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Cisco Confidential 1© 2013-2014 Cisco and/or its affiliates. All rights reserved.
Technology Policy
Implications of Market, Technology, and
Policy Trends in the Latin America Telecom
Marketplace
Andres Maz
Advanced Technology Policy
Buenos Aires, June 2014
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Program
Market, Technology and Policy Trends
• Premises for the Future
• Opportunities and Challenges for Telecom Operators
Impact to Business Model and Market
Evolution
• Forces upsetting the equilibrium
Critical Success Factors

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Cisco Confidential 3© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 3© 2013-2014 Cisco and/or its affiliates. All rights reserved.
Four Key Messages
Market, technology, and policy trends are upsetting the telecom market
equilibrium forcing telecom operators to evolve business models to develop new
sources of revenue growth value creation
Service providers’ greatest opportunity to create value will depend on their ability
to monetize the network and capture new market adjacencies
In this dynamic and evolving market telecom operators’ JVs, partnerships and
entrepreneurship ventures will be as important as horizontal and vertical
consolidation to gain competitive advantage and market leadership
A change in mindset and even organization structure will be necessary to enable
the evolution
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Market, Technology and Policy Trends
Technology Policy
Market
• Role of Government
• Degree of regulatory
intervention
• Cybersecurity
• Data Privacy & cross
border data flow
• Spectrum
• Net Neutrality
• IoE
• Cloud
• Smart Devices
• Video Evolution
• Traffic Growth
• Voice Revenue

3. 6/10/14
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Market, Technology and Policy Trends
Revenue Trends
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Fixed Line Voice Subscriptions NOT Declining
Source: Informa Telecoms & Media
Switched Access Lines
The number of fixed voice
subscriptions is on the rise in Latin
America, whereas it is on the decline
in most other regions

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Cisco Confidential 7© 2013-2014 Cisco and/or its affiliates. All rights reserved.
Fixed Broadband ARPU Going UP
Findings
• Broadband ARPU is on the rise in
Latin America, whereas it is flat or
falling in other regions
• ARPU higher than Asia, Eastern
Europe, and world average
Upside Potential
• ARPU
• Migration to faster connections
• Triple/Quad Play is working
• Subscriber base
Fixed Broadband ARPU
Source: Informa Telecoms & Media
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Mobile ARPU Revenue Flat… Urgent Need to Evolve
• Voice ARPU declining
• Data ARPU growing… but not enough
• ARPU flat
Pressure Factors
• Fixed to Mobile Termination regulated
rate down-path
• Roaming rates’ pressure
• New generation usage trends
• Telephone call?
• Leapfrogging to video
Revenue Upside Potential
• 4G
Fixed to Mobile Termination Rates
Source: Cullen International
Latin America - ARPU
Source: Informa/World Cellular Information Service

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Market, Technology and Policy Trends
Traffic Growth
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The Traffic Challenge
Internet Traffic Growing Fast
• How much CAPEX?
• Can faster and robust broadband network generate
higher revenues?
• Can fixed broadband compensate for fixed telephony
revenue decline?
• Can telecom operators establish commercial
agreements with OTTs for faster speeds and QoS?
CAPEX and ROI

6. 6/10/14
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Cisco Confidential 11© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 11© 2013-2014 Cisco and/or its affiliates. All rights reserved.
Market, Technology and Policy Trends
Smart Phone
Adoption
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Smart Mobile Devices Creating New Value Opportunities
Smart Devices Leading Market
• Advertising value moving from fixed big
screen to mobile-smart mobile devices
• Critical elements:
• Content
• APPs
• Advertisement
• Data Mining
• Location based services
• Payment platforms
Advertising Value Migrating to Small Screen

7. 6/10/14
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Market, Technology and Policy Trends
Video
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Video to Exceed 72 Percent of Mobile Data Traffic by 2018
LATAM Mobile Data Traffic Growth / Apps
• Multi-platform and mobile
• Netflix, Apple TV, Amazon fireTV, youtube
• Telecom Operators’ online video offerings
• AT&T to start a venture to launch both online
video platforms and on-demand TV channels
• Horizontal Expansion
• AT&T’s DIRECTV acquisition
• Policy Issues
• Vertical integration (Comcast – Time Warner)
• Must Carry and Must Offer Regulations
• Bundling
• Policies for on-net vs. off-net content
e.g. Bandwidth cap exceptions for on-net content
On-line Video Platforms Disrupting the Market
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
2013 2014 2015 2016 2017 2018
ExabytesperMonth
Mobile File Sharing (3.4%)
Mobile M2M (4.8%)
Mobile Audio (10.3%)
Mobile Web/Data (9.4%)
Mobile Video (72.1%)
Mobile
Video
72%
66% CAGR 2013–2018

