Day 7 Session 28 Analysis of concrete models Mobile...Kosten in EURO MSC HLR VAS BSC BTS Transm. AFA...

InternationalTelecommunicationUnion

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Day 7 – Session 28

Analysis of concrete modelsMobile

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Bottom Up Models WIK MNCM Model

MobileAustralia

WIK MNCM = WIK Mobile Network and Cost Model

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Modelling process.

Schematic view of the WIK-MNCM modelling process

Source: WIK

WIK MNCM = WIK Mobile Network Cost Model

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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

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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

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Example BT.

Distribution of total costs to cost categories for British MNOs in 2004

Source: WIK

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Optimization.

BTS site investment

Source: WIK

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Optimization.

BTS system equipment

Source: WIK

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Optimization.

BTS-BSC links

Source: WIK

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Optimization.

BSC investment

Source: WIK

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Optimization.

BSC-MSC links

Source: WIK

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Optimization.

MSC investment

Source: WIK

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Optimization.

MSC-MSC links

Source: WIK

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Optimization.

HLR investment

Source: WIK

HLR= home location register

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Optimization.

Investment in network support assets allocated to BTS

Source: WIK

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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

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Routing matrix.

Routing matrix: Usage factors for network elements and services

Source: WIK

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Traffic distribution.

Traffic shape and busy hour

Source: WIK

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Demand.

Demand parameters

Source: WIK

HSCSD= high-speed circuit switched data

GPRS= general packet radio service

SMS= short message service

MMS= multimedia messaging service

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Capacity.

Capacity limitations for network equipment

Source: WIK

BHCA – busy hour call attempt

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Cost of frequency.

1,800 MHz spectrum available to 3 GSM operators and amounts paid for it

Source: WIK

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Cost.

Leased line prices in Australia

Source: WIK

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Traffic distribution.

Traffic distribution between services

Source: WIK

GPRS= general packet radio service

SMS= short message service

MMS= multimedia messaging service

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Sensitivity analysis.

TSLRIC+ impact of parameter value changes

Source: WIK

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Costs per minute (cpm) of services for an operator with 31 per cent market share

Source: WIK

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Sensitivity analysis

Costs per minute (cpm) of services for a large operator

Source: WIK

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Costs per minute (cpm) of services for a small operator

Source: WIK

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Bottom Up Models Mobile BULRIC Model

Netherlands

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Model overview.

Model schematic

Source: Analysis

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Optimization.

Coverage network design

Source: Analysis

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Optimization.

Sector capacity calculation

Source: Analysis

TRX - transceiver

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Optimization.

Capacity-driven macro sites

Source: Analysis

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Optimization.

Micro site and pico site deployment

Source: Analysis

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Optimization.

Transceiver design

Source: Analysis

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Optimization.

Capacity requirements for backhaul links

Source: Analysis

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Optimization.

Average traffic per remote BSC calculation

Source: Analysis

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Optimization.

BSC-MSC link calculation

Source: Analysis

LL – leased line

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Optimization.

Calculation of MSC units to support processing demand

Source: Analysis

CPU – central processing unit

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Optimization.

Overall MSC units, sites and transit switches calculation

Source: Analysis

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Optimization.

Total MSC-MSC links for a network without transit layers

Source: Analysis

STM-1 = Synchronous Transport Module level - 1

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Optimization.

HLR units calculation

Source: Analysis

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Top Down Models RTR ModelMobileAustria

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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

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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

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Input data & cost

Source: RTR

Case

� Cost have to be prepared for:

� Operating cost

� depreciation

� capital

� Other cost

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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

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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

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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)

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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

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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


Outgoing


Durchschnitt


On-Net

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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

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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

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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

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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

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We now know how costs are distributed.

Mobile network – sensitivity analysis

Source: RTR

Case

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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.

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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


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Conclusions

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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


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ITU Expert-Level Training for national regulatory authorities on cost model development

Day 8

Nov. 19, 2008


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Day 8 - Agenda

Day 8 - overview

Session 29: Practice




Goal:>Fixed mobile IC


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Practice


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Practice


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Practice


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Practice


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Day 9

Nov. 20, 2008


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Day 9 - Agenda

Day 9 - overview





Goal:>Access & retail


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Practice


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Practice


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Practice


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Practice


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Day 10

Nov. 21, 2008


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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


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Future challenges(NGN & data)

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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)

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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

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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

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A outline “new” model for NGN cost allocation.

A outline “new” model for NGN cost allocation

Source: OVUM

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Services independent of networks - fundamental changes in network implementations.

Services independent of networks – new challenges

Source: KPN

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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


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Future models & alternatives

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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.

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Future issues

Future issues

Source: RTR

� Alternative forms of billing

� Bill and keep

� Reciprocity

� Separation and non-discrimination


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Final evaluation


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Wrap up

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ContactRoland BelfinRTR-GmbH

[email protected]+43 676 7268899

Day 7 Session 28 Analysis of concrete models Mobile...Kosten in EURO MSC HLR VAS BSC BTS Transm. AFA...

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Transcript of Day 7 Session 28 Analysis of concrete models Mobile...Kosten in EURO MSC HLR VAS BSC BTS Transm. AFA...