EUR 21192 (OK 2T 3Color).indd

Transcription

TECHNICAL REPORT SERIES
The Future of Mobile
Communications
in the EU: Assessing
the potential of 4G
EUR 21192 EN
European
Science and
Technology
Observatory
Institute for
Prospective
Technological Studies
About the JRC-IPTS
The Joint Research Centre (JRC) is a Directorate General of the European Commission,
staffed with approximately 2,100 people, coming in the vast majority from the 15 Member
States of the European Union. The Brussels Support Services (including the office of the
Director General and the Science Strategy Directorate) and seven Institutes located in five
different countries compose the main organisational structure of the JRC (http//:www.jrc.org).
The mission of the JRC is to provide customer-driven scientific and technical support for the
conception, implementation and monitoring of EU policies.
The Institute for Prospective Technological Studies (IPTS) is one of the seven Institutes making
up the JRC. It was established in Seville, Spain, in September 1994.
The mission of IPTS is to provide prospective techno-economic analyses in support of the
European policy-making process. IPTS’ prime objectives are to monitor and analyse science
and technology developments, their cross-sectoral impact, and their inter-relationship with the
socio-economic context and their implications for future policy development. IPTS operates
through international networks, drawing on the expertise of the best high level scientific experts
in Europe and beyond. It analyses the results of this scientific work and synthesises them into
timely and policy relevant reports.
Most of the work undertaken by IPTS is in response to direct requests from (or takes the form of
long-term policy support on behalf of) the European Commission Directorate Generals, or
European Parliament Committees. IPTS sometimes also does work for Member States’
governmental, academic or industrial organisations, though this represents a minor share of its
total activities.
Although particular emphasis is placed on key Science and Technology fields , especially those
that have a driving role and even the potential to reshape our society, important efforts are
devoted to improving the understanding of the complex interactions between technology,
economy and society. Indeed, the impact of technology on society and, conversely, the way
technological development is driven by societal changes, are highly relevant themes within
the European decision-making context.
The inter-disciplinary prospective approach adopted by the Institute is intended to provide
European decision-makers with a deeper understanding of the emerging science and technology
issues, and it complements the activities undertaken by other institutes of the Joint Research
Centre.
The IPTS approach is to collect information about technological developments and their
application in Europe and the world, analyse this information and transmit it in an accessible
form to European decision-makers. This is implemented in the following sectors of activity:
Technologies for Sustainable Development
Life Sciences / Information and Communication Technologies
Technology, Employment, Competitiveness and Society
Futures project
In order to implement its mission, the Institute develops appropriate contacts, awareness and
skills to anticipate and follow the agenda of the policy decision-makers. IPTS Staff is a mix of
highly experienced engineers, scientists (life-, social- material- etc.) and economists. Crossdisciplinary experience is a necessary asset. The IPTS success is also based on its networking
capabilities and the quality of its networks as enabling sources of relevant information. In
fact, in addition to its own resources, IPTS makes use of external Advisory Groups and operates
a number of formal or informal networks. The most important is a Network of European
Institutes (the European Science and Technology Observatory ) working in similar areas. These
networking activities enable IPTS to draw on a large pool of available expertise, while allowing
a continuous process of external peer-review of the in-house activities.
The Future
of Mobile
Communications in
the EU: Assessing
the potential of 4G
An ESTO Project Report
Carlos Rodríguez Casal, Jean Claude Burgelman,
Gérard Carat (IPTS)
(Editors)
Erik Bohlin, Sven Lindmark, Joakim Björkdahl
(VINNOVA)
Arnd Weber, Bernd Wingert (ITAS)
Pieter Ballon (TNO)
(Authors)
February 2004
EUR 21192 EN
European Commission
Joint Research Centre (DG JRC)
Institute for Prospective Technological
Studies
http://www.jrc.es
Legal notice
Neither the European Commission nor any
person acting on behalf of the Commission is
responsible for the use which might be made of
the following information.
Technical Report EUR 21192 EN
© European Communities, 2004
Reproduction is authorised provided the
source is acknowledged.
Printed in Spain
The editors of this report take responsibility for the text. However, a number of key individuals and
organisations made an essential contribution to the completion of this report.
Invited external experts made some perceptive remarks on early draft deliverables at project meetings
and workshops. In particular, we would like to thank:
Michel Berne, INT (Institute National des Télécommunications)
Arthur Drewitt, BWCS (Baker Wilde Consultancy Services)
Simon Forge, SCF Associates (Simon C. Forge Associates).
We would also like to thank Bernard Clements, Head of the IPTS-ICT Unit, and Duncan Gilson (IPTS)
for their valuable comments.
ESTO partner organisations contributed as follows:
-
ITAS (Institut für Technikfolgenabschätzung und Systemanalyse): Arnd Weber, Bernd Wingert,
with the assistance of Asae Yokoi– Chapter 1
-
TNO (Nederlandse Organisatie voor Toegepast-Natuurwetenschappelijk Onderzoek): Pieter
Ballon – Chapter 2
-
VINNOVA (Verket för INNOVAtionssystem): Erik Bohlin, Sven Lindmark, Joakim Björkdahl, with
the assistance of Niklas Fredelius, Martin Lockström, Mikael Olsson – Chapters 1 and 3 plus
synthesis and project co-ordination.
The Future of Mobile Communications in the EU: Assessing the potential of 4G
Acknowledgments
Editorial support from Eva Burford and Patricia Farrer is gratefully acknowledged.
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Even before the so-called third generation (3G) of mobile telecommunications technologies has been
fully deployed, new mobile broadband technologies are appearing on the market. The IPTS technical report
on “Prospects for Third-Generation Mobile Systems”, published in June 2003, highlighted the significant
influence these alternative technologies could have on the adoption of 3G technologies. It also called for
a study of the fourth generation (4G), which would consider the various technologies and services likely to
be used and the opportunities that they may bring.
This suggestion was taken up by the JRC-IPTS, and the study was carried out under the FISTE project1
by the IPTS and the ESTO network. ESTO (European Science and Technology Observatory) is a network of
research organisations with experience in the field of scientific and technological foresight, managed by
the IPTS. Its core competence is in independent prospective analysis and advice relating to Science and
Technology developments relevant to the EU.
This study focuses on 4G mobile communications over the next ten to fifteen years. It does not,
however, address the long term integration of all communications by 2020 and beyond, when the
Ambient Intelligence (AmI) paradigm is expected to become a reality. Moreover, as the roadmaps show,
4G technology is, as yet, very immature and a range of alternative scenarios are still possible. As a result,
all the forecasts are by definition open to criticism. The authors are therefore well aware that this is not the
final word on the topic.
Despite its limitations, this study does, however, offer an integrated analysis (covering technical,
business and demand-related aspects) of what the future 4G environment might be like. It also builds on
the IPTS study on 3G which had a strong European perspective and therefore continues to closely reflect
the concerns of European stakeholders in its analysis of 4G.
Finally, we decided to include a series of annexes providing detailed support to the study.
Preface
The editors
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1
Foresight in Information Technologies in Europe (http://fiste.jrc.es)
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Executive summary
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Introduction
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1. Technology roadmap for 4G
1.1 Overall assessment of wireless network technologies
1.2 Assessment of WLAN versus 3G
1.3 Core Issues
1.3.1 Spectrum policy
1.3.2 Quality of Service
1.3.3 Power Issue
1.3.4 Software-defined radio
1.3.5 Ad-hoc Networking
1.3.7 Other Issues
1.4 Roadmaps and plans
1.5 Conclusions
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2 Business Models: the European actor space in 4G
2.1 Short-term visions
2.2 4G Visions and strategies
2.2.1 4G-related organisations world-wide
2.2.2 Eurescom: The operators’ vision on 4G
2.2.3 Wireless Strategic Initiative and Wireless World Research Forum
2.2.4 Non-Europe-based organisations
2.2.5 Individual players’ 4G strategies
2.3 Implications for Europe
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3 wireless telecommunications technologies, investments and growth
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3.1 Introduction
3.2 The evolution of public WLAN
3.2.1 Predictions of the future public WLAN market
3.2.2 The stand-alone public WLAN business case
3.2.3 WLAN as a new niche
3.2.4 Strategic value?
3.3 4G-linear
3.3.1 Business case
3.4 Who will back up future telecommunications system investments?
3.4.1 The fallout in the telecommunications sector
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Table of contents
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Table of Contents
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3.4.2 The capital market
3.5 Conclusions from financial analysis
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Annex 1: Regional roadmaps for 4G
A1.1 Introduction
A1.2 Wireless technology development within IST: Overview
A1.3 WWRF Book of Visions
A1.4 The “Wireless Foresight” study
A1.5 US visions
A1.6 Japanese initiatives and roadmaps
A1.7 Korea
A1.8 China
A1.9 India
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Annex 2: Current and emerging business models for mobile services
A2.1 2.5G and 3G
A2.2 WLAN
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References
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List of acronyms
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LIST OF FIGURES AND TABLES
Figure 1: Trade-offs between mobility and data rates in mobile communications
Figure 2: Battery development over time
Figure 3: BMW envisages that every car will transmit information that is of
use to drivers
Figure 4: Business models: conceptual framework
Figure 5: Potential timelines for the ‘immediate’ 4G scenarios.
Figure 6: Potential timelines for the ‘linear’ 4G scenarios.
Figure 7: Number of hotspots world wide.