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Market, Technology and Policy Trends
Cloud
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0.0
0.1
0.1
0.2
0.2
0.3
0.3
0.4
2012 2013 2014 2015 2016 2017
Zettabytes/Year
Latin America Cloud Traffic Growth
Cloud Traffic Will Grow 3.9 Fold from 2012 to 2017
31% CAGR 2012–2017
298 EB
249 EB
77 EB
117 EB
159 EB
203 EB

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Cisco Confidential 17© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 17© 2013-2014 Cisco and/or its affiliates. All rights reserved.
Cloud: Opportunities and Challenges to Telecom Operators
Cloud Readiness
• Cloud applications’ network speed and quality requirement will add additional stress to
telecom networks
• Network capacity upgrades will be necessary. Can investments be monetized?
• What are the options?
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Network Infrastructure Needed to Support to the Cloud
Network Requirements for Concurrent Applications
Basic Cloud Apps
Concurrency Bucket
Network Requirements:
Download Speed: ~1900 kbps
Upload Speed: ~600 kbps
Latency: Above 160 ms
Intermediate Cloud Apps
Concurrency Bucket
Network Requirements:
Download Speed: ~7,000 kbps
Upload Speed: ~2,600 kbps
Latency: 159 - 100 ms
Advanced Cloud Apps
Concurrency Bucket
Network Requirements:
Download Speed: ~21,000 kbps
Upload Speed: ~9,000 kbps
Latency: Less than 100 ms
• Text communications
(email, instant messaging)
• Web browsing
• File sharing
(low-res video)
• Web conferencing
• Social networking
(basic text only)
• Stream basic video/ music
• File sharing (high-res video)
• IP Telephony
• ERP / CRM
• Basic gaming (single player)
• Basic video chat
(low-res video)
• IP audio conferencing
• Basic video conferencing
(low-res video)
• Advanced social networking
(multimedia/interactivity)
• HD video streaming
• HD Industrial design collaboration
• Advanced gaming
(multi player)
• Advanced video chat
(high-res video)
• Advanced file sharing
(super high-res video)
• HD audio conferencing
• HD video conferencing
(high-res video)
• Stream super HD video

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Cisco Confidential 19© 2013-2014 Cisco and/or its affiliates. All rights reserved.
Regional End User Cloud Readiness—2013
Supporting Business & Consumer Applications Today on Fixed Networks (Concurrent Apps)
Basic Cloud
Application Ready
Intermediate Cloud
Application Ready
Hi Lo
Latency
Advanced Cloud
Application Ready
WEAPAC
CEE
NA
LATAM
MEA
Uruguay
UAEUSA
Romania
Hong
Kong
Korea
Lithuania
Luxembourg
Sweden
Lo
Hi
Average
Broadband
Speed
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Regional End User Cloud Readiness—2013
Supporting Business & Consumer Applications Today on Mobile Networks (Concurrent Apps)
Basic Cloud
Application Ready
Intermediate Cloud
Application Ready
Hi Lo
Latency
Advanced Cloud
Application Ready
NA
WE
CEE
MEA
APAC
LATAM
Singapore
Hong
Kong
UAE
Kuwait
Lo
Hi
Average
Broadband
Speed

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Cisco Confidential 21© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 21© 2013-2014 Cisco and/or its affiliates. All rights reserved.
Market, Technology and Policy Trends
IoE
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Daily Data Growth
Exabytes (10^18) of new
data are created every
single day and 90% of the
world’s stored data was
created in the last two
years alone.
Cisco Confidential 22©2014 Cisco and/or its affiliates. All rights reserved.

12. 6/10/14
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Internet of Everything
• More Connected Devices that People
• By 2020, the total number of connected
devices will range from around 20 billion to 50
billion
• Most applications do not exist today
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IoE Transformation
Parking
Increased compliance
Reduced search times
Lighting
OpEx reductions
Crime reductions
Road Pricing
Improved traffic flow
City revenue
Particulate Monitoring
Improved health
Improved compliance to standards
Buses (Bus Stops)
Reduced wait times
Higher occupancy
Toll Booths
Faster processing times
Reduced traffic congestion
Waste Management
OpEx reductions
Usage-based pricing
City
• Gas monitoring
• Video surveillance
• Water management
• Smart parking
• Public transportation
• Smart street lighting
• Smart grid
• Disaster response
• Chronic disease
management
• Telework
• Smart payments
• Smart buildings
• Fleet management

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Cisco Confidential 25©2014 Cisco and/or its affiliates. All rights reserved.
Technical Policy
Legacy
Regulatory
Frameworks
Cross-border
data traffic
Reliability
Scaling
Electrical
Power
Policy and Technical Issues Facing Big Data and the IoE
Privacy &
Security
Spectrum &
Bandwidth
Constraints
Standards &
Interoperability
Network
Intelligence
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Internet of Everything
Unlimited Opportunities for Service Providers to Create Value in the Ecosystem
• IoE Lead Player
• Partnerships and Entrepreneurship
• APPs networks inter-dependence
• High dependence on entrepreneurship and new ventures
• Degree of Service Providers integration with the ecosystem
• Bandwidth and platform provider
• Payment Platforms

