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Sundeep Bihani This guidebook is divided into different sectors including, telecommunications
(LBAL, Hong Kong) technology, including cellular, mobile handsets, broadband, fiber optics, radio,
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expressed in this research report
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Guide to Telecoms
Table of Contents
Cellular Technology.......................................................................................... 3
Mobile phone network terminology ................................................................... 10
Mobile Phone Network Components ................................................................. 14
Handset and Related Terms ............................................................................. 18
Spectrum and Auctioning................................................................................. 25
Wireless Software Terminology......................................................................... 28
Terminology for Other Wireless Technologies ...................................................... 29
Broadband and Access Terminologies ............................................................... 37
Broadband and DSL Terminology...................................................................... 39
Cable TV & Video Terminology ........................................................................ 43
Fiber and Optical Component terminology ......................................................... 46
Radio & Satellite Communication Terminology ..................................................... 51
Wireline Enterprise Network Terminology ........................................................... 54
Enterprise Network Component Terminology ....................................................... 62
Carrier Network and Equipment Terminology ...................................................... 66
Internet-related Terminology.............................................................................. 69
Various Telecom Organization ......................................................................... 71
Appendix ..................................................................................................... 75
Sources for Data ......................................................................................... 75
Lehman Brothers Global Telecom Team ........................................................... 76
Index ........................................................................................................... 77
Cellular Technology
Asia Pacific 551 702 887 1,122 1,377 1,619 1,848 2,062
Europe 445 582 719 835 911 961 997 1,024
South and Central America 124 174 241 303 362 396 425 446
North America 172 192 218 251 275 294 309 322
Middle East and Africa 90 115 188 272 357 442 530 635
World 1,382 1,765 2,253 2,784 3,282 3,710 4,109 4,488
Growth Rate 20% 28% 28% 24% 18% 13% 11% 9%
APAC % of total subs 40% 40% 39% 40% 42% 44% 45% 46%
Growth Rate 27% 27% 26% 27% 23% 18% 14% 12%
Source: Lehman Brothers Research estimates
Asia Pacific 15.1% 19.2% 24.1% 30.3% 37.1% 43.2% 45.2% 46.7%
Europe 51.1% 66.8% 82.3% 95.6% 104.2% 109.7% 111.3% 112.6%
South and Central America 22.9% 31.9% 43.8% 54.8% 65.0% 70.8% 70.2% 69.8%
North America 53.3% 58.9% 66.5% 75.8% 82.2% 87.1% 89.5% 91.1%
Middle East and Africa 9.7% 10.9% 17.7% 25.5% 33.3% 41.1% 42.8% 44.3%
World 21.9% 27.7% 34.9% 42.7% 49.7% 55.6% 60.9% 65.7%
Source: Lehman Brothers Research estimates
Advanced Mobile Phone Service (AMPS): AMPS is an analog mobile phone system that
was used in U.S. from the 1980s to early 2000s. It was usually used in the frequency
range 800 MHz and used FDMA technology. It is also known as first generation cellular
technology. Total Access Communication System (TACS) is the European equivalent of
AMPS. TACS used in Japan was named ‘Japanese Total Access Communication’ (JTAC).
Personal Communications Service (PCS): The name given to digital cellular services that
operate at 1900-MHz in the United States. PCS systems in use are D-AMPS, GSM and
CDMA.
Personal Access System (PAS): A limited mobility mobile network operating at 1900
MHz that is deployed in China. It is also known as Xiaolingtong in China. The number of
PAS subscribers in China is trending down as GSM and CDMA mobile phone service
pricing becomes more affordable.
Global System for Mobile Communications (GSM): This is currently the most popular
digital standard for mobile phones in the world. The GSM service is used by over 2
billion subscribers across more than 212 countries.
General Packet Radio Service (GPRS): A 2.5G mobile data service that is available to
users of GSM and D-AMPS. GPRS is a packet-switched technology and hence billed per
MB of data transferred. GPRS is usually used for accessing the internet and downloading
emails. GPRS provides a theoretical data download speed of 60-80 kbps but usually
averages about 30 kbps in real-world conditions.
Enhanced Data Rates for Global Evolution (EDGE): A packet switched mobile data
service for GSM networks that provides theoretical data speed of 384 kbps (but usually
averages about 80 to 160 kbps). EDGE is mainly used for data applications like
multimedia (such as music downloads) and video services. The provisioning of EDGE
and GPRS technology only requires software upgrades for GSM networks—which makes
it relatively cost effective.
Universal Mobile Telephony System (UMTS): Another name for the 3G technology.
UMTS combines W-CDMA, TD-CDMA, or TD-SCDMA air interfaces and the GSM
family of speech codecs.
High-Speed Packet Access (HSPA): Protocols that improve data transmission speeds for
existing WCDMA networks. The HSPA protocol is still under development with only
HSDPA currently being deployed.
Long Term Evolution (LTE): This is a project within the Third Generation Partnership Project
to improve UMTS mobile phone standards. The objectives of LTE are to improve
efficiency, lower costs, improve services, make use of new spectrum opportunities, and
provide better integration with other mobile phone standards. The proposed LTE upgrade
path from UMTS is known as Super 3G or High Speed OFDM Packet Access (HSOPA).
• Since there are many more GSM networks in the world, GSM subscribers
have more opportunities to roam when traveling.
• GSM network equipment is also more inexpensive compared to CDMA,
given the economy of scale and number of vendors providing GSM
equipment.
PDC
(2G)
TDMA
(2G)
CDMA2000- 1x RTT: This is an upgrade for CDMA that has more traffic channels and
provides QoS control. CDMA 2000 1x RTT (1 times Radio Transmission Technology)
provides a theoretical peak data download speed of 144 kbps (usually at 50 to 70
kpbs in actual usage).
EV-DO Revision-A: A modified version of the EV-DO standard that increases peak data
downlink speed up to a theoretical 3.1 Mbps and reduces latency. EV-DO Revision-A is
best suited for IP-based services like voice over Internet Protocol (VoIP) and video
telephony. This technology has been commercially deployed by KDDI in Japan, SK
Telecom, KT Freetel and LG Telecom in Korea, and Sprint and Verizon Wireless in the
United States.
EV-DO Revision B: An evolution of the EV-DO Rev A standard that provides a theoretical
peak downlink speed of 14.7 Mbit/second using better modulation schemes. However,
Rev B will require more spectrum than earlier technology upgrades. EV-DO Rev-B are
expected to be commercially available in 2008.
The "S" in TD-SCDMA stands for "synchronous,” which means that uplink signals are
synchronized at the base station receiver which should reduce interference between
users.
Short Messaging Service (SMS): SMS is a text messaging service that is available
through a mobile phone. A SMS can have up to 160 characters.
Multimedia Messaging Service (MMS): MMS is a messaging service for 2.5G and 3G
mobile networks that enable the sending of multimedia attachments such images, audio,
and video clips. A MMS gateway, relay and server are the main equipment needed to
provide MMS service. Mobile handsets also need to be enabled to receive MMS.
i-mode: i-mode is a wireless Internet service first introduced by NTT DoCoMo in Japan in
February 1999. It provides data transmission speeds only up to 28.8 kbps. Unlike the
WAP standard (that uses WML), i-mode uses format C-HTML, based on HTML and
DoCoMo proprietary protocols ALP (HTTP) and TLP (TCP, UDP).
Freedom of Mobile Multimedia Access (FOMA): FOMA is the name for the 3G mobile
service offered by NTT DoCoMo in Japan. FOMA was the world’s first 3G service and
was launched in October 2001.
International Mobile Telephony Advanced (IMT-A): ITU's official term for 4G mobile
telephony. IMT-A as per ITU will provide throughout of up to 100 Mbps for a mobile unit
and 1 Gbps for a fixed unit.
Average Revenue per Unit (ARPU): The average revenue per connection per month. It is
calculated by dividing the total service revenue per month by the average number of
subscribers. ARPUs are often used to determine how valuable a subscriber is to the
operator. ARPUs often decline as penetration rates increase.
Average Selling Price (ASP): The average price for a particular good. Often used when
discussing the price of a mobile phone. Since many mobile phone operators subsidize
handsets for their customers, lower ASPs are better for the carriers. On the other hand,
when discussing ASPs for mobile phone manufacturers, declining ASPs could have a
negative impact on the company’s revenue growth.
Average Wholesale Price (AWP): The sum of the factory price and shipment costs to the
main distributor.
