Mobile World Congress
Richard J. Lynch
Barcelona, Spain
February 18, 2009
Mobile World Congress Slides
http://newscenter.verizon.com/assets/slides-mobile-world-congress-final.ppt
As delivered
TITLE SLIDE
Thank you, Andy [Moderator], and good morning to everyone here in Barcelona. Before I kick off my remarks, I’d like to start things off with a quick video.
RUN VIDEO – 60 Seconds
SLIDE 2 – Verizon Background
Hopefully that short video gives you a good idea of who Verizon is and what we represent. Simply stated, we are first and foremost a network company. In fact, I like to think of us as THE network company. Whether you are talking about 50 megabit service to the home, global connectivity for multinational corporations, or fast, reliable wireless data service -- all of these capabilities are tied to the unique capabilities of the Verizon network.
Our investment in networks is being driven by the same thing that’s driving the market worldwide, and that’s broadband … in the home, in the office, on the go, around the world.
SLIDE 3 – Superior Broadband Portfolio
Across our entire business, we are steadfastly focused on providing the fastest, most robust data connections available:
• From our fiber-to-the-home network, or FiOS – the fastest broadband network in the U.S.;
• To our global IP network, with advanced business backhaul capabilities of 100 Gbps;
• To our EVDO network – the broadest, most reliable 3G service in the U.S.
All of these technologies were built with the intent of providing the kinds of robust connections consumers want and expect for today’s applications, tomorrow’s needs, and the eventual promise of a truly converged world.
But, since I am speaking here today at the Mobile World Congress, I’d like to talk specifically about where I believe wireless broadband is today, where I think it is going to be in the not-to-distant future, and why I believe it will be at the heart of the growth of our industry in the decade to come.
SLIDE 4 – Wireless Revenue Growth
This evolution of wireless from a voice to a broadband business is already under way.
As you see on this chart, wireless has seen almost unparalleled growth in the United States over the past 14 plus years. Historically, this has been driven by the migration of wired voice users to untethered means of communication. More recently, it’s been data. And going forward, the future of our industry won’t just be data, it will be broadband data -- the kind of broadband that makes the transition from wired to wireless networks seamless.
SLIDE 5 – Wireless Voice Trends
Beyond the industry-wide numbers, I’d like to give you a view into the kinds of growth we’ve been seeing on Verizon’s wireless network.
Voice continues to be our bread-and-butter business. In any given month, we still handle tens of billions of minutes of use on our network. And while this upward trend is likely to taper off in the future, I believe there is still healthy room for growth.
SLIDE 6 – Wireless Data Trends
Moving to the data side of our network, if we look at wireless data trends over the past four years, we see a tale of two technologies.
One is our 2G technology known as 1xRTT. This is a CDMA-based voice and data technology that we deployed in 2004 specifically to increase the overall capacity of Verizon’s network. At the time, most of our capacity issues were voice related. But our 2G strategy did provide us with a foundational data network – one that could be leveraged for lower bandwidth data applications.
With the scale of the diagram, it may not look like we have seen a lot of data growth out of this technology, but actually we have. Over the four years shown here we’ve increased the amount of data on this network by over 300%.
Not bad. But let me paint another picture for you.
CLICK
Here is what we have seen over this same time period with the second part of our two-technology tale – EVDO.
As you see, this is a dramatically different kind of growth curve. And what this tells me, as a network guy, is that if I put a technology on the network that increases my end users’ throughput by a factor of ten – which is roughly what EVDO does – I can expect to see an increase in traffic far exceeding an order of magnitude.
These kinds of metrics deliver a powerful message about the customer demand that is unleashed when we push more speed and capacity into the marketplace.
That growth dynamic is shaping our view of the future and driving our network investments.
SLIDE 7 – More WAN Applications
One of the main drivers of this exploding customer demand is the rapidly growing set of applications for these wide-area networks.
