Communications Regulatory Authority of the Republic of
Lithuania
Reference paper for creating model for
calculation of bottom up long run
average incremental costs (BU-LRAIC)
for operator of public mobile
communications network
2012 m. May
1. Glossary
The terminology used in this document is defined in the legal acts of the Republic of Lithuania and
international practices. The list of other terminology and abbreviations is placed in the following
table.
No.
Abbreviation
Term
Explanation
1.
-
X 
A function that returns the highest integer less than or equal to X.
2.
-
X 
A function that returns the smallest integer not less than X.
3.
A
A interface
Link between the BSS and MSC/MGW.
4.
B
Byte
Basic unit of information equal to 8 bits
5.
bit
Bit
A bit is a binary digit, taking a value of either 0 or 1. Binary digits are a basic unit of
information storage and communication in digital computing and digital information
theory
6.
BSC
Base Station
Controller
Base Transceiver
The BSC is the functional entity within the GSM architecture that is responsible for
radio resource allocation to a mobile station, frequency administration and
handover between BTS controlled by the BSC.
In cellular GSM system the Base Transceiver Station terminates the radio interface.
7.
BTS
8.
BHCA
9.
BHE
Busy Hour Erlangs
10.
BHT
Busy Hour Traffic
11.
-
Call
12.
CAPEX
CAPEX
Capital expenditure costs. CAPEX costs comprise depreciation and ROI.
13.
-
Channel
Logical unit in a circuit used for transmitting electric signals.
14.
-
Circuit
Station
Busy hour call
attempts
Each BTS may consist of a number of TRX, typically between 1 and 16.
Number of call attempts in a busy hour.
Measurement of traffic in telecommunications network during a busy hour
expressed in Erlangs.
Amount of traffic in a busy hour.
Connection established by means of a publicly available electronic communications
service allowing two-way communication in real time.
Telecommunications line which ensures transmission of electric signals.
CSD is the original form of data transmission developed for the time division
15.
CSD
Circuit Switched Data
multiple accesses (TDMA)-based mobile phone systems like Global System for
Mobile Communications.
16.
CJC
17.
CCS
18.
-
19.
CVR
Common and joint
costs
Common-Channel
Signaling
Cost driver
Cost volume
relationship
Costs that need to be allocated to several services.
CCS is the transmission of signaling information (control information) on a separate
channel to the data.
A factor that influences the existence and amount of costs.
Relationship between total value of cost and cost driver.
No.
Abbreviation
Term
20.
-
Costs
Explanation
Decrease in the economic value for a company due to usage of fixed assets, sale
of assets, loss of assets, decrease in asset value or increase in liabilities over a
period, which results in a decrease in equity capital.
21.
CCA
22.
CD
Current cost
accounting
Current depreciation
Accounting of costs in terms of current costs and prices of products and services.
Depreciation cost expressed in current cost accounting terms.
DDF is the distribution equipment used between digital multiplexers, between
23.
DDF
Digital distribution
frame
digital multiplexer and exchange equipment or non voice service equipment,
carrying out such functions as cables connection, cable patching and test of loops
transmitting digital signals.
Equipment identity
24.
EIR
25.
-
eNode B
26.
-
Erlang
27.
EPC
Evolved Packet Core
28.
FC
Fixed costs
29.
-
30.
GGSN
31.
Gb
register
Forward looking cost
accounting
Gateway GPRS
Support Node
Gb interface
Global System for
32.
GSM
Mobile
communication
33.
GBV
34.
GRC
35.
HSCSD
36.
HSDPA
37.
HCA
38.
HG
39.
HLR
40.
HCC
Gross book value
Gross replacement
cost
High Speed Circuit
Switched Data
High Speed Downlink
Packet Access
Historic cost
accounting
Holding gain
Home Location
Register
Homogenous cost
category
EIR is a database employed within mobile networks. It stores information about
user equipment state (stolen, non-conforming and other).
The eNode B is the function within the LTE network that provides the physical radio
link between the user equipment and the network
Measurement of traffic indicating number of call minutes on a network during one
minute time.
The EPC serves as equivalent of GPRS networks (via the Mobility Management
Entity, Serving Gateway and PDN Gateway subcomponents).
Costs that are fixed and not influenced by change in volume of service.
Accounting of costs in terms of forward looking costs and prices of products and
services.
GGSN supports the edge routing function of the GPRS network.
Link between the SGSN and PCU.
GSM is a cellular network, which means that mobile phones connect to it by
searching for cells in the immediate vicinity.
Acquisition cost of an asset.
Cost incurred for replacing object of similar type and characteristics not taking into
account accumulated depreciation.
HSCSD is an enhancement to Circuit Switched Data.
HSDPA improves system capacity and increases user data rates in the downlink
direction, that is, transmission from the Radio Access Network to the mobile
terminal.
Accounting of costs in terms of historic (actual) costs and priced of products and
services.
Income that results due to increase in asset value.
The Home Location Register is a database, which provides routing information for
mobile terminated calls and SMS.
A set of costs, which have the same driver, the same cost volume relationship
pattern and the same rate of technology change.
3
No.
Abbreviation
Term
41.
IMS
42.
-
Incremental cost
43.
-
Indirect costs
44.
Iub
Iub Interface
IP multimedia subsystem
Explanation
An architectural framework of core network for delivering multimedia services over
IP protocol.
Increase in costs due to increase in volume of service.
Costs that are indirectly related to a specific product and service and that need to
be allocated to different products or services using economically justifiable drivers.
Link between the RNC and the Node B.
The principle of long run average incremental costing – estimating change in costs
45.
LRAIC
Long run average
incremental costing
as a result of change in cost driver volume and dividing them over a unit of service.
The costs are measured in the long run, which means that the company based on
the level of demand can change the amount of resources involved in providing a
service i.e. all costs become variable.
Standard for wireless communication of high-speed data for mobile phones and
46.
LTE
Long term evolution
data terminals. It is based on the GSM/EDGE and UMTS/HSPA network
technologies, increasing the capacity and speed using new modulation techniques.
47.
Max (…)
Maximum
48.
MGW
Media Gateway
49.
Min (…)
Minimum
50.
MME
Mobility management
entity
It is a function, which returns the biggest number in a set of values defined in
brackets.
A gateway that supports both bearer traffic and signaling traffic. It provides
conversion between TDM and IP traffic.
Min (minimum) is a function, which returns the smallest number in a set of values
defined in brackets.
The MME is the key control-node for the LTE access-network. It is responsible for
idle mode UE (User Equipment) tracking and paging procedure including
retransmissions.
51.
MSC
Mobile Switching
Centre
A Mobile Switching Centre is a telecommunication switch or exchange within a
cellular network architecture which is capable of inter working with location
databases.
MSC Server handles call control for circuit-based services including bearer
52.
MSS
MSC Server
services, tele services, supplementary services, charging and security, besides
controlling resources related to circuit-based services.
Multimedia
53.
MMSC
Messaging Service
Centre
54.
NBV
Net book value
55.
NRC
Net replacement cost
56.
NC
Network Component
57.
NE
Network element
58.
-
Node B
59.
OPEX
OPEX
The Multimedia Messaging Service Centre provides a store and forward facility for
multimedia messages sent across a mobile network.
Remaining value of an asset calculated as a difference between gross book value
and accumulated depreciation plus changes in asset revaluation over time.
Cost incurred for replacing object of similar type and characteristics taking into
account accumulated depreciation.
Network Components represent logical elements that are functionally integrated
and in combining those elements any services may be modeled.
Any network object, which physically or logically can be identified as an
independent network unit.
In cellular UMTS system NodeB terminates the radio interface.
Operating expenditures that comprise salaries, material and other external service
costs.
4
No.
Abbreviation
60.
ODF
Term
Optical distribution
frame
61.
-
Port
62.
PGW
Packet gateway
Explanation
ODF are used for connection and patching of optical cables, mainly used as the
interface between optical transmit network and optical transmit equipment and
between optical cables in access network of optical fiber subscribers.
A device for connecting lines with network nodes accepting and forwarding electric
signals.
PGW includes Serving Gateway and PDN Gateway subcomponents, which
together provide connectivity from the user equipment (UE) to external packet data
networks by being the point of exit and entry of traffic for the UE.
Radio Network
63.
RNC
64.
ROI
Return on investment
65.
-
Routing matrix
66.
SCP
Service Control Point
67.
SGSN
68.
SMSC
69.
SFH
Controller
The main element in Radio Network Subsystem that controls the use and the
reliability of the radio resources.
Required return on investment calculated by multiplying WACC and capital
employed.
Matrix which represents the intensity of NE usage for different services.
The SCP processes the request and issues a "response" to the MSC so that it may
continue call processing as appropriate.
Serving GPRS
SGSN keeps track of the location of an individual Mobile Station and performs
Support Node
security functions and access control.
Short Message
The SMSC forwards the short message to the indicated destination subscriber
Service Centre
number.
Soft handover is a category of handover procedures where the radio links are
Soft Handover
added and abandoned in such manner that the mobile always keeps at least one
radio link established.
Stand-alone
70.
SDCCH
Dedicated Control
Channel
71.
-
72.
-
73.
-
Supporting activity
Switch (switching
host)
Electronic
Communications
network
This channel is used in the GSM system to provide a reliable connection for
signaling and SMS messages.
Supporting activity comprise administration, accounting, planning, human resource
management and other supplementary activities.
Network element that switches calls between two network nodes.
Electronic communications network used to provide public telephone service
including transmission of voice between network end points and other services
such as fax or data transmission.
Transmission of a call from a switch (including switch) where interconnection can
74.
-
Termination
be established, located closest to the subscriber receiving the call, to the final
network point where the call ends.
75.
TRX
Transceiver
76.
TRC
Transcoder Controller
A device that is capable of both transmission and reception of a signal.
Function of TRC is transmitting data between switching controllers in a data
transmission network.
Transmission of a call from a switch where interconnection can be established
77.
-
Transit
located closest to a subscriber initiating a call (excluding the switch ) to a switch
where interconnection can be established located closest to a subscriber receiving
a call (excluding the switch) via one or more switches.
5
No.
Abbreviation
Term
78.
-
Transmission link
79.
-
Transmission network
80.
-
Tributary card
Universal Mobile
81.
UMTS
Telecommunications
System
82.
-
Unsuccessful call
83.
VC
Variable costs
84.
VLR
Visitor Location
Register
85.
VMS
Voice Mail Service
86.
-
WAP Gateway
87.
WACC
88.
-
89.
WAP
90.
–
Weighted average
cost of capital
Wholesale billing
system
Wireless Application
Protocol
Recommendation
Explanation
A link which ensures transmission of optical and electric signal between two remote
geographic units.
Electronic communications equipment which ensures transmission of optical and
electric signals among separate core network components.
Component of a multiplexer constituting interface between multiplexer and other
telecommunication equipment.
It is a 3G mobile communications system which provides an enhanced range of
multimedia services.
Unsuccessful calls comprise calls when the line is busy and calls when the
recipient does not answer the call.
Costs that are directly related to change in volume of services.
The Visitor Location Register contains all subscriber data required for call handling
and mobility management for mobile subscribers currently located in the area
controlled by the VLR.
Network element, which executes recording of voice messages for users, who are
unable to answer a call.
WAP Gateway accesses web content for a mobile.
Cost of capital calculated as a weighted cost of borrowed and equity capital.
Information system which involves wholesale Usage Detail Records collection,
validation, analysis and processing.
A standard designed to allow the content of the Internet to be viewed on the screen
of a mobile device such as mobile phones, personal organizers and pagers.
European Commission Recommendation 2009/396/EC on the Regulatory
Treatment of Fixed and Mobile Termination Rates in the EU as of 7 May 2009.
6
2. Table of contents
1.
Glossary ............................................................................................................................... 2
2.
Table of contents.................................................................................................................. 7
3.
Introduction .......................................................................................................................... 9
3.1.
Legal background ............................................................................................................. 9
3.2.
Document objective ........................................................................................................ 11
4.
LRAIC methodology ........................................................................................................... 11
4.1.
Network modeling ........................................................................................................... 13
4.2.
Increments ...................................................................................................................... 13
4.3.
Modeling period .............................................................................................................. 14
4.4.
Cost accounting .............................................................................................................. 15
4.5.
Cost of capital ................................................................................................................. 15
4.6.
Technological background .............................................................................................. 15
4.7.
Mark – ups ...................................................................................................................... 16
5.
Outline of the modeling principles....................................................................................... 18
5.1.
Sub-models .................................................................................................................... 18
5.2.
Model scenarios ............................................................................................................. 19
6.
Flow of BU-LRAIC modeling............................................................................................... 19
6.1.
Network demand ............................................................................................................ 19
6.2.
Network dimensioning .................................................................................................... 19
6.3.
Network valuation ........................................................................................................... 20
6.4.
Service cost calculation .................................................................................................. 20
7.
Scope of the model ............................................................................................................ 22
7.1.
List of services ................................................................................................................ 22
7.2.
List of homogeneous cost categories .............................................................................. 24
7.3.
List of network components ............................................................................................ 28
8.
Vocabulary of formulas....................................................................................................... 29
9.
Demand ............................................................................................................................. 29
9.1.
9.1.1.
Conversion of video calls ......................................................................................... 36
9.1.2.
Conversion of SMS and MMS .................................................................................. 37
9.1.3.
Conversion of GSM packet data .............................................................................. 38
9.1.4.
Conversion of UMTS data........................................................................................ 39
9.1.5.
Conversion of LTE VoIP calls and packet data ........................................................ 40
9.2.
10.
Service demand conversion ............................................................................................ 32
Calculation of total traffic in minutes ............................................................................... 41
Network Dimensioning ....................................................................................................... 44
7
10.1.
10.1.1.
Base Transceiver Station ..................................................................................... 45
10.1.2.
Transceiver .......................................................................................................... 50
10.1.3.
Base Station Controller ........................................................................................ 51
10.1.4.
Transcoder Controller .......................................................................................... 51
10.2.
Dimensioning of UMTS network .................................................................................. 52
10.2.1.
Node B ................................................................................................................. 52
10.2.2.
Radio Network Controller ..................................................................................... 56
10.3.
Dimensioning of LTE network ..................................................................................... 57
10.3.1.
eNode B ............................................................................................................... 57
10.3.2.
Evolved Packet Core............................................................................................ 61
10.4.
Dimensioning of BSS, RNS and PSS system .............................................................. 62
10.4.1.
Base and extension units ..................................................................................... 62
10.4.2.
Sites ..................................................................................................................... 65
10.4.3.
Packet control unit (PCU) / Serving GPRS support node (SGSN) ........................ 66
10.5.
Dimensioning of Network Switching System ................................................................ 68
10.5.1.
Mobile Switching Centre....................................................................................... 68
10.5.2.
Mobile Switching Centre Server ........................................................................... 72
10.5.3.
Media Gateway .................................................................................................... 73
10.5.4.
Short messages service center ............................................................................ 77
10.5.5.
Multimedia messaging service center (MMSC) .................................................... 78
10.5.6.
IP multimedia Sub-System ................................................................................... 78
10.5.7.
Voice Mail Service and Home Location Register .................................................. 81
10.5.8.
Centralized User Database (CUDB) ..................................................................... 82
10.5.9.
Service Control Point (Intelligent Network) ........................................................... 82
10.5.10.
Network Functionality ........................................................................................... 83
10.5.11.
Other Network ...................................................................................................... 84
10.6.
11.
Dimensioning of GSM network .................................................................................... 45
Transmission ............................................................................................................... 84
Network valuation ............................................................................................................... 97
11.1.
Cost annualization ....................................................................................................... 97
11.2.
Mark-ups ..................................................................................................................... 99
12.
Service cost calculation .................................................................................................... 102
12.1.
Homogeneous cost categories allocation to Network Components ........................... 102
12.2.
Network Component average unit cost ...................................................................... 106
12.3.
Service cost .............................................................................................................. 111
13.
Annex 1. Second sub-model: cost calculation of Auxillary services for network
interconnection ........................................................................................................................... 113
14.
Annex 2. Economic depreciation method: analysis and results ........................................ 116
8
3. Introduction
This document is based on the mobile BU-LRAIC reference paper originally created in 2008. All of
the key changes to the document are marked with grey color – aa. Key changes to the document
are presented below:
Previous RRT approach
Model the costs of an efficient service
provider
Based on current costs
Forward looking BU LRAIC model
Comply with the requirements of
"technological efficiency” – NGN
Take into account 2G and 3G technology
Take into account pure incremental costs
of call termination in determining the per
item cost
Take into account development of LTE
technology in mobile telecommunications
New Recommendation












