Okay. Well, first of all, welcome and thank you for attending this session. I don't know which is worse, to have a panel directly before lunch or directly after lunch, but hopefully we can keep you awake here. So, as Frank Casanova talked about in his Digital Media State of the Union presentation yesterday, mobile video is really an exciting new opportunity for Apple and QuickTime. With QuickTime's support for the creation, delivery, and desktop playback of mobile video standards like 3GPP and 3GPP2, we are a leading provider of mobile video infrastructure and technology. And we're working with a number of operators worldwide on both the development and deployment of multimedia services.

So, in today's session, we're going to step back a bit and take sort of a broader view of the marketplace. We have some experts from various different leading companies within the mobile universe. And they're going to take us through sort of their unique perspective on the market drivers that are helping to shape this marketplace and turn it into a reality. So, first up, we have David Brudnicke with AT&T Wireless. We have Eugene Sarmiento from Ericsson.

And last but not least, we have Gabriel Sidhoem from France Telecom R&D. So, in terms of the format, they're each going to take you through a presentation. If we could hold questions to the end, then we'll go through some questions. We actually have a little bit of demo in here as well. So, hopefully, that'll deal with the after lunch doldrums. But that's basically it. And I'll open it up to Dave.

Thanks, Benjamin. Thanks, everybody. Hopefully I won't bore you too much. I wanted to spend a few minutes and give you some background around the evolution of data services and the work that AT&T Wireless has been doing in this space, and talk about some of the opportunities that exist for leveraging some of the convergence that we're seeing of capabilities.

So, you know, all the analysts have lots of reports around the importance of wireless data, and while they vary on what they think, how big the opportunity is, I think they're all in agreement that it is pretty substantial. You know, this is the U.S. forecast through 2006. I've seen forecasts for mobile commerce in Europe, for example, saying that just for mobile commerce alone, the forecast there is $5 billion, and this is a data revenue forecast. So we're pretty excited.

I think there's a pretty substantial opportunity here. And this is important to us, and I think it's important to most of the other operators, in that data is our opportunity to reverse the revenue erosion that we've seen happening in terms of decline associated with the pricing of voice minutes and services around voice.

And a good example of this is on the voice side, the opportunities to compete are relatively limited. So there's so many permutations of voice bundles and minutes that you could create to be competitive, and it's always a game of catch-up. Okay, they've got nights and weekends. Okay, now we've got nights and weekends. So come over to us. So it's just a mad dash of customers running back and forth between different voice plans.

So back in 2001, we formed a division within AT&T Wireless called the Mobile Multimedia Services Division as a part of our investment agreement with NTT Docomo. And we realized early that we wanted to make sure that we could get ahead of the data game. And really move the differentiator away from being price competition around voice to being data services that our consumers would value and that would provide some stickiness that would keep the customers with AT&T Wireless.

So moving away from the value that you'd see in how many voice minutes you have or what plan you have to being able to look up the latest sports court while you're on the go, being able to check your email from your phone, traveling to San Francisco, which would be nice to know where a good restaurant to eat is. it is, or even find directions to the hotel.

So we started this little M-mode data experiment way back in the mid-90s when we used to call it "pocket net." And that was back when there was lots of hype around the "wireless internet." I think those two words together back in the mid-90s were kind of an oxymoron since there was really nothing internet about seeing a five-line black-and-white LCD display trying to communicate what was on the internet.

Running at 9.6 or 14.4 kbps wasn't necessarily a very compelling experience. But it was a great opportunity for us to get our feet wet and learn some lessons. And some of the important things that we picked up through this was obviously devices matter. You know, back then it was a big clunky Mitsubishi or Sony Ericsson phone.

And while it was pretty advanced in its day, "I'm looking at the wireless internet now, I'm pulling out my antenna and waiting for it to connect," was a rather underwhelming experience unless you were a pretty patient individual. And also, the other thing we learned there was content matters.

Our approach then was a walled garden approach where we said, "You can have unlimited access to the wireless internet, but it's the wireless internet that we give you within our garden." And back then there weren't a lot of applications or services that were necessarily enabled or could be easily converted for application and use in the wireless space.

And probably most importantly, one of the things that we learned through this is it's really important for us to focus on the environment in which our customers are going to use the services. It's not really practical to expect that. It's not really practical to expect someone to pick up their phone, wait for the connection to happen, to try to look up a phone number when they're competing with voice minutes and all they have to do is dial 411 or call somebody to get the information that they're looking for.

So I think one of the most important takeaways that we had, and I think what's important for folks to understand as they're looking at creating more advanced services, whether they be multimedia services or applications, or any application that they think they would like to bring into the wireless space, is that it needs to be relevant for the mobility of the device. And it needs to be relevant for the mobility scenario and environment and be relevant for the time slice.

Because that's really what mobility is about. It's about I have a few seconds, I have a time slice of availability to be entertained or find information or connect to those that are important to me. So I think that's really what mobility is about. It's about I have a few seconds, I have a time slice of availability to be entertained or find information or connect to those that are important to me.