Bundling: This is a term that is used when a service provider can provide two or more
services to its customers. The service provider often offers the bundled product at a
discount and might even have cross subsidies. Usually, a carrier uses bundling to reduce
churn rates and to improve ARPUs.
Calling Party Pays (CPP): The mobile subscriber does not pay for incoming calls. The
person who calls pays for the call.
Churn Rate: The rate at which subscribers disconnect from a network. This is usually
expressed as either monthly or yearly churn rates. Generally, this rate is much higher for
prepaid subscribers and is often “churn” imposed by the carrier when a prepaid
customer does not “top up” his prepaid account after a certain period of time.
Cost per Gross Add (CPGA): The cost of sales, marketing, advertising and handset
subsidies divided by the gross number of subscribers added during a period. CPGA is
often much higher for operators that offer handset subsidies in order to attract subscribers.
CPGA is often quite low for operators with a large prepaid subscriber base that
generally do not offer handset subsidies.
Erlang: A unit to measure telecommunications traffic. An Erlang describes the total traffic
volume during one hour.
For example, if a group of users make 20 calls in one hour, and each call had average
call duration of 5 minutes, then the number of Erlangs is calculated as shown below:
Minutes of traffic in the hour = number of calls x duration
Minutes of traffic in the hour = 20 x 5 = 100
Hours of traffic in the hour = 100 / 60 = 1.7
Traffic figure = 1.7 Erlangs
Facilities-based Operators: Network telecom operators that have their own network and
offer services on it.
F2M Substitution (fixed to mobile substitution): When a customer gives up his fixed-line
telecom connection and substitutes it with a mobile connection, this is called as F2M
substitution.
Interconnection Rate: The amount that carriers receive and pay to connect a call between
two networks. Interconnection rates are usually different for calls made between two
fixed-line networks, fixed-to-mobile calls and mobile-to-mobile calls. The highest rates are
generally paid-for calls made between mobile and fixed-line networks.
Mobile Network Operator (MNO): A wireless carrier that owns and operates its own
mobile network.
Mobile Virtual Network Operator (MVNO): A company that does not own mobile
spectrum but sells mobile services under its own brand name using the network of a
licensed mobile operator.
Net New Connections (a.k.a. Net adds): Gross new subscriber connections minus the
number of disconnections from a network during a given period—also referred to as the
“net adds” of a carrier.
On Net (on network calls): Calls that originate and terminate on the same network.
Off Net (off network calls): Calls that originate on the network of one carrier and
terminate on another network.
Refilling/Top-up: The process recharging a prepaid account with more money (value for
usage) is called as refilling or a top-up.
Mobile Number Portability (MNP): MNP allows a mobile telephone subscriber to retain
his/her telephone numbers when changing from one network operator to another. Asia,
Hong Kong, Korea and Singapore have already implemented MNP. Pakistan
implemented MNP in March 2007.
Termination Rate: The rate that one telecom carrier charges another carrier to complete
(terminate) a call.
Subscriber Acquisition Cost (SAC): The cost that an operator incurs to acquire a new
subscriber. The typical costs come from sales and marketing, and handset subsidies. Also
refer to cost per gross addition (CPGA).
Handoff: A handoff is when a call is transferred from one base station to another (as user
moves from one cell to another) without disconnecting the call. It is also known as
Handover.
There are two types of Handoffs-
• Hard Handoff: A handoff in which connection to the source base station is
broken before the connection to the target base station is made. It is also
called as “break-before-make” handover.
• Soft Handoff: A handoff in which the channel to the source cell is retained
as the connection to the target cell is established. This handoff is also
called “make-before-break.”
Preferential Roaming: In regular roaming, a mobile phone usually picks up a network that
has the strongest signal. In preferential roaming, the SIM is programmed to choose a pre-
determined network rather than the network with the strongest signal. Operators with a
global footprint use this means to retain more calls on their own network.
Cell Splitting: A means of creating more capacity on a wireless network by having more
than one cell site cover a particular area. Each cell site covers a smaller area, with lower
power MHz and is able to reuse frequencies more times over a larger geographic
coverage area, such as a city or MTA.
Frequency Reuse: The process of using the same frequencies repeatedly across a cellular
system. Since each cell is designed to use radio frequencies only within its boundaries,
the same frequencies can be reused in other cells not far away with little potential for
interference. This process helps mobile network operators handle large numbers of calls
with a limited number of channels.
Smart Antenna: This type of antenna uses algorithms to identify the direction of signal
and to locate the signal beam from a mobile phone. They are usually used in more
recent technologies like W-CDMA, TD-SCDMA and WiMAX. They are also known as
adaptive antennas.
Cell Sites: An area where antenna is placed to provide wireless services to mobile
phone users in that particular area (cell).
Picocell: The short-range area (approx. 100- 250-meter range) that is covered by a cell
site. A picocell is usually used to boost the signal in a small area, usually where there is
high density of users—such as within a skyscraper in a central business district.
Femtocells: These are very small mobile phone base stations (even smaller than Picocells).
They are more inexpensive and easily scaleable—which help operators to increase
coverage while reducing capex and opex.
Transceiver (TRX): Equipment that transmits and receives signals to and from mobile
phones. Transceivers are part of the base transceiver station system.
Base Transceiver Station (BTS): A BTS contains the equipment for transmitting and
receiving signals as well as the equipment for securing transmissions with the base station
controller. A BTS handles traffic from several transceivers (TRXs).
Base Station Controller (BSC): Equipment that manages a network of base stations and
provides the interface between the cell sites and the mobile switching center (MSC).
Base Station Subsystem (BSS): The part of a mobile network that handles the traffic and
signaling between mobile phones and network switching sub-systems.
Billing and Operational Support System (BOSS): Software systems that help manage the
cellular network.
Operations Support Systems (OSS): Software programs that manage the network by
provisioning services, configuring network components, and managing faults.
Business Support System (BSS): Software programs that focus on customer support. Major
functions include managing order data, billing, and offering value-added services.
Visitor Location Register (VLR): A database that stores information about roaming
customers that are currently roaming a network.
Home Location Register (HLR): A database that contains information of all the mobile
users (not roaming) that are in a network.
SMS Gateway: A system that helps deliver and receive SMS messages to or from mobile
devices. Messages are temporarily stored in the SMS center if they cannot be sent
immediately.
Telecom Infrastructure Sharing: This is mainly used to lower capital expenditures between
one or more carriers.
The various types of infrastructure sharing include:
• Passive Infrastructure Sharing: The sharing of passive equipment—usually
means towers, etc. This is particularly helpful in a market with many mobile
carriers. Often the towers of a mobile operator are sold to an independent
tower company.
• Active Infrastructure Sharing: Sharing which includes electronic equipment.
• Spectrum-sharing: One operator leases part of its spectrum to another
operator. This is also known as spectrum trading. E.g. MVNOs in Europe.
APAC 136 146 181 210 249 348 423 493 546
Europe 143 138 167 210 240 275 293 304 312
Latin America 30 29 38 73 100 117 127 133 139
North America 89 95 108 135 148 163 175 185 195
MEA 15 20 26 47 77 88 101 116 133
Total 413 431 520 674 814 991 1118 1230 1325
GSM/GPRS/EDGE 250 263 342 484 603 720 735 658 550
WCDMA 0 0 3 18 44 88 168 258 338
CDMA(EVDORevA,IS,2000) 69 81 100 122 135 160 168 179 187
TDMA 46 42 27 11 2 0 0 0 0
PDC 34 32 37 24 14 5 1 0 0
Other digital 8 12 11 15 16 18 45 134 250
Analog 7 1 1 0 0 0 0 0 0
Total 413 431 520 674 814 991 1118 1230 1325
Source: Gartner, Lehman Brothers estimates
Dual-band Mobile Phones: Denotes mobile phones that work on two sets of frequencies.
For example, a GSM phone that works on both 900MHz and 1,800MHz.
Tri-band Mobile Phones: Denotes mobile phones that work on three different sets of
frequencies. For example, a GSM phone that works on 900MHz, 1,800MHz and
1,900 MHz spectrums.
Dual-band Network: A mobile phone network that operates in two different frequency
bands.
Subscriber Identity Module (SIM) Card: A removable smart card for mobile phones that
stores subscriber/phone number information. A subscriber can change handsets by
removing the SIM card from one phone and inserting it into another mobile phone and
retain the same phone number and other information stored on the phone. All GSM
mobile phones have SIM cards.
