Mobile Networks Evolution:
Economic Aspects of
Evolution towards IMT2000
ITU-BDT Regional Seminar on Fixed Mobile Convergence and new
network architecture for Arab Region
Tunis, Tunisia, 21-24 November 2005
Sami Tabbane
1
Summary
1. Service
and
evolution
network
2. Issues for migrating to
IMT2000
3. Evolution scenarii
2
1
Introduction
3
Main trends in the telecom scene (1)
Convergence
¾ Wireline data: wireless data with WiFi,
¾ Wireline voice: data with VoIP,
¾ Wireless voice: data with VoIP over wireless,
¾ Broadcast services: TV/ADSL, TV on mobile,
¾ Core network: one unique packet core network,
⇒ New hybrid services through multiple networks.
⇒ NGN and IMS.
4
2
Main trends in the telecom scene (2)
New entrants
ƒ Operators evolution in OECD area
ƒ Alternative operators, MVNO, new licences, …
ƒ Entrants from the Internet world.
5
Main trends in the telecom scene (3)
New technologies and alternative solutions
- WiFi, Bluetooth, …: indoor coverage,
- WiMAX, Flash-OFDM: outdoor and 3G
challengers,
- …
⇒ Multiple access technologies to services (data
and voice) ≠ 2G networks.
6
3
Main trends in the telecom scene (4)
Value chain extension
Migration of service intelligence from the core to
the user terminals: value is pushed to the edges
of the networks.
⇒ With IP, the value chain got extended and the
operators share in the service reduces.
Producer,
content owner
Service provider, Interconnection capacity
provider, brokers, …
content integrator
Content
Integration
Interconnection
Operator
End-user
Network
User
7
Main trends in the telecom scene (5)
ƒ Mobility + wireless access,
ƒ Wideband (fixed and mobile),
ƒ Customization,
ƒ…
8
4
I. Service and
networks
evolution
9
Services/Applications
3G
2,5 G
2G
Telephone
Email
SMS
2000
Mobile banking
Voicemail, Web
Mobile audio player
Digital audio
delivery
Digital newspaper
publishing
Push marketing
LBS
…
2001
Mobile videoconferencing
Videophone/mail
Remote medical diagnosis and
education
Digital catalog shopping
Digital audio/video delivery
Collaborative B2B applications
…
2003
Source : ITU
10
5
UMTS services classes
Service class Conversa- Streaming
tional
Main
- Minimum - Minimum
characteris- jitter,
jitter
tics
- Low
delay.
Interactive
Background
- Query/
answer mode,
- Minimise
errors.
- No delay
constraints,
- Minimise
errors.
Example
Web browsing Email
Voice
Video
11
Network infrastructure evolution (1)
Early 2G
BSS
NSS
HLR-AuC
BTS
BSC
MSC
G-MSC
PSTN/PLMN
VMS-C
VAS
12
6
Network infrastructure evolution (2)
2G in 2000
NSS
HLR-AuC
BSS
BTS
BSC
G-MSC
MSC
PSTN/PLMN
SMS-C
VMS-C
VAS
13
Network infrastructure evolution (3)
2,5 G
BSS
NSS
HLR-AuC
BSC
BTS
PCU
G-MSC
MSC
GSS
PSTN/PLMN
SGSN
GGSN
Internet
WAP
Server MMS-C
SMS-C
VMS-C
VAS
14
7
Network infrastructure evolution (4)
2,75 G
GERAN
NSS
HLR-AuC
BSC
BTS
PCU
G-MSC
MSC
GSS
PSTN/PLMN
SGSN
GGSN
WAP
Server MMS-C
Internet
SMS-C
VMS-C
VAS
15
Network infrastructure evolution (5)
HLR-AuC
3 G R99
UTRAN
NSS
GERAN
RNC
Node B
GSS
3G Core
PSTN/PLMN
SGSN
GGSN
Internet
WAP
Server MMS-C
SMS-C
VMS-C
VAS
16
8
Network infrastructure evolution (6)
Application
Servers (SIP,
OSA, CAMEL)
Session
Control
3 G R5
IMS
Media
Control
Media
Gateway
SIP
GMSC
server
MSC
server
A
GSM Core
IP/ATM
backbone
MGW
G-MGW
GERAN
PSTN
Gb
DataBases
User
Data
Iu CS
Internet
(HLR/AuC, VLR, EIR)
Firewall IP
UTRAN
IP Backbone
SGSN
Iu PS
GGSN
17
Packet Core network
Network infrastructure evolution (7)
Application
Servers (SIP,
OSA, CAMEL)
Session
Control
3 G R6
IMS
Media
Control
WLANUMTS tight
coupling,
UMA
Media
Gateway
SIP
GMSC
server
MSC
server
A
GSM Core
IP/ATM
backbone
MGW
G-MGW
GERAN
PSTN
Gb
DataBases
User
Data
Iu CS
Internet
(HLR/AuC, VLR, EIR)
WLAN
Firewall IP
PDN
UTRAN
SGSN
IP Backbone
GGSN
Iu PS
WLAN
Packet Core network
18
9
Evolutions constraints
HW
SW
2G to 2,5 G
GSS
BSS
2,5 G to 2,75 G
Minor BSS
Skills
PS and IP
Updating
costs
Medium
No
Low
High
2,75 G to 3G R99 New
New
New
3G R99 to 3G R5 IMS
IMS
3G R5 to 3G R6
WLAN
coupling
IMS –
Medium
NGN – SIP
/
Low
/
19
2. Issues for
migrating to IMT
2000
20
10
Why evolve to 3G ?
