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BUSINESS MODELS AND BUSINESS ROLES FOR USE OF LOW COST

INFRASTRUCTURE SOLUTIONS

Jan Markendahl, Wireless@KTH, Royal Institute of Technology, Stockholm,Bertil Thorngren, Stockholm School of Economics, Centre for Information & Communication research

ABSTRACT. In this paper low cost concepts for future

wireless access are presented and discussed from thebusiness perspective. Instead of extending todays cellular

technology or to focus on the bandwidth efficiency of the

radio equipment, the chosen approach focus on reduction

of costs for network deployment and operation. Adaptive

antennas (MIMO), multihop schemes and local access

points are combined with user deployed infrastructure

and reuse of existing network assets.

Business models candidates are analysed, showing that

all proposed low cost solutions can be used either by local

network operators (LNOs) in close cooperation with

mobile operators (network franchising) or to be user

deployed using a traditional subscriber model. MIMO

and multihop relays require close integration into thecellular network implying that these solutions would be

less suitable for an independent LNO.

I.

INTRODUCTION

Todays cellular communication systems are primarilydesigned to provide cost-effective wide-area coverage forusers with moderate bandwidth demands (voice and low ratedata). By contrast communication costs per month must besimilar or even lower than in second and third generationcellular systems. The challenge of upgrading cellularnetworks to capacities and speed comparable to thoseavailable by the use of fixed networks is therefore not only a

matter of technological achievements.However, there is a business reality test to face for any

new technology (e.g. HSDPA) and service. The costs for anyadditional infrastructure, and hence the cost for any serviceto be delivered over cellular networks, cannot be radicallyhigher in comparison to the price tag for other options, likeusing a Wireless LAN at an airport or hotel, or simply awired high-speed connection at the office or at home.

On this count todays cellular operators and vendors arebound to face an uphill battle. The basic dilemma is theconflict between provisioning of more geographical coverageversus more capacity as a response to customer demand.Another restriction is the lack of bandwidth needed to

provide Mbps transmission over cellular networks. To simplybuild denser forests of masts will increase cost and price tolevels which are too high in comparison with other options.In addition the Regulators often require wider and fasternetwork roll-out compared to what operators see as realistic.

The rush into unlicensed parts of the spectrum is bound toradically change the playground for the wireless industry.There is an opportunity to access and share new revenuestreams outside what was previously within reach for telecomoperators. The downside, from an operators perspective, isthat this new turf is highly competitive, and has to be sharedwith new potentially powerful market players with sometimesa large customer base derived from non- telecom business.

In this paper we will focus on system and business model

aspects of proposed wireless solutions for low costinfrastructure (LCI). Low cost means significantly lowercost than what can be achieved by extrapolating todayscellular technology [1][2].

The outline of the paper is as follows: Section 2 containsnotes on related work and trends, in the next section coststructure and scalability aspects of current cellular solutionsare discussed leading to the proposed low cost conceptspresented in section 4. In section 5 business models and rolesfor the proposed LCI concepts are presented, includingaspects as ownership and evolution paths.

II. RELATED WORK AND TRENDS

In the autumn 2004 a group from industry and telecomoperators finalized specification for Unlicensed MobileAccess (UMA) [3]. UMA is a suggested standard forextension of GSM/GPRS mobile services using an unlicensedradio link in the customers premises, where the standardWLAN and software are added to standard mobile terminals.

The EU integrated project Ambient Networks (AN) focusat always best connected solutions using multi-operatormulti-radio access architectures that works across businessboundaries[4]. The AN project also includes research on LowCost and Non-conventional wireless access and evaluation ofthe economic feasibility of the proposed solutions.

In addition to (pre) standardisation research there are also

activities initiated by individual companies. Intel and Toshibaare engaged in the build-out and provisioning of base-stationsfor Hot Spots in business districts. The US companyBoingo with the concept WISP in the Box (Wireless ISP)is convincing owners of hotels and restaurants etc. of themerit of installing cheap base stations on a franchising basis

Cellular operators might even not need to invest in any ownWiFi networks. E.g. Vodafone cooperates with the fixed lineoperator British Telecom to get access to WiFi capacity andFrance-based Orange combines its own WiFi Hot Spots withthose provided by independent actors.

Currently many networks are deployed in parallel in thesame geographical area although seamless mobility between

inter-working networks would offer a substantial potential forcost savings [4][5]. Inter-working between WLAN andcellular systems has been a work item for many years in3GPP and most vendors of cellular systems offer solutions.

