2G, 3G and BeyondAn Understanding of Technology and Services

Agenda Wireless Cellular Technology Overview

2G, 3G and Beyond Market Segmentation

Network Convergence Market Trends

Services

2G: Technology Summary TDMA: Time Division Multiple Access

Standardized in 1990 as IS-54 Provides 3-6 times capacity increase over AMPS (1G) Peak data rate of 14.4kpbs (can bundle up to 8 channels) Introduced authentication and encryption for security

GSM: Global System of Mobile communications Standardized in 1992, based on TMDA technology Improved battery life over TDMA GPRS peak data rates of 140 kbps; EDGE data rates of 180kbps

CDMA: Code Division Multiple Access Standardized in 1993 as IS-95 Provides 1.5-2 times capacity increase over TDMA Peak data rate of 14.4kpbs (can bundle up to 8 channels)

2G: Winners & Losers TDMA

Marginally better capacity than GSM, marginally worse battery life No evolution path beyond 2G – DEAD END !!

CDMA Lots of hype on capacity, delivered on upwards of 2x capacity

improvement over TDMA/GSM Clear evolution to 3G

GSM International Roaming and Compatibility Clear evolution to 3G Defacto Global Standard

GSM: A Success StoryGrowth in China

GSM subscribers in Asia Pacific reached 650 GSM subscribers in Asia Pacific reached 650 million in March 2006million in March 2006

(521 million March 2005 = 24.7% annual growth)(521 million March 2005 = 24.7% annual growth)

GSM growth exceeded CDMA by 11x from March 05 to March 06GSM growth exceeded CDMA by 11x from March 05 to March 06

ChinaChina

GSM grew over 54 mil subs in past GSM grew over 54 mil subs in past 12 months = over 1 million/week12 months = over 1 million/week

Cdma added under 5 mil subs in Cdma added under 5 mil subs in the same periodthe same period

GSM: A Success StoryGrowth in India

India reached almost 64 million India reached almost 64 million GSM subscribers at 31.03.06GSM subscribers at 31.03.06

GSM has 77.5% market shareGSM has 77.5% market share

GSM additions = 22.7 million in GSM additions = 22.7 million in 12 months = over 55% growth12 months = over 55% growth

Cdma added 8 million in same Cdma added 8 million in same periodperiod

GSM: A Success StoryGrowth in Rest of World

Europe:Europe:Eastern Europe 289 million (48.9% annual growth)Eastern Europe 289 million (48.9% annual growth)Western Europe 426 million (8.1% annual growth)Western Europe 426 million (8.1% annual growth)

Africa:Africa:146 million (62.6% annual growth)146 million (62.6% annual growth)

Middle East:Middle East:51.4 million (63.5% annual 51.4 million (63.5% annual

growth)growth)

Americas:Americas:Canada and USA 85 million (35% annual growth)Canada and USA 85 million (35% annual growth)

Latin America and the Caribbean 144 million (92.6% annual Latin America and the Caribbean 144 million (92.6% annual growth)growth)

Evolution to 3GDrivers: Capacity, Data Speed, Cost

cdmaOnecdmaOne

GSMGSM

TDMA TDMA

2G

PDC PDC

CDMA2000 1x

CDMA2000 1x

First Step into 3G

GPRSGPRS 90%

10%

EDGEEDGE

WCDMA

WCDMA

3G phase 1 Evolved 3G

3GPP CoreNetwork

CDMA2000 1x EV/DO

CDMA2000 1x EV/DO

HSDPA/HSUPA

HSDPA/HSUPA

Expected market share

EDGEEvolution

EDGEEvolution

CDMA2000 EV/DO Rev A

CDMA2000 EV/DO Rev A

3G: Technology Summary Technology Convergence on Wideband-CDMA CDMA 2000

Successor to CDMA IS-95, 4 core standards – 1xRTT, 1x EV-DO, 1x EV-DV, 3xRTT

1xRTT provides 2x voice capacity increase over IS-95 and a peak data rate of 144kbps

EV-DO Rev A provide peak data rates of 3.1 downlink / 1.8 uplink (800kbps typical)

UMTS Successor to GSM, based on W-CDMA Peak data rates of up to 1920kbps (384kbps typical) HSDPA peak data rate of up to 14.4Mbps

3G: Winners & Losers ?? UMTS

Huge delays (terminals availability) Exorbitant license fees Confusing pricing strategies & lack of compelling services Clear evolution path

HSxPA (Peak Data Rates), LTE (Network Simplification)

CDMA2000 Early adoption (Korea) Compelling peak data rates (EV-DO) Unclear evolution path

3xRTT? WIMAX?

