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InternationalTelecommunicationUnion
1
Day 7 – Session 28
Analysis of concrete modelsMobile
2
Bottom Up Models WIK MNCM Model
MobileAustralia
WIK MNCM = WIK Mobile Network and Cost Model
3
Modelling process.
Schematic view of the WIK-MNCM modelling process
Source: WIK
WIK MNCM = WIK Mobile Network Cost Model
4
Network design.
Mobile network design and dimensioning
� The SNPT of the WIK-MNCM carries out the following tasks:
� Calculates the optimal cell radius and cell deployment for each relevant area,
� Determines the network hierarchy, and
� Determines the capacity requirements of the link structure.
The network elements will be determined on the basis of optimizing algorithms. For their
concrete implementation the values for a large number of parameters as outlined need
to be known:
(1) Information on topography and population,
(2) Demand parameters for the different services, such as territory to be covered,
total mobile penetration, market share of modeled operator, average traffic
demand per subscriber,
(3) Technical data, prices of the equipment as well as operating and maintenance
cost factors, and
(4) Network design and configuration data.
Source: WIK
SNPT = Strategic Network Planning Tool
5
Optimization.
Schematic view of the network module of the WIK-MNCM
Source: WIK
MSC = mobile switching centre
BSC = base station controller
BTS = base transceiver station
6
Example BT.
Distribution of total costs to cost categories for British MNOs in 2004
Source: WIK
7
Optimization.
BTS site investment
Source: WIK
8
Optimization.
BTS system equipment
Source: WIK
9
Optimization.
BTS-BSC links
Source: WIK
10
Optimization.
BSC investment
Source: WIK
11
Optimization.
BSC-MSC links
Source: WIK
12
Optimization.
MSC investment
Source: WIK
13
Optimization.
MSC-MSC links
Source: WIK
14
Optimization.
HLR investment
Source: WIK
HLR= home location register
15
Optimization.
Investment in network support assets allocated to BTS
Source: WIK
16
CAPEX.
Calculation of annualized CAPEX for productive network and network support assets
Source: WIK
TRAU= transcoder and rate adaptor unit
SMSC= short message service centre
WACC=weight average cost of capital
17
Routing matrix.
Routing matrix: Usage factors for network elements and services
Source: WIK
18
Traffic distribution.
Traffic shape and busy hour
Source: WIK
19
Demand.
Demand parameters
Source: WIK
HSCSD= high-speed circuit switched data
GPRS= general packet radio service
SMS= short message service
MMS= multimedia messaging service
20
Capacity.
Capacity limitations for network equipment
Source: WIK
BHCA – busy hour call attempt
21
Cost of frequency.
1,800 MHz spectrum available to 3 GSM operators and amounts paid for it
Source: WIK
22
Cost.
Leased line prices in Australia
Source: WIK
23
Traffic distribution.
Traffic distribution between services
Source: WIK
GPRS= general packet radio service
SMS= short message service
MMS= multimedia messaging service
24
Sensitivity analysis.
TSLRIC+ impact of parameter value changes
Source: WIK
25
Sensitivity analysis.
Costs per minute (cpm) of services for an operator with 31 per cent market share
Source: WIK
26
Sensitivity analysis
Costs per minute (cpm) of services for a large operator
Source: WIK
27
Sensitivity analysis.
Costs per minute (cpm) of services for a small operator
Source: WIK
28
Bottom Up Models Mobile BULRIC Model
Netherlands
29
Model overview.
Model schematic
Source: Analysis
30
Optimization.
Coverage network design
Source: Analysis
31
Optimization.
Sector capacity calculation
Source: Analysis
TRX - transceiver
32
Optimization.
Capacity-driven macro sites
Source: Analysis
33
Optimization.
Micro site and pico site deployment
Source: Analysis
34
Optimization.
Transceiver design
Source: Analysis
35
Optimization.
Capacity requirements for backhaul links
Source: Analysis
36
Optimization.
Average traffic per remote BSC calculation
Source: Analysis
37
Optimization.
BSC-MSC link calculation
Source: Analysis
LL – leased line
38
Optimization.
Calculation of MSC units to support processing demand
Source: Analysis
CPU – central processing unit
39
Optimization.
Overall MSC units, sites and transit switches calculation
Source: Analysis
40
Optimization.
Total MSC-MSC links for a network without transit layers
Source: Analysis
STM-1 = Synchronous Transport Module level - 1
41
Optimization.
HLR units calculation
Source: Analysis
42
Top Down Models RTR ModelMobileAustria
43
Mobile costing example.
