TECHNOLOGY AND INNOVATION

Digital transformation is characterized by steady growth

in demand for bandwidth and data driven by increased connectivity in more and more areas of professional and private life. The A1 Telekom Austria Group’s infrastructure forms the technological backbone for all of that.

The further development of the network infrastructure plays a central role in ensur- ing that the Group is optimally equipped for the dynamically growing requirements in an era of digital change and because this forms the basis for innovative prod- ucts and services. Accordingly, the Group’s mobile and fixed network infrastructure was continuously expanded once again in 2018. Convergence, i. e. the intelligent combination of the mobile and fixed-line network infrastructure, enables efficient and extended regional coverage with increasingly large bandwidths. For this rea- son, the A1 Telekom Austria Group already has a presence as a convergent opera- tor in six of the seven core markets in its operational footprint (Austria, Bulgaria, Croatia, Belarus, Slovenia and the Republic of Macedonia). In order to meet the re- quirements of future mobile communication technologies such as 5G and new ser- vices based on them, the Group is continuing to press ahead with the roll-out of fiber to mobile base stations. The next mobile communication standard 5G, the “Internet of Things” (IoT) and cloud-based services for the B2B market all require high computing capacity. As a result, data centers are playing an increasingly im- portant role as the third pillar of A1 Telekom Austria Group’s infrastructure strategy.

The investments (CAPEX) of the A1 Telekom Austria Group totaled EUR 771 mn in the 2018 financial year, with one of the focal points being the broadband expansion.

Fixed-line broadband expansion

In Austria, the fixed-line broadband expansion was continuously driven forward by the accelerated fiber roll-out in the form of FTTC (fiber to the curb), FTTB (fiber to the building) and FTTH (fiber to the home). While fiber is coming closer and closer to the customer, the capacity of existing copper lines is also being in- creased. This is being done with a combination of vectoring – a technology for suppressing interfering signals – with transmission technologies such as VDSL2 and G.fast. In this case, the target transmission rates are several 100 Mbps for medium line distances. The first generation of G.fast enables data rates of up to 500 Mbps. 2018 also saw the start of the roll-out of Vectoring Plus (V.Plus), the latest VDSL technology. This means significant increases in bandwidth to up to 300 Mbps for medium line lengths.

With its Internet@Home portfolio, A1 offers an attractive solution for every cus- tomer requirement in Austria. Since July 2016, the traditional fixed-line broadband offering has been supplemented by a hybrid modem that combines the perfor- mance of the DSL fixed broadband line with LTE as required to achieve transmission rates of up to 150 Mbps, thereby reaching more households with higher band- widths. In August 2018, a practical function was added to this product allowing the hybrid modem to be used via the mobile network for 30 days before the installation of fixed-line access. Mobile WiFi routers (“Net Cube”) also offer maximum flexibility via the mobile network and round off the Group’s broadband offering.

Mobile network expansion

The A1 Telekom Austria Group offers the LTE (long-term evolution) mobile com- munication standard in Austria, Bulgaria, Croatia, Slovenia, the Republic of Ser- bia, and the Republic of Macedonia. The accelerated roll-out of 4G LTE Advanced Pro in 2018 led to a significant expansion of the supply of superfast mobile Inter- net in Austria, Croatia, Slovenia, the Republic of Serbia, and the Republic of Macedonia. To achieve even faster mobile Internet, the A1 Telekom Austria Group is using LTE carrier aggregation with 256 QAM (a complex modulation technique) at selected locations in Austria, Croatia, and the Republic of Serbia, enabling data rates of up to 400 Mbps. As part of the roll-out of 4G LTE Advanced Pro in all countries covered by the A1 Telekom Austria Group, 4x4 MIMO (multiple input multiple output) is also being used to increase data transmission speeds on a targeted basis where these capacities are required.

Carrier aggregation, complex modulation techniques and even more powerful forms of MIMO (massive MIMO) will also play a key role in the next mobile commu- nications generation 5G, since these serve as the technological basis for high bandwidths and the particularly efficient use of the available frequency bands. In the 2018 financial year, the A1 Telekom Austria Group successfully demonstrated various examples of the application of 5G services based on a 5G radio cell and a 5G core in its live network, achieving transmission rates in excess of 1.4 Gbps and latencies of less than four milliseconds. The base station used in the demon- stration was based on hardware that is already available, which was connected to massive MIMO active antennas. One of the main driving forces behind 5G tech- nology, massive MIMO marks the introduction of a new, advanced concept that supports the formation of 3D radio fields, thereby dramatically increasing throughput, network capacity, and coverage. Further examples of the application of 5G mobile technology were demonstrated in Croatia, where the Group became the first network operator in the country to achieve transmission speeds in excess of 20 Gbps.

