s-38.3041 operator business - tietoverkkolaboratorio - · pdf filecase finland, 2007 -2008 ......
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S-38.3041 Slide 1Helsinki University of TechnologyNetworking Laboratory
Interconnection and Roaming
S-38.3041 Operator Business
S-38.3041 Slide 2Helsinki University of TechnologyNetworking Laboratory
Importance of Interconnection
• Operator’s perspective
– Connectivity
=>Network effect
=> Customer satisfaction
=>Revenue
S-38.3041 Slide 3Helsinki University of TechnologyNetworking Laboratory
Types of interconnections
• Fixed (PSTN) - Mobile
• Mobile – Mobile
• Fixed – Fixed
• Fixed Internet – Fixed Internet
S-38.3041 Slide 4Helsinki University of TechnologyNetworking Laboratory
InterconnectionBusiness interfaces in Internet
4
31
2
5
9
8
76
Source: Courcoubetis, Weber, 2003
Direct peering
connection
Peering point/bilateral agreements
(Network Access Point, NAP)Transit ISP
Access ISP
• Business interfaces are technically managed via announcements and
withdrawals of destination routes (e.g. Border Gateway Protocol)
• Three types of agreement– direct bilateral peering: non-transitive traffic exchanged without payment
– bilateral peering through NAP (matchmaker -> bandwidth broker)
– true transit traffic involving charging (typically per volume or port speed)
• Optimal business choice between peering and transit?
S-38.3041 Slide 5Helsinki University of TechnologyNetworking Laboratory
InterconnectionCharging schemes
Source: Courcoubetis, Weber, 2003
• Calling-party’s network pays (CPNP)– calling operator pays to called operator for call termination (e.g. telephony)
– terminating operator is a de-facto monopolist ⇒ high termination charges
– lock-in creates an opportunity for disruptive technologies such as IP telephony
• Sender Keep All (SKA, Bill-and-keep)– appears as peering agreements in Internet
– network effect ⇒ discouraging to big operators ⇒ cost sharing
e.g. facility-based interconnection cost charging ⇒ equal customer prices
• Revenue sharing– typically new entrant pays to incumbent
– simple but potentially anti-competitive
• Interconnect charges based on retail prices– retail prices sometimes used as reference for inter-operator discounts
– sometimes enforced by regulator
S-38.3041 Slide 6Helsinki University of TechnologyNetworking Laboratory
InterconnectionRegulation
EU Relevant Markets include wholesale interconnection:• Call origination/termination in an individual PSTN
• Transit services in the fixed PSTN
• Access and call origination in public mobile networks (often SMPs)
• Voice call termination in public mobile networks (always SMPs)
GSM call termination monopoly implies that
• regulator adjusts the termination prices according to operator size
Virtual Mobile Network Operators (VMNO) can survive if• they get access capacity from MNOs (SMP decisions if necessary)
• their call termination prices do not need to be cost-oriented
S-38.3041 Slide 7Helsinki University of TechnologyNetworking Laboratory
Expected to increase competition and reduce
distortion between the wholesale and retail charges
InterconnectionCase Finland, 2007 -2008
• Impact of regulator’s threat (Significant Market Power
identification for mobile operators) on termination charges
for GSM mobile-to-mobile calls
• 2007
– TeliaSonera to reduce from 6.8 to 6.6 cents per min.
– Elisa to reduce from 8.4 to 7 cents per min.
– DNA to reduce from 10 to 8.2 cents per min.
• 2008
– TeliaSonera and Elisa to charge 5.1 cents per min.
– DNA to charge 6 cents per min.
Source: FICORA
S-38.3041 Slide 8Helsinki University of TechnologyNetworking Laboratory
InterconnectionCase Finland, ISPs
• National ISP interconnection is handled via FICIX ry
– Non-profit organization (membership and port fees only)
– No transit traffic allowed
– Bilateral agreements required but without charging settlements
S-38.3041 Slide 9Helsinki University of TechnologyNetworking Laboratory
What next for
Interconnection?