Ongoing activities on seamless mobility includes bothresearch in many areas; e.g. radio resource management [4],security and connectivity for integration of WLAN-3G [6],optimisation of packet flows at handovers [7], marketaspects of merging the telecom and datacom worlds [7],device flexibility and user experience [8], as well as jointefforts by the industry; e.g. by Motorola and Skype on mobileVoice over IP and by Vodafone, Ericsson and HP onsolutions for mobile offices.


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III. COSTSTRUCTUREANDSCALABILITY

OFCURRENTCELLULARSOLUTIONS

A breakdown of the cost structure of a mobile operatorshows that the direct equipment cost only are a smaller partof the total costs. Three major parts of the total cost structurepie can be identified: Marketing and handset subsidies is onepart, operational costs (OPEX) and capital investment costs(CAPEX) are the two other parts. Hence, reducing equipmentcosts is only part of an overall Low-Cost solution [5][11][12].

Large cost components are related to the maintenance ofthe infrastructure (OPEX) and to the physical deployment ofthe infrastructure, such as planning, installation of antennas& towers, cabling and other site costs. As shown in [12] thecost structure characteristics differ for different types of basestation deployment. The major cost component for macro

base station systems is the sites, whereas the transmissiondominates for Pico base station deploymentAnother important factor in the search for a low cost

solution is the scalability problem of the traditional cellularnetworks [5] In a future with radically increasing traffic andbandwidth demands, there will be a trade-off betweencoverage and provided capacity. The operators can eitherbuild a dense forest with base station sites to providebroadband everywhere; or accept that high capacity coveragewill only be in the vicinity of the base-stations (see figure 1).

Figure 1.Deployment of base station sites and coverage for different

data rates; the upper part illustrates a full coverage system for voiceservices and low data rates, in the middle the sites are re-used for

higher data rates (spotty coverage), the lower part shows the site

forest needed in order to achieve full coverage for high data rates

IV. LOW COST SOLUTIONS

A. LCI Solutions by re-use strategies

The solutions proposed within the LCI project all focus onthe reduction of costs for network deployment and operation.The common LCI strategy in order to avoid the dense basestation site situation could be called involve users and re-use infrastructure assets, see figure 2.

Multihop terminalsand/or relay nodes

Local Access PointsMIMO relays Multihop terminalsand/or relay nodes

Local Access PointsMIMO relays

Figure 2. Three proposed LCI concepts for low cost infrastructure,

example where coverage of existing base station sites are extended

Different re-use strategies are used for low cost solutions inspecific deployment and business scenarios. User deployed Local Access Points (LAPs) make use of

existing broadband connection in homes and offices Fixed multi-hop relays deployed by Mobile Network

Operators (MNO) is a strategy to extend the capacityand/or coverage of existing base station sites [13]

User owned mobile relays based on MIMO technology(both in the relay and in the base stations) is anotherstrategy to make the best use of existing sites

User terminals with multi-hop capability require otherterminals to be available in order to extend the capacityor coverage of existing cellular systems.

B. The New Network Element (NNE)

Local access points, multihop terminals and different typesof relay nodes are functionally located between the terminaland the infrastructure. In [14] this proposed intermediate

relaying access point is called the New Network Element(NNE). The NNE can be mobile or stationary and provideslocal coverage for user equipment in its close vicinity.

The NNE can be connected to the fixed-part of the networkvia either wired or wireless interfaces (figure 3). The localcoverage would typically be based on evolved WLANtechnology. The NNE supports multiple standards both in thecommunication with the mobile stations and the fixednetwork. By employing multi-radio technology in the NNE,the mobile stations can be kept as simple as possible.

NNEcontroller

NNE

Internet

Network

control

Base

station

Cellular Radio

Access Network

MS

NNE

MS

MS

NNE

MS

Cellular

Core Network

Fixed Network

Local Air NetworkInterface Interface

Relay Air

Interface

Figure 3. The proposed infrastructure with NNE and mobile stations

(MS), and with the proposed Network Interface (NI), the Local Air

Interface (LAI) and the Relay Air Interface (RAI) ( From[14])


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V.