Data security campus networks are playing an increasingly important role for many industrial partners. The A1 Telekom Austria Group covers this requirement with edge computing, a solution that gives industrial customers the option of transmitting their own data via 4G LTE Advanced Pro or NB-IoT (narrowband IoT) without it leaving the company’s internal network. At the same time, campus net- works enable the use of dedicated resources for internal communications. Some solutions of this nature were already successfully tested with selected industrial partners in 2018.

In the area of management systems, the A1 Telekom Austria Group has initiated the development of a future operations support system (future OSS). Systems of this type differ from existing management systems in that the data to be pro- cessed is stored in a data lake and processed from there. This open structure makes it possible to respond to new requirements extremely quickly and to ad- dress new questions in service assurance in a short space of time.

Data centers as the third pillar of infrastructure

State-of-the-art, highly secure data centers will continue to gain in importance in the future. Accordingly, they represent the third pillar of the A1 Telekom Austria Group’s infrastructure strategy alongside mobile and fixed-line networks. The following technological developments are playing a key role in this process:

▸Network function virtualization (NFV) can be performed in IT data centers with increased agility and standard IT hardware.

▸Growing customer demand for cloud-based solutions (e. g. SaaS1), PaaS2), IaaS3)) via secure local data centers

▸Edge computing allows applications like IoT, advanced analytics and 5G to unleash their full potential. Applications requiring large processing power are run as closely as possible to the place of performance at decentralized or regional data centers.

In 2018, the A1 Telekom Austria Group successfully pressed ahead with network function virtualization (NFV) in all countries. Data communication is now con- trolled using virtual network components in all of the markets in its operational footprint. The A1 Telekom Austria Group will complete the virtualization of its core mobile networks in 2019.

A1 Digital: Ideal partner for digital transformation

Thanks to the growing spread of connectivity and increasingly high transmission rates, the digital transformation is in full swing – and is radically changing tradition- al business models. Digitalization is not a temporary trend or something that only concerns the IT department. It is a key strategic topic that enjoys corresponding relevance at management level. A1 Digital supports companies in the challenging process of digital transformation as a one-stop shop for digitalization and technol- ogy advice. A1 Digital works with companies to develop the best technical solution for customer interaction, business process optimization, the development of new business models, and communication with partners and suppliers.

A1 Digital – founded in early 2017 as a affiliate of the A1 Telekom Austria Group – focuses on Europe, encompassing the Group’s existing markets in the CEE region as well as new markets in Western Europe, especially Germany. A team of experi- enced experts advises customers on IoT services like asset tracking, fleet management, smart metering, machine learning, and artificial intelligence (AI) applications. The digital value chain is being enhanced further with innovative, scalable cloud services and the new security portfolio.

In the 2018 financial year, a dedicated security team was established at A1 Digi- tal in response to growth in the rate of cybercrime. The portfolio includes an inter- nally developed vulnerability scanning solution that warns customers about po- tential security gaps in their IT systems, as well as security consulting services.

Promoting innovation with the “A1 Start Up Campus” and research partnerships

The A1 Telekom Austria Group focuses on a wide range of areas in its research and development (R&D). The topic of innovation has been implemented as a strategic cornerstone of this process. In Austria, the “A1 Start Up Campus” initia- tive aims to help young companies to realize innovations by providing the neces- sary expertise and infrastructure. The “A1 Start Up Campus” offers selected com- pany founders free office space fitted with state-of-the-art technology, as well as data center services and cloud space. The young entrepreneurs can also call on the advice of A1 specialists in all relevant business disciplines, including market- ing, sales, and controlling. The “A1 Start Up Campus” offering is rounded off by support in the area of public relations.

Research partnerships with notable scientific and industrial partners and joint projects with national and international institutions are supporting the A1 Telekom Austria Group in the launch of technologies of the future for market- and customer-oriented communications solutions. The A1 Telekom Austria Group is also a partner of the Industry 4.0 platform and is addressing the interoperability of IoT platforms within the Europe-wide H2020 project symbIoTe. symbIoTe is supported by the European Union and is intended to promote research in the area of IoT.