Input data & volumes
Source: RTR
Case
� Minutes of traffic and routing factors for originating products
� Mobile subscriber calls own mobile networks (including voice-box)
� Mobile subscriber calls other mobile network
� Mobile subscriber calls fixed network
� Mobile subscriber calls service number
� Mobile subscriber calls international
� Visitor-roaming
44
Mobile costing example.
Input data & cost
Source: RTR
Case
� Cost of the following network elements are part of the calculation:
� MSC - mobile switching centre
� RNC/BSC - radio network controller/base station controller
� NodeB/BTS - base transceiver station
� HLR - home location register
� VAS - value added service
� Transmission
45
Mobile costing example.
Input data & cost
Source: RTR
Case
� Cost have to be prepared for:
� Operating cost
� depreciation
� capital
� Other cost
46
Mobile costing example.
Input data & cost
Source: RTR
Case
� Depreciation periods for all relevant assets
� Cost of frequency (invest and annual cost)
� Routing table for all products
� Cost of IT/IC-Billing (cost which occur with the generation of call-data-records (CDR))
� Overhead cost
� Cost for the SMS service
� Cost for the GPRS service
47
Origination normally should lead to lower cost as termination inmobile networks.
Origination vs. termination
Source: RTR
� Origination
� near end routing (call leaves network at nearest POI - point of interconnection)
� no origination from voice mails
� lower costs
� Termination
� far end routing (in average more network elements involved)
� termination either on a handset or on voice mail box
� higher costs
48
Mobile costing.
Issue of cost of frequency
Source: RTR
Case
� 290 mil. EUR (Mobilkom, T-Mobile)
� paid in 96, depreciated over15 years
� no difference between access and conveyance service found
� air interface is necessary for mobile termination
� -> these costs are included in calculation for mobile termination(IC)
49
Mobile costing.
Issue
Source: RTR
Case
included
not included
included
Top down model based on operator specificdata
Main cost driver are minutes of use peroperator
Issue Decision and description
Cost of frequency
Cost of marketing
Efficiency gains
Methodology
Results
50
Mobile costing.
The model
Source: RTR
Case
Kosten in EURO MSC HLR VAS BSC BTS Transm.
AFA
ZINSEN NETZ
BETRIEB
Marketing
Call typeMSC HLR VAS BSC BTS Transm.
Minuten
(MoU)
Kosten
pro Netzintern (inkl. Box)
Vertrag 1,000 1,000 1,000 1,000 1,000 1,000 0 0,0000 0,0000
Prepaid 1,000 1,000 1,000 1,000 1,000 1,000 1 0,0000
SUMME 1 1 1 1 1 1 1 0
Auskunft/Mehrwertnummern
Vertrag 1,000 1,000 1,000 1,000 1,000 1,000 1 0,0000 0,0000 0,0000 0,0000
Prepaid 1,000 1,000 1,000 1,000 1,000 1,000 1 0,0000 0,0000
SUMME 2 2 2 2 2 2 2 0 5 0
Betreiber zu Mobile
Vertrag 1,000 1,000 1,000 1,000 1,000 1,000 0 0,0000 0,0000
Prepaid 1,000 1,000 1,000 1,000 1,000 1,000 1 0,0000
SUMME 1 1 1 1 1 1 1 0 0,0000
7 0
Betreiber zu Festnetz
Vertrag 1,000 1,000 1,000 1,000 1,000 1,000 0 0,0000 0,0000
Prepaid 1,000 1,000 1,000 1,000 1,000 1,000 1 0,0000
SUMME 1 1 1 1 1 1 1 0
Ausland
Vertrag 1,000 1,000 1,000 1,000 1,000 1,000 0 0,0000 0,0000
Prepaid 1,000 1,000 1,000 1,000 1,000 1,000 1 0,0000
SUMME 1 1 1 1 1 1 1 0
Visitors
all outgoing trafic 1,000 1,000 1,000 1,000 1,000 1,000 0 0,0000
SUMME 0 0 0 0 0 0 0 0
0,0000
Mobile Terminating Calls (MTC)
Incoming total 1,000 1,000 1,000 1,000 1,000 1,000 1 0,0000
SUMME 1 1 1 1 1 1 1 0
Kostentreibereinheiten 7 7 7 7 7 7
AFA: Kosten pro Kostentreibereinheiten 0,0000 0,0000 0,0000 0,0000 0,0000 0,0000
ZINSEN NETZ: Kosten pro Kostentreibereinheiten 0,0000 0,0000 0,0000 0,0000 0,0000 0,0000
BETRIEB: Kosten pro Kostentreibereinheiten 0,0000 0,0000 0,0000 0,0000 0,0000 0,0000Marketing: Kosten pro Kostentreibereinheiten 0,0000 0,0000 0,0000 0,0000 0,0000 0,0000
Output: Kostentreibereinheiten je
Netzelement
Output: Kosten je Netzelement
und Kostentreibereinheit
Output: Kosten je Minute
Incoming
Input: Kostendaten je
Netzelement
Input: Routingfaktoren je
Produkt
Input: Verkehrsmengen je
Produkt
Output: Kosten je Minute
Outgoing
Output: Kosten je Minute
Durchschnitt
Output: Kosten je Minute
On-Net
51
Mobile costing.