Removable User Identity Module (R-UIM) or a CDMA Subscriber Identity Module (CSIM):
A SIM card for CDMA handsets. This allows a CDMA subscriber to switch mobile
phones, use the same number, and retain other stored data (such as phone numbers).
Most CDMA handsets sold globally do not have this feature. However, China Unicom
requires that all its CDMA handsets sold in China have an R-UIM.
FeliCa: A brand name for the contactless IC card technology developed by Sony. The
card includes an integrated non-volatile memory and wireless communication chip which
facilitates data exchange when held adjacent to compatible reader/writers. The main
applications include e-money, prepaid cards for mass public transit systems, employee ID
cards, student ID cards and card-keys.
Contactless Card: A chip that uses radio frequencies to transmit data and does not need
any physical contact. It works on Near-Field Communication (NFC)—an example being
Sony's FeLiCa chip-card technology.
Blackberry: The Blackberry is a mobile device that supports corporate email (it uses push
e-mail technology) apart from normal telephone features. It was developed by the
Canadian company Research In Motion (RIM).
Push Mail: An e-mail system that transfers new incoming email to a mail server then to a
mobile phone. This provides "always on” email technology. Traditional e-mail is “pull
based,” requiring users to logon to request for emails.
Smartphones: A mobile phone with personal computer features like email, a personal
organizer, and multi-media functionality (Nokia 5500, 6680; Sony Ericsson W950).
Symbian OS: A proprietary operating system for mobile devices that was developed by
Symbian Ltd. Symbian is owned by Nokia (47.9%), Ericsson (15.6%), Sony Ericsson
(13.1%), Panasonic (10.5%), Siemens AG (8.4%) and Samsung (4.5%). The software
provides customizable interfaces, along with Internet and PC connectivity software.
EPOC 32: An operating system for mobile devices that was developed by Psion and is
now supported by Symbian.
Palm OS: An operating system for personal digital assistants (PDAs) developed by Palm
Computing.
Mobile TV: The function of viewing video content on a mobile phone. The content is
usually streamed or broadcast over a network and is "real time". Mobile TV services,
similar to conventional TV services, depend on a multicast architecture—broadcasting the
same content to multiple subscribers through a simultaneous transmission. Mobile TV
technologies include DVB-H, ISDB-T, FLO, DMB (both S-DMB, a satellite-based
technology, and T-DMB, a terrestrial-based technology), and TDtv.
Lehman Brothers’ global telecom equipment team estimates that the service provider
opportunity may grow from less than $10 million in 2006 to $2.2 billion by 2009 in
North America and Europe. From a handset perspective, we estimate that units with
mobile TV functionality will grow from less than 100,000 units in 2006 to nearly 50
million units by 2009 in North America and Europe.
Forward Link Only (FLO): This technology was designed by QUALCOMM to provide TV
services over dedicated mobile TV networks. FLO allows mobile operators to provide live
video channels, in addition to 50–100 national and local channels, which includes up
to 15 live channels, clip casts (short-format video cached on a mobile device), and
audio channels.
Owned by Qualcomm, MediaFLO USA’s business model is to program, procure,
aggregate, and broadcast video/TV and other audio- and data-related content to
various wireless devices for the US market. MediaFLO has announced plans to invest
$800 million over the next three to four years to develop, launch, and support the
network. Verizon Wireless is one of the first mobile operators to sign up for the
MediaFLO service in the 700 MHz frequency band.
DMB provides CD-quality audio streaming and can support additional data services such
as text and pictures. It is possible to roll out DMB using current DAB broadcast stations
and frequencies.
DMB has some technical similarities with DVB-H. There are a variety of DMB
technologies, including S-DMB (utilizing a satellite network) and T-DMB (utilizing a
terrestrial network). South Korea has been the primary supporter of the technology. SK
Telecom began offering commercial S-DMB services in May 2005, while T-DMB was
launched in December 2005.
TDtv: Provided by IP Wireless, TDtv operates in the unpaired 3G spectrum bands that are
available in Europe and Asia at 1900 MHz and 2010 MHz. The system is designed to
allow W-CDMA operators to use existing spectrum to offer mobile TV and multimedia
services. TDtv base stations can be co-sited on existing W-CDMA sites and integrates at
the core network level in order to allow for integration of billing and other back-office
functionalities.
Ringtones: The audio tone heard for an incoming call. Downloading ringtones is a form
of value-added service. Ringtones can be classified as -
• Monophonic: A ringtone that has ability to only sound one note or voice,
at a time.
• Polyphonic: A ringtone that makes use of polyphony (produces multiple
notes at a time).
• Master tone or True tones: Actual songs or tones.
Ring Back Tones: An audio tone or music that a caller hears after dialing and prior to the
call being answered at the receiving end. The service is also known as color ring tone. A
subscriber will pay to have different songs/melodies played while his caller waits for the
phone to be answered.
Figure 17: Mobile Application and Billing Market Share and Size
Mobile Applications Telecom/OSS/Bill s-w Mobile System Comp.
Comverse Tech 24% IBM 25% Andrew 34%
RIMM 11% Accenture 24% Powerwave 12%
Alcatel-Lucent 10% Telcordia 12% Others 54%
Ericsson 10% $ 7.1 billion $ 6.5 billion
Openwave 8%
$ 5 billion
Source: Lehman Brothers Research
UMTS specifies the bands 1900-2025 MHz and 2110-2200 MHz for 3G
transmission. The satellite service uses the bands 1980-2010 MHz (uplink), and 2170-
2200 MHz (downlink). This leaves the 1900-1980 MHz, 2010-2025 MHz, and
2110-2170 MHz bands for terrestrial UMTS.
UMTS FDD is designed to operate in paired frequency bands, with uplink in the 1920-
1980 MHz band, and downlink in the 2110-2170 MHz band. UMTS TDD is left with
the unpaired frequency bands 1900-1920 MHz, and 2010-2025 MHz. In most
countries, a paired spectrum is given for each operator- one for uplink and one for
downlink.
3G License Process
The 3G licensing process is usually classified as either an Auction or Beauty contest (also
known as comparative selection).
Auctions
The types of auctions are
• Sealed-bid Auction or Dutch Auction: In a first-price sealed-bid auction
every bidder makes a single “best-and-final” bid, and the winner pays the
price he bid.
• Ascending auction or English Auction: The price starts low and competing
bidders raise the price until nobody is prepared to bid any higher, and the
final bidder wins the prize at the final price he bid.
Advantages of an Auction
• Process is open, non-discriminatory and transparent and hence provides
fair opportunity for new players.
• Spectrum goes to the operator that values it the most.
Disadvantages of an Auction
• They are not appropriate if the number of bidders is less than the number of
licenses.
• It requires a lot of planning.
Beauty Contest
In this process, licenses are awarded on the criteria set out in the invitation bid. Criteria
might include, for example, speed of deployment, project viability, spectrum efficiency
and the ability to stimulate competition.
Wireless Application Protocol (WAP): An application that helps access the Internet from a
mobile phone or PDA. It is an open-standard international protocol.
Wireless Mark-up Language (WML): A language that manages the content format for
mobile devices that implement Wireless Application Protocol (WAP) specifications. WML
takes into account the limitations of mobile phones, such as more limited bandwidth and
the small screen size.
E-cash (electronic cash): Currency or value uploaded onto smart cards or handheld
devices to enable transactions.
E-wallet (electronic wallet): A program that stores and controls online shopping
information, like logins, passwords, credit card details, digital signatures etc.
M-payment (mobile payment): Payments that are made through mobile phones or other
wireless devices like a smart phone or PDA.
Mobile Middleware: Software that helps to connect mobile and enterprise applications
over wireless networks. More specifically, mobile middleware is a software layer that
helps programs and databases on different networks work together.
Mobile portal: A mobile Internet gateway that allows mobile phones to connect remotely
with an enterprise intranet mainly via a Web browser interface.
Mobile Java: Java software uploaded onto a mobile phone. Java-enabled handsets
provide various applications for mobile phones that increase software content and
reduce the risk of software viruses.
J2ME (Java 2 Micro Edition): A version of Java that is used in mobile phones, PDAs, etc.
802.11 (WiFi): An IEEE 802.11 standard for wireless local area networks (WLAN). This
technology is more commonly used in laptops. Wi-Fi means Wireless fidelity.
802.11a: This technology operates at the 5GHz frequency band and can offer speed
up to 54 Mbps for a range up to 75 feet. 802.11a is incompatible with both 802.11b
and 802.11g as it operates at a different frequency band.
