Video services delivered over mobile broadband data networks are both a dream and a nightmare for network builders. Mobile video is in high demand, and consumers are willing to pay for it. However, poor design and high usage can lead to network congestion, negative user experiences and, ultimately, customer churn. While video is often viewed as a killer application for mobile broadband access, it lacks the requisite linear revenue-to-usage business case that has characterized killer applications such as voice and SMS in the past. In this webinar, Yankee Group Distinguished Research Fellow Chris Nicoll and Analyst Terry Cudmore investigate the pressing issues of mobile video delivery and provide recommendations to ensure that video becomes a killer application, not a network-killing service.

1. Preparing for 4G Video Services
Terry Cudmore and Chris Nicoll
June 2010
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 1

2. Agenda
1 Challenges of 4G?
2 Pressing Issues
3 Video Impact on the Network
4 Data Traffic Increases
5 Impact of Smartphones
6 Recommendations
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3. Poll: What is 4G?
What is your opinion?
• I have never heard of 4G
• I have heard of 4G, but I don’t
understand it
• I have heard of 4G, and I understand
what it means
• I am anxiously awaiting 4G products
• I am already using 4G
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4. 4G Awareness Poll Results
Are you aware of 4G and do you have a basic understanding of it?
(n=1283)
I have never heard of the term 4G 27%
I have heard of the term 4G but I don't understand
41%
it
I have heard of the term 4G and I understand what
24%
it means
I am anxiously awaiting 4G products 6%
I am already using 4G 2%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
n=1,283
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5. What is ‘4G’?
• The Radio
• LTE
• WiMAX
• HSPA+
• Core Infrastructure
• 3GPP (IMS, EPC)
• Fiber backhaul
• Devices and Services
• Handsets
• Telco cellular and wireless
• Business Models
• Sharing/outsourcing
• Pricing
• Content partnerships
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6. Challenges of 4G?
• Users are a fragmented group
• Demographics are changing
• User habits vary enormously
• Western Europe, Asia-Pacific
and North America will make up
over 75 percent of mobile data
traffic in five years, but the Middle
East and Africa will see the highest
growth in that time, with a 133
percent CAGR
• Device penetration has direct
and enormous impact on mobile
video use
• No learning curve
• Existing data sources available
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7. Pressing Issues
• 3G/4G network video support
• E-mail
• Text
• Web
• ‘Mobile’ IP
• What is mobile IP?
• Network congestion
• Backhaul
• Core
• Device congestion
• Smartphones
• Dongles
• Devices
• M2M
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8. Pressing Issues
• Device availability
• Smartphones and other advanced
devices are available to customers
right now
• Users can go from using no data to
1 GB per month
• Networks receive little to no ramp-
up time
• Video as a differentiator
• Unprepared servers can result in a
poor user experience
• Networks that don’t deliver quality
mobile video experiences to their
consumers run a serious risk of
churn
• The problems are not just in the
network—but that is what the user
blames
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9. Poll: Mobile Video Usage
How often do you use mobile video?
• At least once a day
• At least once a week
• At least once a month
• Less than once a month
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10. Mobile Video is Gaining Traction
How much time do you spend watching video on …?
100%
4%
90% 5% 15%
7%
80% 13% 8%
14%
70% 26%
13%
Percentage 60% 34% 17%
12%
of 50% 14%
respondents 40% 24% 13%
74% 37% 16% 8%
10%
30%
20% 18% 4%
20% 41% 18% 6%
9%
31% 5%
10% 20%
16% 16% 14% 8%
12%
5%
0%
TV (live TV (VoD) TV PC/laptop Video Handheld Digital Mobile Retail set-
TV) (n=371) (programs (n=1244) game game audio phone top box
(n=1231) recorded console console player or (n=994) (n=764)
on DVR) (n=800) (n=473) MP3
(n=606) (n=593)
At least once a day At least once a week At least once a month Less than once a month
Base: People with device
Source: Yankee Group, U.S. Consumer Survey, Q1 2010
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11. Does Video REALLY Overwhelm the Network?
It does, but the effect tends to be localized and only a few cells
are congested at any given time
• Average cell capacity during the busy hour: 35%
• Only 7% of cells are above 90% capacity in the busy hour
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12. Mobile Video Will Be 66% of Mobile Data Traffic
by 2014
108% CAGR 2009–2014
4%
5%
8%
17%
66%
Source: Cisco Visual Networking Index (VNI) Global Mobile Data Forecast, 2009–2014
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13. Mobile Video Growth Is 3 Times Mobile Phone Growth
• Yankee Group forecasts mobile phone registered lines will surpass 5 billion in 2011
• Total phone line growth, as well as higher adoption rates of devices like
smartphones, will result in increased levels of mobile video users
• Mobile video users are forecasted to register over 3 times more annual growth than
mobile phone lines from 2011-2014
Total Mobile Phone Registered Lines-Global Mobile Video/TV Users-Global
7,000,000 500,000
450,000
6,000,000
400,000
5,000,000 350,000
Thousands
Thousands
4,000,000 300,000
250,000
3,000,000
200,000
2,000,000 150,000
100,000
1,000,000
50,000
0 0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
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14. Networks Must Adapt to Growing Data Levels
• Yankee Group projects that mobile
network traffic will grow by a factor
of 28 between 2008 and 2012
• Meanwhile, revenue will only grow
15 percent in that same period
• No CSP can pay for a 2,800 percent
boom in demand with a 15 percent
revenue increase without changing
the way it does business
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15. Poll: Smartphone Usage
What is your attitude towards
smartphones?
• I have one and use it often
• I have one and rarely use it
• I don’t have one, but I plan on
purchasing one as my next phone
• I don’t have one, and I don’t plan
on purchasing one anytime soon
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16. Smartphone Ownership Will Explode
How likely is it that your next personal mobile phone will be a
smartphone with a data plan?
100% 5% 1%
8% 7% 5% 6%
9% 12%
90% 7% 18%
10% 9%
13% 27%
15% 16%
80% 16%
30% 21% 23% 17%
70% 24%
26%
60% 33% 28%
Percentage 21% 34%
of 50% 27% 25%
25%
respondents 28%
40%
29% 18% 20%
20%
30%
20% 41%
37% 37% 3%
34%
28% 25% 25%
10% 22%
16%
0%
13-15 16-17 18-19 20-24 25-34 35-44 45-54 55-64 65+ (n=74)
(n=73) (n=46) (n=44) (n=104) (n=209) (n=239) (n=190) (n=117)
Very likely Likely Unsure Not likely Very unlikely
Base: People who own a mobile phone
Source: Yankee Group, U.S. Consumer Survey, Q1 2010
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17. Global Mobile Phone Internet Usage Forecast
• 51% of U.S. survey respondents say
they are likely/very likely to purchase a
smartphone with a data plan as their • In 2010, feature phones in use in
next personal mobile phone. the U.S. will outnumber
smartphones by close to 200
• We forecast there will be over 500 million. That difference will fall to
million smartphones in use worldwide in less than 40 million by 2014.
2010, and that number will increase
137% by 2014. Global feature phone use
will only increase 8% from 2010 to 2014.
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Preparing for 4G Video Services June 29, 2010 Page 17