UMTS GrowthDevices Penetration

Source: GSA survey published February 28, 2006

315 Devices

38 Suppliers

UMTS GrowthSubscriber Penetration

Over 55 million WCDMA Over 55 million WCDMA subs at 31 March 06subs at 31 March 06

Approaching 140% Approaching 140% yearly growthyearly growth

Over 3 million adds Over 3 million adds monthly in last 6 monthsmonthly in last 6 months

WCDMA gained over WCDMA gained over 10% share of mobile 10% share of mobile

growth in Asia Q1 06 growth in Asia Q1 06

WCDMA gained 1 in 3 WCDMA gained 1 in 3 new connections in new connections in

Western Europe in Q1 06Western Europe in Q1 06

Global Subscriber Counts

0

0.5 Bn

1 Bn

1.5 Bn

2 Bn

2.5 Bn

2006 2007 2008 2009 2010 2011

CDMA

GSM

PHS

W-CDMA

Note:GSM Emerging Market Handset (EMH) initiative = 80% of Global Population with Wireless Service by 2010, based on sub $30 handsets17 countries targeted = 1.8 Bn people ; not included in current sub counts

…and Beyond Technology Convergence on OFDM (Orthogonal Frequency Division

Multiple Access) WIMAX

Standardized by IEEE 802.16, evolution of 802.11 (Wi-Fi) Improved bandwidth, encryption and coverage over WiFi

Theoretical peak data rates of 70Mbps (practical peak ~2Mbps) Improved QoS better enables applications such as VoIP or IPTV Ideal application is for “last mile” connectivity to the home or business Intel plans to embed WiMAX chips as part of ‘Intel Inside’

L3GTE/HSOPA Early standardization work starts in 3GPP R8 Improved bandwidth, latency over UMTS/HSxPA Radio technology based on MIMO-OFDM, peak data rates of up to 70Mbps Network simplification

Wireless Access Evolution

BroadbandBroadband

New ServicesNew Services

EfficiencyEfficiency

Broadband

Subscribers

Voice

CoverageCoverage

MobilityMobility

Voice QualityVoice Quality

PortabilityPortability

CapacityCapacity

BroadbandBroadband

Network Network SimplificationSimplification

Cost of Cost of OwnershipOwnership

Agenda Wireless Cellular Technology Overview

2G, 3G and Beyond Market Segmentation

Network Convergence Market Trends

Services

Market Segments

Cordless

WiMAX 16eHSDPA to OFDMEV-DO to OFDM

WiFiLocal

Fixed

Voice Broadband

Cellular

WiMAX 16dDSL / CablePOTS

802.11a/b/g802.11n MIMO

Mesh

Dialup

2.5G

Mobile

Operator ObjectivesVoice+

Growth to Wireless

Data+ Growth to

Broadband

Network Goals are SimilarDifferentiation on Access & Business goals

Mobile Operators Subscriber growth Wireless Data / 3G Wireline Substitution

Fixed Operators Broadband Line Growth Revenue Protection

Cable, Satellite, ISP Network Leverage New Market Penetration Video Triple Play

DriversWireless

BroadbandCore IP

Customer LifestyleSearch for Growth

Network Convergence

Internet PSTN

Reliable, Scalable, Secure

IP

SGSN

PDSN

WLAN

GGSN

HA

PDGIP

DSLAM

BRAS

PDG

WIMAX

WLAN

Service ControlPresence / GLMS

Applications

R4CDMAPSTN

Media Resources

TDM & Packet Interworking

PDF

HSS/AAA

Peer IPNetwork

Access Network

IP/MPLS Core

MultimediaServices

MessagingServices

Web / WAPServices

StreamingServices

MG15000

MGCF(CS2000)

