ROAMING CONSIDERATIONS FOR THE FINNISH PUBLIC WLAN MARKET

Transcription

1 ROAMING CONSIDERATIONS FOR THE FINNISH PUBLIC WLAN MARKET Timo Smura Helsinki University of Technology Networking Laboratory P.O. Box 3000 FIN HUT, FINLAND Tel , Fax Abstract Wireless local area networks (WLANs) are becoming increasingly popular in offices, homes, and public places. In public hotspots such as airports and hotels, these networks can be used to provide broadband wireless connectivity for people on the move. In Finland, hotspot networks are operated by TeliaSonera and DNA Finland. Because of interference issues, only one WLAN network can usually be built in one hotspot site. This leads to competition between the s of the hotspot locations. Otherwise, the barriers for s to enter the public WLAN market are sufficiently low. A number of different players are expected to enter the market, with different kinds of backgrounds. The business models pursued by the players may vary considerably. Roaming agreements can be used to enable subscribers of one to access their services using networks of other s. A number of different roaming models exist, including bilateral agreement, clearinghouse, and roaming broker models. By far, the Finnish public WLAN s have used bilateral agreements to enable roaming with international partners. National WLAN roaming is not available, decreasing the service coverage of all s and hindering the success of the whole public WLAN market. Key Words WLAN, hotspot, roaming, value system 1. Introduction Wireless local area networks (WLANs) are becoming increasingly popular in offices, homes, and public places around the world. The success of the technology results largely from the emergence of the IEEE family of standards. Mass production of standardized chipsets has lowered the prices of WLAN equipment to a level suitable for most consumers and enterprises. Certification of interoperable products by the Wi-Fi Alliance has lowered the risk of customer lock-in to a single manufacturer. The increasing popularity and decreasing prices of WLANs have motivated innovative people to find new kinds of applications for the technology. Although originally designed for extending or replacing traditional wired LANs, WLANs are currently used also to provide fixed broadband last-mile access to households, and to offer broadband data services in public places such as airports, hotels, and conference centers. Public WLANs are built to provide wireless connectivity in places where there is demand for highspeed data services. The most lucrative places for public WLANs have been those where many people carrying laptops have extra time to use the services. These socalled hotspots include e.g. airports, hotels, conference centers, and cafes. Accordingly, the target end-user group for the services has been mainly traveling businessmen and women. WLANs operate on 2.4 GHz and 5 GHz unlicensed frequency bands. Because of the unlicensed nature of the bands, the transmission power of the devices is limited, resulting in limited range and coverage of WLAN cells. Thus, even a small hotspot place may require multiple access points for sufficient coverage. In adjacent cells, different frequency channels have to be used to avoid interference. A maximum of four noninterfering channels can be used in the 2.4 GHz band, making it difficult or even impossible to build several overlapping WLAN networks in one building or area. In the 5 GHz bands the problem is less significant, as the number of non-interfering channels is significantly higher (between 8 and 18, depending on the region and equipment). 5 GHz WLANs, however, are not very widely used, and therefore not yet suitable for public hotspots. Because of the interference issues, hotspot site owners are often reluctant to allow many s to build WLAN networks in their premises. The that first builds a network to hotspot premises holds a strong position and is unlikely to be replaced to another very soon. As the number of WLAN s in a certain geographical region is likely to be higher than one, problems occur. Operators cannot reach all the potential customers, and customers cannot access their services in all the WLANs in the area. The solution to the problems is roaming. Roaming means that subscribers of a certain are able to

2 access their services using networks of other s. Without roaming agreements, subscribers have to pay separately to different s in different places they are visiting, causing harm and decreasing the value of the services. The aim of the paper is to introduce the business models of different players in the public WLAN market, as well as roaming models that could be used between the players. These models are then contrasted to the current situation among the Finnish WLAN s. Three cases are discussed in more detail, including Sonera, DNA WLAN, and Vantaa Energy Wivanet services. The rest of the paper is organized as follows. In section 2, the main players in the public WLAN market are introduced and placed in a simple value system framework. In section 3, the concept of WLAN roaming is discussed, and possible roaming models are introduced and analyzed. In section 4, three WLAN cases from Finland are introduced. Finally, section 5 concludes the findings of the paper. 