18. Evolution of Devices is Driven by Video
New smartphone capabilities will enhance mobile video viewing and make it a more
enjoyable experience. These include:
• Larger screens with high resolution
• Video cameras for shooting video and YouTube apps for publishing it (Cisco Flip)
• Support for video calling on iPhone 4
• Support for streaming HD-quality video
• Network-specific apps such as Sprint TV on HTC EVO 4G
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19. Recommendations
• Get it together
• Think holistically
• Get your position
• Model the business
• Leverage core assets
• Price, price, price!
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20. Disparate Billing/CRM Systems Increase Costs
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21. CSPs Should Adopt Holistic Success Criteria
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22. CSPs Need Clear Positioning in a Crowded Mobile
Broadband (Access) Market
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23. CSPs MUST Develop New Business Models
Leverage core assets to create new revenue sources
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24. CSPs Must Bridge the App Gap To Partner Effectively
with Third Parties
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25. CSPs Should Keep Searching for the Holy Grail:
New Pricing For New Market Realities
In addition to adopting
new pricing models,
CSPs must optimize and
effectively manage their
exploding mobile Internet
traffic, particularly video
and other rich media
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26. Summary
• 4G video is a true turning point for the industry
• IP is a game-changer for architecture, apps, services and devices
• The ecosystem, not the network, drives the total value
• Devices are the user experience portal
• Brands and application ecosystems (APIs, developer communities)
• Mobile, nomadic and fixed
• Business models must expand
• Devices, apps and services
• Data (internal) becomes an asset
• The office must get smart
• OSS/BSS
• Subscriber data, analytics and billing
The video experience demands a total support system
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27. Questions and Answers
Check out these reports to learn more
• Redefining 4G
• 4G Déjà Vu
• Unifying Billing and CRM
• VCs Bet on Mobile Video and TV
Technologies for 3G Networks
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28. Read analyst blogs at
blogs.yankeegroup.com Thank You
Watch analyst videos at
youtube.com/yankeegroup
Follow us on Twitter:
Terry Cudmore, Analyst
@YankeeGroup tcudmore@yankeegroup.com
Chris Nicoll, Distinguished
Fan Yankee Group Research Fellow
at facebook.com
cnicoll@yankeegroup.com
Upcoming Yankee Group webinar:
How Can the Telecom Industry Start Growing Again?
Tuesday, July 27, 2010 | 11 a.m. ET
Register at www.yankeegroup.com
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