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 Operators evolution in OECD area Alternative operators, MVNO, new licences, … 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) Mobility + wireless access, Wideband (fixed and mobile), Customization, … 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 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 Without terminals provision, cost of introducing 3G: 20 to 25 % Subsidising the terminals: 48% With licence: ? ⇒ Mobile market maturity and competition are the key points for deciding about the strategy to be adopted. 35 Concluding remarks Choice of moving to 3G is complex. Today: many technologies and threats from new entrants. Different issue for a GSM/GPRS/EDGE operator and an IS-95 operator. Terminal base (massive 2,5G) is the first major constraint. Subscribers demand (basically SMS based services) is the other issue. 36 18