So we launched M-Mode in early 2002 when we were in the process of rolling out our GPRS network nationwide. And at that point, we had hundreds of content providers. We had lots of applications, Java applications, ringtones. You could go to 19 different places and get news. And it was like walking into Walmart and having never been there before and just having rows and rows of aisles of stuff to look for and not really knowing how to find it.

So one of the things that we did in 2003 was rebuilt a whole new M-Mode data service. And what was really important here was we really were trying to focus on, again, the point I made earlier about it being relevant to the mobile experience. Through some extensive customer interviews and research and working with a leading design firm here in San Francisco, we relaunched M-Mode and we remade it, and we relaunched it last November.

And what was really important to us was that we had a lot of data. And what was really important to us was it needed to appeal to the mass market, not to a propellerhead 35-year-old person like me who was patient enough and understood the complexities of trying to buy a phone, figure out how to launch a browser, get all the settings correct, and make it work.

Because our real goal here was to drive daily usage. We wanted this to be something that was important and part of people's lives. And we wanted it to be a best-in-class service through work that we were doing with our content partners to make sure it was compelling content and it was meaningful and up-to-date.

So today we have over 260 sites and applications available through M-mode. These range anywhere from repurposed Internet content or sites that have been rewritten or have a mobile version of their content, such as some of the new sites, Google and others, as well as applications for download, primarily a lot of Java content available for phones. And additionally, we even today already have some sites that are providing streamed content on the GPRS network.

So some of the questions I get from a lot of people is, well, how does this whole M-mode thing work for me as a developer or a content provider, somebody who wants to create an application and bring it to market? We at AT&T Wireless, and through our M-Mode platform, we don't host content. We don't have big servers in our data center aggregating lots of Java applications for people to connect to and download and vend them.

What we do is we follow very closely the NTT Docomo iMode model, where M-Mode is your portal, your connection to those content partners and providers within our sphere or without. We don't prohibit our consumers or customers from connecting anywhere they would like to, but for those content providers that work with us, they can reach into our entire customer base without having to have an individual billing relationship.

So it makes it really easy for our content partners to bring an application to market and to be able to monetize it without having to worry about, "I have to print a bill, I have to figure out how to do all these transactions with the customer," because we have a very flexible mobile commerce platform that we've put in place to try to... take that burden off the content partner.

So I know you're all probably wondering, "Well, this is really cool. What does this have to do with mobile video or multimedia or QuickTime?" Well, bear with me and I'll get there. Because what we are constantly doing is we're refining our platform and looking to deliver new applications and content.

Some of the examples of new applications that we've recently launched are the mobile traffic applications, so that in over 70 cities in the country, you can pick up your phone and within a few days, you can get your phone back to work. And within two clicks, if you subscribe to the application, in your phone, see the traffic conditions.

So a logical evolution of this would be, "Well, it's really nice that I can see the traffic conditions, and I see that there's a backup here, but what about that traffic cam associated with that?" So there's a lot of natural extensions that our multimedia capability and devices in the network could enable to extend applications like that. We see the same thing with some of the other applications with news, with games, with movies and movies.

So we're trying to get that back. with movies and movie trailers. We are continually working with our content providers, trying to help them understand what capabilities we have in the devices and in the network and our billing platform to help them bring these applications and services to market.

So we've seen some pretty substantial success that we're really excited about. In 2003, we crossed over the million subscriber mark for M-Mode. These are a million active users, and we see on average $7 to $8 a month of revenue for those users, in addition to their voice revenue. So if you remember back to that previous slide I put up, we're really seeing data revenue reversing the decline there. And we see advanced applications providing us a tremendous opportunity for both ourselves and our developers and content partners to continue that trend.

So, I talked a little bit yesterday in Frank's keynote, I mentioned 2004 being the year of convergence, some of you may have been there and heard me make that comment. And some of the trends that I see and that we see at AT&T Wireless and with our partners is Three key areas that are converging in this year and in the years to come. And some of these enablers are already here. So we launched our Edge network last year.

We completed the deployment nationwide. So Edge, if you're not familiar, is an advancement or enhancement to GPRS. And GPRS was the data standard that GSM employs, and I'll show a little network evolution slide there. But this allows us to provide customers with devices that have the capability to access data at rates up to 130 kilobits per second with bursts up to 200. So the networks are getting there.

New devices. One of the big challenges to delivering richer applications was device capabilities. We had, years ago, Frank and I mentioned going to Asia and seeing demonstrations of mobile streaming over wireless networks. And, you know, one of the big inhibitors was the Internet. And one of the big challenges was devices. We didn't have enough devices that had the horsepower to stream the video.

They didn't have the big enough color displays to actually render it in a format that was meaningful to customers. And then there was battery life. You know, walking around with five batteries in my pocket so I can, you know, watch 15 minutes of video wasn't a really compelling experience.

And, of course, new types of applications, some of those of which I've showed you and that we'll take advantage of and use this capability. But more importantly are the tools that are needed to bring these applications to market. Three years ago, a content partner of ours would have been forced to say, "Okay, I want to deliver rich content to my consumers.