802.11b: This technology operates on the 2.4GHz frequency band and can transmit
data at speeds of up to 11Mbps within a range of up to 100-150 feet. Obstacles like
walls can affect the signal strength and transmission speeds.
Hybrid (802.11a + g): This wireless LAN technology operates in 2.4GHz and 5 GHz
frequency bands simultaneously. Equipment vendors like Linksys offer dual-band products,
in which routers and adapters are compatible with both standards.
802.11n: This technology is the next generation high-speed wireless standard that can
deliver data transmission speeds up to 540 Mbps. The technology operates in the 2.4
GHz frequency band and is backward compatible with the “a”, “b” and “g” standards.
This technology will be used for applications like streaming high definition video, voice,
and music. Estimated release date is September 2008.
Hot Spot: An area that is covered with a wireless LAN service. This is often a public
place (such as an airport lounge, in a hotel lobby, in a coffee shop, etc.) or a business
center. It is also known as a “WiFi Hotspot.”
WiMAX is a further evolution of wireless connectivity that will extend wireless access
beyond current personal area networks (PANs), such as Bluetooth, and local area
networks (LANs), such as WiFi technology.
There are two main categories of WiMAX: fixed and mobile WiMAX.
Fixed WiMAX (802.16-2004): This technology also known as 802.16d. This version of
WiMAX replaces the 802.16a specifications.
Lower-cost Technology: WiMAX is a data-only network that will not support circuit-
switched voice services. Providing circuit-switched voice is a significant cost burden for
both the CDMA2000 and W-CDMA technologies. We believe that a data-only network
like WiMAX will be up to 10%–15% less expensive to construct and maintain than
networks using both voice and data.
Higher Data Rates: WiMAX can deliver higher data rates at lower prices than existing
cellular or broadband wireless networks. The improved efficiencies generally derive from
the more sophisticated air-interface standard, a streamlined data-only system, and
improved standardization.
Standardization Issues: There are currently several wireless broadband solutions in the
market such as WiBro in Korea, SmartBro in Philippines, as well as other proprietary
wireless broadband technologies. Although these technologies are similar, they differ in
terms of propagation characteristics and are not compatible.
Frequency Bands Allocated for WiMAX Differ by Country: The radio frequency
allocations for WiMAX vary by region. Although equipment vendors will provide
equipment for the various WiMAX frequencies, the economics of the network could vary
depending on the frequency band. The higher frequency bands (5.8 GHz) would most
likely require line-of-sight equipment. On the other hand, 2.3 GHz to 2.5 GHz would be
most optimal for non-line of sight products that require more robust in-building coverage.
KT and SKT launched WiBro services at the end of June 2006. So far, WiBro has very
weak uptake due limited network coverage, a lack of differentiated features relative to
3.5G wireless services, and a limited selection of handsets/products for consumers.
Smart Bro: Smart in the Philippines is offering a wireless broadband service named Smart
Bro. Smart uses Canopy, a proprietary technology developed by Motorola. SmartBro
operates on unlicensed 5.6 GHz spectrum and has gained traction after being launched
in April 2006. Smart Bro targets areas in the country where DSL service is not available.
So far, Smart Bro already has about 170k subscribers on the network. Around 40% of
the Smart Bro subscribers are in Manila and the remaining 60% are in regions
throughout the rest of the Philippines.
Peak speed 384 Kbps 1.8-7.2 Mbps 2.4 Mbps 3.1 Mbps 3 Mbps 2-4 Mbps 3 Mbps 20 Mbps
Channel size 5 MHz 5 MHz 1.25 MHz 1.25-20 MHz 1.25-10 MHz 1.25-10 MHz 1.25-20 MHz 1.25-20 MHz
Strength Increased S/w upgarde High data S/w upgarde Customised Political OFDM Cheaper
voice capty for high BW rate for high BW for TDtv Support technology Efficient
Weakness Low data Uplink Uplink Uplink Vendor Proprietary Lack of Timing
speed capacity capacity capacity Support Only- China mobility Uncertain
Ultra Mobile Broadband (UMB): The name for a 3GPP2 project that is working on the
evolution of next generation CDMA technology. This standard is expected to provide
download speeds of up to 280 Mbps and will employ OFDMA technology.
ZigBee: An IEEE 802.15.4 standard that uses low-power consumption for wireless
personal area networks. The technology works in the 2.4GHz band and offers data
rates of less than 220 Kbps over a 75 meter radius. ZigBee is used in applications that
require a low data rates, long battery life, and secure networking.
Cell-Fi: A dual-mode device that has cellular and WiFi capabilities and which enables
seamless roaming between WiFi and mobile networks. So far, there are still very limited
Cell-Fi handsets available, as few mobile operators would want to support their growth.
Spatial Division Multiple Access (SDMA): A multiple antenna system that optimizes the
use of radio spectrum and minimizes system costs by taking advantage of the directional
property of antennas. Unlike traditional antennas that radiate power in all directions,
SDMA tracks the spatial location of mobile devices. This technology requires only one
antenna at the receiver end--which reduces CPE costs.
Multiple Input/multiple Output (MIMO): A term that refers to the use of multiple antennas
at the transmitter as well as receiver side. This technology increases throughput, improves
capacity and spectral efficiency, and reduces fading.
Two examples of MIMO are:
• Multiple-input Single-output (MISO): A single antenna at the receiver end.
• Single-input Multiple-output (SIMO): Single antenna at the transmitter end.
Bluetooth: A short range wireless technology used for personal area networks that
maintain a high level of security. Several key features of Bluetooth are robustness, low
power consumption, and low cost. Bluetooth operates in the 2.4 GHz and provides
data transmission speeds up to 3 Mbps by consuming power as low as 2.5 mw. The
technology transmits for a range of one to 20 meters. Bluetooth can be used to transfer
data and exchange information between devices such as mobile phones, laptops, PCs,
and printers.
Figure 24: Bluetooth Technology can Transmit Data Wirelessly to a Variety of Devices
Wireless Local Loop (WLL): Replaces the traditional copper wire in the last mile for
normal telephony by wireless. Signals are sent over the wireless frequencies. WLL is also
known as Broadband Wireless Access (BWA).
Wireless Local Area Network (WLAN): Data speeds on wireless LANs range from 30 to
60Kbps. WLAN utilizes spread-spectrum and works in the 900 MHz to 2 GHz
frequency band.
Access Point (AP): A device that connects wireless devices to wireline networks.
WAP Gateway: Allows mobile handsets (using WAP protocol) to access the internet.
Bit: A binary digit that takes a value of either 0 or 1. A bit carries digital information.
Baud: Baud is a measure for data transmission speed. One baud is one electronic state
change per second. However, the preferred unit is bps (bits per second). A single state
change can involve more than a single bit of data, the bps unit of measurement is a
better unit for the measurement of data transmission speed.
Access, Last mile, Local Loop: The final connection to an end user is called the “last mile
access.” Access technology can either be wireless or wireline. Wireline access is usually
through copper or fiber and wireless may be limited mobility or cellular. In the case of a
wireline connection, the last mile tends to require more expenditure as wires or cables
need to be rolled out.
Remote Termination Unit (RTU): A device installed at a remote location that collects and
transmits data to a central or the main station.
Narrowband: An internet connection which has a data transmission speed of less than
56 kbps is usually considered narrowband.
Broadband Wireless Local Loop (B-WLL) or Local multipoint distribution service (LMDS): A
broadband wireless technology that operates around in the 28-31 GHz frequency band.
This technology is used to provide broadband fixed wireless services to transmit voice,
video, and data signals for last mile access. The technology is a point-to-multipoint
technology and is governed by IEEE. LMDS usually transmits up to five miles but the ideal
distance is a radius of about 1.5 miles.
DSL 2-10 Mbps $10-30 Most widely used technology for broadband
Cable 1-3 Mbps $15-35 Not widely deployed in Asia largely due to
fragmented nature of industry
Fiber 40 Mbps- 1Gbps $40-50 Limited deployments
Satellite 500 Kbps $15-25 Used in rural areas; gets affected by heavy
rains
xDSL: A digital subscriber line that provides digital data transmission over traditional
telephone copper wires and is capable of providing speeds from 256 kbps to 24,000
Kbps, depending on the technology used, the quality of the copper infrastructure, and the
distance from the telecom carrier’s exchange.
