Interconnection Regime in Korea : Long Run Incremental Cost Approach

Transcription

1 Meeting of the Regional Tariff Group for Asia and Oceania (TAS Group) G and Seminar on tariff issues, Seoul, Korea, 3 6 July 2007 IT R&D Global Leader Interconnection Regime in Korea : Long Run Incremental Cost Approach Byoung Nam Lee, Ph.D. Principal Researcher

2 I Interconnection regime and BU Model II Redesign of Mobile and Fixed Networks III Future Development of BU Model 2

3 I Interconnection regime and BU Model I-1. Overview of Interconnection regime in Korea I-2. I-3. I-4. I-5. I-6. Forward Looking LRIC Bottom-Up & Top-Down Overview of LRIC Model in Korea ETRI Bottom-Up Model Principles and Assumptions of ETRI BU Model I-7. Overview of Bottom-Up Model Development I-8. I-9. I-10. LRIC Bottom-Up Process : Fixed Network LRIC Bottom-Up Process : Mobile Network Radio Propagation Model for Redesigning BTS 3

4 I-1. Overview of Interconnection regime in Korea 98~ 98~ 9999 Revenue Sharing 00~ 00~ 0101 Representative Cost System Zero-Payment Introduction and Settlement Application of between Mobile Cost-based Operators Pricing 02~ 02~ 0303 Individual Rate System Fully Distributed Costs (FDC) 04~ 04~ ~ 06~ 0707 Individual Rate System Introduction and Application of LRIC Increasing the transparency of LRIC pricing by elaboration of both bottom-up and top-down model SKT KTF LGT KT

5 I-2. Forward Looking LRIC LRIC is a methodology for estimating the cost of a total service increment based on a hypothetical model of the actual network the long-run is defined as the time horizon over which all costs are variable The concept of forward-looking Assets are valued using the cost of replacement with the modern equivalent asset The MEA will generally incorporate the latest available and proven technology Top-Down Model Bottom-Up Model 5 Using the operator s accounting information Using generic network cost Models

6 I-3. Bottom-Up & Top-Down Bottom-Up Model Bottom-up modeling uses detailed data to build a hypothetical network that can supply telecommunications services, including interconnection services. The costs of this network, including capital costs and operations and maintenance costs, are then allocated to all the services provided Top-Down Model 6 Top-down modeling attempts to measure LRIC starting from the firm s actual costs, as set out in its accounts. This method does not involve detailed network modeling. Instead, a top-down model separates the firm s assets and costs into service groups, and then adds the costs associated with interconnection to arrive at an estimate of LRIC

7 I-4. Overview of LRIC Model in Korea Since 2004, forward looking LRIC has been adopted as interconnection Pricing methods, because FDC was calculated based on historic costs and therefore it might include the costs of the operator s inefficient investment Long Run Incremental Cost Accounting Model Engineering Model Cost of Capital Top-Down Model Depreciation Operating Cost Bottom-Up Model 7 Access charges for the years 2006 and 2007 are set in a way that the top-down LRIC of the year 2004 was projected to the years 2006 and 2007 with the trends of bottom-up LRIC during the period

8 I-5. ETRI Bottom-Up Model Input Data Subscribers location and Call volume Location information of switch topography, heights, building information Asset lifetime Operating cost Conversion factor Cost of capital Specifications of equipment Equipment price Bottom-Up Model Process Mobile Mobile Component and Implementation Fixed Fixed Redesign Network Investment Cost for Network Elements Investment quantity Investment Cost Depreciation Operating cost Access Charges for Network Elements Cost of Capital Results Interconnection tariff for fixed and mobile operators Interconnection tariff for network elements KT : Local loop, Local Exchange, LE-LE, LE-TE, Toll Exchange, TE-TE SKT/KTF/LGT : Base station, Control station, MSC, CGS, HLR, BS-MSC, MSC- MSC 8

9 I-6. Principles and Assumptions of ETRI BU Model Bottom-Up Model estimates the cost of a total service increment based on a hypothetical model of the network that is more economical and efficient than the actual network Building an LRIC BU model was carried out under the following three principles; 1) Design of efficient network topology, 2) Adoption of forward-looking technology, 3) Consideration of avoidable costs Long-Run Incremental Forward-Looking LRIC Bottom-Up Model Scorched Node Instantaneous replacement Consideration of Operators 9

10 I-7. Overview of Bottom-Up Model Development 08~ 09 Extension of sample area - Mobile 16, Fixed 20 06~ 07 Extension of sample area - Mobile 8, Fixed 12 Full redesign of backbone 04~ 05 Sample area : network Allow Operator s existing Point of Interconnection - Mobile 2, Fixed 12 Forward-looking Partial redesign of Technology backbone network Reflect Operator s network topology 10 Elaboration of algorithms for optimizing mobile and fixed networks Re-design of 3G network

