◊ VDSL2 Vectoring,

bonding and beyond

Promises versus reality

Market
Insight

This report analyses

bonding and vectoring
Key questions
techniques improving
• How and whether can bonding and vectoring techniques
existing copper-based boost existing VDSL networks?
broadband architecture. It
• What are the performances and the maturity of the new
highlights the performance
techniques?
and maturity, the
importance of regulatory • What role for the regulatory framework?
framework and the actual
• What are the offerings of network equipment providers?
network equipment
providers offering. It also • How are operators positioning themselves regarding the new
provides detailed analyses techniques?

of operators’ stakes and the • What is the role of copper within the ultrafast-broadband
role of copper in general technology, especially FTTH?
within ultrafast-broadband
networks.

w w w. i d a t e - r e s e a r c h . c o m
Consulting & Research
 ◊
VDSL2 Vectoring, bonding and beyond
Promises versus reality

Contents (Report - PDF) Discover also our annual

subcription-based service
1. Executive Summary FTTx Watch Service 45 pages
Report+Slides
2. Intro Take advantage of one of the most
powerful FTTx tracking tools in the world EUR 2 500
3. Copper innovative techniques • A unique database covering January 2012
description > 68 countries covered
3.1. DSL Bonding > +150 operators sheets
> +250 roll-out projects
To order,
3.2. DSL Vectoring please contact :
3.3. Beyond VDSL vectoring • Monthly insights with industry analyses
3.4. Technical requirements • Direct access to our lead FTTx analysts Isabel JIMENEZ
3.5. Regulatory aspects [email protected]
3.5.1. Regulatory impacts on vectoring Database: tel: +33 (0)467 144 404
3.5.2. Market 4 analyses in Belgium and the • Markets & Forecasts
Netherlands - Data 2008-2010
- Estimates 2011
4. Network Equipment providers - Forecasts 2012-2016
Project Manager
offering and positioning
4.1. Alcatel-Lucent • Breakdown by technology Tiana RAMAHANDRY
4.2. Ericsson - FTTH/B [email protected]
4.3. Huawei - VDSL
tel: +33 (0)467 144 457
4.4. Nokia Siemens Networks - FTTLA
4.5. ZTE
4.6. Other major players: • Key indicators
Assia, Broadcom, Ikanos - Number of subscribers
- Number of Homes passed
5. Case studies Other related reports:
5.1. AT&T • Vendor market share by technology
5.2. Belgacom
5.3. BT This solution is mainly based on primary • Capex Trends
5.4. DT research - we do regularly one-to-one
5.5. KPN interviews with vendors, carriers and other
• Ultrafast-Broadband
5.6. Swisscom FTTx players
Survey
6. VDSL 2, a potential key element Visit our dedicated webpage to discover
to meet national NGA this cutting-edge research solution and • Telcos TV Strategies
broadband goals?
contact us for a free online-presentation
• Mobile Backhaul
Strategies

Visit our website for

detailed presentations
www.idate-research.com
 Telecoms

Innovation
Report

VDSL2 bonding, vectoring and

beyond
Promises versus reality?

M11317 – January 2012

Contributors
Tiana RAMAHANDRY, Senior Consultant
Tiana Ramahandry, a Senior Consultant, joined IDATE in 2005.
Tiana works primarily on infrastructure-related projects on behalf of equipment
providers and carriers. She is a key contributor to the Online Service regarding the
World Telecom Equipment Market.
Tiana also provides her expertise on issues related to fixed broadband access
technologies.
Ms. Ramahandry holds a post-graduate professional degree in Cable Networks,
from the Université de Lille, and a Master in Business Administration from the IAE
de Bordeaux IV.
[email protected]

Christoph PENNINGS, Head of Regulation Practice

Copyright IDATE 2012, BP 4167, 34092 Montpellier Cedex 5, France

Tous droits réservés – Toute reproduction, All rights reserved. None of the contents of this
stockage ou diffusion, même partiel et par tous publication may be reproduced, stored in a
moyens, y compris électroniques, ne peut être retrieval system or transmitted in any form,
effectué sans accord écrit préalable de l'IDATE. including electronically, without the prior written
permission of IDATE.
ISBN 978-2-84822-269-1
ISSN 2109-6783
VDSL2 bonding, vectoring and beyond

Content

1. Executive Summary .......................................................................................................... 5

2. Intro .................................................................................................................................... 8

3. Copper innovative techniques description .................................................................. 10

3.1. DSL Bonding ........................................................................................................... 10
3.2. DSL Vectoring ......................................................................................................... 11
3.3. Beyond VDSL vectoring .......................................................................................... 14
3.4. Technical requirements .......................................................................................... 15
3.5. Regulatory aspects ................................................................................................. 16
3.5.1. Regulatory impacts on vectoring............................................................................................. 16
3.5.2. Market 4 analyses in Belgium and the Netherlands ............................................................... 18

4. Network Equipment providers offering and positioning ............................................ 21

4.1. Alcatel-Lucent ......................................................................................................... 21
4.2. Ericsson .................................................................................................................. 24
4.3. Huawei .................................................................................................................... 25
4.4. Nokia Siemens Networks ........................................................................................ 27
4.5. ZTE ......................................................................................................................... 28
4.6. Other major players: Assia, Broadcom, Ikanos ...................................................... 30

5. Case studies .................................................................................................................... 31

5.1. AT&T ....................................................................................................................... 31
5.2. Belgacom ................................................................................................................ 32
5.3. BT............................................................................................................................ 34
5.4. DT ........................................................................................................................... 36
5.5. KPN ......................................................................................................................... 37
5.6. Swisscom ................................................................................................................ 39

6. VDSL 2, a potential key element to meet national NGA broadband goals?.............. 40

www.idate-research.com © IDATE 2012 3

VDSL2 bonding, vectoring and beyond

Tables
Table 1: Potential of bonding, vectoring among the major countries in very high broadband ............................ 7
Table 2: SDFs per MDF ................................................................................................................................... 17
Table 3: SLU obligation in major VDSL countries ............................................................................................ 20
Table 4: Belgacom commitment in deploying FTTx ......................................................................................... 32
Table 5: KPN speeds evolution with bonding, vectoring and Phantom Mode .................................................. 38
Table 6: Potential of bonding, vectoring among the major countries in very high broaband ............................ 40

***

Figures
Figure 1: VDSL2 technologies timeframe ............................................................................................................ 6
Figure 2: Bandwidth requirements and provision ................................................................................................ 8
Figure 3: Theoretical Performance of ADSL2+, VDSL and VDSL2..................................................................... 9
Figure 4 : Principle of vectoring .......................................................................................................................... 12
Figure 5 : Vectoring performance ....................................................................................................................... 12
Figure 6: Lower cost per Mbps .......................................................................................................................... 13
Figure 7: Phantom Mode principle .................................................................................................................... 14
Figure 8: VDSL2 profiles ................................................................................................................................... 15
Figure 9 : Comparison between VDSL2 performance with 0.4mm cable over 24 lines (left) and 0.5mm over 6
lines (right) ......................................................................................................................................... 15
Figure 23: The ladder of investment .................................................................................................................... 16
Figure 24: SLU impact on Vectoring ................................................................................................................... 17
Figure 10: Alcatel-Lucent’s Phantom Mode functioning ...................................................................................... 22
Figure 11: VDSL2 deployments and trials .......................................................................................................... 23
Figure 12: Ericsson vectoring system performance ............................................................................................ 24
Figure 13: Huawei vectoring results .................................................................................................................... 25
Figure 14: ZTE bonding performance ................................................................................................................. 28
Figure 15: ZTE vectoring gain ............................................................................................................................. 28
Figure 17: Belgacom timeline and network innovations ...................................................................................... 33
Figure 18: Superfast broadband transformation in UK ........................................................................................ 35
Figure 19: Openreach deployment objectives ..................................................................................................... 35
Figure 20: KPN broadband technologies evolution ............................................................................................. 37
Figure 22: Swisscom’s vectoring field tests results ............................................................................................. 39
Figure 25: VDSL2 technologies timeframe .......................................................................................................... 41

www.idate-research.com © IDATE 2012 4

◊ Mobile VoIP
Is it really a threat to operator voice revenues?

Innovation
Reports

This study looks at the

changing landscape of the
Key questions
mobile VoIP market; the
• Who are the new entrants in the mobile VoIP market and how
main over the top players, does it change the competition landscape?
the new entrants together
• User experiences, current networks and upcoming
with what they bring, and
LTE deployments - what are the technological challenges ?
how the operators are
• Which major OTT and managed solutions are on the Mobile
reacting. The technical
VoIP market? How are the Internet Giants positioning there?
challenges are assessed,
and an analysis as to the • What are the key trends for Mobile VoIP applications?

level of threat mobile VoIP

• How will the mobile VoIP market evolve by 2015, in the context
brings to operator revenues of more regulation& competition on the voice market?
is made. It concludes with a
scenario for the Data & Forecasts up to 2015 covered in the report:
development of this - Worldwide mobile VoIP user and pentration of 3G subscribers
- Worldwide mobile VoIP volume (billion minutes)
emerging market.

w w w. i d a t e - r e s e a r c h . c o m
Consulting & Research
 ◊
Mobile VoIP
Is it really a threat to operator voice revenues?

Contents
1. Executive Summary 4.3. Internet giants 85 pages
4.3.1. Competition and strategy overview
2. Methodology 4.3.2. Google
Hardcopy: EUR 2 900
4.3.3. Apple PDF: EUR 3 500
3. Technical challenges for 4.3.4. Yahoo!
mobile VoIP 4.3.5. Facebook
April 2011
3.1. The various types of mobile VoIP
3.2. User experience 5. Key trends To order,
3.2.1. Usability 5.1. Mobile Video over IP services gaining please contact :
3.2.2. Availability traction Isabel JIMENEZ
3.2.3. QoS 5.1.1. A comparison of the video over IP [email protected]
3.2.4. Synthesis offerings tel: +33 (0)467 144 404
3.3. Current networks; Wi-Fi, 2G and 3G 5.1.2. Challenges of video calls
3.3.1. Encoding 5.2. Becoming the hub for all IP
3.3.2. Wi-Fi coverage will remain spotty, but communications
adequate for the home 5.2.1. Google Voice synchs with Gmail
3.3.3. 2G networks are not suited for Mobile 5.2.2. Facebook further socialising the concept Project Manager
VoIP of communicating Soichi NAKAJIMA
3.3.4. 3G networks: capacity trade-off 5.3. The battle between operators and VoIP
[email protected]
3.4. LTE networks: moving towards all-IP providers for a better pricing proposition
3.4.1. Technological enablers of voice and 5.3.1. VoIP over Wi-Fi is not very mobile tel: +33 (0)467 144 458
SMS over LTE 5.3.2. Genuinely “free” calls are rare
3.4.2. Initial LTE rollouts will rely on CS fallback 5.3.3. International calls are very attractive,
3.4.3. In the long term, voice over IMS solution whether Wi-Fi or not
is expected 5.3.4. The evolution of operator voice tariffs
3.4.4. Roadmap for VoLTE makes them attractive
3.5. Mobile handsets 5.3.5. In conclusion; international calls are the Other IDATE reports:
3.5.1. 3G handsets only real advantage

4. Player profiles and strategies 6. Strategic analysis and forecasts

4.1. Mobile operators 6.1. Looking to the future • Mobile Video
4.1.1. Operators want to protect their voice 6.1.1. How much of a threat is mobile VoIP to
revenues operators? • Mobile Internet
4.1.2. The different strategies of mobile 6.1.2. How will the mobile VoIP competition
operators structure pan out?
4.1.3. Strategies from national context 6.2. Forecast • LTE Strategies
4.1.4. Opportunities and threats 6.2.1. Analysis of growth drivers and barriers
4.1.5. Benchmark of mobile VoIP offered by 6.2.2. Forecast hypotheses • The Future of Telecoms
operators 6.2.3. Mobile VoIP forecasts, 2010 – 2015
4.2. Over the top players
4.2.1. Competition and strategies overview
4.2.2. Skype Visit us online
4.2.3. fring www.idate-research.com
4.2.4. Nimbuzz
4.2.5. Tru
4.2.6. Other start-ups: Viber, TalkFree, Tango
Extracts from market report

Value added of mobile VoIP is mostly limited to international calling

CALL DESTINATION
Same Other
Domestic Domestic International
(connected) (connected)
fixed call mobile call call
VoIP client VoIP client
CALL ORIGINATION

Free for most Depends on Depends on No roaming

Wi-Fi* Free user user fees
providers
behaviour behaviour required

MNO plan No roaming

Outside Consumes mobile MNO plan
required fees
Wi-Fi operator data plan required
required

* Excluding Wi-Fi connectivity cost

Competitive compared to MNO plans
Uncompetitive compared to MNO plans
Source: IDATE Not comparable

Comparison of functions between video call providers

Source: IDATE

Players examined

Over the top players: Internet Giants:

• fring • Google
• Nimbuzz • Apple
• Skype • Yahoo!
• Talkfree • Facebook
• Tango
• Tru

BP 4167 – 34092 Montpellier Cedex 5

Tel : +33 (0) 467 144 444 – Fax : +33 (0) 467 144 400
[email protected] – www.idate-research.com
 Internet Services

Innovation
Report

Mobile VoIP
Is it really a threat to operator voice revenues?

