4G LTE Services Strategy

Workshop with Portugal Telecom 12-13 Feb 2013 www.huawei.com

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Agenda
The new world order Services for the near term VoLTE / &Video/LTE Enterprise focus: VPN M2M Discussion

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Out with the old in with the new

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The traditional Model Evolving the Model

Voice & SMS Mobile broadband BB Connectivity Bandwidth & Traffic
B

Ultra Broadband

User Generated Content Social Networking

Digital Economy New Services New Revenues New Business

ARPU & Revenue

A C C

Cost Moderate performance

High-Def Devices Emerging 3D - Video Consumer Electronics

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The New Opportunities Todays Opportunities

NGNs and the Digital Society

Value per Service

One-time Applications Telco Integrated Apps Sensors RCS - Voice PCS VoIP M2M Data Mining

Cloud Services E-Education Transport Presence Location Smart Metering

E-Health

E-Government Connected Home Social Networking Plus

Security Services

Storage

Environmental Management

Circuit Switched

Packet Switched SMS WAP Mobile internet

Ultra Broadband

Value per bit

Voice 112

Mobility

Internet Access Modems

MBB access
Mobile video

Millions of applications

Killer application domain

Long tail operation

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Applicability and performance of wireless technologies

2G (GSM/GPRS) Application breadth Degree of mobility Responsiveness
Richness/data intensity Application criticality Device type Feature phone, smartphone Tablet, smartphone PC/Laptop, tablet, smartphone PC/Laptop, tablet, smartphone

3G (HSPA, HSPA+)

WiFi (with fibre)

4G LTE

Download speed Upload speed Latency (ms)

0.01-0.13 0.008-0.13 300-700 (GPRS)

1-5 0.2-0.5 100-200

20-30 2-10 10-20

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10-40 1-15 50-150

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LTE performance agrees with near term opportunities

VoLTE

LTE Video

LTE VPN

LTE M2M

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LTE Voice

VoLTE capabilities and positioning

VoLTE Why VoLTE?
Standards Global Roaming Interoperability QoS & Regulatory (e.g. Emergencies)

CSFB

OTT

OTT players threat

End user demand media-rich communications

Rich Media

IP-based rich communications

Simultaneous 4G LTE Data &* Voice

Telcos need to deliver voice service over LTE network

Evolved Voice

HD, Web/App integration KPIs (Reliability, Billing, Security etc) 2G/3G integration fallback

Source: Heavy Reading, 2012

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LTE Video

SK Telecom launches worlds first HD Voice over LTE

Call connection time : 0.25 to 2.5 seconds, 2 to 20 times shorter than that of 3G voice calls (average of 5 seconds) HD Voice uses AMR-WB codec, which offers 23.85 Kbps transmission bandwidth, 2.2 times wider than that of 3G Much richer, clearer and more natural speech quality due to a wider speech band width of 507000 Hz compared to 3G voice call service that is optimized for only 3002400 Hz voice band. Transmitting the previously-inaudible low and high sound waves, improving voice quality by 40% compared to that of 3G Make customers feel as if the person on the other end of the line is sitting right next to him/her
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SKT begin selling HD Voice enabled Galaxy S3 LTE on Aug.8 Offer firmware upgrades for existing users of Galaxy S3 LTE in Aug. SKT plans to embed HD Voice as a basic feature in most of its LTE Smartphones to be released in the future HD Voice be provided at same rates (KRW 1.8 per second) as that of 3G under pay-per-second billing scheme

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LTE Video

U + VoLTE launch
the HD-quality voice calls (VoLTE) and video / data innovative services
Simultaneously share content such as the map / music / news / photos to the other side during voice call Crisp, clear HD-quality sound 2 times to 20 times (0.25~2.5sec) faster than a CS voice call connection time(5sec) Audio / Video / Experience a variety of communication, converged services

Monthly fee Free (comes with subscription )

Galaxy S SHV-E210L

Service information
VoLTE-based high-quality HD calls + All-IP service Sign up as options in the form of product after application is possible using (Available Only for VoLTE phone )