Using a traditional copper telephone line, human voices are carried in the frequency
range of 0 to 3,400 Hertz in the form of analog signals. The remaining frequency
bandwidth on the copper wire is unutilized. DSL uses this "extra capacity" to carry data
information in digital format on the wire without disturbing the line's ability to carry
analog voice traffic.
The alphabet x in xDSL can be replaced by various letters like ‘A’, ‘H’, ‘S’, ‘V’ etc -
denoting various types of DSL technologies.
Consumers typically use this technology, rather than corporate users, to connect to the
internet as ADSL provides higher download speeds.
ADSL provides up to 8 Mbps download speed and 1 Mbps upload speed. ADSL is used
over short distances of about 5 km. Signals and repeaters cannot be used to boost the
signal as they distort the original voice that is carried by the same telephone lines.
Rate Adaptive Digital Subscriber Line (RADSL): A variation of ADSL in which the modem
can adjust speed depending upon the length and quality of the line between the
exchange and the modem.
G.Lite: An ADSL version that provides lower speeds (1.5 Mbps downstream and 512
kbps upstream). It is also less expensive as it does not require phone splitters.
ISDN Digital Subscriber Line (IDSL): A DSL technology that carries data on existing ISDN
lines and provides data transmission speeds of 144 kbps, slightly higher than normal
ISDN speed of 128 kbps. IDSL is not a switched technology like ISDN and is an
“always on” service.
High Bit Rate Digital Subscriber Line (HDSL): High bit rate DSL provides symmetric
upstream and downstream data transmission speeds. This technology is used to connect
local exchange carriers and is often used by corporations using T1 lines. This technology
provides data transmission speeds of 1-2 Mbps over a distance of 12,000-15,000 feet.
HDSL is one of the oldest DSL technologies.
• HDSL2: A modified version of HDSL that uses two wires instead of four to
carry the same amount of data. It is less expensive than HDSL as it requires
less wiring. This technology can work over copper of lower gauge or
quality.
Very High Data Rate DSL (VDSL): This is the fastest DSL technology and provides up to 26
Mbps data transmission speed in a symmetric functionality and 52 Mbps (downlink) and
12 Mbps (uplink) in asymmetric access. This technology will only operate in a range of
up to 1000 feet from a central office. VDSL can support HDTV on copper and
applications like video on demand.
Digital Subscriber Line Access Multiplexer (DSLAM): A device that combines data signals
from various DSL subscribers into one stronger signal. Consumers that originally could not
be served by DSL can get access after the telephone company locates a DSLAM closer
to the end users. Depending upon the technology used, DSLAMs connect DSL lines with
Asynchronous Transfer Mode (ATM), frame relay, or Internet Protocol networks.
Naked DSL or Dry Loop DSL: A standalone DSL service that provides broadband internet
connection without requiring the end user to sign up for voice telephony service.
Figure 32: Market Share and Market size for DSL Equipment
DSLAM xDSL Modem
Alcatel-Lucent 40% Thomson 21%
Huawei 9% Siemens 12%
Nokia-Siemens 8% Zyxel 12%
Ericsson 6% 2-Wire 7%
NEC 5% Cisco 6%
Others 32% D-Link 6%
$ 3.5 billion $ 2.5 billion
Source: TechWeb
Community Antenna Television (CATV): Known as Cable TV, this service provides analog
television service to consumers typically though a hybrid fiber-coaxial network. Recently,
CATV systems are being upgraded to support broadband internet access and voice over
IP through the cable infrastructure.
Multi Service Operator (MSO): This is another name for companies that own large cable
TV systems, such Comcast in the U.S. or Virgin Media in the U.K.
Cable Modem Termination System (CMTS): This system provides high-speed data
services like cable internet or Voice over IP to cable subscribers. It is located in a cable
company's headend.
Conditional Access System (CAS): A system in which digital video signals are transmitted
over satellite to subscribers. This service is called “conditional access” because it
provides access only to subscribers, unlike free-to-the-air broadcast channels which are
available to anyone with a television. A set-top box containing a “conditional access
module” is required in the customer’s home to receive and to decrypt the signal.
Hybrid Fiber Coax (HFC): A hybrid network of optical fiber and coaxial cable that is
used by cable TV operators. The optical fiber usually forms the backbone and the coaxial
cable is used between the backbone and the customers’ homes.
Wavelength division multiplexing is used for the optical cable and frequency division
multiplexing is used for the coaxial portion. The network is capable of providing analog
TV, digital TV, video on demand as well as other high-speed services-.
Digital Video Recorder (DVR)/ Personal Video Recorder (PVR): This equipment records
programming (in a digital format) usually to a disk drive in the unit. One popular DVR is
provided by Tivo in the US.
Standard-definition Television (SDTV): Television systems that meet the required resolution
requirements but are not considered high definition TVs. This technology requires less
bandwidth than HDTV. SDTVs are superior to analog TVs (NTSC, PAL, PAL2, SECAM) as
SDTVs do not suffer from ghosting effects, snowy images, or static noises.
Motion Picture Experts Group (MPEG): A standard used for encrypting and compressing
videos.
Various MPEG groups include:
• MPEG-2: Used for over-the-air digital television, satellite TV service and
DVDs.
• MPEG-3: Originally used for HDTV but has since been replaced by MPEG-
2.
• MPEG-4: used for interactive media.
Figure 36: Market Share and Market Size for Cable Technology Equipment
Cable Modem CMTS Cable Transmission DVR/Set top box
Motorola 34% Cisco 54% Cisco- SF Atlanta 36% Motorola 44%
Arris 30% Arris 24% Motorola 27% Cisco- SF Atlanta 32%
Cisco- SF Atlanta 22% Motorola 19% Others 37% $ 3.6 billion
Thomson 7% Bigband 3% $ 2.3 billion
$ 1.3 billion $ 990 million
Source: Lehman Brothers Research
Fiber: A glass-based medium that allows light signals to propagate through it. Fiber
consists of a core (through which a signal is passed) and surrounding cladding layer to
prevent loss of signal strength.
• Single-mode fiber: Fiber with a core diameter of less than 10 μm that
allows only one signal to pass at a time.
• Multi-mode fiber: Fiber with a large (greater than 10 μm) core diameter that
can carry multiple signals at a time.
Dark Fiber: Fiber that has been deployed but not utilized. This type of fiber-optic cable
has not been connected to any active or passive component and has been laid to be
used in the future. It is also known as “unlit fiber.”
Lit Fiber: This is fiber optic cable that is already being used and is attached to electronic
components.
Optical Carrier (OC-x): This describes the range of digital signals that can be carried on
a SONET network. It is generally denoted by OC-n, where OC is the optical signal and
‘n’ indicates increments of 51.8 Mbps.
• OC-1=51 Mbps
• OC-3=155 Mbps
• OC-12 = 622 Mbps
• OC-48 = 2.5 Gbps
Optical Components: Denotes equipment used for transmission and reception through an
optical fiber.
Active Optical Components: Denotes components that transmit, amplify and receive
signals in optical transmission.
Optical Receiver: This equipment converts optical signals back into electrical signals.
Passive Optical Components: These components do not generate or amplify the signal
but route an optical signal without using any electronics. Passive components are
attenuators (devices that reduce signal power), couplers (devices that combine/split the
signal), optical add/drop multiplexers (optical multiplexers) and filters (devices that allow
specific wavelength to pass through).
FTTx: A generic term for fiber-based network architecture. Access networks can be
divided into three main architectures:
• Fiber to the Node (FTTN);
• Fiber to the Curb (FTTC);
• Fiber to the Premise (FTTP) or Fiber to the Building (FTTB);
• Fiber to the Home (FTTH).
Fiber to the Premise is a pure fiber connection from a central office to the end user’s
home. Fiber to the Node and Fiber to the Curb are hybrid fiber/copper connections,
with the difference being that a “node” is roughly 5000 feet (1 mile) from the end user
and a “curb” is roughly 500 feet. The closer a carrier builds out a fiber network to the
end user, the faster the data connection speed.
AT&T is a major supporter of the FTTN technology in the U.S., arguing that it can
generate enough bandwidth (approximately 25 megabits per second) to support fast
data, voice and video services; and FTTN is much more cost effective than FTTP.
Many telecom carriers have a tendency to choose to leverage their copper networks,
rather than deploy a new fiber connection, since their end users are more centrally
located. We believe that the quality of a carrier’s copper plant is a key factor to
enabling an easy migration to FTTN/FTTC.
