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Russia Broadband Market Survey

Sirena Cheng Apr. 16, 2007

Agenda ¾ Global Broadband Trend ¾ Russian ICT market situation ¾ Russian Fixed Network Market ¾ Russian Wireless Network Market ¾ Top 10 things need to do in Russian branch ¾Q & A Sirena Cheng


Global Broadband Trend

Broadband Access Market forecast

Sirena Cheng

Source: Cisco IBSG, January 2005


Ценность NGN для бизнеса: Технология

Sirena Cheng

Current Internet Traffic Characteristics ™High-speed networks (Mbps →Gbps →Tbps) ™High-volume traffic ™Variety of Applications 9Streaming media (Windows Media, Real Media, Quicktime) 9P2P traffic 9Network Games 9Network Security Attacks 9Etc. Sirena Cheng


Broadband in Enterprise: Wealth of Opportunities Front Office Sales Tools • Reinvent your business processes • Enhanced management options

POS, Back Office

Digital Signage Solutions • Queue management (Banks) • New revenues stream (Retail) • Engaging, entertaining and informing customers

• Cost saving • Data exchange • Credit Card Verification, SAP, etc. LAN (optional)

Business Continuity e-Learning/Training

File Distribution

• Cost saving • Customer satisfaction and sales uplift • Increases competitiveness

• Cost saving • Consistent and confirmed delivery Sirena Cheng satisfaction • Customer

• Backup to terrestrial network • Increased network resilience • Cost saving (fraud reduction)

Global Broadband Situation

Sirena Cheng


Description of the market Subscriber

Property net

Metro net

Backbone

Service

PSTN PSTN(telephone) (telephone)network network Cable Cable(TV) (TV)network network

Competing Service Providers Telephony Telephony TV TV Video Videoon onDemand Demand Internet Internet connection connection ASP/SSP/ ASP/SSP/ Co-location Co-location

Subscriber

Smart Smarthome home&& Property Propertyservices services

Municipal Municipalnetwork networkprovider provider Property Propertynetwork network

Communication operator

Order Sirena Cheng

Delivery

Wireless Wireless communication communication Shop Shop&& Hotel HotelServices Services

Payment

Infrastructure levels Services Stimulating the market to invest

Active network

Dark fiber Municipality / housing associations participating / paying for the passive network

Ducts

Sirena Cheng

Competition of service level and not on infrastructure level!


The matrix network products Core Network

Access Network

CPE

Customer Type

Carrier

1st & 2nd Tier ISP

Large Enterprise, SOHO/SMB

Bandwidth

Fiber Optical 10GB/40GB+

Fiber Optical 10GB/2.5GB

Fiber Optical or ADSL depend on different Area

Fiber optical type

Single Mode DWDM

Single Mode and Multi Mode CWDM

Multi-mode and LAN cable

Large SI

Large SI – Large Enterprise, DistributorsSOHO/SMB

Product Very Large SI Sales channel

Sirena Cheng

Access Network Evolution Program Geographical capillary coverage can be achieved with operatorowned microwave links, rather than with 3rd party leased lines Benefits: High Avoidance of higher longshort-term CapEx investment term CapEx for new leased in operator-owned access Grooming Microwave link line acquisition transmission networks Upper level microwave link node X x STM-1 rd party Replacement of 3 Reduction of volume-driven X x STM-1 ADM OpEx costs and QoS leased lines with operatorcontrolled by the operator owned microwave circuits Hub Grooming Support of higher-bandwidth TXC SDH node node Transport Creation of high-capacity and demanding data traffic Network scalable transmission expected to accompany 3G network, leveraging network uptake and new revenue • Description: vendors’ UTRAN – PDH generating opportunities by • Design and implementation of an operatorcombined technologies reselling network owned access transmission network based transmission resources to 3rd on PDH radio links (RBS linked to parties grooming and hub nodes, then connected to telephony exchange centers via the SDH Dependencies/linkages: transport network) • Need to synchronize with radio, core network • Replacement of 3rd party leased lines with and property infrastructure evolution projects PDH links • Design and implementation of new O&MSirena Cheng • Impacts on OSS evolution projects organization, processes and procedures 2G/3G Radio Access Network

2G BSC or 3G RNC


Core Network Evolution Program The target of wireless operators is to run their business over one full IPbased signaling and transport network for both real and non real time traffics OSS/BSS Sub-network Monitoring Billing Pre-paid

SS7-like IP-based Signalling

Service Farm Sub-network Intelligent Network Services SDP UMMS

ATM transport Signalling Pure IP Signalling IP routing Billing mediation and O&M

Benefits: MSC

Deployment of Gbps switching IP network, replacing obsolescent nodes

Meeting bandwidth requirements of new 3G/3.5G service

MSC

.