Now, when software developers think of applications, they think of usability, functionality, and things of that nature. When I think about applications on my network, I think “How much?” As in, “How much bandwidth do you need me to provide for that given second of that given day?”
In today’s world, with today’s wide area technologies, I have a good idea of the kinds of bandwidth capabilities that I need to put into the network. SMS consumes less, and Internet connectivity consumes more. But all-in-all, for the vast majority of the applications we are seeing today, the type of technology I am supporting on my network is sufficient. But what about tomorrow’s applications?
CLICK
For these kinds of applications -- many of which will be video based -- I need to provide a different kind of broadband experience. It’s no longer good enough to provide a megabit to a megabit-and-a-half of throughput -- not to support things like video conferencing and the “you name it” on-demand requests that will proliferate into the future. To support this kind of an environment, I’m going to need to deliver 8, 10, 12 megabits of throughput to my end users. This is especially true for my converged end users – that is, those customers who want the application they’re running on FiOS to seamlessly port over to their wireless device, and work in largely the same way it did when on the wired connection.
SLIDE 8 – More WAN Devices
We’re also seeing a rapid proliferation of new advanced data devices that our network needs to support.
CLICK
In the future, these devices will expand significantly – both in their variety and in their volumes.
SECOND AND LAST CLICK
And in the not too distant future, I expect that any and all devices that have a need to communicate on a wide area network will have LTE embedded within them.
Of course, we’re already seeing a new generation of converged devices that let customers make phone calls, read e-mail, listen to music, and watch television, all on a single device. But some of the more interesting and compelling innovations will be highly specialized devices – ones that could never be replaced by a “do everything” device – that will begin to proliferate throughout the consumer electronics industry and fuel unprecedented demand for inherently intelligent, perpetually connected devices that meet the specialized needs of consumers.
Customers will no longer be asking if there are devices out there that can connect to a robust, nationwide network … they’ll demand it.
As an example, I think it’s probably unlikely Verizon will ever sell a converged device that also monitors a patient’s sugar levels. But an LTE-enabled glucose monitor that seamlessly and intelligently hooks into the Verizon network and immediately sends pertinent information to your healthcare provider – now that, to me, seems much more viable and promising.
New applications like the ones on my previous chart will come at a fast and furious pace. But new devices -- these tend to be a little trickier.
Before a company such as a Sony or an LG invests countless millions of dollars on a given device, they need to be relatively certain these products are going to sell. So the question becomes, “How does Verizon help bridge the gap between a manufacturer just thinking about selling an LTE-enabled device and actually selling it?”
I have two answers for you here.
SLIDE 10 – Open Development Initiative
The first is something we introduced a little over a year ago. It’s known as the Open Development Initiative.
FIRST CLICK
The concept is straightforward. Instead of Verizon controlling all of the devices riding on our network, we have opened things up to allow any device and any application to connect to our network, so long as it doesn’t negatively impact the network.
SECOND CLICK
In essence, we bring the network and other providers bring the hardware,
THIRD CLICK
the applications,
FOURTH AND FINAL CLICK
And then we’ll work together with these device and application providers to interface their solutions into our network.
By opening things up on our network, we are now allowing a whole host of new devices that previously may have never made it onto the network before. It’s good for the device manufacturers. It’s good for our customers. And it’s good for Verizon.
While this program to date has been very successful, we recognize that for LTE we may have to do things a little bit differently. Given that this is a new technology, and given that we know we need to help build the LTE ecosystem from the ground up, we decided to start up what we are calling the LTE Innovation Center.
SLIDE 11 – Verizon LTE Innovation Center
With the introduction of the LTE Innovation Center, Verizon will work with several of our most strategic partners to help the consumer electronics industry quickly bring products to market.
The goal will be to help these manufacturers develop full suites of products on the same wide area network equipment that Verizon and its carrier partners will be using within their networks. And once these products are tested and ready for commercial launch, we will work to drive these devices through our sales channels so that these products can quickly be brought to market.