Figure 8: Number of users (millions world wide).
Figure 9: Number of public WLAN users in Europe (million).
Figure 10: Annual revenues from public WLAN, world wide (US$ billion)
Figure 11: Cost of network investment (€ million).
Figure 12: Cash outflow components.
Figure 13: Required number of users for positive NPV.
Figure 14: Investment in 4G for UK reference operator (£m).
Figure 15: 4G penetration.
Figure 16: Required average revenue per user (£ per month).
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Figure 17: Comparative credit ratings of major European telecommunications
operators, 1999-2001.
Figure 18: Total debts for some operators in the end of 1998 vs. August
2001, and the debt per equity value.
Figure 19: 4G as the integrator of present and emerging technologies
Figure 20: Clusters on Mobile Communications
Figure 21: An overview of project technologies
Figure 22: Project technologies: aggregated view
Figure 23: Gantt overview of the cluster projects
Figure 24: Coverage/mobility and bit-rate chart
Figure 25: Evolution of mobile communication systems and related EU
research programs
Figure 26: Mitsubishi Megapixel mobile camera phone prototype
Table 1: Comparison between different technologies with respect to some
features
Table 2: Summary of potential 3G and WLAN business models
Table 3: Overview of 4G-related organisations
Table 4: Scenarios for the ‘Linear’ 4G vision
Table 5: Four Scenarios for ‘Immediate’ 4G
Table 6: SWOT analysis of Europe’s position regarding 4G
Table 7: European operators that have launched public WLAN.
Table 8: The largest public WLAN providers (world wide).
Table 9: Assumptions of network deployment and cost.
Table 10: Pricing schemes for some public WLAN providers.
Table 11: Network coverage per 50 percent of population.
Table 12: Overview of areas addressed by IPs and NoEs in the Mobile and
Wireless Systems Beyond 3G objective, call 1 of FP6 IST
Table 13–(a): Re-Configurability Cluster Projects
Table 13–(b): Systems beyond 3G Cluster Projects
Table 13–(b): Systems beyond 3G Cluster Projects (cont.)
Table 13–(c): Advanced Antennas Cluster Projects
Table 13–(d): Advanced Mobile Satellite Systems Cluster
Table 13–(e): Location Based Services Cluster
Table 13–(e): Location Based Services Cluster (cont.)
Table 14: An overview of FP5 Mobile cluster projects
Table 15: System evolution according to the WSI
Table 16: GPRS operators in Europe
Table 17: 3G introduction in Europe
Table 18: Overview of WLAN hotspots in selected EU, North American
and Asian countries (August 2003)
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This report examines some of the technological and business trends in mobile communications
systems, taking into account both developments currently underway and the longer term outlook for socalled fourth-generation (4G) mobile communications technologies. How mobile communications unfold
over the coming years will depend on the interaction of a number of factors. These include the progress
made in developing the various technologies, the emergence of new applications, and the adoption of
new services by users. Although the technology is an essential element, a viable business model is clearly
the crucial factor.
Focusing on the development of the technology, two broad scenarios have been identified for further
analysis.
•
The first scenario is an extrapolation from current trends towards increasing the bandwidth delivered
by mobile communications and envisages the widespread availability of 4G mobile communications
some time around 2010. This scenario projects forward the view of mobile communications as
having evolved through a series of successive generations, a view that it is implicit in the term “fourth
generation”. (This scenario is referred to in the report as the “linear 4G vision”).
•
The alternative scenario (referred to in the report as the “concurrent 4G vision”) considers the
possibly disruptive impact of the emergence of public wireless local area network (WLAN) access.
To a limited extent WLAN access is already available today, and plans are afoot to deploy large
numbers of so-called “hot-spots” offering semi-mobile Internet access. This approach enables a highbandwidth service to be offered at relatively low cost in specific locations where usage is likely to be
concentrated
After reviewing current and future technological trends, the analysis given here examines some of
the proposed business plans, focussing on those of telecom operators, telecoms equipment vendors,
and IT companies. It also takes into account the implications for value propositions and organisational
structures.
Executive summary
Clearly it is in the long-term interests of the European telecommunications industry to remain up-todate with emerging trends in the mobile communications field, even if that may involve difficult choices
about how to best recoup their past investments. And it is in the interests of Europe’s citizens and businesses
to have access to affordable mobile information society technologies in order for European businesses
to remain competitive and European citizens to enjoy full participation in the information society. The
situation is perhaps still changing too rapidly for specific policy recommendations to be possible, but
clearly promoting research, facilitating the standards-setting process, and the allocation of spectrum are all
areas in which policy-makers can exert some influence over the future direction of the industry. Overall,
one of the key enablers for mobile data communications as a viable business will be a sufficiently strong
base of computer literate users, therefore any measures building these skills are to be welcomed.
Technology Roadmaps for the next generation of mobile networks
The transition from a first generation of analogue mobile telephony in the 1970s-80s to the second
generation of digital in the 1990s (in the form of the global standard for mobile, GSM, in Europe and
many other countries) engendered a view of the development of mobile communications as a sequence
of successive generations. On this view the next stage of mobile communications (based on the universal
mobile telecommunications system, UMTS) after digital mobile telephony became widespread, which
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Executive summary
would enable full multimedia data transmission as well as voice communications, was dubbed the third
generation (3G). However, the high cost and technical difficulties faced have led to delays in deployment.
Meanwhile, the neat model of a succession of generations began to break down, first with the intercalation
of a 2.5G in the form of GPRS (general packet radio service), enabling rudimentary Internet access from
mobile phones, and then with the emergence of public wireless LAN technologies as potential competitors.
Against this backdrop, the concept of a fourth generation is increasingly difficult to pin down precisely.
Indeed, beyond UMTS or 3G, looking at the 2010-2015 timeframe, the scenario is almost certainly going
to be one of numerous interoperating systems each filling different niches of the mobile communications
market. Factors that could have a significant impact on the deployment of mobile telecommunications
technologies in this timeframe include radio access techniques enabling greater intelligence and flexibility
to be built into transmitters and receivers (so as to use spectrum more efficiently), improved power supply
technologies, and ad-hoc networking between mobile devices. The latter two factors could contribute to
substantially cheaper phones and improved coverage, respectively.
The most significant emerging technology at the moment is public wireless LAN. Wireless LAN technologies
such as IEEE 802.11b (popularly known as “WiFi”) were originally developed as a means of creating local area
networks for homes, businesses, university campuses, etc. These networks use unlicensed spectrum and operate
over short distances. There is no built-in security or charging mechanism, but encryption (using the wireless
equivalent protocol, WEP, or the WiFi Protected Access, WPA protocol, for example) enables a degree of security
and authentication to be implemented, opening up the way for access on a fee-paying basis. In their present
state, WLANs cannot compete with UMTS (3G) in terms of Quality of Service (QoS), coverage and security,
but their low deployment cost (particularly for fixed-line operators with spare backbone capacity) makes them
attractive to users who are mobile but not necessarily in motion (for example, using a laptop from a café, hotel
or airport). The equation could change, however, if cheap voice over IP (VoIP) communication materialises as a
viable alternative for voice communications, as this could transform WLANs into direct competitors with 3G in
the lucrative voice segment of the mobile communications business. As WLANs expand in urban areas, users
with dual-mode phones might take advantage of the lower cost of calls while in town, leaving 3G operators to
cover sparsely populated and hence less profitable areas. However the slow take-up of VoIP over fixed Internet
connections places a question mark over the likelihood of this scenario.
When looking at developments outside Europe, the US appears to lack a shared industry-wide view
of how mobile telecommunications are likely to develop. The trend in the US is towards new proprietary
technologies deployed over unlicensed spectrum, co-existing with new standards developed for use on both
unlicensed and licensed spectrum. At the same time, more unlicensed spectrum is being made available
and flexible spectrum management is supporting the interoperability of products and technologies offered
by a more fragmented industry. It should come as no surprise, therefore, that the US is leading the way in
the deployment of potentially disruptive technologies such as public WLAN.
The main players in Asia (particularly Japan and Korea) are taking an entirely different approach by
promoting a vision of a high data-rate public standard for the 4G system as a whole, building on strong
demand for advanced data and entertainment services. Both Korea and China have adopted industrial
policies intended to enable them to achieve leadership in mobile telecommunications. China, in particular,
has the potential to produce very cheap equipment. Chinese mobile phone system operators offer low
prices for calls over their 2G systems and even aim to undercut fixed line systems.
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Is there a business case for 4G?
Doubts about the market potential for mobile data and multimedia have lowered expectations for 3G,
and the roll out of 3G services has run into difficulties. Nevertheless, 3G is still expected to be deployed
In the short term, 3G in Europe will be driven by ‘traditional’ telecoms players, i.e. mobile operators
and especially telecoms equipment suppliers. This approach, which emphasises an evolution based on 3G
and the integration of heterogeneous networks, constitutes a definite opportunity and a potential strength
in that it allows past investments to be recouped.