MG . W

MG W.

New hardware providing more bandwidth and more resilient connections for corporate customers

MG W

Pro-active monitoring and planning and Improvement of performance/SLA monitoring Convergence of 2G/3G services in one scalable CS/PS network

• Description: • Consolidation of legacy networks into one new IP network and migration of services onto the new network (e.g. one common network for voice, data and management) • Evolve signaling from SS7 to SigTran • IP-based roaming signaling (e.g. next generation interconnect) • Service migration to the new network (e.g. full VoIP solution)

Enhanced traffic engineering to enable VoIP

CapEx avoidance as new equipment is cheaper O&M OpEx reduction, due to automatic and faster problem identification and resolution Saving in support costs Long-term cost reduction due to decommissioning of legacy equipment and systems

Dependencies/linkages: • Need to synchronize with radio, property & service infrastructure (especially for IN services porting to IP) evolution projects Impacts on OSS evolution projects Sirena •Cheng

Broadband Satellite Demand: Growing Globally at 15% CAGR

Sirena Cheng


Broadband Satellite Services: Where the Profits Are

Sirena Cheng

Applications and Services for WiMAX

Sirena Cheng


Global WiMax Deployments

Sirena Cheng

Russia ICT Market


Autonomous Areas in Russia

Sirena Cheng

The growth for Russian IT industry up to 2015 Model of Russian IT market

2009

2015

Total volume (US$B)

29.2

56

Russian It as the part of world market

2.2%

3.4%

Annual Growth

16.7%

Hardware

60.1%

50.9%

Software

9.4%

9.2%

Services

17.3%

16.8%

Internal Corporate IT expenses

13.2%

23.1%

Sirena Cheng

Source: Inforus, Cnews 2006


Prospects for PC and Internet Growth/Internet Revenues Internet Access Service Revenue

2

PC and Internet Growth

1.8 30 1.6

25

1.4

Revenue ($B)

20 15 10 5

1.2 1 0.8

0 1998

1999

2000

2001

Number of Internet users (M)

2002

2003

2004

2010

0.6

Number of PC users (M) 0.4 0.2

G-27611 P 03/30/05

• Boosted by eRussia initiative – $2.6B investment (2002–2010) Sirena Cheng to raise IT exports to $1B+/yr

0 2000

2001

2002

2003

CAGR ~ 21% (for ’98 – ’02 period)

Russian Broadband Market Projections

Sirena Cheng

2004

2010


Internet Growth with incredible speed

Sirena Cheng

ウクライナ (Ukraina) 概況経済動向

Sirena Cheng


Russia Telecom Infrastructure

Sirena Cheng


Main fiber optic infrastructure (TTC)

Sirena Cheng

Russian International Bandwidth

Sirena Cheng


Russia International connectivity

Sirena Cheng

BANDWIDTH IN RUSSIA

Sirena Cheng


Russian Backbone Network (RBnet)

Sirena Cheng

ERMC(Europe-Russia-Mongolia-China)

Sirena Cheng


Russia’s Telecom Development in 2006 •

Russia’s telecoms and IT market exceeds $20 billion per year and the market is expected to grow by a further 50% in 2006. Russia now has one of the most diverse and rapidly developing telecom and information technology markets in the world.

An estimated 84% of the population now uses mobile telecoms and broadband access is growing at a fast rate. IP telephony sales equaling $260 million, a 53% increase.

Russia currently spends more than $2.5 billion every year on imported telecoms equipment, making up 60% of the market.

The Russian broadband internet market is now worth $1 billion and 40% of the population is expected to be using the internet by 2008.

Sirena Cheng

Russian Network Market Growth Forecast

Sirena Cheng


Traffic to Non-Moscow Russian Cities Traffic to Non-Moscow Russian Cities

200,000

Megabytes

180,000

C hernogolovka

160,000

E katerinburg

140,000

Dubna P rotvino

120,000

N ovos ibirs k

100,000

Samara C helyabins k

80,000

P us hc hino

60,000

I rkuts k

40,000

V ladivos tok

20,000

I zhevs k Kazan

Ch er no go Ek lo at vk er a in bu rg D ub Pr n N a ot ov vin os o ib ir s Sa k Ch m el ar ya a bi Pu ns sh k ch in o Ir Vl ku ad ts iv k os to k Iz he vs k Ka za n To m sk Tv er

T oms k

Vo ro ne zh

City

T ver

2002-05 2002-04 2002-03 2002-02 2002-01 2001-12 2001-10

V oronezh

Month

Sirena Cheng

А есть ли рынок?

