Airvana LEH Call 7.10.031 - CDMA Development Group
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Transcript of Airvana LEH Call 7.10.031 - CDMA Development Group
Airvana Proprietary & Confidential1
LEHMAN BROTHERS
Investor Conference Call:
Update on CDMA2000 1xEV-DOFeaturing Airvana
Hosted by Lehman BrothersJuly 10, 2003
Airvana Proprietary & Confidential2
LEHMAN BROTHERS
Introduction: Investigating CDMA 1XEV-DO
• Today’s call examines the development of the CDMA2000 1XEV-DO high speed mobile data market– Continues our investigation of mobile wireless data markets – Follows our recent call on the development of the WLAN market
• CDMA 1XEV-DO appears poised to become an important new technology for the CDMA community– Carriers include Verizon Wireless and SK Telecom – CDMA vendor includes QUALCOMM, Lucent, Nortel, Motorola and Ericsson
• CDMA 1XEV-DO is developing traction in Korea, Japan, the U.S. and Latin America and is enabling a broad range of exciting new multimedia applications and services
• Featured speaker Randy Battat is President & CEO of Airvana, a high-profile start-up driving the development of this market
Airvana Proprietary & Confidential3
LEHMAN BROTHERS
Topics
• Airvana Overview• 1xEV-DO Market & Applications• Airvana Products• Future Direction
Airvana Proprietary & Confidential4
LEHMAN BROTHERS
Airvana Overview
• Product– Differentiated All-IP Radio Access Network– 1xEV-DO: Broadband, mobile, CDMA wireless standard
• Funding– $80M raised in three rounds– largest investment in 1xEV-DO
• Major Investors– Matrix Partners– Desh Deshpande– Qualcomm
• Key Partners– Qualcomm, Nortel, Ericsson
Airvana Proprietary & Confidential5
LEHMAN BROTHERS
Current Status
• Financial– Revenue: $5M in 2002; $20M-$30M in 2003– Expect to turn profitable by year-end
• Trials/Deployments To Date– 2 North America
• Verizon Wireless Commercial Launch Q3 ‘03
– 2 Latin America• Vesper Commercial Launch Q2 ‘03
– 4 Asia/Pacific• Asia Pacific Broadband Wireless Launch Q3 ‘03
– 1 EMEA
Airvana Proprietary & Confidential7
LEHMAN BROTHERS
How operators will migrate to 3G
CDMA
2G
GSM
2G
200 KHz
GSM GPRS
2G 2.5G
• Same spectrum• Same Cell Sites• Packet Data• Low Speed
Data Rate (kbps)
10 14
10 14
1
10
100
1000
10000
GS
MC
DM
A
TypicalPeak
1
45
171
GP
RS
Airvana Proprietary & Confidential8
LEHMAN BROTHERS
How operators will migrate to 3G
CDMA
2G
GSM
2G
200 KHz
GSM GPRS W-CDMA“UMTS”
2G 2.5G 3G
• Same spectrum• Same Cell Sites• Packet Data• Low Speed
• New Spectrum• New Cell Sites• Higher Capacity Voice• Higher Speed Data
5 MHz
Data Rate (kbps)
10 14
10 14
1
10
100
1000
10000
GS
MC
DM
A
TypicalPeak
1
45
400171
2,000
GP
RS
WC
DM
A
Airvana Proprietary & Confidential9
LEHMAN BROTHERS
How operators will migrate to 3G
CDMA CDMA2000(1xRTT)
2G 3G
• Same spectrum• Same Cell Sites• 2x Voice Capacity • Higher Speed Data
1.25 MHz
GSM
2G
200 KHz
GSM GPRS W-CDMA“UMTS”
2G 2.5G 3G
• Same spectrum• Same Cell Sites• Packet Data• Low Speed
• New Spectrum• New Cell Sites• Higher Capacity Voice• Higher Speed Data
5 MHz
Data Rate (kbps)
10 14
10 14
1
10
100
1000
10000
GS
MC
DM
A
TypicalPeak
153
307
CD
MA
2000
1
45
400171
2,000
GP
RS
WC
DM
A
Airvana Proprietary & Confidential10
LEHMAN BROTHERS
How operators will migrate to 3G
CDMA CDMA2000(1xRTT)
1xEV-DOData Rate (kbps)
10 14