New topic


New topic

Included
 Not
included
Key changes affected these areas of the document:
3.
Introduction .......................................................................................................................... 9
3.1.
4.
Legal background ............................................................................................................. 9
LRAIC methodology ........................................................................................................... 11
4.2.
Increments ...................................................................................................................... 13
4.3.
Modeling period .............................................................................................................. 14
7.
Scope of the model ............................................................................................................ 22
7.1.
List of services ................................................................................................................ 22
7.2.
List of homogeneous cost categories .............................................................................. 24
7.3.
List of network components ............................................................................................ 28
9.
Demand ............................................................................................................................. 29
9.1.5.
10.
Conversion of LTE VoIP calls and packet data ........................................................ 40
Network Dimensioning ....................................................................................................... 44
10.3.1.
eNode B ............................................................................................................... 57
10.3.2.
Evolved Packet Core............................................................................................ 61
10.4.
Dimensioning of BSS, RNS and PSS system .............................................................. 62
10.5.6.
IP multimedia Sub-System ................................................................................... 78
9
3.1. Legal background
Elaboration of a tool for the calculation of cost-based carrier specific interconnection prices of the
Lithuanian mobile networks developed by bottom-up method of long-run incremental costs
(hereinafter, BU-LRAIC ) method is maintained by these legal regulations:
► European Union Electronic Communications Regulation System (directives);
► Law on Electronic Communications of the Republic of Lithuania;
► Market analysis conducted by the Communications Regulatory Authority of the Republic of
Lithuania (hereinafter, RRT);
► Executive orders and decisions of the Director of the RRT;
► European Commission recommendation (2009/396/EC).
In 2008 RRT initiated a project to estimate call termination costs for mobile networks.
Ernst & Young created a BU-LRAIC cost calculation model for mobile networks according. Taking
into account the results of cost calculation, RRT started regulation of call termination prices from
20101.
However, in 2009 the European Commission released a new recommendation (2009/396/EC)
regarding price regulation of call termination prices on mobile and fixed networks. Therefore and
the aim of the project is to update the BU-LRAIC model to calculate costs of call termination in
mobile operators’ networks in order to comply with the requirements set out in the
Recommendation, in particular the following:
► Model the costs of an efficient service provider;
► Calculations shall be based on current costs;
► Implement a forward looking BU LRAIC model;
► Comply with the requirements of "technological efficiency” – NGN;
► Take into account 2G and 3G technology mix;
► May contain economic depreciation method;
► Take into account the incremental costs (Pure LRAIC) of call termination in determining the
per item cost.
1
Orders No 1V-1515, No 1V-1516 and No 1V-1517 of 24 December 2009 of the Director of RRT.
10
3.2. Document objective
The objectives of this reference paper (hereinafter, BU-LRAIC model reference paper or MRP) are:
► To present the scope and the detailed principles of the BU-LRAIC modeling (guidelines
and concept of the BU-LRAIC model);
BU-LRAIC modeling is theoretical and might differ from the real market situation; however, it
models mobile network operator operating efficiently in a competitive market.
While using BU-LRAIC method, there is a risk that some of the practical aspects will be excluded
from the scope of the model. In order to avoid this kind of situation, it is expected that all market
players will take an active participation in model implementation. In case there is a lack of data for
BU-LRAIC modeling, benchmarks will be used.
4. LRAIC methodology
All calculations in the model are based on Forward – Looking Long Run Average Incremental Cost
(LRAIC) methodology, assuming Bottom-up approach and efficient operator operating in a fully
competitive market. Below is provided a short introduction to the model of BU-LRAIC. The meaning
of the definition of BU-LRAIC is as follows:
1. LRAIC costs: There are 3 LRAIC methods of cost calculation: Pure LRAIC, LRAIC+ and
LRAIC++.
► Pure LRAIC method – includes only costs related to network components used in the
provision of the particular service
► LRAIC+ method – includes only costs related to network components used in the
provision of the particular group of services, which allows some shared cost of the
group of services to become incremental as well. The group of service could be total
voice services and total data services.
► LRAIC++ method – includes costs described in LRAIC+ method description plus
common and joint cost. The common and joint cost related to each group of service
(total voice services and total data services) are calculated separately for each Network
Component using an equally-proportional mark-up (EPMU) mechanism based on the
level of incremental cost incurred by each group of service (total voice services and
total data services).
Approaches in calculating using each method are illustrated in the picture below:
11
Figure 1: Illustration of LRAIC cost allocation methods
BU-LRAIC model will have functionality to calculate costs using all three methods.
2. Long run. In the short run incremental costs can split into fixed and variable incremental costs;
however, in the long run all costs are variable, which is the principle of LRAIC. Consequently,
all input factors (as well as capital) should be included to the forecasted demand for services.
3. Average Incremental. The principle of average incremental costs involves estimating a
change in costs which is caused by production (service) increment (or decrease) and allocating
estimated costs to one unit of service. Figure 2 illustrates the concepts of incremental and
average incremental costs.
Costs
Incremental costs
Average incremental costs
Increment
Figure 2: Incremental and average incremental costs
12
Output
4. Forward looking. Forward-looking costs are the costs incurred today building a network which
has to face future demand and asset prices. In practice this means that if modeling is done in a
year X, the cost of services is calculated for the year up to X+10 (e.g. if modeling is done in
2009, service costs are calculated for the years 2010 - 2020).
5. Bottom-up. A bottom-up approach involves the development of engineering-economic models
which are used to calculate the costs of network elements which would be used by an efficient
operator in providing interconnection services.
Bottom-up models perform the following tasks:
► Dimension and revaluate the network.
► Estimate non-network costs.
► Estimate operating maintenance and supporting costs.
► Estimate services costs.
In a broader meaning, BU-LRAIC (together with the efficiency assumption) is the approximation of
incremental costs, which, according to the economic theory, reflects the economic costs (and the
price) of an efficient operator operating in a fully competitive market. As a result, for the purpose of
efficient competition, mobile termination rates should come up to the same rates as calculated
using the pure BU-LRAIC method.
4.1. Network modeling
Current BU-LRAIC network modeling is not constrained by current network design or topology. It is
assumed that network is built from scratch with forward-looking technology. Number of network
elements and their locations are derived from technological models. Consequently, this approach
determines the level of optimization, that closely approximates long-run economic costs of
providing interconnection and other services and assures that Operators have incentives to
migrate to a more efficient architecture.
Following the network modeling principles described above, the detailed calculations of required
network elements are provided in section 10. Network dimensioning.
4.2. Increments
In LRAIC methodology increments refer to elements that influence costs of objects subject to
analysis (objects under analysis are provided in section 7.1 List of services). Calculating the
incremental costs of wholesale services in mobile networks using Pure LRAIC method, it is
necessary to identify only those fixed and variable costs that would not be incurred if the wholesale
13
services were no longer provided to third-party operators (i.e. the avoidable costs only). The
avoidable costs of the wholesale service increment may be calculated by identifying the total longrun cost of an operator providing its full range of services and then identifying the long-run costs of
the same operator in the absence of the wholesale service being provided to third parties. This
may then be subtracted from the total long-run costs of the business to derive the defined
increment.
When calculating costs using LRAIC+ method, it is necessary to identify only those fixed and
variable costs that would not be incurred if the group of services were no longer provided to thirdparty operators and retail subscribers (i.e. the avoidable costs only). The avoidable costs of the
group of services increment may be calculated by identifying the total long-run cost of an operator
providing its full range of services and then identifying the long-run costs of the same operator in
the absence of the group of services being provided to third parties retail subscribers. This may
then be subtracted from the total long-run costs of the business to derive the defined increment.
When calculating costs using LRAIC++ additional mark-ups are added on the primarily estimated
increments to cover costs of all shared and common elements and activities which are necessary
for the provision of all services.
Increments of current BU-LRAIC model are:
► Coverage (geographical scope of mobile network);
► Traffic;
► Subscribers.
The increment “coverage (geographical scope of mobile network)” effect on costs is assessed
respect to costs, which are incurred seeking to accomplish territory coverage obligations, which are
stated in the licenses of frequency handling.
4.3. Modeling period
In order to get a deeper insight into the mobile network operator cost structure, it is common
practice to calculate service costs for at least several periods. BU-LRAIC model will calculate
nominal service costs for the years 2010 – 2020.
14
4.4. Cost accounting
It has to be noted that BU-LRAIC calculation, as a rule, is based on current cost basis. The
objective of the current cost accounting approach is to derive information what it would cost to
acquire assets and other required resources now or in the near future. The current cost is
calculated by using the current (or the latest) market prices (replacement cost) or adjusting the
historical cost for asset specific inflation and therefore getting more realistic values of assets and
other resources used in business.
In the situation, when fixed assets that are still in use are outdated or no longer available on the
market, it may be difficult to assign their current price. In this situation the concept of modern
equivalent asset (MEA) has to be adopted. MEA means an asset that would perform the same
function as the asset to be replaced and is currently available on the market. Historical costs may
also be used as a proxy for current costs when assets have been purchased quite recently and no
better source for current costs (including MEA) is available.
4.5. Cost of capital
Weighted Average Cost of Capital (WACC) is used in BU-LRAIC model for cost of capital
estimation. WACC measures a company’s cost of debt and equity financing weighted by the
percentage of debt and percentage of equity in a company’s target capital structure.
Calculation and elaboration of WACC of Lithuanian mobile network operators will be provided in a
separate report.
4.6. Technological background
At the moment of the BU-LRAIC modelling, all Operators used GSM and UMTS network
technologies to provide services. As there are new tendencies of developing Long term evolution
(LTE) mobile network technology, the model will have a functionality of modelling costs using joint
GSM / UMTS / LTE network.
It is assumed that in the following years voice traffic can be fully accomodated in GSM and UMTS
network; nevertheless, modeled network will be capable to provide voice services over LTE.
According to the data available as of 31th of December 2011, the total number of mobile network
15
subscribers was 4938.01 thousand, the number of UMTS subsribers was 1201.52 thousand and
there were no LTE subscribers reported for that period. Assuming that the majority of new LTE
subscribers are going to use LTE network mostly for data services3, LTE voice traffic proportion will
be insignificantly small in the total voice traffic.
Taking into account operators’ practical experience in Lithuania and abroad, three alternative core
network architectures are being evaluated:
► Establishment of Mobile Switching Centres (all voice in MSCs);
► Establishment of Mobile Switching Centre Server and Media Gateways (all voice in MSS
and MGW).
► Establishment of Evolved Packet Core and IP multimedia subsystem (all LTE voice in EPC
and IMS).
BU-LRAIC model has a functionality to model all three scenarios.
Dimensioning rules for all network elements are given in the section 10. Network Dimensioning.
4.7. Mark – ups
As already discused in section 4.2 Increments a mark-up approach is provided for in the BU-LRAIC
model to cover network related operational cost, administration and support operational and capital
costs and network management system capital cost. The major driver of network structure and
development is service demand. Increasing service demand requires additional network capacity
and appropriate network elements. This results in increased network related operational costs (e.g.
more designing engineers are needed to built and supervise network). Network related operational
cost (headcount) is a driver for administration and support operational and capital costs. Service
demand and mark-up relation is illustrated in figure 3:
%
Network
demand
Network
infrastructure
%
Network related
operational costs
Admin/support operational
and capital costs
Figure 3. Service demand and mark-up relation
2
Report on the electronic communications sector 2011 Quarter IV. www.rrt.lt
3
Based on data provided by Operators
16
A more detailed description of mark-ups usage and allocation is provided in section 11.2 Mark-ups.
Referring to the best practices and international experience, mark-ups to cover network related
operational cost, administration and support operational and capital costs and network
management system capital cost are estimated by collecting data from Operators, further they are
adjusted by benchmarks derived from foreign operators’ data. Currently it is assumed that the
latest data from the following sources will be adopted for the purpose of mark-up calculation:
1. Questionnaire data provided by Operators.
If data provided by the Operators is not sufficient for modeling purposes, the following data sources
will be used:
1. Reports published by the Information Society Directorate of the European Commission
related to bottom-up costing models used for the interconnection cost calculation in
European Union member states.
2. Reports and documents published by the Federal Communication Commission related to
bottom-up costing models used for the interconnection cost calculation in the European
Union member states;
3. Public reports on LRAIC projects, LRAIC models that are used in other EU member states.
4. EY knowledge of the global telecommunications sector.
17
5. Outline of the modeling principles
5.1. Sub-models
BU-LRAIC model consists of two separate sub-models. Each of them includes different services
(see Table 1). The sub-models are physically separated into two independent (not inter-linked) MS
Excel models.
Table 1. Sub-models of the BU-LRAIC model
First sub-model – services included
Second sub-model – services included
Call origination
Provision of auxiliary services for network
interconnection
Call termination
Call transit
Short messages services (SMS) (initiation,
termination, sending on-net SMS)
Multimedia
messages
services
(MMS)
(initiation, termination, sending on-net MMS)
Capacity based services
In the First sub-model the following costs are calculated:
► CAPEX related network costs;
► OPEX related network costs;
► CAPEX – administration and support;
► OPEX – administration and support.
CAPEX related network costs cover network components listed in section 7.3 List of network
components. CAPEX related network management system costs4, OPEX related network costs,
OPEX and CAPEX for administration and support, are listed and discussed in section 11.2. Markups.
The modeling principles used in the second BU-LRAIC sub-model are presented in Annex 1.
4
Costs of network management system (NMS) are calculated as a mark-up.
18
5.2. Model scenarios
First BU-LRAIC sub-model will contain individual model scenarios for each Operator (in total three
scenarios). Model for auxiliary services for network interconnection will contain a single scenario
for all Operators.
6. Flow of BU-LRAIC modeling
The objective of BU-LRAIC method is to measure the costs of services that would be incurred by a
efficient operator in a competitive market assuming that network is rebuilt to meet the current and
the forward looking demand.
Figure 4 illustrates the overall flow of BU-LRAIC methodology. Accordingly, the structure of this
reference paper is aligned with the provided flow as well.
Network
demand
Network valuation
Network dimensioning
Service costs
calculation
Figure 4: the overall flow of BU-LRAIC methodology.
6.1. Network demand
The network demand section of the model is required to translate the relevant portfolio of service
demand into the network dimensioning demand. As the dimensioned network should handle the
traffic during the peak period, measured service volumes are translated into busy-hour throughput
network element demand.
No network is built for the current demand. Networks are constructed to meet future demands. In
order to reflect this requirement the planning horizon for which networks are designed has to be
considered. In principle this is determined on the basis of economic considerations by examining
the trade-off between the costs of spare capacity in the short term and the costs of repeatedly
augmenting capacity on a just-in-time basis.
The detailed explanation of network demand principles is provided in section 9. Demand.
6.2. Network dimensioning
Following the identification of demand on a network element basis, the next stage in the process is
identification of the necessary network equipment to support the identified level of busy-hour
demand. This is achieved through the use of engineering rules, which consider the modular nature
of network equipment and hence identify the individual components within each defined network
19
element. This then allows variable cost structures to determine the costs on an element-byelement basis.
The detailed explanation of network dimensioning principles is provided in section 10. Network
dimensioning.
6.3. Network valuation
After all the necessary network equipment is identified, Homogenous Cost Categories (HCC) are
derived (physical units of network elements identified are multiplied by current prices and
investments calculated later on are annualized). HCC is a set of costs, which have the same driver,
the same cost volume relationship (CVR) pattern and the same rate of technology change. HCC
values are calculated by multiplying physical units of network elements by current prices. Later on,
calculated investments are annualized and mark-ups (both for CAPEX and OPEX costs) are set.
HCC list is provided in section 7.2 List of homogeneous cost categories.
All mobile network elements identified during network dimensioning must be revalued at Gross
Replacement Cost (GRC). On the basis of GRC value its annual cost is calculated. This cost
includes both:
► Annualized capital costs (CAPEX); and
► Annual operating expenses (OPEX).
CAPEX costs consist of Return on Investment (ROI) and depreciation. OPEX costs consist of
salaries (including social insurance), material and costs of external services (external services –
transportation, security, utilities, etc).
The detailed analysis of methodologies to annualize CAPEX costs is provided in section 11.1. Cost
annualization.
A detailed explanation of Mark-ups used to recover costs related with CAPEX and OPEX is
provided in sections 4.7. Mark-ups and 11.2. Mark-ups.
The list of HCCs, Network Components (NCs) and services used in the model is provided in
section 7. Scope of the model.
6.4. Service cost calculation
The fundamental principle of LRAIC methodology – costs are allocated to network components,
network components are mapped with network services and in this way the costs are calculated
(see figure 5).
20
Homogeneous cost
categories
Network components
Services
Figure 5: Cost allocation principle
After HCC are derived they are allocated to a particular Network Component (NC). NCs represent
logical elements that are functionally integrated and any services may be modeled by combining
those elements. NC list is provided in the section 7.3 List of network components. Later, the total
NC costs are calculated by summing up the appropriate HCCs. NC costs are divided by service
volumes. Costs of services are calculated on a basis of network component unit costs according to
network component usage statistics.
The detailed explanation of service cost calculation is provided in secion 9. Service cost
calculation.
21
7. Scope of the model
The scope of the model is defined with respect to the range of services, network components and
homogenous cost categories to be included into the BU-LRAIC model. This determines the
modeled network architecture and its granularity level.
7.1. List of services
The list of services included in the first BU-LRAIC sub-model comprises:
1. Call origination;
2. Call termination;
3. Call transit:
► Transit of call via network originated and terminated in Lithuania – Transit 1
► Transit of call via network originated in Lithuania and terminated abroad – Transit 2
► Transit of call via network originated abroad and terminated in Lithuania – Transit 3
4. Short messages services (SMS): initiation, termination and on-net SMS
5. Multimedia messages services (MMS): initiation, termination and on-net SMS
6. Capacity based services
Call origination, call termination and transit services in addition to average cost per unit have peak
and off-peak hour perspective. Other services do not have a perspective of peak and off-peak.
Average cost of the Provision of auxiliary services for network interconnection is calculated in
second BU-LRAIC sub-model.
BU-LRAIC model is fitted to estimation of costs of services modeling the provision of services on
the ground of GSM (900 MHz), DCS (1800 MHz), LTE (2600 MHz), UMTS (2100 MHz) and
HSDPA/HSUPA standards.
Referring to the list of services in the first BU-LRAIC sub-model provided above and BU-LRAIC
modeling principles covered in this reference paper, respective outcome of the first BU-LRAIC submodel is expected as presented in Table 2.
22
Table 2. Outcome of the first BU-LRAIC sub-model
Service
Network
Tower BTS /
Component and
NodeB /
site
eNodeB
prepa- voice
ration
Call transit 1, per minute
Call transit 2, per minute
Call transit 2, per minute
Call origination, per minute
Call termination, per minute
Initiation of Short
messages services (SMS),
per unit
Termination of SMS, per
unit
On-net SMS, per unit
Initiation of Multimedia
messages services (MMS)
Termination of MMS, per
unit
On-net MMS, per unit
Capacity based services
BSC/
RNC/
EPC
voice
BTS/
NodeB/
eNodeB
data
BSC/ MSC/ TX
TX / TX
RNC/ MSS/ back- aggre- core
EPC MGW haul gation voice
data
voice voice
TX
backhaul
data
TX / TX
aggre- core
gation data
data
SMSC MMSC SGSN/ SGSN/ EDGE HSDPA WAP HLR Billing IMS Number Total
GGSN GGSN
porta- costs:
voice
data
bility
platform
7.2. List of homogeneous cost categories
As mentioned in section 6. Flow of BU-LRAIC modeling, HCC values are calculated by annualizing
CAPEX costs calculated in the network dimensioning part of the model and by application of a set
of mark-ups (both for CAPEX and OPEX costs).
Table 3 indicates the list of homogeneous cost categories (HCC) in BU-LRAIC model.
Table 3. List of HCC in BU-LRAIC model
HCC name
HCC sub-components
Site
Macro cell: tower and site preparation
Micro cell: site preparation
Pico cell: site preparation
Stand-alone transmission radio link: tower and site
preparation
BTS
Macro cell: equipment (omni sector)
Macro cell: equipment (2 sector)
Macro cell: equipment (3 sector)
Micro cell: equipment
Pico cell: equipment
Macro cell: TRXs
Micro cell: TRXs
Pico cell: TRXs
Node B
Macro cell: equipment (omni sector)
Macro cell: equipment (2 sector)
Macro cell: equipment (3 sector)
Micro cell: equipment
Pico cell: equipment
eNode B
Macro cell: equipment (omni sector)
Macro cell: equipment (2 sector)
Macro cell: equipment (3 sector)
Micro cell: equipment
Pico cell: equipment
HCC name
HCC sub-components
EPC
PGW: base unit
PGW: extension units
MME: base unit
MME: expansion units
SGSN / GGSN
PCU: base unit
PCU: expansion units (Gb link)
SGSN: base unit
SGSN: processing expansion
GGSN: basic unit and license
IMS
IMS - Cabinet
IMS core - Service frame
HSS - Service frame
IMS core - Service card - Type 1 - CSCF
IMS core - Service card - Type 2 - MGCF
IMS core - Service card - Type 3 - VoIP AS
IMS core - Service card - Type 4 - MRCF/CCTF
IMS core - Service card - Type 5 - MRFP
IMS core - Service card - Type 6 - BGCF
HSS - Service card - Type 1 - Control card
HSS - Service card - Type 2 - Database card
IMS - Licenses - Type 1 – subscriber
IMS - Licenses - Type 2 – traffic
HSS - Licenses
Ethernet Radio link
Ethernet radio link 10 Mb/s microwave link
Ethernet radio link 20 Mb/s microwave link
Ethernet radio link 40 Mb/s microwave link
Ethernet radio link 100 Mb/s microwave link
Ethernet radio link 300 Mb/s microwave link
25
HCC name
HCC sub-components
BSC / RNC
BSC: base unit
BSC: BS TRX extension
TRC: transcoder base unit
TRC: transcoder E1 (A interface) extension
RNC: basic units
RNC: extension units (Iub link)
RNC: extension units (sectors)
RNC: extension units (sites)
MSC / MGW
MSC: basic unit and software
MSC: processor extension
MSC: VLR, EIR extension
MSC: SS7 extension
MSC: trunk port extension
MSC: I/O peripherals
MSS: basic unit and software
MSS: processor extension
MGW: basic unit and software
MGW: processor extension
MGW: trunk port extension
Network Functionality
SFH: soft handover (network-wide)
SFH: soft handover (MSS extension)
SFH: soft handover (RNC extension)
SFH: soft handover (NodeB extension)
GSM/DCS: control (network-wide)
GSM/DCS: control (MSC extension)
GSM/DCS: control (BSC extension)
GSM/DCS: control (BTS extension)
LTE: CS fallback function (eNodeB extension)
LTE: CS fallback function (MME extension)
SMSC / MMSC
SMSC: base unit
SMSC: extension
MMSC: base unit
MMSC: extension
26
HCC name
HCC sub-components
Other Network
SSP: service switching point (network-wide)
SCP: service control point - base unit (pre-paid
related)
SCP: extension - subscribers
SCP: extension - tps
VMS: base unit
VMS: extension
HLR: base unit
HLR: extension
Centralized User Database (CUDB): base unit
Centralized User Database (CUDB): extension
Billing IC hardware and software
Number portability system: hardware and software:
License and frequency fee
Concession right - GSM 900 MHz (total value)
Concession right - GSM 1800 MHz (total value)
Concession right - UMTS (total value)
Concession right - LTE (total value)
Data transmission services
Data transmission services aggregation, per link
Data transmission services aggregation, per km
Data transmission services core, per link
Data transmission services core, per km
Network management system5
5
-
Costs of network management system (NMS) are calculated as a mark-up. See section 8.2 Mark-ups
27
7.3. List of network components
List of NC used in BU-LRAIC model is as follows:
► Tower and site preparation
► BTS / Node B / eNode B voice
► BSC / RNC / EPC voice
► BTS / Node B / eNode B data
► BSC / RNC / EPC data
► MSC / MSS / MGW
► TX backhaul voice - transmission between BTS/NodeB/eNodeB and BSC/RNC/EPC ► TX aggregation voice - transmission between BSC/RNC/EPC – MSC/MGW/SGSN/GSSN
► TX core voice - transmission between MSC/MGW/GSSN - MSC/MGW/GSSN
► TX backhaul data - transmission between BTS/NodeB/eNodeB and BSC/RNC/EPC
► TX aggregation data - transmission between BSC/RNC/EPC – MSC/MGW/SGSN/GSSN
► TX core data - transmission between MSC/MGW/GSSN - MSC/MGW/GSSN
► SMSC
► MMSC
► SGSN / GGSN voice
► SGSN / GGSN data
► EDGE
► HSDPA
► WAP
► HLR
► Billing
► IMS
► Number portability platform6
6
Number portability platform is only estimated in the particular modeling scenario, when LTE is not used for
handling voice services and consequently, IMS is not dimensioned.
28
8. Vocabulary of formulas
In the table below a vocabulary of formulas used to dimension network elements and calculate the
demand is described:
Abbreviation Explanation
N
Number of x elements
V
Volume of x traffic
S
Number of subscribers/services
T
Throughput x element
HA
Headroom allowance

