Transitioning to LTE: Business and Technical Considerations

Presented by: Alcatel-Lucent

Kyle: Hello and welcome to today’s live chat Transitioning to LTE: Business and
Technical Considerations, brought to you by Alcatel-Lucent. Please submit your
questions now!

Pat: Please note: Attendees on today’s call will receive a copy of Alcatel-Lucent’s soon
to be published white paper, "The Keys to Making a Successful Transition to LTE".

1. Question: Does LTE radically change how services are structured and sold, or is it
largely just a matter of faster, better?

Answer by Jay: Thank you for your question. LTE transformation offers the opportunity
of how services, including new IP-centric services, are packaged and sold. It also offers
the network service provider the opportunity to improve cash flow over time by focusing
on meeting more aggressive KPIs than what current 3G networks can provide.

2. Question: Are most LTE-related revenues going to be generated by the traditional

smart phone/wireless modem market, or are we going to see a lot of other use cases are
driving a significant amount of new revenue?

Answer by Jay: It depends on the network operator’s business. For operators that
offer both wireline and wireless services, the IP-centric architecture offers the
opportunity to deploy converged appls that drive both wireless and wireline devices,
even at the same time. The next generation of high-bandwidth services arrives a lot
faster when you pool the strengths and resources of global leaders and innovators in
infrastructure, devices, applications and content. That’s the idea driving the ng Connect
Program. Visit our website for more details: http: //ngconnect.org/

3. Question: But what about existing OSS/BSS infrastructure? Does that get scrapped
or can we integrate what we’ve invested in going forward?
Answer by Nisar: existing OSS/BSS can be used to support LTE. Of course it
depends upon the specific OSS and BSS. Most carriers currently in trial are reusing their
system and developing interfaces to new LTE elements.

4. Question: When exactly can we expect to see LTE handsets in the market?

Answer by Nisar: USB dongle are already available and used in the first LTE
commercial launch. Smartphones are expected early 2012. Alactel-Lucent is strongly
involved with Tier 1 device providers to run IOT and is also provided services for
customized interoperability test for operators.

5. Question: What are the requirements for the network transmission in LTE
(Bandwidth per user or station and synchronization precision in parts per billion)?

Answer by Nisar: Radio site backhaul will have to evolve to cope with LTE higher
spectrum efficiency. Depending on radio bandwidth and MIMO scheme the required
bandwidth per site will range from 50 Mbps to more than 350 Mbps, definitively requiring
upgrade to Ethernet backhaul or Microwave packet radio from traditional T1.
Synchronization requirement for LTE is the same as for 2G or 3G technology.

6. Question: How to re-allocate using frequency band between DVB-T and LTE?

Answer by Nisar: Could you clarify what do you mean by DVB-T reallocation: do you
mean frequency "white space" in the 700-800 MHz or the Digital dividend from Analog
TV?

7. Question: DVB-T UHF occupies from 470~862MHz, but LTE operated from
698MHz. There must be interference with each other. How to avoid such worse case?

Answer by Nisar: Thanks for clarification. Alcatel-Lucent is actually performing some

field trials with operators to further assess the level of filtering required to minimize the
interference between the two systems. Note as well that some bands have been defined
by standard bodies in "reverse" duplex in order to have easier filtering at site level than
handset/device level.

8. Question: How has forecasting infrastructure investments changed with 4G? How
can we gauge if we’re building out too much or too little, and is there a way to minimize
these risks?

Answer by Jay: Initial forecasting infrastructure will follow a legacy planning in terms
of coverage. However, this will quickly ramp up to an approach of forecasting based on
traffic usage patterns. ALU has award winning tools and deep expertise in assessing
and optimizing networks and stands ready to help as new applications appear and drive
network capacity planning needs.

9. Question: What are the benefits of ALU’s approach to LTE?

Answer by Jay: We offer a combined business and technology approach to

understanding the network service provider’s specific benefits that LTE transformation
can provide. Our focus is to work directly with the CXO community to first understand
what each part of the business is expecting from LTE. That includes Sales & Marketing,
Network Architecture, Operations, and Finance. We offer an initial one-day workshop to
help the network service provider rate and rank order expectations of LTE transformation
to then help the customer understand the parameters for its own LTE transformation
business case. This includes not only the equipment requirements, but also the
surrounding integration work that is needed. Finally, our focus gets down to a market-by-
market analysis for the network service provider.

By partnering with ALU, the network service provider can also leverage our
experience in over seventy (70) IP network transformations on a global basis involving
hundreds of ALU experts. We also offer tools and associated methodologies that are
focused to LTE transformation such as our world-class Wireless Spectrum Optimization
(WSO) tool for recommending re-allocation and re-farming of spectrum.