BUSINESS MODELS AND ROLES

A. Use cases and business model candidates

In addition to cost savings for deployment and operationother benefits include aspects as reduced risk and increasedflexibility for both investments and for network planning anddeployment. Applicable use cases for LCI solutions would be

Low cost capacity or coverage extensions for anynetwork operator

Fast roll out for Greenfield operators Short term or temporary hot-spot deployment Low cost and flexible private access ensuring own

communication needsThree main business model candidates are considered for

the analysis of the LCI solutions: Traditional MNO which offers all services and capacity Local operators or users offer capacity for public use in

close cooperation with a MNO (Network franchising) Independent local network operators (LNOs) offering

network capacity and services

B. Ownership and operation of the NNE

Mobile operators, local operators as well as private usersand companies can own and deploy the NNE, see figure 4.Subscriptions for private users could e.g. include 4 terminalsand 6 NNEs, where these can be deployed at homes, insummerhouses or in cars. The NNEs are supposed to havebuilt-in functionality for self-configuration and test. Since the

NNE is small and portable, maintenance can be handled asfor any consumer product, i.e. no need for field support.When it comes to the network control and operation, the

MIMO relays and the multihop relay nodes require very closeintegration into the cellular network e.g. for cell planning,channel allocation, admission control etc. This means that itis less likely that an independent market player could operatenetworks with MIMO and multihop NNEs. However, for thelocal access points the situation is believed to be different,see subsection D.

Operatornetwork OperatornetworkOperatornetwork

NNE NNENNE

Terminal Terminal Terminal

Operator Operator Operator

LN O

User User User

Operatornetwork OperatornetworkOperatornetwork

NNE NNENNE

Terminal Terminal Terminal

Operator Operator Operator

LN O

User User User

Figure 4 Traditional operator (MNO), Local operator (LNO) or

private user as owner of the NNE

C. Network franchising

Most large and medium sized companies have internalcommunication networks and services. The usage of these

company networks are characterised by fully known internalusers (no public users) and focus on internal services &needs. These companies can act as Local network operators(LNOs) where the company network and infrastructure isre-used for local public wireless access. All types ofpresented NNEs are candidates to be a local base or relaystation that can be deployed in homes, offices, and hot spotsin order to provide extended local access. Internetworkingcan be established using fixed or mobile wireless links orfixed broadband connections [14][15][16].

The network reuse for provisioning low cost high-speedwireless access can be supported by a business model callednetwork franchising [15]. The LNOs can offer different

company assets to a MNO including Site space, power & stable environment, Transmission & fixed line infrastructure Local network operation & maintenance.

For the proposed concept, the traffic in the area covered bythe local access provider can be split between the localprovider and the wide area system operated by a MobileNetwork Operator (MNO), see figure 5.

Results on the technical feasibility have been presented oncoverage and capacity of user-deployed wireless networks[17], an on the possible gains when more than one localnetwork can be accessed [18].

In the proposed business model both parties will benefit

from the arrangement. The MNO can use this kind of cheap,high-capacity wireless access, as an alternative to a morecostly network build out of the network using the traditionalbase station site approach, whereas the user gets a wirelessaccess point and some form of compensation by the operator.

As argued in [20], another potential benefit for the MNOcan be identified when the agreement between the parties alsoincludes access to all traffic, both internal and public. In asense the MNO will experience lowered costs for customeracquisition. Since the traffic in this case usually can beconsidered to be stable and established the costs for networkfranchising would represent a low risk investment for MNOs.

Local access provider

Mobile operator wide area coverage

User group

Public users

Local access provider

Mobile operator wide area coverage

User group

Public users

Figure 5 Widearea coverage mobile operator (MNO) co-operating

with a local network provider (LNO) using local access points.


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D. Evolution path for the local access point NNE

User deployedlocal access pointsOWN access only

User deployedlocal access points

with PUBLIC accessusers of OWN

MNO only


with PUBLIC accessfor ALL users

User deployedlocal access pointsOWN access only


with PUBLIC accessusers of OWN

MNO only


with PUBLIC accessfor ALL users

Figure 6 PossibleEvolution paths for local access point NNE.

A possible evolution path for the use of local access points(LAPs) can be envisaged within a traditional MNO businessmodel. The first step includes user or MNO owned LAPs thatare deployed in offices and homes for the access of the ownuser group only; this is the case for the current UMAsolution. In the second phase, the LAPs will provide accessfor customers of the own MNO. This will put additionalrequirements on the LAP to include security features, accessand mobility control. In the next phase, true public access, i.e.access for all users, can be provided. Hence, the LAPs musthave some form of support for local and national roaming.