Proportion expressed in percentage
C
Capacity of x element
9. Demand
Mobile networks are dimensioned to handle traffic in the peak periods, not the average traffic
loads. The average traffic load must therefore be converted into peak loads by the application of
traffic distribution factors drawn from the operator’s network management statistics. Consequently,
data related to service demand and customer profile in BU-LRAIC model comprises the following
type of information:
► Service demand in terms of voice and video call minutes, SMS and MMS quantities, data
minutes and bytes;
► Number of subscribers;
► Traffic flows, network element usage factors;
► Service profiles in terms of daily traffic structure, set-up time, rate of unsuccessful call
attempts.
Demand calculation is also split in two parts according to mobile network technology used:
► LTE network;
► UMTS network;
► GSM network.
29
The load is measured with busy hour Erlangs (BHE). BHE is calculated for services in the network
by network element or transmission type between elements. BHE calculation algorithms for
services provided by three mobile network technologies analyzed are presented further in this
section. The summary of services included in the modeling of each mobile network technology is
presented in the table below.
Table 4. Services modeled in GSM, UMTS and LTE networks
Service
GSM network
UMTS network
LTE network
Voice calls7
X
X
-
Video calls
-
X
-
SMS
X
X
-
X
X
-
X
X
X
MMS
Data services
8
Voice calls minutes are analyzed in four groups:
► On-net minutes (call minutes originated and terminated on own mobile network including,
calls to short telephone numbers, services for Mobile virtual network operator’s (hereinafter,
MVNO) and inbound roaming traffic (calls originated and terminated on the same network);
► Off-net minutes (call minutes originated on own network and terminated on other networks,
on international networks, including calls to short telephone numbers, services for MVNOs
and inbound roaming traffic (calls originated on network but terminated on the other
network);
► Incoming minutes (call minutes originated on other networks, international networks,
including calls to short telephone numbers, services provided to MVNOs and inbound
roaming traffic (incoming roaming calls) and terminated in own network);
► Transit minutes (traffic, which is neither originated nor terminated in the own network,
bridge traffic between different operators).
SMS is split into three groups:
► On-net SMS (SMS sent from own mobile network to own mobile network, including services
provided to MVNOs and inbound roaming traffic (SMS originated and terminated on the
same network);
7
Actual minutes of traffic in the network, not rounded billing system data.
8
Including all retail and wholesale services
30
► Outgoing SMS (SMS sent from own mobile network to international networks and to other
mobile networks including services provided to MVNOs and inbound roaming traffic (SMS
originated on own network, but terminated on the other network);
► Incoming SMS (SMS sent from international networks and from other mobile networks
including services provided to MVNOs and inbound roaming traffic (SMS originated on the
other network but terminated on own network) to own mobile network).
MMS is split into three groups:
► On-net MMS (MMS sent from own mobile network to own mobile network, including
services provided to MVNOs and inbound roaming traffic (MMS originated and terminated
on the same network);
► Outgoing MMS (MMS sent from own mobile network to international networks and to other
mobile networks, including services provided to MVNOs and inbound roaming traffic (MMS
originated on own network, but terminated on the other network);
► Incoming MMS (MMS sent from international networks and from other mobile networks,
including services provided to MVNOs and inbound roaming traffic (MMS originated on the
other network but terminated on own network) to own mobile network).
Packet data traffic volumes comprise yearly total up-link and yearly total down-link traffic loads in
MB9.
Video calls are split into 3 groups:
► On-net minutes (call minutes originated and terminated in own mobile network including
MVNOs and inbound roaming traffic (calls originated and terminated on the same network);
► Off-net minutes (call minutes originated in own network and terminated in fixed networks, in
international networks and in other mobile networks including MVNOs and inbound roaming
traffic (video calls originated on network but terminated on the other network);
► Incoming minutes (call minutes originated in fixed networks, international networks and in
other mobile networks, including MVNOs and inbound roaming traffic (incoming roaming
video calls) and terminated in own network).
9
Volumes also include traffic of roaming data services.
31
9.1. Service demand conversion
The average traffic load conversion to peak loads is needed for the evaluation of network (network
elements, equipment amounts), which would effectively service the required services demand.
Average traffic load conversion to peak loads is done to each network element, i.e. BHE is
calculated to each network element. The amount of network elements is calculated according to
the estimated BHE. The average traffic load consists of statistic raw service data. Peak loads
consist of statistic raw service data evaluated according to routing, inhomogeneity factors other
coefficients.
The average service demand conversion to BHE will be done in the followings steps:
1. Calculating the number of call attempts (for voice and video calls);
2. Weighting billed traffic volumes by routing factors;
3. Adjusting billed voice and video minutes volumes for unbilled traffic;
4. Converting service volumes to minute equivalent;
5. Traffic volumes (minutes) adjusted by de-averaging factors.
The number of call-attempts (NCA, units) is calculated according to the following formula:
N CA 
(1)
Tcall
 CD
Where:
Tcall – Voice or video calls traffic, minutes;
αCD – Average call duration, minutes.
Call-attempts in BU-LRAIC reference paper are converted to busy hour call-attempts for each
network element. This size is used to estimate the processor part capacity of the mobile switching
centre (MSC), mobile switching centre server (MSS), media gateway (MGW), IP multimedia
subsystem (IMS) and intelligent network (IN).
Busy hour call-attempts per minute are calculated by multiplying the annual number of callattempts (NCA) by routing factors (formula No. (2) is applied and instead of services traffic callattempts are inserted), average traffic to busy hour traffic factors (respectively applying formula No.
(16)), unsuccessful compared to successful calls ratio and dividing by the amount of minutes in a
year. So, the number of busy hour call-attempts (NBHCA, units) is calculated according to the
following formula:
32
N BHCA 
N CA  r f  f DA  (1  ru )
(2)
365  24  60
Where:
NCA – Call-attempts number, units. See formula No. (1)
fR – Routing factor for particular service traffic in a particular network element. See table No. 5
fDA – De-averaging factor. See formula No. (18)
ru – Ratio of unsuccessful calls compared to successful calls, %. See table No. 6
Division by 365 is year to days conversion, division by 24 is day to hours conversion and division
by 60 is hour to minutes conversion.
Weighted traffic volumes (TW, minutes, messages or MB) for particular network element by routing
factors are calculated according to the principle given in the following formula:
TW  T  f R
(3)
Where:
T – Traffic volume, minutes, messages or MB;
fR – Routing factor. Routing factor of traffic for particular service in a particular network element.
See table No. 5
Routing factors are given in the Routing factors matrix (see table 5). In this matrix each row
represents separate traffic of service type and each column represents a separate element in the
network. The routing factor is estimated having in mind traffic nature and shows the minimum
number of times a particular service type traffic utilizes a particular network element. For instance,
on-net SMS messages service in element BTS routing factor is two, which means on-net SMS in
its path from user device to user device steps through BTS element two times on average.
33
Table 5. Routing factors
Routing factors
1
Service type
BTS/
NodeB/
eNode B
2
3
BSC/
RNC/
EPC
MSC/
MGW or
SMSC or
MMSC or
SGSN or
GGSN
4
5
6
7
8
TX backhaul
TX aggrega
tion
TX - core
MSC/M
GW/IM
S-IC
IMS*
Voice traffic (minutes of use)
1
On-net minutes
2,00
2,00
1,20
2,00
2,00
0,20
0,00
1,00
2
Off-net minutes
1,00
1,00
1,50
1,00
1,00
0,50
1,00
1,00
3
Incoming minutes
1,00
1,00
1,50
1,00
1,00
0,50
1,00
1,00
4
Transit 1 minutes
0,00
0,00
2,00
0,00
0,00
1,00
2,00
0,00
5
Transit 2 minutes
0,00
0,00
2,5
0,00
0,00
2,00
2,00
0,00
6
Transit 3 minutes
0,00
0,00
2,5
0,00
0,00
2,00
2,00
0,00
Video traffic (minutes of use)
5
On-net minutes
2,00
2,00
1,20
2,00
2,00
0,20
0,00
1,00
6
Off-net minutes
1,00
1,00
1,00
1,00
1,00
0,00
1,00
1,00
7
Incoming minutes
1,00
1,00
1,00
1,00
1,00
0,00
1,00
1,00
SMS traffic
(units)
8
On-net SMS messages
2,00
2,00
1,00
2,00
2,00
0,00
0,00
0,00
9
Outgoing SMS messages
1,00
1,00
1,00
1,00
1,00
0,00
1,00
0,00
10
Incoming SMS messages
1,00
1,00
1,00
1,00
1,00
0,00
1,00
0,00
MMS traffic
(units)
11
On-net MMS messages
2,00
2,00
1,00
2,00
2,00
0,00
0,00
0,00
12
Outgoing MMS messages
1,00
1,00
1,00
1,00
1,00
0,00
1,00
0,00
13
Incoming MMS messages
1,00
1,00
1,00
1,00
1,00
0,00
1,00
0,00
1,00
1,00
1,00
1,00
1,00
0,00
1,00
0,00
Up-link (GSM subscribers)
1,00
1,00
1,00
1,00
1,00
1,00
0,00
0,00
Down-link (GSM subscribers)
1,00
1,00
1,00
1,00
1,00
1,00
0,00
0,00
1,00
1,00
1,00
1,00
1,00
1,00
0,00
0,00
data)
1,00
1,00
1,00
1,00
1,00
1,00
0,00
0,00
Up-link (LTE subscribers - data)
1,00
1,00
1,00
1,00
1,00
1,00
0,00
0,00
1,00
1,00
1,00
1,00
1,00
1,00
0,00
1,00
Circuit data traffic (minutes of use)
14
HSCSD/CSD minutes
Packet data traffic (Mbytes)
Up-link (UMTS subscribers data)
15
Down-link (UMTS subscribers -
Down-link (LTE subscribers data)
*IMS used instead of MSC/MSS only for LTE voice traffic
The adjustment for unbilled traffic in the network applies separately to the following traffic groups:
voice calls, video calls. Billed minutes traffic or just billed minutes are defined as call duration from
34
a connection start, when a phone is picked up to a connection end, when a phone is hung up.
Performing calculations of billed traffic includes short, emergency, information and similar numbers
minutes traffic, i.e. all actual call minutes in the network. Unbilled traffic is related to call set-up
duration and unsuccessful calls. Unsuccessful calls comprise calls both when the line is busy and
when the recipient does not answer the call.
Other services (SMS, MMS and data) are billed as they use the network resources; therefore, the
adjustment for unbilled traffic is not needed.
Calls traffic (TB+U) (billed plus unbilled traffic) is calculated according to the following formulas:
TB U  TW  (1  f A )
fA 
(4)
Ss
S r
 u u
 CD  60  CD  60
(5)
Where:
fA – Adjusting factor;
TW – Weighted calls traffic for particular network element, minutes. It is calculated according to the
principle given in the formula No. (3).
Ss – Call set-up duration for successful calls, seconds. See table No. 7
Su – Call set-up duration for unsuccessful calls, seconds. See table No. 7
ru – Ratio of unsuccessful calls compared to successful calls, %. See table No. 7
αCD – Average call duration, seconds. See table No. 7
Division by 60 is second conversion to minute number.
Parameters for the calculation of formula No. (4) and No. (5) are provided in the table 6.
Table 6. TB+U calculation parameters
Parameter
Unit
Values per total network
Call set-up duration for successful calls
seconds
8
Call set-up duration for unsuccessful calls
seconds
15
Call duration
seconds
120
Unsuccessful call attempts as percentage of successful calls
%
40
In order to come to homogenous service volume measures, volumes of all non minute services are
converted to minute equivalent. This homogenous service volume measure is needed in order to
dimension elements, which are used in the network dimensioning generally. The list of converted
services is provided below:
35
1. Video calls;
2. SMS (SMS);
3. MMS (MMS);
4. Packet data traffic for GSM network:
► GPRS transmission technology;
► EDGE transmission technology.
5. Packet data traffic for UMTS network:
► UMTS R99 transmission technology;
► HSDPA transmission technology.
6. Packet data traffic and VoIP calls for LTE network:
► LTE transmission technology;
Traffic conversion to minute equivalent is done according to the principle given in the following
formula:
TC  TW  f C
(6)
Where:
TC – Converted particular service traffic, minutes;
TW – Weighted particular service traffic (in this case voice calls traffic is not included), messages or
MB. It is calculated according to the principle given in the formula No. (3).
fC – Refers to a particular service (video calls, SMS, MMS, packet data services) conversion factor.
Factors calculations are provided in formulas (7) - (14).
Different conversion factors are applied to different types of services. Further in the document
conversion factor calculation algorithms are presented.
9.1.1.
Conversion of video calls
Conversion factor for video call minutes to voice minute equivalent (fvi) is calculated according to
the following formula:
f vi 
 vi
 vo
(7)
Where:
36
ρvi – Video call bit rate, kbit/s. See table No. 8
ρvo – Voice call bit rate, kbit/s. See table No. 8
Video conversion factor is a proportion of video and voice bit rates, the technical average values of
which are given in the table 7.
Table 7. Video conversion parameters
Parameter
Unit
Voice call bit rate
kbit/s
12.20
Video call bit rate
kbit/s
64.00
9.1.2.
Values per total network
Conversion of SMS and MMS
SMS message to minute equivalent conversion factor (fSMS) is calculated according to the following
formula:
f SMS 
LSMS
 ch

(8)
8
60
Where:
LSMS – Average length of SMS message, B. See table No. 8
ρch – SDCCH channel bit rate, kbit/s. See table No. 8
Division by 60 is second conversion to minute number and multiplication by 8 is bytes conversion
to bits.
MMS message to minute equivalent conversion factor (fMMS) is calculated according to the
following formula:
f MMS 
f G  LMMS
106
(9)
Where:
fG – GPRS MB to minute conversion factor. It is calculated according to the principle given in the
formula No. (10)
LMMS – Average length of MMS message, B.
Division by 106 is bytes conversion to megabytes.
SMS and MMS to minute equivalent conversion is based on SDCCH channel bit rate and the
length of a particular message (B), the technical values of which are given in the table No. 8
37
Table 8. SMS/MMS conversion parameters
Parameter
Unit
SDCCH bit rate
bit/s
Average SMS length
B
40.00
Average MMS length
B
40,000.00
9.1.3.
Values per total network
765.00
Conversion of GSM packet data
The packet data traffic conversion factor calculation for GSM network is split in two parts according
to the technologies, on which data transmission is based. So, there will be the following conversion
factors calculated in GSM network:
► GPRS MB to minute conversion factor;
► EDGE MB to minute conversion factor;
► General GSM MB to minute conversion factor.
GPRS/EDGE data traffic conversion factor (fG or fE) in megabytes to minute equivalent is calculated
according to the principle given in the following formula:
f G or E  1000  8 
(10)
1
1

60 G or E
Where:
ρG – GPRS bit rate, kbit/s. See table No. 9
ρE – EDGE bit rate, kbit/s. See table No. 9
Division by 60 is second conversion to minute, multiplication by 8 is bytes conversion to bits and
multiplication by 1000 is megabyte conversion to kilobytes.
General data traffic conversion factor (fGSM) in GSM network in megabytes to minute equivalent is
calculated according to the following formula:
f GSM  1000  8 
1
1

60  G  ( PG  PGW )   E  ( PE  PEW )
Where:
PGD – GPRS data traffic proportion in GSM network, %;
PGW – GPRS WAP traffic proportion in GSM network, %;
PE – EDGE data traffic proportion in GSM network, %;
38
(11)
PEW – EDGE WAP traffic proportion in GSM network, %;
ρG – GPRS bit rate, kbit/s. See table No. 9
ρE – EDGE bit rate, kbit/s. See table No. 9
Division by 60 is second conversion to minute, multiplication by 8 is bytes conversion to bits and
multiplication by 1000 is megabyte conversion to kilobytes.
9.1.4.
Conversion of UMTS data
Packet data conversion to equivalent minutes in UMTS network is done to estimate networks joint
traffic in minutes and allocate for it the network component’s “Tower and site preparation”, which is
employed to provide all the costs of services described in this document ,.
The packet data traffic conversion factor calculation for UMTS R99 network is split in two parts
according to the technologies, on which data transmission is based. So, there will be the following
conversion factors calculated in UMTS network:
► UMTS R99 MB to minute conversion factor;
► HSDPA MB to minute conversion factor;
► General UMTS MB to minute conversion factor.
UMTS R99 and HSDPA data traffic conversion factor (fumts and fHSDPA) in megabytes to minute
equivalent is calculated according to the following formulas:
f umts  1000  8 
f HSDPA  8 
(12)
1
1

60  umts
(13)
1
1

60  HSDPA
Where:
ρumts – UMTS bit rate, kbit/s. See table No. 9
ρHSDPA – HSDPA bit rate, Mbit/s. See table No. 9
Division by 60 is second conversion to minute, multiplication by 8 is bytes conversion to bits and
multiplication by 1000 is megabyte conversion to kilobytes.
General data traffic conversion factor (fUMTS) in UMTS network in megabytes to minute equivalent
is calculated according to the following formula:
39
f UMTS  1000  8 
(14)
1
1

60  umts  Pumts  1000   HSDPA  PHSDPA
Where:
Pumts – UMTS R99 data traffic proportion in UMTS network, %;
PHSDPA – HSDPA data traffic proportion in UMTS network, %;
ρumts – UMTS bit rate, kbit/s. See table No. 9
ρHSDPA – HSDPA bit rate, Mbit/s. See table No. 9
Division by 60 is second conversion to minute, multiplication by 8 is bytes conversion to bits and
multiplication by 1000 is megabyte conversion to kilobytes.
9.1.5.
Conversion of LTE VoIP calls and packet data
Packet data conversion to equivalent minutes in LTE network is done to estimate the network’s
joint traffic in minutes and allocate it to the network component “Tower and site preparation”, which
is employed to provide all the costs of services described in this document.
LTE data traffic conversion factor (fLTE) in megabytes to minute equivalent is calculated according
to the following formula:
f LTE  8 
(15)
1
1