10 14
1
10
100
1000
10000
GS
MC
DM
A
2G 3G
• Same spectrum• Same Cell Sites• 2x Voice Capacity • Higher Speed Data
• Same spectrum• Same Cell Sites• Broadband Data• Multimedia services
1.25 MHz
3G
GSM
2G
200 KHzTypicalPeak
153
750307
2,400
CD
MA
2000
1xE
V-D
O
1GSM GPRS W-CDMA“UMTS”
2G 2.5G 3G
• Same spectrum• Same Cell Sites• Packet Data• Low Speed
• New Spectrum• New Cell Sites• Higher Capacity Voice• Higher Speed Data
5 MHz
45
400171
2,000
GP
RS
WC
DM
A
Airvana Proprietary & Confidential11
LEHMAN BROTHERS
Residential / SOHOBroadband
MobileProfessional
Mobile Consumer
• Cell Phone or Home Modem is used to connect to PC via USB
• Application: Broadband Internet Access for Residential and Small Business Users
• Service deployed without a “truck-roll” just like a Cell Phone Service
• Cell Phone or PC Card is Used as a Modem for Laptops and PDA
• Application: Email, Internet Access, Corporate Intranet Access, VPN
• No change required to the Application
• Multimedia Content to Cell Phone
• Application:Pictures, News, Information, Entertainment
Applications: 3 Market Segments
Airvana Proprietary & Confidential12
LEHMAN BROTHERS
1xEV-DO Devices Currently Available
Source: QUALCOMM Annual Meeting of Stockholders, 2/11/2003
Airvana Proprietary & Confidential13
LEHMAN BROTHERS
Asia/Pacific
• Korea: SKT and KTF posting impressive subscriber and ARPU numbers
Airvana Proprietary & Confidential17
LEHMAN BROTHERS
Asia/Pacific
• Korea: SKT and KTF posting impressive subscriber and ARPU numbers
• KDDI will launch 1xEV-DO in Q4 ’03– Covering 60% of Japanese population at launch, 90%
within a year
• Asia Pacific Broadband Wireless (Taiwan) will launch commercial service in Q3 ‘03
• China Unicom launching several trials• Additional planning underway driven by Korea
success and threat of WCDMA by Hutchison
Airvana Proprietary & Confidential18
LEHMAN BROTHERS
North America
• Verizon Wireless to launch commercial service in San Diego and Washington, DC in Q3– Expect broader deployment in 2004
• Most large CDMA operators are either have trials in place or are planning them
• Alaska Communications Systems successful fixed-wireless trial
• Target applications– Mobile business professional laptop PC access– Residential broadband– Broadband content delivered to handsets: sports, news,
stocks, weather, entertainment, games, …
Airvana Proprietary & Confidential19
LEHMAN BROTHERS
Latin America
• Vesper launched service in March– Fixed business/residential broadband service
• rate-limited to 300 kbps
– Very positive reaction from users• >70% conversion success rate converting free
subscribers to paid subscribers
• Brazil Telecom launched 1xEV-Trial and roaming agreement with Vesper
• BellSouth International launches several 1xEV-DO technology & market trials across the region
Airvana Proprietary & Confidential21
LEHMAN BROTHERS
Airvana’s 1xEV-DO System
IPNetwork
IPNetwork
Element Management System
AAA ServerAirvana RN-8000
R-P Interface
Airvana Channel Card
PDSN
Radio NetworkController
Benefits of an ALL-IP Radio Network:• Enhanced Revenue with Differentiated Services• Better Reliability & System Availability• Lower Deployment and Operating Costs• Leaves Legacy Voice Network Alone
Airvana Proprietary & Confidential24
LEHMAN BROTHERS
Benefits of All-IP Architecture