M11111 – May 2011

Contributors

¼ Soichi NAKAJIMA, Head of Project, Senior Consultant

Soichi joined IDATE as a senior consultant in January 2009.
His main area of endeavour is the mobile communications market, such as the mobile Internet,
applications, contents and services, the analysis of strategies employed by the various players,
scenario building and forecasts. He also works on other business potentials for the mobile Internet,
such as smart grids and VoIP.
Before coming to IDATE, Soichi worked for NTT DoCoMo, Japan’s largest mobile network operator by
subscriber numbers, where he played a leading role in the strategic planning of the roll-out of Japan’s
first 3G M2M data-only tariffs.
Soichi holds a Bachelors degree in mathematics, from the University of Nottingham in the UK.
[email protected]

¼ Sophie LUBRANO, Director of Studies

A member of the IDATE team since November 2000, Sophie Pernet is specialised in demand analysis,
particularly in the area of consumer applications. Sophie also contributes her expertise in supply
analysis, notably companies’ Internet service strategies. Her assignments focus on various aspects of
the telecom industry: Internet, media, landline and mobile telephony.
Prior to joining IDATE, Sophie was an economic consultant for B.I.P.E., where she was in charge of
telecom market monitoring.
Ms. Pernet is an economist, with a post-graduate degree from ESLSCA (Ecole Supérieure Libre des
Sciences Commerciales Appliquées).
[email protected]

Copyright IDATE 2011, BP 4167, 34092 Montpellier Cedex 5, France

Tous droits réservés – Toute reproduction, All rights reserved. None of the contents of this
stockage ou diffusion, même partiel et par tous publication may be reproduced, stored in a
moyens, y compris électroniques, ne peut être retrieval system or transmitted in any form,
effectué sans accord écrit préalable de l'IDATE. including electronically, without the prior written
permission of IDATE.
ISBN 978-2-84822-223-3
ISSN 2109-6791
Mobile Platforms and Application Stores

Contents
1. Executive Summary .......................................................................................................... 7
1.1. The changing competition landscape with Internet giants coming in ....................... 8
1.2. Value-added of mobile VoIP is limited to international calling.................................. 9
1.3. Drivers and barriers of mobile VoIP........................................................................ 10

2. Methodology.................................................................................................................... 11

3. Technical challenges for mobile VoIP .......................................................................... 13

3.1. Introduction: the various types of mobile VoIP ....................................................... 13
3.2. User experience...................................................................................................... 14
3.2.1. Usability .................................................................................................................................. 14
3.2.2. Availability............................................................................................................................... 14
3.2.3. QoS......................................................................................................................................... 15
3.2.4. Summary ................................................................................................................................ 16
3.3. Current networks; WiFi, 2G and 3G........................................................................ 16
3.3.1. Encoding................................................................................................................................. 16
3.3.2. WiFi coverage will remain spotty, but adequate for the home ................................................ 17
3.3.3. 2G networks are not suited for Mobile VoIP ........................................................................... 17
3.3.4. 3G networks: capacity trade-off .............................................................................................. 18
3.4. LTE networks: moving towards all-IP ..................................................................... 19
3.4.1. Technological enablers of voice and SMS over LTE .............................................................. 19
3.4.2. Initial LTE rollouts will rely on CS fallback .............................................................................. 21
3.4.3. In the long term, Voice over IMS solution is expected............................................................ 22
3.4.4. Roadmap for VoLTE ............................................................................................................... 23
3.5. Mobile handsets...................................................................................................... 24
3.5.1. 3G handsets ........................................................................................................................... 24

4. Player profiles and strategies........................................................................................ 26

4.1. Mobile operators ..................................................................................................... 26
4.1.1. Introduction: operators want to protect their voice revenues .................................................. 26
4.1.2. The different strategies of mobile operators ........................................................................... 27
4.1.3. Strategise on a national basis................................................................................................. 30
4.1.4. Opportunities and threats ....................................................................................................... 31
4.1.5. Benchmark of mobile VoIP offered by operators .................................................................... 33
4.2. Over-the-top players ............................................................................................... 46
4.2.1. Competition and strategies overview...................................................................................... 46
4.2.2. Skype...................................................................................................................................... 47
4.2.3. fring......................................................................................................................................... 52
4.2.4. Nimbuzz.................................................................................................................................. 54
4.2.5. Tru .......................................................................................................................................... 55
4.2.6. Other start-ups: Viber, TalkFree, Tango ................................................................................. 57

www.idate-research.com © IDATE 2011 3

Mobile Platforms and Application Stores

4.3. Internet giants ......................................................................................................... 59

4.3.1. Competition and strategy overview......................................................................................... 59
4.3.2. Google .................................................................................................................................... 61
4.3.3. Apple....................................................................................................................................... 63
4.3.4. Yahoo! .................................................................................................................................... 64
4.3.5. Facebook ................................................................................................................................ 65

5. Key trends........................................................................................................................ 66
5.1. Mobile Video over IP services gaining traction....................................................... 66
5.1.1. A comparison of the Video over IP offerings........................................................................... 66
5.1.2. Challenges of video calls ........................................................................................................ 67
5.2. Becoming the hub for all IP communications ......................................................... 68
5.2.1. Google Voice synchs with Gmail ............................................................................................ 69
5.2.2. Facebook further socialising the concept of communicating .................................................. 70
5.3. The battle between operators and VoIP providers for a better pricing proposition 72
5.3.1. VoIP over WiFi is not very mobile........................................................................................... 72
5.3.2. Genuinely ‘free’ calls are rare ................................................................................................. 72
5.3.3. International calls are very attractive, whether WiFi or not ..................................................... 73
5.3.4. How operator voice tariffs have become more attractive........................................................ 75
5.3.5. In conclusion – international calls are only real advantage..................................................... 78

6. Strategic analysis and forecasts ................................................................................... 79

6.1. Looking to the future ............................................................................................... 79
6.1.1. How much of a threat is mobile VoIP to operators? ............................................................... 79
6.1.2. How will the mobile VoIP competition structure pan out?....................................................... 82
6.2. Forecast .................................................................................................................. 84
6.2.1. Analysis of growth drivers and barriers................................................................................... 84
6.2.2. Forecast hypotheses .............................................................................................................. 84
6.2.3. Mobile VoIP forecasts, 2010 – 2015....................................................................................... 85

www.idate-research.com © IDATE 2011 4

Mobile Platforms and Application Stores

Tables
Table 1: Summary of user experience issues between managed VoIP, unmanaged VoIP (mobile) and
unmanaged VoIP (WiFi)..................................................................................................................... 16
Table 2: Encoding data rates for various mobile services................................................................................ 17
Table 3: LTE fallback schemes ........................................................................................................................ 21
Table 4: Penetration of 3G handsets, 2009 and 2014 ..................................................................................... 24
Table 5: Partnerships and acquisitions between operators and VoIP players ................................................. 27
Table 6: National strategies of mobile operators.............................................................................................. 28
Table 7: Tariffing of VoIP options..................................................................................................................... 29
Table 8: National strategies of world operators................................................................................................ 30
Table 9: The VoIP strategies of mobile operators in the USA.......................................................................... 33
Table 10: VoIP strategies of mobile operators in the USA in detail ................................................................... 34
Table 11: The VoIP strategies of mobile operators in France............................................................................ 36
Table 12: Details of the mobile VoIP strategies of French operators................................................................. 36
Table 13: The VoIP strategies of mobile operators in Germany ........................................................................ 37
Table 14: Details of the mobile VoIP strategies of German operators ............................................................... 37
Table 15: The VoIP strategies of mobile operators in the UK ............................................................................ 38
Table 16: Details of the mobile VoIP strategies of British operators .................................................................. 38
Table 17: The VoIP strategies of mobile operators in Italy ................................................................................ 40
Table 18: The VoIP strategies of mobile operators in Spain.............................................................................. 41
Table 19: Details of the mobile VoIP strategies of Spanish operators ............................................................... 41
Table 20: The VoIP strategies of mobile operators in Austria............................................................................ 42
Table 21: The VoIP strategies of mobile operators in Sweden .......................................................................... 42
Table 22: The VoIP strategies of mobile operators in Australia ......................................................................... 43
Table 23: Details of the mobile VoIP strategies of Australian operators ............................................................ 43
Table 24: The VoIP strategies of mobile operators in Japan ............................................................................. 43
Table 25: Details of the mobile VoIP strategies of Japanese operators ............................................................ 44
Table 26: Overview of the VoIP strategies of mobile operators ......................................................................... 44
Table 27: Table of international call tariffs for MNOs in the USA....................................................................... 74
Table 28: How the Free rate plan has grown ..................................................................................................... 76
Table 29: Monthly data plans for smartphones for the four national US operators............................................ 77

***

Figures
Figure 1: Comparison of price competitiveness between mobile VoIP and MNO plans ................................... 10
Figure 2: Breakdown of mouth-to-ear delay ...................................................................................................... 15
Figure 3: CS fallback architecture ..................................................................................................................... 19
Figure 4: VoLGA: Voice over LTE via Generic Access ..................................................................................... 20
Figure 5: Voice over IMS................................................................................................................................... 20
Figure 6: LTE deployment scenario of NTT DOCOMO..................................................................................... 22
Figure 7: World mobile data and voice revenues, 2010 .................................................................................... 26
Table 5: Partnerships and acquisitions between operators and VoIP players ................................................. 27
Figure 8: Relation between openness to VoIP and degree of competition ....................................................... 31
Figure 9: Trends in the market share of KDDI in Japan .................................................................................... 32
Figure 10: Trends in the market share of 3 in the UK ......................................................................................... 32
Figure 11: The A1 over VoIP offer....................................................................................................................... 42
Figure 12: Connectivity offered by the over-the-top players .................................................................................. 47
Figure 13: Nokia N900, with pre-integrated Skype.............................................................................................. 48
Figure 14: Skype on KDDI................................................................................................................................... 51

www.idate-research.com © IDATE 2011 5

Mobile Platforms and Application Stores

Figure 15: The fring service................................................................................................................................. 53

Figure 16: fring uses data connectivity, not voice minutes.................................................................................. 53
Figure 17: Milestones achieved by Nimbuzz....................................................................................................... 54
Figure 18: Tru Anywhere call-through mode ....................................................................................................... 56
Figure 19: Tru Anywhere call-back mode............................................................................................................ 56
Figure 20: Usage statistics of Tango................................................................................................................... 59
Figure 21: Connectivity offered by the Internet giant VoIP offering..................................................................... 60
Figure 22: Features of Google Voice .................................................................................................................. 61
Figure 23: Google Voice Mobile features ............................................................................................................ 62
Figure 24: FaceTime from Apple......................................................................................................................... 64
Figure 25: Yahoo! Messenger with video calling feature..................................................................................... 64
Figure 26: Facebook page seen through Skype ................................................................................................. 65
Figure 27: Comparison of functions between video call providers ...................................................................... 67
Figure 28: Google Voice in Gmail; incoming call................................................................................................. 69
Figure 29: Google Voice in Gmail; making a call ................................................................................................ 69
Figure 30: The new Facebook Messages ........................................................................................................... 70
Figure 31: International VoIP calling rate plan: Skype example.......................................................................... 73
Figure 32: The ‘Orange Open’ offer by Orange France – at a glance................................................................. 75
Figure 33: Comparison of price competitiveness between mobile VoIP and MNO plans ................................... 78
Figure 34: VoIP share of fixed telephony revenues, 2006 and 2009 .................................................................. 80
Figure 35: Mobile termination rate caps (pence per minute)............................................................................... 81
Figure 36: Worldwide mobile VoIP user forecast (million) and % penetration of 3G subscribers, 2010 -1015 ... 85
Figure 37: Worldwide mobile VoIP volume forecast (billion minutes), 2010 -1015 ............................................. 86

www.idate-research.com © IDATE 2011 6

 Mobile Platforms and Application Stores

2. Methodology
The approach adopted by IDATE’s team of analysts and consultants employs a combination
of methods:
• Field research and validation of field research data;
• Conventional tools of industry and market analysis: segmentation, competition analysis,
strategic strengths, modelling, assessment and forecasts…;
• Expert analysis from specialists in the field and from their professional networks.

More specifically, IDATE’s teams employed the following tools:

1/ A multidisciplinary team of full-time consultants, specialised by business sector

IDATE’s analyses are performed primarily by our in-house consultants, and very
occasionally by freelance market analysts. This approach allows us to capitalise on our pool
of expertise through teamwork, sharing knowledge, ideas, contacts, viewpoints and key data.
Each report is drafted by a team of specialists under the direction of senior consultants who
are recognised experts in their field.

2/ Primary and secondary research

IDATE's reports and databases are compiled based on primary data obtained from first-hand
interviews with the sector’s decision makers, and on secondary data assembled from public
sources and external databases.

3/ An integrated information centre sustained by a number of tools and proprietary

databases
Over the course of 30 years, IDATE has developed proprietary work methods, data
structures and databases that trace the history of major developments in the sectors under
study.
• Companies: IDATE’s in-house data service tracks the latest news and events to come
out of the leading telecom, Internet and media industry companies around the globe.
Innovative firms and start-ups are monitored by the market experts in the different
‘Practices’.
• Markets: IDATE’s databases are developed using rigorous methods to process major
economic indicators (principally GDP, investment, exchange rates and demographics)
and relate them to influential sectoral and national factors (such as CAPEX and national
market dynamics).
• Technologies: IDATE’s organisation by Practice provides us with an efficient means of
tracking innovation. IDATE’s engineers ensure an in-depth understanding of the changing
shape of products and services and of the latest innovations in the marketplace.

www.idate-research.com © IDATE 2011 11

Mobile Platforms and Application Stores

4/ Contents of the published reports

Each IDATE market report details the structures and issues at play in the market being
examined, the driving forces (technologies, regulation, and consumption) and the players
involved. Particular emphasis is given to the market assessments and forecasts, which are
developed within the framework of a core scenario. Every market report features a clear and
concise presentation illustrated with tables and graphs of key market data and trends.
The process of drafting of a market report includes the following stages:
• analysis of the information available in the in-house databases, and review of analyses
performed in the recent past;
• based on a preliminary segmentation and assessment of the market, and as part of an
validated interview guide, analysts conduct interviews that enable them to validate
working hypotheses;
• a market model is then established, making it possible to test the hypotheses that have
an impact on the market’s development, and validated by a new round of interviews;
• and, finally, the report’s conclusions are debated with the team responsible for the project
and with expert consultants from the various fields involved;
• a final proofreading and editing/revision process, prior to the production of the final
version of the report which is delivered to the client.