60  LTE
Where:
ρLTE – LTE bit rate, Mbit/s. See table No. 8
Division by 60 is second conversion to minute, multiplication by 8 is bytes conversion to bits.
Data to minute equivalent conversion factors are based on specific bit rates, the values of which
are given in the table 9.
Table 9. Data conversion parameters
Parameter
Unit
Values per total network
GPRS bit rate (ρG)
kbit/s
13,04
EDGE bit rate (ρE)
kbit/s
39,12
UMTS bit rate (ρumts)
kbit/s
optimal throughput according to description provided in point 8.2.1.Node B
HSDPA bit rate (ρHSDPA )
Mbit/s
optimal throughput according to description provided in point 8.2.1.Node B
LTE bit rate (ρLTE)
Mbit/s
optimal throughput according to description provided in point 8.2.2.eNode B
40
9.2.
Calculation of total traffic in minutes
To sum up, converted to minute equivalent traffic (TC, minutes) for particular services (video calls,
SMS, MMS, data) is calculated according to the following formula:
TCj  TWj  f j
(16)
Where:
TWj – Specific service weighted traffic, video minutes, SMS messages, MMS messages, GSM,
UMTS and LTE data transmission).
fj – Specific service type conversion factor to minute equivalent. These factors are calculated,
respectively, in formulas No. (5), (7), (8), (9), (11), (14), (15)
j – Defines a specific service.
Particular service traffic (volume), converted to equivalent minutes is used to estimate network
components average unit costs in section 12.2 Network Component average unit costs . General
GSM and UMTS services and all LTE services traffic converted to equivalent minutes adding GSM
and UMTS voice calls traffic is used to calculate the average unit cost of the network component
“Tower and site preparation”.
In the next step, particular GSM services and video calls equivalent minute traffic (for voice calls –
billed and unbilled traffic) is adjusted to busy hour traffic. Differently from GSM services and video
calls, UMTS and LTE packet data traffic in megabytes is adjusted to busy hour traffic in
megabytes. It is also important to note that every group of network elements has a different traffic
aggregation level, so the inhomogeneity factor (see table No. 10) for peak load distribution in time
should be applied separately for each network element. The average annual traffic is adjusted to
annual busy hour traffic (TBH, minutes or MB) according to the principle given in the following
formulas:
TBH  TC / TB U / TW  f DA
(17)
f DA r BA rW A  f H
(18)
Where:
TC/TB+U/TW – Particular GSM service or video calls traffic, converted to minute equivalent (minutes),
voice calls traffic (billed and unbilled, minutes) or either UMTS packet data or LTE services
weighted traffic, MB.
fDA – De-averaging factor;
41
rBA – Busy hour traffic to average hourly traffic ratio. This factor shows proportion of busy and
average traffic. Value of this factor is provided in the table No. 10.
rWA – Working days traffic to average daily traffic ratio. This factor shows proportion of working day
and average daily traffic. Value of this factor is provided the in the table No. 10.
fH – Inhomogeneity factor for peak load distribution. This factor shows traffic aggregation level in
the network element. Value of this factor is provided in the table No. 11.
Table 10. De-averaging parameters
Parameter
Values per total network
Busy hour traffic to average hourly traffic ratio (rBA)
2.00
Working days traffic to average daily traffic ratio (rWA)
1.40
Table 11. Inhomogeneity factors
BTS/ NodeB/
eNode B
BSC/ RNC/
EPC
MSC/ MGW or
SMSC or MMSC
or SGSN or GGSN
BTS/ NodeB/
eNodeBBSC/RNC/
EPC
BSC/
RNC/EPCMSC/MGW/IM
S
MSC/ MGWMSC/MGW
MSC/MGW/
IMS-IC
1.50
1.00
1.00
1.00
1.00
1.00
1.00
Finally, annual total traffic is converted to busy hour Erlangs (BHE, BHE). The conversion is made
according to formula No. (19). Before the conversion, the following actions are carried out:
a) The total traffic in busy hour is weighted by routing factors and adjusted by unbilled traffic
(applied for voice only);
b) The total traffic of non voice services is converted to minutes equivalents;
c) The total traffic in steps a) and b) is converted to busy hour and de-averaged.
BHE 
(19)
TBH
365  24  60
Where:
TBH – Annual particular GSM services or video calls busy hour traffic, minutes. It is calculated
according to the principle given in the formula No. (17)
Division by 365 is year to day conversion, division by 24 is day to hour conversion and division by
60 is hour to minute conversion.
To dimension GSM network, the general demand for GSM (BHEGSM, BHE) network is calculated
according to the following formula:
42
BHE GSM   BHE i
(20)
i
Where:
i – Particular service in GSM network (voice calls or video calls, SMS, MMS, HSCSD/CSD, GPRS,
EDGE packet data).
Next, to evaluate data transmission equipment in UMTS network, busy hour megabytes traffic
(BHMBUMTS, MB) (weighted by routing factors, converted to busy hour and de-averaged) in UMTS
network is calculated according to the following formulas:
BHMB umts 
TBH  Pumts
365 24
BHMB HSDPA 
(21)
TBH  PHSDPA
365  24
(22)
BHMB UMTS  BHMB umts  BHMB HSDPA
(23)
Where:
TBH – Year total busy hour traffic, MB. It is calculated according to the principle given in the formula
No. (17)
Pumts – UMTS R99 data traffic proportion in UMTS network, %;
PHSDPA – HSDPA data traffic proportion in UMTS network, %;
Division by 365 is year to day conversion and division by 24 is day to hour conversion.
Finally, to calculate data transmission equipment in LTE network, busy hour megabytes traffic
(BHMBLTE, MB) (weighted by routing factors, converted to busy hour and de-averaged) in LTE
network is calculated according to the following formulas:
BHMB LTE 
TBH
365 24
(24)
Where:
TBH – Yearly total busy hour traffic, MB. It is calculated according to the principle given in the
formula No. (17)
Division by 365 is year to day conversion and division by 24 is day to hour conversion.
43
10.
Network Dimensioning
Table 12. List of components used in network dimensioning
NSS
BSS,
RNS,
PSS
PSS
RN
S
BSS
Phases
Network architecture
GSM
UMTS
LTE
Component
Base Transceiver Station (BTS)
Transceiver
Base Station Controller (BSC)
Transcoder Controller (TC)
Node B
Radio Network Controller (RNC)
eNode B
Evolved Packet Core (EPC)
X
Base and extension units (BU)
Sites
SGSN / GGSN
Mobile Switching Centre (MSC)
Mobile Switching Centre Server (MSS)
Media Gateway (MGW)
Short Messages Service Center (SMSC)
Multimedia Messages Service Center (MMSC)
IP multimedia sub-system (IMS)10
Voice Mail Service and Home Location Register
Service Control Point (Intelligent Network)
Network Functionality
Other Network
Transmission
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Having in mind the complexity of network dimensioning, the algorithms are further divided into
separate phases according to GSM, UMTS and LTE network architectures, respectively:
1. Base Station System (BSS) for GSM, Radio Network System (RNS) for UMTS and Packet
Switching System (PSS) for LTE;
2. Network Switching System (NSS);
Elements of BSS, RNS or PSS layer are driven by the traffic demand and coverage of the network
that is necessary to provide a given quality of service. Elements of NSS layer are driven by the
number of subscribers, traffic demand (as in BSS/RNS/PSS layer) and other parameters (e.g.
number of voice mailboxes).
10
IMS component will be included in cost calculation only in case of the presence of Voice over IP (VoIP) service in LTE network.
44
Links of dimensioned components with their network architecture and dimensioning phase are
presented in table 12 .
10.1. Dimensioning of GSM network
10.1.1.
Base Transceiver Station
The first step in dimensioning the Base Station Subsystem (BSS) layer is modeling the Base
Transceiver Stations (BTS). The outcome of the algorithms presented in this section is the number
of BTS locations (sites).
All of the BTS calculations presented in this section are executed by subdividing the territory of the
Republic of Lithuania (for coverage) and traffic (for capacity) into the following geographical areas:
1. Urban – Built up city or large town with large buildings and houses. Building heights above 4
stores (about 10m). As a reference to the Republic of Lithuania, it would be major cities:
Vilnius, Kaunas, Klaipeda, Siauliai, Panevežys, Alytus, and Marijampolė. If parks, forests fall in
this area, they are treated as suburban or rural geographical area.
2. Suburban – Village, highway scattered with trees and houses. Some obstacles near the
mobile, but not very congested. As a reference to the Republic of Lithuania, it would be
previously not mentioned towns.
3. Rural11 – Open space, forests, no tall trees or building in path. As a reference to the Republic
of Lithuania, it would be the rest of the territory of the Republic of Lithuania.
Traffic and coverage geographical areas equally correspond with geographical areas definitions
when dimensioning the network.
Estimation of the minimum number of BTS locations required is a function of requirements to meet
coverage and traffic demand.
Coverage requirements
Si
The minimal number of localizations required to satisfy coverage requirements ( N COV
, units) are
determined by the following formulas:
Concepts of geographical areas used in this document are in line with the respective Okumura – Hata
model concepts.
11
45
A 
Si
N COV
  Cc 
 AC 
(25)
ACc  1.5  3  R 2  2.6  R 2
(26)
Where:
AC – Coverage area in GSM network for a particular geographical area type, km2. This size is
calculated multiplying particular geographical area coverage proportion in GSM network (%) with
total GSM coverage area.
ACc – Coverage area of one cell, km2;
R – Maximal cell range, km.
The basis of a formula for cell coverage area ( ACc , km2) is a formula to calculate hexagon area.
Maximal cell range in every geographical area in the BU-LRAIC model is given below in the list:
► Urban area R = 0.90 km;
► Suburban area R = 3.00 km;
► Rural area R = 9.00 km.
Parameters given above are taken as the assumed dimensioning parameters of average
effectively utilized BTS in the Republic of Lithuania at a given area to provide the current quality of
services in the network.
Traffic demand
Number of sites required to meet traffic demand are calculated in the following steps:
1. Calculation of spectrum and physical capacity of a sector;
2. Calculation of effective sector capacity;
3. Calculation of a number of sites to meet the traffic demand.
Sector capacities are calculated for each type of a cell (macro, micro and pico) as well as single
and dual bands. As before, calculations for cells are also split by geographical area types. The
traffic is also split by geographical area type.
Consequently, the following cell types for sector capacity calculations are used:
► Macro cell – urban area;
46
► Macro cell – suburban area;
► Macro cell – rural area;
► Micro cell – urban area;
► Micro cell – suburban area;
► Pico cell – urban area;
► Pico cell – suburban area.
Spectrum capacity of BTS is a required TRXs number to cover the spectrum specifications. A
spectrum capacity (CSs, TRXs) for single band cell is calculated according to the principle given in
the following formula:
 N 900 
C Ss  
  0.5
 f su  TRX 
(27)
Where:
N900 – Amount of 900 MHz spectrum, 2 x MHz. This value is calculated according to the public
information (permissions to operate radio channels) placed on RRT website and according to
information provided by RRT.
fsu –- Sector re-use factor for 900 MHz, units;
λTRX – Bandwidth of a transceiver, MHz. According to technical transceiver parameters, it is
assumed λTRX equals to 0.2 MHz.
Similarly, spectrum capacity (CSd, TRXs) of a logical sector for dual band is calculated according to
the following formula:
 N1800 
C Sd  C Ss  

 f du  TRX 
(28)
Where:
CSs – Spectrum capacity for single band cell, TRXs. It is calculated according to the principle given
in the formula No. (27).
N1800 –- Amount of 1800 MHz spectrum, 2 x MHz. This value is calculated according to the public
information (permissions to operate radio channels) placed on RRT website.
fdu –- Sector re-use factor for 1800 MHz, units;
λTRX – Bandwidth of a transceiver, MHz. The same assumption is applied as in the formula No.
(27).
47
Physical capacity (CP, TRXs) of a logical sector for single and dual band is a technical specification
value. Effective sector capacity (CE, TRXs) for macro (urban, suburban and rural), micro, pico cell
groups respectively single and dual band frequency is calculated according to the principle given in
the following formula:
C E  min( C S ; C P )
(29)
Where:
CS – Spectrum sector capacity (single CSs or dual band CSd), TRX;
CP – Physical (equipment technical limitation) sector capacity (single or dual band12), TRX. This
value describes maximal TRX amount, which can be physically installed in mikro, pico or makro
cells.
It is assumed in BU-LRAIC model, that first TRX in BTS handles 7 traffic channels and each
additional TRX in BTS handles 8 traffic channels.
TRXs conversion (NTRX, units) to channels (NCH, units) is done according to the following formula:
N CH  7  8  N TRX  1
(30)
Where:
NTRX – Number of TRXs, TRX. See formula No. (39).
As the TRXs number is converted to channels, effective sector capacity (CE) for single and dual
band (in channels) is translated into BHE ( CEErl ) according to Erlangs table, assuming blocking
probability equals to 2%.
Se
The number of sectors ( N CAP
, units) to serve the traffic is calculated according to the principle
given in the following formula:
Se
N CAP

(31)
A
BHE GSM
C EErl  HABTS
Where:
A
BHE GSM
– GSM services busy hour traffic part in a particular geographical area, BHE. This size is
calculated by multiplying a particular geographical area traffic proportion in GSM network (%) by
total GSM traffic.
12
Single or dual band physical capacity. This parameter is included in questionnaire.
48
CEErl – Effective sector capacity of dual or single band (for a particular cell type), BHE.
HABTS – Headroom allowance of BTS equipment, %. It is calculated according to the principle
given in the formula No. (25)
Si
The number of sites ( N CAP
, units) to serve the traffic is calculated according to the following
formulas:
N
Si
CAP
Se
N CAP

N Se / Si
(32)
3
N Se / Si 
i  N
i 1
Si
iSe
(33)
3
N
i 1
Si
iSe
Where:
Se
N CAP
– Sectors number to serve the traffic, units;
NSe/Si – Average number of sectors per site, units.
Si
N iSe
– i sectored sites in GSM network, units. This size is calculated by multiplying total number of
sites with proportions (%) of i sectored sites in the network.
i – Defines number of sectors in the site (one, two or three).
Total amount of GSM sites
Si
The total amount of BTS sites in a mobile network ( N Total
, units) is calculated according to the
following formula:
Si
Si
Si
N Total
 Max ( N COV
; N CAP
)
(34)
Where:
Si
N COV
– Sites to serve the coverage, units;
Si
N CAP
– Sites to serve the traffic, units.
It is assumed that each GSM site handles EDGE, single band base stations are present in rural
areas and double band base stations are present in suburban and urban areas.
49
10.1.2.
Transceiver
The second step in dimensioning Base Station Subsystem (BSS) layer is modeling of Transceivers
(TRX). The outcome of the algorithms presented in this section is the number of TRX units.
Similarly to BTS modeling case, all of the TRX calculations are executed by subdividing the
territory of the Republic of Lithuania into geographical areas defined in section 10.1.1. Base
Transceiver Station.
Se
The next step to estimate TRX number is calculation of traffic load per sector ( BHE GSM
, BHE). It is
calculated according to the principle given in the following formula:
BHE
Se
GSM
(35)
A
BHE GSM
 Si
N Total  N Se/Si
Where:
A
BHE GSM
– GSM services busy hour traffic part in a particular geographical area, BHE.
Si
NTotal
– Total BTS sites in a mobile network, units. See formula No. (34).
NSe/Si – Average number of sectors per site, units (see formula No. (33)).
Se
Traffic load per sector ( BHE GSM
, BHE) is translated into channels per sector ( N CH / Se ) according to
Erlangs table with a blocking probability of 2%.
Further, the number of TRXs per sector ( N TRX / Se , units) is calculated according to the following
formulas for macro, micro and pico cells respectively:
N TRX / Se (macro) 
N CH / Se

7  8  ( N TRX  1)
(36)
N TRX / Se (micro) 
N CH / Se

7  8  ( N TRX  1)
(37)
N TRX / Se ( pico) 
(38)
N CH / Se

7  8  ( N TRX  1)
Where:
N CH / Se
– Channels per sector, units;
NTRX – TRX number, TRX. See formula No. (39).
50
γ – TRX utilization adjustment, which equals to 0.5 TRX per sector. Non-uniform allowance is the
½ unit of capacity per sector allowance for the fact that traffic is not evenly distributed (in both time
and space) across each area type.
The total number of TRXs in a mobile network ( NTRX , units) is calculated according to the following
formulas:
Se
N TRX  N TRX / Se  N Total

(39)
N TRX / Se  N TRX / Se (macro)  N TRX / Se (micro)  N TRX / Se ( pico)
(40)
(41)
3
Se
Si
N Total
  i  N iSe
i 1
Where:
N TRX / Se – Average number of TRXs per sector, units. See formula No. (36), (37) and (38).
Se
– Total amount of sectors in mobile network, units;
NTotal
Si
N iSe
– i sectored sites in GSM network, units. This size is calculated by multiplying total number of
sites with proportions (%) of i sectored sites in the network.
i – Defines number of sectors in the site (one, two or three)
10.1.3.
Base Station Controller
Base station controller comprises two parts:
► Base unit;
► Base station extension (TRXs).
The outcome in this section is the amount of base units and the amount of extension units. The
dividend variable for both units calculation is the number of TRXs.
The total amount of BSC base units and extension units is calculated according to the algorithm
provided in section 10.4.1. Base and extension units with TRXs as dividend variable for both parts.
10.1.4.
Transcoder Controller
Transcoder controller (TRC) comprises two parts:
► Base unit;
51
► Transcoder E1 extension (A interfaces).
The outcome of the algorithms presented in this section is the amount of base units and
Transcoder E1 extension (A interfaces) units. Therefore, calculations are described with respect to
these parts. The dividend variable for both parts is total 2 Mbit/s link capacity (CL, E1 A interface).
The total 2 Mbit/s link capacity is calculated according to the following formula:
CL  C 
TH GSM BHE GSM  BHE PD

Cb
BHE GSM
(42)
Where:
THGSM – Throughput in TRC, kbit/s. See formula No. (115).
Cb – Basic 2 Mbit/s link capacity, kbit/s.
ρC – TRC compression rate, equal to 4;
BHEGSM – Demand for GSM network, BHE (see formula No. (20));
BHEPD – Packet data demand for GSM network, BHE. It is calculated according to the principle
provided in the formula No. (35).
Assumption is made that basic 2 Mbit/s link capacity is 2048 kbit/s.
Next, as in BSC calculations, TRC base units and extension units are calculated according to the
algorithm provided in section 10.4.1. Base and extension units with E1 number (A interface) as
dividend variable for both parts.
10.2. Dimensioning of UMTS network
10.2.1.
Node B
In UMTS network, the first step in dimensioning RNS layer is modeling the Node B element. The
outcome of the algorithms presented in this section is the number of Node B sites. All Node B
calculations are divided by geographical area proportions.
UMTS macrocell range and sector capacity are calculated separately for different area types. In
UMTS system the cell range is dependent on current traffic, the footprint of CDMA cell is
dynamically expanding and contradicts according to the number of users. This feature of UMTS is
called “cell breathing”. Implemented algorithm calculates optimal UMTS cell range with regard to
the cell required capacity (demand). This calculation is performed in four steps:
1). Required UMTS network capacity by cell types
52
In this step the required UMTS network capacity for uplink and downlink channel is calculated
based on voice and data traffic demand. The UMTS network capacity is calculated separately for
different area type.
2) Traffic BH density per 1km2
In this step traffic BH density per 1km2 is calculated based on the required UMTS network capacity
and required coverage of UMTS network. The UMTS traffic BH density per 1 km2 is calculated
separately for uplink and downlink channel for each area type.
3) Downlink and uplink calculation
In this section implemented algorithm finds the relationship (function) between cell area and cell
capacity, separately for uplink and downlink channel and different area type. To find relationship
(function) formula algorithm uses two function extremes:
1. x: Maximal UMTS cell range assuming minimal capacity consumption
y: Minimal site capacity volume (single data channel)
2. x: Maximal UMTS cell range assuming full capacity consumption
y: Maximal site capacity volume
Then according to traffic BH density per 1 km2 and found relationship (function) formula, the
optimal cell area and sector capacity is calculated separately for different area type.
4) Total
In this last step the optimal UMTS macrocell range and sector capacity is calculated separately for
uplink and downlink channel and different area type.
The values presenting:
1. x: Maximal UMTS cell range assuming minimal capacity consumption
y: Minimal site capacity volume (single data channel)
2. x: Maximal UMTS cell range assuming full capacity consumption
y: Maximal site capacity volume
Values will be gathered from operators and verified based on link budget calculation.
53
Coverage
UMTS network area coverage is split by geographical areas defined in section 10.1.1. Base
Transceiver Station.
SiB
The minimal number of Node B sites required to satisfy coverage requirements ( N COV
, units) are
determined by the following formulas:
 bA 
SiB
N COV
  Cc 
 bAC 
(43)
2
2
bACc  1.5  3  RUMTS
 2.6  RUMTS
(44)
Where:
bAC – Coverage area in UMTS network for a particular geographical area type, km 2. This size is
calculated multiplying a particular geographical area coverage proportion (%) in UMTS network by
total UMTS coverage area.
bACc – Coverage area of one Node B cell, km2;
RUMTS – Maximal cell range, km.
The basis of a formula for cell coverage area is a formula to calculate hexagon area.
Traffic demand
The capacity required (CUMTS, kbit/s) to handle voice calls, SMS, MMS and the packet data traffic in
the UMTS network is calculated according to the following formula:
CUMTS 
BHMBUMTS
 8  1000
60  60
(45)
Where:
BHMBUMTS – Capacity to be handled by UMTS network, MB. It is a busy hour traffic part in a
particular geographical area and cell type (macro, micro and pico) in UMTS network (see formula
No. (23)).
Division by 60 and 60 is hour conversion to seconds, multiplication by 8 is a bytes conversion to
bits and multiplication by 1000 is megabyte conversion to kilobytes. There is an assumption in the
BU-LRAIC modeling that cell capacity in BHT in the UMTS network is utilized by 120%.
SeB
Sector number ( N CAP
, units) to meet capacity requirements is calculated according to the principle
given in the following formula:
54
C
BHE
SeB
N CAP
  UMTS
 ErlV
Se
CV
 C min

  LU

(46)
Where:
CUMTS – Capacity required to handle the traffic in UMTS network, kbit/s. See formula No. (45).
Se
– Sector capacity in BHT, kbit/s.
C min
LU – Cell capacity utilization in BHT, %. BU-LRAIC modeling that cell capacity in BHT in the UMTS
network is utilized by 120%.
SiB
The number of UMTS sites ( N CAP
, units) to meet capacity requirements is calculated according to
the following formulas:
3
SiB
SiB
N CAP
  N iSeB
(47)
i 1
N
SiB
iSeB
SeB
N iCAP

i
(48)
Where:
SeB
N iCAP
– Sectors number to meet capacity requirements in UMTS network, distinguished by
particular sectorization, units. This size is calculated by multiplying the total number of sectors (
SeB
N CAP
, see formula No. (46) by respective sectorization proportions (%).
SiB
N CAP
– UMTS sites number to meet capacity requirements, units;
Si
N iSeB
– i sectored sites in UMTS network, units;
i – Defines number of sectors in the site (one, two or three).
Total amount of Node B sites
SiB
Finally, total number of Node B sites ( N Total
, units) is calculated according to the following
formulas:
55
SiB
SiB
N Total
 N CAP
 Adj
(49)
SiB
SiB
N COV
 N CAP
Adj 
2
(50)
Where:
SiB
– Sectors to meet capacity requirements, units (see formula No. (47)).
N CAP
SiB
N COV
– Sectors to meet coverage requirements, units (see formula No. (43)).
Adj – Adjustments (sites number) for planning assumptions, units.
In UMTS network Node Bs number to meet capacity and coverage requirements are correlated
figures; therefore, an adjustment is applied to the calculated total Node Bs number, not the
maximum value out the two, as it is in GSM BTSs case.
It is assumed that each UMTS site handles HSDPA/HSUPA.
10.2.2.
Radio Network Controller
In UMTS network, the next step in dimensioning BSS layer is modeling the Radio Network
Controller (RNC). RNC comprises of the following parts:
► Base unit;
► Extension units:

Iub links extension;

Sectors extension;

Sites extension.
The outcome of the algorithms presented in this section is the amount of base units and extension
units.
Estimation of the minimum number of RNC base units required is a function of requirements to
meet particular number of Iub links, particular number of sectors and sites.
Total amount of RNC base units (BURNC, units) is calculated according to the following formulas:
56
BU RNC
SeB
SiB