Viable business models for public wireless LAN will depend on the cost of access to the backbone
network, security, and charging mechanisms. As a public mobile technology, it could potentially evolve as a
separate competitor to cellular networks (whether 3G or 4G) in the form of a network of hotspots or it could
become more closely integrated within the cellular network. Although public WLANs cannot substitute entirely
for 3G in terms of functionality, if they are able to offer most of the services users might want from 3G at lower
cost, and before 3G has had time to become established, they may undermine 3G’s already fragile business
model. On the other hand, WLANs might stimulate demand for mobile broadband and create a cohort of users
willing to pay to upgrade to higher quality 3G when they tire of the limited coverage, high demands on battery
power, patchwork of hotspot ownership and congestion of WLAN access points. What seems less likely today,
however, in the light of the problems faced by 3G deployment and in the context of emerging technologies, is a
smooth linear transition to a homogeneous and universal fourth generation at some point in the medium term.
The model put forward by Eurescom, the European Institute for Research and Strategic Studies in
Telecommunications, which is mainly backed by the European Telecoms Operators, builds upon the
operators’ existing strength in terms of their customer relationships, access provisioning, billing and
branding, so they can act as trusted third parties in payments for data and service delivery. This approach
would oblige operators to move away from competing on the basis of their geographical coverage and price
towards competition on the basis of the services they offer, thus increasing cooperation between access
network providers, service providers and mobile or wireless service users through service integration and
personalisation. It is also foreseen that existing operators will face tough competition from unlicensed
wireless access providers, virtual service providers who rent network capacity and newcomers who
could acquire radio bands if further spectrum is released for mobile communications. In terms of timing,
Eurescom sketches a migration path, where functionality is added to 3G from 2005 onwards, with a move
to a system “beyond 3G” some time after 2008/2010.
in Europe, although launch dates have been pushed back considerably. A survey of emerging 3G strategies
and services in Europe reveals two main approaches. The first is to offer multimedia applications as a
means of increasing revenues and the second, to use the technology to relieve congestion so as to better
support and/or combine existing applications and services, and offer cheap mobile voice calls. In terms
of the value proposition, operators also face something of a dilemma as to whether to position 3G as a
complement to, or a substitute, for 2.5G.
Moreover, the vision of 4G shared by both the WWRF (Wireless World Research Forum) and WSI
(Wireless Strategic Initiative) –which represent telecoms equipment manufacturers more than operators–
emphasise the heterogeneity of networks and new service infrastructures, rather than increased bandwidth
per se. The WWRF Book of Visions, in contrast to the network management oriented view expressed by
operator-driven organisations, includes long-term visions with innovative approaches to wireless systems
architecture and forecasts the commercial introduction of 4G in 2011/12.
Asia, Japan, South Korea, and China, on the other hand, are taking a proactive role in promoting a
standardised model of 4G. Their 4G visions have many points in common with those of Europe, but on
the whole, they tend to be more in line with the original linear vision of 4G’s developing as the next stage
in the sequential evolution of mobile communications. They focus more on increasing mobile system
data rates, and on developing new systems or system components, and less on the seamless operation of
existing systems (though this latter strategy is increasingly included as the visions are developed further).
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Executive summary
These countries also envisage their governments taking an active role in driving domestic manufacturers to
set early 4G standards.
The situation in the US tells a completely different story. Although there is no representative body that
articulates US visions for 4G, statements made by individual US IT companies, telecoms operators and
standards organisations lead to the following observations. Some US mobile operators see 4G as a way of
leapfrogging to next-generation mobile networks. Standards for broadband wireless access such as IEEE
802.16 and 802.20 have developed very rapidly. Also, a number of US-based IT vendors, such as IBM,
Oracle, Sun and Microsoft, have explicitly identified mobile communications as a strategic target market.
Financial analysis
As the lack of demand for 3G has shown, it is extremely difficult to predict the likely market adoption
of mobile wireless communications and the revenues that can be expected. Added to this uncertainty is the
potential impact of Public WLANs. However, as yet, although operators have been deploying public WLAN
networks for some years now, most have been unable to turn them into a profitable business. Calculations
suggestion that standalone public WLAN services will probably not provide a sustainable business in the
short-term, despite the free use of spectrum and relatively small investments required compared to 3G. As
well as the technical limitations alluded to above, the intrinsic problem of achieving efficient usage of free
bandwidth, in the absence of any sort of coordination (such as the market mechanism opted for in the case
of UMTS bandwidth), could become critical as more players enter the field. Nevertheless, WLANs may
prove to be of high strategic value and an important source of competitive differentiation. Even if the direct
revenue impact of public WLAN is low, they may be important for subscriber retention, or as the means by
which a fixed line operator could enter the mobile market.
The business case for a linear evolution to 4G relies on customers’ generating significant additional
revenue from advanced 4G-type services. The question therefore arises as to how these future investments
will be financed. The downturn in the telecommunications sector caused by excessive operator debt and
disappointment over market growth, as well as the extreme cases of vendor financing, makes it highly
likely that it will be more difficult to secure financial backing for new investments in a future generation
of mobile communications systems. It has been suggested that several 3G operators may not recoup their
investments at all, and this will reduce the likelihood of operators’ investing in 4G by 2011, the date
tentatively set by several equipment vendors for its introduction. Instead, for most operators, this investment
is likely to be postponed a long way into the future. However, before more accurate predictions of operator
investments in 4G can be made, 3G adoption will have to take off. It does not seem likely that a very highspeed mobile data network will gain user acceptance unless successful mobile data applications have
been developed and commercialised with 3G.
Overall conclusions
The foregoing analysis suggests that three main issues need to be addressed in Europe:
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Firstly, operators in Europe have limited experience of advanced mobile data communications and
there are as yet no signs of any increase in demand from users for these services (in contrast to
Japan, which is the world’s most advanced mobile market). There is clearly a need to abandon the
technology push approach that has so far characterised European mobile communications in favour
of a more user-focused perspective.
Secondly, new technologies will emerge that will increase competition, and the pressure on prices
will lead to cheaper mobile communications. However, the right balance is needed as too much
competition could limit the possibilities for economies of scale. The right balance is also needed to
harmonise operators’ and vendors’ diverging strategic visions.
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Finally, on a regional basis, several countries are aiming for a leading role in 4G and Europe runs the
risks of being a late starter in the race to deploy of 4G. In this situation, mobile telecommunications
equipment will be built cheaply in Asia, causing Europe to fall behind in the production and
deployment of mobile communications systems.
The development and adoption of 4G in Europe will require the prior large-scale adoption of 3G.
While European actors should certainly aim for a leading role in 4G in the future to avoid missing
opportunities, efforts should also be made to consolidate 3G infrastructure as a means of supporting a
multitude of co-existing applications and enable the continuous incorporation of emerging standards and
technologies. The standardisation made possible by Europe-wide UMTS adoption is an opportunity, but
does not mean that other emerging technologies and standards should be ignored. On the contrary, UMTS
integration should be the priority in the coming years, encouraging other standards to be made compatible
with UMTS, promoting its enhancement and ensuring the removal of any barriers to its adoption. It should
include provisions for micro-payments, spectrum regulation harmonisation and interconnection issues,
which would allow investments in 3G infrastructure to be recouped without missing the opportunities
stemming from technological innovation in other areas.
4G should form a part of Europe’s long-term plans for mobile telecommunications. However, the
fragile business case suggests efforts should concentrate on creating a dynamic and sophisticated market
for advanced mobile data and voice services based on 3G technologies. If this can be achieved, at the
same time as integrating new technologies to improve the user experience further, the evolutionary path
towards 4G will become clearer and will maintain its momentum.
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The third generation (3G) of mobile
communications in Europe (based on the
universal mobile telecommunications service or
UMTS standard) is having to confront not only
the high cost of licences but also the possibility
that it may be bypassed by other technologies.
New broadband wireless technologies that
could coexist with 3G or even compete with it
are already appearing on the market. An everexpanding range of wireless (radio) network
technologies and topologies (such as WLAN,
Bluetooth, Home-RF, UltraWide Band) will
undoubtedly interact in the market place
with the dominant mobile communications
technology. Of these technologies, wireless local
area network (LAN) technologies (including
the rapidly spreading 802.11b standard,
commonly referred to as WiFi) are a potential
threat to the economic viability of 3G mobile
systems and strong contenders to lead the future
communications scene. Wireless LANs are, by
their very nature, short range, but in areas where
there is a concentration of potential users (e.g.
hotels, airports, cafés) commercial access points
(so-called “hot spots”) have sprung up worldwide.
However, serious concerns remain regarding the
security and privacy of communications using
existing WLAN technologies.
The IPTS Technical Report entitled “Prospects
for Third-Generation Mobile Systems” highlighted
the need to consider the influence that these
alternative technologies might have on the spread
and adoption of 3G. It also called for a study of the
fourth generation (4G) of mobile communications
technologies which would consider the various
technologies and services likely to be used and
the specific opportunities that they may create.
DG INFSO supported this suggestion and the
study was carried out by the IPTS, through the
ESTO network, within the framework of the JRCIPTS FISTE project.2
2
See http://fiste.jrc.es
This prospective study aims to identify
the milestones on the road towards the mobile
communications systems of the future, taking
into account both the present state of 4G
technologies and the long-term prospects for their
development (2010 and beyond). The analysis
of the likely future direction of 4G involves
addressing a number of subsidiary issues,
such as the possibility of 4G building on 3G
networks and services; 4G as a paradigm shift,
leapfrogging the 3G infrastructure; and the path
to 4G as a linear and chronological succession of
incremental developments. These different paths
are conditioned by how the technology develops
and how the different technology options are
received by the market, and each raises different
policy and regulatory issues.