5/ Market assessment and forecasts

IDATE's forecasts are based on:
• Primary data gathering worldwide.
• Market models which isolate key service consumption parameters and service pricing
assumption.

www.idate-research.com © IDATE 2011 12

◊ Net Neutrality
Technical-economic issues and business models

Innovation
Reports

This report explores the

technical-economic issues Key questions
surrounding Net neutrality
and its current status in • What are the core technical-economic issues attached to Net
neutrality?
markets around the globe.
How are telecom carriers handling the traffic surge?
It also delivers analysis of
the traffic management • What is the status of Net neutrality in the different countries?

practices and technical • What possible changes could be made to business models?
measures needed to Can the new solutions solve the issue of network financing?
control costs. And, finally,
• How are the different players in the internet ecosystem
looks at the new business positioning themselves (wireline telcos, mobile telcos, regulators,
models we are seeing content and service providers)?

emerge through an • What technical measures can and are being taken to manage
examination of traffic?
stakeholders’ models,
along with synthesis of the > A detailed benchmark of 13 European countries (90 pages) is
state of affairs in each included as a separate report

country.

w w w. i d a t e - r e s e a r c h . c o m
Consulting & Research
 ◊
Net Neutrality
Technical-economic issues and business models

Contents International benchmark

(separate report)
70 + 90 pages
1. Executive Summary Methodology
For each country are examined: 2 PDF + Slides
2. The core technical-economic • Wireline telcos EUR 4 500
issues surrounding Net neutrality • Mobile telcos
2.1. Economic environment of internet access • Regulation December 2011
networks and services • Content and service providers
2.2. Can services contribute to network costs? To order,
2.3. What role do transit and CDN play in the Countries examined please contact :
transport market? • Australia
• Canada
Isabel JIMENEZ
2.4. Does peering need to adapt to the changes [email protected]
brought by new video distributors? • France
• Germany
tel: +33 (0)467 144 404
2.5. Can flat rate billing sustain the rise in
traffic? • Ireland
2.6. Will managed distribution networks help • Italy
reconcile content and network economics? • Norway
2.7. Is P2P an efficient alternative for • Portugal Project Manager
distributing content? • Spain Vincent BONNEAU
• Sweden
• The Netherlands [email protected]
3. Status of Net neutrality
around the globe • The UK tel: +33 (0)467 144 453
3.1. Global overview • The United States
3.2. Synthesis of wireline telcos
3.3. Synthesis of mobile telcos Focus on
3.4. Synthesis of existing regulation • Europe
3.5. Synthesis of content and service providers - Regulation
- Proposals from the CEO Roundtable Other related reports:
4. Technical solutions - Other elements
4.1. Dedicated QoS architectures • Net neutrality and piracy
- Examples of traffic filtering • Online Video
4.2. Traffic management
4.3. Technical measures
Case Studies • Mobile Video
5. Creation of new business models • Amazon
5.1. Usage-based billing for users • ARCEP
• AT&T • World Internet Uses &
5.2. Quality-based billing for users
5.3. Bundled offers • Comcast Markets
5.4. Charging content and service providers • Eircom
for traffic • Google et Verizon • Online Content
5.5. Premium quality services • Imgur blocked by mistake
• Vodafone's dynamic mobile network management Distribution Market
5.6. Wholesale solutions in the form of
packages • European regulation
5.7. Assessment of operators’ initiatives • The NEBA wholesale model in Spain
• NBNCo Visit us online
• Next GenTel
• O2 UK www.idate-research.com
• Orange vs Cogent
• Rogers
• Tele 2
• UPC
• Partnership between Virgin Media and Detia
• Vonage vs Madison River
 The key issues surrounding Net neutrality along the video distribution

Synthesis of the Net neutrality debate relating to mobile networks

State of political
Content and
Use of traffic and regulatory
services at the Key issues in the mobile
Country differentiation on debates
heart of the network debates
mobile networks concerning
debates
mobile networks
Network congestion
VOIP, P2P,
France Network financing
Newsgroups
Managed VoIP
Network financing
The UK P2P, VOIP, Video
Managed VoIP

Germany VOIP Managed VoIP

Italy VOIP, P2P Managed VoIP

Network congestion
Spain VOIP, P2P

Sweden VOIP Network financing

Norway None None

BP 4167 – 34092 Montpellier Cedex 5

Tel : +33 (0) 467 144 444 – Fax : +33 (0) 467 144 400
[email protected] – www.idate-research.com
 Internet Practice

Innovation
Report

Net neutrality
Core issues and new business models

M11112 – January 2012

Contributors
► Vincent BONNEAU, Head of the Internet Business Unit
Vincent Bonneau is IDATE’s chief expert on fixed and mobile Internet services and
software innovation. He is the head of the Internet Business Unit which tackles issues
surrounding the Web and emerging technologies, and especially services, markets,
usage and monetisation aspects. Vincent’s particular specialty is detecting and
analysing innovations.
Before coming to IDATE, Vincent worked in the software and telecom industries. He
was the “Internet Software and Technologies” attaché to the French Trade Commission
(DREE) in San Francisco, in addition to having gained strategic operational and
marketing experience working for Noos, Wanadoo and France Telecom in Paris.
Mr. Bonneau is a graduate of the École Polytechnical (1997) and the École Nationale
Supérieure des Télécommunications (2002), and holds a Masters Degree in New
Technologies Management from the HEC business school (2002).
He can be reached at: [email protected]

Samuel ROPERT, Senior consultant

Christoph PENNINGS, Senior consultant
Gilles FONTAINE, Deputy CEO

Copyright IDATE 2012, BP 4167, 34092 Montpellier Cedex 5, France

Tous droits réservés – Toute reproduction, All rights reserved. None of the contents of this
stockage ou diffusion, même partiel et par tous publication may be reproduced, stored in a
moyens, y compris électroniques, ne peut être retrieval system or transmitted in any form,
effectué sans accord écrit préalable de l’IDATE. including electronically, without the prior written
permission of IDATE.
ISBN 978-2-84822-277-6
ISSN 2109-6791
Net neutrality: Core issues and new business models

Contents
1 Executive Summary .......................................................................................................... 7
1.1 Technical-economic issues ......................................................................................... 8
1.2 Current state of affairs ................................................................................................. 9
1.3 Designing new solutions ............................................................................................ 10

2 The main technical-economic issues tied to Net neutrality ....................................... 12

2.1 Economics of access networks and online services ................................................. 12
2.1.1 Swift rise in traffic... ...................................................................................................... 12
2.1.2 Rise in video traffic still generating little added revenue .............................................. 13
2.1.3 But growing traffic requires ongoing network investments ........................................... 14
2.1.4 The complexity of online video services distribution dissociates service and network
economics .................................................................................................................... 14
2.2 Can video services help cover network costs? ......................................................... 17
2.2.1 Uncertainties over revenue streams for online video services ..................................... 17
2.2.2 TV cost models do not apply to online video ................................................................ 17
2.3 What role for transit and CDN in the transport market? ............................................ 19
2.3.1 Decrease in IP transit market value ............................................................................. 19
2.3.2 Dividing line between service providers and transport network operators being
blurred .......................................................................................................................... 20
2.4 Does peering need to change to adapt to changes brought by new video
distributors? ............................................................................................................... 21
2.4.1 Peering under pressure ............................................................................................... 21
2.4.2 Are we going to see a change in transit network interconnection schemes? ............... 22
2.5 Can flat rate access plans finance the traffic surge? ................................................ 23
2.5.1 Limitations of the flat rate plan ..................................................................................... 23
2.5.2 No linkage between service providers’ and access providers’ economics ................... 24
2.6 Do managed distribution network make it possible to reconcile content and network
economics? ............................................................................................................... 24
2.6.1 The two roles played by managed distribution networks.............................................. 24
2.6.2 Open Web competing with managed networks ............................................................ 25
2.7 Is P2P an efficient alternative solution? .................................................................... 26

3 Status of Net neutrality around the world .................................................................... 27

3.1 Overall view ............................................................................................................... 27
3.2 Summary of wireline telcos ....................................................................................... 31
3.3 Summary of mobile telcos ......................................................................................... 33
3.4 Summary of regulation .............................................................................................. 35
3.5 Summary of content and service providers ............................................................... 37

4 Technical solutions ......................................................................................................... 39

4.1 Architectures dedicated to QoS................................................................................. 39
4.1.1 DiffServ ........................................................................................................................ 39
4.1.2 IntServ ......................................................................................................................... 40
4.1.3 MPLS ........................................................................................................................... 41

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Net neutrality: Core issues and new business models

4.2 Traffic management................................................................................................... 43

4.2.1 Basic identification ....................................................................................................... 43
4.2.2 DPI solutions ................................................................................................................ 43
4.2.3 Integration of DPI solutions .......................................................................................... 45
4.2.4 The DPI market ............................................................................................................ 47
4.2.5 Beyond DPI .................................................................................................................. 48
4.3 Technical measures .................................................................................................. 50

5 Introducing new business models ................................................................................ 54

5.1 Traffic-based billing for users .................................................................................... 55
5.2 QoS-based billing ...................................................................................................... 58
5.3 Packaged solutions ................................................................................................... 61
5.4 Charging content and service providers for their traffic............................................. 62
5.5 Premium QoS solutions ............................................................................................. 65
5.6 Wholesale packages ................................................................................................. 67
5.7 Assessment of operators’ initiatives .......................................................................... 69

www.idate-research.com © IDATE 2012 4

Net neutrality: Core issues and new business models

Tables
Table 1: Synthesis of the Net neutrality debate relating to fixed networks .................................... 29
Table 2: Synthesis of the Net neutrality debate relating to mobile networks ................................. 30
Table 3: Differentiation practices on fixed networks...................................................................... 31
Table 4: Differentiation practices on mobile networks................................................................... 33
Table 5: Status of regulatory debates and policies ....................................................................... 36
Table 6: Content and service providers’ positions with respect to Net neutrality .......................... 38
Table 7: Applications of DPI according to deployment level ......................................................... 45
Table 8: Types of DPI integration in a mobile network.................................................................. 46
Table 9: Advantages and drawbacks of DPI ................................................................................. 48
Table 10: Restrictions applied by PlusNet ...................................................................................... 50
Table 11: Traffic management measures applied by Virgin Media ................................................. 51
Table 12: Summary of the feasibility of the traffic-based billing option ........................................... 57
Table 13: Summary of the feasibility of the QoS-based option ....................................................... 61
Table 14: Summary of the feasibility of the packaged offers option ................................................ 62
Table 15: Summary of the feasibility of the charging content and service providers for traffic
option ........................................................................................................................................ 65
Table 16: Summary of the feasibility of the premium QoS option ................................................... 67
Table 17: Summary of the feasibility of the wholesale packages option ......................................... 68
Table 18: Summary of the feasibility of the non-network wholesale solutions option...................... 69
Table 19: Advantage of traffic management according to Vodafone .............................................. 69
Table 20: Summary of operators’ initiatives .................................................................................... 70

***

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Net neutrality: Core issues and new business models

Figures
Figure 1: New sources of income for telcos ................................................................................... 11
Figure 2: Growth of Internet traffic by type of service, 2009-2014 ................................................. 12
Figure 3: Typical video coding levels by type of device ................................................................. 13
Figure 4: Average time viewers spend per month on a selection of video services ....................... 13
Figure 5: Fixed and mobile network investments around the globe, 2007-2013 ............................ 14
Figure 6: The key Net neutrality issues along the video distribution value chain ........................... 16
Figure 7: Comparative contribution of search and video to Internet revenue the United States,
in 2009 ........................................................................................................................................ 18
Figure 8: Evolution of IP transit prices ........................................................................................... 20
Figure 9: Percentage of Google traffic that uses direct peering ..................................................... 22
Figure 10: Comparison of increase traffic costs and increased access revenue ............................. 23
Figure 11: Respective earnings of new video services on managed networks and the open Web .. 25
Figure 12: Description of a DSCP header ........................................................................................ 39
Figure 13: How DiffServ works......................................................................................................... 40
Figure 14: How RSVP works (Resource Reservation Protocol)....................................................... 41
Figure 15: The IntServ model .......................................................................................................... 41
Figure 16: MPLS header .................................................................................................................. 42
Figure 17: MPLS network architecture ............................................................................................. 42
Figure 18: Identification of Kazaa by a text string ............................................................................ 43
Figure 19: Identification of Skype by its digital properties ................................................................ 44
Figure 20: HTTP vs. P2P ................................................................................................................. 44
Figure 21: Implementation of DPI in a mobile network..................................................................... 46
Figure 22: Installing DPI in a 3G (above) and LTE (below) network ................................................ 47
Figure 23: Breakdown of the DPI market ......................................................................................... 48
Figure 24: Main features of intelligent traffic management .............................................................. 49
Figure 25: How an end-to-end traffic management system works ................................................... 49
Figure 26: Traffic restriction measurements used, depending on the application ............................ 50
Figure 27: AT&T’s fibre access plans .............................................................................................. 52
Figure 28: AT&T’s DSL rate plans ................................................................................................... 52
Figure 29: The leaky bucket............................................................................................................. 53
Figure 30: New sources of income for telcos ................................................................................... 54
Figure 31: Users’ monthly consumption on wireline networks in 2009 ............................................. 55
Figure 32: Example of a usage monitor ........................................................................................... 56
Figure 33: Offer carrying a quality commitment ............................................................................... 58
Figure 34: Virgin Media rate plans ................................................................................................... 59
Figure 35: Gaming offer from British ISP Demon ............................................................................. 59
Figure 36: Gaps between headline rates and actual rates ............................................................... 60
Figure 37: Priority Pass (QoS on catch-up TV) ................................................................................ 60
Figure 38: Eircom’s premium broadband offer ................................................................................. 62
Figure 39: Principles of paid peering and IP transit.......................................................................... 63
Figure 40: Downstream traffic, asymmetrical traffic and revenue in 2009 (situation of even
termination) ........................................................................................................................................ 64
Figure 41: AT&T’s CDN deployments .............................................................................................. 66
Figure 42: Telefónica’s positioning on API ....................................................................................... 68
Figure 43: Bell Canada’s rate changes ............................................................................................ 70
Figure 44: Rogers Communications’ sharing plans.......................................................................... 70
Figure 45: Telefónica’s rate plans in Chile ....................................................................................... 71

www.idate-research.com © IDATE 2012 6

 Net neutrality: Core issues and new business models

2 The main technical-economic issues

tied to Net neutrality
2.1 Economics of access networks and online services

2.1.1 Swift rise in traffic...

The Net neutrality debate is being fuelled, first, by the overall rise in traffic generated by the
use of online video services. According to Cisco, video traffic is growing by more than 100%
a year on wireline networks, and at an even faster pace on mobile systems. By 2014, video
will account for more than half of all fixed network traffic.