2. Players in the public WLAN market The concept of public WLANs is wide, and could include e.g. the following types of networks: Commercial hotspots in public places such as airports and hotels Broadband last-mile access networks covering city-wide areas WLAN networks in enterprise guest areas Free WLAN networks provided by e.g. restaurants and cafes as a value-added service to customers Free community and neighborhood networks Most of the public WLAN networks are commercial, although in some cases the access to the networks can be free. Free WLANs could be seen as a threat to the commercial WLAN s, but not treated in this paper any further. 2.1 Public WLAN value system Porter (1985) introduced the concept of value chain as a basic tool for systematically examining all the activities a firm performs and their interactions. Furthermore, Porter defined a value system as a larger stream of activities, comprising of the successive value chains of multiple firms acting as suppliers, channels, and buyers to one another. Value chain and value system are valuable tools for firms in analyzing sources for competitive advantage. Simplified value system figures are also often used to recognize the key players and their interactions within a certain industry. For this purpose, Figure 1 shows a simplified public WLAN value system. Network Roaming intermediary Service Figure 1: Public WLAN value system The site owners own the rights to the locations where WLAN hotspots are deployed. Building a WLAN hotspot usually requires permission from a site owner. The network installs, operates, and maintains the required equipment in the hotspots, including e.g. the WLAN access points, access controllers, switches, and cabling. The service owns the customers, and is responsible for marketing, customer care, and end-user billing. Between the network and service s, one or more roaming intermediaries may exist. These intermediaries provide e.g. clearing and settlement of the revenue shares between s. Roaming is possible also without any intermediaries by bilateral agreements between the s. The value system model introduced above is deliberately simplified to serve the purposes of this paper. In reality, a number of other actors are required to implement complete systems and services, including e.g. backbone network s, equipment and system suppliers and integrators, and content providers. 2.2 Players and their roles in the value system The players in the public WLAN market can be classified based on the their backgrounds and other businesses, as well as on their role in the value system. The first classification is based on the backgrounds of the players. Currently, WLAN services are offered by e.g. the following kinds of players: Mobile and fixed line s, providing WLAN services as a complement to their other data service offerings Greenfield s, providing WLAN services as their main business s, providing WLAN service in their own premises, both as a means to tempt more customers and as a source of additional revenues The second classification is based on the roles of the players in the public WLAN value system. The most important types of roles are listed in the following:

3 Wireless Internet Service Providers (WISPs) that offer services in their own WLAN networks, as well as roaming services in networks of other s Wholesale network s that build and manage WLAN networks and sell capacity to roaming brokers and service s Roaming brokers that buy capacity from network s and resell capacity to service s Clearinghouses that provide clearing and settlement services between network and service s Virtual WISPs that do not own any networks, but buy capacity from network s or roaming brokers and offer services to their own subscribers Figure 2 illustrates these roles in the public WLAN value system. only one WLAN network can be deployed in a single location. Coverage area of the WLAN access points is small, making it costly to build and operate a nationwide network Roaming gives two kinds of benefits to the s, i.e. larger user base and larger footprint. Inbound roaming increases the usage of the s own networks, giving rise to higher revenues. Outbound roaming increases the footprint of the, making the service more attractive to customers. 3.1 Roaming models WLAN roaming can be organized by making bilateral roaming agreements with each roaming partner or by a multilateral roaming agreement with a clearinghouse or a roaming broker. When using bilateral agreements, the makes roaming agreements separately with each selected partner. Nonroaming Bilateral roaming Multilateral roaming Network WISP / wholesale network WISP / wholesale network Roaming intermediary WISP Clearinghouse / roaming broker WISP / virtual WISP Service WISP / Any virtual WISP Multilateral roaming agreements can be made either with roaming brokers or with clearinghouses. A roaming broker buys capacity from many network s and then resells it to service s at a higher price. A clearinghouse provides merely the clearing and settlement services for s that still can agree on the details of e.g. pricing by bilateral agreements. A network can also exclude some service s from the agreement, and vice versa. Figure 2: Roles in the public WLAN value system The terms introduced above often have different meanings in different sources. The classification introduced above is based on the personal views of the author. 