The study applies both qualitative and
quantitative methods and is subdivided into
sections on the technologies, business models
and the financial viability of 4G mobile
communications. Quantitative simulation has
been performed according to the standard
methodology for cash flow and net present
value (NPV) analysis. The qualitative studies are
primarily based upon secondary sources but also
involve direct interviews with selected experts
and “insiders”. The analysis and conclusions bring
together the findings of both the quantitative and
the qualitative studies.
Introduction
The sources of information drawn upon
when examining the technologies include expert
interviews, and company information. Industry
forums were also asked to formulate visions on
future directions in the wireless communications
field. Financial conclusions are based on a
solid knowledge of both telecommunications
economics and mobile service providers. Outside
experts were also invited to the interim and final
meetings to comment on all the findings.
17
18
The history of mobile communications can be
interpreted as a sequence of transitions between
technologies. On this view, the first generation
(1G) of mobile communications comprised the
analogue voice networks that began appearing in
the late 1970s. The second generation (2G) was
marked by the advent of digital voice networks
(Global System for Mobile Communication or
GSM being the standard adopted in Europe),
which was deployed in the 1990s. Although 2G
has been enhanced since its initial deployment,
with increased bandwidth, packet routing, and
multimedia (to the point where it is currently
referred to as 2.5G), the next step in the envisaged
evolution of mobile communications was to a
system offering greater interoperability and full
broad-band multimedia capability. However, even
before this third generation (3G) was launched,
the concept of a “fourth generation” (4G) had
already begun to be discussed, and now there is
even talk of a “fifth generation” (for instance, this
was discussed, at the IST Mobile Summit 2003).
Some early clarifications on 4G for the purposes
of this report are therefore in order.3
Following the paradigm of generational
changes, it was originally expected that 4G
would follow sequentially after 3G and emerge
between 2010 and 2015 as an ultra-high speed
broadband wireless network. This view is referred
to as the linear 4G vision in this report. Little
consensus has emerged regarding this view, nor
has it been defined in detail, despite the fact that
industry collaboration forums such as the Wireless
World Research Forum (WWRF), ITU and IST
conferences have all devoted sessions to the longterm development of mobile communications
systems. This vision, in essence, is about a future
4G network that provides very high data rates
(exceeding 100 Mb/s), which will be deployed
several years after 3G has become commercially
3
available on a large scale. Additionally, it is
expected that these 4G networks will enable
seamless interoperability and interconnection
with other mobile devices. It is assumed that
they will generally have a cellular structure,
which builds on the fundamental architecture of
preceding generations of mobile technologies.
However, not everyone sees the future of
mobile communications as a smooth progression
from one generation to the next. Indeed,
technologies are currently emerging that may
either complement or compete with 3G. As a
reflection of this fact, the European Commission
IST programmes used the term beyond 3G denote
the plethora of systems and standards that are
likely to interact with 3G.
One of the technologies attracting particular
attention in this context is the wireless local area
network (WLAN). Wireless LANs are short-range
networks that can either be used alone or in
conjunction with a traditional wired LAN. Current
standards for wireless LANs include IEEE 802.11b
(popularly known as WiFi), which is suitable for
wireless networks covering a building or group of
buildings, such as a hotel, airport, office building
or university campus. Conceivably, in the future
WLANs may interoperate with other wireless
technologies as part of an overall system providing
both longer- and shorter-range communications.
For the purposes of this report, the WLANbased networks form part of the concurrent 4G
1 A Technology roadmap
for 4G
scenario. Though WLAN is considered a necessary
component of the concurrent 4G scenario, in
this scenario 4G networks could include other
network technologies as well.
Given the fluidity and imprecise nature of
the 4G concept in the industry and policy forums
(in contrast with the relatively stable consensus
achieved around 3G in its formative stages in
See Chapter 2 for an in-depth discussion of the various technologies in question, starting with 1G.
19
the late 1990s) it would perhaps be useful to
develop a less ambiguous terminology. However,
for the purposes of this report, the findings
will be discussed in terms of the linear vs. the
concurrent 4G scenarios, as the lowest common
denominators rather than the best use of the term
‘4G’.
This chapter aims to examine how future
mobile communications systems may evolve,
taking into account both the present 4G and WiFi developments, and the long-term outlook for
4G (2010 and beyond). A number of policy and
regulatory issues will also be briefly discussed.
1.1 Overall assessment of wireless
network technologies
There is a vast range of wireless technologies,
networks and terminals available today. It is,
however, beyond the scope of this report to
evaluate all of them in depth. An initial broad
classification of network technologies can be
obtained by defining them in terms of their
range:
•
Global area systems (e.g. satellite).
•
Wide-area (high-mobility) (e.g. 2G, 3G,
Mobitex, TETRA).
•
Local area (low-mobility) systems (such as
the DECT standard for cordless phones, and
the WLAN technologies mentioned above).
•
Very local area (low-mobility) (e.g. infrared ,
Bluetooth, UWB, free-space optical).
The list above does not include digital
broadcasting technologies (such as digital
audio broadcasting, DAB, and digital video
broadcasting, DVB) or wireless local loop (WLL)
solutions (i.e. using a wireless link to connect
fixed line subscribers to local exchanges), which
lie outside the scope of the report (although
the use of 3G to provide WLL access has been
suggested).
One way to compare existing technologies
is by means of using diagrams. Figure 1, already
Figure 1: Trade-offs between mobility and data rates in mobile communications
Bit-rate
100M
UWB
Difficult area due to laws of nature 4G?
10M
WLAN/HIPERLAN2
1M
3G
Bluetooth
Broadcast
(Downlink only)
2G
100K
10K
Satellite
20
Fixed
Local
Source: Adapted from Ericsson (2001), Fukada et. al (2002)
Wide Area
Coverage/Mobility
A number of observations should be made
about the figure shown above:
-
First, the graph clearly shows a typical
engineering
trade-off
between
two
negatively correlated technical performance
parameters. The parameters in Figure 1
concern (1) a measure of the degree of
mobility offered by the technology and (2) its
communications quality in terms of the bit
rate. It should be noted that some ten years
ago, capacity was believed to be the main
performance limitation in mobile telephony.
Rapid technological development and new
spectrum have since made the capacity
parameter less important, but in the late
1980s and 1990s it was believed to be a key
issue for 3G systems.
-
Second, the performance of all the systems
shown is greatly exaggerated.
-
Third, no single system is able to meet
the needs of all applications. This opens
up possibilities for different multi-mode
solutions (possibly using software defined
radio, SDR, for instance) or inter-working
between systems.
-
Fourth, the upper left-hand corner, “the lowmobility high-data rate” niche, is essentially
empty, and is not addressed by existing
technologies such as Bluetooth and Infrared.
Provided there is need for such solutions, this
could be a niche worth occupying. One of
the technologies which could potentially fill
this niche is ultra-wide band (UWB), which
is able to transmit very high bit rates over
Table 1: Comparison between different technologies with respect to some features
Characteristics
3G
WLAN
Theoretical data rates of widely of recently
introduced technology (Mbps)
2.4 (downlink)
(1XEV-DO)
54 (802.11a)
Theoretical data rates of most commonly used
technology
144 kbps (CDMA2000)
11 Mbps (802.11b)
Typical data rate under normal conditions
70-80 kbps
500 Mbps (T1 connection)
100 Mbps (DSL)
5 Mbps (given unlimited backhaul
and no other users)
Predictability of data rate
High
Low
Typical Range – Stationary (1 cell or access point)
1.5-20 km (depending on user
density)
30-40 m
Coverage
Wide-area contiguous
Hot spots, offices, homes noncontiguous
Roaming
Yes
Not yet, under development
Cross system roaming
Planned
Not yet
Security –authentication
High
Medium – improving
Security encryption
High
Medium – improving
Potential for interference
Low
High
Spectrum
Licensed
Licence free
Device Power requirements
Low to medium
High
Devices most likely used
Handsets, PDAs, handhelds
PDAs, Laptops
Deployment
Hierarchical cell
Ad hoc cell
Mobility
High speed
Essentially stationary
Services
Voice and data
Primarily Non-voice
Source: Compiled by the authors from UMTS Forum, report No. 22, CDG (2003), Lehr and McKnight (2003)
a classic, compares different technologies with
respect to data rates and mobility/capacity. In
many reports 4G is placed in the “difficult-toachieve region”, suggesting that considerable
technical challenges may need to be overcome.
21
short distances, whilst using very low powers
and offering high immunity to inference.
As Da Silva (2000) has noted, the emphasis
on higher data rates, more capacity, etc. is
essentially a technology push approach, which
basically assumes that if operates increase their
bandwidth users will generate more traffic to fill
it. To date there has been little evidence that this
is the case. Instead, the focus needs to be shifted
onto the user. However, this approach runs into
the problem that, in Europe in particular, there is
almost no user experience of advanced mobile
data communications. European users of cellular
systems limit themselves almost exclusively to voice
and text-messaging, which makes very limited
demands in terms of data rates and latency. A look
at more developed mobile data markets may give
some idea of user experiences of advanced mobile
data communications, but cultural differences may
also need to be taken into account.
lightweight building materials, but they do not
transmit well through metal, concrete or solid
walls.4 As there are only three non-overlapping
channels to choose from, the leading WLAN
technology, 802.11, risks becoming congested
if many users require simultaneous access (IEEE
Spectrum 2003). Congestion might result if large
number of users start making use of bandwidthhungry applications such as web-cams (e.g. shop
owners who “video-cam the front of their shop”
to keep an eye on their premises in Noam’s (2003)
example).5 In addition, as it uses unlicensed
bandwidth WLAN can be affected by interference
from other uses of these unlicensed bands, such
as Bluetooth, cordless phones, and (in some
countries) microwaves. As a result, the data rates
and quality of service for WLAN are often much
lower than stated, often in the range of 100 kbps
and connections can be unreliable.6
Coverage
1.2 Assessment of WLAN versus 3G
Over short ranges wireless LANs offer high
bit rates at low cost, although security and privacy
are serious concerns. Table 1 compares some of
the features of current WLAN technologies with
those of third generation mobile communications
technologies.