Figure 2: Growth of Internet traffic by type of service, 2009-2014

Source: Cisco

The gradual development of the connected TV in particular will drive yet another growth
spurt for traffic. The video coding needed to render a satisfactory picture quality on the TV is
three times what is required for a computer.

www.idate-research.com © IDATE 2012 12

 Net neutrality: Core issues and new business models

Figure 3: Typical video coding levels by type of device

9000,0 8000
8000,0
7000,0
6000,0
5000,0
4000,0
3000,0 2500

2000,0
650 800
1000,0 500

0,0
YouTube (PC) Megavideo (PC) BBC iPlayer (PC) Netflix (PC) Xbox (TV)

YouTube (PC) Megavideo (PC) BBC iPlayer (PC) Netflix (PC) Xbox (TV)

Source: IDATE

2.1.2 Rise in video traffic still generating little added revenue

The swift development of the selection of video products available online is being spurred by:
• the ubiquity of broadband access
• the rise of piracy
• the emergence of new on-demand services that are not available on classic TV networks
• some licence-holders’ desire to distribute their own content directly
• the development of user-generated content sites such as YouTube
• the incorporation of video services into popular online destinations like Facebook.

Figure 4: Average time viewers spend per month on a selection of video services

900,0 809
800,0
700,0
600,0 515
500,0
400,0
269
300,0 198
180 170
200,0
70
100,0
0,0
YouTube (USA) Hulu (USA) BBC iPlayer Netflix (USA) DailyMotion Megavideo Justin.tv (USA)
(UK) (France) (France)

Time per viewer (minutes per month)

Source: IDATE

The new video services are adopting various business models: ad-based, pay-per-view or
subscription. But they are earning only a tiny fraction of TV/video market revenue.

www.idate-research.com © IDATE 2012 13

 Net neutrality: Core issues and new business models

4 Technical solutions
Having to contend with economic problems and in a bid to avoid costly investments,
operators will work to manage and optimise their networks using the different technical
solutions described below. But they only provide temporary solutions for managing
congestion or improving QoS.

4.1 Architectures dedicated to QoS

4.1.1 DiffServ
DiffServ is a networking architecture that makes it possible to classify and manage traffic to
deliver a superior quality of service. The specified mechanism is based on the IP DSCP
(Differentiated Services Code Point) packet headers which come to replace the "Type of
Service" octet in IPv4 and use the "Traffic Class" octet in IPv6.
Coded in one octet, traffic is marked by the first six bits that make up the DSCP, offering up
to 64 classes of service. One class gives the traffic top priority on the network. All of the
high-priority traffic is delivered first, after which the remainder of the traffic is processed if
availability remains.

Figure 12: Description of a DSCP header

Source: Cisco

This solution is currently employed only in access networks. It is too complicated to

implement on the open Web given the incompatible systems in use. But even in access
networks, it has been little deployed.
Contrary to IntServ (integrated services), DiffServ is based on a system of classes of traffic
since a packet can be marked specifically. So QoS is achieved through traffic classification
thanks to the DSCP. Another goal of DiffServ is traffic management.

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 Net neutrality: Core issues and new business models

Figure 13: How DiffServ works

Source: Cisco

4.1.2 IntServ
IntServ, which stands for Integrated Services, is a networking architecture that makes it
possible to deliver a higher quality of service. It requires a signalling protocol that informs the
routers of the QoS required for certain streams.
This mechanism is implemented through a bandwidth reservation system (adapted to the
stream), transmitted to the routers. Once the reservation has been made for all the routers
all along the traffic’s path, transmission can begin.

More specifically, IntServ uses two mechanisms:

• "Flow spec" takes account of the traffic’s technical characteristics, and especially the
needs for guaranteed QoS, before the reservation phase;
• the Resource Reservation Protocol (RSVP) in the transport layer (fourth layer) of the OSI
model. The idea is to signal of the network equipment (notably the routers) of QoS
requirements and so “reserve” the bandwidth needed to achieve it. Once the bandwidth
has been reserved, the traffic can be sent.

So with both IntServ and DiffServ the network needs to be properly scaled: network capacity
must be such that it can support the services being supplied and must be used efficiently.
There is nevertheless a fundamental difference between the two systems:
• IntServ reserves the network resources required for certain traffic flows, so it is capable
of guaranteeing QoS.
• DiffServ is a networking architecture that specifies a mechanism for classifying and
managing traffic. So any QoS guarantee requires the network to be properly scaled, but
planned ahead of time by the operator.

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 Net neutrality: Core issues and new business models

5 Introducing new business models

A great many players are already contemplating a change in Internet business models,
especially ones that involve changes in revenue streams going to ISPs, through the creation
of more segmented and more differentiated solutions. This shift in revenue streams may
occur on the lower end of the chain (retail market, via users) and/or further up the chain
(directly from content and service providers or indirectly from IP transit providers and CDN),
and are by no means mutually exclusive as operators may seek to adopt several approaches
at once. These models rest on paying for traffic, either upstream or downstream, based on:
• traffic consumed, either total amount or peaks;
• the quality of the service associated with the traffic (which could be billed by volume as
well), with prices that vary according to quality level;
• elements that are by and large independent of traffic, through packaged offers and
services, which may include a set amount of traffic and/or QoS level.

Figure 30: New sources of income for telcos

Source: IDATE

In practice, then, these new business models would involve the following retail end services
(on the open Web and possibly over managed services as well):
• billing for the amount of traffic actually consumed (end of unlimited offers). Variations
are possible, such as differentiated billing by time of day or possibly two-tier systems;
• Quality-based billing that guarantees users a better connection to certain services (e.g.
lower latency for online gaming) or priority routing when the network is congested;
• Packaged solutions that include a service/content and the traffic that goes with it
(possibly with increased QoS) – that service/content being a main selling point for the
solution, so the traffic is paid for indirectly. This is already the case with managed
services, but we are also seeing it develop with OTT solutions.

www.idate-research.com © IDATE 2012 54

 Internet Practice

Innovation
Report

Net Neutrality
International benchmark
Australia, Canada, USA, Europe, Germany, Spain, France,
Ireland, Italy, Norway, Netherlands, Portugal, UK, Sweden
Part 2

M11112 – February 2012

Contributors

► Vincent BONNEAU, Head of the Internet Business Unit

Vincent Bonneau is IDATE’s chief expert on fixed and mobile Internet services and
software innovation. He is the head of the Internet Business Unit which tackles issues
surrounding the Web and emerging technologies, and especially services, markets,
usage and monetisation aspects. Vincent’s particular specialty is detecting and
analysing innovations.
Before coming to IDATE, Vincent worked in the software and telecom industries. He
was the “Internet Software and Technologies” attache to the French Trade Commission
(DREE) in San Francisco, in addition to having gained strategic operational and
marketing experience working for Noos, Wanadoo and France Telecom in Paris.
Mr. Bonneau is a graduate of the Ecole Polytechnical (1997) and the Ecole Nationale
Superieure des Telecommunications (2002), and holds a Masters Degree in New
Technologies Management from the HEC business school (2002).
He can be reached at: [email protected]

Samuel ROPERT, Senior consultant

Christoph PENNINGS, Senior consultant
Gilles FONTAINE, Deputy CEO

Copyright IDATE 2012, BP 4167, 34092 Montpellier Cedex 5, France

Tous droits reserves – Toute reproduction, All rights reserved. None of the contents of this
stockage ou diffusion, même partiel et par tous publication may be reproduced, stored in a
moyens, y compris électroniques, ne peut être retrieval system or transmitted in any form,
éffectué sans accord écrit préalable de l‘IDATE. including electronically, without the prior written
permission of IDATE.
ISBN 978-2-84822-277-6
ISSN 2109-6791
Net neutrality: International benchmark

This report includes:

• an executive summary in PDF
• and the main report

Contents
1 Australia ............................................................................................................................. 8
1.1 Wireline telcos ............................................................................................................. 8
1.1.1 Technical measures employed ...................................................................................... 8
1.1.2 Statements ..................................................................................................................... 9
1.1.3 Related elements (piracy) .............................................................................................. 9
1.1.4 Broadband network (NBN) ............................................................................................. 9
1.2 Mobile telcos.............................................................................................................. 10
1.2.1 Differentiation measures .............................................................................................. 10
1.2.2 Statements ................................................................................................................... 11
1.2.3 Legal cases .................................................................................................................. 11
1.3 Regulation ................................................................................................................. 12
1.4 Content and service providers................................................................................... 12

2 Canada ............................................................................................................................. 14
2.1 Wireline telcos ........................................................................................................... 14
2.1.1 Technical measures employed .................................................................................... 14
2.1.2 Rogers Communications .............................................................................................. 15
2.1.3 Statements ................................................................................................................... 16
2.2 Mobile telcos.............................................................................................................. 17
2.2.1 Differentiation measures .............................................................................................. 17
2.2.2 Statements ................................................................................................................... 18
2.3 Regulation ................................................................................................................. 18
2.3.1 Initiatives from the regulator (CRTC) ........................................................................... 18
2.3.2 Parliamentary initiatives ............................................................................................... 20
2.3.3 Legal cases .................................................................................................................. 20
2.4 Content and service providers................................................................................... 21

3 The United States ............................................................................................................ 24

3.1 Wireline telcos ........................................................................................................... 24
3.1.1 Technical measures employed .................................................................................... 24
3.1.2 Statements ................................................................................................................... 28
3.2 Mobile telcos.............................................................................................................. 29
3.2.1 Differentiation measures .............................................................................................. 29
3.2.2 Statements ................................................................................................................... 31
3.3 Regulation ................................................................................................................. 32
3.3.1 Initiatives from the regulator (FCC) .............................................................................. 32
3.3.2 Bills .............................................................................................................................. 34
3.3.3 700 MHz spectrum ....................................................................................................... 34
3.3.4 President Obama’s position ......................................................................................... 35
3.3.5 Legal cases .................................................................................................................. 35
3.4 Content and service providers................................................................................... 36

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Net neutrality: International benchmark

4 Europe .............................................................................................................................. 40
4.1 Regulation ................................................................................................................. 40
4.2 CEO Roundtable proposals ....................................................................................... 42
4.3 Other elements .......................................................................................................... 43

5 Germany ........................................................................................................................... 44
5.1 Wireline telcos ........................................................................................................... 44
5.1.1 Technical measures employed .................................................................................... 44
5.1.2 Statements ................................................................................................................... 44
5.2 Mobile telcos.............................................................................................................. 45
5.2.1 Differentiation measures .............................................................................................. 45
5.2.2 Statements ................................................................................................................... 46
5.3 Regulation ................................................................................................................. 47
5.3.1 Position of the federal ministry (BMWi) ........................................................................ 47
5.3.2 The regulator’s position (BNetzA) ................................................................................ 47
5.3.3 Other regulatory elements............................................................................................ 47
5.3.4 Legal cases .................................................................................................................. 48
5.4 Content and service providers................................................................................... 49

6 Spain................................................................................................................................. 51
6.1 Wireline telcos ........................................................................................................... 51
6.1.1 Technical measures employed .................................................................................... 51
6.1.2 Statements ................................................................................................................... 51
6.1.3 Billing system ............................................................................................................... 52
6.2 Mobile telcos.............................................................................................................. 53
6.2.1 Differentiation measures .............................................................................................. 53
6.2.2 Statements ................................................................................................................... 54
6.3 Regulation ................................................................................................................. 55
6.4 Content and service providers................................................................................... 55

7 France............................................................................................................................... 56
7.1 Wireline telcos ........................................................................................................... 56
7.1.1 Technical measures employed .................................................................................... 56
7.1.2 DNS hijacking .............................................................................................................. 57
7.1.3 Statements ................................................................................................................... 58
7.2 Mobile telcos.............................................................................................................. 60
7.2.1 Differentiation measures .............................................................................................. 60
7.2.2 Statements ................................................................................................................... 61
7.3 Regulation ................................................................................................................. 62
7.3.1 Regulator (ARCEP)...................................................................................................... 62
7.3.2 Draft legislation ............................................................................................................ 63
7.4 Content and service providers................................................................................... 64

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Net neutrality: International benchmark

8 Ireland............................................................................................................................... 67
8.1 Wireline telcos ........................................................................................................... 67
8.1.1 Technical measures employed .................................................................................... 67
8.1.2 Statements concerning Net neutrality .......................................................................... 68
8.1.3 Billing systems ............................................................................................................. 68
8.2 Mobile telcos.............................................................................................................. 70
8.3 Regulation ................................................................................................................. 71
8.4 Content and service providers................................................................................... 71

9 Italy ................................................................................................................................... 72
9.1 Wireline telcos ........................................................................................................... 72
9.1.1 Technical measures employed .................................................................................... 72
9.1.2 Statements concerning Net neutrality .......................................................................... 73
9.2 Mobile telcos.............................................................................................................. 73
9.2.1 Differentiation measures .............................................................................................. 73
9.2.2 Statements ................................................................................................................... 74
9.3 Regulation ................................................................................................................. 74
9.3.1 The regulator’s position ................................................................................................ 74
9.3.2 Political positions ......................................................................................................... 75
9.3.3 Legal cases .................................................................................................................. 76
9.4 Content and service providers................................................................................... 77

10 Norway ............................................................................................................................. 78
10.1 Wireline telcos ........................................................................................................... 78
10.1.1 Technical measures employed .................................................................................... 78
10.1.2 The case of NextGenTel .............................................................................................. 79
10.1.3 Statements ................................................................................................................... 79
10.2 Mobile telcos.............................................................................................................. 80
10.2.1 Differentiation measures .............................................................................................. 80
10.2.2 Statements ................................................................................................................... 80
10.3 Regulation ................................................................................................................. 81
10.4 Service and content providers ................................................................................... 82

11 The Netherlands .............................................................................................................. 83

11.1 Wireline telcos ........................................................................................................... 83
11.1.1 Technical measures employed .................................................................................... 83
11.1.2 The UPC case.............................................................................................................. 83
11.1.3 Billing systems ............................................................................................................. 83
11.2 Mobile operators ........................................................................................................ 84
11.3 Regulation ................................................................................................................. 85
11.4 Content and service providers................................................................................... 86

