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Evolution of mobile networks

Incremental change

Discontinuous change

Mag

nitu

deof

Cha

nge

TimeSource: adapted from Tushman, 1997

1 G NMT

2 G GSM

3 G UMTS4 G LTE

5 GNFV

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© Sakari Luukkainen

• The core concept of the mobile networks was first inventedin the early 1940’s by the researchers of the BellLaboratories in the USA

• The cellular systems were, however, not introduced intowide commercial use until the 1980’s

• The first public mobile networks were analogy, manuallyswitched and mainly based on the national standards duringthe 1970’s

• The services were mainly targeted at the needs of thetraffic, and the terminals were mostly located inside thevehicle

Introduction

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© Sakari Luukkainen

Introduction

• ARP mobile networks in Nordic countries were in thebeginning of 1980´s the largest in the Europe

• NMT 450 and 900 networks continued this forerunner rolecompeting in fragmented market with english TACS, USAMPS, German Netz-C, Italy RTS, no economies of scalein equipment, no roaming, limited spectral efficiency,services and security

• In the early days of GSM the PTT´s were part of the publicsector, French PTT made first initiative for pan-Europeanmobile network

• 1982 CEPT established Group Speciale Mobile workinggroup

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© Sakari Luukkainen

Case GSM• EU started to play major role in mid 1980´s and ETSI was set up to

continue the standardization work now open for all players frompublic to private

• ETSI and EU played major role also in facilitating the share of IPRbased on basket model

• Main manafacturers involved were Nokia, Ericsson, Motorola,Siemens, Alcatel, AEG, Bosch, Orbitel, Matra, Philips

• Co-operation between operators has been facilitated by MoU, e.g.roaming agreements, rollout timetable to 1991, tariffing

• Independent research organizations and universities have alsosignificantly influenced in GSM development in EU researchprograms

• In USA (D-AMPS, CDMA) and Japan (PDC, CDMA) there whereseveral competing standards, which could not evolve to globalmass markets at similar extent like GSM

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© Sakari Luukkainen

Case GSM• The decision that GSM is digital required range of new technology

compared to NMT, however the way GSM developed gavesignificant advantages to Nordic firms allthough 82% of patentscame outside Nordic countries (Motorola 50%)

• The advantages of digital radio transmissions related to improvedspectrum efficiency, security and new services, it also facilitatedthe use of highly integrated CMOS circuits in mobile terminals,which influenced to reduced size and price

• Adoption of TDMA radio interface made possible considerable costreduction for operators in BSS (1/3 of NMT) and also favouredNordic manufacturers

• The downside of the basket model was that complexity increasedsignificantly e.g. the lines of sw code in MS grow from 20 000 inNMT to 500 000 in GSM

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© Sakari Luukkainen

Case GSM• EU´s liberalization of telecom market (deregulation) opened

the competition for GSM

• All European countries awarded licenses to 2-3 operators

• Added value compared to NMT: Mobile voice incremental,pricing, roaming, SMS discontinuous and unexpectedsuccess, mobile data, SIM reduced the switching cost ofterminal and operator, fast coverage expansion

• Competition was further promoted by the launch of PCS1800(dual mode terminals), substitute technologies like DECTand ERMES failed

• Regulation of interconnection charges, separation ofnumbering space enabled calling party pays

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© Sakari Luukkainen

Case GSM• First commercial service launch 1991 in Finland

• Critical mass easily created, global market selected GSM asdominant design, huge network externalities and positivefeedback effects enabled tipping market

• 1992 commercial GSM services were initiated in 15 and 1996 in103 countries by 167 operators

• 1997 number of subscribers started to increase from 50 millionexponentially, now more than one billion subscribers, servicerevenue 277 billion USD (2004, GSM Association)

• 2001 also main US operators transferred to GSM in 1900 MHz,GSM technology accounted about 60 % of global mobilecommunications market

• The european export market opened to Nokia through liberalisationand new operators that had no legacy systems and were notlocked in to national equipment providers

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© Sakari Luukkainen

Case UMTS

• the first actions in 3G evolution were the spectrum allocation in 2GHz band by the World Radio Conference in 1992

• the original success of GSM created excessive expectations of themarket demand for the third generation mobile technologies

• originally 3G was planned to be a revolutionary concept especially inthe research domain, which would renew the whole 2G networkinfrastructure

• EU’s research projects investigated the suitability of different radioaccess technologies for the 3G systems

• their work became the basis of the standardization work of ETSI,which decided to select WCDMA (Wideband Code Division MultipleAccess)

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© Sakari Luukkainen

Case UMTS

• the name of the European 3G version became UMTS(Universal Mobile Telecommunications System), and it wasalso decided that it is an evolutionary approach of GSM

• the decision of the European Union at the same timesuggested that the member states should introduce theUMTS services in 2002 and the networks should cover 80 %of the population by the year 2005

• after this, companies in the USA started to promote theirown CDMA2000 system, which is an evolution from 2GCDMA, while Japan operator NTT DoCoMo decided to jointhe European effort

• China also introduced its own 3G radio interface called TDSCDMA

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© Sakari Luukkainen

Case UMTS• ETSI delegated the UMTS specification work to a co-operativeorganization called 3GPP, while the 3GPP2 project wasestablished to develop the rival CDMA2000 standard