How am I going to do this?" Well, I could go out and buy a real server and pay for lots of hardware and lots of licenses, or should I use packet video? But if I use either of those, then I have to work with the device manufacturer to make sure they're putting the appropriate hardware codecs and everything into them. And there were a lot of hodgepodge of standards. Standards were evolving and weren't quite there yet.

But this year, I think we've really seen the standards turn the corner, and that we're actually seeing these capabilities and standard compliant capabilities implemented in tools. And I think what Apple's done with QuickTime and their tool set there for content authoring and creation is a perfect example of that. It's that easy to create your content, author it, and deliver it to the device.

So devices, there's a whole plethora of devices. You walk into any of our stores or competitor's stores, you have a wide variety of devices to choose from. On the consumer side, from smartphones to camera-enabled phones to music-capable phones to gaming devices, some that have been successful and some not so successful. I'm sure some of you have probably been to that favorite Nokia, non-Nokia site, sidetalking.com, where you see lots of people talking on their taco.

So there's definitely been some lessons learned by both the operators and the device manufacturers. On the enterprise side, we offer a pretty rich array of devices to support our enterprise customers' access to their corporate data, applications, and email in a secure manner, both through devices as well as PC cards and working with various OEMs to ensure that the capabilities are baked into the device at the factory.

The network evolution has been a really interesting journey for us. As I mentioned, we launched GSM and GPRS and completed our build-out in late 2001, and that completed our GPRS deployment. Last year, we did an upgrade nationwide across all of our network, which took us to edge, which takes us up to 384 kilobits per second aggregate throughput. And again, that varies by conditions and the device's capability. Not every edge device is going to be configured by the manufacturer to take advantage of all the throughput.

But on average, the newer devices, such as the device I'll do a little demo on, the Nokia 6620, is a four-time slot edge device. It's a Class 10 device, for those of you who may be following some of the wireless standards. But what that means is I have the ability to access data at speeds up to about 120 to 130 kilobits per second.

That's pretty cool, considering I'm mobile. And for the PowerBook users in the audience, this is the greatest wireless modem I ever had, because I just turned Bluetooth on on my laptop, and I'm connected. It blows dial-up away. And now, with improvements we've made to our network, it's accessible just about everywhere.

We also announced that this year we would be deploying the next evolution on the GSM data path, and that is our move to wideband CDMA, or you may have heard it referred to as UMTS. We'll launch UMTS in four cities this year. We've launched it already. It's available in Dallas. That was our original launch city that we were testing in. We'll launch it in three other cities this year.

And some of you may be familiar with the fact that we're being acquired by Singular. And Singular has announced that they will be--they're fully committed to UMTS and will be launching UMTS nationwide as well. So we're really excited that the bandwidth is increasing, and there is a pretty robust evolution path that takes us to HS. That's actually misspelled. It should be DPA, and that stands for High-Speed Data Packet Access. But it's just the next evolution in the GSM/GPRS data path.

So what is this Edge thing? I talked a little bit about it, but what's great about Edge is we rolled out Edge, and all we had to do was a software upgrade to our network. We didn't have to go out and replace radios and roll trucks and have forklifts.

And Edge is essentially just a new algorithm that takes what was previously required three data time slots in the GPRS world and condenses that into one time slot in Edge, which is really important to us because not only it frees up capacity on the data side, it frees up capacity on the voice side, so it's a big efficiency improvement for us.

So what does this mean to services, and what does this mean to those folks who want to create multimedia applications and deliver those? Well, you can see the evolution here. I talked about GPRS. We got pretty excited when GPRS came out, but the reality is, on average, a GPRS device supports around 30 kilobits per second, which means you probably want to do a typical video encode at around 24 kilobits per second.

And streaming is probably something a lot of people would avoid under GPRS, unless you were doing some lower-quality AM quality audio streams. But it was good for crude video or more of a slideshow or download and playback scenario. With Edge, we've seen significant improvement, and Edge is substantially better in that we get really good quality streaming for video. For audio, you can have a pretty decent experience with AAC, the 32K or 64K encodes on AAC work really well. Streamed over Edge, pretty decent FM quality.

And the big benefit we get is the latency is much improved. That was one of the biggest complaints we got from a lot of folks was, "That's great, you always have an always-on GPRS connection, but the latency is really painful." Edge is a substantial improvement in latency, and that's really important when it comes to applications.

And then, moving to UMTS, we get really excellent quality streaming, even lower latency, and a good amount of performance. And the typical video encode around 128 kilobits per second provides a pretty compelling experience. So we're really excited about the capabilities that have converged this year, and we're excited about our partnership with Apple and the work that Apple is doing to enable folks like yourselves to create content and deliver this content without having to figure out, "Am I delivering this to the desktop? How do I encode this? What are all these standards?" That's the beauty of QuickTime and the authoring tool.

And the authoring tool is, I just select, I want to export it, and I don't have to be the rocket scientist to figure this out. And it really works. Recently, a little side story here, Frank, I'm going to make fun of you. Not really. No, I won't make any comments about your shirt or anything.