 TH Iub N Total

N Total

  Max
; Se ; Si 
 C Iub C RNC C RNC 

(51)
3
SeB
SiB
N Total
  i  N iSe
(52)
i 1
Where:
THIub – Iub link throughput, Mbit/s. The same as UMTS throughput (see formula No. (115))
CIub – RNC maximal operational capacity to satisfy Iub interface throughput, Mbit/s; Calculated
according to the principle provided in formula No. (66).
SeB
N Total
– Total number of sectors in UMTS network, units;
Se
C RNC
– RNC maximal operational capacity to satisfy number of sectors, units; Calculated
according to the principle provided in formula No. (66).
SiB
N Total
– Total number of Node B sites in UMTS network, units;
Si
– RNC maximal operational capacity to satisfy number of sites, units; Calculated according
C RNC
to the principle provided in formula No. (66).
SiB
N iSe
– i sectored sites in UMTS network, units. This parameter is calculated multiplying the total
number of sites by appropriate proportion (%) according to number of sectors.
i – Defines number of sectors in the site (one, two or three).
Extension units for RNC - lub links extension, sectors extension and sites extension – are
calculated according to the algorithm provided in section 10.4.1. Base and extension units. RNC
Iub link throughput, sectors number and Node B sites number are the respective dividend
variables.
10.3. Dimensioning of LTE network
10.3.1.
eNode B
In LTE network, the first step in dimensioning PSS layer is modeling the eNode B element. The
outcome of the algorithms presented in this section is the number of eNode B sites. All eNode B
calculations are divided by geographical area proportions.
57
The optimal LTE cell range regarding to the cell required capacity (demand) will be performed in
the same way as for NodeBs, taking into account the technical parameters specific for LTE
technology.
In the model eNode B is dimensioned for handling both data and voice traffic. Since LTE network is
a packet based network, all the volume of voice traffic in billed minutes must be converted into
packet data traffic (volume of kbps). This calculation consists of the following steps:
1. Calculate the average volume of BHE (Busy Hour Erlangs) for each eNodeB.
The volume of BHE determines how many VoIP channels are required to handle the voice
traffic in the busy hour.
2. Calculate VoIP cannel bandwidth.
This calculation requires to determine some assumptions regarding VoIP (Voice over IP)
technology:
► Voice codec used;
► Payload of each network layer protocols: RTP / UDP / IP / Ethernet.
The VoIP channel bandwidth is calculated according to the following formula:
VoIPbit rate  ( IP  UDP  RTP  ETH  PLS )  PPS  PF 
8
1000
(53)
Where,
IP - IP header (bytes);
UDP - UDP header (bytes);
RTP - RTP header (bytes);
ETH - Ethernet header (bytes);
PLS - Voice payload size (bytes) – VoIP codec related value;
PPS - Packets per second (packets) – codec bit rate related value;
PF - Priority factor.
The results of calculation are presented in the table below.
Table 13. VoIP codecs and their required channel bandwidth
Codec & Bit Rate (Kbps)
Bandwidth in Ethernet layer (Kbps)
G.711 (64 Kbps)
87.2 Kbps
G.729 (8 Kbps)
31.2 Kbps
58
G.723.1 (6.3 Kbps)
21.9 Kbps
G.723.1 (5.3 Kbps)
20.8 Kbps
G.726 (32 Kbps)
55.2 Kbps
G.726 (24 Kbps)
47.2 Kbps
G.728 (16 Kbps)
31.5 Kbps
G722_64k(64 Kbps)
87.2 Kbps
ilbc_mode_20 (15.2Kbps)
38.4Kbps
ilbc_mode_30 (13.33Kbps)
28.8 Kbps
Source: “Voice Over IP - Per Call Bandwidth Consumption”, Cisco
3. Calculate busy hour voice bandwidth for eNodeB.
For eNodeB modeling the busy hour bandwidth will be calculated by multiplying volume of BHE by
bandwidth of voice channel.
Coverage
LTE network area coverage is split by geographical areas defined in section 10.1.1. Base
Transceiver Station.
SiE
The minimal number of eNode B sites required to satisfy coverage requirements ( N COV
, units) is
determined by the following formulas:
 eA 
SiE
N COV
  Cc 
 eAC 
(54)
2
2
eACc  1.5  3  RLTE
 2.6  RLTE
(55)
Where:
eAC – Coverage area in LTE network for a particular geographical area type, km2. This size is
calculated multiplying particular geographical area coverage proportion (%) in LTE network with
total LTE coverage area.
eACc – Coverage area of one eNode B cell, km2;
RLTE – Maximal cell range, km. (will be gathered from the operators).
The basis of a formula for cell coverage area is a formula to calculate hexagon area.
Traffic demand
The capacity required (CLTE, kbit/s) to handle the packet data traffic in LTE network is calculated
according to the following formula:
59
C LTE 
BHMB LTE
 8  1000
60  60
(56)
Where:
BHMBLTE – Capacity to be handled by LTE network, MB. It is a busy hour traffic part in a particular
geographical area and cell type (macro, micro and pico) in LTE network (see formula No. (24)).
Division by 60 and 60 is hour conversion to seconds, multiplication by 8 is a bytes conversion to
bits and multiplication by 1000 is megabyte conversion to kilobytes. There is an assumption in the
BU-LRAIC modeling that cell capacity in BHT in the LTE network is utilized by 120%.
SeB
Sector number ( N CAP
, units) to meet capacity requirements is calculated according to the principle
given in the following formula:
C
SeE
N CAP
  LTE
Se
 C min

  LU

(57)
Where:
CLTE – Capacity required to handle the traffic in LTE network, kbit/s. See formula No. (66).
Se
– Sector capacity in BHT, kbit/s. (will be gathered from the operators). LU – Cell capacity
C min
utilization in BHT, %.
In BU-LRAIC modeling it is assumed that cell capacity in BHT in the LTE network is utilized by
120%.
SiE
The number of LTE sites ( N CAP
, units) to meet capacity requirements is calculated according to
the following formulas:
3
SiE
SiE
N CAP
  N iSeB
(58)
i 1
SiE
N iSeE

SeE
N iCAP
i
(59)
Where:
SiE
N iCAP
– the number of sectors to meet capacity requirements in LTE network, distinguished by
SiE
particular sectorization, units. This size is calculated total sectors number ( N CAP
, see formula No.
83) multiplying by respective sectorization proportions (%).
SiE
N CAP
– the number of LTE sites to meet capacity requirements, units;
60
Si
– i sectored sites in LTE network, units;
N iSeB
i – Defines number of sectors in the site (one, two or three).
Total amount of eNode B sites
SiE
Finally, the total eNode B sites number ( N Total
, units) is calculated according to the following
formulas:
SiE
SiE
N Total
 N CAP
 Adj
(60)
SiE
SiE
N COV
 N CAP
Adj 
2
(61)
Where:
SiE
– Sectors to meet capacity requirements, units (see formula No. (58)).
N CAP
SiE
N COV
– Sectors to meet coverage requirements, units (see formula No. (54)).
Adj – Adjustments (sites number) for planning assumptions, units.
In LTE network the number of eNode Bs to meet capacity and coverage requirements are
correlated figures, therefore adjustment is applied to calculated total eNode Bs number, not the
maximum value out the two, as it is in GSM BTSs case.
10.3.2.
Evolved Packet Core
Evolved packet core (EPC) is dimensioned for the third alternative core network modeling scenario
(see section 4.6. Technological background). EPC handles all traffic in LTE network. EPC consists
of two main groups of components: Mobility management entity (MME), which handles control
functions, and Packet gateway (PGW) which is responsible for the actual transmission of data.
The number of MME basic units is calculated as S1-U link number of sessions [BH sessions / sec]
divided by maximal capacity of MME physical location. The MME extension unit is calculated
according to the formula:
CAP( A)


 OC base 

BU MME 

EU MME    BU (MME ) 
OC ext 




(62)
Where:
61
EU(MME) – number of MME extension units
BU(MME) – number of MME basic units
CAP(A) – S1-MME link number of sessions [BH sessions / sec]
OC(base) – base unit operational capacity of MME
Estimation of the minimum number of PGW base units required is a function of requirements to
meet:
1. Minimal network configurations;
2. Switching capacity (CPU part);
3. Ports number in PGW;
C
The number of PGW base units ( BU PGW
, units) to meet network requirements is calculated as S1-
U link throughput [BH packets / sec] divided by maximal capacity of PGW physical location. The
PGW extension unit is calculated according to formula:
CAP( A)


 OC base 

BU PGW 

EU PGW    BU (PGW ) 
OC ext 




(63)
Where:
EU(PGW) – number of PGW extension units
BU(PGW) – number of PGW basic units
CAP(A) – S1-U link throughput [BH packets / sec]
OC(base) – base unit operational capacity of PGW
10.4. Dimensioning of BSS, RNS and PSS system
10.4.1.
Base and extension units
Having in mind the modular nature of mobile network, the dimensioning of network elements
returns amount of base units (BU) and, if applicable, extensions units (EU) for particular network
elements. Extension unit is an additional piece in a base unit, which enhances BU capacity. EUs
are dimensioned, when there is not enough capacity to serve the traffic with n BUs, but n+1 BUs
62
would lead to over capacity of the resources needed. It is cost effective to install an extension unit
in a base unit, then to install an additional base unit as long as the required traffic is served.
Algorithms for the calculation of the amounts of BU and EU are general for all network elements
analysed in the scope of BU-LRAIC model. Figure 6 represents BU and EU calculation algorithm.
Element
Operational Capacity
Element Technical Capacity
Extension unit 1
X
Base unit
X
=
Extension unit 2
=
Extension unit 1
=
Base unit
Maximal operational capacity
X
=
Design utilisation factor at
planning stage
Extension unit 2
X
...
Extension unit N
...
...
X
=
X
Headroom allowance
Maximal technical capacity
...
Extension unit N
Figure 6: BU and EU calculation algorithm.
The amount of network element base units (BU, units) required is generally calculated according to
the principle given in the following formula:
 DV 
BU    
C 
(64)
Where:
DV – Dividend (demand) variable, measurement unit depends on the network element. DV is a
particular traffic demand, on which the BU dimensioning depends directly.
Cψ – Maximal operational capacity of network element, measurement unit is the same as for DV.
Calculation principle of Cψ is provided in the formula No. (66).
Operational capacity of a base unit or extension unit shows what traffic volumes it can maintain.
The amount of network element extension units (EU, units) required, if applicable, is generally
calculated according to the principle given in the following formula:



 BU  C  C BU

EU  


C ES


(65)
Where:
63
Cψ – Maximal operational capacity of a network element, measurement unit is the same as for DV.
Calculation principle of Cψ is provided in the formula No. (66)
BU – Base unit, units;

– Base unit operational capacity, measurement unit depends on the network element;
C BU

– Extension step (additional extension unit to BU) operational capacity, measurement unit
C ES
depends on the network element.
Maximal operational capacity (Cψ, BHCA, subscribers, etc.) for a particular network element is
calculated according to the principle given in the following formula:
C  C   OA
(66)
Where:
C  – Maximal technical capacity (including possible extension), measurement unit depends on the
element. C  shows maximal technical theoretical capacity of a network element in composition of
BU and EU.
OA – Operational allowance, %. Calculation principle of OA is provided in the formula No. (67).
Operational allowance (OA, %) shows both design and future planning utilization of a network
equipment, expressed in percents. OA is calculated according to the principle given in the following
formula:
OA  HA  fU
(67)
Where:
HA – Headroom allowance, %. HA shows what part of BU or EU capacity is reserved for future
traffic growth. Calculation principle of HA is provided in formula No. (69).
fU – Design utilization factor at a planning stage, %. It is equipment (vendor designated) maximum
utilization parameter. This utilization parameter ensures that the equipment in the network is not
overloaded by any transient spikes in demand.
BU and ES operational capacity ( C i , BHCA, subscribers, etc.) are calculated according to the
principle given in the following formula by applying capacity values respectively.
Ci  Ci  HAi
(68)
Where:
64
Ci – Base unit or extension unit capacity, measurement unit depends on the element. Ci defines
technical parameter of BU or EU capacity.
HAi – Headroom allowance of BU or EU, %. Calculation principle of HA is provided in the formula
No. (69).
i – Specifies BU or EU.
Operational allowance and capacity calculations depend on the headroom allowance figure (HA,
%). Headroom allowance is calculated according to the principle given in the following formula:
HA 
1
(69)
rSDG
Where:
rSDG – Service demand growth ratio.
rSDG determines the level of under-utilisation in the network, as a function of equipment planning
periods and expected demand. Planning period shows the time it takes to make all the necessary
preparations to bring new equipment online. This period can be from weeks to years.
Consequently, traffic volumes by groups (demand aggregates given below) are planned according
to the service demand growth.
The service demand growth ratio is calculated for each one of the following demand aggregates:
► Total subscribers number;
► CCS traffic, which comprises of voice, circuit data and converted to minute equivalent video
traffic;
► Air interface traffic, which comprises of converted to minute equivalent SMS, MMS and
packet data traffic. Packet data traffic in this case means GSM, UMTS and LTE traffic sum
of up-link or down-link traffic subject to greater value.
A particular demand growth ratio is assigned to a particular network element’s equipment.
10.4.2.
Sites
In BU-LRAIC model, to build a mobile network for UMTS, GSM and LTE, a minimal number of sites
is calculated to serve traffic. Sites are distinguished by particular types given in the following list:
► Urban macro cells (omni sector);
► Urban macro cells (2 sector);
► Urban macro cells (3 sector);
65
► Suburban macro cell (omni sector);
► Suburban macro cell (2 sector);
► Suburban macro cell (3 sector);
► Rural macro cell (omni sector);
► Rural macro cell (2 sector);
► Rural macro cell (3 sector);
► All micro cells;
► All pico cells.
The total number of sites (NSI, units) in the mobile network is calculated according to the following
formula:
N SI   Max ( N iSi ; N iSiB ; N iSiC )
(70)
i
Where:
N iSi – Particular i type sites in GSM network, units;
N iSib – Particular i type sites in UMTS network, units.
N iSic – Particular i type sites in LTE network, units.
i – Defines number of sectors in the site (one, two or three).
10.4.3.
Packet control unit (PCU) / Serving GPRS support node
(SGSN)
In this section the PCU basic and extension units is calculated. The number of PCU basic units
(BUPCU) is calculated as follows:
  TH 

BU PCU  max    Gb ; BU RNC  BU BSC 
 C

  PCU 

(71)
Where:
THGb – Gb link throughput [Mbps]
CPCU
– Maximal operational capacity of PCU [Mbps]
BURNC – number of RNC base units
66
BUBSC – number of BSC base units
Gb link throughput [Mbps] is calculated as follows:
TH Gb 
1  max( TGSMu ; TGSMd ) 


60 
f GSM

(72)
Where:
TGSMu – Total minute equivalent for up-link packet data megabytes in the GSM network element per
minute in busy hour
TGSMd – Total minute equivalent for down-link packet data megabytes in the GSM network element
per minute in busy hours
fGSM – GSM data traffic to minute equivalent conversion factor
The PCU extension unit is calculated according to formula:
CAP( A)


 OC base 

BU PCU 

EU PCU    BU (PCU) 
OC ext 




(73)
Where:
EU(PCU) – number of PCU extension units
BU(PCU) – number of PCU basic units
CAP(A) – Gb link throughput [BH packets / sec]
OC(base) – base unit operational capacity of PCU
OC(ext) – extension step operational capacity of PCU
Later in this section the SGSN basic and extension units is calculated. The number SGSN basic
units is calculated as Gb link throughput [BH packets / sec] divided by maximal capacity of SGSN
physical location. The SGSN extension unit is calculated according to the formula:
CAP( A)


 OC base 

BU SGSN 

EU SGSN    BU (SGSN ) 
OC ext 




Where:
67
(74)
EU(SGSN) – number of SGSN extension units
BU(SGSN) – number of SGSN basic units
CAP(A) – Gb link throughput [BH packets / sec]
OC(base) – base unit operational capacity of SGSN
10.5. Dimensioning of Network Switching System
10.5.1.
Mobile Switching Centre
Mobile Switching Centre (MSC) is dimensioned for the first alternative core network modeling
scenario (see section 4.6. Technological background).
All voice services traffic is handled by MSC and comprises the following parts:
► Base unit and software;
► MSC extensions:

Processor extension;

VLR, EIR extension;

SS7 extension;

Trunk port extension;

Input/Output peripherals.
Estimation of the minimum number of MSC base units required is a function of requirements to
meet:
1. Minimal network configurations;
2. Switching capacity (CPU part);
3. Ports number in MSC;
4. Subscribers number (VLR, EIR part).
In each component’s case calculation algorithms are described below.
For the requirements to meet minimal network configuration demand there is an assumption
adopted in BU-LRAIC model that the minimal number of MSCs in a mobile network is two. This
requirement is for the security reasons; in case one MSC does not work, another will maintain the
traffic.
68
C
The number of MSC base units ( BU MSC
, units) to meet switching capacity requirements (central
processing unit (CPU) case) are calculated according to the following formulas:
N BHCA
CCPU
(75)
CCPU  CMSC,s  N CPU / MSC
(76)
C
BU MSC

Where:
NBHCA – Call attempts in BHT, BHCA. Look at formula No. (2).
C MSC, s – Maximal MSC operational capacity, BHCA (see formula No. (66));
CCPU – CPU capacity of MSC, BHCA;
NCPU/MSC – CPUs per MSC, units.
Default MSC’s configuration in a most usual case gives one PCU per MSC, consequently, it is
assumed that there is one CPU per MSC.
p
The number of MSC base units ( BU MSC
, units) to meet port number requirements is calculated
according to the following formula:
p
BU MSC

Np
(77)
C MSC, p
Where:
Np – Total ports required, units;
CMSC, p – Maximal MSC operational capacity to satisfy the number of ports (see formula No. (66)).
The total number of ports required (Np, units) is calculated according to the following formula:
N p  p BSC  p ic  p is
(78)
Where:
pBSC – BSC-facing ports, units;
pic – Interconnect-facing ports, units. See formula No. (79).
pis – Inter-switch 2 Mbit/s ports, units. See formula No. (81).
The number of BSC-facing ports is the same number as total 2 Mbit/s link capacity, E1 A
interfaces, which is calculated in section 10.1.4. Transcoder Controller (see formula No. (42)).
69
The number of interconnect-facing ports (pic, units) is calculated according to the following formula:
pic  Tic 
1
1

0.7 31
(79)
Where:
Tic – Interconnect traffic, BHE.
Division by 0.7 is BHE conversion to channels number and division by 31 is channels conversion to
2 Mbit ports number.
Interconnect traffic (Tic, BHE) is calculated according to the following formula:
Tic  M Total  SMSTotal
(80)
Where:
MTotal – Total call minutes between MSC and point of interconnection, BHE;
SMSTotal – Total SMS messages between MSC and point of interconnection, BHE.
The number of inter-switch 2 Mbit/s ports (pis, units) is calculated according to the following
formula:
pis  Tis 
1
1

0.7 31
(81)
Where:
Tis – Inter-switch traffic, BHE (see formula No. (82)).
Division by 0.7 is BHE conversion to channels number and division by 31 is channels conversion to
2 Mbit ports number.
Inter-switch traffic (Tis, BHE) is calculated according to the following formula:
Tic  M ON  SMS ON
(82)
Where:
MON – Total on-net minutes in MSC, BHE;
SMSON – Total on-net SMS messages in MSC, BHE.
S
The number of MSC base units ( BU MSC
, units) to meet subscribers’ requirements (visitor location
register (VLR, EIR) case) is calculated according to the following formula:
70
S
BU MSC

GSM
N Sub
CMSC, sub
(83)
Where:
GSM
– GSM network subscribers, units;
N Sub
CMSC,sub – Maximal MSC operational capacity to satisfy number subscribers, subscribers (see
formula No. (66)).
So, the total amount of MSC base units (BUMSC, units) is calculated according to the following
formula:

C
p
S
BU MSC  Max BU MSC
; BU MSC
; BU MSC

(84)
Where:
C
BU MSC
– Number of MSC base units to meet switching capacity requirements, units (see formula
No. (75)).
p
BU MSC
– Number of MSC base units to meet port number requirements, units (see formula No.
(77)).
S
BU MSC
– Number of MSC base units to meet subscribers’ requirements, units (see formula No.
(83)).
The number of extension units is calculated for:
► Processor;
► VLR, EIR;
► Signaling System (SS7);
► Trunk ports.
The dividend variable of a processor part is the number of BHCA, VLR, EIR – number of
subscribers, SS7 – number of SS7 links, trunk ports – the total number of ports required in MSC.
The number of SS7 links is calculated according to the following formula:
N SS 7 
pis  pic
N p / SS 7
(85)
Where:
pis – Inter-switch 2 Mbit/s ports, units (see formula No. (81)).
71
pic – Interconnect-facing ports, units (see formula No. (79)).
Np/SS7 – Trunks per SS7 link, units.
It is assumed that there are 16 trunks per SS7 link.
As Input/Output peripherals number in MSC is a part of MSC configuration, it equals to the number
of MSCs base units.
The amount of MSC extension units for each, processor, VLR, EIR, trunk port and SS7 is
calculated according to algorithm provided in section 10.4.1. Base and extension units with number
of BHCA, number of subscribers, number of SS7 links, total number of ports required in MSC as
dividend variables respectively.
10.5.2.
Mobile Switching Centre Server
Mobile Switching Centre Server (MSS) is dimensioned for the second alternative core network
modeling scenario (see section 4.6. Technological background).
MSS handles video calls and voice services traffic. As MSS is a processing unit of the core
network and it does not handle the traffic, its calculations are based only on the amount of busy
hour call attempts.
The outcome of the algorithms presented in this section is the amount of MSS base and extension
units.
Estimation of the minimum number of MSS base units required is a function of requirements to
meet minimal network configurations and switching capacity (CPU part).
For the requirements to meet the minimal network configuration demand there is an assumption
adopted in BU-LRAIC model that the minimal number of MSS in a mobile network is two.
C
The number of MSS base units ( BU MSS
, units) to meet switching capacity requirements (central
processing unit (CPU) case) are calculated according to the following formulas:
N BHCA
CCPU
(86)
CCPU  CMSS,s  N CPU / MSS
(87)
C
BU MSS

Where:
N BHCA – Call attempts in BHT, BHCA (see formula No. (2)).
72
CMSS,s – Maximal MSS operational capacity to satisfy call attempts in BHT, BHCA (see formula No.
(66)).
CCPU – CPU capacity of MSS, BHCA;
NCPU/MSS – CPUs per MSS, units.
Default MSS’s configuration in most usual case gives one PCU per MSS, consequently it is
assumed there is one CPU per MSS.
So total amount of MSS base units (BUMSS, units) is calculated according to the following formula:

min
c
BU MSS  Max BU MSS
; BU MSS

(88)
Where:
min
– Number of MSS base units to meet minimal requirements of the network, units. This
BU MSS
number is assumption equals to 2 units.
C
– Number of MSS base units to meet switching capacity requirements, units (see formula
BU MSS
No. (86)).
The amount of MSS extension units is calculated according to the algorithm provided in section
10.4.1. Base and extension units with number of BHCA as dividend variable.
10.5.3.
Media Gateway
Similarly to MSS, Media Gateway (MG) is dimensioned for the second alternative core network
modeling scenario (see section 4.6. Technological background). MGW handles video calls and
voice services traffic.
MGW comprises of the following parts:
► Base unit and software;
► MGW extensions:

Processor extension;

Trunk port extension;
Estimation of the minimum number of MGW base units required is a function of requirements to
meet:
1. Minimal network configurations;
73
2. Switching capacity (CPU part);
3. Ports number in MGW;
In each component’s case calculation algorithms are described below.
For the requirements to meet the minimal network configuration demand there is an assumption
adopted in BU-LRAIC model that the minimal number of MGWs in a mobile network is two.
C
The number of MGW base units ( BU MGW
, units) to meet switching capacity requirements (central
processing unit (CPU) case) are calculated according to the following formulas:
N BHCA
CCPU
(89)
CCPU  CMGW ,s  N CPU / MGW
(90)
C
BU MGW