12 Portugal ............................................................................................................................ 87
12.1 Wireline telcos ........................................................................................................... 87
12.2 Mobile telcos.............................................................................................................. 88
12.3 Regulation ................................................................................................................. 88
12.4 Content and service providers................................................................................... 88

www.idate-research.com © IDATE 2012 5

Net neutrality: International benchmark

13 The United Kingdom ....................................................................................................... 89

13.1 Wireline telcos ........................................................................................................... 89
13.1.1 Technical measures employed .................................................................................... 89
13.1.2 Virgin Media’s partnership with Detica ......................................................................... 90
13.1.3 Statements ................................................................................................................... 91
13.2 Mobile telcos.............................................................................................................. 92
13.2.1 Differentiation measures .............................................................................................. 92
13.2.2 Traffic management by 02 UK ..................................................................................... 93
13.2.3 Statements ................................................................................................................... 94
13.3 Regulation ................................................................................................................. 95
13.3.1 The regulator’s position ................................................................................................ 95
13.3.2 The government’s position ........................................................................................... 97
13.3.3 Legal cases .................................................................................................................. 97
13.4 Content and service providers................................................................................... 98

14 Sweden ........................................................................................................................... 101

14.1 Wireline telcos ......................................................................................................... 101
14.1.1 Technical measures employed .................................................................................. 101
14.1.2 Statements ................................................................................................................. 101
14.2 Mobile telcos............................................................................................................ 101
14.2.1 Differentiation measures ............................................................................................ 102
14.2.2 Statements ................................................................................................................. 102
14.3 Regulation ............................................................................................................... 103
14.3.1 The regulator’s position .............................................................................................. 103
14.3.2 Legal cases ................................................................................................................ 103
14.4 Content and service providers................................................................................. 104

15 Net neutrality and piracy .............................................................................................. 105

15.1 European legislative framework .............................................................................. 105
th
15.1.1 European Court of Justice/14 April 2011 ................................................................. 105
15.1.2 Situation in the United States ..................................................................................... 106
15.2 Examples of filtering ................................................................................................ 106

www.idate-research.com © IDATE 2012 6

Net neutrality: International benchmark

Tables
Table 1: Recap of data plan prices as of February 2010 .............................................................. 54
Table 2: ISP Get: flat rate plans segmented by connection speed ............................................... 79
Table 3: Pricing for Sapo bundles, based on connection speed ................................................... 87
Table 4: Virgin Media’s traffic management policy........................................................................ 90
Table 5: Ofcom presentation on Net neutrality (2006) .................................................................. 95
Table 6: Allowable use of the word “unlimited” according to Ofcom ............................................. 97

***

Figures
Figure 1: Classes of service proposed for Australia’s NBN............................................................ 10
Figure 2: Rogers’ traffic management policy.................................................................................. 15
Figure 3: Bell Canada’s traffic management policy ........................................................................ 16
Figure 4: Port blocking, as applied by Madison River .................................................................... 26
Figure 5: Netflix performance in the United States according to customers’ ISP ........................... 27
Figure 6: Enablers identified by WG1 ............................................................................................ 42
Figure 7: ONO’s service bundles ................................................................................................... 52
Figure 8: Illustration of DNS hijacking by Orange .......................................................................... 57
Figure 9: Message displayed on 12/01/2011 on the screens of Orange customers trying to connect
to Megavideo ........................................................................................................................................ 58
Figure 10: Proposals contained in the Economic Affairs Committee report ..................................... 63
Figure 11: Special plan for gamers .................................................................................................. 67
Figure 12: Flat rate plans differentiated by bitrate and traffic caps................................................... 68
Figure 13: Eircom Next Generation Broadband service that guarantees no congestion .................. 69
Figure 14: TeleTu information on quality of service ......................................................................... 76
Figure 15: Alice’s current information on quality of service .............................................................. 77
Figure 16: Internet access plans priced by connection speed ......................................................... 83
Figure 17: Regulation in the Netherlands......................................................................................... 85
Figure 18: Degrees of traffic management....................................................................................... 96

www.idate-research.com © IDATE 2012 7

 Net neutrality

3 The United States

The Net neutrality debate has been going on for some time now in the United States and
gained momentum in 2005 (following AT&T’s statements) and especially in 2007 as a result
of the Comcast/BitTorrent affair. It is an extremely politicized debate and is pitting telecom,
media and Internet industry titans against one another. AT&T is clearly taking the lead in with
various initiatives, including putting an end to unlimited fixed and mobile plans.
Despite some forays into regulation – which have been quite meek and already being
opposed by several operators – debates are far from being over, and have been rekindled
over matters of financing and by the much publicized Level3-Comcast-Netflix case, along
with piracy initiatives.
Mobile systems are less subject to regulation, something which has even been deemed
acceptable by a few major Internet companies such as Google.

3.1 Wireline telcos

3.1.1 Technical measures employed

Virtually all ISPs in the States differentiate P2P to some degree. Comcast, which came
under fire from BitTorrent in 2007, has since changed its traffic management practices.
P2P software provider Vuze published a report in April 2008 which states that the majority of
American ISPs, including AT&T, Cablevision Systems, Charter Communications, Comcast,
Cox Communications, Qwest, Time Warner Cable and Verizon, all block or throttle P2P
48
traffic .
AT&T switched to usage-based billing in 2011, with capped data plans for DSL and U-Verse
products (cf. section on new business models for details), and so coming in line with the
country’s top cable companies. This means users are now billed for any overage: $10 per 50
Gb. AT&T has said that this concerns only 2% of its users, and had in fact put an end to its
capped plans in 2010 (which were sold in only a few states).
In July 2011, virtually all of the top American ISPs – including AT&T, Comcast and Verizon –
decided to collaborate with rights holders to take measures/impose penalties (typically traffic
49
management) against those guilty of repeat piracy violations , either via P2P or another
system (streaming…).

48
http://209.197.11.110/q2s3q4k4/cds/docs/Internet_future/First_Results_from_Vuze_Network_Monitoring_Tool.pdf
?dopvhost=cache2.vuze.com&doppl=0763b0a94cba3bd84cea3b8809fabedb4cea0259&dopsig=95dc5be15510a16
dcddd2337f80d36c7
49
http://www.copyrightinformation.org/sites/default/files/Momorandum%20of%20Understanding.pdf

www.idate-research.com © IDATE 2012 24

Net neutrality

Operator Content-based differentiation Differentiation towards content and

service providers
Comcast P2P traffic blocked or throttled in the
past (Comcast-BitTorrent affair)
AT&T Rebuffs accusations of throttling (or Numerous statements against Google
50
blocking) P2P traffic and Yahoo
Time Warner P2P traffic blocked or throttled Numerous statements against Net
51
Cable neutrality
Verizon P2P traffic blocked or throttled Numerous statements against Net
Communications neutrality
52
Cox P2P traffic throttled Blocked Craigslist (classified ads) in
54
Communications Traffic management test carried out in 2006 – but since lifted
Kansas and Arkansas and questions Blocked AP (wire service) videos in
53 55
raised over widespread application 2006, but since lifted
Madison River In 2005, MR blocked Vonage VoIP
56
traffic (port filtering)
Source: IDATE

57
A report out of Georgia Tech states that cable companies are the biggest practitioners of
traffic shaping.

Source: Georgia Tech

The Comcast/BitTorrent affair

In 2007, Comcast allied itself with Sandvine in a bid to better manage its network and
especially P2P traffic (particularly coming from BitTorrent). As a provider of DPI solutions,
Sandvine was hired to identify P2P traffic then interrupt the connection between a Comcast
subscriber and a non-Comcast user. Sandvine uses patented technology that blocks certain
traffic by interrupting the connection instantaneously. It involves inserting forged TCP
packets and rebooting the session.
American regulator, the Federal Communications Commission (FCC) rebuked Comcast for
the practice.

50
http://news.cnet.com/8301-10784_3-9929158-7.html
51
http://arstechnica.com/telecom/news/2009/04/time-warner-cable-to-fcc-shut-up-about-net-neutrality.ars
52
http://arstechnica.com/tech-policy/news/2009/01/cox-opens-up-throttle-for-p2p-non-time-sensitive-traffic.ars
53
http://www.cox.com/policy/congestionmanagement/
54
http://blogs.zdnet.com/Foremski/index.php?p=86
55
http://www.pbs.org/mediashift/2006/03/fighting-for-open-standardscox-newspapers-says-no-to-ap-video089.html
56
http://www.tmcnet.com/viewette.aspx?u=https%3a%2f%2f2.zoppoz.workers.dev%3a443%2fhttp%2fwww.tmcnet.com%2ftmcnet%2farticles%2f2005%2fvoip-
call-blocking-fcc-madison-river-vonage-buzz.htm&kw=
57
End to end Detection of ISP Traffic Shaping using Active and Passive Methods, Georgia Tech University

www.idate-research.com © IDATE 2012 25

 Net neutrality

3.2 Mobile telcos

3.2.1 Differentiation measures
AT&T was the first telco to open its 3G networks up to Voice over IP, with Verizon following
suit in February 2010. As for caps on traffic, AT&T, which is the sole distributor of the iPhone
in the US, has experienced congestion issues in New York and San Francisco, and the
company has announced changes to its rate plans.
American telcos’ mobile data plans stipulate a number of prohibited applications, and
combined with traffic shaping policies enforced under the blanket term of “fair use policy”.
They are also likely to intervene to block unlawful content and apply filters themselves.
CTIA (wireless association) members agreed to classify content into two categories: (1)
Generally Accessible Carrier Content that is available to consumers of all ages; and (2)
Restricted Carrier Content accessible only to consumers age 18 years and older or to a
consumer less than 18 years of age when specifically authorized by a parent or guardian.
And that “implementations of access controls shall be at the sole discretion of the individual
65
carriers” – although the association does not provide any technical guidelines for doing so.
The implementation of usage-based billing is becoming virtually standard for all new mobile
customers.
Content-based differentiation Differentiation Differentiation towards
towards content and users
service providers
Sprint Prohibits applications that affect Sprint offers a parental Sprint can throttle bandwidth
66
network performance , or that control option which or disconnect a customer if
generate continuous traffic (i.e. limits access to certain their traffic exceeds:
applications that connect to a sites • 5 Gb/month
server) (contractual)
• 300 Mb/month
Unlimited usage on the 4G
network
Sprint has since put a 2.5 Gb
cap on Virgin Mobile unlimited
offers (throttling applied
67
beyond that)
(contractual)
T-Mobile P2P and file sharing prohibited In December 2007, T- Throttling or disconnection if
Prohibits broadcast video on Mobile blocked access usage exceeds 10 Gb a
68
Internet, bots , applications that to Twitter on the basis month
69
maintain a live Internet of its fair use policy End of unlimited in 2011
connection and any activity that (contractual)
degrades the service for other
users
(contractual)
AT&T • Prohibited VoIP up to October Parental control option Existence of usage-based
2009: in July 2009, Apple which limits access to billing
refused to offer the Google certain sites Company heads announced a
Voice application on its App Sling: in January 2009, change to rate plans (iPhone
Store – AT&T being the sole AT&T blocked the use traffic accounts for 40% of all
distributor of the iPhone in the of the SlingPlayer network traffic), with the
70
United States). Changes Mobile application on possibility of usage-based

65
http://www.ctia.org/business_resources/wic/index.cfm/AID/10394
66
http://shop.sprint.com/en/legal/legal_terms_privacy_popup.shtml
67
http://virginmobileusa.marketwire.com/easyir/ceom.do?easyirid=F4ABAEBA3A27ECD9&pagesec=vm_price
68
A computer bot is an automated or semi-automated software agent that interacts with servers. They are used
chiefly to execute repetitive tasks quickly.
69
http://blogs.zdnet.com/ip-telephony/?p=2877
70
http://techcrunch.com/2009/07/27/apple-is-growing-rotten-to-the-core-and-its-likely-atts-fault/

www.idate-research.com © IDATE 2012 29

 Net neutrality

3.3 Regulation
The United States is home to the most heated Net neutrality debates. The trigger for these
discussions appears to have been the 2002 decision from the FCC (Federal
Communications Commission) to classify broadband access via cable as an information
91
rather than a telecommunications services . For access delivered over xDSL, this
92
reclassification occurred in 2005 . As a result, network operators were freed from the
obligation of opening their networks up to rival ISPs (i.e. unbundling).
In November 2002, a group of Internet companies created the Coalition of Broadband Users
and Innovators (CBUI) whose members include bigwigs such as Amazon, Yahoo!, Disney
and eBay. In a letter sent to then FCC Chairman, Michael Powell, the CBUI requested
assurances that users would be able to access lawful services and content without
impediment.
Discussions reached their first peak in 2005:
• in March 2005, the FCC fined ISP Madison River for blocking Vonage;
• in August 2005 the FCC published the four main rules that should guide ISPs;
• in November 2005, in an interview with Business Week, then CEO of SBC, Ed
Whitacre, stated very clearly that he expects Internet companies to help cover
infrastructure costs: “They use my lines for free -- and that's bull. For a Google or a
Yahoo! or a Vonage or anybody to expect to use these pipes for free is nuts!”93

3.3.1 Initiatives from the regulator (FCC)

During talks over the FCC’s views on broadband, in 2004 Chairman Michael Powell stated
the four rules that the industry must adhere to avoid new regulation. He then listed four
94
Internet freedoms that must be extended to users:
• freedom to access content;
• freedom to use applications;
• freedom to attach personal devices;
• freedom to obtain service plan information.

Three of the four principles that were ultimately adopted by the FCC in 2005 closely
95
resemble Powell’s ideas, while the fourth one goes one step further :
• consumers are entitled to access the lawful Internet content of their choice;
• consumers are entitled to run applications and use services of their choice, subject to
the needs of law enforcement;
• consumers are entitled to connect their choice of legal devices that do not harm the
network;
• consumers are entitled to competition among network providers, application and service
providers, and content providers.