CallSession

Controller

MRF

Audio/Video

PDG

WLAN

ASN

CSN

ASNWiMAX

GGSN

GPRSUMTS

EASGW

ASGHSOPAOFDM/MIMO

BRAS

PDG

GGSN

ASN

CSN

ASGW

Network Convergence - IMS

Network Enablers Charging

Ability to provide differentiated charging based flexible usage models, including time / data / volume

Quality of Service Ability to provide differentiated service, e.g. Olympic levels: gold /

silver / bronze Policy Management

Ability to make personalized policy decisions based on subscriber, access and content

Security Ability to provide secure access and “clean pipes” for content

delivery

Agenda Wireless Cellular Technology Overview

2G, 3G and Beyond Market Segmentation

Network Convergence Market Trends

Services

Market Trends Media Convergence – Multiple Play

Dual Play: High-Speed Internet & Fixed Line Triple Play: Dual Play + TV Quadruple Play: Triple Play + Wireless Challenge: Consolidated Invoice and Price Points

Fixed Mobile Convergence Dual Mode connectivity

Cellular / Cordless (DECT, ADSL/Bluetooth) WLAN / WWAN

Challenge: Technology standardization MVNO – Mobile Virtual Network Operator

Wireless Service Reseller, wholesales access from wireless operators Discount & Lifestyle MVNO’s Segment, Product, Utilization Driven Challenge: Market Saturation & Service Differentiation

Market Trends (continued) M-Commerce – Electronic Commerce using Mobile Phones

Leverage ubiquity of mobile phones to make transactions Current payment methods: premium calling #’s, phone bill invoice, credit card Strong interest in key industries: banking, sports & entertainment, travel, retail Challenge: Security, Terminal Capabilities, Access Speeds

Multimedia – use of several media types to convey information Effective information delivery across many disciplines: art, education,

telecommunications, medicine IMS enables multimedia services for mobile users

VoIP Challenge: User Interface, Form Factor, lack of “killer app”

Presence – Always on, always connected Combine Mobility & Reachability Effectively bring Popularity of IM to mobile phones (AOL, Yahoo!, MSN, Skype) Opportunity for standardization & interworking based on SIP/SIMPLE Challenge: Standardization & always on connectivity

Market TrendsThe next 5 years in North America More substitution of mobile and wireless technologies for fixed lines

30% US homes will have only cellular or broadband access, driven by youth who see no value in fixed lines for telephony

Lower churn Due to consolidation, better pricing and marketing plans, higher quality

networks More mobile e-mail

Driven by popularity, proliferation of smartphones, and ease of setup and use Greater adoption of smartphones

Defined as phones that run open OS’s, e.g. Microsoft, driven by business users,

Increased mobile advertising Mobile advertising needed for added revenue generation; successful use will

require balancing intrusive nature of unsolicited ads & value to the end user

Market TrendsThe next 5 years in North America The growth of mobile entertainment

Handsets are increasing designed for entertainment with integrated cameras, MP3 players – trend will be to partner with content providers to drive usage (Google, Yahoo!, Apple)

Greater market penetration by mobile technologies and slower connection growth North America will become increasingly saturated – will drive price

competition, flexible and targeted tariff plans, and differentiation More converged services based on the IP Multimedia Subsystem (IMS)

Will become common network infrastructure, will enable fixed and mobile service bundles

The rise of mobile virtual network operators (MVNOs) Will add value by offering differentiation

More mobile data applications for enterprises Increased email, as well as presence and location functions, will drive up data

usage

Services Prepaid

Segment driven, will increase with MVNO’s SMS

Remains extremely popular, key driver is use of short-code numbers Push-To-Talk

Segment driven, slow take amongst general consumers MMS

Slow adoption due to user interface, will increase due to interoperability improvements and integration with m-commerce

Downloads Ring-tones is #1 revenue generator but slowing, Gaming is on the rise

Video Video clip services are emerging, pricing is typically subscription-based

Music Music stores increasingly common, need competitive pricing, will leverage MP3 integration

Radio Satellite radio offers resell XM and Sirius

Adult CTIA recommendation for socially responsible access to content; penetration expected to start in

2008