Data rates and quality
The data rate and other quality aspects of
WLAN connections vary and are affected by
several factors including the number of active users
connected to an access point, the distance the
device is from the access point, any obstructions
that are blocking the signal, the model of WLAN
card and software used, the speed at which the
device is moving, and the speed of the fixed line
connecting the access point. Generally, signals
transmit reasonably well through glass and
A single access point, or “hot-spot”, can
cover a radius of about 50 metres under normal
circumstances, while a normal 3G cell has a
radius of several kilometres.7
Security and privacy
Lack of security and privacy is a frequently
cited drawback of the current WLAN technology.
Current products use the WEP standard, which
is susceptible to hacking and eavesdropping.
The issue has been addressed through the Wi-Fi
Protected Access standard (WPA), completed in
the summer of 2003, and by 802.11i, which is
being standardised.
Telephony
Finally, while much of the discussion
of existing and future technologies concerns
22
4
5
6
7
See http://www.verizon.net/Wi-Fi/faqs/
Reportedly, it has become possible to buy a “hot spot in a box” for as little as € 200.
According to CDG (2003).
See e.g. CDG (2003)
For some market segments, particularly in
less developed countries, the Internet is used
for cheap Voice over IP communications (VoIP),
which effectively allows low-quality telephony
over the Internet. VoIP is also used for gaming
applications (e.g. with the Microsoft SideWinder
Game Voice). Voice over IP may, under certain
circumstances, become a successful option over
WLAN (Hirt, 2003). Cisco’s recent announcement
of a wireless IP mobile phone for Wi-Fi, (the 7920)
intended to be used, for example, on campuses
is particularly significant. It is said to weigh 136
grams and allow up to 4.25 hours of talk time, and
up to 30 hours standby (Cisco 2003). While 30
hours is not much compared to cellular phones,
it is a significant achievement, given that WLANs
are relatively power-hungry. The Netlink e340 of
competitor Spectralink weighs 119 grams, and
provides 4 hours talk time and 80 hours standby.
Such phones may lead to very cheap mobile
communications– in which case reloading every
night might not be a serious hindrance.
In June 2003, Motorola announced a dual
Wi-Fi/cellular system phone to be developed in
co-operation with NEC. A trial with a corporate
customer has been announced. The phone will
probably contain several radio frequency (RF)
components and antennas and therefore be
expensive.
On balance, 3G technologies are clearly
technically superior to WLANs. This fact has led
many analysts (CDG, UMTS Forum etc) to conclude
that these services are not in competition with
each other; but are somehow “complementary”.
Although may be true in the everyday sense of the
word, they cannot readily be understood as being
complementary goods in the way economists
understand the term (i.e. products that are used
together and so displaying what label “negative
and non-negligible cross elasticity of demand”).
Unless there is a lot of traffic between the two
(WLAN and 3G), the relationship is likely to be
pre-dominantly neutral or substitutive. In the case
where a 3G user switches to WLAN when in a
hot spot area, the relationship between 3G and
WLAN is anything but complementary. If the bulk
of communication actually takes places within
these hot-spots, operators’ revenues from 3G may
be eroded. Hence mobile operators’ concern
about competition from WLANs.
1.3 Core Issues
There are several issues that will have
an important impact on the future of mobile
communication, and policy measures could
modify the influence of these issues.
1.3.1 Spectrum policy
Spectrum is a limited resource, efficient use
of which should be made so as to maximise the
benefit to all. As a kind of common good, overall
control of spectrum generally lies with national
governments. These reserve bands for military and
other uses, allow free, unlicensed use of certain
bands, and have allocated or sold other bands
to telecommunications operators, and television
and radio broadcasters. Some commentators have
suggested more complex schemes for allocating
spectrum. For instance, Eli Noam suggests that
usage rather than bandwidth should be paid for
and Scott Woolley argues that “one way to free
up more spectrum is to dispense with the notion
that licenses must grant exclusive rights at every
minute of the day. Piggybacking on someone
else’s spectrum when it is idle for a minute or an
hour could vastly increase the supply of airwaves
and send prices plummeting”. Without going into
the pros and cons of these alternative approaches,
in order to make spectrum usage more efficient, it
is important to analyse how spectrum is actually
used and to address a number of issues. The types
of questions that deserve further consideration
include the following:
•
The European Commission has highlighted
that although spectrum is a public,
data communications capabilities, the major
communications service still is –and will be for
the foreseeable future– voice. Any system that can
offer cheap high-quality voice communication is
likely to have a competitive advantage.
23
common good, spectrum frequencies have,
nevertheless, been sold at auction. This has
burdened telecommunications operators
with debt. Are there concepts and economic
(and welfare) models able to reconcile these
two conflicting principles, paying for rights
and free use for all?
•
Will approaches to spectrum trading, as
anticipated in Germany (Computer&Recht
2003) and France, be established in a
harmonised way? Will such spectrum trading
be limited to license holders, and to what
degree can or should this make competition
with UMTS possible?
•
Which bands could possibly be made
available for new spectrum management
approaches Europe-wide (Military? TV?)?
•
In which frequencies could UMTS-like
services possibly be deployed outside the
allocated spectrum (Satellite? WLL? 450
MHz [Ewers 2003])?
•
To what degree could longer wave
frequencies be used for UMTS-like services,
for easing local conflicts regarding base
station deployment?
•
Is it economic for Europe as a whole,
and particularly from the perspective of
telecommunication service users, to refrain
from discussing 4G activities (Ewers 2003, p.
20f) or from implementing concrete steps for
research and deployment?
•
UWB and SDR may require regulation on
interference issues.
1.3.2 Quality of Service
24
Voice transmission is a lucrative business for
telecommunications operators and they are likely
to perceive any alternative means of transmitting
voice cheaply over wireless technologies as a
threat to their business. Licence holders therefore
have a strong interest in seeking to ensure
insufficient spectrum is available to allow the low
latency transmissions required for speech. Apart
from bandwidth, latency, measured as the time
taken for a packet of data get from one point to
another across a network, is a key indicator of
quality of service (QoS) in telecommunications as
low latency times are essential for smooth voice
and real-time video transmission. QoS issues are
addressed in the Intenet protocol (IPv6), which
offers a partial solution (e.g. by allowing different
classes of QoS to be specified in the packet
header). However, the future deployment of IPv6
is still uncertain, and will not in principle solve
the issue of congestion, rather it will only provide
the opportunity for differentiation. Researchers
have identified QoS in IP-based networks as an
issue for research (Gosse et al. 2003).
1.3.3 Power Supplies
For 4G to become a reality, user terminals
will need to be able to store enough power to
provide more advanced services for useful lengths
of time. There are two different paths that could
be taken to extending the operating autonomy of
mobile devices. The first is to continue to make
incremental improvements to existing battery
technologies (see Figure 2); the other is to make a
quantum leap by using fuel cells.
Battery technology progresses slowly
compared to electronics. Higher data rates, higher
performance displays, etc. are likely to lead to a
situation where the gap between performance
requirements and battery capabilities widens. A
radical leap forward in power supply technology
(or new low-power circuitry) would then be
needed. Research issues that need to be resolved
in order to make fuel cells suitable for use in
mobile devices include valves that close hydrogen
cells easily, and a general design which is secure
enough to be used onboard aircraft (Oertel,
Fleischer 2001).
1.3.4 Software-defined radio
Software-defined radio (SDR) refers to a
wireless communication technology in which
the transmitter modulation is controlled by
a computer. Building more intelligence into
transceivers in this way means they are able to
400
Lithium Polymer
350
300
Energy
Density
(Wh/kg):
Lithium Ion
250
?
Nickel-Metal Hydride
200
150
100
Nickel-Cadmium
Lead Acid
50
0
1975
1980
1985
1990
1995
2000
2005
Time:
Source: http://www.benerridge.freeserve.co.uk/batteryt.htm8
switch frequencies as required to reduce cost
or avoid congestion (Beach et al. 2002; Ewers,
2003). Software-defined base stations are already
beginning to appear on the market (Kolodzy,
2003) and multi-band handsets are now on the
market. Research is also underway to develop the
most efficient broadband antennas, wideband
amplifiers, and adaptive filters. Other issues
include the ability to download code quality
securely during automatic upgrades.
The development of software-defined
radio could have important consequences.
Car manufacturers, in particular, are interested
integrating mobile communications into vehicles.
This could be significant as a number of other
uses of mobile data communications started as
in car applications (even though some of these
applications have not had the anticipated massmarket appeal). Progress is rapid, however:
Bender (2003), for instance, reported that the car
industry has plans to implement software-defined
radio by 2005 (see Figure 3). There appear to be
plans for both short range radar at frequencies
above 20 GHz, and for WLAN communications
between cars. Here, a superficial analysis suggests
8
that Europe is lagging behind both the US and
Japan.