In September 2009, the current Chairman of the FCC, Julius Genachowski, suggested
adding two more rules to this list:
• preventing Internet access providers from discriminating against particular Internet
content or applications, while allowing for reasonable network management;
• ensuring that Internet access providers are transparent about the network management
practices they implement.

91
http://www.fcc.gov/Bureaus/Cable/News_Releases/2002/nrcb0201.html
92
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-260433A1.pdf
93
http://www.businessweek.com/magazine/content/05_45/b3958089.htm
94
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-243556A1.pdf
95
http://fjallfoss.fcc.gov/edocs_public/attachmatch/FCC-05-151A1.pdf

www.idate-research.com © IDATE 2012 32

 Research Catalogue

Reports & Services

Networks & Telecom TV & Internet
• Networks & Equipment • Internet Services
• Telecom Strategies • TV & Video
• Mobile • Digital Content
• Broadband / FTTH • Digital Home
• Satellite • Video Games

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2012 Research Catalogue
IDATE presents its Market Reports Programme for 2012 which constitutes a natural extension of the work
performed by our teams of analysts, as well as our ongoing investments in information and monitoring systems
for player strategies and markets.
More than just a catalogue of publications, this constitutes a concrete manifestation of our drive to create a
unique tool geared towards understanding and monitoring the Telecom, Internet and Media sectors.

3 pivotal collections for an easy navigation between the different reports and services:
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Innovation reports
Qualitative approach of prospective issues

Ref Market intelligence reports Them es Publication Deliverables Price

Internet Series in Euro

Market & Data reports - full report, database & slideshow

M11118 Mobile Video Mobile June 11 3 3 500
M11101 World Internet Uses & Markets Internet Services Jan. 12/July 12 6 3 500
M11115 M2M Internet Technologies Nov. 11 3 3 500
M11117 Apps & Mobile Internet - Battle of platforms: both native and web apps Internet Services Feb. 12 3 3 500
M12122 LBS Internet Technologies May 12 3 3 500
M12121 Future communication services - Scenarios 2020 Prospective Nov. 12 3 4 500
M12122 OTT video distribution & CDN markets Internet Services Sept. 12 3 3 500

Innovation reports - full report & slideshow

M10211 Social TV TV & Digital Content May 10 2 2 500
M11111 Mobile VoIP Mobile May 11 2 3 500
M11112 Net Neutrality - Business models & International Benchmark Regulation Nov. 11 2 3 500
M11114 Open Data Internet Services May 12 2 3 500
M11410 Cloud - Focus Datacenter Netw orks April 12 2 3 500
M12113 Telco CDN Netw orks May 12 2 3 500
M12119 NFC - Mobile Payments Mobile June 12 2 3 500
M12120 Live OTT Internet Services Sep. 12 2 3 500
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Telecom Series in Euro

Market & Data reports - full report, database & slideshow

M12310 Ultrafast-Broadband per Satellite Satellite June11/May '12 3 3 500
M11301 World Telecom Services Markets Telecom Strategies Jan. '12/Dec.'12 3 3 500
M11318 Femtocells Mobile July '11/July '12 3 3 500
M11411 SME Equipment - B2B Survey in France: Telecom, IT, Internet Survey Aug. 11 3 8 500
M11314 Radio Spectrum Mobile Sep. 11 3 3 500
M11312 Trends in Telco Capex - down, but not out Telecom Strategies Nov. 11 3 3 500
M11316 Ultrafast-Broadband - B2C Survey in France, Japan, Sweden, UK, USA Survey Nov. 11 3 8 500
M12315 Satellite M2M Satellite March 12 3 3 500
M12412 Smartphones - B2B Survey in Europe Survey May 12 3 8 500
M12306 Mobile Devices Mobile June 12 3 3 500
M12311 Future Telecom - Scenarios 2020 Prospective Oct. 12 3 4 500

Innovation reports - full report & slideshow

M10304 Services over FTTH/B Broadband Jan. 11 2 3 500
M10312 Satellite Markets - New Growth Engines Satellite July 11 2 3 500
M11319 Mobile Backhaul Strategies Netw orks Aug. 11 2 3 500
M11317 VDSL2 Vectoring Broadband Dec. 11 2 3 500
M11307 LTE Telcos Strategies Mobile Dec. 11 2 3 500
M12304 Next Gen Access Networks - cost models for the digital agenda 2020 Netw orks May 12 2 3 500
M11413 Smart Cities Netw orks May 12 2 3 500
M12320 FTTx Market Revenues & Strategies Broadband June 12 2 3 500
M12312 Restoring Telco Margins Telecom Strategies June 12 2 3 500
M12308 Next Gen Offers and Bundling - fixed & mobile Telecom Strategies June 12 2 3 500
M12319 Vertical Markets Telecom Strategies July 12 2 3 500
M12313 Pricing Strategies Telecom Strategies Dec. 12 2 3 500

Ref Market intelligence reports Them es Publication Deliverables Price

Media Series in Euro

Market & Data reports - full report, database & slideshow

M12212 Future Television - Scenarios 2020 Prospective July 11 3 4 500
M11200 World Television Markets TV observatory Jan. 12/July 12 6 3 500
M11201 World Video Game Markets Video Game observatory Jan. 12/July 12 6 3 500
M10118 Online Video TV & Digital Content Oct. 11 3 3 500
M11216 Digital Home & Connected Devices Consumer Electronics Oct. 11 3 3 500
M11116 eBooks Digital Content Oct. 11 3 3 500
M12212 Next Gen TV - Scenarios 2020 Prospective April 12 3 4 500
M11218 Cloud Gaming Digital Entertainment April 12 3 3 500
M12214 DTT - Switch-off stakes & emerging markets Netw orks May 12 3 3 500
M12216 World Connected Devices - Consumer Electronics CE Observatory July/Dec. 12 6 3 500
M12206 App Store Games Digital Entertainment Nov. 12 3 3 500

Innovation reports - full report & slideshow

M10214 TV Groups' Quadruple-Screen Strategies TV & Digital Content Nov. 10 2 3 500
M11211 Satellite TV in Europe - Will the future of satellite be guided by 3D? Netw orks April 11 2 3 500
M11215 Hybrid TV Prospects - What impact on Connected TV? Netw orks Dec. 11 2 3 500
M11214 Telcos TV Strategies - From a strategy of differentiation to one of innovationTelecom Strategies Dec. 11 2 3 500
M11213 Serious Games Digital Entertainment Dec. 11 2 3 500
M12210 Connected TV - Services & Interfaces, Strategies, Players, Forecasts TV & Digital Content March 12 2 3 500
M12215 Content Production Netw orks Aug. 12 2 3 500
M12217 Cable & IPTV face to cord-cutting Netw orks Nov. 12 2 3 500

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◊ Mobile Backhaul
Trends and Telcos'
Strategies
4G networks: growing backhauling needs and use
of fibre links

Innovation
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This report spotlights

telcos’ strategies regarding Key questions
backhauling and fixed
mobile convergence, how • How high are the Capex and Opex related to the mobile
backhaul infrastructure? What are the technologies used
the transport network is and which one can be a cost-effective alternative?
evolving within the
• What are the stakes for operators? How can they improve
migration to all-IP and
their mobile backhaul infrastructure ?
which choices telcos take
to meet the increasing • What are the upcoming trends for backhhaul upgrade? How are
the major MNOs deploying their backhaul strategy?
demand of bandwidth. The
study analyses the • Is optical fibre the unique answer to rising mobile data traffic
due to LTE deployment?
evolution of backhaul
networks, its investment
control and the necessary > This report ships with a complementary slideshow.

implementation with the

legacy infrastructure.

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Mobile Backhaul - Trends and Telcos' Strategies
4G networks: growing backhauling needs and use of fibre links

Contents
1. Executive Summary 4.4. Microwave 60 pages
1.1. New mobile technologies improve • Microwave characteristics
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3. Backhaul in the eyes of the telcos 4.6. Future options for mobile backhauling
3.1. Dramatic growth of data traffic
3.1.1. Global data traffic will quadruple by 2014 5. Case studies
3.1.2. Current data growth driven by mobile • AT&T
usage • BT Wholesale Project Manager
3.2. Telcos still cautious with network spends • NTT DOCOMO Tiana RAMAHANDRY
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backhaul are not sustainable • T-Mobile USA
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backhaul network 6.1. Key backhaul challenges faced by MNOs
• LTE is driving need to upgrade backhaul
Other related reports:
• Backhaul portion of network weighs
heavily in mobile network operator costs • Migration to packet-based Ethernet mobile
backhaul no longer challenged
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4. Backhaul, the state of the art • The real issue today is how to manage
4.1. Definition of backhaul migration cost-efficiently
• Re-defining backhaul frontier • Changes of the Radio Access architecture • Radio Spectrum
4.2. Backhaul network elements and RAN impact on the backhaul
requirements/constraints 6.2. Analysis of strategy options for MNOs
• Mobile Networks
4.2.1. Capacity, latency and jitter • Microwave, DSL or Fibre?
• Investment in mobile backhaul may be Saturation
4.2.2. Quality of Service (QoS)
4.2.3. Clock synchronisation linked to FTTH deployment
4.2.4. Management with Operations, • Smooth migration or straight upgrade? • The Future of Telecoms
• Administration and Maintenance (OAM) • Purchase capacity, or deploy own
4.2.5. Supporting legacy and IP over new infrastructure?
backhaul network
• Circuit services emulated with pseudowires For more information visit
• Pseudowire technology provides a www.idate-research.com
migration path
4.3. Various technologies can support backhaul
at Physical Layer…
Backhaul technologies breakdown today Backhaul technologies breakdown in 2016

100% 100%

80% 80%

60% 60%

40% 40%

20% 20%

0% 0%
North America EMEA APAC Nort h America EMEA APAC

microwave E1/T1 f iber Others microwave E1/ T1 f iber Ot her s

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 Telecom

Innovation
Report

Mobile Backhaul
Trends and telcos' strategies
4G networks: growing backhauling needs
and use of fibre links

M11319 – July 2011

Contributors

ÎTiana RAMAHANDRY, Head of Project, Senior Consultant

Tiana Ramahandry, a Senior Consultant, joined IDATE in 2005. Tiana works primarily on infrastructure-
related projects on behalf of equipment providers and carriers. Tiana provides her expertise on issues
related to fixed and mobile broadband access technologies. Ms. Ramahandry holds a post-graduate
professional degree in Cable Networks, from the Université de Lille, and a Master in Business
Administration from the IAE de Bordeaux IV.
[email protected]

ÎFrédéric PUJOL, Head of Radio Technologies & Spectrum

Copyright IDATE 2011, BP 4167, 34092 Montpellier Cedex 5, France

Tous droits réservés – Toute reproduction, stockage ou All rights reserved. None of the contents of this publication
diffusion, même partiel et par tous moyens, y compris may be reproduced, stored in a retrieval system or
électroniques, ne peut être effectué sans accord écrit transmitted in any form, including electronically, without the
préalable de l'IDATE. prior written permission of IDATE.
ISBN 978-2-84822-261-5
ISSN 2109-6791
Mobile Backhaul – Trends and telcos' strategies

Contents

1. Executive Summary .......................................................................................................... 6

1.1. New mobile technologies improve network capacity and data rates........................ 7
1.2. Traditional backhaul model is unsustainable............................................................ 7
1.3. Beyond capacity, cost is the determinant criterion for backhaul migration............... 8
1.4. Combination of FTTx and LTE backhaul investments could ease backhaul upgrade .. 10

2. Methodology.................................................................................................................... 12

3. Backhaul in the eyes of the telcos ................................................................................ 13

3.1. Dramatic growth of data traffic................................................................................ 13
3.1.1. Global data traffic will quadruple by 2014............................................................................... 13
3.1.2. Current data growth driven by mobile usage .......................................................................... 13
3.2. Telcos still cautious with network spends ............................................................... 14
3.2.1. No additional capex foreseen by telcos .................................................................................. 14
3.2.2. Operator investments in legacy mobile backhaul are not sustainable.................................... 15

4. Backhaul, the state of the art......................................................................................... 18

4.1. Definition of backhaul.............................................................................................. 18
4.2. Backhaul network elements and RAN requirements / constraints ......................... 18
4.2.1. Capacity, latency and jitter...................................................................................................... 18
4.2.2. Quality of Service (QoS) ......................................................................................................... 19
4.2.3. Clock synchronisation............................................................................................................. 19
4.2.4. Management with Operations, Administration and Maintenance (OAM)................................ 20
4.2.5. Supporting legacy and IP over new backhaul network ........................................................... 20
4.3. Various technologies can support backhaul at Physical Layer…........................... 23
4.4. Microwave............................................................................................................... 24
4.4.1. Copper .................................................................................................................................... 26
4.4.2. Fibre........................................................................................................................................ 29
4.4.3. Others ..................................................................................................................................... 31
4.4.4. Summary ................................................................................................................................ 32
4.5. Transport network options for backhaul.................................................................. 34
4.6. Future options for mobile backhauling.................................................................... 35

5. Case studies .................................................................................................................... 38

