1. Presentation to the Analyst Meeting at the M2M Forum 2009
Bringing Wireless Broadband
to Vertical Markets
Monica Paolini
Senza Fili Consulting
M2M Forum 2009 Milano, April 6, 2009

2. About Senza Fili Consulting
• Mobile and fixed wireless broadband technologies
Technology
• VoIP, convergence, mobile broadband applications
focus
• Network infrastructure and devices
• Bridge between technologies and services
Approach • Quantitative analysis
• International perspective
• Business development and strategy
• Business plans and financial modeling
Services • RFPs, procurement and due diligence
• Market analysis and forecast
| 2 | © Senza Fili Consulting LLC
April 6, 2009

3. Why vertical markets?
• Stagnant ARPU (even taking into account growing
Retail segment is
data revenues)
approaching saturation in
developed markets • Wireless operators need to expand to new areas
• New market currently underserved
Vertical applications allow to
connect the entire • Market opportunity with very low risk of
environment, not just people cannibalization
• Low churn and customer acquisition
Vertical applications bring a
• Long contract
new revenue stream to
operators • High number of connections
• Better functionality
Enterprises see the benefit of
wireless connectivity • Reduction in operational costs
| 3 | © Senza Fili Consulting LLC

4. Why now?
Growth in wireless broadband Growth in demand for wireless
availability connectivity
• 3G, WiMAX, LTE • Enterprise is looking at
multiple wireless
• Better performance and
technologies
capacity to meet vertical
applications requirements • Value proposition of wireless
connectivity becoming
• Cost‐effective deployments
compelling
lead to affordable services for
the enterprise • Improved functionality
• Regulatory push for wireless
connectivity for some services
Many vertical sectors are not affected by the financial downturn
—and some stand to benefit from financial stimulus packages
April 10, 2009 | 4 | © Senza Fili Consulting LLC

5. What are vertical services?
• They cannot be purchased by
individuals through retail channels
• They require:
– a contract between an operator and
a company or public entity
– support for one or more vertical‐
specific applications
– a custom device
• They exclude:
– Standard voice and data contract
with enterprises
– Blackberry enterprise users
– CE devices like the Kindle
Source: Senza Fili Consulting, 2008
– In‐vehicle modules for cars targeted
at the general market
| 5 | © Senza Fili Consulting LLC
April 10, 2009

6. Why haven’t cellular operators
pursued vertical markets?
• Vertical applications have been so far
considered niche markets
– Market is too small, 1 to 2% of connections
• Understanding of vertical market
requirements requires effort
• Limited capacity excludes high‐bandwidth
applications
• Most profits come from voice services
– Voice performance needs to be preserved
– Traffic from vertical applications may create
network congestion
This is changing as cellular operators are
under increased pressure to increase revenues
| 6 | © Senza Fili Consulting LLC
April 10, 2009

7. Aren’t vertical applications a niche market?
• Vertical markets are by definition fragmented
– Each enterprise vertical and each application represents a limited
opportunity
• When considered together, vertical services represent a huge
opportunity for operators
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April 10, 2009

8. Bringing Wireless Broadband to Vertical Markets
A high‐margin revenue stream for operators
and compelling services for enterprises
A new report from Senza Fili Consulting
• Vehicle telematics and mobile workforce are applications better suited to
wireless broadband
– High traffic requirements
– Support for mobility and wide coverage needed
• Service revenues are higher than for applications like M2M
– Attractive for operators
• Attractive business case for enterprise accelerates adoption of these applications
April 10, 2009 | 8 | © Senza Fili Consulting LLC

9. Vertical market devices and traffic requirements
Device Traffic
Downlink
Volume
Human
Vehicle
Uplink
M2M
Telemetry
Vehicle telematics
Financial transactions
Building monitoring
Surveillance
Content delivery
Mobile workforce
High, Mid, Low
| 9 | © Senza Fili Consulting LLC
April 10, 2009

10. What’s the difference between
retail and enterprise services?
Consumer retail services Vertical services
High churn Low churn
High customer acquisition costs Low acquisition costs
Some M2M applications have very low
High ARPU
ARPC
Short‐term contracts Long‐term contracts (10 years is common)
Individual or family contracts High number of connections per contract
Growing traffic with few heavy users Predictable traffic
Mass market Fragmented markets
Best efforts Strict performance requirements
Subsidized devices, generally purchased Devices paid by customer (and may be
directly from operator purchased directly from manufacturer)
| 10 | © Senza Fili Consulting LLC
April 10, 2009