11 I-8. LRIC Bottom-Up Process : Fixed Network Input Data GIS Data Subscriber ( 가입자수 ) Traffic ( 통화량 ) Local Loop Backbone Other Network Element Subscriber Clustering Optimizing route for Local Loop Optimized backbone network topology Calculation of of Demanding Lines Calculation of Demanding E1 Line and Traffic Volume Quantity of of transmission/cables Quantity of of Switch/(transmission equipment/cables Required Square meters of of Central Office Investment Cost for LL Investment Cost for Backbone network Investment Cost for Central Office Depreciation period Operating cost Conversion factor Cost of Capital 11 Interconnection tariff for operator

12 I-9. LRIC Bottom-Up Process : Mobile Network Input Data GIS Data Subscriber ( 가입자수 ) Traffic ( 통화량 ) Radio Propagation Backbone Other Network Element Topography/Traffic density Optimized backbone network topology Calculation of of Demanding Line and Traffic Volume Radio Propagation for (800MHz/1.8GHz) Number of of BS and Location Quantity of of Switch/(transmission equipment/cables Required Square meters of of Central Office Investment Cost for Base Station Investment Cost for Backbone network Investment Cost for Central Office Depreciation period Operating cost Conversion factor Cost of Capital 12 Interconnection tariff for operator

13 I-10. Radio Propagation Model for Redesigning BTS The radio propagation model employed is L vpm (Vertical Plane Model) which is a combination of knife edge model, Walfisch model, and dual slope model L vpm = (1-g)[Max(L FS, L DS ) F] + gl W Radio Propagation Model g L FS L DS F L w = Weighting Factor = Free Space Loss = Dual Slope model = Knife Edge model = Cost231 Walfisch-Ikegami model 13

14 II Redesign of Mobile and Fixed Networks II-1. II-2. II-3. II-4. II-5. Redesign of Mobile Network GIS Data Radio Propagation Simulation with Current BTS Results of Redesigning BTS Results of Redesigning Network Sample Area Redesign of Fixed Network - Demonstrations 14

15 II-1. Redesign of Mobile Network GIS Data 15

16 II-2. Radio Propagation Simulation with Current BTS 16

17 II-3. Results of Redesigning BTS Strong Signal Weak Signal 17

18 II-4. Results of Redesigning Network Sample Area Results of Radio Propagation Result of Redesigning Backbone Base Station (BTS) Base Station (BTS) Optimized Route of BS- MSC MSC Manhole/ Handhole 18

19 II-5. Redesign of Fixed Network - Demonstrations 19

20 III Future Development of BU Model III-1. Future Direction For 08~ 09 BU Model III-2. III-3. III-4. Extension of Sample Area for Network Redesign Elaboration of Network Redesign Network Evolution and Improvement of Aggregation Method 20

21 III-1. Future Direction For 08~ 09 BU Model The BU Model for 08~ 09 will be developed based on 1 extension of sample areas, 2 Elaboration of Network Redesign, 3 Network Evolution, 4 Improvement of Aggregation Method Extension of Sample areas Elaboration of Network Redesign Future Direction for 08~ 09 BU Model Network Evolution Improvement Of Aggregation Method 21

22 III-2. Extension of Sample Area for Network Redesign To get more accurate interconnection tariff, the BU Model will increase the number of sample areas for both mobile and fixed network redesign Fixed : 12 regions 20 regions (Total 250 regions) Mobile : 8 regions 16 regions (Total 157 regions) Same as before, Full redesign of backbone network will be implemented for the years 서울특별시 충남공주 경북울진 대전광역시 전북익산 충북음성 부산광역시 전남함평 The BU Model employ the following criteria for selection of sample area : 1 geographical characteristics, 2 Population Density, 3 Traffic Density 22

23 III-3. Elaboration of Network Redesign The Bu model will improve the algorithms for mobile and fixed network redesign and modify the radio propagation model for 3G network design Algorithms For Network Redesign Imprevement in algorithm for optimized locations of Base Stations(BTS) Improvement in algorithm for optimized local loop based on the information such as the number of subscribers and location 가입자망구성알고리즘고도화추진 - Fixed : MST Algorithm (for redesign local loop) and TSP Algorithm (for Backbone) - Mobile : Trial and Error Heuristic algorithm Radio Propagation Model 23 To check if the existing L vpm model could be applied to 3G network redesign and Develop the appropriate radio propagation model by modifying the existing one - The BU model will develop the radio propagation model for different band in 3G network and it help to calculate more accurate the investment cost for 3G network elements

24 III-4. Network Evolution and Improvement of Aggregation Method The BU Model will consider the network evolution and improve the aggregation method Network Evolution Considering the network evolution by operators, it will be decided whether or not to include 3G network and next generation network in BU model - Fixed : Consideration of Next Generation Network - Mobile : Consideration of 3G network Aggregation Method TO get more accurate interconnection tariff, the improvement of aggregation method will be implemented 24

25 25 Thank You!!!