• Convergence and its impact
– Separation of network and service layer
– Non-IP models => IP models?
– Impact on telecom operator’s business?
S-38.3041 Slide 10Helsinki University of TechnologyNetworking Laboratory
Roaming
• Ability of subscriber A to reach or be
reached by subscriber B over a visited
network.
– National Mobile Roaming : Visited network in
the same country.
– International Mobile Roaming (IMR): Visited
network in another country.
S-38.3041 Slide 11Helsinki University of TechnologyNetworking Laboratory
Global IMR Market
• 207 million subscribers in 2004 – 13% of global subscriber base
• USD 78.5 billion revenue in 2004.
• Expected to have 850 million subscribers by 2010.
• Currently dominated by postpaid
• Prepaid expected to grow in future
• Business customers generate major share of revenue
• Over 2 % of the total traffic
• High profit margins for operators.
Source: Informa Telecoms & Media 2005, World Tourism Organization, 2005
International Tourist Arrivals (in million)
0
200
400
600
800
1000
1990
1995
2000
2001
2002
2003
2004
Year
Nu
mb
er
of
To
uri
st
arr
iva
ls
(mil
lio
n)
Total
Leisure, recreation and
holidays
Business and
professional
Health, religion, other
Not specified
S-38.3041 Slide 12Helsinki University of TechnologyNetworking Laboratory
Mobile Roaming Relationships(past, present and future)
SO/MVNO
NO NO
SO/MVNO
Subscribers Subscribers
Retail Retail
WholesaleNational WholesaleNational
WholesaleInternational
Home Visited
SO/MVNO
NO NO
SO/MVNO
Subscribers Subscribers
Retail Retail
WholesaleNational WholesaleNational
WholesaleInternational
SO/MVNO
NO NO
SO/MVNO
Subscribers Subscribers
Retail Retail
WholesaleNational WholesaleNational
WholesaleInternational
Home Visited
•Dominant in the past and present: Vertically integrated.
• Future: Separation of network and service operations
•WholesaleNational :between service operator (SO) or MVNO
with the national network operator (NO)
•WholesaleInternational : between NOs (home and visited) which is typically international in nature.Source: Renjish Kaleelazhicathu, 2005
S-38.3041 Slide 13Helsinki University of TechnologyNetworking Laboratory
Roaming AgreementsCase: TeliaSonera, 2007
• International roaming coverage
– GSM in over 100 countries (over 220 operator partners)
– GPRS in over 50 countries (over 90 operator partners)
– WLAN in over 16 countries (3500 hotspots)
• Member of the Freemove alliance (28 countries with over
295 million customers worldwide)
• TeliaSonera GRX service connects e.g. all Finnish mobile
operators to each others and to foreign networks
• TeliaSonera has over 25,000 hotspots worldwide through
roaming partners.
S-38.3041 Slide 14Helsinki University of TechnologyNetworking Laboratory
Roaming FinancialsRevenue and cost structures
• Revenue
– Inbound and outbound
– Function of:
• Number of visits
• Duration of days
per visit
• Usage of services
per day
• Price per unit usage
of service
• Cost
– Inter-operator tariff
(Outbound)
– Network cost
(inbound)
– Signaling cost
– Data clearing and
financial settlement
cost
– Fraud management
S-38.3041 Slide 15Helsinki University of TechnologyNetworking Laboratory
RoamingRegulation
•EU Relevant Markets include wholesale roaming:• Wholesale national market for international roaming on public mobile
•National regulators have difficulty in guiding international
roaming prices because of its inherent cross-border nature.
•EU’s parliament is currently debating on the proposals by EC.
•European Home Market Approach •proposal to enforce wholesale and retail price caps !
•Decision expected this year!
