systems Enablers DB, OS,Inf. Platf. Languages, Load Balanc., OSS Management Network & Systems Infrastructure Servers & Storage Building and Physical Network Infrastructure June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 25 Towards Converged Platforms and Services Connectivity Customers, Customer classes and Wholesale/Retail chain Voice/data fixed Service Enablers Voice/data mobile Applications Enablers Network & Systems Infrastructure Portals CRM Customer Perceived Services E-Business Information Systems Enablers Servers & Storage Office ERP, etc - Service Level Agreement Management - Service activation - Service management - Quality/performance mgt - Invoicing - Billing - Customer care - Provisioning - Inventory - Application monitoring - Application management - NE/DC management - NE/DC supervision Building and Physical Network Infrastructure June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 26

14 Content Key factors in Evolution Cost structure and savings Economies of scale Competition Level A stair case strategy for a universal operator Business trends per service categories Migration steps towards universal operation Convergence at Network, Services and IT platforms Architectures for convergence per domain Business planning and impacts of competition level June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 27 Role of Business Planning Forecast solutions, costs and revenues Evaluate future Cashflows, NPV, IRR, ROI, etc. Perform What-if analysis for optional alternatives on Volume of customers, customer mixes and services domains Perform benchmarking with best in class operators Decision making on strategy and actions in competition based on quantified evaluations Recommend alternatives and actions to ensure success June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 28

15 Case study for medium size country with mixes of customer classes and services domains: Role of Business Planning Evaluations to be based on robusts techno-economical tools due to high number of alternatives and complexity Multiservice IP Network with integrated operation Three service categories: Voice, Data/Internet, Video distribution Modeling demands, multiservice traffic flows, dimensioning, network resources, CAPEX, OPEX and financial results for different levels of competition Evaluate future Cash-flows, NPV, IRR, etc. for a 10 years period June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 29 8e+08 7e+08 Role of Business Planning Effects of the mix of customers on Reference Scenario: Low competition level Network NPV Euro 6e+08 5e+08 4e+08 3e+08 2e+08 SOHO and Small Enterprise All Segments (reference) Residential 1e+08 Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 0e+08-1e+08 Year SME and SOHO with quicker recovery but less NPV and company value at medium term All customer segments case with much better behavior June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 30

16 7e+08 Role of Business Planning Effects of the mix of services on Reference Scenario: Low competition level Network NPV Euro 6e+08 5e+08 4e+08 3e+08 2e+08 1e+08 Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 0e+08 Internet Internet & VoDSL Internet & Video All Services (reference) -1e+08-2e+08 Year Major impact of service classes on NPV and company survivability Single service classes without future High benefit of all services case June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 31 5e+08 Role of Business Planning Effects of the mix of services on typical scenario: Medium competition level Network NPV Euro 4e+08 3e+08 2e+08 1e+08 Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 0e+08 Internet Internet & VoDSL Internet & Video All Services (reference) -1e+08-2e+08 Year Increase of competition level amplifies the previous effects on feasibility: big differences between service mixes Data only or single service classes without feasibility at medium term Very robust behavior for the all services case June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 32

17 Conclusions Ensure proper modeling of key factors and professional tools Focus on multiple customers, multiple services domains Take benefit of all economies of scale Which convergence will happen? Combination Driven by Market, Economy of scale and competition June, 2005 ITU/BDT/ Convergence Strategy O. G.S. slide 33