1.3.5 Ad hoc Networking
Unlike traditional mobile network topologies,
where mobile devices connect to some form of
fixed base station, ad hoc networks are formed
on the fly from whatever devices are available. As
the number of network-enabled devices grows,
ad hoc networks become increasingly feasible
as a means of increasing overall bandwidth
or filling in gaps in other networks. Clearly it
is virtually impossible to guarantee QoS with
ad hoc networks, particularly if the nodes are
mobile and/or battery-powered. Yet, if nodes are
distributed within systems such as cars or PCs,
ad hoc networks could contribute substantially
to achieving coverage. When coverage is
unavailable, systems could switch to more
expensive networks.
For example, Intel intends to enable ad hoc
networks “that self-assemble and reconfigure
automatically” (Intel 2003a, cf. Kahn, Culler
2002). For example, it has implemented a
Note that this graph is probably not the best one available. It is included here to illustrate the relatively slow rate of
development.
Figure 2: Battery development over time
25
Figure 3: BMW envisages that every car will transmit
information that is of use to drivers.
Another important topic is security. It
nevertheless seems likely that issues such as
confidentiality and authentication can be solved
satisfactorily if there is the will on the part of the
market participants, given that these issues have
in practice, been solved in many systems already
(e.g. SSL in NTT DoCoMo phones).
Source: Spiegel Online 2003.
prototype of a network in a vineyard, where each
plant has a node, forming a network that selfassembles and reconfigures automatically (Intel
2003a). As Krco et al. (2003) indicate, research is
needed on a number of issues in order to develop
ad hoc networks further:
•
Mechanisms
formation.
for
automatic
network
•
The air interface (i.e. the radio frequency
portion of the circuit).
•
Authentication.
•
Mechanisms to prevent selfish behaviour by
nodes.
•
Mechanisms to prevent the risk of denial of
service attacks (e.g. – an attacker could keep
a lot of nodes busy by broadcasting nonsense
until their batteries ran down).
1.3.6 Other issues
One possible new direction in terminal
technology is the so-called “open phone”. An
“open phone” is one which can be modified by
the user much like a PC in terms of both hardware
(e.g. adding antennas or memory) and software
(using the operator of your choice, adding games
etc.), could drive down phone prices and increase
competition.
26
terminal capabilities in general (input/output
devices, processing power, etc), development
of the IPv6 protocol, personal integrity/intrusive
systems, and health hazards.
A number of other issues are mentioned in the
literature (e.g. Gosse et al. 2003, Falconer et al.
2003) - for instance, network architectures, high
capacity air interfaces, IPR-protection schemes,
1.4 Roadmaps and plans
Although there is a variety of different views
about how 4G is likely to develop, a number of
trends can be distinguished as predominating in
different regions. In simple terms (Pereira 2002),
these are:
1)
A
European
vision
emphasising
a
heterogeneous mixture of private and public
systems with a number of standards, some of
which offer very high data rates.
2)
A US vision promoting private, unlicensed
systems with high data rates (such as the IEEE
802.11x series of WLAN standards).
3)
An Asian vision promoting a very high rate
public system standard, on a global scale.
Roadmaps describing these alternative
scenarios in more detail are included in Annex
1. The conclusions that may be drawn from these
contrasting visions of the development of 4G and
their policy implications for are:
Europe
The European roadmaps that have been
examined, while differing in approach and
purpose, all recognise that the future of mobile
communications will be characterised by the coexistence of a multitude of wireless technologies.
There is an emphasis on taking advantage of
existing and emerging technologies to provide
what is, from an end-user perspective, a seamlessly
integrated communications environment. DG
The objectives and foci of the EC’s IST
projects concerned with the future of mobile
communications (see Annex 1), including both
FP5 projects that have been carried out and major
FP6 projects that are just starting, indicate a clear
tendency towards the development of a future
mobile system where a multitude of technologies,
complementing each other in terms of coverage,
bit rate and other characteristics, work together
in a seamless system to optimise usability for the
end user. To achieve this, and move closer to the
vision of ambient intelligence based on software
defined radio, significant resources will have
to be devoted to integration. The advantage of
integration is the elimination of tradeoffs between
various systems. In addition, the IST projects
point to several specific issues - such as quality
of service, security, power management and
multi-modal dialogue capabilities - that must be
resolved if the promised end-user experience is to
be realised. At the same time, it cannot be taken
for granted that users will embrace the vision of
ubiquitous mobile communications services and
devices presented in the IST programme.
A shift to a user-centred perspective is a
second common feature of European 4G visions.
These visions emphasise to varying degrees the
concept of smart and personalised services based
on a complex, context-aware network. However,
there are considerable dilemmas concerning
the hidden complexity and responsibility issues
associated with advanced personalised services
as defined in, for instance, the WWRF’s “Book of
Visions”.9
Although a European consensus seems to
exist on the inevitability of a future diversity of
wireless technologies, and on the development
of services driven by user needs as opposed to
9
Wireless World Research Forum
technology push, the visions express uncertainty
as to the industry structure that will deliver 4G
services in the 2010-15 timeframe. The emergence
of new players from below and the possibility
of a fragmented industry, coupled with the
convergence of tele- and data- communications,
suggests that the industry is at a crossroads.
USA
The lack of publicly formulated visions for the
US mobile communications industry is certainly
not a sign that developments there will have no
effect on the future European wireless system.
So far the rapid adoption of Wi-Fi, which is
already leading to congestion in some areas, has
triggered the design of a stream of new wireless
technologies. New approaches are improving
the 802.11 series of protocols (which includes
the 802.11b WiFi wireless LAN protocol) and
products, while new proprietary technologies are
also being deployed over unlicensed spectrum.
New standards are also being developed for use
on both unlicensed and licensed spectrum with
a view to providing the quality of service needed
for voice communications.
In addition, the push by some US actors
to make further free spectrum available, and
the increasing flexibility of the FCC in the field
of spectrum regulation, has important policy
implications for the rest of the world. The future
existence of more unlicensed frequency could
speed up developments leading towards a more
fragmented industry structure with a rapid entry
of new service providers.
INFSO’s vision, in particular, embodied by a
range of ongoing research projects within the
IST programme, is that of a seamlessly integrated
network of networks, with software defined radio
as an enabling technology.
Asia
In Asia, countries that have historically been
relatively passive in the standards-setting process
are showing a desire to reduce their dependence
on others and take the lead in 4G through
ambitious, long-range plans. In contrast to an
27
increasing realisation in Europe that the future
mobile wireless system will be characterised by
diversity, and to the US preference for private
and unlicensed alternatives, these countries are
aiming to achieve the early introduction of public
standards for 4G systems.
Clearly, the Japanese market is far more
advanced than that in Europe in terms of the
extent of use of cellular mobile data services
and terminals. Therefore, it provides one of the
few learning experiences that can be fed back
into the design future mobile communication
systems. Perhaps the most interesting observation
from Japan is that the Japanese have managed
the transition to 3G better than European players.
They have carefully and successfully developed
the 2.5G mobile Internet market, thus cultivating
the whole innovation system (in terms of usage,
operating networks, terminal supply, content
development, etc.). This cultivation has not only
prepared the Japanese market for 3G services, it
has given them first-mover advantages that they
can leverage on the international market. Thus,
it is expected that market shares of Japanese
handset manufacturers (which generally offer
more advanced functionality than European
models) and other actors will increase when the
transition to 3G (and mobile Internet) takes place
elsewhere. Clearly, European actors need to take
steps to catch up.
It may also appear that competition between
different technologies (in the case of 3G,
CDMA2000 versus WCDMA) helps bring down
prices. The obvious policy conclusion, therefore,
would be to shape market conditions so as to
encourage competition between standards. On
the other hand, experiences from 1G (AMPS
versus European standards) and 2G (GSM versus
American and Japanese standards) point to the
opposite conclusion. Too much competition
between technologies/standards limits the
possibilities of economies of scale.
28
The Japanese experience shows that the
development of mobile phones with peer-to-
peer (P2P) video and still picture functions is an
important factor in generating interest and traffic
on 2.5 and 3G networks. This is likely to be the
case in Europe as well, and will drive demand for
capacity and data rates in 3G networks.
Korea and Japan are the current joint
leaders in mobile communications, taking
a proactive approach to the introduction of
4G. In Japan, a cross-industry initiative for 4G
has emerged, and the leading operator NTT
DoCoMo has advanced plans for a low-cost, 4G
network. Similarly, Korea has set itself the goal
of a fully commercialised 4G network by 2010,
with Samsung proclaiming itself the leader in
4G and participating in several international
initiatives in the area. In addition to the concrete
plans for a commercial introduction of 4G in
both countries, the Korean experience of WLAN
is highly relevant for European visions of 4G,
especially if the concurrent 4G scenario is
embraced.
China is aggressively pursuing a leading
role in 4G. In order to achieve this, the country
has started developing its own technological
standards such as TD-SCDMA. It has also
launched a number of government-sponsored
research projects on 4G, and may be about to
take the lead in WLAN from Korea. Furthermore,
a crucial step for China is the stipulation of fiftyfifty ownership of joint ventures between Chinese
and foreign companies. This policy has allowed
Chinese companies to get their hands on both
knowledge and capital. China’s large population,
willingness to adopt new technologies and rapid
economic growth means that 4G development
here should be followed closely. If China succeeds
in developing 4G systems, it can be anticipated
that these will be offered at very competitive
prices. India may also attempt to leap-frog 3G to a
certain degree in order to take the initiative for 4G
systems. India’s size and unique ICT competence
give it potential, but the passivity of its government
has put telecommunications on hold. Despite
its proposed road map for taking the lead in 4G,
India is not as serious a contender as China.