•Internet-based access-independent approaches of solving the
roaming problem (e.g. Voice-over-Internet by Skype) are likely
to push roaming prices down
S-38.3041 Slide 16Helsinki University of TechnologyNetworking Laboratory
GPRS/IMS RoamingHome network-based roaming
Source: GSMA
S-38.3041 Slide 17Helsinki University of TechnologyNetworking Laboratory
GPRS/IMS RoamingVisited network-based roaming
Source: GSMA
S-38.3041 Slide 18Helsinki University of TechnologyNetworking Laboratory
GPRS Roaming Exchange
(GRX)
S-38.3041 Slide 19Helsinki University of TechnologyNetworking Laboratory
GPRS/IMS RoamingBusiness Interfaces between Players (Transport)
GRXOperator 1
GRXOperator 2
VisitedNetwork
IOT
Roaming charges
Free exchangeMonthly and volume charges
Monthly and volume charges
ClearingHouse
(optional)
HomeNetwork
Volume
Volume
• Bilateral roaming agreements between GPRS operators
• Settlement of inter-operator tariffs (IOT) via clearing houses
• Transport agreements via GPRS Roaming eXchange (GRX) operators
S-38.3041 Slide 20Helsinki University of TechnologyNetworking Laboratory
IP Packet Exchange (IPX)(Enhanced GRX)
Source: GSMA
•SIP proxies
•Charging data record creation
•IP version conversions
•Traffic control/policing
•Separation of network
and service layers
S-38.3041 Slide 21Helsinki University of TechnologyNetworking Laboratory
Roaming industry evolutionBusiness Model Scenarios: Bilateral, Clustered, Centralized
Triggers\Models Bilateral Clustered Centralized
Number of contracts High Medium Low
Complexity of single contract High High Low
Management structure Distributed Centralized Centralized
Vertical bundling Yes Yes No
Control of standards spec GSMA
Global
Operator Non-commercial
Competition in roaming features No Yes No
Price regulations No No Yes
Cost per operator High Medium Low
Profit opportunity Medium High Low
• Bilateral model has dominated so far
• Clustered model will develop, driven mainly by global operators
• Centralized model may emerge from regulatory needs
S-38.3041 Slide 22Helsinki University of TechnologyNetworking Laboratory
WLAN RoamingSystem Architecture using RADIUS
enterprise.net (RADIUS)
operator.fi (RADIUS)
Internet
CLEARING HOUSE (RADIUS)
Access Controller
User DB
ISP DB
User DB
• Authentication based on RADIUS protocol (DIAMETER)
• WLAN charging and settlement handled by Clearing House
S-38.3041 Slide 23Helsinki University of TechnologyNetworking Laboratory
WLAN usage
(includes non-roaming usage)
32%491%12,10610 Denmark
271%681%12,3469 Australia
1%422%17,9848 Singapore
49%572%20,7127 France
18%433%33,8876 Japan
37%1093%36,3425 Netherlands
96%643%37,4434 Switzerland
112%1065%63,4963 Germany
75%7811%131,5462 United Kingdom
33%6559%692,3321 United States
GROWTH FROM
1H06
AVERAGE
SESSION LENGTH
(minutes)
% OF
WORLDWIDE
TOTALDAY SESSIONS
Source: iPass, 2006
Top 10 countries (stats based on iPass customers)
S-38.3041 Slide 24Helsinki University of TechnologyNetworking Laboratory
WLAN vs. GPRS/IMS Roaming
• GPRS/IMS roaming being deployed based on home-
network routing
• WLAN roaming being deployed based on visited network
routing (direct local acces to Internet) ⇒ strong trust
required between operators
• Roll-out of WLAN in handsets is likely to increase the use
of SIM/HLR authentication for roaming
• GRX enables end-to-end quality of service (QoS) control
– MMS uses GRX for both interconnect and roaming traffic
– Voice-over-IP on public WLAN could use GRX for QoS
• WLAN roaming: Threat or complement to GPRS/IMS
roaming?