BellSouth in the US has been a major supporter of FTTC since the late 1990s and enjoys
the economics of the solution based on the topography/geography of its users and the
fast new line growth in the location it serves. BellSouth has used this technology to offer
broadcast video services (basic cable) to some subscribers, as well as voice and DSL
connection.
Figure 39: Verizon and AT&T Capital Expenditure Estimates for FTTx
Verizon Year 1 Year 2 Year 3 Total
Incremental CapEx due FTTP ($B) 1.3 0.9 0.7 2.9
FTTP Capex (% of Total CapEx) 13% 9% 7% 10%
# of Homes Passed (M) 3 3 3 9
Incremental CapEx/Home Passed ($K) 0.44 0.28 0.23 0.32
Passive Optical network (PON): A fiber technology for premise and home networks. In
this network architecture, un-powered optical splitters are used to enable a single optical
fiber to serve multiple premises. Since the technology does not use active components,
the costs required to build out a passive optical network is lower than for other networks.
A PON requires Optical Line Termination (OLT) at the service provider's central office
and a number of Optical Network Units (ONUs) near the end users.
Optical Line Terminals (OLT): This equipment is located at a central office and interfaces
with the metropolitan network. The main functionality of OLT is to adapt the incoming
traffic from the metropolitan rings to the PON transport layer.
Optical Network Termination (ONT) and Optical Network Unit (ONU): Both types of
equipment have the same functionality. An ONT is located in a customer’s premise while
an ONU is located outside the premise. These devices serve as an interface between the
customer’s equipment and the PON.
IPTV can either be unicast or multicast. The unicast method provides a private content
stream to the viewer and enables on-demand services. However, the bandwidth
requirements are higher.
An IPTV network consists of a video headend, video storage and server equipment, an IP
backbone network and consumer premises equipment (CPE) such as set-top boxes (STB).
To deploy IPTV, most telecom operators need to further invest in their broadband network
infrastructure. According to PCCW, the company’s total capex on its fixed-line business,
including broadband infrastructure, has been around 10-11% of the revenue from the
segment. PCCW’s additional expenditure on equipment and system upgrades, to
support IPTV beyond spending for its existing broadband network, was not significant.
With a 67% household broadband penetration, IPTV has been well received in Hong
Kong. PCCW’s IPTV subscriber base is currently over 800K. This has become the largest
IPTV commercial implementation in the world, and includes more than 20% of all
households in Hong Kong.
Downlink: Sending signal from a satellite to a ground station. Signals use different
frequencies for uplink and downlink.
Digital Audio Broadcasting (DAB): A method of broadcasting audio using digital signals.
DAB is expected to deliver better quality digital stereo sound. DAB systems are expected
to be upgraded to DAB+ (which have superior error correction methods). DAB+
equipment is expected to become commercially available by the end of 2007.
Global Positioning System (GPS): This technology helps to determine location, speed and
direction of a user with the help of constellation of at least 24 medium Earth-orbiting
satellites. GPS is widely used for navigation worldwide and is a useful tool for map-
making, land surveying, commerce, and scientific uses.
Mobisode: Video content (usually broadcast television) that is designed for viewing on a
mobile telephone. These mobisodes are usually short in duration given the cost of
wireless data transmission.
Very Small Aperture Terminal (VSAT): A device that communicates by bouncing signals
off a satellite in geosynchronous (stationary) orbit above the earth. "VSAT terminals" are
the satellite modems/routers and are small (generally between .75 meter and 1.2
meters) dishes that operate at a customer's location. "VSAT hubs" are large (often 9
meters or larger) dishes with sophisticated network controls which send and receive
transmissions to communicate with the VSAT terminals.
VSAT terminals are used for internet access in rural areas where getting cable or
telephone lines is too expensive. Download speeds using VSAT terminals can reach up to
500 kbps while upload speeds are only up to 50 kbps. Satellite networks are slower
than cable and DSL but faster than narrowband. Data speeds can also be slowed by
poor weather conditions such as heavy rain.
Attenuation: This refers to the loss of strength (amplitude and intensity) of a signal
during the transmission through a medium. Amplifiers are used to strengthen a signal.
Decibel: The unit to measure attenuation is decibels. This is represented as per unit length
of medium. E.g. dB/cm, dB/km.
Portable Navigation Device: Mobile equipment that has GPS and navigation
functionality.
Crosstalk: Unwanted interference (generally pieces of speech or tones leaking from other
connection). Analog signals are more susceptible to crosstalk compared to digital
signals. A twisted pair cable is often used to reduce crosstalk for analog signals.
Dispersion: The weakening of a signal that occurs in transmission through fiber optic
cabling. Two main types of dispersion include material dispersion and waveguide
dispersion. Material dispersion occurs due to the material of waves and wave guide
dispersion occurs due to the speed of a wave.
Circuit: A circuit can be defined as the entire path between two terminals where
communication takes place.
Packet-switched Network: In a packet switched network, data is split into pieces, called
packets, which are routed over a shared network. Packet-switched networks do not
require an established circuit—allowing many pairs of nodes to communicate almost
simultaneously over the same channel. Each “packet” of data is individually addressed to
help the data find its way to its final destination. Internet networks are packet switched as
are voice-over-IP (VOIP) networks.
Duplex: A duplex communication system has two connected devices that communicate
with each another in both directions.
• Half-duplex: provides communication in both directions, but only one
direction at a time (not simultaneously).
• Full-duplex: provides communication in both directions simultaneously
Time Division Duplex (TDD): A modulation technique that uses time division multiplexing
to separate outward and return signals with the same frequency band.
TDD is a particularly useful technology when uplink and downlink data speeds are
variable. As the amount of uplink data traffic increases, more bandwidth can be
allocated and can be reduced when it declines. The primary two technologies that use
TDD are TD-CDMA and TDS-CDMA.
Frequency-division duplex (FDD): A modulation technique that uses separate uplink and
downlink frequencies, which allows users to transmit and receive data simultaneously.
FDD is a more efficient technology for symmetric data traffic patterns. Radio frequency
planning is easier and more efficient when using FDD.
10 Base-T: A technological standard that denotes 10 Mbits/s speed for Ethernet over a
twisted pair. 10 Base-T was the first vendor-independent standard for the implementation
of Ethernet using twisted-pair wiring.
Other common standards are 100 BASE-T and 1000 BASE-T which are capable of
handling speeds at 100 Mbits/s and 1000 Mbits/s, respectively. These standards have
backward compatibility with 10 Base-T networks.
DS1/T1: A carrier signaling mechanism devised by Bell Labs that is widely used for
digital lines in North America, Canada and Japan to transmit voice and data. The
technology operates at 1.544Mbps. In Europe, T-1 lines operate at 2.048Mbps and
are known as E-Carriers.
Fiber Data Distributed Interface (FDDI): This technology provides faster local area network
access than Ethernet as it primarily uses fiber as its preferred medium. FDDI offers data
transmissions that can extend up to 200 kilometers (124 miles). Typically, FDDI offers
data transmission speeds up to 100Mbps. The technology can also be used as a high-
speed backbone to connect a group of lower speed LANs.
Frame Relay: A data transmission technique used to send digital information using a relay
of frames to one or many destinations. The data is divided into variable-size units called
a frame. The data is sent over an established circuit. The user of a frame relay network
only pays for the amount of data transferred rather than a full-time leased line.
Frame Relay originated as an extension of ISDN.
Permanent Virtual Circuit (PVC): A term used for defining the establishment of a network
connection between two points. Typically used in frame relay and ATM networking.
Multiplexing: A process where multiple signals are combined into one signal. The main
purpose of this technology is to share an expensive resource such as a carrier channel.
Frequency Division Multiple Access (FDMA): This technology allows multiple users to
share a physical communications channel. FDMA is the traditional means of separating
radio signals from different transmitters.
Time Division Multiplexing (TDM): A type of multiplexing where two or more signals are
transferred simultaneously as sub-channels into one communication channel based on
time slot assignment.
Time Division Multiple Access (TDMA): This technology allows different users to share the
same frequency channel by dividing the signal into different timeslots.
TDMA is mainly used in various mobile phone technologies (such as GSM, PDC, iDEN)
and in satellite systems.
Code Division Multiple Access (CDMA): CDMA is a method of multiple access that
divides a radio channel by using different pseudo-random code sequences (using a
unique code for each piece of data). CDMA is a form of "spread-spectrum" technology,
where each voice conversation is spread and transmitted over multiple frequencies.
Intelligent Networking (IN): An architecture for both fixed and mobile telecom networks
that allows operators to differentiate themselves by providing value-added services in
addition to traditional telecom services. This is typically achieved through software
upgrades.
