Bangkok--22 Jul--GM of Farh Agency By: Mr. Jing Wang, Executive Vice President, Qualcomm Asia Pacific & Middle East and Africa The wireless telecommunications market is rapidly expanding, fueled by convergence in the consumer segment, and increased wireless integration in the enterprise segment. At the same time, conventional voice services are being commoditized, resulting in stable or declining voice average revenue per user (ARPU) for most operators, especially in developed markets. Thus, operators are looking to advanced and rich data services to help spur revenue growth. To support such data services, operators are fast realizing that they must look beyond their 2G/2.5G networks for long-term, cost-effective and proven solutions. 3G technologies and their broadband capabilities provide a viable solution with the key characteristics that operators are looking for: - A well-established roadmap that ensures investment protection - Excellent performance and a large ecosystem that provides cost efficiency - Support for rich applications and services - Seamless backward compatibility for ubiquitous coverage Many small and large operators, serving both developed and emerging markets, are already reaping the benefits of 3G technologies. As of April 2008, there were 465 3G operators worldwide, with more than 625 million subscribers in 144 countries. Among these subscribers, 128 million have either Evolution — Data Optimized (EV-DO) or High-Speed Packet Access (HSPA) services. There are a few success stories from some of the world’s leading 3G operators, notably Verizon Wireless, AT&T, KDDI and Maxis, whose services span markets in the U.S., Japan and Malaysia. Verizon and KDDI offer -based 3G services, while AT&T and Maxis provide WCDMA-based 3G services, including HSPA.Case StudiesAT&T In 2005, AT&T, the largest mobile operator in the U.S., with 71.4 million customers, launched the first commercial, large-scale HSDPA deployment in the world. AT&T’s rollout focused primarily on major metropolitan areas, though subsequent deployments will include suburban areas. It plans to expand the 3G service to reach nearly 350 top U.S. markets by the end of 2008. 3G has spurred rapid growth in data ARPU and increased customer loyalty for AT&T. Data ARPU increased by 57.5 percent year over year in the fourth quarter of 2007. The data revenues currently stand at $2 billion, about 20 percent of the total wireless service revenue. Churn continues to fall; it was 1.2 percent in the fourth quarter, compared with 1.5 percent a year ago. Figure 1: AT&T Wireless Data Revenues Source: AT&T Quarterly Reports AT&T recently unveiled its plan to finish upgrading the network to HSUPA (High-Speed Uplink Packet Access) technology by mid 2008. AT&T reaffirmed its commitment to a 3G roadmap by recently announcing its intention to evolve the 3G network to HSPA+ and LTE (Long Term Evolution) technologies in the future.KDDI KDDI is the pioneer in employing a 3G feature called BCMCS (broadcast multicast service). BCMCS offers two benefits to operators: the ability to offer multicast multimedia services using cellular infrastructure, and the ability to monetize network idle time through cache casting. EZ News Flash provides hourly news and weather updates throughout the day, and EZChannelPlus provides the preview of popular content such as music, audio and video along with ranking and other related information. The subscribers can preview the clips free of cost, and download the full versions by paying a nominal fee. KDDI’s WIN uptake and ARPU performance tell a compelling story. Total ARPU for WIN users is 30-40 percent higher than for all other users on the network, and data ARPU for WIN users is almost double that of all other users. The data portion of total ARPU for WIN customers is 35-40 percent. Figure 2: Growth for WIN Subs Source: KDDI Quarterly/Annual Reports As with other leading EV-DO providers, KDDI upgraded the network to EV-DO Rev. A in 2007. This upgrade allowed KDDI to expand its services portfolio to include packet-switched video telephony, another first in the market.Maxis 3G success is not limited to developed countries. In fact, 3G is proving to be an important technology in emerging markets, especially for improving broadband penetration in countries such as Malaysia and Indonesia. Maxis, the biggest operator in Malaysia, is one of the phenomenal 3G success stories in Southeast Asia. Maxis, with a 41.5 percent share of the mobile market, covers over 92% of the country. It launched WCDMA services in July 2005, and introduced HSDPA in September 2006. 3G has equipped Maxis with an efficient and high-performance platform to launch a number of data-centric applications, such as video on demand, full-track music downloads and video telephony. It offers a range of 3G-enabled devices including PC data cards and USB terminals targeting the enterprise market. As of April 2008, Maxis reported 1.3 million active 3G users, an impressive three-fold year-over-year increase. The key takeaway from Maxis’ roaring success is this: to ensure the economic viability of investments in 3G, operators should target both mobile and fixed use, especially in countries where the wireline broadband penetration is minimal. Maxis has demonstrated a compelling model for 3G’s success in emerging markets.Verizon Wireless Verizon pioneered the concept of a ubiquitous wireless data service in the U.S. by launching its EV-DO network in 2003. Its service, branded BroadbandAccess, initially targeted the enterprise market. The devices offered were PC cards that supported data rates of 2 Mbps peak and 400 Kbps average per subscriber. This BroadbandAccess service, providing both ubiquitous coverage and high-speed connectivity, fundamentally changed the way professionals and consumers accessed corporate network and browsed the Internet. Verizon’s performance during the last quarter of 2007 speaks volumes about its success: - 2 million total net customer additions, 1.9 million net retail customer additions; 65.7 million total customers, 63.7 million retail (non-wholesale) customers; 6.9 million retail net adds in 2007 — the most of any carrier. - 1.20 percent total churn, 0.94 percent retail post-paid churn — industry-leading customer loyalty. - 13.3 percent increase in total revenues; data revenues up 53 percent; service ARPU up for quarter and full year; highest-ever data ARPU in the quarter; 43.6 percent EBITDA margin on service revenues (non-GAAP). Figure 3: Verizon Wireless Total Data Revenue ($B) Source: Verizon quarterly reportsConclusion 3G has helped many operators across the world offer profitable, rich voice and data services that significantly enhance the user experience. 3G technologies have proven to be suitable for both developed and emerging markets. Furthermore, the phenomenal growth of 3G in terms of subscribers, infrastructure, devices and service revenues underscores the strong market leadership position of 3G operators. The numerous success stories across the world have emphatically proven that 3G is an ideal solution for the global wireless market. 3G’s vast ecosystem and its advanced wireless broadband capabilities continue to offer competitive advantages in the rapidly growing wireless market. Further information, please contact: Ms Voraparn Eua-arporn (coco) GM of Farh Agency Tel: 0 2616 0991-2, Fax: 0 2616 0993 MB: 08 9144 4014, 08 1376 5927 email: [email protected]