3. WLAN roaming Roaming enables subscribers of an to access their services using networks of other s. The charges collected from the subscribers are shared between the home and the visited according to an agreement between the two. Inbound roaming agreements allow visiting subscribers to use the s network, whereas outbound roaming agreement allows own subscribers to use the networks of other s. In the case of WLANs, the importance of roaming is even higher than in mobile networks. This is due to the following reasons: Barriers to enter the market are sufficiently low, resulting to a high number of s. The use of unlicensed frequency bands limits the number of s in one site. Usually, Table 1 shows typical characteristics of the different roaming models. Table 1: Roaming model characteristics Roaming model Bilateral model Roaming broker model Clearinghouse model Agreement type Bilateral Multilateral Multilateral + Bilateral Cost of agreements High Low Medium Time-to-market Slow Fast Medium Control over roaming partners High Low High Control over roaming tariffs High Low High Control over technologies High Low Low Tariffs paid to Transactionbased None Usage-based intermediaries 3.2 End-user and requirements From the end-user perspective, mobile data services should be ubiquitous, reliable, affordable, and convenient and easy to use. WLAN networks provide the users with increased convenience when using services with high throughput demands. WLAN roaming provides the means to make the footprint of these services larger. To retain the convenience, roaming services should be implemented so that the

4 end-user experience remains the same both in visited and home networks. From the perspective, it is important to be able to serve all the potential roaming customers. This means that e.g. the authentication methods have to be such that are supported by current WLAN terminals. Roaming should be arranged in a way that minimizes the need for upgrades in the existing WLAN networks. Nevertheless, the roaming architecture should support smooth upgrades to new network technologies. 3.2 Technical solution for WLAN roaming From a technology point-of-view, the solution to WLAN roaming is simple and well documented. Regardless of the roaming model used, the roaming architecture is based on AAA (Authentication, Authorization, and Accounting) servers, that proxy the AAA information between each other. The roaming architecture is illustrated in Figure 3. Network (Visited WISP) AAA Server RADIUS Access controller Access Point Wi-Fi Laptop User data Roaming intermediary (Clearinghouse or roaming broker) AAA Server Direct AAA exchange Internet Roaming user Service (Home WISP) AAA Server Billing End user Figure 3: WLAN roaming architecture (Adapted from Wi-Fi Alliance 2003) The architecture can be used to provide roaming between all the players in the public WLAN market, including mobile s, greenfield s, and site owners x and EAP (Extensible Authentication Protocol) based access control and authentication mechanisms are recognized as the long-term solution for WLANs. The majority of end-user terminals, however, do not yet have support for those. To serve these customers, the so-called Universal Authentication Method (UAM), i.e. web-browser based authentication has to be supported. The roaming architecture introduced above is flexible in that it supports a variety of different authentication methods to be used at the same time. Solutions for the coexistence of UAM and 802.1x/EAP have been introduced e.g. by Intel (2003). In the case of mobile s, SIM (Subscriber Identity Module) based authentication can be used to authenticate the users. This will become more important when the new WLAN-integrated mobile devices such as the Nokia 9500 Communicator become popular. For SIM authentication, the home AAA server has interfaces to the home location registers (HLR), charging gateways (CGw), and on-line charging systems (OCS) of the mobile s, as specified in 3GPP TR Technology-wise, WLAN roaming is straightforward to implement and take into use. The lack of roaming agreements among Finnish WLAN s therefore results from the strategic decisions made by the s. The following section gives more insight to the public WLAN market in Finland. 4. Public WLANs and roaming in Finland The Finnish telecommunications market is dominated by three major players: TeliaSonera, Elisa, and the Finnet Group. Each of the players has both fixed and mobile network operations. In addition to these, a number of service s are active both in the fixed and mobile markets. Currently, both TeliaSonera and Finnet Group have their own WLAN service offerings targeted to enterprise users and traveling businessmen. Elisa has built some WLAN networks for pilot and trial purposes, but does not have commercial WLAN services available. The current structure of the public WLAN market in Finland results largely from the merger of Telia and Sonera in Before the merger, Telia had already built some WLAN hotspots in Finland, but was forced to sell all its Finnish operations. Finnet Group acquired these operations, which gave its mobile service DNA Finland an opportunity to quickly launch WLAN services. At the same time, Sonera re-branded its service to, according to Telia s service. Figure 4 illustrates the course of actions. Sweden Telia Telia Sonera wgate Sonera Finland Telia Telia and Sonera merge, DNA Finland buys Telia s Finnish operations DNA WLAN Figure 4: The effect of TeliaSonera merger on the Finnish public WLAN market In addition to Sonera and DNA WLAN services, there are no active WISPs providing services in hotspots. Large-scale deployment of site owner operated WLAN hotspot networks is also yet to be seen. Airports, hotels, and conference centers have given the rights to the mobile s. Only a few cafes are offering WLAN services for their customers by themselves.