From my standpoint, bringing LTE to the market quickly – quicker than any other US carrier - is important and ultimately good for the customer. And having new and robust applications that can take advantage of the kinds of bandwidth we will make available to them is also important. But for LTE to reach its full potential, we need to couple its capabilities with new and exciting devices that take full advantage of its power.
That’s what the LTE Innovation Center is designed to do.
SLIDE 12 – LTE Expectations
So where does LTE take us? If you look at the scale of the graph on this chart, you’ll see we are talking about a different kind of animal in the future. No longer am I talking about pushing thousands of terabytes on Verizon’s wireless network. Now we are looking at millions.
FIRST CLICK
As you will also notice, our 3G EVDO network is going to be around for at least another 5 years, and it is going to be handling a fair amount of traffic. But, it’s not going to be the workhorse of our future data network any longer.
SECOND CLICK
LTE will be the workhorse.
And if you assume the growth curve for LTE will be anything like the one we observed with Verizon’s current 3G network, you can conservatively expect by 2014 to be pushing about two million terabytes of data on the network in any given month.
But actually, that’s not what I am expecting.
THIRD AND LAST CLICK
I think, over the next five years, we will easily double that amount.
When I talk to my engineers today, and we think about the kinds of traffic we are going to be putting on the network, these are the kinds of volumes we are expecting to see. Now the reality may be somewhere in between, but the point is, growth is going to be explosive. I’m expecting to see at least a 1,000 fold increase in the amount of traffic when compared to what’s riding on my network today.
These are game-changing numbers.
Of course, it’s one thing to say “This is what I expect,” and it is another to say “Here’s how we get there.” So let’s talk about how we plan to get from here to there.
SLIDE 13 – Getting to LTE
As this slide highlights, we actually started the journey to LTE a number of years ago by working through the standards process and conducting a series of vendor trials both within the US and abroad with the assistance of Vodafone.
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I am happy to report the trials have completed, and we are now in the planning stages for our first two pre-commercial deployments
So where has all of this hard work gotten us?
SLIDE 14 – LTE Deployment Partners
We have now identified the key infrastructure partners who will help us build the LTE network.
On the radio access side, we have chosen Alcatel Lucent – a long-time partner of ours – and Ericsson as our strategic partners for the initial rollout of the LTE network.
To help us build the new 4G packet core, we’ve chosen Alcatel Lucent, Ericsson, and Starent.
And to build the new IMS core that will manage the command and control portion of the network, we have awarded the primary contracts to Nokia Siemens and Alcatel-Lucent.
I believe the combination of these primary partners will provide my team with the kind of expertise and experience we need to efficiently deploy the first commercially available LTE network in the United States.
So the final question is, “When is the network going to be available?”
FIRST CLICK
Under our current plan, we expect to have LTE available across the US by the end of 2010
SECOND AND LAST CLICK
Once this initial rollout is complete, we expect to aggressively expand this footprint, with a goal of covering all of our 700 MHz licensed territories by 2015.
I’m confident that this network will provide a launching pad for each and every next generation application or device that manufacturers may be looking to bring to market.
SLIDE 15 – Wireless Broadband Future
By “applications,” I mean all the applications we know today, combined with all the future ones no one has even begun to dream up.
By “devices,” I mean each and every handset, PDA, laptop, and any and all consumer electronics devices or appliances that need to be connected to the best network available. Again, I think the vision of millions of highly specialized devices, permanently connected through a robust, 4G wide-area network, is upon us.
And probably most importantly, Verizon, along with its strategic partners like Vodafone and China Mobil, will be working in close coordination to ensure that all of Verizon’s customers’ experiences are the same whether they are in New York, London, or Beijing.
The future of true broadband data is just beginning. And I believe Verizon -- THE Network company -- is best positioned to lead the way.
Thanks for listening, and I look forward to your questions at the break.