• Increased revenues– Quality of Service prioritizes traffic to most profitable users– Multiple service offerings from a single network: fixed or mobile,
broadband PC or phone, Internet access, push-to-talk
• Lower operating costs– IP backhaul gives operators choice– Fewer central offices– Web-based provisioning
• Increased system reliability & maintainability– Routed network structure– Web-based management system– Redundant/load-balanced system elements with hot-swap– On-site flash for multiple SW copies, statistics collection…
Airvana Proprietary & Confidential26
LEHMAN BROTHERS
User-Level Quality of Service
• Users assigned to classes of service (e.g. gold, silver, …) with network performance tuned for each service class
• Business impact:– Prioritizing more profitable customers (e.g. corporate enterprise– Tuning network traffic by market segment (e.g. PC Internet access
versus handset applications)– Pricing by market segment
Airvana Proprietary & Confidential27
LEHMAN BROTHERS
IP Broadcast
• Single transmission →Multiple receivers– Network utilization
scales with content, not subscribers
• Selectable data rates: 38.4 – 614.4 kbps
• New services– News, music, video/TV
distribution, sports, advertising,….
– Supports TV-like logical channels
Airvana Proprietary & Confidential28
LEHMAN BROTHERS
1xEV-DO Release A• Reverse Link
– Very High Peak Data Rates: 153.6 → 1.2 Mbps– Significantly Higher Sector Throughput
• 350 → 550 kbps (Hybrid ARQ + Enhanced MAC)
• 550 → 900 kbps (4-way diversity)
• Forward Link– Higher Peak Rate: 2.5 Mbps → 3 Mbps– 30% Higher Sector Throughput
• Support for short packets• Lower latency• Faster sleep-time interval• Tighter 1x/1xEV-DO interoperability
Airvana Proprietary & Confidential29
LEHMAN BROTHERS
Outlook: CDMA Applications & Services
Telephony Telephony
WebContent
NotebookPC Access
CameraPhone
Telephony
WebContent
NotebookPC Access
CameraPhone
Push-To-Talk
Push-To-Talk
FixedBroadband
VideoOn Demand
Telephony
WebContent
NotebookPC Access
CameraPhone
Push-To-Talk
FixedBroadband
VideoOn Demand
MultimediaMessaging
BroadcastVideo
On-LineGamingIS-95
1xRTT
1xEV-DO
Legend
Telephony
WebContent
NotebookPC Access
CameraPhone
Push-To-Talk
FixedBroadband
VideoOn Demand
MultimediaMessaging
BroadcastVideo
On-LineGaming
Airvana Proprietary & Confidential30
LEHMAN BROTHERS
Wireless Equipment Industry Restructures
IntegratedWireless
EquipmentCompany
Late ’80s
Chips
Late ’90s
Handsets
Infrastructure
Chips
Early ’00s
Handsets
Infrastructure
Applications
Power Amps
Deploy Svcs
Servers
Chips
Late ’00s
Handsets
Infrastructure
Applications
Power Amps
Deploy Svcs
Servers
NetworkSoftware
Airvana Proprietary & Confidential31
LEHMAN BROTHERS
Summary
• 1xEV-DO: a standard to spark wireless data growth– Clear value proposition: Broadband Internet Access– Low barriers to deployment, complements voice network– Market traction with commercial launches under way– Continuous improvement with new services and features being
standardized
• All-IP technology:– New services to grow revenue, lower operational cost– Significant carrier-class data networking experience
• Airvana– Close partnerships with large equipment suppliers
• Nortel, Ericsson– Products in commercial deployment today– The leader in an emerging segment of the wireless industry