6. Conclusions..................................................................................................................... 55
6.1. Key backhaul challenges faced by MNOs .............................................................. 55
6.2. Analysis of strategy options for MNOs.................................................................... 58

www.idate-research.com © IDATE 2011 3

Mobile Backhaul – Trends and telcos' strategies

Figures
Figure 1: Gap between revenues and traffic growth ........................................................................................... 7
Figure 2: Circuit emulation with pseudowire........................................................................................................ 8
Figure 3: Operator strategies in migrating backhaul networks ............................................................................ 9
Figure 4: FTTH network adapted for LTE backhaul .......................................................................................... 10
Figure 5: Backhaul technologies breakdown today........................................................................................... 11
Figure 6: Backhaul technologies breakdown in 2016........................................................................................ 11
Figure 7: Global IP traffic trends with breakdown applications, 2009-2014 ...................................................... 13
Figure 8: Annual mobile traffic 2010-2020, EB.................................................................................................. 14
Figure 9: Gap between revenues and traffic growth ......................................................................................... 14
Figure 10: MNO capex in value and growth rates, 2005-2010............................................................................ 15
Figure 11: Protocol stacks in mobile backhaul .................................................................................................... 16
Figure 12: Typical network costs breakdown ...................................................................................................... 17
Figure 13: Illustration of mobile backhaul............................................................................................................ 18
Figure 14: Circuit emulation with pseudowires.................................................................................................... 21
Figure 15: TDM emulation technologies.............................................................................................................. 21
Figure 16: Options to transport legacy over packet networks, and inversely ...................................................... 21
Figure 17: Cell sites and Aggregate gateways.................................................................................................... 22
Figure 18: Available backhaul support technologies ........................................................................................... 23
Figure 19: TDM and Ethernet evolution over microwave .................................................................................... 24
Figure 20: Different architectures: Point-to-point and Point-to-multipoint............................................................ 24
Figure 21: Adaptive Coding and Modulation ....................................................................................................... 25
Figure 22: Relative weight of microwave among backhaul support technologies in 2010 .................................. 26
Figure 23: Several options to use xDSL as mobile backhaul .............................................................................. 26
Figure 24: Relative weight of copper among backhaul support technologies in 2010 ........................................ 27
Figure 25: Evolution of VDSL2 rate-reach curves for downstream and upstream traffic..................................... 28
Figure 26: FTTH network adapted for LTE backhaul .......................................................................................... 29
Figure 27: GPON as mobile backhaul................................................................................................................. 30
Figure 28: Relative weight of fibre among backhaul support technologies in 2010 ............................................ 31
Figure 29: Theoretical backhaul capacity and radio capacity requirements........................................................ 32
Figure 30: Breakdown of mobile backhauling choice by Telecom Italia.............................................................. 33
Figure 31: Comparison of cost per bandwidth requirement between fibre and microwave................................. 33
Figure 32: Backhaul technologies breakdown today........................................................................................... 33
Figure 33: Backhaul technologies breakdown in 2016........................................................................................ 33
Figure 34: Mobile transport options..................................................................................................................... 35
Figure 35: Gradual migration with bonded E1/T1................................................................................................ 36
Figure 36: Gradual migration with data offload on Ethernet network .................................................................. 36
Figure 37: Gradual migration with separate legacy and Ethernet backhaul networks......................................... 37
Figure 38: Gradual migration with Unique Ethernet backhaul using Pseudowire for legacy services................. 37
Figure 39: Full Ethernet backhaul ....................................................................................................................... 37
Figure 40: Fibre-based broadband roll out .......................................................................................................... 42
Figure 41: Mobile network coverage, by technology ........................................................................................... 43
Figure 42: Planned deployment of FTTH ............................................................................................................ 45
Figure 43: Cableco Hybrid Fiber-Coax networks used for mobile backhaul........................................................ 53
Figure 44: Decision-making criteria..................................................................................................................... 56
Figure 45: Possible stages for backhaul migration.............................................................................................. 57
Figure 46: Development of radio access architecture and its impact on backhaul.............................................. 58
Figure 47: Operator strategies in migrating backhaul networks .......................................................................... 60

www.idate-research.com © IDATE 2011 4

Mobile Backhaul – Trends and telcos' strategies

Tables
Table 1: Major trends in terms of backhaul ........................................................................................................ 6
Table 2: Microwave vs Fibre .............................................................................................................................. 9
Table 3: Preferred operator choices in backhaul physical media....................................................................... 9
Table 4: MNO capex growth rate between 2009 and 2010.............................................................................. 15
Table 5: Mobile capacity requirements ............................................................................................................ 16
Table 6: Specific backhaul requirements, by mobile generation...................................................................... 19
Table 7: Strengths and weaknesses of major layer 1 backhaul technologies.................................................. 32
Table 8: AT&T roadmap................................................................................................................................... 39
Table 9: T-Mobile backhaul agreements in 2008 ............................................................................................. 49
Table 10: LTE subscriber forecasts ................................................................................................................... 55
Table 11: Preferred operator choices in backhaul physical media..................................................................... 59
Table 12: Actual number of fibre-fed cell sites in 2010 (IDATE estimates)........................................................ 59

www.idate-research.com © IDATE 2011 5

 Mobile Backhaul – Trends and telcos' strategies

2. Methodology
The overall approach adopted by the IDATE team of analysts and consultants combines a
variety of methods:
• Field research and validation of field research data;
• Conventional tools of industry and market analysis, principally segmentation, competition
analysis, strategic strengths, modelling and assessment and forecasts;
• Expert analysis from specialists in the field and from their professional networks.

More specifically, IDATE teams make use of the following tools:

1/ A multidisciplinary team of full-time sector-specialist consultants

IDATE analyses are performed primarily by our in-house consultants, and very occasionally
by freelance market analysts. This approach allows us to capitalise on our pool of expertise
through teamwork, sharing knowledge, ideas, contacts, viewpoints and key data. Each report
is drafted by a team of specialists under the direction of senior consultants who are
recognised experts in their field.

2/ Primary and secondary research

IDATE reports and databases are compiled from primary data obtained from first-hand
interviews with sector decision makers, and on secondary data assembled from public
sources and external databases.

3/ An integrated information centre sustained by a number of tools and proprietary

databases
Over the course of 30 years, IDATE has developed proprietary work methods, data
structures and databases that trace the history of major developments in the sectors under
study.
• Companies: the IDATE in-house data service tracks the latest news and events to come
out of the leading telecom, Internet and media industry companies around the globe.
Innovative firms and startups are monitored by the market experts in the different
"Practices".
• Markets: the IDATE databases are developed using rigorous methods to process major
economic indicators (such as GDP, investment, exchange rates and demographics) and
relate them to influential sectoral and national factors (such as CAPEX and national
market dynamics).
• Technologies: the organisation of IDATE by Practice provides us with an efficient means
of tracking innovation. Our engineers ensure an in-depth understanding of the changing
shape of products and services and of the latest innovations in the marketplace.

4/ Contents of the published reports

Each IDATE market report details the structures and issues at play in the market being
examined, the driving forces and the players involved. The process of drafting of a market
report includes the analysis of the information available in the in-house databases, and
review of analyses performed in the recent past. Based on a preliminary segmentation and
as part of an validated interview guide, analysts conduct interviews that enable them to
validate working hypotheses.

www.idate-research.com © IDATE 2011 12

 Market & Data

The World Telecom

Services Market
Markets & Data – 22nd edition – M11301_2 – January 2012
This report provides a • The recovery is underway, with growth worldwide reaching
snapshot of the current slightly more than 3% in 2011: is the divide between
state of the telecom advanced and emerging economies widening?
services market, along with
details on global trends as • Is the tremendous growth of mobile data services enough to
they are playing out both drive a shift in revenue structure?
regionally and nationally.
• How much do fixed broadband and ultra-fast broadband
It explores the growth
Internet services as well as mobile data services need to
dynamics in the different
grow to sustain lasting market growth?
market segments, in terms
of user numbers and sales
• Is the increasing power of certain carriers repainting the
up to 2016, along with
global telecom landscape?
recent developments
among telcos, including
mergers and acquisitions >Database (Excel)
and global rankings. Markets & Forecasts up to 2016 by country and by segment:
• Fixed telephony
• Mobile services
• Fixed Internet services and data
Report (pdf) • Internet Deliverables:
- Internet subscribers • Report (pdf)
Contents - Dial-up subscribers • Database (Excel)
- Broadband subscribers (DSL, • Slideshow (pdf)
1. Executive Summary cable modem, FTTx subscribers,
1.1. The recovery is confirmed but Publication date:
other broadband subscribers, VoIP
January 2012
precarious subscribers)
1.2. Market trends 1-5 user licence:
1.3. Trends by region Revenue indicators EUR 3 500
1.4. Mid-term forecasts • Fixed telephony
• Mobile services Sales contact:
2. Methodology - Mobile voice services
Isabel Jiménez
2.1. Database [email protected]
- Mobile data services
2.2. Definition of indicators and Tel. : +33 (0)467 144 404
• Internet and data
sources - Corporate data services
3. Mergers and acquisitions - Internet services Project Manager
• Total telecom services Carole MANERO
4. Rankings [email protected]
Regions & countries Tel: +33 (0)467 144 428
4.1. Rankings by revenue
4.2. Rankings by market capitalization North America
4.1. Rankings by subscriber numbers • Canada • USA
Other available reports:
5. Europe Latin America • World Internet Usage &
• Brazil • Mexico
6. North America Markets
7. Asia-Pacific Asia-Pacific • Apps & the mobile
• China • India Internet
8. Latin America
• Japan • South Korea • LTE - Strategies for
9. Africa and the Middle East MNOs
Africa-Middle East • Trends in telco capex
Database (Excel) European Union
Indicators for each zone and • Austria • Belgium Upcoming reports:
• Bulgaria • Czech Republic • Future Telecom
country analysed:
• Denmark • Estonia • Changes in offers &
• Historical data 2008-2010
• Finland • France bundles fixed/mobile
• Estimates for 2011
• Pricing strategies
• Forecasts 2012-2016 • Germany • Greece
• Vertical markets
• Hungary • Ireland
• Telcos’ strategies
Key indicators • Italy • Latvia
• Fixed telephony • Lithuania • Luxembourg Annual services:
- PSTN/ISDN lines • Netherlands • Poland • LTE Watch Service
- Annual change (%) • Portugal • Romania • FTTx Watch Service
- Density (% of population) • Slovenia • Slovakia - Half-yearly updated
• Mobile services • Spain • Sweden database
- Mobile subscribers • UK - Monthly Insights
- 2G subscribers - 3G subscribers - Analyst access
Rest of Europe
- Prepaid subscribers- Postpaid • Norway • Russia
subscribers More information at
• Switzerland • Turkey
www.idate.org

IDATE - BP 4167 – 34092 Montpellier Cedex 5

Tel : +33 (0) 467 144 444 – Fax : +33 (0) 467 144 400 - [email protected] – www.idate.org
Database – Markets & Forecasts 2008-2016 (Excel) - Excerpts

Europe
Telecom services market in value
Millions, unless otherwise mentioned
2008 2009 2010 2011F 2012F 2013F 2014F 2015F 2016F
USD
Fixed telephony 117 498 109 214 101 738 94 022 88 868 85 473 83 134 81 649 80 801
Mobile services 210 611 208 440 211 529 213 528 215 454 219 899 224 741 229 653 234 466
Mobile voice services 166 759 159 222 156 155 151 112 146 038 144 017 143 356 143 628 144 782
Mobile data services 43 852 49 218 55 375 62 416 69 416 75 882 81 385 86 024 89 683
Fixed Internet & data 82 204 85 665 89 250 91 718 94 870 98 966 103 338 107 735 112 035
Corporate data services 31 406 31 287 30 917 30 941 31 231 31 848 32 736 33 848 35 140
Internet services 50 798 54 377 58 333 60 777 63 639 67 117 70 601 73 887 76 895
Total telecom services 410 312 403 319 402 517 399 268 399 192 404 338 411 213 419 037 427 301
EUR
Fixed telephony 88 716 82 462 76 817 70 991 67 099 64 536 62 770 61 649 61 008
Mobile services 159 021 157 382 159 714 161 223 162 678 166 033 169 690 173 398 177 032
Mobile voice services 125 910 120 219 117 904 114 097 110 266 108 739 108 240 108 446 109 317
Mobile data services 33 110 37 162 41 810 47 127 52 412 57 294 61 450 64 952 67 715
Fixed Internet & data 62 067 64 681 67 388 69 251 71 631 74 724 78 025 81 345 84 591
Corporate data services 23 713 23 623 23 343 23 362 23 581 24 047 24 717 25 557 26 532
Internet services 38 355 41 057 44 044 45 890 48 050 50 677 53 307 55 788 58 059
Total telecom services 309 804 304 524 303 918 301 465 301 408 305 293 310 484 316 392 322 632
Source : IDATE, in "World Telecom Service Market", 2012 Edition
F: Forescast

Brazil
Telecom services market in value
Million currency units, unless otherwise mentioned
2008 2009 2010 2011F 2012F 2013F 2014F 2015F 2016F
National currency (BRL)
Fixed telephony 43 814 42 718 40 112 38 491 37 249 36 411 35 783 35 171 34 573
Mobile services 44 712 49 859 52 800 57 030 60 738 62 637 64 477 65 870 67 086
Mobile voice services 40 598 43 713 44 775 47 049 48 894 49 483 50 163 50 720 51 321
Mobile data services 4 113 6 146 8 026 9 980 11 844 13 154 14 314 15 150 15 765
Fixed Internet & data 13 147 14 372 15 934 17 450 19 241 20 920 22 616 24 260 25 901
Corporate data services 3 721 3 832 4 116 4 404 4 690 4 972 5 245 5 507 5 755
Internet services 9 426 10 540 11 819 13 047 14 550 15 949 17 371 18 753 20 146
Total telecom services 101 672 106 949 108 847 112 972 117 227 119 968 122 876 125 301 127 560
USD
Fixed telephony 24 905 24 282 22 801 21 880 21 173 20 697 20 340 19 992 19 652
Mobile services 25 415 28 341 30 013 32 417 34 525 35 605 36 651 37 443 38 134
Mobile voice services 23 077 24 848 25 451 26 744 27 793 28 128 28 514 28 831 29 172
Mobile data services 2 338 3 493 4 562 5 673 6 732 7 477 8 136 8 612 8 961
Fixed Internet & data 7 473 8 170 9 058 9 919 10 937 11 892 12 855 13 790 14 723
Corporate data services 2 115 2 178 2 340 2 503 2 666 2 826 2 981 3 130 3 271
Internet services 5 358 5 991 6 718 7 416 8 271 9 066 9 874 10 660 11 452
Total telecom services 57 794 60 793 61 872 64 216 66 636 68 194 69 846 71 225 72 509
EUR
Fixed telephony 18 804 18 334 17 216 16 520 15 987 15 627 15 358 15 095 14 838
Mobile services 19 190 21 399 22 661 24 477 26 068 26 883 27 673 28 271 28 793
Mobile voice services 17 424 18 761 19 217 20 193 20 985 21 238 21 530 21 769 22 026
Mobile data services 1 765 2 638 3 445 4 283 5 083 5 645 6 143 6 502 6 766
Fixed Internet & data 5 643 6 168 6 839 7 490 8 258 8 979 9 706 10 412 11 117
Corporate data services 1 597 1 645 1 766 1 890 2 013 2 134 2 251 2 364 2 470
Internet services 4 046 4 524 5 072 5 599 6 245 6 845 7 455 8 048 8 647
Total telecom services 43 637 45 902 46 716 48 486 50 313 51 489 52 737 53 778 54 748
Source : IDATE, in "World Telecom Service Market", 2012 Edition
F: Forecast

IDATE - BP 4167 – 34092 Montpellier Cedex 5

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 Markets & Data

World Telecom
Services Market
Markets & Data
nd
22 edition / M11301 – March 2012

This report includes:

- a report (PDF)
- a database (Excel)
- a presentation (PowerPoint)
IDATE becomes the DigiWorld Institute

Founded in 1977, IDATE has gained a reputation as a leader in tracking telecom, Internet and
media markets, thanks to the skills of its teams of specialized analysts. Now, with the support
of close to 40 member companies – who include many of the digital economy’s most influential
players – the newly rebranded DigiWorld Institute has entered into a new stage of its
development, structured around three main areas of activity:
• A European forum open on the world: The DigiWorld Institute will take existing IDATE initiatives,
such as DigiWorld Summit, and the monthly clubs in Paris, London and Brussels, to the next level.
• An independent observatory: The DigiWorld Institute will keep a close and continual watch on
digital world industries, collect relevant data and provide benchmark analyses on market
developments and innovations in the telecom, Internet and media sectors – through its DigiWorld
Yearbook and the DigiWorld Economic Journal, along with its comprehensive collection of market
reports and market watch services that are published and made available online throughout the year.
• Time-tested analysis and consultancy solutions: The DigiWorld Institute established its credibility
and independence by building multi-disciplinary teams of economists and engineers who regularly
perform bespoke research and analysis on behalf of top-flight industry players and public authorities.
We have also built a solid reputation in managing think tanks on the outstanding developments that
are shaping the industry’s future, drawing on the skills and knowledge of our members, our teams
and outside experts.