Frank and Elisa were recently up at our offices. We were in a meeting, and I was introducing Frank and telling him that, you know, this Apple job is just a distraction because Frank's really a musician. And he mentioned his website to us. Well, while we were sitting in the meeting, I browsed out to Frank's website, downloaded one of his video clips of him jamming out with some famous guitar players, put it into QuickTime, exported it to 3GP, and in the meeting, I streamed it over to my phone and showed everybody in the meeting.

That's how easy it is, and that's how easy Apple's made it. So with that, I'd like to conclude with just a quick demo. So working with Benjamin, what we did is we took some movie trailers and we encoded them and put them up on their Apple QuickTime streaming server.

What I've done is I've got a session queued up here. I'm going to connect to the server, and we'll actually stream the Alien vs. Predator movie trailer over the Edge network. And if the demo gods cooperate with me, we'll actually see it working. So let's see. Get the phone over here.

This is a two-minute clip, and I could let it stream and stream, and I would get about a meg and a half worth of data moved through the network. So as an operator, I get pretty excited about customers moving a meg and a half of data. Obviously, we have data plans and arrangements available to our consumers that make that affordable to them, so that's important as well.

And I don't know necessarily that someone wants to watch the entire two-minute video clip, but this is a great example of how easy it was to take very rich content on the desktop and convert it and deliver it to the mobile device. So with that, thanks. Thanks, Benjamin.

I think we'll note that was actually streaming off of one of our XSERV G5s back at Apple using QuickTime streaming server, and the content was created using Final Cut and QuickTime. That client happened to be Packet Video, but we work with a number of 3GPP compliant These devices come with the real player on them, which supports 3GP, but it doesn't prevent anybody from downloading other players.

That's the beauty of having a device with an open operating system, and the pack video player works really well and is available across other devices. So as an operator, we don't have bias toward one player or the other. Our bias is toward standards, and our bias is toward great customer experience.

Thank you, David. Okay, so coming up next, from the infrastructure perspective, we have Eugene Sarmiento from Ericsson. He's going to talk to you a little bit about some of the Some of the other components that are involved in delivering rich media to a handset, we play a very specific role in that we are the streaming engine that delivers content to the handset, but there's a whole bunch of other stuff that has to happen before that, like billing and authentication. And that's really where Ericsson plays a role, and we've been working together to ensure that both of our standards-based solutions work quite closely together.

Thank you, Benjamin. Can I borrow this? Sure, why not? So, good afternoon, everybody. First of all, I'd like to thank Apple for giving Ericsson this opportunity to address the developer community that you have and to give our insights on the convergence of mobile and media. We've seen already a lot of things that I might be repeating, but I'll try to add the world view to this in terms of what we see in mobile media from the holistic perspective.

To start off, my name again is Eugene Sarmiento. I'm a Product Marketing Manager for Ericsson. I've been working with the streaming and download solution from Ericsson for the past two and a half years, working with the global operators, trying to push them. towards this mobile and media convergence.

Now, the slides I'm about to present to you, We'll mainly cover three main areas. First of all, what opportunities we see in the mobile media space, what's Ericsson's role in this space, and finally, what are the key success factors that will basically take what we have now into a full-blown service earning millions or billions of dollars.

So, the first question I'd like to address, of course, is why will mobile, when combined with media, be successful? So, what's so interesting about the mobile network that will allow for better services of media content? Well, as a start-off, what I've put on as a slide is the huge number of mobile subscribers that we address today with 2G, 2.5G, and 3G networks. As you can see, in 2004, we have roughly 1.3 billion subscribers that are covered with mobile phone technology.

Now, this 1.3 billion subscribers are potential subscribers for media content, and we see another billion of growth within the next four to five years. So, that's the amount of potential revenue or potential customers that the mobile media industry will have. We see a lot of growth in areas such as Asia Pacific, specifically talking about, let's say, China and India.

We see in China alone a growth of 5 million subscribers per month, right? And in India, we have roughly 2 to 3 million subscribers per month. And we see the same growth in Southeast Asian countries such as Bangladesh, Pakistan, Indonesia, and the Philippines, all having a total, let's say, a total population of 100 million each.

And at this point in time, they only have penetrations of 14%. So, there's still a lot of growth out there, and what you can see is the penetration of mobile phones is much, much more than what there is for the web today. It's much more than the TVs.

And what you can see also with the number of phones that are coming out, there's more picture messaging capability that are coming out than there are digital cameras that are coming out. So, we see all these factors as key points in making mobile media successful. Now, the first thing that I'd like to address or ask is, what's so different? What's so different about mobile technologies? Well, I can basically sum it up in two things.

The first thing is that it's very personal. A mobile phone is the only device that you have where you keep very personal information. If any of you have mobile phones with picture capability, a big probability is that you have your family's picture inside it. You have credit card information or password information as I have it. And basically, this is the only device that you keep right up to your face.

No other device has that capability. And that would mean that you could push content to the mobile phone. Anytime, anywhere. And, you know, we always emphasize in Ericsson, mobility, mobility, mobility. Because that's actually the key for mobile technologies. So, it's the personalization factor of mobile phones. The second part to that is that users are willing to pay for content on the mobile phone. This is something that's very different from internet.