Results
Source: RTR
Case
Results reflect:� Country specific circumstances
� Geography� Distribution of demand
� Operator specific circumstances� Used technology� Individual cost of frequency� Level of demand in individual network� Call pattern in the individual network
52
Mobile costing: Generic cost function
Technical cost in a mobile network – empirical results
Source: RTR
0
100
200
300
400
500
600
0 1.000 2.000 3.000 4.000 5.000 6.000 7.000
MoU [M io. M in]
Co
st
of
ne
t [M
io.
EU
R]
0,00
0,05
0,10
0,15
0,20
0,25
0,30
0,35
0,40
0,45
0,50
0,55
0,60
Co
st
pe
r m
inu
te [
EU
R]
Cost of Net estimated tele.ring CoN One CoN t-mobile CoN
Mobilkom CoN avg Cost MoU estimated avg Cost IC estimated tele.ring IC
One IC t-mobile IC Mobilkom IC Benchmark 0,1962
Case
53
Mobile costing: Generic cost function
Technical cost in a mobile network – empirical results
Source: RTR
0
100
200
300
400
500
600
700
800
900
1.000
0 1.000 2.000 3.000 4.000 5.000 6.000 7.000 8.000 9.000 10.000 11.000 12.000
MoU [Mio. Min]
Co
st
of
ne
t [M
io. E
UR
]
0,00
0,05
0,10
0,15
0,20
0,25
0,30
0,35
0,40
0,45
0,50
0,55
0,60
0,65
0,70
0,75
0,80
Co
st
per
min
ute
[E
UR
]
Mobilkom CoN t-mobile CoN One CoN tele.ring CoN
H3G CoN Cost of Net estimated Mobilkom IC t-mobile IC
One IC tele.ring IC H3G IC avg Cost MoU estimated
avg Cost IC estimated
Case
54
As a result of RTR´s mobile costing studies a cost function for Austria is now available.
Cost of efficient service provisioning in mobile networks
Source: RTR
Case
55
We now know how costs are distributed.
Mobile network – sensitivity analysis
Source: RTR
Case
56
A glide path is one method of achieving a competitive level of interconnection charges over a number of years.
Glide path
Source: MCA
A glide path is one method of achieving a competitive level of interconnection charges over a number of years. Such an approach can be summarized as follows:
• The time period (e.g. between three and five years);
• The definition of the starting rates for the glide path;
• The target interconnection rate at the end of the glide path period;
• The basis for calculating such a target rate (e.g. the fifth lowest average termination rate from operators in EU member states),
• The maximum ceiling for the yearly reduction in the interconnection charges (e.g. 20% per year over five years).
Such an initiative would ensure a gradual transition from the current levels of interconnection rates.
57
In order to clarify the cost orientation obligation for mobile termination rates the regulator has defined a glide path for thenext years.
2004 2005 2006 2007 2008 2009 2010 Year
Costs & tariffs
Average cost per minute of use
Minutes of use (MOU)
Cost and tariffs for mobile termination
• Cost per minute vary between operators as there aredifferences in utilization of economies of scale.
• In the long run first mover advantages are gettingsmaller.
• In a fully competitive market tariffs would approach tocost of efficient service provisioning.
• A glide path can determine the way from different tariffs to a single tariff which is equal to costof efficient service provisioning.
• Operators had different termination tariffs.
The regulator has defined a glide path for mobiletermination rates.