5 A somewhat distinctive characteristic of the Finnish WLAN market are the city-wide WLAN networks deployed mostly by energy companies in the cities of Vantaa. These companies are competing in the fixed broadband access market against e.g. DSL and cable modem s. In the following cases, three Finnish public WLAN s are introduced. Sonera and DNA WLAN services are offered as complements to the mobile GSM and GPRS data services of the s. Vantaa Energy s Wivanet service is introduced as an example of the city-wide WLAN networks. 4.1 Sonera TeliaSonera Finland acts as WISP in the public WLAN market, offering services in its own hotspot networks. The company offers both UAM and SIM-authentication methods. Services were launched in 2000 under the brand name Sonera wgate. After the merger of Telia and Sonera in 2003, the service was renamed to Sonera. TeliaSonera has been very proactive in signing contracts with major airports, hotels, and conference centers in Finland. According to a contract with CAA (Civil Aviation Administration) Finland, Sonera Homerun services are available in all of the airports in Finland. It is also providing WLAN services in five Silja Line ships cruising in the routes Helsinki- Stockholm, Turku-Stockholm, and Helsinki-Tallinn. (TeliaSonera Finland 2004a) The company has also launched a Corporate Service Area service for companies wanting to offer WLAN access to guests and visitors in the company premises. Currently, however, only three companies have been reported to have taken this service in use. Table 2 shows the number of active hotspots for both TeliaSonera and DNA Finland. Table 2: Commercial WLAN hotspots in Finland Hotspot type Sonera ( ) DNA WLAN ( ) Hotels Sokos / Radisson SAS 35/6 0/0 Cumulus/Rantasipi/Ramada 23/9/5 1/1/5 Scandic 0 14 Others Airports 25 1 Conference centers, business parks etc Enterprise guest areas 36 (total) 3 (non- Sonera) 6 (Finnet offices) Mobile phone stores 8 0 Ships 5 0 Restaurants, cafes 5 6 Other 20 2 Total As the table shows, a half of the Sonera hotspots are located in hotels. In the hotel market, the one per site principle is clearly visible, and WLAN s have pursued to strike deals with complete hotel chains at once. Sonera pricing is time-based. In addition to a monthly fee, the subscribers are charged on minute-byminute basis. Table 3 compares the pricing of Sonera service to TeliaSonera s mobile data services in Finland (TeliaSonera Finland 2004b) Table 3: Pricing of Sonera data services (VAT excl.) Service / / / MB month minute Sonera Company Data GPRS and EDGE High-speed data, 1 channel * High-speed data, 2-4 channels * - WLAN service Sonera Company Data GPRS and EDGE < 100 MB GPRS and EDGE > 100 MB WLAN service Separate Sonera service * per call In addition to the hotspots in Finland, Sonera customers can use the Telia hotspots located in Sweden, Norway, and Denmark, as well as in certain airports in Europe and in the USA. TeliaSonera Finland has also made roaming agreements with several European s, listed in Table 4. Table 4: Sonera roaming agreements Operator Telia Swisscom Eurospot BT OpenZone Orange Metronet Elion Kubi Wireless Countries Sweden, Norway, Denmark Belgium, France, Germany, Netherlands, United Kingdom United Kingdom France Austria Estonia Spain The total number of hotspots available in for Sonera customers is about As of now, TeliaSonera Finland has not made any national roaming agreements. 4.2 DNA WLAN DNA Finland runs the mobile service business of the Finnet Group. In May 2003, DNA acquired the businesses of Telia Finland that was acting as a mobile service and also operating a number of Telia WLAN hotspots in Finland. After the acquisition, DNA launched its WLAN services under the brand name DNA WLAN. As shown in Table 2, a majority of DNA WLAN hotspots consists of hotels and conference centers. In March 2003, DNA announced that it will expand its WLAN footprint to 180 Hesburger fast-food restaurants around the country. The number of new hotspots is very large compared to the existing base of DNA WLAN hotspots. The deal is interesting also in the sense that Hesburger has done close co-operation with Saunalahti