Or web technologies. Because it's very difficult to have the user perception that the internet is a secure way to pay for content. Although it's taking off with Apple's iTunes. It's taking off with real networks. And a lot of music downloads we see from the web. It's still easier for a user with a mobile phone to pay for that content.

So, we see that as a big potential. Or a big reason why mobile networks are so different. Just to give you a small example. I saw American Idol at home. Because my mom comes from, well, my brother comes from San Francisco. And, you know, there's two, I come from the Philippines as well. And there's two contestants there that have Philippine background.

And so, when my mom visited me in Sweden, first thing she said was, "Oh, do you know about American Idol?" And I was like, "What's that?" And so, she starts streaming, you know, using our wireless LAN at home. She starts streaming, showing me, "Oh, these are the singers." Now, I think she would have done the same thing if she had that capability on her phone.

You know? If I was on the train going, I think it was four months ago. I was going to an office in Atlanta. And there was this guy who was just talking to me about Michael Jackson's trial. And then his mother called. And she said, "Oh, have you seen the latest information about Michael Jackson and what's happening there?" If she could have sent him a link or a telephone number to call to show her that clip, I think she would have, I mean, he would have, you know, shown me that clip and said, "Hey, here's what's happening with Michael Jackson." So, there's a lot of potential for mobile media. And 3GPP has seen this potential, has standardized codecs as well as protocols to make sure that streaming is available on mobile networks. I think they're forecasting roughly $6 billion worth of revenue in five years from now. So, that's 2008.

So, that's the first reason why we think mobile media is successful. But there's growth drivers. And our colleague from AT&T has already mentioned that one of the growth drivers is the technologies that we have. Right? And what technologies that we have today in most of the world is 2G technology. Where you have up to 28 kbps.

Right? If you've monitored how Vodafone has addressed very small numbers of users, The first thing I want to say is that mobile media content on the 2G space, since there's very limited bandwidth, they don't push or they don't provide streaming applications as their thrust or as their core services.

They're looking at download services because then you would have the quality of the video even though the bit rates are quite low on these 2G networks. But we've seen a lot of the operators in 2003 move into Edge, which have 64 to 144 kbps capabilities. One of them is AT&T, and there's roughly 76 operators around the world who have Edge and have launched Edge in 50 countries. So now we have the network technologies with huge bandwidths to deliver mobile content. So these are growth drivers for mobile media services. And then there's 3G, which is 384 kbps with 2 megabits.

And finally for 3G Evolved, which is HSE. As he explained, it's 384 to 15 megabytes per second. I saw a session yesterday talking about H264. That's already been, or is being introduced in 3GPP and there's a lot of hype on that and there's a lot of activity in making that codec available for the wireless handset. I think if you have phones that have not just 64,000 colors available but millions and millions of colors, then you have almost DVD quality in 3G networks.

So, what else do we see? We also see, since there's a lot of bandwidth in the operator networks, we see that the revenue potential for mobile data is increasing year by year. This figure alone is from Q2 2002 to Q4 2003. And you see 5% increases in the operator's revenue, in the revenue that they earn off of data. And this has moved up from roughly 10% to roughly 30%, and that's quite a big number for them.

Another driver for mobile media is, as you can see here, is the handsets. There are a lot of handsets coming out. Last year, when we were trying to sell, well, two years ago when we were trying to sell streaming technologies, we couldn't find handsets. So we had to hire application developers, create clients, put it in iPacks, connect it to a GPRS phone, and then stream content.

But that's not the case today. You have all the big brands, all the big terminal manufacturers, Sony Ericsson, Nokia, Sanyo, LG, all these Japanese terminal manufacturers, coming out with phones which have video call capabilities, content streaming capabilities, download capabilities, and this is driving the mobile media market as well.

Okay? So... Now that we have the handsets, we have the bandwidth, the next thing is, of course, for operators to take both and offer mobile media services to the customers. And what we've seen is there's a... Last year, it was more marketing-oriented. A lot of operators said, "Okay, we have streaming capability," but not really fully launched it. So it was more a marketing campaign that they have that capability. We're first, and basically, we have that service up and running. But we've seen services like TV to the mobile, video on demand, video telephony services.

I'll just give you a short example. In Italy and in Sweden, they have a service called Big Brother Live. Has anybody heard about Big Brother here? No? Okay, there. Big Brother is a reality TV show, and basically, a group of people stay in one place, they live there, and they have cameras everywhere. What they did in Sweden is they had six live feeds of content, plus on-demand content, and a director's cut, of course. The director's cut is the most important aspect of this whole show.

And they were able to generate roughly 50,000 streams per week, and these streams were 1 to 2 euro each time you access it. So it generated a lot of money for one show. And this is not the only thing that's picking up. We've also seen what we call the Master Tone Download Service. That's been picking up here as well in the US. But it is very popular in Japan, especially with KDDI.

They have roughly 7 million downloads of ringtones per month, and each ringtone download is $1 each. So that's $7 million every month. In the US, Beyonce launched her song with this Master Tone, and you could download the Beyonce song. And what it generated was 1 million downloads. So that's roughly $1 million.