Where:
NBHCA – Call attempts in BHT, BHCA. See formula No. (2).
CMGW , s – Maximal MGW operational capacity to satisfy call attempts in BHT, BHCA (see formula
No. (66)).
CCPU – CPU capacity of MGW, BHCA;
NCPU/MGW – CPUs per MGW, units.
Default MGW’s configuration in the most usual case gives one PCU per MGW, consequently it is
assumed there is one CPU per MGW.
p
The number of MGW base units ( BU MGW
, units) to meet the ports number requirements is
calculated according to the following formula:
p
BU MGW

(91)
p
N MGW
CMGW , p
Where:
p
N MGW
– Total ports required in MGW, units. See formula No. (92).
CMGW , p – Maximal MGW operational capacity to satisfy number ports, ports. See formula No. (66).
p
Total number of ports required ( N MGW
, units) in MGW is calculated according to the following
formula:
74
p
N MGW
 p RNC  picmgw  pismgw
(92)
Where:
pRNC – RNC-facing ports in MGW, units. See formula No. (93).
picmgw – Interconnect-facing ports in MGW, units. See formula No. (95).
p ismgw – Inter-switch 2 Mbit/s ports in MGW, units. See formula No. (97).
Number of RNC-facing ports (pRNC, units) is calculated according to the following formula:
p RNC  TRNC 
(93)
1
1

0.7 31
Where:
TRNC – RNC-MGW traffic, BHE.
Division by 0.7 is BHE conversion to channels number and division by 31 is channels conversion to
2 Mbit ports number.
RNC-MGW traffic (TRNC, BHE) is calculated according to the following formula:
TRNC  M Total  VM Total  SMS Total  MMS Total
(94)
Where:
MTotal – Total voice minutes traffic in RNC, BHE;
VMTotal – Total video minutes traffic in RNC, BHE;
SMSTotal – Total SMS messages traffic in RNC, BHE.
MMSTotal - Total MMS messages traffic in RNC, BHE.
The number of interconnect-facing ports ( picmgw , units) in MGW is calculated according to the
following formula:
picmgw  Ticmgw 
(95)
1
1

0.7 31
Where:
Ticmgw – Interconnect traffic in MGW, BHE.
Division by 0.7 is BHE conversion to channels number and division by 31 is channels conversion to
2 Mbit ports number.
75
Interconnect traffic ( Ticmgw , BHE) in MGW is calculated according to the following formula:
Tic  M Total  MVTotal  SMSTotal  MMSTotal
(96)
Where:
MTotal – Total call minutes between MGW and point of interconnection, BHE.
VMTotal - Total video call minutes between MGW and point of interconnection, BHE.
SMSTotal – Total SMS messages between MGW and point of interconnection, BHE.
MMSTotal – Total MMS messages between MGW and point of interconnection, BHE;
Number of inter-switch 2 Mbit/s ports ( p ismgw , units) in MGW is calculated according to the following
formula:
pismgw  Tismgw 
1
1

0.7 31
(97)
Where:
Tismgw – Inter-switch traffic in MGW, BHE.
Division by 0.7 is BHE conversion to channels number and division by 31 is channels conversion to
2 Mbit ports number.
Inter-switch traffic ( Tismgw , BHE) in MGW is calculated according to the following formula:
Tismgw  M ON  VM ON  SMS ON  MMS ON
(98)
Where:
MON – Total on-net voice minutes traffic in MGW, BHE;
SMSON – Total on-net SMS messages traffic in MGW, BHE;
VMON – Total on-net video minutes traffic in MGW, BHE;
MMSON – Total on-net MMS messages traffic in MGW, BHE;
So, total amount of MGW base units (BUMGW, units) is calculated according to the following
formula:

min
C
p
BU MGW  Max BU MGW
; BU MGW
; BU MGW

(99)
Where:
76
min
BU MGW
– Number of MGW base units to meet minimal network requirements, units. Value of this
parameter is assumption provided at the beginning of this section.
C
BU MGW
– Number of MGW base units to meet switching capacity requirements, units (see formula
No. (89)).
p
– Number of MGW base units to meet port number requirements, units (see formula (91)).
BU MGW
The amount of MGW extension units for both processor and ports part is calculated according to
the algorithm provided in section 10.4.1. Base and extension units with the number of BHCA and
the total number of ports required in MGW as dividend variables respectively.
10.5.4.
Short messages service center
The fourth step in dimensioning NSS layer is modeling the SMSC. Each SMSC comprises two
parts:
► Base unit;
► Extension units.
The outcome of the algorithm presented in this section is the number of base unit and extension
unit for SMSC.
SMSC in BU-LRAIC are dimensioned according to the same engineering rules, so one algorithm
for both network elements is provided.
The dividend variable for both parts is the number of busy hour messages (SMS messages) per
second (MMS/s, messages/s) and is calculated according to the following formula:
N MS / s 
1 TMS

60 f MS
(100)
Where:
fMS – Message to minute equivalent conversion factor. They are calculated in the formulas No. (8)
and (9).
TMS – Total minute equivalent for messages in the network element per minute in busy hour,
minutes.
Amount of SMSC base units and extension units is calculated according to algorithm provided in
section 10.4.1. Base and extension units with busy hour SMS messages as dividend variable.
77
10.5.5.
Multimedia messaging service center (MMSC)
The next step in dimensioning NSS layer is modeling the MMSC. During this step basic and
extension units of MMSC are calculated. The number MMSC basic unit is calculated as the
number of BH MMS per second divided by maximal capacity of MMSC physical location. The
MMSC extension unit is calculated according to the formula:
CAP( A)


 OC base 

BU MMSC 

EU MMSC    BU (MMSC) 
OC ext 




(101)
Where:
EU(MMSC) – number of MMSC extension units
BU(MMSC) – number of MMSC basic units
CAP(A) – number of BH MMS per second
OC(base) – base unit operational capacity of MMSC
OC(ext) – extension step operational capacity of MMSC
10.5.6.
IP multimedia Sub-System
IMS is dimensioned for the third alternative core network modeling scenario (see section 4.6.
Technological background). It is responsible for handling the point of interconnection traffic and
control of local traffic and services.
1. Volume of BHCA for whole network is calculated. The total BHCA for the network is calculated
using the following formula:
Vr  rBHT / AVG
 (1  Rr )
365  24  Rl
BHCA 
HA
(102)
Where,
BHCA - Total busy hour call attempts in the network;
Vr - Total realized services volume;
rBHT / AVG - Busy Hour to Average Hour traffic ratio;
78
Rr
Rl
- Ratio of unsuccessful call attempts to total call attempts;
- Average call length;
HA - Headroom allowance for IMS voice processing elements.
2. the total volume of Busy hour erlangs is calculated using the following formula:
BHE IMS 
mERL AN  N l total
1000  HA
(103)
Where,
BHE IMS
- Busy hour erlangs;
mERLAN - Average throughput;
N l total
- Total amount of voice lines in network;
HA - Headroom allowance for IMS voice processing elements.
3. the following formula is used to calculate the total amount of voice services:
S total 
N l total
HA
(104)
Where,
Stotal - Total amount of voice services in the network;
N l total - Total amount of voice lines in network;
HA - Headroom allowance for IMS subscriber serving elements.
4. For each IMS element determine the main unit (chassis) type based on the volume of supported
volume BHE, volume of BHCA and volume of subscribers.
The number of IMS cabinets needed is determined using the following formula:
79
 N  N HSF 
N IMS c   ISF

 CCSFC

(105)
Where,
N IMS c - Number of IMS cabinets required to serve the network. The number is rounded up
to the nearest integer;
CCSFC - IMS cabinet’s capacity of service frames;
N HSF - Number of required service frames in EPC;
N ISF - Number of required service frames in IMS core.
The required service frames are calculated using the following formula:
N ISF
 6

IMS
  ( N Type  x ) 

  i2
 (C ICSC  2) 




(106)
Where,
C ICSC
- IMS core service frame’s card capacity;
IMS
N Type
x
- Number of x type IMS service cards. The required amount of each type of cards
is dimensioned according to the network specifics;
5. For each IMS element volumes of expansion cards (TDM processing, VoIP processing) are
calculated. Formulas, according to which volume of each expansion card is calculated, are
presented below.
The number of required Type 1, 2, 3, 4, 5, 6 cards is calculated using the following formula:
IMS
N Type
x 
Vz
C x capacity
2
(107)
Where,
C x  capacity
-Type x IMS service card handling capacity;
80
V z - Total network volume
z handled by x type of component;
z - Total network volume of
BHE or BHCA or Stotal ;
x - IMS service card Type: 2 or 3 or 5 or 6.
N HSF - Number of required service frames in HSS core. The amount is calculated using the
following formula:
N HSF
 2

HSS
  ( N Type x ) 

  i 1
 C HSCC 


(108)
Where,
C HSCC - HSS service frame’s card capacity;
HSS
N Type
x
- Number of x Type HSS service cards.
There are two types of HSS service cards and their required amount is calculated using the
following formula:


S total
HSS
N Type
2
1 / 2  
 HA  C x capacity 
(109)
Where,
Stotal - Total amount of voice subscribers in the network;
HA - Headroom allowance for IMS subscriber processing elements;
C x  capacity
- Type x HSS service card handling capacity;
x - Type of the service card. There are two types in total.
10.5.7.
Voice Mail Service and Home Location Register
Each Voice mail service (VMS) and Home location register (HLR) comprises two parts:
► Base unit;
81
► Extension units.
The outcome of the algorithm presented in this section is the number of base units and extension
units for VMS and HLR. The dividend variable for VMS is measured by mailboxes and HLR by the
number of subscribers’.
The amount of VMS and HLR base units and extension units is calculated according to the
algorithm provided in section 10.4.1. Base and extension units with mailboxes and the number of
subscribers as dividend variables.
10.5.8.
Centralized User Database (CUDB)
Each Centralized User Database (CUDB) comprises two parts:
► Base unit;
► Extension units.
The outcome of the algorithm presented in this section is the number of base units and extension
units for CUDB. The dividend variable for CUDB is measured by the number of subscribers.
Amount of CUDB base units and extension units is calculated according to algorithm provided in
section 10.4.1. Base and extension units with mailboxes and subscribers number as dividend
variables.
10.5.9.
Service Control Point (Intelligent Network)
Service Control Point (SCP) is the network element, which services pre-paid subscribers. SCP
comprises two parts:
► Base unit (pre - paid related);
► Extension:

Subscribers part;

Transactions part.
Estimation of the minimum number of SCP base units required is a function of requirements to
meet the subscribers and traffic demand. In each component’s case calculation algorithms are
described below.
82
The total amount of SCP base units (BUSCP, units) is calculated according to the following
formulas:
 N
N
BU SCP  Max  pre ; Tr / s
 C SCP ,sub C SCP ,Tr
N Tr / s 
N pre
N TSub





(110)
N BHCA
t /c
60
(111)
Where:
Npre – Pre-paid subscribers, units;
NTr/s – Busy hour transactions per second, units;
CSCP,sub – Maximal operational capacity to satisfy number of subscribers (see formula No. (66));
CSCP,Tr – Maximal operational capacity to satisfy number of transactions, BH transactions/s (see
formula No. (66));
NTSub – GSM, UMTS and LTE subscribers, units;
NBHCA – Call attempts in BHT, BHCA (see formula No. (2)).
αt/c- Average number of IN transactions per one pre-paid subscriber call (on-net and off-net).
Assumption is made that αt/c is 8 transactions per call.
The amount of SCP extension units for subscribers and transactions part is calculated according to
the algorithm provided in section 10.4.1. Base and extension units with the number of subscribers
and BH transactions per second dividend variables.
10.5.10.
Network Functionality
Network functionality (NF) elements in BU-LRAIC comprise the following elements:
► Soft handover (SFH);
► GSM/DCS control;
BU-LRAIC model assumes that the amount of NE elements is equal to the amount of other NE
according to the table 14.
83
Table 14. Amount of NE elements
HCC name
Total amount of units
SFH: soft handover (network-wide)
One unit in a mobile network
SFH: soft handover (RNC
extension)
Equal to a number RNC base units
SFH: soft handover (NodeB
extension)
Equal to a number of Node Bs
GSM/DCS: control (network-wide)
One unit in a mobile network
GSM/DCS: control (MSC extension)
Equal to a number of MSC base units
GSM/DCS: control (BSC extension)
Equal to a number of BSC base units
GSM/DCS: control (BTS extension)
Equal to a number of dual band BTS sites
LTE: CS fallback function (eNodeB
extension)
Equal to a number of eNodeB
LTE: CS fallback function (MME
extension
Equal to a number of MME
10.5.11.
Other Network
It is assumed that in BU-LRAIC model there is one billing system (hardware and software).
10.6. Transmission
Transmission network connects physically separated nodes in a mobile network (BTSs/Node
B/eNode B, BSCs/RNC/EPC, MSCs or MSS/MGWs or SGGSN/GGSN) and allows transmission of
communication signals over far distances.
Transmission network, according to the mobile network topology in BU-LRAIC model, is split into
the following hierarchical levels:
► Backhaul transmission:

BTS/Node B/eNode B – BSC/RNC/EPC;
► Core transmission:

BSC/RNC – MSC, BSC/RNC – MGW or EPC – GGSN transmission;

MSC – MSC, MGW – MGW or MGW- GGSN transmission.
BU – LRAIC model also assumes two different transmission technologies:
► Ethernet technology in backhaul transmission
84
► Ethernet technology in core transmission. Data transmission services are modeled in core
transmission as well.
The following sections provide algorithms for calculating transmission network capacity in each
hierarchical level of the mobile network.
Backhaul transmission
Backhaul transmission connects BTSs with BSCs (GSM network), Node Bs with RNCs (UMTS
network) or eNode Bs to EPC. Ethernet technology is used to transport data between the
mentioned nodes of mobile network. Ethernet comprise the following transmission modes:
► Ethernet radio link 10 Mbit/s microwave link;
► Ethernet radio link 20 Mbit/s microwave link;
► Ethernet radio link 40 Mbit/s microwave link;
► Ethernet radio link 100 Mbit/s microwave link.
To calculate backhaul transmission costs the proportion of each using Ethernet radio link needs to
be estimated. Consequently, essential assumption in backhaul transmission is made that
BTSs/Node Bs/eNode Bs are linked to one transmission line. Then, the proportion of each Ethernet
radio link is set depending on:
► The number of sites (BTS/Node B/eNode B) per transmission line which connects
BSC/RNC/EPC and the furthest BTS/Node B/eNode B;
► Average throughput per site.
Figure 7 illustrates the principal transmission scheme between BTSs/Node Bs and BSCs/RNCs.
N1
N2
T1=N1
N3
T2=T1+N2
T3=T2+N3
BSC/RNC/
EPC
BTS/Node B/eNode B
BTS/Node B/eNode B
BTS/Node B/eNode B
N1=N2=N3 - Average throughput per site in (kbit/s)
Figure 7: Calculating proportions of each Ethernet radio link.
85
Key characteristics for backhaul transmission modeling are13:
► Transmission network equipment is built with minimal capacity level to assure BTS/Node B/
eNode B – BSC/RNC/EPC transmission on the level sufficient to serve the traffic demand.
► Each BTS/Node B/eNode B that belongs to a particular transmission line put additional
volume of data to the transmission line. It results in higher loading of the transmission line
coming up to BSC/Node B/eNode B and lower loading moving backwards.
► Assumption that the average number of sites per transmission line is three is set.
Below, the algorithm of Ethernet radio links number calculation by different transmission modes
(10Mbit/s; 20 Mbit/s; 40 Mbit/s; 100 Mbit/s) is provided. As all Ethernet radio link modes are
calculated with reference to one algorithm, a common Ethernet radio link number calculation
algorithm is provided.
At first, the average throughput per site (αTH, kbit/s) is calculated according to the following formula:
 TH 
TH UMTS  TH GSM  TH LTE
N SI
(112)
Where:
THUMTS – Total throughput per UMTS sites taking in account all type of cells, sub-areas and
sectors, kbit/s;
THGSM – Total throughput per GSM sites taking in account all type of cells, sub-areas and sectors,
kbit/s;
THLTE – Total throughput per LTE sites taking in account all type of cells, sub-areas and sectors,
kbit/s;
NSI – Total number of sites (GSM, UMTS and LTE networks), units (calculated in formula No. (70)).
THUMTS is calculated according to the following formula:
TH UMTS 
 TH
UMTS
i , j ,k
 N iUMTS
, j ,k
(113)
i , j ,k
Where:
TH iUMTS
, j , k – Throughput per UMTS site, kbit/s. See formula No. (114).
13
When network is built in a ring structure data traffic is going through the shortest way. This is the reason
why these characteristics are accepted.
86
– Number of UMTS sites, units;
N iUMTS
, j ,k
i – Type of area;
j – Type of cell;
k – Type of sector.
TH iUMTS
, j , k is calculated according to the following formula:
TH
UMTS
i , j ,k
SeB
Se
Se
N CAP
 ( PUMTS  C min
 PHSDPA  C HSDPA
)

i
Si
N iSeB
(114)
Where:
SeB
N CAP
- Number of sectors to meet capacity requirements in all types of area and cell, calculated in
formula No. (46), units;
PUMTS – UMTS data traffic proportion in UMTS network, %;
PHSDPA – HSDPA data traffic proportion in UMTS network, %;
Se
– Sector capacity in BHT in all types of area and cell, kbit/s. Assumptions for this value are
C min
provided in the beginning of section 10.2.1. Node B.
Se
C HSDPA
- Sector capacity – HSDPA, in BHT in all types of area and cell, kbit/s. Assumptions for this
value are provided in the beginning of section 10.2.1. Node B.
Si
N iSeB
– i sectored sites in UMTS network, calculated in formula No. (48), units;
i - 1, 2 or 3, respectively to omni sector, 2 sector or 3 sector.
THGSM is calculated according to the following formula:
TH GSM 
 TH
GSM
i , j ,k
 N iGSM
, j ,k
(115)
i , j ,k
Where:
TH iGSM
, j , k - Throughput per GSM site, kbit/s;
N iGSM
, j , k - Number of GSM sites, units;
i – Type of area;
j – Type of cell;
k – Type of sector.
87
TH iGSM
, j , k is calculated according to the following formula:
(116)
Se
TH iGSM
i
, j , k  N TRX / Se  TH
Where:
N TRX / Se - Number of TRXs per sector (taking in account all types of area and cell), calculated in
formulas No. (36), (37), (38), units;
THSe – Throughput per TRX, kbit/s; as there are 8 channels in one TRX and it is assumed that
throughput per one channel equals 16 kbit/s, throughput per TRX is calculated multiplying 8
(channels) by 16 (throughput per one channel);
i - 1, 2 or 3, respectively to omni sector, 2 sector or 3 sector.
Further, link capacity of transmission modes ( Cil , circuits) is calculated according to the following
formula:
Cil  Cb  OA  N ilc
(117)
Where:
Cb – Basic 2 Mbit/s link capacity, kbit/s; Mbit/s will be translated into kbit/s using 1000 multiple.
OA – Operational allowance, %; Algorithm of operational allowance is provided in formula No. (67)
(calculated according to Ethernet equipment).
N ilc – Number, which multiplies basic 2 Mbit/s link capacity;
i – Ethernet links at 10 Mbit/s, 20 Mbit/s, 40 Mbit/s, and 100 Mbit/s.
N ilc values are:
► Ethernet radio link 10 Mbit/s microwave link – 5;
► Ethernet radio link 20 Mbit/s microwave link – 10;
► Ethernetradio link 40 Mbit/s microwave link – 20;
► Ethernet radio link 100 Mbit/s microwave link – 50.
The maximum number of transmission modes sections per transmission line ( N iMAX ,sec , units) is
calculated according to the following formula:
88
 Cl 
N iMAX ,sec   i 
 TH 
(118)
Where:
Cil – Particular link capacity of transmission modes, kbit/s;
αTH – average throughput per site, kbit/s. Calculation of this dimension is provided in formula No.
(112).
The number of transmission modes sections per transmission line is calculated with different
algorithms for different types of Ethernet radio links. The number of 10 Mbit/s sections per
transmission line ( N 5sec , units) is calculated according to the following formula:
N10sec  MIN ( N 10MAX ,sec ;  BTS )
(119)
Where:
N 10MAX ,sec – Maximum number of 10 Mbit/s sections per transmission line, units (see formula No.
(118)).
 BTS – Average number of BTS sites per transmission line, units. Assumption is provided in page
86.
sec
The number of 20 Mbit/s sections per transmission line ( N 20
, units) is calculated according to the
following formula:
sec
MAX ,sec
sec
N 20
 MIN ( N 20
;  BTS )  N 10
(120)
Where:
MAX ,sec
N 20
– Maximum number of 20 Mbit/s sections per transmission line, units. (see formula No.
(118)).
 BTS – Average number of BTS sites per transmission line, units. Assumption is provided on page
86.
sec
– Number of 10 Mbit/s sections per transmission line, units. Look at formula No. (119).
N 10
sec
The number of 40 Mbit/s sections per transmission line ( N 40
, units) is calculated according to the
following formula:
89
sec
MAX ,sec
sec
sec
N 40
 MIN ( N 40
;  BTS )  N 20
 N 10
(121)
Where:
MAX ,sec
– Maximum number of 40 Mbit/s sections per transmission line, units. (see formula No.
N 40
(118)).
 BTS – Average number of BTS sites per transmission line, units. Assumption is provided on page
86.
sec
– Number of 10 Mbit/s sections per transmission line, units (see formula No. (119))
N 10
sec
N 20
– Number of 20 Mbit/s sections per transmission line, units (see formula No. (120)).
sec
The number of 100 Mbit/s sections per transmission line ( N 100
, units) is calculated according to the
following formula:
sec
MAX ,sec
sec
sec
sec
N 100
 MIN ( N 100
;  BTS )  N 40
 N 20
 N 10
(122)
Where:
MAX ,sec
– Maximum number of 100 Mbit/s sections per transmission line, units (see formula No.
N 100
(118))
 BTS – Average number of BTS sites per transmission line, units. Assumption is provided in page
86.
sec
– Number of 10 Mbit/s sections per transmission line, units. Look at formula No. (119).
N 10
sec
N 20
– Number of 20 Mbit/s sections per transmission line, units. Look at formula No. (120).
sec
N 40
– Number of 40 Mbit/s sections per transmission line, units. Look at formula No. (121).
Share of transmission modes sections per transmission line ( Pi sec , %) is calculated according to the
following formula:
Pi
sec

