s-38.3041 operator business - tietoverkkolaboratorio - · pdf filecase finland, 2007 -2008 ......

S-38.3041 Slide 1Helsinki University of TechnologyNetworking Laboratory

Interconnection and Roaming

S-38.3041 Operator Business


Importance of Interconnection

• Operator’s perspective

– Connectivity

=>Network effect

=> Customer satisfaction

=>Revenue


Types of interconnections

• Fixed (PSTN) - Mobile

• Mobile – Mobile

• Fixed – Fixed

• Fixed Internet – Fixed Internet


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?


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


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


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


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


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?


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.


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


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


Retail Retail



SO/MVNO

NO NO

SO/MVNO


Retail Retail



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


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.


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


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


GPRS/IMS RoamingHome network-based roaming

Source: GSMA


GPRS/IMS RoamingVisited network-based roaming

Source: GSMA


GPRS Roaming Exchange

(GRX)


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


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


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


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


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)


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?

s-38.3041 operator business - tietoverkkolaboratorio - · pdf filecase finland, 2007 -2008 ......

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