Customer orientation

The A1 Telekom Austria Group’s technology and infrastructure provides solid foundations for the broad and innovative portfolio with which the Group meets its customers’ needs. In order to identify current and future customer requirements and find out how its products and services are being received on the market, the A1 Telekom Austria Group uses a wide range of information channels including shops and service lines, social media such as Facebook, Twitter, and YouTube as well as customer apps and its own support communities.

The Group is adapting to the dynamic shift in lifestyle and usage habits in the era of digitalization by continuously expanding its product portfolio. Current innova- tions such as “A1 Smart Home” and “A1 Xplore Music” are good examples of this process. “A1 Smart Home” allows customers to conveniently connect electronic devices in their households, optimally customize them to reflect their own habits, and increase security within their own home. The “A1 Smart Home” service is easy to install and connects via its own gateway to a user-friendly mobile app. The system, whose servers are located solely in the EU, uses innovative, self- learning algorithms to create automation scenarios that it suggests to customers – such as turning off the heating system when a window is opened. The smart home product was successfully established and enhanced on the market in four countries (Austria, Bulgaria, Croatia, and Slovenia) in 2018.

With “A1 Xplore Music”, the A1 Telekom Austria Group began offering another at- tractive service in Austria and Bulgaria in 2018. Customers use an app or a web browser to enjoy their favorite music whenever and wherever they like. “A1 Xplore Music” has more than 30 million songs and over 10,000 live radio stations in its li- brary. In addition to international content, local music editors create playlists and recommendations that are tailored to the listening habits in the respective country.

The company has adopted customer experience management and customer centricity as core principles in order to ensure a consistently winning customer experience across all products, services and processes and in all interactions. Customer needs and requirements are systematically identified and recorded. This then forms the basis for developing and implementing innovative optimiza- tion measures aimed at allowing customers to experience the A1 brand’s distinct values even more positively.

Around 70 % of customers who have contacted one of the customer interfaces would “definitely recommend” the A1 Telekom Austria Group, with customer satisfaction rising significantly across all channels in 2018.

With more than 1.3 million active users per month, the self-care app is are an important communications channel for many customers, allowing them to quickly and easily find out how many free units they have used, view their bills, change tariffs, manage add-ons and much more.

Providing the best possible digital customer experience is also the idea behind the new shop design of the A1 Telekom Austria Group. In addition to personal service and a local presence, the innovative concept offers the ideal atmosphere in which to try out products, exciting solutions that bring digitalization to life, touchscreen-based interactive advice, and state-of-the-art design with a feel- good character.

Ecological network design

The biggest environmental impact caused by the A1 Telekom Austria Group is due to the electricity used in operating its networks. This accounts for around 80 % of the Group’s total energy requirements. The introduction of the next mobile com- munication standard 5G, will enable quicker data transmission and larger band- widths. At the same time, a strong increase in the electricity requirements for 5G communication is anticipated. The A1 Telekom Austria Group has been working to improve its energy efficiency for a number of years. In addition to high service quality, the use of the latest RAN (Radio Access Network) components at the sub- sidiaries of the A1 Telekom Austria Group ensures energy efficiency within the company. To this end, old components are being replaced as part of the LTE roll- out. Innovative cooling techniques like hotspot suction, cold aisle containment and heat recovery systems also help to reduce electricity requirements by up to 75 % compared with conventional cooling systems. All in all, the A1 Telekom Austria Group improved its energy efficiency 2) by 24 % between 2017 and 2018. Total energy consumption in 2018 amounted to approximately 810,900 MWh with electricity consumption of about 300,600 MWh of which 62 % was generat- ed from renewable energy sources.

The A1 Telekom Austria Group follows fundamental ecological principles in its lifecycle management with a view to preventing waste, conserving resources and keeping valuable raw materials in circulation for as long as possible (“Reduce – Reuse – Recycle”). Equipment and devices that no longer work are systematically disassembled and their components are properly recycled.