Local Area Network (LAN): A computer network covering a small geographical area like
house or group of buildings. Most LANs are based on IEEE 802.3 Ethernet technology.
Metropolitan Area Network (MAN): A data network that usually spans over a city area.
These networks typically use wireless infrastructure or optical fiber connections to link
network sites. This technology is an IEEE 802.6 standard.
Wide Area Network (WAN): A computer network that covers a broad geographical
area (i.e. regional or national boundaries) and typically uses routers and public
communications links. The largest and most well-known example of a WAN is the
internet.
Long-haul Networks: These networks carry aggregated traffic across cities. These
networks mainly have point-to-point transmission links.
Open System Interconnection (OSI): An OSI Model is a seven-layer model in which each
layer performs a set of functions to support the other layers. The seven layers, from top to
bottom are: Application, Presentation, Session, Transport, Network, Data Link and
Physical. This architecture is considered one of the main standards for data networking.
Packet: A packet is a block of data carried over a computer network. It has a header
that contains information like the destination address.
Public Data Network (PDN): A network that provides data transmission services for the
public.
Point of Presence (POP): An interface point for communications devices. It is also termed
as a service provider’s location for connecting its users.
Point-to-Point Protocol (PPP): A term used to define a direct connection between two
nodes.
Figure 46: SONET and WDM Market Size and Market Shares
Long-Haul WDM Metro WDM SONET/SDH
Alcatel-Lucent 23% Nortel 19% Alcatel-Lucent 25%
Nortel 10% Cisco 14% Huawei 12%
Huawei 10% Alcatel-Lucent 13% Fujitsu 12%
Siemens 9% ADVA Optical 12% Nortel 11%
Ciena 9% Fujitsu 7% Nokia-Siemens 7%
$ 1.8 billion $ 1.7 billion $ 5.3 billion
Source: Lehman Brothers Research
Protocol: A set of rules regarding signaling, authentication and error detection that are
followed to send information over a communications channel.
SS7 (Signaling System 7): Telephony signaling protocols that are used in public switched
telephone network calls.
Mesh Network: A network with no centralized access point, but is connected to other
adjacent nodes. Data is routed between nodes to be sent to the final destination. A mesh
network where all nodes are connected is called a fully-connected network.
Virtual Private Network (VPN): A private communication network used by corporate users
to communicate securely over a public network. A VPN’s encrypted data is sent using a
tunneling protocol.
P2P (peer-to-peer): A type of networking where computers are directly connected to each
other rather than communicating through intermittent nodes. Peer nodes simultaneously
function as client and server.
Router Protocol: A program used by routers to determine an appropriate path for data to
be moved toward its final destination. The path taken by the data is dynamically
determined depending on the traffic load of various route options.
Resource Reservation Protocol (RRP): A protocol that reserves and allocates bandwidth for
real-time transmission. It is mainly used for video data traffic.
Multiprotocol Label Switching (MPLS): A networking protocol that uses the properties of a
circuit-switched network over a packet-switched network. This technology protocol uses
labels that contain destination information attached to packets. MPLS is much faster than
older technologies (ATM and Frame Relay) as the routers only examine the top-most data
label and transfers it further.
Transmission Control Protocol (TCP): One of the core protocols used for the Internet. This
is a connection-oriented protocol that guarantees reliable and orderly delivery of data
from sender to receiver.
Unsigned Datagram Protocol (UDP): An internet protocol used for delivering data. Unlike
TCP, this protocol does not guarantee that the packets will be arriving in a particular
order at a destination. This protocol is often used in videoconferencing and similar
applications when it is necessary to get large amount of data through quickly and it does
not matter if some data packets are dropped.
Modulation: The process of varying an electrical signal (e.g. voice) so that it can be
transmitted over a particular channel in a required band.
Modulation can be either analog or digital. Analog modulation techniques are Amplitude
modulation (AM), Frequency modulation (FM) and Phase modulation (PM). Digital
modulation techniques are Amplitude-shift keying (ASK), Frequency-shift keying (FSK) and
Phase-shift keying (PSK).
Carrier Wave: A signal that is modified to carry information. Carrier waves are usually
at a higher frequency than the signal needed to be transmitted.
Baseband: The original information carrying signal that is modified by carrier wave.
Quadrature Phase-shift Keying (QPSK): A digital modulation scheme that conveys data by
changing the phase of carrier wave. QPSK can carry twice as much data as other
techniques since uses four phases for data transmission.
Backbone: The main path for carrying traffic between a source and destination in a
wireline network.
Switch: A networking device that connects Ethernet or other packet networks. One
purpose of a switch is to reduce network costs. With a switch deployed in a network, all
nodes do not need be connected to each other. Switches also transfer data packets
through a network. However, a switch mechanically forward data without regard to data
congestion (unlike routers).
Router: A networking device that forwards data traffic towards a destination based on
predetermined routing tables and protocols. 3 main types of routers are Enterprise, core
and edge.
Bridges: A means of connecting two networks at a physical level. They are very similar to
hubs/repeaters, however, unlike Hub/repeater bridges they manage traffic.
Layer 2 Switch: These switch data packets to a destination based on the MAC (media
access control) address. Layer 2 switches have high speed, low latency and low cost.
They are also efficient as they require no modification to data packet.
Layer 3 Switch: Layer 3 switching is hardware-based routing with all packet forwarding
handled by hardware ASICs. Layer 3 switches are similar to routers in terms of
functionality except that routers use microprocessors to make forwarding decisions and
switches use hardware-based packet switching.
Digital Loop Carrier (DLC): This type of carrier digitizes and multiplexes signals carried
on the local loops onto a single stream on a DLC segment. DLC is also known as pair-
gain device.
Concentrator: A device that consolidates low-speed circuits into a high-speed circuit with
an intention of efficiently utilizing the limited network resources.
Network Interface Card (NIC): A unit that acts as an interface between a computer and
the network cable. It is also known as a LAN adaptor.
Node: An access point or a point on the network where there is a router or switching
equipment.
Converter: A device that coverts analog signals to digital signals. They are also called as
A/D converters.
Digital Signal Processor (DSP): The main function of DSP is to remove any noise or
compression of signals. DSPs ensure quality is maintained during transmission and allows
proper recreation of a signal. Before signal processing, an analog signal is first
converted to digital before passing through a DSP.
Twisted Pair: In this type of cabling, the two wires are wound together. This method
helps in canceling out the electromagnetic interference (EMI) from external sources and
also lowers the amount of crosstalk from neighboring wires. Twisted pair is mainly used
in telephone networks.
Unshielded Twisted Pair (UTP): UTP cables are not shielded cabling. The lack of shielding
provides a high degree of flexibility. Radiation generated during high speed transmission
is released and reduces interference. UTP is mainly used in computer networking.
Central Office: The main hub of a telecom carrier that includes telephone switches that
terminate all the lines into an assigned area.
Trunk lines: Telephone lines that link a PBX to the telephone provider.
Post Telephone and Telegraph Administrations (PTT): Government organizations that are
responsible for postal mail, telegraph, and telephone services. In many countries, the
former government-monopoly PTT has been partially or completely privatized.
Plain Old Telephone Service (POTS): A term used to describe traditional voice telephony
service. Some of the modern services that became available to basic wireline telephony
subscribers are voicemail, caller ID, call waiting, and conference calling facility.
Private Branch Exchange (PBX): A private telephone exchange that serves a particular
office. This exchange is connected to a public-switched telephone network (PSTN) and
can handle calls between extensions as well as connections to the PSTN. It is also called
as Private Automatic Branch Exchange (PABX) or Electronic Private Automatic Branch
Exchange (EPABX).
Class 4 switch: A switch that connects long distance lines in the Public Switched
Telephone Network (PSTN) to connect with telephone company offices.
Class 5 switch: A switch that directly serves subscribers. Class 5 switches usually utilize
hardware for the switching.
Softswitch: A device in a telephone network which connects calls from one phone line to
another through software. Older switches used hardware to carry out switching.
Next Generation Networking (NGN): A single network that transports services (voice,
data, and all sorts of media such as video) by putting all the data into packets. A NGN
uses Internet Protocol.
Incumbent Local Exchange Carrier (ILEC): A LEC that is an incumbent and has a
dominant position in the market.
Competitive Local Exchange Carrier (CLEC): A new telecom operator that competes
against the ILECs for customers. There are both facilities based CLECs that build out their
own networks and non-facilities based CLECs that lease network access on a wholesale
basis from the ILEC and resells telecom services to its customers.