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Cisco Confidential 27© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 27© 2013-2014 Cisco and/or its affiliates. All rights reserved.
Market, Technology and Policy Trends
Policy & Regulation
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Evolution ICT Ecosystem – Networked Readiness Index
30
40
50
60
70
80
90
100
110
2009
2010
2011
2012
2013
2014
Networked
Readiness
Ranking
Argen1na
Brazil
Chile
Colombia
Mexico
Peru
High
Low
Chile
Colombia
Brazil
Mexico
Peru
Argentina
WEF GITR

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Cisco Confidential 29© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 29© 2013-2014 Cisco and/or its affiliates. All rights reserved.
Key Policy and Regulatory Issues
Role of Government
Degree of Regulatory Intervention
Cybersecurity
Data Privacy & Cross Border Data Flow
Spectrum
Net Neutrality
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Changing Views on the Role of Government
Regulated
Market + State
Owned Telecom
Company
Free
Market
Regulated
Market
State Monopoly
Regulatory Intervention
GovernmentInvestment
+
+
- -

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Degree of Regulatory Intervention
The Regulatory Tool Kit
State
Intervention
• Wholesale
• Retail
Wholesale
• Access to network elements / unbundling
• Transparency
• No discriminatory obligations
• Accounting Separation
• Price Controls / Cost Oriented Rates
• Functional Separation
Retail
• Price Controls
• Bundling limitations
• No discrimination
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Cybersecurity
• Network security as a national priority
• Concerns:
• -Law enforcement and intelligence
• -National Security
• -Citizen’s privacy rights
False Choice. Security by Decree
• Data localization requirements
• Security certifications
• Domestic technology mandates
Government’s ResponseChanging Landscape
Comprehensive National Security Strategy
• National security frameworks
• Investment in security
• Government-to-government collaboration
• Industry – government partnership

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Cisco Confidential 33© 2013-2014 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 33© 2013-2014 Cisco and/or its affiliates. All rights reserved.
Data Privacy & Cross Border Data Flow
A growing list of
issues and ideas
to regulate
• Data localization requirements
• Data controller requirements
• Data processors requirements and liability
• Breach notifications
• Consultations with data protection authority
• Data storage regulation
• Right to be forgotten
• Data portability
• Standardization
• Network information security
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Spectrum
700 MHz Spectrum critical to accelerate
4G networks build out
-Auction timelines
-Spectrum Caps
-Wholesale Single Networks
-Price / Conditions
WiFi off-load critical to alleviate network
congestion

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Net Neutrality
Net Neutrality regulation could
weaken network resiliency, limit
innovation and new business
models, and increase network
vulnerabilities
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Implications Net Neutrality Regulation
• Use of traffic management tools to resolve
congestion. Regulations could require equal
treatment to different types of traffic independent
of the applications’ needs
• Data mining
• Agreements with OTTs
• Sponsored access data
• Low cost limited packages
• Value Added Services

19. 6/10/14
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Lessons Learned From The EU
Impact To Telecom Operators’ Financial Health
Arthur D Little
National Fibre Strategies
www.adl.com/Fibre
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Impact to Business Models and
Market Evolution

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Forces Upsetting The Equilibrium
IoE
Cloud
Video Evolution
Traffic Growth
Role of Goverment
Degree of Regulation
Data Privacy & Cross Border Data Flow
Spectrum
Net Neutrality
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Business Model and Market Evolution
Service Aggregation
Value
Creation
Niche
Services

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Business Model and Market Evolution
Service AggregationNiche Players
Smaller but Specialized Networks
• Ability to differentiate product and
segment markets
• Commercial agreements to access third
party last mile and transport networks
(market or regulatory driven)
Large and Complex Networks
• Ability to aggregate services
• Landline, mobile, broadband, pay-tv, cloud
• Robust and wide high-speed fiber
networks
• Room for consolidation
• M&A, JVs, partnerships
• Policy understanding and Strategy
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Market Evolution
Vertical and Horizontal Market Moves
Fixed
Voice
Mobile
Voice
&
Data
Broad-
band
Broadcast
TV
Pay-TV
on-net
Pay-TV
off-net
DC Cloud IoE
Horizontal Expansion: Organic, Acquisitions, JVs, Partnerships
Consolidation

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CRITICAL SUCCESS
FACTORS
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Critical Success Factors
Major Industry Transformation And Game Changers
Unlimited opportunities to create new sources of value
• Revenue and growth
Identifying and capturing opportunities will require:
• Enable intelligence in the network
• Business development & market intelligence
• Partnerships
• Pro-innovation regulatory environment
Dynamic organization structure

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Thank you
amaz@cisco.com