Optimus LTE II LG F160LV

VoLTE: Voice 1.8 won / sec, video 3.0 won / sec

HD Voice VoLTE

VoLTE calls between subscribers are available, call charges and the same applies to the existing toll. No separate data is deducted (currently, billing rates and the same)

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LTE Video

HD Video lies at the core SK Telecom LTE offer

Background

For its launch of LTE services, SK Telecom announced that it would offer innovative services, including high-quality video on all its LTE smartphones.
The feature

Bandwidth of voice call is 500 Kbps (compared to 64kbps for WCDMA video call). Video calls are charged like voice. Support by all LTE handsets available during the first 3 months of launch (from Samsung, LG, Pantech and HTC) More than 13.000 HD videos available at launch through T-Store and 8.000 movies available on N-screen service. High Value customers receive a monthly credit to download content.
Result

SK Telecom objective at launch was to sign up 500K LTE subscribers by end of 2011 (has achieved 575K) and 5M LTE subscribers by end of 2012 (has achieved 6.3M). 3 months after the launch of its premium content offer, more than 1 million customers generated 6 million downloads.
Source: :Wireless Intelligence, Huawei Business Consulting, http://www.umts-forum.org/content/view/4074/172/

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LTE Business

Unleashing LTE capabilities for wireless SMEs

1. Reduce the Cost / Mbps 2. Service Delivery from 40 days to 3 days (LTE VPN) 3. Provide E2E solutions to enterprise customers, bundle with fixed integration services
HUAWEI Ascend P2 LTE

Corp
>50 employees

Data
Company Net Business Internet

SME
4 -49 employees

Voice
SIP Trunk Office Net Unified Communication

SOHO
1-4 employees

Unwired Enterprise

Cloud
Microsoft Office 365 Virtual Desktop Virtual Server/Storage

Circa 97% of companies in Portugal are under 50 employees

SME Needs: Seamlessly combining telephony, data, VPN, UC and Cloud, with enhanced OSS Tools and services
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Huawei LTE for Enterprise Solution: LTE + Small Cell + Cloud + OSS + SME CPE Professional & Managed Service
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LTE Business

Verizon targets the enterprise market with VPN & M2M

Key application scenarios business model
Verizons Private Wireless Network solution: MPLS IP VPN over LTE

scenarios

Example target enterprises SME with relatively low usage demand and more price sensitive Branches of Medium or Large enterprises Retail branch use backup for credit card communication Organization cant access fixed broadband currently SME with relatively higher reliability demand
Pricing: $250-$500 initial set up fee+ connection monthly fee Verizons M2M Router service: Act as Primary connection for small business or back up for larger
Volume / month 50MB 250MB 1 GB 5 GB Monthly fee $39.99 $49.99 $59.99 $99.99

Substitute fixed VPN

Supplement for fiber

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LTE Business

How has LTE benefited enterprise customers?

More work done on the go

85%
76% 47% 39%

Customer benefits: Applications breadth Location agnostic Faster / real time sharing of larger file and streaming media Fully mobile application Improved convenience Security (over a secure wireless VPN connection no need to authenticate to a private network)

Innovate & competitive advantage Cut costs Won more business Increased employee well-being / Improved customer satisfaction 4G hasn't benefited my business Don't know Supported new ways of working Other 11% 9% 6%

37%

4%
3%

Survey of US businesses using LTE Arthur D. Little, 2012 HUAWEI TECHNOLOGIES CO., LTD. Page 14

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LTE Business

Relevance of LTE to selected horizontal enterprise applications identify key applications that will benefit from LTE
Application

Application bandwidth

Degree of mobility

Responsiveness

Richness / data intensity

Application criticality

Content sharing communication and collaboration CRM Product Portfolio management Content Creation Supply Chain Management ERP PLM

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LTE Business

LTE VPN case studies

Construction: Connected site office

Multiple employees to connect on site either directly or through an LTE WiFi hub. Full use of all enterprise applications without returning to main office for the duration of the project Main applications used are Building Information Models (BIM) containing visual images such as 3D CAD photos. Supply chain management, percentage of work complete and quality inspection delivered to base in real time. Savings per day: $1000