Contributor

► Carole MANERO, Project Manager, Director of Research

An IDATE project manager and director of research since October 2000, Carole
monitors mobile markets worldwide and developments in mobile services and
operators (networks, MVNO). She is also an expert in spectrum management issues.
Before joining IDATE, Carole worked for the COGEMA’s North American corporate
strategy department where she was involved in several acquisitions in the nuclear
sector.
Carole is a graduate of the École des Hautes Études Commerciales du Nord
business school (class of 1991), with a major in Marketing, and holds a Masters in
Human Resources and Corporate Management from the École Supérieure de
Commerce in Paris (1992).
[email protected]

Copyright IDATE 2012, BP 4167, 34092 Montpellier Cedex 5, France

Tous droits réservés – Toute reproduction, All rights reserved. None of the contents of this
stockage ou diffusion, même partiel et par tous publication may be reproduced, stored in a
moyens, y compris électroniques, ne peut être retrieval system or transmitted in any form,
effectué sans accord écrit préalable de l'IDATE. including electronically, without the prior written
permission of IDATE.
ISBN 978-2-84822-268-4
ISSN 2109-6783
World Telecom Services Market

Contents
1. Executive Summary .......................................................................................................... 6
1.1 Trends by market......................................................................................................... 7
1.2 Trends by region........................................................................................................ 10
1.3 Medium-term forecasts .............................................................................................. 14

2. Methodology .................................................................................................................... 17
2.1 Database ................................................................................................................... 17
2.2 Definition of indicators and sources .......................................................................... 18

3. Mergers and Acquisitions .............................................................................................. 20

3.1 Rankings by revenue ................................................................................................. 22
3.2 Rankings by market capitalization ............................................................................. 24
3.3 Rankings by user base .............................................................................................. 25

4. Europe .............................................................................................................................. 27

5. North America ................................................................................................................. 36

6. Asia-Pacific ...................................................................................................................... 39

7. Latin America .................................................................................................................. 43

8. Africa and the Middle East ............................................................................................. 47

www.idate.org © IDATE 2012 3

World Telecom Services Market

Tables
Table 1: World telecom services market, 2008-2012 ........................................................................... 9
Table 2: World – Telecom services market by zone, 2008-2012 ........................................................ 13
Table 3: World – Fixed line subscribers, 2008-2012 .......................................................................... 13
Table 4: World – Mobile customers, 2008-2012 ................................................................................. 14
Table 5: World – Broadband subscribers, 2008-2012 ........................................................................ 14
Table 6: The main mergers and acquisitions in 2010-2011 ................................................................ 21
Table 7: The globe’s top 15 telecom service providers at end of 2010, in terms of sales................... 23
Table 8: The globe’s top 15 telecom service providers in 2010, in terms of market capitalisation ..... 24
Table 9: The globe’s top 12 telecom service providers in 2010, in terms of customers/lines ............. 26
Table 10: Early LTE deployments (2009-1H 2011) .............................................................................. 29
Table 11: H2 2011 LTE deployments ................................................................................................... 30
Table 12: Europe – Telecom services market, 2008-2012 ................................................................... 33
Table 13: Europe – Telecom services market by zone, 2008-2012 ..................................................... 34
Table 14: Europe – Main telecom services markets, 2010-2012F ....................................................... 34
Table 15: Europe – Fixed line subscribers, 2008-2012 ........................................................................ 34
Table 16: Europe – Mobile customers, 2008-2012 ............................................................................... 34
Table 17: Europe – Broadband subscribers, 2008-2012 ...................................................................... 35
Table 18: North America – Telecom services market, 2008-2012 ........................................................ 37
Table 19: North America – Telecom services market by country, 2010-2012F .................................... 38
Table 20: North America – Fixed line subscribers, 2008-2012 ............................................................. 38
Table 21: North America – Mobile customers, 2008-2012 ................................................................... 38
Table 22: North America – Broadband subscribers, 2008-2012 ........................................................... 38
Table 23: Asia-Pacific – Telecom services market, 2008-2012 ............................................................ 41
Table 24: Asia-Pacific – Main telecom services markets, 2010-2012................................................... 41
Table 25: Asia-Pacific – Fixed line susbcribers, 2008-2012 ................................................................. 42
Table 26: Asia-Pacific – Mobile customers, 2008-2012........................................................................ 42
Table 27: Asia-Pacific – Broadband subscribers, 2008-2012 ............................................................... 42
Table 28: Latin America – Telecom services market, 2008-2012 ......................................................... 45
Table 29: Latin America – Fixed line subscribers, 2008-2012 .............................................................. 46
Table 30: Latin America – Mobile customers, 2008-2012 .................................................................... 46
Table 31: Latin America – Broadband customers, 2008-2012 ............................................................. 46
Table 32: Africa and the Middle East – Telecom services market, 2008-2012 ..................................... 50
Table 33: Africa and the Middle East – Fixed line subscribers, 2008-2012 .......................................... 50
Table 34: Africa and the Middle East – Mobile customers, 2008-2012................................................. 51
Table 35: Africa and the Middle East – Broadband subscribers, 2008-2012 ........................................ 51

***

www.idate.org © IDATE 2012 4

World Telecom Services Market

Figures
Figure 1: Comparison of GDP and telecom sector growth .................................................................... 6
Figure 2: World telecom services market by region, 2008 & 2016....................................................... 12
Figure 3: World telecom services market by region, 2008-2016F........................................................ 13
Figure 4: Telecom growth by regions in the next five years................................................................. 15
Figure 5: Expected densities in the next five years, 2008-2016 .......................................................... 16
Figure 6: The globe’s top 15 telecom service providers at end of 2010, in terms of sales................... 23
Figure 7: The globe’s top telecom service providers in 2010, in terms of market capitalisation .......... 25
Figure 8: The globe’s top 12 telecom service providers in 2010, in terms of customers/lines ............. 26
Figure 9: Gap between revenue and traffic growth .............................................................................. 31
Figure 10: Annual mobile traffic 2010-2020 ........................................................................................... 31
Figure 11: Fixed-mobile broadband substitution in Austria.................................................................... 32

www.idate.org © IDATE 2012 5

 World Telecom Services Market

2. Methodology
2.1 Database
The World Telecom Services Market database is composed of this summary report and a
detailed data sheet (Excel file).
nd
For this 22 edition of the report, we have reviewed the data for all of the countries being
examined. Updates are as of end-September 2011 and include detailed data from operators
and regulators up to the end of 2010 and data as of mid-2011 for most advanced markets.
The method used to evaluate the South American market was changed in 2009. Volume
indicators are given for each country in the region and value calculation is based on
calculation of average revenue per user and total market revenue for Argentina, Brazil, Chile,
Mexico and Venezuela, and applied to the region’s entire customer base.

Regional and national indicators

• Historical data 2008-2010
• Estimates 2011
• Forecasts 2012-2016

Key indicators
• Fixed telephony: PSTN/ISDN lines, annual growth, density (% of the population)
• Mobile services: mobile customers, 2G customers, 3G customers, prepaid and post-paid
customers
• Internet: total Internet subscribers, dial-up subscribers, broadband subscribers (DSL, cable,
FTTx and other) and VoIP subscribers

Revenue indicators
• Fixed telephony
• Mobile services: voice services, data services
• Internet & data: enterprise data services, Internet services
• Total telecom services

www.idate.org © IDATE 2012 17

 World Telecom Services Market

Regions and countries examined

European Union
Austria Germany Netherlands
Belgium Greece Poland
Bulgaria Hungary Portugal
Czech Republic Ireland Romania
Denmark Italy Slovakia
Estonia Latvia Slovenia
Finland Lithuania Spain
France Luxembourg Sweden
United Kingdom
Europe, non EU North America Latin America
Norway Canada Brazil
Russia United States Mexico
Switzerland
Turkey
Asia-Pacific Africa & the Middle East
China
India
Japan
South Korea

2.2 Definition of indicators and sources

Definition of business areas and segmentation

For the purposes of this report, the telecommunications services market is broken down into
three main business areas:
• fixed telephony, which includes the operation of fixed networks and basic fixed services
(set-up fees, subscriptions and calls) and fixed IP telephony services. Turnover includes all
retail revenue;
• mobile services, which include the operation of wireless communication networks (cellular
telephony and paging). Turnover includes retail revenue, excluding equipment sales and
income from interconnection;
• data and Internet access services, which include the operation of networks dedicated to
data transmission and leased lines as well as dial-up and broadband and ultra-fast
broadband Internet access services (DSL, cable modem, FTTx…).
Revenue is broken down in each business area to the extent that the underlying statistics
(data from operators, regulators, etc.) separate them out when they are part of bundled
services. For example, a portion of VoIP revenue is grouped with broadband access revenue
in the case of multi-play offerings.

Geographical coverage
From a geographical perspective, the telecom services market is segmented into five main
zones:
• North America,
• Europe, with a European Union sub-category,
• Asia-Pacific,
• Latin America,
• Africa & the Middle East.

www.idate.org © IDATE 2012 18

World Telecom Services Market

The countries examined individually within each zone (37 in total) are listed on the front page
of the data file (under “Contents”). Those which are factored into regional totals are listed in
the introduction to each corresponding section of the summary report.

Currency
Market data are presented in the national currency and then converted into USD and EUR.
The exchange rates applied (IMF average exchange rates for 2010) are listed in the
"Exchange rates" section in the data file. The previous edition of this report, published in
January 2011, used the exchange rates for 2009 as the 2010 rates were not yet available.
Estonia switched to the euro at the start of 2011.

Sources
Historical data are drawn from the following sources:
• publications from national regulatory authorities, ministries and national statistics bureaux,
• ITU publications,
• OECD publications,
• European Commission publications,
• operators’ financial reports.
These various sources are cross-referenced, and in some cases supplemented by estimates
made by our experts.
Figures taken from previous reports have been revised thanks to new information that has
become available, to corrections issued and adjustments made to the boundaries between
countries.
Our forecasts are based on hypotheses of the expected evolution of penetration rates (% of
the population) in the different markets and growth of ARPU..
The hypotheses formulated are based on several factors:
• current market development rates,
• the perceived market potential based on the general level of economic development,
• ICT development policies being enacted,
• and the national market situation (notably the announced arrival of new market players).

Excel files
Complete data files are supplied in Excel with the electronic version of the report. They
provide detailed information on market value and physical indicators on equipment levels.
Readers can access national and regional data directly from the “Contents” sheet by clicking
on the name of the region/country, or by clicking on the labeled tab.

www.idate.org © IDATE 2012 19

 Research

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Ref. M12302 January-December 2012

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Markets & Forecasts Geographical Zones & Countries
Regulation & national Network architectures Local Authorities Asia-Pacific Hungary Mexico
FTTx initiatives - FTTH - Architectures Australia Italy Uruguay*
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issues and national FTTx - FTTN - Investments China Latvia
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Technologies & vendors
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Market data
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Our FTTx Team

A dedicated team of consultants specialised in analysis of the FTTx sector, devoted to meeting
the needs of the broadcasting industry, operators, equipment manufacturers, service providers
and content providers.
Roland Montagne joined IDATE in 1998 and is now the Director of the Telecom Business Unit. Since
Roland 2004, Roland has been the project leader for the FTTH Council Europe's yearly European FTTH project
MONTAGNE panorama. In 2006, he conducted a major study for the French Government on FTTH deployment sce-
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Valérie Didier Tiana Virginie

CHAILLOU POUILLOT RAMAHANDRY BLACHERE
FTTx Access Cost & Telecom Broadband
Markets & Business Equipment Access Markets
Services Models
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IDATE becomes the DigiWorld Institute

Founded in 1977, IDATE has gained a reputation as a leader in tracking telecom, Internet
and media markets, thanks to the skills of its teams of specialized analysts. Now, with the
Sales contact:
support of close to 40 member companies – who include many of the digital economy’s most Jeremy George
influential players – the newly rebranded DigiWorld Institute has entered into a new stage of its
[email protected]
development, structured around three main areas of activity:
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IDATE presents its Market Reports Programme for 2012 which constitutes a natural extension of the work
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IDATE creates the DigiWorld Institute
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Now, with the support of close to 40 member companies – which include many of the
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entered into a new stage of its development, structured around three main areas of
activity: Isabel Jimenez
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benchmark analyses on market developments and innovations in the telecom,
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