• however, 3GPP started to produce specifications for UMTSefficiently and the first 3GPP R99 specification was ready in2000

• it was also decided that UMTS would use the existing corenetwork of GSM with GPRS

• the main new aspect was the radio network UTRAN, whichcontained a new controller called RNC and base stations thatincreased transmission speeds up to 2 Mbit/s per mobile userand even more by the incremental development of modulationslike HSDPA or HSUPA

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© Sakari Luukkainen

Case UMTS

• NTT DoCoMo was also the first operator who offeredcommercial 3G services, which began in Japan in 2001 by thename FOMA (Freedom of Mobile Multimedia Access)

• when the mobile hype was in the hottest phase, severalEuropean countries decided to award UMTS licences for theoperators on the basis of an auction procedure

• the fear of getting out of the market raised the price of thelicences to incredibly high levels especially in Germany andEngland

• this got the operators into financial trouble and the wholeindustry stagnated

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© Sakari Luukkainen

Case UMTS

• the introduction of video into the mobileenvironment did not create enough value added• because of these experiences many operators inEurope delayed their commercial 3G launches until2004• the operators that made an earlier start sufferedfrom a shortage of terminals• thus the original timetables set by the EuropeanUnion could not be reached• in 2005 there were globally 41 million 3Gsubscribers and 82 networks in 37 countries, whichwas 3 years behind what was originally forecasted

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© Sakari Luukkainen

Case LTE

• because GSM networks will still serve the demand for the basic voicecall service, the only way for 3/4 G to differentiate are the mobile dataservices with flat rate pricing like in ADSL, added value from Internetservice providers, low margin business for operators

• LTE does not support traditional circuit-switched telephony service, butIP based data communication, can be seen as extension to UMTS dataservice for 1800 and 2600 MHz, new radio network and MME/S&P-GWelements

• lower frequencies increase the range of the base stations and thusdecrease the network investment

• operators have started move their existing customer base mainly usingthe voice services from GSM to UMTS and take the 900 MHz band in 3G and 800 MHz in 4G rural usage

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Network functions implemented as software modules in cloud –hence “virtualized”

Can run on standard computing hardware• COTS hardware (Commercial Off the Shelf)• as opposed to current vendor specific hardware

Driven by ETSI and operators• NFV ISG – decide business & technical requirements• Active involvement of network operators worldwide• White papers and specifications• Piloting in 4 G and basic building element of 5 G

NFV – Network functionsvirtualization

TMitTI 15NFV – Network functionsvirtualization

© Sakari LuukkainenSource: ETSI

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Key benefits for mobile operator

© Sakari Luukkainen

• Less revenue from mobile data – need for reducedequipment, space costs and power consumption• Elastic capacity provisioning• Improved operational efficiency throughautomatization• Reduced time to market with minimal hardwaredependency• Ability to run production, test and reference facilitieson the same infrastructure• Ability to support targeted local service-introduction• Complementarity with SDN• Easy to experiment new innovations – lower entrybarriers of challengers of incumbents

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Per

form

ance

Time

cloud computing asdisruptive technology

Source: adapted fromChristensen, 1997

Disruptive technology

New entrants

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Performance?

Source: M. Murphy, ”Telco Clouds”, Cloud Asia 2010

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3 - 4 G data networks

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HLR in Amazon EC2 public cloud

Source: Raivio, Päivärinta 2011

6x EC2 cost ca. 15k€ / year

SLA Carrier grade 6 EC2 Large VMs

Availability 99.999 %99.95 % one zone

99.9999 % two zonesLatency < 150 ms < 50 ms (EU zone)

Throughput > 1000 msg/s >1000 msg/s

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NFV in 4 G / vEPC

VirtualAppliance

VirtualAppliance

VirtualAppliance

High volume compute,storage and Ethernet

MME S-GW P-GW

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Realising NFV in 4 G / EPC

Source of images: GS NFV 001, Network Functions Virtualisation(NFV); Use Cases, Version 1.1.1. Specification,ETSI, 2013

Co-existence of virtualisednetwork and non-virtualpacket core network

Co-existence of virtualisedand non-virtualised nodes

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© Sakari Luukkainen

Conclusions

• Market and committee based mechanisms – strongstandardization culture differences between USA andEurope

• The role of governments in the creation of globalstandards

• Public sector forced strongly single GSM standard but letdetails to be defined by private players

• Network externalities and positive feedback favouredcentralized over market oriented selection of technology

• GSM is also a success story of regulation policy

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© Sakari Luukkainen

Conclusions

• Market aspects for new services have to be consideredearly in the standardization process: enduser real needs,threat of substitutes, service / terminal pricing andavailability, system life cycle, network roll-out strategy

• GSM provided clear benefits to operators and enduserswhile in the case of UMTS they were uncertain, operators asbit pipes, main new value for Internet service providersthough operators have to made big investments

• Cost savings and elasticity in transformation of 4/5 Ginfrastructure to the cloud

• New entrants can enter to the telecommunications by usingcloud computing in network infrastructure and operatormarkets – disruption potential is high

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Next week lecture

Mobile ecosystems / Juha Winter

Cases of Google Android and Apple iOS