TeliaSonera Annual Report 2008 - Company Description

Technology trends

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Customers want coverage and fast internet at home, at work and indoors as well as outdoors. Demand for capacity is virtually unlimited. The technology evolution taking place in the Nordic and Baltic countries is expected also in Eurasia, but when and to what extent remains to be seen.

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“Every 18months the performance doubles.” Moore's law, named after Intel co-founder Gordon E. Moore, has been of major importance to describe the history of computer and IT technologies and is becoming relevant also to describe the development in telecommunications.

Transmission for fixed broadband has grown rapidly over the past five years. For example, traffic to TeliaSonera's Swedish IP network reached 100 Gigabits per second in October 2008, hundredfold the speed in 2000. While file sharing makes up a large part of that rise, recent growth in streamed traffic involving web-TV watching place new demands on the networks. Moore's law is becoming true also for describing the evolution of mobile communications. The rapid development of wireless access technologies drives a massive increase in mobile data traffic.

Global IP-traffic increase

Source: Cisco, Approaching the Zetta byte Era, June 16, 2008

Network upgrades and investments

Bandwidth requirements will be determined by the total use of simultaneously connected devices at a certain spot, for example a home or office. Strong traffic growth drives a need for network upgrades and network investments. For many, broadband delivered via the existing copper network or via the mobile network are sufficient. However, for very capacity intense sites, the most future proof technology is fiber, often referred to as FTTx - fiber to the home, building or curb.

Western Europe consumer DSL1 subscriptions per speed

Digital Subscriber Lines, DSL, carry data at high speeds over standard copper telephone lines.

Source: Ovum, 2008

A new global generation of mobile network technology is about to be launched, the so called 4G or Long Term Evolution, LTE, networks. The technology offers high speed mobile broadband and implies a migration to IP-based services also in the mobile networks. This migration opens for new opportunities in service creation, quality and production efficiency.

Technology evolution supports mobile broadband

Source: Ericsson – TeliaSonera joint technology study, October 2008

Moore's law does not only describe increased performance but also improved cost efficiency. An operator needs to support each radio transmitter with a capacity of several hundreds of Megabits per second rather than the few Mbps that has been the norm until recently. To meet this requirement and to capture new business opportunities, while achieving reasonable cost per Megabit, upgrading of the current backbone networks is needed.

Improved mobile indoor coverage

Two major technologies support converged fixed-mobile services as well as improved mobile coverage and capacity for certain indoor environments. Unlicensed Mobile Access, UMA, is a standard for extension of mobile services using a WLAN radio link and access point in the customer's premises. UMA requires specific handsets. The second, femtocells, are low-power wireless access points that operate in the 3G spectrum to connect standard mobile handsets to a mobile core network using residential digital subscriber line, DSL.

All IP and improved service quality

Telecommunication is developing into an all-IP world. In order to improve performance, efficiency and quality for IP-based services, specifications for a new mobile core network are being finalized in the international standardization body 3GPP during the first quarter, 2009. The new network, named Evolved Packet Core, and the related standard, will be of major importance as it lowers delays and can efficiently offer fully seamless IP-connectivity management between different access networks.

A technology related to the delivery of IP-based mobile services is IP Multimedia Subsystem, IMS, which is a telecom architecture for building and delivering IP-based services. Now IMS solutions are progressing and being accepted by fixed, mobile as well as cable operators as the future default control platform for IP-based communication services such as VoIP.

New technologies for commercial purposes

Peer-to-Peer is a technology that enables among other things file sharing. P2P is already used in various commercial purposes as for example Skype, a software allowing phone calls via internet, and Joost, a system for distributing recorded TV programs and other forms of video content.

Web services, web 2.0 and related tools play an extremely important role in making service development possible for many people. This puts the end user in the driver seat of open service innovation. Social software enabling online communities and media communication include Rich Site Summary, RSS, for delivering online news, as well as podcasts, videocasts, blogs and sites, or Wikis, the pages of which are edited by the users themselves.

Near Field Communication

Near Field Communication, NFC, is a standardized short range radio frequency based communications protocol that provides easy and secure connections among various devices without user configuration. NFC will increase simplicity significantly and can be used in for example public transport, retail payments, event arenas and for business workflow.

The possibilities will increase once the next generation of mobile SIM-cards is available. The Universal Integrated Circuit Card, UICC, will increase storage capabilities and improve possibilities for operators to configure and update services. As a result new business models emerge and in turn new opportunities for mobile operators, who can offer business partners a channel to the end users.

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