The review of IST research activities in Europe
indicates that 3G is emerging as a strong base for
mobile communications in the coming years. 3G
has just been launched in Europe and is still far
from being a commercial success, but European
research efforts are clearly building on 3G as a
backbone infrastructure around which a multitude
of applications will co-exist and evolve together.
Although there is major uncertainty regarding
future generations of wireless communications,
and the fact that planning for 4G has proceeded
further in other regions, the centrality of 3G
in current European research activities reflects
an ambition to consolidate efforts around this
generation of mobile communications in the
coming years, incorporating other emerging
standards and technologies to the greatest extent
possible. Three main lessons can be drawn for
Europe:
1.
the i-mode business model has only been
partially copied, high data fees hinder
development: New services in Europe, such
as Vodafone live and T-Zones, are copying the
Japanese model of operator control to a large
degree. However, packet-oriented pricing
such as short or multimedia messaging
services (SMS and MMS) are not widespread
in Europe. It appears that the operators are
aiming to keep data services prices relatively
high. This may be a key cause of the lower use
of mobile data in Europe. It should be noted
that Asian handsets are gaining a larger role.
2.
Europe may become an island of high
mobile tariffs: Currently, 2G prices are high
enough for the operators to pay for the high
3G auctioning prices with these revenues.
Competitors, as well as European companies
from other industries, may create pressure
for lower tariffs. An island of high prices will
not be sustainable in a globalised economy
characterised by high pressure on prices.
Pressure is already building up. The German
company Airdata10 has discovered ways to
use WLL-frequencies of 2.6 GHz for data
transfer. Parts of the German industry appear
to be interested in using UMTS-like services
in the 450 MHz-Band. Car manufacturers
are considering the use of WLANs for
communication from car to car. Airlines are
starting to provide broadband services, and
DSL-providers are offering flat fee telephony.
With so many options available, the pressure
on mobile operators can only increase and
lead to cheaper mobile communications.
3.
Europe could be a late starter in 4G.
However, an evolutionary and organic
approach may make economic sense for
Europe due to path dependencies (e.g. an
installed base in UMTS).
1.5 Conclusions
29
10
See http://www.airdata.ag; cf. Just, Mattke 2003.
30
Some of the main uncertainties for 4G in
socio-economic terms are what its potential
will be in Europe, which stakeholders may be
expected to play a dominant role, and what the
timeframe of 4G developments might be. The aim
of this chapter is to address these uncertainties
by outlining and assessing the potential business
models for 4G in Europe, in the framework of
both the ‘immediate’ and the ‘linear’ 4G vision.
In this paper, a business model is defined
(adapted from Hawkins, 2002) as:
a description of how a set of companies
intend to create and capture value with a
product or service by linking new technological
environments to business strategies. A business
model deals with four dimensions of new
business design, i.e. the functional dimension, the
organisational dimension, the value proposition
dimension and the financial dimension, and with
the interdependencies between them.
Figure 4 illustrates the conceptual framework
of business modelling used in this chapter. This
framework will be used to make the research
question behind this chapter operational.
The functional dimension deals with the
technical architecture and functionality of new
systems and services. Some of the technological
factors shaping 4G business models were outlined
in the previous chapter. Key questions relating
to this dimension include whether the technical
architecture is open or closed and whether the
intelligence in the architecture is centrally located
or distributed.
The organisational dimension refers to the
way in which the value network producing the
new system or service is structured. It deals
with the different business roles within the
value network, the relationships between these
roles and the types of actors executing them.
Key questions defining the eventual business
2 Business models:
The European actor
space in 4G
Figure 4: Business models: conceptual framework
VALUE
NETWORK
Designs / Uses
Roles & relationships
ACTORS
Offers
FUNCTIONAL
ARCHITECTURE
Technical Architecture
Functionality
Supports
Shares costs and
revenues
FINANCIAL
MODE
Revenue sharing model
NPV calculation
Generates
costs
VALUE PROPOSITION
Service portfolio
Market segments
Formalises
31
2. Business models: The European actor space in 4G
model are whether or not the activities carried
out within the value network are protected by
actors also carrying out other activities, and
whether or not one actor has a structurally
dominant position within the network.
proposition dimensions, the service portfolio, the
business roles involved and the resulting business
models, are analysed. The potential influence of
WLAN on 2.5G and 3G, and how this relates to
The value proposition dimension deals with
the way in which actual value is created in the
market. Elements defining the value proposition
are, among others, the service portfolio and
the market segment which is addressed. Key
questions for business models are what market
segmentation and pricing strategies should
be chosen; and to what extent value is codetermined by the user.
The most striking difference between the
2.5G/3G value network and the traditional
mobile value chain is highlighted. The latter is
characterised by linear sequential dependencies,
while the former is organised in the form of
parallel, but interlinked, tracks of different chains
and systems. Network transport, applications
operation, content provisioning, payment
processing, and providing device solutions can
be identified as the five major value chains,
along with network equipment provisioning and
middleware/platform provisioning as enabling
value chains. The traditional constellation, where
the mobile network operator plays a central gate
keeping role, still appears to be valid for new
services over 2.5/3G systems, although a number
of profound underlying changes are emerging.
The financial dimension can be seen as
the formalisation of the dimensions mentioned
above. The main elements in this dimension are
the division of investments and profits between
the actors in the value network, and an estimation
of the profitability of the service. This dimension
is addressed in the following chapter.
In addition, there are also external factors to
consider when designing or assessing a business
model, the most important one being government
policy and regulation. However, such factors will
only be marginally addressed in this chapter.
In terms of the conceptual framework, this
chapter will deal mainly with the organisational
dimension and the value proposition dimension
of potential business models underlying 4G
systems and services in Europe. This chapter
concentrates on European telecom operators
and manufacturers; other stakeholders and
regions are only reviewed when necessary from a
comparative viewpoint.
2.1 Short-term visions
32
A short-term view is presented in Annex
2 where an overview of current and emerging
business models for mobile and wireless services
is described. The organisational and value
11
See Annex 2 for further information on these three models
the ‘immediate’ 4G vision, is outlined.
As regards business models, current
typologies point to the dilemma of the walled
garden vs. open models. In the Annex, it is
argued that this typology tends to neglect peerto-peer services and the decisive role of handset
vendors and platform providers. Therefore,
another typology adapted from Tee (2003) is
adopted, which distinguishes between three
typical approaches to new mobile services
and the network surrounding them. These
are service-centric models (driven by mobile
operators), protocol-centric models (driven by
mobile phone manufacturers), and platformcentric models (driven by platform providers
such as Microsoft and the Symbian group)11. The
competition between these models is still open
and will probably not be settled in the short
term, but the protocol-centric, and to a lesser
extent the service centric model, are expected
to remain the most important on the European
market for the time being.
•
Private model: WLANs will substitute shortrange wireless technologies to be used at
home or in companies.
•
Hotspot model: WLANs are positioned
as complementary to fixed networks, and
perhaps as substitutes for mobile networks.
This model can be operated as a network
of commercial hotspots or for free by public
authorities or hospitality providers.
•
Integrated WLAN-cellular model. This model
may be seen as a potential evolution of the
WLAN hotspot model. In this case, WLAN is
positioned as a complement to 2.5G/3G, and
potentially as a substitute for 3G access points,
as WLAN may make it unnecessary to upgrade
from 2.5G to 3G, at least in some locations.
Mobile operators will drive this model. The
first signs of integrating WLAN into cellular
networks can already be seen today.
The main obstacles to a viable business model
for public-access WLANs are: flawed security, the
fact that hotspot operators are entirely reliant on
the incumbent network operators for the backbone
network, limited coverage, high demands on
battery power, the different ownership of hotspots
and the potential congestion of WLAN access
points.
Table 2 below summarises the potential
value propositions, value network configurations
and associated business models for both 3G
and WLAN. The potential value propositions
relate to how services are positioned, i.e. in
terms of complementarity or substitutability.
The potential value network configurations and
associated business models depend on who has
the dominant role within the value network, what
the main services offerings are, and what network
architecture is used.
Table 2: Summary of potential 3G and WLAN business models
Value proposition
Value Networks / Business Models
3G
3G may be positioned as a substitute
for 2.5G. This is most likely if a strong
uptake of mobile broadband services
(such as video services) is expected or
experienced.
3G may be positioned as complement
to 2.5G. This is most likely if uptake
of mobile broadband services is not
expected or perceived to be strong.
In the service-centric model, mobile operators gain control over
the value network. There is an emphasis on third party content.
Operators rely on operator-specific standards and platforms.
In the protocol-centric model, mobile phone manufacturers dominate
the value network. Messaging services are predominant, relying on
protocols defined by telecom vendors.
In the platform-centric model, platform providers, which may include
mainstream IT-vendors, control the value network. There is an
emphasis on mobile office services, supported by powerful operating
systems.
In the short term, the protocol-centric, and, to a lesser extent, the
service-centric models, will remain the most important models for
3G. These are driven by ‘traditional’ mobile (cellular) players. WLAN
may be a disruptive technology for these business models.