Data Local Exchange Carrier (DLEC): A CLEC that specializes in DSL services. A DLEC
usually leases lines and resells them to Internet Service Providers (ISPs).
Regional Bell Operating Company (RBOC): The seven regional telco companies formed
to focus on a specific region after the splitting up of AT&T in US in 1984. The initial
seven “Baby bells” were Ameritech, Bell Atlantic, BellSouth, NYNEX, Pacific Telesis,
Southwestern Bell and US West. Over the past 10 years, these companies have merged
again to form three remaining companies: AT&T, Verizon, and Qwest.
Interexchange Carrier (IXC): A long-distance telephone company that carries voice traffic
between telephone exchanges.
Internet-related Terminology
Internet: The worldwide publicly accessible network that uses the standard IP protocol for
communications.
Intranet: A private computer network within an organization that uses internet protocol.
IP (Internet Protocol): A set of rules (protocol) regarding the transfer of packets over the
internet
ISP (Internet Service Provider): An Internet service provider gives its customers’ access to
the Internet and related services. Initially, most ISPs were run by the existing wireline
companies.
Portal: A web-site that acts as an access point to other sites on the internet. Portals
present information from diverse sources in a unified way. Some examples of internet
portals include: Yahoo, MSN, and Google.
Proxy Server: An intermediary server that requests other servers for required requests.
IP v4: The fourth iteration of the Internet Protocol (IP) and is the first version of internet
protocol to be widely deployed. IPv4 uses 32-bit (4-byte) addresses which translates to
4,294,967,296 possible unique addresses. However, some of the addresses are
reserved for special purposes such as private networks. With the increase in internet
subscribers, the number of available new addresses is declining.
IP v6: The successor for IPv4 which support almost an unlimited number of addresses. IP
v6 is still in development.
Voice-Over IP: VoIP is the routing of voice conversations over the Internet using internet
protocol.
Internet Telephony: Using voice over IP to make telephone calls using the public internet.
Figure 56: Carrier VOIP and IP Telephony Market Share and Size
Carrier VoIP Ent IP Telephony
Nortel 17% Avaya 19%
Cisco 11% Siemens 14%
Nokia-Siemens 9% Cisco 13%
Huawei 8% Nortel 12%
Sonus Networks 6% Alcatel 7%
Ericsson 6% NEC 6%
$ 3.4 billion $ 5.4 billion
Source: Lehman brothers Research
Skype: Skype is company that provides voice-over internet protocol (VOIP) service. Skype
operates on a peer-to-peer model, rather than the more traditional central server model.
In other words, a user directory is not stored at a centralized location but distributed
among various points in the network. Skype was acquired by eBay in September 2005.
MIME (Multi-Purpose Internet Mail Extensions): An internet email standard that allows
attachments to be included with an email.
American National Standards Institute (ANSI): A private, nonprofit organization that sets
standards for products, services, processes, systems, and personnel in the United States.
The organization also coordinates US standards with international standards so that
American products can be used worldwide.
WiMAX Forum: An organization formed to certify and promote the compatibility and
interoperability of broadband wireless products based upon the harmonized IEEE
802.16 standard. One of the WiMAX Forum’s goals is to accelerate the introduction of
the technology into the marketplace. The Forum was established in June 2001 and has
more than 420 members comprising the majority of operators, component and
equipment companies in the WiMAX ecosystem.
Common Public Radio Interface (CPRI): An industry group aimed at defining publicly
available specification for the key internal interface of radio base stations between the
Radio Equipment Control (REC) and Radio Equipment (RE). Companies cooperating to
define the CPRI Specification include Ericsson AB, Huawei Technologies Co., Ltd, NEC
Corporation, Nortel Networks SA and Siemens AG
Infrared Data Association (IrDA): An association that defines the physical specifications
communications protocol standards for short-range exchange of data over infrared light.
The IrDA maintains a standard for infrared data transmission (up to 4 Mbps).
Australia
• Australian Competition and Consumer Commission (ACCC): An
independent authority in Australia that was formed in 1995 to administer
the Trade Practices Act of 1974. The ACCC promotes competition and fair
trade in the market place to benefit consumers, businesses and the
community. The ACCC also regulates national infrastructure services such
as the telecommunications industry.
China
• Ministry of Information Industry (MII): The communications and IT regulator
in the Peoples Republic of China. The MII handles telecom industry-specific
issues and provides rulings on items such as calling party pays, 3G
licensing terms, telecom tariffs, and VAS agreements, etc.
Hong Kong
• Office of the Telecommunications Authority (OFTA): The regulator and
competition authority for telecommunications industry in the Hong Kong
Special Administrative Region.
India
• Telecommunications Regulatory Authority of India (TRAI): The main
telecommunications regulatory body in India. TRAI is an independent
regulator that was established in 1997. The main functions of TRAI are to
make recommendations on licensing issues, competition, spectrum, levy
fees and charges on operators, and perform administrative and financial
functions.
• The Department of Telecom (DOT): DOT is part of the Ministry of
Communications and Information Technology in the executive branch of the
Government of India. The DOT makes major policy decisions in India
related to the telecom industry. More specifically, the DOT is responsible
for the granting of licenses, managing spectrum allocation, and forming
regulatory policies.
Indonesia
• Badan Regulasi Telekomunikasi Indonesia (BRTI): The telecommunications
regulator in Indonesia.
Korea
• Ministry of Information and Communications (MIC): The communications
and IT regulator in South Korea.
• Fair Trade Commission (FTC): It is South Korea's regulatory authority for
economic competition. It was established in 1981 within the Economic
Planning Board.
Malaysia
• Malaysian Communications and Multimedia Commission (MCMC): The
regulator for the converging communications and multimedia industry in
Malaysia. The minister in charge of telecom policies is the Energy, Water
and Communications Minister.
The Philippines
• National Telecommunications Commission (NTC): The communications
regulator for information and communications technology in the Philippines.
This agency is part of the Department of Transport and Communication.
Singapore
• Infocomm Development Authority of Singapore (iDA): iDA is a statutory board
of the Singapore government, operating under the Ministry of Information,
Communications and The Arts (MICA). The iDA is a single agency for
integrated planning, policy formulation, regulation and industry development
of the IT and telecommunications sectors in Singapore.
Taiwan
• National Communications Commission (NCC): It is the regulator for
telecommunications, broadcast radio and TV in Taiwan. The NCC was
established in Feb 2006 through the merging of DGT and the Department of
Broadcasting Affairs of Government Information Office (GIO), which
regulated broadcasting.
Thailand
• National Telecommunications Commission (NTC): The telecom regulator in
Thailand. It is Thailand’s first independent regulator. The government is in
process of forming a regulator National Broadcasting Commission (NBC) for
the media sector in Thailand.
Appendix
Sources for Data
For all the worldwide market share and size: Dataquest, Dell’Oro, Infonetics, RHK,
Synergy and Lehman Brothers.
Althosbooks.com
Converge Digest
FCC
Flexwatch
Howstuffworks
IEC.org
Infocellular
IST-Bread
ITU
Linksys
OFCOM
RIMM
Starband
TEC
Techhweb
Telecordia
Three-g.net
Wikipedia
WIMAX forum
Index
Stock Rating
1-Overweight – The stock is expected to outperform the unweighted expected total return of the relevant country index over a 12-month investment horizon.
2-Equal weight – The stock is expected to perform in line with the unweighted expected total return of the relevant country index over a 12-month investment horizon.
3-Underweight – The stock is expected to underperform the unweighted expected total return of the relevant country index over a 12-month investment horizon.
RS-Rating Suspended – The rating and target price have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances including when Lehman Brothers is acting in an advisory capacity in a
merger or strategic transaction involving the company.
Sector View
1-Positive – Sector coverage universe fundamentals/valuations are improving.
2-Neutral – Sector coverage universe fundamentals/valuations are steady, neither improving nor deteriorating.
3-Negative – Sector coverage universe fundamentals/valuations are deteriorating.
Distribution of Ratings:
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44% have been assigned a 2-Equal weight rating which, for purposes of mandatory regulatory disclosures, is classified as Hold rating, 38% of companies with this rating are investment banking clients of the Firm.
12% have been assigned a 3-Underweight rating which, for purposes of mandatory regulatory disclosures, is classified as Sell rating, 25% of companies with this rating are investment banking clients of the Firm.
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