So apart from that, we have video telephony services, where you can call people, have video-to-video conferences, but also you have the possibility to send numbers, and with these numbers, stream content. And what advantages that have, of course, is I could push a special number to you, and you would dial up through this number and access specific content.

So, what else have we seen? As you see, all the big operators such as Vodafone, T-Mobile with their T-Zones, NT2 Tacoma with their iMode, they're all looking at packaging services and integrating that to the handset. It's all about the personalization, quickness to access that content. And in terms of the services that Ericsson has launched with our operators, we've done live TV with a lot of the Hutchinson companies. For infotainment services, we've done a lot with Telefonica, we've done a lot with Amena.

SmartTone, we have a traffic cam service. I think you were talking about the picture-based traffic cam. We have streaming-based traffic cam services. We have streaming-based traffic cam services in Hong Kong where they have certain streets that you can select and find out what the traffic situation is. But of course, the most mature markets will always be Japan and South Korea where they have, specifically for South Korea, they have roughly 400 different channels. And they earn roughly 7.5 US dollars per month on top of their previous ARPU because of these streaming and download services.

So, there is an opportunity and what we would like to do is have a special role in the mobile media space. And what is that role? First of all, we address our customers' needs. And who is Ericsson's customers? It's mainly operators: AT&T, Orange, Vodafone, T-Mobile. These are our customers and what we provide to them is end-to-end solutions for person-to-person services as well as application-to-person services. Person-to-person being SMS, MMS, video call, instant messaging, as well as voice over IP over wireless. Apart from that, we are also trying to bridge the gap between the media industry and the mobile industry.

Although AT&T is quite advanced in having a lot of partners, a lot of content providers already having access to the mobile network and to the mobile clients, there are still a lot of operators out in the world that don't have that relationship, that don't know what the content industry is doing. They don't know what your competencies are.

They think that, "Oh, maybe it's the same thing as voice and I'll just try my luck in this service." And then they fail. So, there's a lot of things that we would like to do for them. And one of the major things that we would like to do is aggregate content and aggregate applications.

And this is quite important for us. And we have an initiative called Mobility World, mainly targeting content developers, application providers, and bringing them in to our portfolio, testing them, verifying it, and then saying, "Alright, this is a verified application. It's a cool service, and we'd like to take it to market." And so that's what we do now.

We do a matchmaking and tell the operator, "Alright, which one do you want? Is it the live traffic cam service? Is it the music download service called EMU's?" This is another service we provide. And then the operator selects from these. And we sell it as part of our portfolio.

So that's what our role is. And again, as I said, we provide person-to-person and application-to-person. So what's Ericsson's offering mainly to our operators? We cover handsets from Sony Ericsson, as well as Ericsson's mobile platforms, which is used by six terminal providers. We provide access networks, which is routing, radio-based stations, wireless networks.

We have core networks, switching infrastructure, service networks, which is basically enablers. And we have content and applications as part of our portfolio. And apart from the hardware, software infrastructure that we sell, we provide services to integrate that, to manage it, and if necessary, to host it. Because we've won a lot of outsourcing. deals when it comes to supporting wireless networks.

So, we think that we can take the next step towards the convergence of mobile media and our strength in the system side from 2G, 2.5G, and 3G, along with, of course, Apple, because Apple enables the whole end-to-end flow. Without the authoring, without them supporting 3GPP, it would be very difficult. It would segment the market. So, I think that our competencies in the wireless network with Apple's content authoring tools, the streaming distribution platforms, when you tie these things together, you have a very good story and a very good offering for our operators.

So, I have two more slides, and basically this one is, so now we know that there's an opportunity. We have a specific role that we've taken as Ericsson, and how do we make it successful? There's two aspects to it. There's the user aspect, and then there's the operator aspect.

From the user aspect, we need to make sure that it's easy to use, it's easy to pay, and it's relevant for the user. And we have a lot of initiatives that focus on these three areas. From the easy-to-use aspect, we have an initiative called Zero123, which is no manuals, so zero manuals, one button to access internet services, such as, let's say, a T-zone service or an AT&T service, and two seconds to access the content that I want. And three, maximum of three clicks to find that content.

So that's Zero123. And on the side for relevant services, how we address that, of course, as I said, is we have Mobility World, where we collect the best services around the world, and we resell this to our operators. But apart from that, we do consumer lab, consumer studies.

We ask the users, "What services do you want?" Is it a peer-to-peer service? Is it an email service? Is it a video call service? And these are things that we collect. And after we collect it, we create packages around that. And then, easy-to-pay. This is one of the things that we really need to consider, because at this point in time, a lot of the operators are missing the growth they should be getting because of the high prices they put on the data. I think it's averaging roughly $20 to $30. Right. Per megabyte of data. So we need to make sure that the packages are there, or we have the capability to do either subscription-based charging, event-based charging, or time-based charging.

Finally, we have the operator aspects, which are platforms, handsets, applications, and content. These are things that, if you tie everything together, will make mobile media successful. So, as a summary, the mobile network offers great opportunities for both you and us because we sell systems, and the more traffic that goes in there, the more systems we sell.