11. Why are WiMAX and LTE well‐positioned to
support vertical services?
• Carrier‐grade reliability makes enterprise
comfortable
• IP‐based core facilitates integration for enterprise
• WiMAX and LTE provide mobility support
– Required by in‐vehicle telematics and mobile
workforce applications
• Enterprise needs Quality of Service (QoS) and traffic
prioritization to move to public networks
• WiMAX and LTE provide better performance over
private networks at a lower cost
• Low latency enables operators to deploy voice‐ and
video‐based applications
• A wide range of affordable devices will expand the
range of M2M applications that can be cost‐
effectively rolled out
| 11 | © Senza Fili Consulting LLC
April 10, 2009

12. How can operators address vertical markets?
• Identify applications relevant to the customers that the operator is
willing to support
• Understand the role that the application will play within the
customer company
• Define the requirements of applications in terms of:
– Traffic generated
– Installation requirements
– Interaction with existing telecom infrastructure owned by vertical
customer
– Devices needed
– Partnerships that are needed with system integrators, application
developers, vendors
• Develop a flexible pricing approach and Service Level Agreements
(SLAs)
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April 10, 2009

13. How will the enterprise benefit
from wireless connectivity?
• Monitor fixed and mobile assets in real time
• Keep constantly in touch with remote and mobile staff,
using voice, video, and data applications
• Integrate wireless devices within existing and planned
IP‐based applications
• Host multiple applications on the same device
– E.g., a single modem may connect both an ATM machine and a
camera that monitors it to the network
• Bring infrastructure and devices to temporary or
seasonal locations
| 13 | © Senza Fili Consulting LLC
April 10, 2009

14. What business models will prevail?
‐ A direct business model requires vertical‐specific expertise and focused sales
efforts from operator
‐ Ideal for high priority applications
‐ An indirect business model allows operators to address more markets through an
MVNO that has expertise of the vertical segment
‐ Device vendors, application developers and system integrators may act as
MVNOs as well
‐ A mix of business models is likely to be common for operators
| 14 | © Senza Fili Consulting LLC
April 10, 2009

15. Should the enterprise use public networks?
Operate own telecom infrastructure Rely on wireless operator
Operator is responsible for spectrum
Expensive and difficult to access spectrum
availability
Enterprise selects coverage areas and Coverage areas and capacity depend on
equipment wireless operator’s plans
Exclusive use of network infrastructure Access shared with other vertical and
and control over access retail users
Inefficient use of spectrum and network Performance may degrade rapidly at peak
infrastructure time if QoS is not used
Single network (no redundancy option) Access to multiple networks, if needed
Proprietary equipment prevalent Standard‐based solutions
Operating network may be distracting or Dependence on wireless operator for
inefficient network to provide reliable performance
| 15 | © Senza Fili Consulting LLC
April 10, 2009

16. Vertical applications for utilities
• Metering
• Asset management
• Surveillance
• Mobile workforce
• Temporary networks
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April 10, 2009

17. Requirements change for each application
(even within the same segment, utilities)
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April 10, 2009

18. What do utilities need?
• High throughput
– GIS‐based applications require transmission of large files.
• Low latency and advanced multimedia capabilities
– Mobile workforce
• QoS and advanced traffic management capabilities
– E.g. deep packet inspection, virtual networks
• Secure access to protect the utilities’ communications, and, by
extension, the safety of their staff and customers.
• IP‐based connectivity to facilitate integration of applications with
the core IT functions within the utility.
– No need for SIM cards
• Handoffs to support mobility access, mostly for in‐vehicle and
mobile workforce applications.
| 18 | © Senza Fili Consulting LLC
April 10, 2009

19. In conclusion: emerging trends
• Vertical applications are going mainstream
– Increasingly important source of revenue for operators
– May be critical to profitability for greenfield operators
• Especially WiMAX operators
• Especially WiMAX operators in the 3.5 GHz
• Equipment price points and functionality meet vertical
players expectations
– Business case can be easily made for operators and vertical
players alike
• By definition, vertical markets are fragmented
– Requirements vary greatly across segments and applications
– Operators need to carefully select the best opportunities
| 19 | © Senza Fili Consulting LLC
April 10, 2009

20. Senza Fili Consulting
+1 (425) 657 4991
www.senzafiliconsulting.com
monica.paolini@senzafiliconsulting.com
| 20 | © Senza Fili Consulting LLC