10. Question: Deals like Kindle’s WhisperNet and Redbox connectivity have worked
out well, providing easy revenue without a lot of hassle. Will we see more productized
offerings with the higher 4G speeds coming online, and where should we be looking to
aggressively sell those kinds of offerings? Any opportunities in particular you see?

Answer by Nisar: Operators need to look at new business models including offering
services from cloud computing. Yesterday, I heard a few industry analysts bantering
about the robust market for health monitoring, however tackling that market will require
building a relationship with the insurance market to capture the value of drastic potential
reductions in health care costs.

11. Question: What are some of the non traditional costs to consider when moving to
LTE?

Answer by Jay: Traditional costs associated with moving to LTE include typical EF&I
(engineer, furnish, and install) from the RAN into the Core. Other (non-traditional) costs
to consider include: opportunity to upgrade Core to IMS to support new revenue
streams across converged wireless/wireline (NG) networks, running two parallel wireless
networks in a given market for a certain amount of time; OSS/BSS integration; and early
retirement of existing wireless network infrastructure. Offseting these incremental costs
are benefits from cost reduction including more effective spectrum utilization and power
consumption, as an example.

12. Question: How big a potential threat is network congestion down the road if
consumers do adopt LTE en masse for their home and business connections? Could
services like Netflix mean swamped connections in a year or two, and what does that
mean for the policies we create today?

Answer by Nisar: LTE differentiator is the high bandwidth and IP at the edge. Today
the congestion issue is more of an issue at edge. However, your point is well taken - we
can look at the recent past. For instance EVDO roll out has seen 10% growth on monthly
basis for several carriers. With higher bandwidth at the edge one should expect greater
demand on capacity planning.

13. Question: How extensive is Alcatel-Lucent’s involvement in the build out of LTE
systems?
Answer by Jay: Very Extensive. We have partnered with Verizon to build out the
largest scale LTE network globally. We have over 50 trials.

14. Question: With LTE, do you see the adoption of QoS-differentiated services both in
Interworking & Roaming environments? When will the IW and Roaming frameworks
(Agreements, Policy management, Charging, Wholesale, TAP, Monitoring, ...) able to
support such QoS awareness/differentiation?

Answer by Nisar: That’s an excellent question which requires rather detailed

discussion. Suggest that we discuss various considerations and approaches offline if
you can reach us.

15. Question: You said operators need to look at offerings like cloud computing. IS
there any advantage we can market that won’t get us in trouble over net neutrality
issues? What can we offer that others can’t?

Answer by Nisar: Tiered bandwidth, services allow you to protect your investment as
well as target niche market segments requiring greater bandwidth e.g. enterprise and
business segment should not be underestimated.

16. Question: Verizon has announced LTE for 38 U.S. Cities and many airports before
the end of the year. But there are no devices yet, not even USB dongles/external
modems. Without devices, won’t LTE just be a nomadic or fixed line? The theory of `if
we build it they will come` doesn’t apply to telecom.

Answer by Nisar: USB dongle are already available and laptop/netbook/tablet are
expected mid next year, smartphone following end 2011-early 2012. LTE device
ecosystem is definitively part of all tier 1 mobile device suppliers.

17. Question: What are some of the biggest mistakes a carrier can make when moving
to LTE?

Answer by Jay: The network service provider should look at LTE as a transformation
of its business and technical models. It is not just about RAN optimization. Some key
issues that the carrier should understand include: (1) What is the competition doing in
the markets that we serve? (2) What are the expectations of depreciation of existing 3G
network infrastructure? (3) Do we have a comprehensive end-to-end strategy of aligning
LTE deployment with the overall NG strategy? (4) Do we have a complete understanding
of all of the cost and benefit drivers associated with LTE transformation? (5) How are we
to operate 3G and 4G networks, in parallel? Should we consider outtasking the
management of the legacy 3G network as we execute 4G LTE transformation?

18. Question: Can you talk more about the trials of LTE systems you have going on?

Answer by Jay: ALU has trials going on in every region. All LTE variants and
frequencies are being tested in large scale trials (e.g 700 Mhz, 1800 MHz, 2.3 GHz, 700
MHz AWS, 2.6 GHz, 800 MHz 2.1 GHz & PCS). With every trial we support the
customer with a robust set of design integration and optimization services.

19. Question: Won’t LTE initially compete with WiFi hot spots (for nomadic users) and
DSL/cable (for fixed line users). If so, there really aren’t any special apps are there?
Answer by Nisar: Wifi and fixed DSL/Cable are definitively compliment to LTE.
Operators want to deliver the best connection any time to the end users and all those
access techniques will be used depending on user connection context (location, Time of
Day, status of the network, connected device, application). Anyway, Alcatel-Lucent is not
considering heavy investment in WiFi hotspot today as the best move because LTE will
provide equivalent performance for static user and obviously much better for mobility.

