# Presentation: 279044

## Broadband Demand View TECHNOLOGICAL ADVISORY COUNCIL IIIFederal Communications Commission Washington, D.C.April 17, 2003

**Sriram Viswanathan**
**Managing Director**
**Intel Capital**

## Agenda

**Current World View ...**
**Key Demand Drivers**
**A Service Framework**
**Real World Examples (a Demo too !)**

## Executive Summary

**Current generation Broadband has its challenges**
**Next Generation Broadband Infrastructure needs an “Integrated Services Framework” (ISF)**
**ISF ****drives ****End User Demand**** that drives economics of ****Next Generation Infrastructure **

## Internet Traffic continues to Increase... 

- Source: Caspian Networks, Merrill Lynch

**Internet Traffic continues to Increase... **

## And # of Internet Users continues to grow...

- Source: IDC

**(Millions)**

## And WW Broadband Adoption continues ...

**DSL is leading access technology (~60% of all BB)**
**Key Drivers**
**Transport of choice in APAC & EMEA (lack cable competitors)**
**Natural migration path for telco SPs (use existing infrastructure)**
**ISPs (Yahoo, MSN, AOL, others) accelerating dial-up to broadband conversion**
**APAC bandwidth driven, US price driven**

**Broadband Subscribers (M)**

**Broadband Subscribers By Transport (M)**

*Source: IDC 3/02 *

**Notes:**
Talk to annex’s by geo
Define ADSL – new flavors ADSL2 and ADSL+, (ultimately ADSL++), upto 18k ft
		- ADSL – 8Mbps down/
		- ADSL2 – adds bonding, new coding scheme 16 bit, manageability built in
		- ADSL+ - 12Mbps down/1.5Mbps up
		- ADSL ++ - 22Mbps down/1.5Mbps up
	VDSL – symmetric, 22/3Mbps, effective reach ~<2k ft

## But the undisputed Leader is ...

**Broadband Penetration**
**(%, homes & businesses)**

**Korea Deploying Faster than US by a factor**

- Source: UBS Warburg, Yankee Group, FCC, and US Census Bureau

- Korea

- United States

**Notes:**
92% of Koreans have access to broadband internet connection.

## And US Projections Lag Leaders ...

- Source: Forrester, Economist, OECD

- Broadband Penetration

**And US Projections Lag Leaders ...**

## Will the spiral of Innovation  continue ?

**Graphical User Interface**

**Multimedia**

**Internet**

**Command Line**

**Mobility, Wireless**

_**Available end user Bandwidth is a key Inhibitor**_

## What about the Next Generation ?

## Some Business Considerations

- Voice

- Data

- Video

- Premium Data Services

- Long Distance

_**Need Multiple Services To Raise the ARPU**_

## Current Broadband Tradeoffs

- Determinants of Current generation of Services
-  Bursty vs. Circuit (peak vs. avg vs. minimum, etc.)
-  Latency
-  One-way vs. Two-way
-  Rate symmetry
-  Broadcast vs. Individual
- Next Gen Infrastructure has to make these tradeoffs in determining the right service “bundle”

## Video in the Internet Era still nascent !The Bandwidth-o-meter

**Video in the Internet Era still nascent !****The Bandwidth-o-meter**

**VHS quality**

**TV quality**

**DVD quality**

**HDTV quality**

**Current DSL**

**“****Promised” DSL**

- 4 Mbps

- 20 Mbps

- > 50 Mbps

**Multi Service Use**

**Fiber “Potential”**

## Sample Bandwidth Requirement

- Application Bandwidth Requirements is  THE
- Next Gen infrastructure Driver

## Integrated Service Framework

- Data Access

- Voice/Video

- Integrated  Applications/Services

- eHealth

- E Entertainment

## Medical Imaging and Distribution Demo

**High-speed network distributes data to where it’s needed, when it’s needed**
**Saves doctor’s time, reduces costs**

**Medical Imaging and Distribution Demo**

## Real World Deployments

## Revenue – Real  Numbers

**Sollentuna Energi (Sweden)– $8.58**** ****a month**
**Connectivity only,  separate ISP charge**
** ****KOpticom (Japan) - $42 a month**
**Data only; telephony will be free**
**Transact (Australia) - $60 a month**
**Video, voice, data, separate ISP charge**
**Fastweb (Italy) - $69.75 a month**
**Data, telephony, video on demand, business revenue, Telemedicine (?)**

## U.S. Density And Competition Make Business Case Difficult

| Company | Coverage
Cost | Drop
Cost | Take
Rate | ARPU | IRR |
| --- | --- | --- | --- | --- | --- |
| KOpticom
(Japan) | $4.17 | $833 | .30 | $42.39 | 27% |
| Fastweb
(Italy) | $400e | $500e | .30 | $70 | 19% |
| Transact
(Australia) | $720 | $390 | .30 | $60 | 5% |
| Utopia
(US) | $1000 | $1000 | .30 | $50
> $ 100 | -6%
> 5 % |

- Assumes 50% operating margin, 10 year capital life
- e = Intel estimate, not directly from company

_**Need for Integrated Services is much higher in the US**_

## 50 Mbps Offering in KoreaKorean Telecom & Hanaro Telecom

- Korea Telecom

- Hanaro Telecom

- Courtesy:  Ikanos Commnunications

## 50 Mbps Offering in JapanKDDI DION –for “Mansion

- Courtesy:  Ikanos Commnunications

## Executive Summary

**Current generation Broadband has its challenges**
** ****US is lagging, and is continuing the slide back**
**Next Generation Broadband Infrastructure needs an “Integrated Services Framework” (ISF)**
**Generic Triple play is not sufficient**
**New Targeted applications are needed (Telemedicine, eLearning etc.)**
**The need for ISF ******** Demand ******** Next Generation Infrastructure **
**This is doubly true in the US where densities are low**

_**This is key to driving the Computing Innovation and **_
_**reinvigorating US Leadership**_

## Thank You !

- Managing Director
- Intel Capital

**Thank You !**