How much of a game-changer is LTE? Technology developments and regulatory implications

1. How much of a game-changer is LTE?Technology developments and regulatory implications Presentation for the Latin America Spectrum Conference 2012 Amit Nagpal 25 October 2012

2. How do we resolve the “capacity crunch”? Global mobile data traffic forecast Decoupling of traffic from revenues Source: Cisco, 2012 Source: Light Reading

3. Spectrum is part of (but not the only) answer • Deployment of next generation more spectrally efficient technologies (e.g. HSPA+/LTE) • Acquisition of new frequencies and re-farming of existing bands • Off-loading of traffic onto fixed networks (WiFi and femtocells) • Deployment of new sites Source: Vodafone

4. LTE provides significant performance improvements LTE/HSPA+ carrier performance Source: Huawei

5. LTE makes more efficient use of available spectrum Theoreticalincrease inspectral efficiency Real-world estimate (takingaccount of networkconfigurations,technology take-upby consumers etc) Three-foldimprovementbetween 2011and 2016(CAGR of 25%) Source: Real Wireless

6. Wider channels present a challenge for regulators • The amounts of low frequency spectrum available for award are limited (e.g. 2x30MHz of spectrum in European digital dividend band) • Is it better to have more competing network infrastructures each making less efficient use of the spectrum (smaller channel widths) or to have fewer competing infrastructures but with each operator making more efficient use of the spectrum? 20MHz channel 10MHz channel 15MHz channel 15MHz channel Alternative options forassignment of 60MHzof spectrum(examples) 10MHz channel 10MHz channel 10MHz channel 5MHzchannel 5MHzchannel 10MHz channel 10MHz channel

7. Frequency sharing between operators is one possibility • ARCEP in France is allowing operators to share frequencies in order to provide high speed services to rural communities • Maintains the benefit of three competing infrastructure players in urban areas

8. Carrier Aggregation Technology provides a solution LTE carrier aggregation What is carrier aggregation? • With the development of LTE towards LTE-Advanced, operators will be able to virtually aggregate their spectrum holdings in order to deploy a larger LTE carrier • This will allow operators to deploy LTE at higher peak rates, without having to own contiguous spectrum AT&T to aggregate acquired spectrum • In 2011, AT&T acquired Qualcomm’s unpaired 700MHz spectrum holdings • AT&T is planning on aggregating the spectrum with its existing AWS (1700/2100MHz) band in order to increase the speed offered over its current LTE network • AT&T is pushing for carrier aggregation utilising LTE rather than waiting for LTE-Advanced technologies and is aiming to deploy compatible networks from 2014 Carrier Aggregation Technology (CAT) is a central component of LTE Advanced (Release 10) • CAT will allow up to 5 2x20MHz channels to be combined to offer data rates of up to 3Gbps 850MHz 700MHz 2x10MHz Actual carrier 2x10MHz Actual carrier 2x20MHz Virtual carrier Note: Carrier aggregation technologiescan also be used to aggregatenon-contiguous spectrum blockswithin the same frequency band

9. Combining frequency sharing and CAT may be required • The European Union has a target to provide minimum 30Mbps broadband to 100% of households by 2020 • A recent presentation by Nokia Siemens Networks suggested this could be achieved using LTE-Advanced with carrier aggregation of all the spectrum in the 700MHz and 800MHz bands Source: ‘Bringing Mobile Broadband to Rural Areas’, presentation by UlrichRehfuess, Head of Spectrum Policyand Regulation, Nokia Siemens Networks,presented at WIK Mobile broadband –Competitive dynamics and policyimplications conference,11-12 September 2012

10. Final question …. Is the provision of telecoms network infrastructure heading back to being a monopoly business?

11. Annex Introduction to Aetha Consulting A.1

12. Aetha Consulting Aetha Consulting helps players in the telecommunications industry to develop creative and sustainable solutions to the challenges facing them in a constantly changing environment We specialise in undertaking rigorous, data-driven and quantitative assessments to support major strategic and regulatory decisions. We work with our clients to develop the tools and methodologies appropriate to solve each new business problem as it arises Our staff have been contracted to advise on key industry issues, including: market strategy development, radio spectrum policy, spectrum valuation and auction support We are committed to quality and exceeding our client's expectations. We have a strong track record of successful assignments with operators, regulators, and manufacturers, as well as financial and legal institutions Trusted advisor to the telecoms industry, undertaking data-driven and quantitative assessments to support strategic and regulatory decisions

13. Spectrum management experience We help operators and regulators to analyse the opportunities and threats arising out of changes in their radio spectrum holdings Our staff have supported operators in over 25 spectrum auctions worldwide in the last 10 years including: 800MHz and 2.6GHz (4G) auctions in Europe including Austria, Germany, Italy, the Netherlands and Switzerland 2.1GHz (3G) auctions in Asia including India, Hong Kong, Singapore and Taiwan New entrant licence acquisition opportunities in countries such as the AWS auction in Canada and 2G/3G auctions in Egypt, Iran, Kuwait, Libya and Qatar. Our consultants have assisted regulators to award spectrum including supporting the UK andDanish Governments with awards of 420MHz, 800MHz, 1.5GHz, 2.1GHz and 2.6GHz spectrum

14. 14 Recent company track record Since Aetha was founded in July 2011 we have worked for over 20 clients The topics covered have included a wide range of topics across our service portfolio 900MHz and 1800MHz auction support Appeal against wholesale price decision Competitor spectrum valuations Cost model for mobile services (various models and review projects) Digital dividend case studies Independent valuation of GSM spectrum Independent valuation review for 800MHz auction IPTV business plan forbroadbandoperator NGA access pricing advice Number portability Premium TV content valuation advice Reserve price analysis Spectrum auction support (numerous projects for operators and regulators) Spectrum policy advice Spectrum re-farming paper Strategy review for fixed operator Support to operator on regulatory consultation document (various projects) Target and budget setting Clients * Projects * • ComReg (Ireland) • Eircom (Ireland) • GSM Association • IBPT (Belgium) • KPN • Millicom • Ofcom (UK) • Oger Telecommunications • Orange • P4 (Poland) • QinetiQ • Sky • SUTEL (Costa Rica) • Talk Talk Group • TDC (Denmark) • Telecom Italia • Telefónica • Telenor • Tigo (Colombia, Paraguay) • TürkTelekom * The client and project lists are in different orders, so each line on the right hand list does not necessarily correspond with the same line on the left hand list

15. Contact details Amit Nagpal Partner amit.nagpal@aethaconsulting.com Tel: +44 7546 912355 Graham Johnson Partner graham.johnson@aethaconsulting.com Tel: +44 7500 961907 Aetha Consulting Limited Coton Hall 10 Brookfield Road Coton Cambridge CB23 7PT United Kingdom www.aethaconsulting.com