Sirena Cheng

Источник: Fast Web, 2005


Платное телевидение и Интернет в Москве

Источник: Система Масс Медиа, 2005 Sirena Cheng

Потенциал развивающихся рынков Potential of the developing markets

Отношение к показателям США

250% 200% США

150%

Германия Россия

100%

Китай Индия

50% 0%

Рост ВВП

Проникновение Проникновение Проникновение стационарной т мобильной связ интернет елефонии и

Sirena Cheng

ИСТОЧНИК: THE WORLD FACTBOOK 2004


Russian Federation: Organizational Details • Kurchatov Institute (Dr. Velikhov), Russian Academy of Science (Dr. Velikhov), Joint Supercomputing Center (RAS), Ministry of Industry, Science & Technology, Ministry of Communications, Ministry of Education, Ministry of Atomic Energy. (TransTelecom: likely network provider) Sirena Cheng

TIM Portfolio Overview ¾

Cumulative financing provided to date: €2.2 billion

Mobile 35%

¾

Current portfolio: €675 million

¾

Covers 22 CEE and CIS countries

¾

Media/Other 24%

87 deals ranging from €10 million to € 125 million and including: –

mobile telecoms

fixed line operators

ISPs

submarine cables

software developers

terrestrial TV

systems integrators

cable TV

outdoor advertising

Fixed line/Integrated Telcos 41%

Source: EBRD Sep. 2006 Sirena Cheng


Selected Transactions: Telecoms Hungary 2001 Loan syndication €350 million (total) €100 million (own account underwriting)

Orange Slovakia 2001 Equity private placement $180 million (total) $20 million (own account)

Poland 2001 Loan syndication €650 million (total) Zloty equivalent of €75 million (own account)

Russian Federation 2001 Loan syndication and quasi-equity package $138 million (total) $30 million (own account)

Romania1997-2002 Loan syndication $300 million (total) $105 million (own account)

Albania 2003 Loan syndication €85 million (total) €35 million (own account)

Russian Federation 1999 IPO $135 million (total) $35 million (own account)

Sirena Cheng

Russia Wireless Network


Russian Wireless Network opportunity

Sirena Cheng

DIRECWAY in Russia/NIS • Twelve countries in the region • New Moscow office with local sales/support • Major oil/gas,tenergy, banking, and government customers • Over 15,000 sites in five countries • Ten DWAY Service Providers

Services

Region-wide DIRECWAY service via Ku-band satellites (Express, YAMAL, Eutelsat, Intelsat) DIRECWAY products licensed throughout region Full turnkey program management, installation, service, and support

• •

Russia/NIS

BELARUS

MOSCOW

MOLDOVA

UKRAINE

RUSSIA

GEORGIA ARMENIA

KAZAKHSTAN AZERBAIJAN

COVERAGE

UZBEKISTAN TURKMENISTAN

Sirena Cheng G-26708 P 03/29/04

KYRGYZSTAN TAJIKISTAN


Target Market

Sirena Cheng

Moscow Internet exchange situation

Sirena Cheng


Russian Mobile Market in 2005

CIS 通信部門地域共同体(RSS: Regional Commonwealth in the field of Sirena Cheng Communication/ http://www.rcc.org.ru/en/index.htm)資料

WiMAX CPE ASP Curve Drops

Sirena Cheng


How to success in Russia Market ?

Top 10 things must do in Russia branch in 2H of 2007 Working items

period

1. To build Russian website

8

weeks

2. To make Russian version company profile, catalogues and sales kit etc.

4-6 weeks

3. To make Russian sales/marketing plan

2 weeks

4. To offer the sales training and to understand Russian employees’ past experiences to start the sales activities.

1 week

5. To attend the local exhibitions, seminars and to execute road show to build good business relationship in Russia. 6. To announce Edimax product news in Russia market 7. To find out the custom importing process, tax and the related regulation in Russia. Sirena Cheng

Target date


D-Link Russian website

Sirena Cheng

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Interop Moscow May 30-31, 2007

Sirena Cheng


Interop Moscow Forum Hall

Sirena Cheng

Thanks you!

/ Спасибо!

Q&A

Sirena Cheng

Russian Broadband Market Survey 20070418 by Sirena Cheng  

Russian Broadband Market Survey 20070418 by Sirena Cheng