6 that is a mobile service and one of DNA s rivals in the mobile market. DNA offers three different types of WLAN subscriptions, based on flat-fee, usage-based, and timebased pricing. Table 4 shows the pricing of DNA data services (DNA Finland 2004). Table 5: Pricing of DNA data services (VAT excl.) Service / / / MB month minute dna Corporate Subscription High-speed data, 1 channel High-speed data, 2-3 channels dna Corporate GPRS dna WLAN gold dna WLAN silver dna WLAN base DNA Finland has made international roaming agreements with 4 different s and a total of about 200 hotspots. These s are listed in Table 6. Operator Netpoint Table 6: DNA WLAN roaming agreements Kubi Wireless Monzoon Networks TDC Mobil Countries Radisson SAS hotels in 19 European countries Spain Switzerland Denmark Table 7: Wivanet pricing (VAT incl.) Service Connection tariff ( ) Monthly tariff ( ) Wivanet 128/ Wivanet 512/ Wivanet 1M/ Wivanet Koti (2M/2M, shared between multiple households) per household Wivanet Yritys (2.5M/2.5M) A Wivanet subscriber is allowed to use the service in the whole coverage area of the network. Vantaa Energy markets the service as one that could be used at home as well as in cafes and outdoors. True coverage e.g. inside public buildings is, however, very questionable as separate in-building hotspots have not been built. City-wide WLAN network s have made an agreement on roaming services. The agreement covers eight cities in Finland, as shown in Table 8 (Radionet 2003). Table 8: Wivanet roaming agreements Operator Haminan Energia Suomen 4G Mäntsälän Sähkö Porvoon Energia Rauman Energia Netsafir Area Hamina Lahti Mäntsälä Porvoo Rauma Vaasa Leppävaara area in Espoo By far, DNA Finland has not made any national roaming agreements. 4.3 Vantaa Energy Wivanet Vantaa Energy is an energy company, providing electricity, district heating, and natural gas to residential and business customers in and around the city of Vantaa. In 2003, the company launched its Wivanet wireless broadband services based on WLAN technology. The Wivanet service is a result of the co-operation of several companies. Vantaa Energy acts as the network and also owns and bills the customers. The network technology is provided by Radionet, a Finnish WLAN equipment manufacturer. The network has been built as a turn-key service by Digita, a company responsible for national transmission and broadcasting networks as well as radio and television stations in Finland. ISP services are provided by Tele2. The Wivanet network provides broadband last-mile connections to residential users and SMEs. Therefore, it is competing with e.g. ADSL and cable modem services provided by other s. The network consists currently of more than 100 base station sites and more than 300 WLAN access points with sector antennas installed at the sites. The network covers over 50 percent of the households in Vantaa, the target being 80 percent in the end of Pricing of the Wivanet subscriptions is shown in Table 7 (Wivanet 2004). The city-wide WLAN s have not by far made any roaming agreements with hotspot s. 5. Conclusion The paper discussed the business models of the players in the public WLAN market and possible roaming models between them. These were contrasted to three different Finnish WLAN s. WISPs can choose between a number of different strategies and roles in the public WLAN value system. In other countries, wholesale network s and virtual WISPs have emerged, and WISPs have widely contracted with clearinghouses and roaming brokers. In Finland, however, the main players have pursued the traditional WISP model with bilateral international roaming agreements. The full potential of roaming has not been made use of. From a technical point of view, WLAN roaming is possible to implement in a way that would suit all the different players in the market. The clearinghouse-based WLAN roaming architecture is technically feasible and perhaps the most viable solution to fulfil the requirements of different types of players. Bilateral agreements are also a viable option, at least between the bigger players. The lack of national roaming agreements results from the strategies driven by the s. Bigger players do not want smaller players to utilize their networks.

7 Clearly, the situation is not beneficial for the public WLAN market as a whole. End-users have to pay separately to a number of s depending on the places they visit, decreasing the willingness to use the services at all. Finnish s should take cooperative actions in order to make WLAN roaming available, fuelling the growth of the whole mobile data market. References 3GPP TS V2.4.0 ( ), 3rd Generation Partnership Project; Technical Specification Group Services and System Aspects; 3GPP system to Wireless Local Area Network (WLAN) Interworking; System Description (Release 6) DNA Finland, DNA WLAN hotspots ut/wlan/toiminta-alueet.pdf (Referenced ) Intel Corporation, Wireless LAN (WLAN) End to End Guidelines for Enterprises and Public Hotspot Service Providers. Release 1.1, November ss/deployment/e2e_wlan.pdf (Referenced ) Porter, M.E., Competitive advantage. New York: Free Press. Radionet Oy, Finnish WLAN s launch roaming service. Press release Espoo: Radionet. TeliaSonera Finland, 2004a. Sonera service areas. Available at: (Referenced ) TeliaSonera Finland, 2004b. Sonera s wireless communications services for business. Price list March 15, Available at: (Referenced ) Wi-Fi Alliance, Best current practices for wireless internet service provider (WISP) roaming, version 1.0, February V1.0.pdf (Referenced ) Wivanet, Wivanet web-site. (Referenced )