(123)
N isec
MIN (  BTS ; N sec )
Where:
N isec – Number of transmission mode sections per transmission line, units. Look at formulas (119)
– (122).
90
i – Ethernet10 Mbit/s, 20 Mbit/s, 40 Mbit/s, 100 Mbit/s;
 BTS – Average number of BTS sites per transmission line, units. Assumption is provided in page
86.
Nsec – Total number of transmission modes sections per transmission line, units. Calculated
summing up the results of formulas No. (119) – (122).
Finally, Ethernetradio links number by different transmission modes ( N iETH , units) is calculated
according to the following formula:
Si
N iETH  Pi sec  N Total
(124)
Where:
Pi sec – Share of transmission modes sections per transmission line, %;
i – 10 Mb/s, 20 Mb/s, 40 Mb/s, 100 Mb/s;
Si
NTotal
– Total number of sites in mobile network, units. This number is calculated in formula No.
(70).
Core transmission
As mentioned before, core transmission connects BSCs/RNCs/EPC and MSCs or MGWs or
GGSNs and for core transmission modeling data transmission services are modeled.
First of all, the number of Ethernet radio links in BSC/RNC – MSC, BSC/RNC – MGW or EPC GGSN hierarchy level is calculated. Below, the calculation algorithm is provided. The number of
sec
BSC/RNC-MSC, BSC/RNC – MGW or EPC - GGSN sections to meet capacity demand ( N SDH
,
units) is calculated according to the following formula:


DC
sec
N ETH



 N BR  C ETH 
(125)
Where:
DC – BSC/RNC-MSC, BSC/RNC-MGW or EPC - GGSN total demand for capacity covered by radio
links, 2Mbit/s;
NBR – Number of BSCs, RNCs and EPC (calculated in sections 10.1.3. Base station controller and
10.2.2. Radio Network Controller), units;
91
C ETH – Maximal operational capacity of Ethernet radio link, E1 (calculated according principles
provided in formula No. (66)).
The total number of Ethernet links (NETH, units) is calculated according to the following formula:
sec
N ETH  N BR  Pmt   BSC  N ETH
(126)
Where:
NBR – Number of BSCs, RNCs and EPC (calculated in sections 10.1.3. Base Station Controller,
10.2.2. Radio Network Controller and 10.3.2. Evolved Packet Core), units;
Pmt – Share of transmission covered by microwave links, %;
αBSC – Average number of BSC sites per link (Ethernet radio links), units;
sec
– Number of BSC/RNC-MSC BSC/RNC-MGW or EPC - GGSN sections to meet capacity
N PDH
requirements, units.
If NETH is not an integer number, it is rounded to integer.
There is an assumption adopted that the average number of BSC sites per transmission line is two.
Alternative technology for transporting data in BSC/RNC – MSC,BSC/RNC – MGW or EPC GGSN hierarchy level is data transmission services. Kilometers as additional measure besides
pieces of data transmission services are calculated, as the costs of data transmission services
increase together with the increasing distance between BSC/RNC and MSC/MGW or EPC and
GGSN. Having in mind the pricing model the suppliers are using (access part is usually shorter but
more expensive comparing with core network), Operators have to provide weighted (access and
core network) average price of data transmission services for 1 km.
The number of data transmission services BSC/RNC-MSC, BSC/RNC-MGW or EPC - GGSN (
l
N BSC
 MSC / MGW , units) is calculated according to the following formula:
l
t
N BSC
 MSC / MGW  N BR  PL
(127)
Where:
NBR – Number of BSCs RNCs and EPC, (calculated in sections 10.1.3. Base station controller and
10.2.2. Radio Network Controller), units.
PLt – Share of transmission covered by data transmission services, %.
The total length of data transmission services in BSC/RNC – MSC, BSC/RNC – MGW or EPC GGSN (LBSC-MSC/MGW , km) is calculated according to the following formula:
92
l
l
LBSC MSC / MGW  N BSC
 MSC / MGW   BSC  MSC / MGW
(128)
Where:
l
N BSC
 MSC / MGW – Number of data transmission services BSC/RNC-MSC, BSC/RNC – MGW or EPC
- GGSN units (see formula No. (127)).
l
 BSC
 MSC / MGW – Average distance of leased line between BSC/RNC/EPC and MSC or MGW or
GGSN, km.
The average distance of leased line between BSC/RNC/EPC and MSC or MGW or GGSN (
l
 BSC
 MSC / MGW , km) is calculated according to the following formula:
l
 BSC
 MSC / MGW 
(129)
R
2
Where:
R – Radial distance of hexagon, km.
The area of hexagon equals to Area of Republic of Lithuania divided by the number of MSC or
MGW.
l
 BSC
 MSC / MGW is shown in the figure 8.
l
 BSC
 MSC / MGW
R
BSC
MSC or
MGW
S1
S2
Figure 8. Average distance between BSC and MSC/MGW.
l
Further algorithm how  BSC
 MSC / MGW is calculated is provided below.
93
S2
 2,
S1
3 3
 R2
2
3 3
l
2
 ( BSC
 MSC / MGW )
2
l
 2 ,  BSC
 MSC / MGW 
R
2
.
Where:
S1 – Area of smaller hexagon, km2;
S2 – Area of bigger hexagon, km2.
In MSC-MSC, MGW – MGW or GGSN - GGSN hierarchy level two types of measure of data
transmission services are calculated as well. The number of data transmission services MSCl
MSC, MGW – MGW or GGSN - GGSN ( N MSC
 MSC / MGW  MGW , units), assuming each
MSC/MGW/GGSN is connected with each of the rest of MSC/MGW/GGSN, is calculated according
to the following formula:
l
N MSC
 MSC / MGW  MGW  BU MSC / MGW  ( BU MSC / MGW  1)
(130)
Where:
BUMSC / MGW – Number of MSC/MGW/GGSN (see formula No. (99), (74), (84)), units.
The total length of data transmission services MSC-MSC, MGW – MGW or GGSN - GGSN (LMSCMSC/MGW-MGW ,
units) is calculated according to the following formula:
l
l
LMSC MSC / MGW  MGW  N MSC
 MSC / MGW  MGW   MSC  MSC / MGW  MGW
(131)
Where:
l
N MSC
 MSC / MGW  MGW
–
Number
of
data
transmission
services
MSC/MSS/MGW/GGSN-
MSC/MSS/MGW/GGSN, units;
l
 MSC
 MSC / MGW  MGW
–
Average
distance
of
data
transmission
services
between
MSCs/MGWs/GGSN, km.
The average distance of
data transmission services between MSCs/MGWs/GGSNs (
l
 MSC
 MSC / MGW  MGW , km) is calculated according to the following formula:
l
 MSC
 MSC / MGW  MGW 
(132)
RMSC / MGW
2
94
Where:
RMSC/MGW – Radial distance of hexagon, km
The area of hexagon is equal to the area of the Republic of Lithuania. An assumption is adopted
that the area of the Republic of Lithuania is one hexagon.
Stand-alone transmission radio link: tower and site preparation
As the total number of Ethernet is calculated, it is assumed that additional (to traffic and coverage)
towers and sites are needed for transmission. These radio links are further referred to as standalone transmission radio links.
The total number of stand-alone transmission radio link ( N St  A , units) is calculated according to the
following formula:
N St  A  N BS  A  N CS  A
(133)
Where:
N BS  A – Number of stand-alone microwave sites in backhaul transmission, units;
N CS  A – Number of stand-alone microwave sites in core transmission, units.
N BS  A is calculated according to the following formulas:
N BS  A  N ETH  PSETH
A
(134)
N ETH   N iETH
(135)
i
Where:
NETH – Total number of Ethernet radio links in BTS/NodeB/eNodeB–BSC/RNC/EPC transmission,
units;
PSETH
 A – Percent of stand-alone Ethernet radio links, %. Data related to stand-alone Ethernet radio
links will be gathered from Operators.
N iETH – 10 Mbit/s, 20 Mbit/s, 40 Mbit/s, 100 Mbit/s Ethernet radio links.
N CS  A is calculated according to the following formula:
95
N CS  A  N ETH  PSETH
A
(136)
Where:
NETH – Total number of Ethernet radio links (calculated in formula No. (126)), units;
PSETH
 A – Percent of stand-alone Ethernet radio links, %. Data related to stand-alone Ethernet radio
links will be gathered from Operators.
96
11.
Network valuation
11.1. Cost annualization
All mobile network elements identified during network dimensioning are revalued at Gross
Replacement Cost (GRC). On the basis of GRC value, its annual CAPEX cost is being further
calculated. In BU-LRAIC model there are four alternative methods that are used to calculate
annual CAPEX costs:
► Straight-line method;
► Annuity method;
► Tilted Annuity method;
► Economic depreciation method.
Algorithms to calculate annual CAPEX cost using straight-line, annuity, tilted annuity and economic
depreciation methods are described in the following sections.
Straight-line method
The annual CAPEX costs under straight-line method are calculated according to the following
formula:
C  CD  HG  ROI
(137)
Where:
► CD 
GRC
- current depreciation (l – useful life of an asset (data will be gathered from
l
Operators); GRC –gross replacement cost of an asset);
► HG 
NBV
GRC  index , holding gain (loss);
GBV
► ROI 
NBV
GRC  WACC - cost of capital;
GBV
► Index - price index change (data will be gathered from Operators);
► NBV – net book value;
► GBV – gross book value;
► WACC - weighted average cost of capital.
97
Annuity method
The annual CAPEX costs under annuity method are calculated according to the following formula:
C  GRC
WACC 
1


1 

 1  WACC 
l
(138)
Tilted annuity method
The annual CAPEX costs under tilted annuity method are calculated according to the following
formula:
C  GRC
WACC  index 
 1  index 
1 

 1  WACC 
l
(139)
Economic depreciation
Economic depreciation algorithm involves a cash-flow analysis to answer the question: what timeseries of prices, consistent with the trends in the underlying costs of production (e.g. utilization of
the network, price change of asset elements), yield expected net present value equal zero (i.e.
normal profit).
Economic depreciation requires to forecast key variables:
► Cost of capital
► Changes in the price of Modern Equivalent Asset
► Changes in operating cost over time
► Utilization profile
The impact of key variables on depreciation, is as follows:
► The lower the cost of capital, the lower the cost of investment that needs to be recovered in
any year
► The greater the future MEA price reductions, the more depreciation needs to be front-
loaded
► The deprecation should be brought forward, according to the increase in the operating cost
of an asset
98
Economic depreciation is a method to calculate annual costs based on a forecasted revenue
distribution during the useful asset lifetime. This is the main reason why this method is favored in
theory. However, in the current BU-LRAIC model the use of economic depreciation is excluded
from modeling scope due to some reasons. Firstly, results from this method are highly dependable
on various forecast assumptions. Forecasted revenue, cost of capital, changes in the price of
Modern Equivalent Asset, changes in operating cost over time, utilization profile are essential for
calculations, though having in mind the dynamic nature of the telecommunications market,
forecasts may be subjective. Secondly, changing the depreciation method14 during the regulated
period would result in different service cost results and could affect the general business case for
the operators. Finally, using alternative depreciation and annualization methods, such as straightline, annuity or tilted annuity, enables to reach comparable results.
A detailed analysis of straight-line, annuity, tilted annuity and economic depreciation and
annualization methods is presented in Annex No. 2.
Recommendation allows using a different depreciation method than economic depreciation if
feasible. The tilted annuity method will be used as the main method to calculate annual CAPEX
costs due to simplicity and a fact that it generates a depreciation profile similar to that of economic
depreciation – method recommended by Recommendation. The comparison of those methods is
presented in Annex 2. It is worth mentioning that the model will have a possibility to calculate
annual CAPEX using straight line, annuity and tilted annuity methods.
11.2. Mark-ups
BU-LRAIC model includes the network related operational cost, administration and support
operational and capital costs and network management system capital cost as a percentage of the
network costs. In the current BU-LRAIC model the following mark-ups are calculated:
Table 15. Mark-ups in BU-LRAIC modeling
Parameter name
Activities and equipments included
Mark ups on GRC
Mark-ups of operational costs on network cost:
Site infrastructure
OPEX. Operational costs of planning,
BSS and RNS infrastructure, eNode B
management, on—site visits, inspections,
14
Currently applied depreciation method is “straight line”.
99
Parameter name
Activities and equipments included
Transmission
configuration and maintenance works, for
MSC/MGW/EPC-GGSN
particular network elements.
Mark-ups of network management system on network costs:
BSS and RNS infrastructure, eNode B
Transmission
CAPEX of network management system
equipment.
MSC/MGW/EPC-GGSN
Mark-ups on operational costs
Mark-ups of administration and support operational cost:
Total network infrastructure
OPEX. Operational cost of general
administration, finance, human resources,
information technology management and other
administration and support activities (salaries,
materials, services).
Mark-ups of administration and support capital cost
Total network infrastructure
CAPEX of general administration, finance,
human resources, information technology
management and other administration and
support activities (buildings, vehicles,
computers, etc.).
General table of detailed mark-ups that would be used in calculations are provided in table 16.
Mark-ups are calculated based on the principles described in section 4.7. Mark-ups.
100
Table 16. Mark-ups to cover network related costs
Mark-ups of operational
costs on network cost
Mark-ups of network
management system on
network cost
Mark-ups of
administration and
support operational
Mark-ups of
administration and
support capital cost
cost
Site
All sub-
Site infrastructure
components
(% on HCC GRC value)
-
Total network
Total network
infrastructure
infrastructure
(% on network OPEX)
(% on network OPEX)
Total network
Total network
infrastructure
infrastructure
(% on network OPEX)
(% on network OPEX)
Total network
Total network
infrastructure
infrastructure
(% on network OPEX)
(% on network OPEX)
Total network
Total network
infrastructure
infrastructure
(% on network OPEX)
(% on network OPEX)
Total network
Total network
infrastructure
infrastructure
(% on network OPEX)
(% on network OPEX)
BTS
All subcomponents
BSS infrastructure
(% on HCC GRC value)
BSS infrastructure
(% on HCC GRC value)
Node B / eNode B
All subcomponents
BSS infrastructure
BSS infrastructure
(% on HCC GRC value)
(% on HCC GRC value)
Ethernet radio link
All subcomponents
BSC/RNC/EPC
All subcomponents
Transmission
(% on HCC GRC value)
BSS infrastructure
(% on HCC GRC value)
Transmission
(% on HCC GRC value)
BSS infrastructure
(% on HCC GRC value)
MSC/MSS/MGW
MSC/MGW and other
MSC/MGW and other
Total network
Total network
network
network
infrastructure
infrastructure
(% on HCC GRC value)
(% on HCC GRC value)
(% on network OPEX)
(% on network OPEX)
MSC/MGW and other
Total network
Total network
network
infrastructure
infrastructure
(% on HCC GRC value)
(% on HCC GRC value)
(% on network OPEX)
(% on network OPEX)
MSC/MGW and other
MSC/MGW and other
Total network
Total network
network
network
infrastructure
infrastructure
(% on HCC GRC value)
Other Network / IMS
MSC/MGW and other
All subnetwork
components
(% on HCC GRC value)
(% on network OPEX)
(% on network OPEX)
MSC/MGW and other
Total network
Total network
network
infrastructure
infrastructure
(% on HCC GRC value)
(% on HCC GRC value)
(% on network OPEX)
(% on network OPEX)
All subcomponents
Network functionality
MSC/MGW and other
All subnetwork
components
SMSC
All subcomponents
(network-wide)
101
12.
Service cost calculation
After major costs with the help of engineering model are established, service cost calculation stage
follows. The flow in figure 8 and explanation of processes are provided below.
As the figure 9 shows, after network
HCC1
elements are established, HCCs are
HCC2
allocated to NCs (see section 12.1 HCC
HCC3
allocation to NC). Further total Network
…
Components costs are calculated by
summing
appropriate
HCCs.
Total
Network Components costs are divided
HCCn
by
NC1

NCn
NC2

NC3


NCn volumes
 

NCn unit costs
Service usage
service
volumes
and
Network
Component unit costs are calculated.
And finally Network Component unit
costs are multiplied by service usage

