Mr. André Merigoux's presentation at QITCOM 2011
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QITCOM 2011 Presentation: Turbulence Ahead: Innovative Thinking Urgently Needed to Unleash Digital Delivery Presenter: Mr. André Mérigoux – Alcatel-Lucent Director, Public Affairs
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Mr. André Merigoux's presentation at QITCOM 2011
- 1. Turbulence ahead: innovative thinking urgently needed to unleash digital delivery QITCOM – May 25th 2011 André Merigoux – Public Affairs Director ALL RIGHTS RESERVED. COPYRIGHT © ALCATEL-LUCENT 2011.
- 2. 1- Disruptive changes ahead Massive investment needed • Fixed and mobile / Core - backhaul - Access • Future of mobile = fixed / • Investments start in all regions of the World: USA, Asia, Russia, etc. .. • But Europe is lagging behind • Europe: the need for incremental investment over 10 years of 380 billion € in Europe, including 100 M € in the radio access (source: EC) • End of voice models - distance • Inability to monetize the explosion of data traffic for operators via traditional business models • Decoupling traffic / revenue - erosion of margins 2 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
- 3. 1- Disruptive changes ahead The changes in the value chain • End of voice models - distance • Inability to monetize the explosion of data traffic for operators via traditional business models • Decoupling traffic / revenue - erosion of margins Emergence of OTT (Over The Top) • OTT Generate traffic growth and innovation • Bandwidth-intensive applications • No incentive for an efficient use of bandwidth • Unbalanced data interconnection agreements with operators • OTT’s are global / operators are local • Business Model: Market Cap and Price / Earning ... is different 3 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
- 4. 2- What are the solutions for business models? New business models between operators and OTTs: • Agreements of "wholesale" grading services on QoS: throughput, latency, stability, security , jitter • Multilateral agreements based on open protocols and standard • Allow operators to manage their networks to offer differentiated services - Debate on Net Neutrality ... • 3 Conditions: • Investments needed • Non harmful discrimination • Increased transparency: throughput, capacity, traffic management system, user information on services offered 4 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
- 5. 2- What are the solutions for revenue increase? Increased revenues from end users • Monetizing new services • Segmentation based on experience levels expected • Responding to various requests from users • Available in "overlay" and offer standard "best effort " with appropriate pricing 5 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
- 6. 2 – What are the solutions for policy makers? Governments step-in to accelerate,ensure coverage, perequation and openness • To achieve ubiquitous coverage of very high speed connectivity and tackle future challenges of society (social inclusion, ageing population, climate change) • To complement private initiatives in policy driven areas and maximize network’s social benefits, minimize public funding thanks to perequation. • To ensure network openness and cost-effective connectivity through network sharing and competition while encouraging new investments needed to handle data explosion Different types of public intervention • Government driven PPP projects (Australia, New Zealand, Singapore, India,Brazil…) to foster coverage and competition • Regional and local PPP projects (Italy, France, Spain,…) based on infrastructure sharing • Rural projects based on new competition models ( LTE sharing in rural areas,…) 6 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
- 7. DIFFERENT POLICY & REGULATORY APPROACHES Americas EMEA APAC • Vertical integration & • Infrastructure competition • Network separation & platform competition & public Intervention service-based competition • Unregulated broadband • NGA regulatory framework in • Heavy influence of government markets place (LLU & bitstream) and regulation • No public intervention outside • State Aid in rural and medium • Structural separation, growth rural areas density areas/infra sharing through premium connectivity • Pro-active spectrum allocation • Digital dividend allocation wholesale policy decided at Member-State level • Bitstream wholesale, open • CALA countries focus on open • Digital Agenda targets difficult backbones & universal coverage access wireless and open to meet with current lead network transformation backbones incremental model - N. Kroes initiative to foster investments in NGA (300 B€ required) 7 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
- 8. 3- What are the solutions for access networks? New investment models for Mobile networks sharing fixed networks • Layer 1: passive infrastructure (civil • Capacity increase will come from network engineering, dark fiber) = 80% of densification: pico and femto cells with the cost of the network with ROI of fixed backhaul 15 years • Shortage in the number of sites in urban / • Layer 2: active infrastructure environmental consideration = sharing sites (network intelligence) = Return On themselves and Rans Investment of 5 years • « Ran sharing » = sharing of radio access • Layer 3: service = OTT model • Spectrum scarcity particularly in LTE with larger channels, should lead operators to increasingly share spectrum Need to share, co-finance • Useless duplication of 3 or 4 networks in and open Layer 1 rural areas • Global phenomenon: Asia - Latin The future of mobile networks America relies on fixed networks 8 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
- 9. 3- What are the solutions in Europe? Devise new investment models • Revisit the dogma of passive infrastructure competition in favor of active infrastructure competition? • Avoid duplication of infrastructure level 1 and admit it should be considered as an essential infrastructure? • Define methods of long-term financing for this level 1 (European Investment Bank Fund - national grant - local) if necessary using the flexibility of PPP Models? 9 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
- 10. 4- Initiative of Neelie Kross/ European Commission on 3rd March 2011 Participants CEO • Alierta César * Telefonica • Gee-Sung Choi *** Samsung • Paolini Nonce * TF1 • Bäcklund Marcus * Voddler • Godlewski Miros•aw Netia PL • Piel Monika *** ARD • Ballmer Steve * Microsoft • Richard Stéphane FT • Granryd Mats Tele2 • Balsillie Jim * Research in Motion • Gubitosi Luigi Wind • Sandberg Sheryl *** Facebook • Bates Tony *** Skype • Guillemot Yves *** Ubisoft • Schaeffer Dave Cogent • Berkett Neil * Virgin Media • Bernabè Franco Telecom Italia • Hagemann Snabe Jim *** SAP AG • Scheepbouwer Ad KPN • Bogaert Lorenz Netlog • Jobs Steve ** Apple • Schmidt Eric *** Google • Calve Simon * Lovefilm • Lévy Jean-Bernard Vivendi • Stefano Parisi Fastweb • Chambers John T. *** Cisco • Livingston Ian BT • Stringer Sir Howard *** Sony Music • Colao Vittorio Vodafone • Suri Rajeev *** Nokia-Siemens Networks • Murdoch James * Newscorp • Confalonieri Fedele Mediaset • Niel Xavier Iliad Group • Thompson Mark *** BBC Trust • Danon Pierre Numericable • Nyberg Lars TeliaSonera • Tournay Cédric *** Dailymotion • Donahoe John *** eBay • Obermann René DT • Verwaayen Ben Alcatel Lucent • Elop Stephen Nokia • Fries Michael T. * Liberty Global • Ostrowski Hartmut Bertelsmann • Vestberg Hans *** Ericsson 10 COPYRIGHT © 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.