Access and services can also be provided by independentLNOs [19][20]. To provide a full value proposition the LNOsneed to cooperate with other types of market players likeaccess brokers, trust managers and clearing houses[21][21][22]. Research is ongoing to ensure support formulti-radio access and mobility that works acrossadministrative boundaries also in highly competitive marketsfor mobile services [23].

VI. SUMMARY

Future wideband wireless networks with potentially lowercost than what can be achieved by extrapolating todayscellular technology are investigated. The solutions focus onthe reduction of costs for deployment and operation by user-deployment and reuse of existing infrastructure.

Technologies and solutions include adaptive antennas inbase stations and mobile relays (MIMO), multihop relays andlocal access points (LAPs) that use existing broad band

connections. In a unified approach the relays and LAPs arelocated between terminals and the operator network; hencewe introduce the term New Network Element (NNE).

User owned (and deployed) NNEs on a subscription basiscan be used for all proposed solutions. MIMO relays andmultihop relay nodes require very close integration into thecellular network, i.e. it is less likely that they would be usedby an independent LNO.

All low cost solutions can be used by local operators(LNOs) to offer capacity for public use in close cooperationwith a MNO (Network franchising). LAPs can also be usedby an independent LNO, which in this case need to cooperatewith access brokers, trust managers and clearing houses.

VII. ACKNOWLEDGEMENT

The contributions from our colleagues in the Low CostInfrastructure project are greatly appreciated, special thanks

to MSc Klas Johansson (KTH), MSc Johan Hultell (KTH),PhD Per Zetterberg (KTH), PhD Miguel Berg (KTH) andEcon Lic Jonas Lind (Stockholm School of Economics) .

This work has been supported by the Swedish StrategicResearch Foundation as part of the funding of the AffordableWireless Services and Infrastructures program.

VIII.

REFERENCES

[1] Markendahl J, Zander J, Low Cost Broadband Wireless Access Key Research Problems & Business Scenarios, ProcISART04

[2] Giles et al, Cost Drivers and Deployment Scenarios for FutureBroadband Wireless Networks Key research problems anddirections for research, Proc. IEEE VTC Spring 2004

[3] http://www.umatechnology.org/specifications/index.htm

[4] N. Niebert et al, Ambient Networks: An Architecture for Comm.Networks Beyond 3G,IEEE Wireless Comm., April 2004.[5] F. Loizillon et al., "Final results on seamless mobile IP service

provision economics", IST-2000-25172 TONIC Deliverablenumber 11, Oct. 2002.

[6] M. Buddhikot et al, Design and Implementation of a WLANCDMA2000 Interworking Architecture, IEEE Com municationsMagazine, November 2003.

[7] J. Kristiansson, P. Barnes, Providing seamless mobility withcompetition based soft handover management, 7th IFIP/IEEEInt. Conf. on Mgmt of multimedia networks & services, 2004

[8] B.Thorngren, P. Andersson, P. Bohlin, M. Boman,Seamlessmobility: More than it seams,INFO, vol 6 (2004) , No. 3

[9] M. Bylund, Z Segal, Seamless mobility with personal servers,Stockholm Mobility Round Table 2003

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[12] K. Johansson, A. Furuskr, P. Karlsson, and J. Zander, "Relationbetween base station characteristics and cost structure in cellularnetworks", Proc. PIMRC 2004.

[13] B Timus. Cost analysis issues in a wireless multihop architecturewith fixed relays. Proc.IEEE VTC Spring 2005

[14] K.Johansson, J.Markendahl, P.Zetterberg, Relaying accesspoints and related business models; Austin Mobility RoundTable, 2004

[15] K. Johansson, J. Lind, M. Berg, J. Hultell, N. Kviselius, J.Markendahl, and M. Prytz, Integrating User Deployed AccessPoints in a Mobile Operators Network, ProcWWRF12, 2004 .

[16] M. Berg, J. Markendahl, A concept for public access to privatelyoperated cooperating access points, Proc.IEEE VTC Spring 2005

[17] K. Johansson Coverage and capacity of user-deployed wirelessinfrastructure, to appear atRVK05

[18] J. Hultell, M. Berg , Generalized roaming and access selectionin multi-operator environments, to appear atRVK05

[19] J.Hultell, K. Johansson, and J. Markendahl, Business models andresource management for shared wireless networks, Proc. IEEEVTC fall 2004.

[20] J. Markendahl, . Mkitalo, J. Werding Company asset analysisof candidates for novel access provisioning, to appear atRVK05

[21] CN.Chuah et al, "QoS Provisioning using a clearing Housearchitecture", Proc IWQoS, June 2000

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