20. Question: What is the market adoption curve looking like? When will we see laptop
devices start selling? When will we see LTE phone adoption? When will it be seen as
the standard vs. 3G?

Answer by Jay: Market Adoption Curve Question -- We need to address this point
market by market. In the US, for example, we expect to see LTE adoption accelerate
quite rapidly, starting with Verizon’s launch of their LTE service offering in December.
USB dongles are already available and laptop/netbook/tablet are expected mid next
year, smartphone following end 2011-early 2012.

21. Question: Do you have any involvement with public safety utilization/deployment of
LTE?

Answer by Jay: We have a number of firsts within the public safety arena. We are very
active with NIST and have done multiple demonstrations for first responders - see our
presence in youtube.

You may also be interested in our recent announcement: Alcatel-Lucent and

Alexandria Police Department present US first Public Safety Broadband spectrum LTE
demonstration Delivering Next-Generation Mission-Critical Communications. You may
also be interested in ALU’s Public Safety and Defense Solutions Minimizing risk is
critical to maintaining public safety and security, and protection and response are
essential when crises occur. Alcatel-Lucent specializes in providing flexible safety and
defense solutions for high-pressure situations. Drawing on our networking and unified
communications expertise, we help you ensure dependable interoperability between
agencies and jurisdictions. For more information - please visit our site.

22. Question: Can you give an example of a carrier that chose ALU for their LTE
Deployment and why?

Answer by Jay: November 4, 2010 — Verizon Wireless and Alcatel-Lucent today

announced a four-year agreement expected to be worth US$4 billion for Alcatel-Lucent
wireless network architecture and services to support Verizon Wireless’ ongoing 3G
network expansion and 4G/LTE network build out. Alcatel-Lucent continues to be a
major Verizon Wireless’ network infrastructure supplier and the agreement builds on a
long-standing relationship between the two companies. “Constant network improvement
is in our DNA,” said Tony Melone, chief technology officer at Verizon Wireless. “Network
reliability is a top reason business and consumers choose and stay with us. With Alcatel-
Lucent’s strong support, we continue to optimize our networks and will remain the most
reliable in the nation for years to come.”

23. Question: How do you see the potentiality of Indian Market on this technology? Are
you planning to go alone?
Answer by Nisar: We see great potential for LTE in the Indian market. Following this
past Spring’s wireless broadband spectrum auction, many Indian operators are moving
forward on their LTE plans and we are involved closely with several. The wireless /
broadband / media ecosystem in India is very rich and diverse, and we recognize the
importance of engaging across this ecosystem fully as part of driving successful LTE
launches.

24. Question: With T-Mobile aggressively marketing their network as 4G, what can
LTE providers do to make sure that their offerings are differentiated in the marketplace?
Is emphasizing speed the key?

Answer by Nisar: For sure speed is part of the differentiator, but with LTE ( i.e. actual
4G) network latency is also much shorter and QoS management much easier, delivering
an higher Quality of Experience to the end user than 3G+ evolution.

25. Question: What kind of added features that aren’t supported on 3G networks do
you see consumers paying extra for?

Answer by Jay: We have identified that customers are willing to pay more for the
superior quality of experience enabled by LTE. The following link has more detail on this.

26. Question: What new network management challenges will operators face, and
what tools is Alcatel-Lucent offering to help keep congestion and traffic under control?

Answer by Nisar: LTE will enable QoS enabled and differentiated services. Greater
emphasis on end-to-end performance management & service quality management will
be required. Alcatel-Lucent offers professional services and set of tools to enable
carriers to get an end-to-end view and allow proactive performance and capacity
management. Examples are Wireless Guardian and SQM tools and modeling services.
This enables monitoring, predicting, and managing the traffic load at a given point in the
network, as well as, from end to end perspective.

Jay: The audience may be interested to visit Verizon’s site to learn more about what
they see as the LTE advantages. According to Verizon Wireless, an LTE industry
powerhouse: “The performance and capabilities of 4G LTE will be unmatched in the
marketplace, allowing customers to do things never before possible in a wireless
environment.” Consider some of the advantages that Verizon Wireless’ implementation
of 4G LTE will provide: HIGHER DATA RATES, COVERAGE:, BETTER MULTIPATH,
MOBILITY AND POWER PERFORMANCE, LOWER LATENCY, SIMULTANEOUS
USER SUPPORT, SECURITY, SIMPLIFIED WORLDWIDE ROAMING, MASS
DEPLOYMENT OF M2M APPLICATIONS. For details please go to our website.

Jay: Thank you for your time and participation.