Energy from sustainable sources

Efficiency measures alone are not enough to compensate for total electricity volumes, which is why the A1 Telekom Austria Group takes steps to ensure that any amount of electricity that cannot be reduced by taking appropriate measures is as sustainable as possible, for example by using electricity from renewable sources such as solar, hydro, and wind (see “Social and Ecological Responsibility”). The A1 Telekom Austria Group’s largest solar park opened in Belarus in mid-2016, spans 41 hectares and has 85,000 solar panels, which produce roughly 27 million kWh of electricity per year. In Austria, Bulgaria, Croatia, Belarus, Slovenia, and the Re- public of Serbia, there are 100 mobile base stations running on solar and wind power or on hydrogen fuel cells.

Electromagnetic fields

Despite research findings such as those presented by the European Commis- sion’s Scientific Committee on Emerging and Newly Identified Health Risks (SCENIHR), which find no causal link between mobile communications and health problems, constant speculation surrounds the topic of mobile communications in connection with electromagnetic fields (EMF). In Austria, the international expo- sure limit recommendations of the EU, the WHO and the ICNIRP (International Commission on Non-Ionizing Radiation Protection) are implemented in the current OVE Directive R 23-1 from 2017, the application of which is mandatory. The A1 Telekom Austria Group complies with — and even keeps well below — all exposure limits recommended by the ICNIRP/WHO for daily operations involving base stations and mobile devices. ▬

Mobile communications technologies at a glance

1) Software as a Service.

2) Platform as a Service.

3) Infrastructure as a Service.

A1 Digital’s product portfolio

at a glance

▸Sector-specific applications for IoT

(Internet of Things) with a new IoT platform

▸Exoscale cloud platform and cloud-based products for the modern workplace

▸Security solutions for cloud, IoT and OT (operational technology) such as protection against hacking

Network quality awards in 2018

▸Chip network test: winner (Austria)

▸connect test: excellent (Austria)

▸PC Magazin network test: winner (Austria)

▸futurezone network test: winner (Austria)

▸DMTEL GSM/UMTS/LTE quality test:

winner (Belarus)

Source: Ericsson Mobility Report (2018)

1)One exabyte is equivalent to one quintillion (1018) bytes or one billion gigabytes.

2)Energy efficiency is defined as electricity consumption per terabyte of data transported.

DATA PROTECTION

More data use also demands more security

A1 Telekom Austria Group

data protection certifications

Austria

▸ISO 27001

▸ISAE 3402

▸ECO Datacenter 3.0

Bulgaria

▸ISO 27001

Croatia

▸ISO 27001

Republic of Macedonia

▸ISO 27001

A1 Digital

▸ISO 27001

▸ISO 27018

The A1 Telekom Austria Group ensures that its customers are on the safe side when it comes to seizing the oppor- tunities and potential related to advancing digitalization.

All companies of the A1 Telekom Austria Group undertake to comply with strin- gent data protection and data security standards. In addition to the statutory re- quirements in the respective countries, all subsidiaries must also adhere to the standards of data security created for this purpose and any other country-specif- ic guidelines on data security and data protection. At A1 in Austria, for example, compre- hensive certificates such as ISO 27001, ISAE 3402, and ECO Datacen- ter 3.0 confirm these high security standards. The Data Privacy department is in charge of compliance with statutory and internal data protection regulations at A1 in Austria.

The company works continuously and systematically on achieving further opti- mization in these areas in order, for instance, to effectively counteract attacks on databases such as the one in Austria in early October 2018. In this particular ex- ample, the server concerned was removed from the network immediately and ac- cess to it was blocked. Passwords were reset as a precaution and customers were informed in writing. A1 cooperated fully with the data protection authorities re- garding this incident.

Harmonization of data protection

In response to the expanded requirements imposed on com- panies by the Eu- ropean Union’s General Data Protection Regulation, the position of a data pro- tection officer was established in the A1 Telekom Austria Group in mid-2017. The General Data Protection Regulation represents a major challenge both now and in the years ahead. In May 2016, data protection law in the European Union was harmonized and subjected to largely uniform rules. At the heart of this is the pro- tection of personal data with the aim of giving those affected greater control over their data, providing comprehensive information on the use of such data, guar- anteeing greater protection for children, and facilitating access to legal protec- tion. The EU General Data Protection Regulation has been in force since May 25, 2018, and A1 Telekom Austria Group has been working since 2016 to gradually implement it in the countries covered by the regulation. For example, corre- sponding process adjustments were made for projects and products. The annual risk assessment was also adapted to take into account the requirements of the General Data Protection Regulation. ▬