Ericsson is leading the way, and we'd like to invite all of you, if you have bright ideas, if you have applications that you'd like to take to market, we have the Mobility World Forum to allow you to take your applications to market. Finally, the key to success for mobile media is basically exceeding user expectations. It's about the user, it's about the user, and it's always about the user. Thank you.

Thank you very much, Eugene. That was a great presentation and excellent choice of hardware in that architecture slide. Coming up next, we have Gabriel Sidhoom from France Telecom R&D. Gabriel and France Telecom are in a unique position in that not only are they one of the lead mobile operators in the world, but they're also one of the lead broadband operators, and they actually have a R&D facility here in the Silicon Valley. I think Gabriel's role is to be the liaison between what's going on in the Silicon Valley and then spreading that throughout all of France Telecom's operations worldwide. I'll hand you the clicker.

All right, thank you. So a couple of hard acts to follow. I'll try. So I wanted to start first by introducing France Telecom just to set the context where we're coming from, where we are today, the kind of challenges we're facing, and then move into our take on the wireless data space.

Okay, so where are we? We're a global group present on five continents. We have about 117 customers worldwide, 117 million customers worldwide. And we have some global solutions through strong brands, and they're listed there. We're pretty much a leader in most of our markets, and we have both multinational and fixed-line solutions. So these are our brands. So we have Orange, which is our wireless carrier; Wannado, which is our internet provider; Equant is a corporate provider, global corporate provider in about 220 countries. Basically, there's an airport. Equant will be there.

And then France Telecom, which is the brand you see in France. And then TP is the Polish carrier, which is a global carrier. And then, of course, we have the same thing in the United States, which we own. So those are our two major fixed properties. Now, it's interesting because this, first of all, if we go back six, seven years, we were basically a fixed-line carrier, doing phone, doing some basic data.

And in the last six years, through acquisition and growth, we've become a full-service provider. And to a certain extent, this has given us opportunities to do more. It's given us opportunities, caused us some problems, of course, integration and so on. But one thing that's positive in all that, it has given us the view that we treat our clients across all those different contexts. So for us, it's really important for us, for the client. In fact, we're organized around client context. The client when he's at the enterprise, the client when he's at home, the client when he's in his personal sphere that is in between those two.

So our approach isn't so much to say, "Okay, what are we going to give him? What's our fixed services? What's our internet service? What is our wireless service?" But it's to treat the customer as a whole and pretty much serve the different contexts that that client finds himself in.

Market position. So if we look at in France and UK, we're a mobile phone leader. We have about 47 million customers for our wireless property. Internet access, we have about 10 million clients, and about a quarter of them have broadband access, which is probably not impressive for the US, but it's a pretty good rate for Europe. And we're a fixed service leader in France with about half of 50 million customers. So basically half of our customers are fixed customers and half are mobile customers.

So we have the three major properties, and we have a distribution division that distributes the products, and that's very important in order to reach that sort of, to be able to meet our clients' context. And then we have a network organization that provides the infrastructure to our business units.

So let's talk a little about who we are in terms of annual results. So we're about a 47 billion euro company. These were the revenues for 2003. Our EBIT about 17 billion and operating results of 10 billion and a net income of 3.2 billion. Now, last year, this is to show the improvement over last year.

Over last year, we ran into a debt problem and have come out of that since. And a lot of the debt issues that carriers were facing, at least in Europe, were due to some investments that had to be made for 3G licenses. So we're very interested in monetizing these investments we made.

In terms of R&D, we have worldwide about 3,000 engineers and scientists in R&D units. It makes us one of the larger R&D units in terms of a European telecom company. In 14 sites, last year we had about 600 million euros dedicated to R&D. We own about 6,000 patents, including patents for MPEG-4 and patents for ATM. And in the last few years, we've created about 15 spin-off startups from our R&D units. So these are engineers and business people who came up with an idea, and then it was spun off. One company you might know is NVIVIO, who is in the MPEG-4 space.

In terms of our key missions here in San Francisco, so one is technology transfer, the identification of new technologies and new business models especially, and then transferring those back to the business units. Visioning of new cutting-edge concepts, that is developing either a mock-up or a demo or a prototype as the needs require.

Developing IP and inventions, integrating, doing an analysis of the impacts of technology integration into our network unit. Development and management of partnerships, and then doing a sort of operational support of our BUs in the US. We have basically two BUs in the US. One is Equant, and the other one is a company called Globcast, which is a satellite services provider.

Anyways, I'm not going to go through this, but basically this is our process in terms of detection of new technologies, validations, and implementation, and then a handoff, an operational handoff, and then just keep doing that over and over again. What are our kind of key practices right now? They're wireless communications and services, the digital content management, web services, identity and messaging, broadband and network engineering, emerging technologies, and advanced IT.

One of the sort of the conclusions that we've come up with is that as an operator, we need to move from being a transport carrier to being an intermediator for our client. And so that'll, as we go through the presentation, you'll see what that means. But that means really being in a position to, for example, manage the client's preferences and their context and their identities. If so required. And then, because I think the future isn't so much clients looking for information anymore, I think clients are going to want information to find them based on where they are, based on the context they're in, and so on.