factor and service costs are calculated
(see table 19. Service matrix).
Service costs
Figure 9. Service cost calclation flow
12.1. Homogeneous cost categories allocation to Network Components
Essential part of LRAIC methodology is allocation of Homogenous Cost Categories on Network
Components. Network Components represent logical elements that are functionally integrated and
from combining which services may be established. An example of Network Component is a logical
meaning of BTS which includes the annual cost of BTS’s along with all mark up costs resulting
from maintenance, localization and supporting activities (e.g. administration, accounting etc.).
HCCs to NC allocation matrix is presented in table 17.
102
Table 17. HCC allocation to NC.
HCC name
Allocation on Network
Components
NC1
NC2
Tower and BTS / Node
site prepa- B / eNode B
ration
voice
NC3
BSC /
RNC /
EPC
voice
NC4
NC5
NC6
NC7
BTS / Node BSC / RNC /
TX
B / eNode B
EPC
MSC / MSS / backhaul
data
data
MGW
voice
NC8
NC9
NC10
NC11
TX / BSCMSC voice
TX
interswit
ch voice
TX
backhaul
data
TX /
BSCMSC
data
Site
Macrocell: tower and site preparation
X
Microcell: site preparation
X
Picocell: site preparation
Stand-alone transmission radiolink:
tower and site preparation
X
X
BTS - GSM
Macrocell: equipment (omni sector)
X
X
Macrocell: equipment (2 sector)
X
X
Macrocell: equipment (3 sector)
X
X
Microcell: equipment
X
X
Picocell: equipment
X
X
Macrocell: TRXs
X
X
Microcell: TRXs
X
X
Picocell: TRXs
X
X
Macrocell: equipment (omni sector)
X
X
Macrocell: equipment (2 sector)
X
X
Macrocell: equipment (3 sector)
X
X
Microcell: equipment
X
X
Picocell: equipment
X
X
Macrocell: equipment (omni sector)
X
X
Macrocell: equipment (2 sector)
X
X
Macrocell: equipment (3 sector)
X
X
Microcell: equipment
X
X
Picocell: equipment
X
X
NodeB - UMTS
eNodeB - LTE
Ethernet Radiolink
Ethernet radiolink 10 Mb/s microwave
link
Ethernet radiolink 20 Mb/s microwave
link
Ethernet radiolink 40 Mb/s microwave
link
Ethernet radiolink 100 Mb/s microwave
link
X
X
X
X
X
X
X
Ethernet radiolink 300 Mb/s
X
X
X
BSC/RNC
BSC: base unit
X
X
BSC: BS TRX expansion
X
X
TRC: transcoder base unit
TRC: transcoder E1 (A interface)
expansion
X
X
X
X
RNC: basic units
X
X
RNC: extension units (Iub link)
X
X
RNC: extension units (sectors)
X
X
RNC: extension units (sites)
X
X
EPC
PGW: base unit
X
X
PGW: extension units
X
X
MME: base unit
X
X
103
NC12
NC13
TX interswitch
data
SMSC
NC14
NC15
NC16
MMSC
SGSN /
GGSN
voice
SGSN /
GGSN
data
NC17
EDGE
NC18
HSDPA
NC19
WAP
NC20
HLR
NC21
Billing
NC22
NC23
IMS
Number
portability
platform
HCC name
Allocation on Network
Components
NC1
NC2
Tower and BTS / Node
site prepa- B / eNode B
ration
voice
MME: expansion units
NC3
BSC /
RNC /
EPC
voice
X
NC4
NC5
NC6
NC7
BTS / Node BSC / RNC /
TX
B / eNode B
EPC
MSC / MSS / backhaul
data
data
MGW
voice
X
NC8
NC9
NC10
NC11
TX / BSCMSC voice
TX
interswit
ch voice
TX
backhaul
data
TX /
BSCMSC
data
NC12
NC13
TX interswitch
data
SMSC
NC14
NC15
NC16
MMSC
SGSN /
GGSN
voice
SGSN /
GGSN
data
NC17
EDGE
NC18
HSDPA
NC19
WAP
NC20
HLR
NC21
Billing
NC22
NC23
IMS
Number
portability
platform
MSC
MSC: basic unit and software
X
MSC: processor expansion
X
MSC: VLR, EIR expansion
X
MSC: SS7 expansion
X
MSC: trunk port expansion
X
MSC: I/O peripherials
X
MSS: basic unit and software
X
MSS: processor expansion
X
MGW: basic unit and software
X
MGW: processor expansion
X
MGW: trunk port expansion
X
Network Functionality
SFH: soft frequency hopping (networkwide)
SFH: soft frequency hopping (MSS
expansion)
SFH: soft frequency hopping (RNC
expansion)
SFH: soft frequency hopping (NodeB
expansion)
X
X
X
X
X
X
X
X
GSM/DCS: control (network-wide)
X
X
GSM/DCS: control (MSC expansion)
X
X
GSM/DCS: control (BSC expansion)
X
X
GSM/DCS: control (BTS expansion)
X
X
Data Network
EDGE: data transfer (network-wide)
X
EDGE: data transfer (MSC expansion)
X
EDGE: data transfer (BSC expansion)
X
EDGE: data transfer (BTS expansion)
X
HSPDA: data transfer (network-wide)
X
HSPDA: data transfer (MSS expansion)
X
HSPDA: data transfer (RNC expansion)
HSPDA: data transfer (NodeB
expansion)
X
X
PCU: base unit
X
X
PCU: expansion units (Gb link)
X
X
SGSN: base unit
X
X
SGSN: processing expansion
X
X
GGSN: basic unit and licence
X
X
WAP: gateway
X
SMSC/MMSC
SMSC: base unit
X
SMSC: expansion
X
MMSC: base unit
X
MMSC: expansion
X
IP multimedia sub-system
IMS
X
Other Network
SSP: service switching point (networkwide)
X
104
HCC name
Allocation on Network
Components
NC1
NC2
Tower and BTS / Node
site prepa- B / eNode B
ration
voice
NC3
BSC /
RNC /
EPC
voice
NC4
NC5
NC6
NC7
BTS / Node BSC / RNC /
TX
B / eNode B
EPC
MSC / MSS / backhaul
data
data
MGW
voice
NC8
NC9
NC10
NC11
TX / BSCMSC voice
TX
interswit
ch voice
TX
backhaul
data
TX /
BSCMSC
data
NC12
NC13
TX interswitch
data
SMSC
SCP: service control point - base unit
(pre-paid related)
NC14
NC15
NC16
MMSC
SGSN /
GGSN
voice
SGSN /
GGSN
data
NC17
EDGE
NC18
HSDPA
NC19
WAP
NC20
HLR
Billing
NC22
NC23
IMS
Number
portability
platform
X
SCP: expansion - subscribers
X
SCP: expansion - tps
X
VMS: base unit
X
VMS: expansion
X
HLR: base unit
X
HLR: expansion
X
Billing IC hardware and software
Number portability system hardware and
software
X
X
License and frequency fee
Concession right - GSM 900 MHz (total
value)
Concession right - GSM 1800 MHz (total
value)
X
X
X
X
Concession right - UMTS (total value)
X
X
Concession right - LTE (total value)
Data transmission services
Data transmission services BSC-MSC
(fixed)
Data transmission services BSC-MSC
(variable)
Data transmission services MSC-MSC
(fixed)
Data transmission services MSC-MSC
(variable)
NC21
X
X
X
X
105
X
X
X
X
12.2. Network Component average unit cost
After deriving the total costs of each Network Component, the average unit costs of those Network
Components are derived. Unit costs (UC, Lt) are derived by dividing the total cost of each Network
Component by yearly traffic utilizing that Network Component as the formula shows:
UC 
TNCC
Volume
(140)
Where:
TNCC – Total Network Component costs, LTL;
Volume – Annual traffic15 utilizing appropriate Network Component. Below, table 16 is provided
which explains how the appropriate volume is calculated.
As described in section 4. LRAIC methodology, model will have a functionality of calculating costs
of any service included in the economic model according each of Pure LRAIC, LRAIC+ and
LRAIC++ principles. Based on these methods, different calculation algorithms of TNCC costs are
applied (more information provided in section 4. LRAIC methodology):
► Pure LRAIC method – includes only costs related to network components used in the
provision of the particular service
► LRAIC+ method – includes only costs related to network components used in the provision
of the particular group of services, which allows some shared cost of the group of services
to become incremental as well. The group of service could be total voice services and total
data services.
► LRAIC++ method – includes costs described in LRAIC+ method description plus common
and joint cost. . The common and joint cost related to each group of service (total voice
services and total data services) are calculated separately for each Network Component
using an equally-proportional mark-up (EPMU) mechanism based on the level of
incremental cost incurred by each group of service (total voice services and total data
services).
Detailed explanation of links between mark-ups and HCC are provided in Table 16. Mark-ups to
cover network related operational cost, administration and support operational and capital costs
and network management system capital cost. It also has to be noted, that according to the
15
Only successful calls are included in this parameter.
106
Recommendation provided in the legal background, all voice services will have to be calculated
using Pure LRAIC approach.
Table 18. Traffic utilizing Network Components.
Network Component
Tower and site preparation
Unit
Traffic included
Weighted service volumes in Voice traffic
equivalent minutes (conversion
Video traffic
is not applied to voice traffic)
SMS traffic
MMS traffic
Circuit data traffic
Packet data traffic
BTS
Weighted service volumes in Voice traffic
equivalent minutes (conversion
SMS traffic
is not applied to voice traffic)
MMS traffic
Circuit data traffic
Packet data traffic (Mbytes):
BSC
o
Up-link (GSM
subscribers)
o
Down-link (GSM
subscribers)
Weighted service volumes in Voice traffic (minutes of use)
equivalent minutes (conversion Video traffic (minutes of use)
is not applied to voice traffic)
SMS traffic (pieces)
MMS traffic (pieces)
Circuit data traffic (minutes of
use)
Packet data traffic (Mbytes):
107
o
Up-link (GSM
subscribers)
o
Down-link (GSM
subscribers)
Network Component
Node B
Unit
Traffic included
Weighted service volumes in Voice traffic
equivalent minutes (conversion
Video traffic
is not applied to voice traffic)
SMS traffic
MMS traffic
Packet data traffic (Mbytes):
RNC
o
Up-link (UMTS
subscribers)
o
Down-link (UMTS
subscribers)
Weighted service volumes in Voice traffic
equivalent minutes
Video traffic
SMS traffic
MMS traffic
Weighted data traffic volume in
megabytes
eNode B
o
Up-link (UMTS
subscribers)
o
Down-link (UMTS
subscribers)
Weighted service volumes in Packet data traffic (Mbytes):
equivalent minutes
EPC
Packet data traffic (Mbytes):
o
Up-link (LTE
subscribers)
o
Down-link (LTE
subscribers)
Weighted service volumes in Packet data traffic (Mbytes):
equivalent minutes
o
Up-link (LTE
subscribers)
Weighted sessions volume
o
Down-link (LTE
subscribers)
Data services (sessions)
MSC/MSS/MGW
Weighted service volumes in Voice traffic
equivalent minutes
108
Video traffic
Network Component
TX - backhaul
Unit
Traffic included
Weighted service volumes in Voice traffic
equivalent minutes
Video traffic
SMS traffic
Weighted data traffic volume in
MMS traffic
megabytes
Circuit data traffic
Packet data traffic
TX - aggregation
Weighted service volumes in Voice traffic
equivalent minutes
Video traffic
SMS traffic
MMS traffic
Weighted data traffic volume in
Circuit data traffic
megabytes
Packet data traffic
TX - core
Weighted service volumes in Voice traffic
equivalent minutes
Video traffic
SMS traffic
MMS traffic
Weighted data traffic volume in
Circuit data traffic
megabytes
Packet data traffic
SMSC
Weighted service volumes
SMS traffic
MMSC
Weighted service volumes
MMS traffic
SGSN / GGSN
Weighted data traffic volume in Packet data traffic (Mbytes):
megabytes
109
o
Up-link
(GSM/UMTS/LTE
subscribers)
o
Down-link
(GSM/UMTS/LTE
subscribers)
Network Component
EDGE
HSDPA
WAP
HLR
Unit
Traffic included
Weighted data traffic volume in EDGE data traffic in GSM
network:
megabytes
o
Year total up-link (GSM
subscribers)
o
Year total down-link
(GSM subscribers)
Weighted data traffic volume in HSDPA data traffic in UMTS
network:
megabytes
o
Year total up-link (UMTS
subscribers)
o
Year total down-link
(UMTS subscribers)
Weighted data traffic volume in WAP data traffic in GSM
network:
megabytes
Number of users16
o
Year total up-link (GSM
subscribers)
o
Year total down-link
(GSM subscribers)
Year end mobile subscribers
(GSM post-paid)
Year end mobile subscribers
(GSM pre-paid)
Year end mobile subscribers
(UMTS post-paid)
Year end mobile subscribers
(UMTS pre-paid)
Year end mobile subscribers
(LTE post-paid)
Year end mobile subscribers
(LTE pre-paid)
User is defined as active subscriber according to the document “General terms and conditions for
engaging in electronic communications activities” (Žin., 2005, No 49-1641; 2006, No 131-4976; 2007, No431670).
16
110
Network Component
Billing
IMS
Unit
Weighted voice traffic volume
Voice traffic:
o
Incoming
o
Transit
Weighted sessions volume
Data services (sessions)
Weighted SMS volume
SMS (messages)
Weighted MMS volume
MMS (messages)
Weighted voice traffic volume
Packet data traffic (Mbytes):
Weighted SMS volume
Weighted MMS volume
Number portability platform
Traffic included
Weighted voice traffic volume
o
Up-link (LTE
subscribers)
o
Down-link (LTE
subscribers)
Voice traffic (call attempts):
o
On-net
o
Incoming
Weighted sessions volume
Data services (sessions)
Weighted SMS volume
SMS (messages)
Weighted MMS volume
MMS (messages)
12.3. Service cost
In order to calculate the total service cost, average service usage factors by each network
component involved in a service are needed. Average service usage factors refer to the quantity of
a particular network component involved in a service (e.g. average number of base stations,
switches and transmission links involved in termination service).
Service matrix with service usage factors is provided in table 19.
111
Tower and site
preparation
BTS
BSC
NodeB
RNC
eNode B
EPC
MSC/MGW
TX - backhaul
TX - aggregation
TX - core
SMSC
MMSC
SGSN - GGSN
EDGE
HSDPA
WAP
HLR
Billing
IMS
Number
portability
platform
Table 19. Service matrix
Call Transit 1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
f R1,1
-
Call Transit 2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
f R2,1
-
Call Transit 3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
f R3,1
-
Call origination
f R4,1
f R4, 2
f R4,3
f R4, 4
f R4,5
-
-
f R4, 6
f R4, 7
f R4,8
f R4,9
-
-
-
-
-
-
- 1
-
-
Call termination
f R5,1
f R5, 2
f R5,3
f R5, 4
f R5,5
-
-
f R5,6
f R5,7
f R5,8
f R5,9
-
-
-
-
-
-
- 1
-
1
SMS termination
f R6,1 * f SMS
f R6, 2 * f SMS
f R6,3 * f SMS
f R6, 4 * f SMS
f R6,5 * f SMS
-
-
f R6,8 * f SMS
-
f R6 / 9
-
-
-
-
-
- 1
-
1
f R7 ,1 * f MMS
f R7 , 2 * f MMS f R7,3 * f MMS f R7 , 4 * f MMS f R7,5 * f MMS
-
-
f R7 , 6 * f MMS f R7 , 7 * f MMS
-
-
f R7 / 8 Lmms/106 -
-
-
- 1
-
1
f R6,6 * f SMS f R6, 7 * f SMS
SMS origination
On-net SMS
MMS termination
-
MMS origination
On-net MMS
Where:
fR – Appropriate routing factor (Network element routing factors are provided in section 9.1 Service demand conversion in table 5);
fx,y– x – Number of row in table 5; y – number of column in table 5.
fG,E,GSM,umts,HSDPA,SMS,MMS – Appropriate conversion factor (Network element conversion factors are provided in section 9.1 Service demand conversion);
αH - Average number of channels used for HSCDS is adopted as assumption and equals to two;
Lmms - Average MMS length, bytes;
When the average routes of particular types of services are established, service cost (SC) of any service is calculated according to the following
formula:

SC    f usei
 UCi 
n
(141)
i 1
Where:
n – From 1 to 23 number of Network Component;

f usei
– Average service usage factor, provided in the service matrix. See table 19.
UCi – Unit Network Component cost, Lt (see formula No. (138), (140)).
The capacity based services unit cost will be calculated based on average utilization of IC ports, which will be provided by the Operators modeled.
Based on the average utilization of IC ports, the monthly volume of the wholesale voice services (termination, origination and transit) provided over
one IC port will be calculated. The cost of the capacity based services will be calculated by multiplying the unit cost of each type of the wholesale
voice service by the proper monthly volume of the service provided over one IC port.
112
13.
Annex 1. Second sub-model: cost calculation of Auxiliary
services for network interconnection
In this annex, principles of the second sub-model are provided. There are lots of alternatives for network
interconnection. Sometimes networks are interconnected at the premises of one operator near switches
or alternative network elements, but for security and network management reasons networks may be
interconnected at some remote premises (Point of Presence, PoP). In current regulatory practice of call
termination services, RRT has imposed that network elements required for network interconnection have
to be implemented by interconnecting operators themselves and no charge shall be applied for these
elements. RRT has also imposed that interconnecting link shall be installed by party able to implement
such link in cheapest way and costs related with link that connects networks shall be equally split.
Network elements from switches of a particular operator to PoP might be implemented and maintained
by that operator. Access to these network elements might be forbidden for security reasons or particular
charges might me applied for access to premises and network elements that could be used for other
interconnecting party to install a link from PoP to switches. Access to network elements from PoP to
switches might also be used for installation of a link not only for call termination services, but also for
origination and transit services. The objective of this model is to calculate long run average incremental
costs of access to network elements for installation of a link from PoP to the network equipment, where
networks can be interconnected for call termination, initiation and transit services. In general access to
these network elements could be called Auxiliary services. The scheme of Auxiliary service for network
interconnection is provided below.
113
B
A
1
Point of Presence
Operat or B
Operat or A
Inside the
cabinet
2
Networ k elements
3
Cable ladder s
4
Cabinet
3
2
net work element s of
operat or, providing
auxiliary services, where
net works are physically
int erconnect ed
Cables
Net work element s of
alt ernat ive operat or
1
1
4
Figure 10. General scheme of auxiliary services.
In Table 20, definitions of the second sub-model services are provided.
Table 20. Service definitions.
Service name
Service definition
Access to
Providing access to network elements in Access
auxiliary
order to install an interconnecting link in Point infrastructure or other network
services for
of Presence from network elements of one elements for installation of a
network
operator to network elements of the other link.
interconnection operator
where
Measure
networks
can
to
physical
be
interconnected.
Depending on the type of agreement between the alternative operator and the provider of auxiliary
services, two types of activities involved in the PoP implementation will be modeled:
1. Lease of full installed equipment in the premises of the provider of auxiliary services;
2. Lease of the technical infrastructure of the provider of auxiliary services.
First modeling scenario:
One-off costs of services
One-off costs are related to first modeling scenario. In this scenario the amount of hours (A hr) required
by technical staff to install and set auxiliary services is calculated. Installation process consists of cable
arrangement and installation with cable ledges, mounting cabinet to the fixed location.
114
One-off costs ( COPOP ) are calculated according to the following formula:
COPOP  t off   MH
(142)
Where:
toff - Total time (A hr) required for one-off activities, man-hours;
αMH – Average activity man-hour costs (of required qualification), currency.
Periodical costs of services
In first modeling scenario, periodical costs of services include both costs related to network equipment
and costs related to periodical specific activities.
While calculating the equipment related costs, following equipment is required:
1. One unit of cabinet;
2. Optional: security equipment (sensor and cable);
3. Certain length of cable ladders;
The cost of this service should represent incurred capital cost (CAPEX) together with mark-ups of:
1. Operational costs (OPEX) on network cost;
2. Network management system (CAPEX);
3. Administration and support (OPEX and CAPEX).
Periodical equipment related annual costs are calculated according to the same principles and using the
same mark-ups as described for transmission in section 11.2 Mark - ups.
Second modeling scenario:
In second modeling scenario, periodical costs related to the rent of the technical infrastructure of the
provider of auxiliary services will be calculated according to the following formula:
RE POP  S i   k
(143)
Where:
Si – total space required for the installation ladders and other PoP equipment in the premises of the
provider of auxiliary service, square meters;
αk – average rate of rent of property for one square meter, currency.
115
14.
Annex 2. Economic depreciation method: analysis and
results
Depreciation can be defined as the systematic allocation of the depreciable amount of an asset over its
useful life. The depreciable amount is the initial cost of an asset less its residual value estimated at the
date of acquisition. Thus depreciation reflects the recovery of invested capital over the asset’s economic
life. It can also be defined as a measure of reduction in the economic life of an asset from the usage,
passage of time and technological or market changes.
There are two main approaches to depreciation, which are commonly used in bottom-up models:
straight-line and annuity (standard or tilted).
Under the straight-line method of depreciation, an asset’s cost is allocated in equal portions over its
useful life, taking into account the changes of prices over the whole period of depreciation as well as cost
of capital:
𝐶 = 𝐶𝐷 − 𝐻𝐺 + 𝑅𝑂𝐼
Where:
𝐶𝐷 =
𝐺𝑅𝐶
𝑢𝑙
– Current Depreciation
𝐻𝐺 =
𝑁𝐵𝑉
𝐺𝐵𝑉
× 𝐺𝑅𝐶 × 𝑖𝑛𝑑𝑒𝑥 – Holding Gain
𝑅𝑂𝐼 =
𝑁𝐵𝑉
𝐺𝐵𝑉
× 𝐺𝑅𝐶 × 𝑊𝐴𝐶𝐶 – Cost of Capital
𝐺𝑅𝐶 – Gross Replacement Cost
𝑢𝑙 – useful life of an element
𝑁𝐵𝑉 – Net Book Value
𝐺𝐵𝑉 – Gross Book Value
𝑖𝑛𝑑𝑒𝑥 – price change index
𝑊𝐴𝐶𝐶 – Weighted Average Cost of Capital
The first part of the equation reflects the assumption that an asset’s economic benefits are consumed in
equal proportions over its useful life, while the latter is proportional to price changes and cost of capital.
Standard annuity calculates recurring capital payments for a given number of periods as a sum of total
economic depreciation and capital costs:
116
𝐶 = 𝐺𝑅𝐶 ×
𝑊𝐴𝐶𝐶
𝑢𝑙
1
1−(
1 + 𝑊𝐴𝐶𝐶 )
It is also possible to reflect economic value of an asset using the tilted annuity method. The aim of tilted
annuity is to:
► Smooth the unit costs by calculating equal charge of capital cost and depreciation over the whole
period of cost recovery;
► Adjust the level of cost recovery to the changes of Modern Equivalent Asset prices in year of
calculation.
The annual CAPEX costs under the tilted annuity method are calculated according to the following
formula:
C = GRC ×
WACC − index
1 + index ul
1−(
1 + WACC)
The major advantage of tilted annuity over standard annuity is that it takes into account the adjustment of
prices of MEA in all years of calculation. In comparison to standard annuity, this method results in higher
capital payments if the price of an asset decreases and lower capital payments if the price of an assets
grows. Almost exclusively, in telecommunication industry, the prices of assets have decreasing trend.
It is also possible to reflect the economic value of an asset using economic depreciation methodology.
The aim of calculation of economic depreciation is to:
► reflect an ongoing character of investments and “smooth” costs for the whole period of cost
recovery;
► smooth the unit costs in regard to changing infrastructure utilization over the whole period of cost
recovery;
► adjust the level of cost recovery to the changes of Modern Equivalent Asset prices in all periods
of cost recovery separately
in such manner that the sum of the present value of all incurred capital investments is equal to the sum
of the present value of all recovered costs.
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The major benefit of the calculation of economic depreciation is that it takes into consideration changing
infrastructure utilization and mitigates its impact by spreading it over the whole period of cost recovery.
This could be important if the utilization of the network changes considerably from year to year due to
network roll-out that is not effectively utilized by the increase of the traffic demand in short term. In such
case, the justified cost of lower utilization would be back loaded and recovered in equal charge over
whole period of cost recovery.
Moreover, development of an economic depreciation model requires much more input data and
assumptions (that have to be provided by the operators) than other depreciation methods. This is due to
the fact that economic depreciation calculation is based on the whole period of cost recovery (30 or more
years) and each year of calculation requires an assumption on the profile of price changes and service
volume.
Another drawback of economic depreciation is that it requires a consideration of the entire lifespan of the
network and, due to the increasing with time discount factor applied to each cost, the calculation will
place considerable emphasis on historic events. If a hypothetical operator made less efficient business
decisions in early years, those decisions may have larger impact on the calculated depreciation in the
following years.
Because of the practical as well as theoretical difficulties with the calculation of economic depreciation
more simple approaches are preferred. Tilted annuity approach generates a depreciation profile similar
to that of economic depreciation assuming lack of considerable changes in the utilization of the network
from year to year and requires much less input data from operators and estimates to be made.
Charts 1 and 2 present an exemplary comparison of profiles of economic depreciation and tilted annuity
depreciation.
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Chart 2: Economic depreciation and tilted annuity
depreciation under the assumption of increasing
volume of services and decreasing prices of MEA.
1.00
1.00
0.95
0.95
0.90
0.90
0.85
0.85
Unit costs
Unit costs
Chart 1: Economic depreciation and tilted annuity
depreciation under the assumption of constant
volume of services and decreasing prices of MEA.
0.80
0.75
0.70
0.80
0.75
0.70
0.65
0.65
0.60
0.60
0.55
0.55
0.50
0.50
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30
Year
Year
Tilted annuity
Economic depreciation
Tilted annuity
Economic depreciation
The table below presents the main assumptions used to present comparison of profiles of economic
depreciation and tilted annuity depreciation.
Parameter
Period of analysis
Chart 1
30 years
Chart 2
30 years
Asset lifetime
10 years
10 years
Price change
-1%
-1%
Services volume change
0%
1%
WACC
12%
12%
The situation presented on Chart 2 is based on the assumption that the increasing volume of services
will cause additional investments in some period of time, after which level of infrastructure utilization is
lower than the most efficient. The “smoothing” of “volatile” level of utilization is included in the economic
depreciation, while the tilted annuity method does not take it into consideration.
Considering all the above, BU LRAIC model will include straight-line and annuity (standard or tilted)
methods where the tilted annuity approach generates a depreciation profile which is most similar to that
of economic depreciation.
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