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