Healthcare: Connected ambulance

In Germany a city hospital is trialling a 3G LTE enabled ambulance aimed at improving the survival rate of stroke patients (3% of total ambulance transport) Main use for high resolution transfer of CT images. A number of wireless technologies were tested but LTEs high velocity tolerance minimises connectivity interruption in fast moving vehicles. Time from alarm to therapy reduced by 54% and with it survival rates increased
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Retail: Distributed connectivity

Connecting a distributed networks of retail stores, kiosks or petrol stations The LTE connection is used to connect POS, inventory control, connected to a centralised back office and a cloudbased time keeping system A US fuel station replaced its fixed broadband and two phone lines in each station with an LTE VPN solution as it saved on overall telecoms cost and the cumbersome task of managing about a hundred broadband lines from several providers.

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LTE Business

Unleashing LTE/M2M capabilities for public services

Developing LTE800/M2M Business

Launched LTE + Wifi

BUS, Taxi

Train

Real time video monitoring 5 M required in China/Y

Automotive Germany used/New car 9.5M each year

Smart meter Total Germany meter market is 70M

E-Health

Digital signage

Fleet Management Germany takes 20% of WE market

M2M Module

Huawei LTE for M2M Solution: LTE + EPC + PCRF + M2M Module
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LTE Business

Relevance of LTE applications to selected vertical enterprise applications identify key industries
Application bandwidth Degree of mobility Responsiveness Richness / data intensity Application criticality

Application mHealth (remote healthcare management) Fleet management EMaaS (Verizon) Connected site office Connected car Mobile temporary office Knowledge sharing

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LTE Business

Focus M2M: Next Wave of Opportunities Await Additional Partnerships for selected industries
Healthcare Emergency & Safety Retail & Finance Security Industrial

Automotive Aftermarket

Utilities
Consumer Automotive embedded 0 5 10 15 20 25 30 BMWs connected M2M SIMs Shipped, millions 2010 2017
Source: Frost & Sullivan

35 40 drive initiative is now 45 replacing all 3G sims for in-car media with LTE

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LTE Business

Verizons breadth of innovative M2M products

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LTE Business

Verizon eyes the success of M2M over LTE in the future as the device value chain is getting mature
Smart Home
Home Monitoring & Control service via computer, tablet, smartphone

Smart Business
Smart energy grids Smart transportation systems Collaboration

Smart Health Care

Remote body meter Remote outpatient health care

Internet of Things
RFID-based object control network Artificial intelligence over internet-connecting consumer products Individuals/ Business users/ Government

Application

Target users

Family users

SME/Enterprise/ Government

Individuals/ Hospital/Clinics

Innovation

FMC synergy

Source: Huawei analysis, Gartner, IDC, BCG

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Your thoughts?
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Appendix
HUAWEI LTE VPN SOLUTION M2M forecasts by country/industry (Europe Frost & Sullivan 2012)

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Overview of LTE VPN Solution

IPsec Hot Standby IKE v1/IKE v2
Backhaul EPC

IPSec Tunnel
eNB SeGW

P-GW MME S-GW

M2000
eNodeB

SeGW

Authentication

CA

Resiliency

eNB1

S1
X2

SeGW

SeGW

SeGW

SeGW
S1
eNB2

SeGW

VPN

Backhaul
Songshanhu Operator LTE Network CA Shipment BBU

Backhaul
MME SGW PGW

Backhaul IPSec GW BBU

Backhaul

Backhaul

Site1

Site2

Site3

Certificate

Deployment

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Single / Branch Office

PE EPC - GW IMS/NGN
CSCF/ SIP

Internet Internet

LTE CPE Fax

Internet: Data Centric

POTs Phone AR

PLMN
MGCF/ MGW

Voice Centric

IP Phone LTE Dongle Desk PC

Intranet: VPN Centric

Appl. Server

PSTN

E
Intranet Intranet: VPN VPN Centric Centric

Remote Access
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PE

EGW

Headquarters

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Total Europe M2M Connections 2010

15.3 million

2015
60.8 million

Europe M2M Connections by Country

Source: Frost & Sullivan

Europe M2M Connections by Industries

Source: Frost & Sullivan FS Vodafone M2M Workshop 121011

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