• New revenues (open the network
to the Internet world, new
services,
• Competition,
• Users demand,
• Ready for the future,
• Regulatory issues (cf. EC).
21
Users needs
• Forecast demand / Observed demand,
• Voice = everyone, i.e. mass market
(cf. GSM evolution),
• Data = mainly young people (cf.
UMTS evolution).
22
11
Where to deploy 3G?
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2004
Rural
Rural
Urban
Urban
Dense
urban
Dense
urban
Population
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Traffic
2020
Rural
Rural
Urban
Urban
Dense
urban
Population
Dense
urban
Traffic
23
Example: migration from 2G to 3G (1)
Phase 1 = Dense trafic areas
Large cities
Suburban areas
GSM/GPRS
EDGE
Small cities
24
12
Example: migration from 2G to 3G (2)
Phase 2 = Complete coverage
Large cities
Suburban areas
GSM/GPRS
EDGE
Small cities
25
Example: migration from 2G to 3G (3)
Phase 3 = UMTS in very high traffic areas
Large cities
Suburban areas
GSM/GPRS
EDGE
UMTS
Small cities
26
13
Example: migration from 2G to 3G (4)
Phase 4 = Expand UMTS in high traffic areas
Large cities
Suburban areas
GSM/GPRS
EDGE
UMTS
Small cities
Combined coverage: WiFi indoor (cf. UMA and UMTS R6),
EDGE and/or WiMAX in rural areas.
27
Terminal equipment base
ƒ Major barriers (/2G):
- Cost,
- Availability,
- Performance,
- Renewing cycle,
-…
28
14
3. Evolution
scenarii
29
Likely paths towards 3G
2,5 G
2G
2,75 G
2,5 G
3G
3G
3G
30
15
Which path for which
operator?
• New entrant operator,
• Historical operator (fixe + mobile),
• New operator (fixe only).
⇒ Different costs of deploying a new
network, different regulatory constraints,
different subscriber base, …
31
Costs of GSM and UMTS
Estimated cost (in USD) of GSM and UMTS networks
(source: Gartner Dataquest)
Core network
Radio network
Transmission links
Maintenance
Sales & marketing
Customer care &
billing
IT management
Total
Cost per subscriber
GSM
UMTS
20,00
24,50
70,00
101,50
40,00
80,50
22,00
38,50
16,00
35,00
20,00
42,00
12,00
200,00
Percent
change
GSM
(%)
UMTS
(%)
22,5%
45,0%
101,3%
75,0%
118,8%
110,0%
10
35
20
11
8
10
7
29
23
11
10
12
28,00 133,3%
350,00 75,0%
6
100
8
100
32
16
Capital and operating costs per subscriber
(without terminals)
GSM GPRS WCDMA
Capital costs
Network only (radio + core + BCS)
$150 $170
Average annual operating costs
For a large, mature operator
$350 $364
For a new entrant or poorly-run
$600 $624
$379
$649
Total (first year)
For a large, mature operator
$500 $534
For a new entrant or poorly-run
$750 $794
$627,5
$897,5
operator
operator
$248,5
33
Capital and operating costs per subscriber (with terminals)
terminals)
GSM GPRS WCDMA
Capital costs
Network only (radio + core + BCS)
$150 $170
Terminal
$50
$55
Total
$200 $225
Average annual operating costs
For a large, mature operator
$350 $364
For a new entrant or poorly-run
$600 $624
operator
Total (first year)
For a large, mature operator
$550 $589
For a new entrant or poorly-run
$800 $849
operator
$248,5
$300
$548,5
$379
$649
$817,5
$1 187,5
34
17
Comparison
ƒ Without terminals provision, cost of
introducing 3G: 20 to 25 %
ƒ Subsidising the terminals: 48%
ƒ With licence: ?
⇒ Mobile market maturity and
competition are the key points for
deciding about the strategy to be
adopted.
35
Concluding remarks
ƒ Choice of moving to 3G is complex.
ƒ Today: many technologies and threats
from new entrants.
ƒ Different issue for a GSM/GPRS/EDGE
operator and an IS-95 operator.
ƒ Terminal base (massive 2,5G) is the first
major constraint.
ƒ Subscribers demand (basically SMS
based services) is the other issue.
36
18