And I think that changing those two words, you know, instead of clients finding information, but basically information finding them, it structures a lot of what an operator, traditional operator, needs to do to move on and succeed. Because, let's face it, transport as a business is not the future. That's a very mature market. IP, you can become an IP carrier with a very low cost today, so they aren't the usual barriers of entries that we saw 10 years ago.

Okay, so now let's move into a little of the market positioning in terms of our wireless business. So, anyways, I just wanted to remind you all of the 47 million customers. So what's going on in the market right now? We're in the 3G launch. The official launch is slated for fourth quarter of this year. Right now, we're bringing up about one city in France per week.

So it is in test mode, so we're testing a lot of the interoperability. We're testing a lot of the device management that we can do. And of course, looking at the users and making sure that what we're providing is well integrated with the other services we're providing. In terms of 2G, 2.5G, basically, there is a growing customer base still and growing RPU, and so we're bundling voice offers with some basic data services.

There's significant pressure from the regulators to open up our network and provide MVNO services, which for us, on one hand, is a source of revenues, and people like Sprint have done real good business with providing these MVNO capabilities. On the other hand, it does lower the barriers to entry into market. It allows people to come in with integrated offers, so it allows a content creator, somebody who owns content, to enter the market and be able to provide a bundle service.

We, as traditional telecom operators, have really not gotten into the content business, almost stayed out of that. We were very careful not to close the door on the internet. We were very careful not to close the door on the internet. certain of the boundaries in the value chain.

So it provides some issues we have to deal with, but on the other hand it's clear for us that it also means that we just have to be much better at partnering with content providers in order to be able to play in this market. And then of course as we've all heard image music games value added services that we're going to be bundling with a voice.

So here's what's going on with the takeoff. So the launch takeoff mass market. You see by end of 2004, we're pretty much, at least for mobile TV and video downloads and video MMS and photo MMS, we'll be achieving sort of the, we'll be getting past the takeoff stage and getting into the mass market. And then in the next year, having video phone and broadcast video being launched.

These are, so in terms of what's going on in music, these are some of the offers in the European companies of ringtones. So, on average, the price of a ringtone is about 3.5 euros in Europe. So that's one thing that probably is in contrast to the US market is the fact that people are paying more for the ringtones.

It's an interesting market because it shows the value of, I mean, if you think of it, you could buy the song for 99 cents and then edit it out and then, you know, get the ringtone. But it shows the value of having a service, you know, that's perceived as being different than actually buying the song. So, yeah.

In terms of the music, okay, so we lost the references here, okay? I'm sorry. So, What you see here is the responses of customers in Italy, the blue is UK, and then the green is Germany. Responses to...

Most people agreed with downloading being something that's free, that people aren't willing to pay for a service to download. They might be willing to pay for the content, but not for a service that allows them to do the download.

They also think it's a way, it's a first step in perhaps sampling a CD before they buy it. What we see in the UK, a big difference in the UK versus some other European countries is that UK kind of like, customers like to pay as they go. As opposed to having a flat fee, you know, an all-you-can-eat type of model. So that was very interesting in terms of behavior. And basically-- Basically, people were on either side of the scale as to whether downloading was something that was useful or appropriate given their current terminals.

Staying on the music, so this is, as we see what's happening in the music market, one is transmission speed of the network increases, and then you get more powerful,

Finally, to look at the games, we see a huge growth in people downloading games to their mobile.

We did a survey, and although it was a significant difference, it seems a small difference, but of the people we surveyed, 15% said they were ready. They saw their mobile phone as a way of playing games, as opposed to 11% who had gaming platforms, portable gaming platforms. Now that could be also, I think that's probably a particular characteristics of the European market.

So in terms of some of the conclusions, I think that one, we really see that this is the way to valorize, because let's face it, voice is still the killer application on any type of wireless network. And in fact, 3G actually makes voice more efficient. And it's probably a value proposition that's more appropriate in the U.S., where as you upgrade, you get better quality on your voice.

The second point is very important, because I think that for us, it's user-created content that's going to make this market take off, and not necessarily just professionally created content. At some point, I think we're going to see the same phenomena we've seen, where people use a service a lot, for like the first year, and then there's a drop-off. I think what's truly going to have the stickiness is when users can integrate their own content with professional content, or just create their own content and be able to use it and display it on their phone.

Of course, that also means that there needs to be some developments in the metadata field. In fact, being able to capture in real time metadata. That's going to be one of the source of innovations in the years to come, as will your indexing strategies of that metadata, and how you correlate it with user preferences.

In order to be able to push the right things, in order to be able to make sure you can recommend to the client, you know, well, if you like this song, you might like this song, and you can download it right now or hear a sample right now.

And finally, I think we're positioned to provide innovative services. That sounds probably banal, but I think the reason I put that up there because of the, I think it's going to be important to all carriers to treat their clients in a holistic manner, not as a wireless client sometimes and sometimes as a different type of client. They're one client with different contexts. In different contexts, they have access to different devices. And by understanding what their contexts are, you're in a better position to be able to provide them the content that they may need. All right, thank you. Kevin, thank you very much.