Comments
5,72€ct/min per 1.1.2009 for all
Case
InternationalTelecommunicationUnion
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Conclusions
59
Bottom up models
Bottom up models - conclusions
Source: RTR
� There is no „one truth“
� a model is as good as the input data
� models are highly complex and have to be fully understood
InternationalTelecommunicationUnion
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ITU Expert-Level Training for national regulatory authorities on cost model development
Day 8
Nov. 19, 2008
InternationalTelecommunicationUnion
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Day 8 - Agenda
Day 8 - overview
Session 29: Practice
Session 30: Practice
Session 31: Practice
Session 32: Practice
Goal:>Fixed mobile IC
InternationalTelecommunicationUnion
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Day 8 – Session 29
Practice
InternationalTelecommunicationUnion
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Day 8 – Session 30
Practice
InternationalTelecommunicationUnion
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Day 8 – Session 31
Practice
InternationalTelecommunicationUnion
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Day 8 – Session 32
Practice
InternationalTelecommunicationUnion
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ITU Expert-Level Training for national regulatory authorities on cost model development
Day 9
Nov. 20, 2008
InternationalTelecommunicationUnion
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Day 9 - Agenda
Day 9 - overview
Session 33: Practice
Session 34: Practice
Session 35: Practice
Session 36: Practice
Goal:>Access & retail
InternationalTelecommunicationUnion
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Day 9 – Session 33
Practice
InternationalTelecommunicationUnion
69
Day 9 – Session 34
Practice
InternationalTelecommunicationUnion
70
Day 9 – Session 35
Practice
InternationalTelecommunicationUnion
71
Day 9 – Session 36
Practice
InternationalTelecommunicationUnion
72
ITU Expert-Level Training for national regulatory authorities on cost model development
Day 10
Nov. 21, 2008
InternationalTelecommunicationUnion
73
Day 10 - Agenda
Day 10 - overview
Session 37: Future challenges (NGN & data)
Session 38: Future models & alternatives
Session 39: Final evaluation
Session 40: Wrap up
Goal:>Other models & alternatives
InternationalTelecommunicationUnion
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Day 10 – Session 37
Future challenges(NGN & data)
75
Next generation access hybrid copper-fiber architectures.
Next generation access hybrid copper-fiber architectures
Source: Telecom Italia
Case
FTTx – fibre to the x (enclosure, building, cab, curb)
76
Next generation access: variations in xDSL data rates in Mbit/s versus line length
Variations in xDSL data rates in Mbit/s versus line length
Source: Analysis
77
Next generation networks – migration in Europe.
Source: Telecom Italia
Next generation networks – migration in Europe
� Migrationplan towards NGN varies significantly across countries.
� The time schedule depends on:
� 1) characteristics of the fixed national market
� 2) Involvement in the mobile market
� 3) Competition pressure
� 4) Obsolescence of the actual network
� 5) Deployment strategy (overlay versus replacement)
Case
78
A outline “new” model for NGN cost allocation.
A outline “new” model for NGN cost allocation
Source: OVUM
79
Services independent of networks - fundamental changes in network implementations.
Services independent of networks – new challenges
Source: KPN
80
NGN and costing models
NGN – costing models implications
Source: KPN
� Traditional costing models will not work for single services in a multiservice environment
� Forward looking cost calculation is difficult
� Volume forecasting
� Bundling of services
� Changes in architecture of networks
� Cost prices network building blocks unknown / change over time
� Migration phase
� Price cap system for traditional networks based on bottom-up calculation
� Bottom-up cost calculation in a technology neutral world leads to different cost price calculations for the same (access) service
� Not appropriate for consumer markets?
� Regional / network differentiation?
� QoS and volume based cost calculation offers some flexibility
� Stimulates cost efficiency on the network level
� Ramsey pricing may better reflect cost price levels and encourage innovation
InternationalTelecommunicationUnion
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Day 10 – Session 38
Future models & alternatives
82
Trends and Convergence
Mobile Fixed
Mobile Internet
Fixed/Mobile Substitution
Convergence
BWARadio
TV
Radio/TV over Internet
Interactivity
Fixed/Mobile Voice/Data Telecommunications/Broadcasting
BroadbandWireless
Access
VoIP
VoIPVoiceoverInternetProtocol
InternetBroadband +
Next challenges come mainly from convergence which is driven by many developments happening at the same time.
83
Future issues
Future issues
Source: RTR
� Alternative forms of billing
� Bill and keep
� Reciprocity
� Separation and non-discrimination
InternationalTelecommunicationUnion
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Day 10 – Session 39
Final evaluation
InternationalTelecommunicationUnion
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Day 10 – Session 40
Wrap up
86
ContactRoland BelfinRTR-GmbH
[email protected]+43 676 7268899