WLAN
WLAN may be positioned as
complementary to fixed networks,
in which case they might operate as
substitutes to mobile networks.
WLAN may also be positioned as
complementary to cellular networks
(2.5G or 3G). Where it complements
2.5G, WLAN may be a partial
substitute for 3G.
In the private WLAN model, WLAN is positioned as complementary
to ADSL, and as a substitute to short-range wireless technologies
such as Bluetooth. Hardware manufacturers and ADSL providers
(including fixed operators) drive this offering.
In the WLAN hotspot model, WLAN is positioned as complementary
to fixed networks, and perhaps as a substitute to mobile networks.
Free hotspots are limited in scope and numbers. Commercial
hotspots may be offered by fixed operators, mobile operators,
specialised WLAN operators or service providers, or even by
location owners themselves. Telecom operators play an increasingly
important part in these models.
The integrated WLAN-cellular model may be seen as a potential
evolution of the WLAN hotspot model. In this case, WLAN is
positioned as a complement to 2.5G/3G, and potentially a substitute
to 3G access points. Mobile operators will drive this model.
In general, three potential WLAN business
models can be distinguished in the short to
medium term:
33
2.2 4G Visions and strategies
This section examines the visions and
public statements on strategies of the main
European stakeholders relating to long-term 4G
developments.
The rest of the section will concentrate
on the long-term analysis, addressing telecom
operators, telecom vendors and IT companies, as
these have been identified previously as potential
drivers of future mobile business models. Data
was gathered from official statements, vision
documents and R&D white papers, individual
players, research forums, standards organisations
and interest bodies. Naturally, it is difficult or even
impossible to select truly representative visions, as
there are a multitude of players and organisations
involved. Also, it is problematic to distinguish
real strategies from vision documents. Therefore,
this analysis should be seen as indicative rather
than representative, and it is only meant to give
a general view of divergent visions and strategic
potential relating to long-term 4G developments.
2.2.1 4G-related organisations world-wide
On a world-wide level, the International
Telecommunications Union (ITU) has taken the
initiative to start working on a general 4G vision
and reference model. It has also put forward a
general timeframe for 4G, in the sense that it has
stated that it does not see a need for 4G as a new
wireless access technology until 2010. One of the
considerations for this is the need to ensure that
the operators and developers of 3G have enough
time to make a return on their investments in 3G
(Rosenbrock, 2003; Wallage, 2003).
34
Besides the ITU, a whole range of existing
and emerging, world-wide and regional, general
and sectoral, standardisation organisations and
research forums are dealing with 4G-related
topics. Table 3 provides a non-exhaustive
overview of these bodies, their focus areas as
well as their regional and sectoral scope.
The following review of vision documents
concentrates on organisations with a European
emphasis. Those identified above include ETSI,
Eurescom, UMTS Forum, WWRF and WSI.
However, as neither ETSI nor the UMTS Forum
has released major vision documents relating to
4G, the review is limited to Eurescom, WSI and
WWRF. Vision documents and statements of other
regional forums such as mITF have been analysed
for comparative reasons only.
2.2.2 Eurescom: The operators’ vision for 4G
As mentioned above, R&D expenditure by
European network operators is generally less
than that of their counterparts elsewhere in the
world. Most innovations with a lasting impact
are usually implemented by other actors in the
telecoms value network. Operators prefer to
invest in short-to-medium term research related
to network management, business and service
modelling, markets and users, etc. Nonetheless,
network operators participate in various research
organisations and other bodies with a longer
term horizon, most notably Eurescom. Eurescom
(European Institute for Research and Strategic
Studies in Telecommunications) was founded in
1991 by major European network operators and
service providers. Members include Deutsche
Telekom, France Telecom, British Telecom,
Telefónica, Telenor and Swisscom. Eurescom
provides research management services for
large-scale innovation trajectories in the
telecommunications industry. In 2001, Eurescom
published a study on the 4G research challenges
for operators. The results were examined in
more depth in a follow-up project outlining the
operators’ vision on systems and services beyond
3G (see Eskedal, 2003; Eurescom, 2003; Kellerer,
2002; Kellerer, 2003). The terminological shift
from 4G to “beyond 3G” may be regarded as
indicative of operators’ anxiousness to present this
future vision as in no way a disruptive alternative
to 3G, but rather as a natural and incremental
migration path.
Eurescom’s main vision of systems beyond
3G (B3G) consists of systems encompassing
heterogeneous access networks to provide the
Scope
3GPP
S
System services and features; Core
Network
World-wide, members of ETSI and other bodies can
contribute
3GPP2
F
IMT-2000
World-wide, membership-based
4G Forum
F
4G
World-wide, yearly meeting of 4G experts
4G Mobile
Forum
F
4G
World-wide, IEEE-related
4G VISION
F
4G
South Korea
Bluetooth SIG
S
Personal Area Networks (PAN)
World-wide, Bluetooth promoter members are Agere,
Ericsson, IBM, Intel, Microsoft, Motorola, Nokia, and
Toshiba
ETSI - BRAN
S
Radio Access Networks
Europe, members are telecom manufacturers, operators
and service providers
Eurescom
F
Open Service Architecture; PAN;
Market analysis; Mobile presence
Europe, members are telecom operators and service
providers
FuTURE
F
4G
China
IEEE
S
WLAN; PAN; Wireless Metropolitan
Area Networks
World-wide, US-emphasis, individual membership
IETF
S
Session control; Ipv6; Mobile IP;
Mobile ad hoc networks; Handover
World-wide, US-emphasis, membership
Ipv6 Forum
F
Ipv6
US and EU, members are internet-related manufacturers
as well as researchers
Ipv6 Task Force
F
Ipv6
US and EU
ITU-T, ITU-R
S
Core Network;Radio Access
Networks, Spectrum
World-wide, members of ITU are both state members
and private telecommunications related companies
Liberty Alliance
F
Identity solutions, single sign-on
mITF
F
4G
Japanese ICT industry
MWIF
F
Access independent mobile internet
OMG
F
Interoperable enterprise applications
and services, middleware
World-wide, US emphasis
UMTS Forum
F
3G promotion
World-wide, European emphasis, members are
operators, manufacturers and regulators
SDR Forum
F
Software Defined Radio
W3C
F
Middleware, Services
WAP Forum,
OMA
F
WAP
WSI
F
4G
World-wide, European and manufacturer emphasis
WWRF
F
4G
World-wide, open forum, with a European and
manufacturer emphasis
Table 3: Overview of 4G-related organisations.
S vs.
Name
Relevant areas of work
F*
Source: TNO-STB, based on Kellerer, 2003 among others.
* S = Standards organisation; F = Forum
highest availability of mobile connectivity. These
systems are not only expected to integrate several
network platforms, but will also encourage a
rich variety of services and applications on a
global scale. Envisaged services and applications
include those that use the mobile phone as
an authentication and security centre within a
user’s distributed device network, enabling open
wireless access to the fixed network, and creating
personalised value-added service packages.
Eurescom identified four main drivers of B3G
mobile systems:
35
•
•
Seamless Access: This concept extends
the concept of roaming to a wide range of
access technologies and access networks
with minimal input from the user. This entails
requirements such as universal authentication
(most operators see this as SIM-card related)
and network integration based on IP.
•
Quality of Service (QoS): In a heterogeneous
network environment, end-to-end QoS
becomes a major issue. The lack of robustness
(particularly
when
using
unlicensed
spectrum) and intrinsically limited capacity
(due to the finite radio spectrum) of the
access network is identified as one of the
biggest bottlenecks. It is noted that there is
a trade-off between quality and price which
has to be balanced and may vary between
users and contexts.
•
36
Personalisation: The increasing heterogeneity
of devices will drive demand for service
personalisation, i.e. seamless service usage
across
communication
environments
and applications that are adaptable to
individual users’ contexts. The requirements
on the architecture go beyond storage and
access of digital content via traditional
database systems, implying an extensive
personalisation
architecture
enabling
information exchange between system
components in all layers.
Intelligent Billing: For operators, billing is one
of the most crucial aspects determining their
relationship with the customer. The need for
more intelligence in billing systems will be
partly driven by the variety of access modes,
the increasing popularity of non-time based
services, more complex value chains and the
evolution towards an IP-based infrastructure.
It also implies that pre-paid to subscription
models need to be made profitable.
In terms of the business models supporting
B3G systems and services, the Eurescom studies
envisage building upon the operators’ existing
strength, i.e. the customer relationship in terms
of access provisioning, billing and branding.
Drivers such as personalisation and intelligent
billing should serve to strengthen the link
between operators and users, and to ensure
the orchestration role for operators in the B3G
value network.
According to the Eurescom reports, the most
important roles in the B3G value network will
be the access network provider, with wireless
access being predominant, and the service
provider, hiding the complexity of the networks.
Operators will be forced to compete on the basis
of the services they provide rather than their
geographical coverage and price. Operators
could take advantage of their trusted status to
act as intermediaries for payment of transport
and service provision and to offer personalised
service packages. An increasing involvement
in service provision also implies (renewed)
co-operation between operators and content
providers, for instance through partnership and
venture activities.
Despite their assets in terms of customer
relationship and access networks, existing
operators are expected to face tough competition
from numerous new service providers entering
the market, and from unlicensed wireless access
providers. Regulators insisting on network
operators opening their access networks to
competitors will also have an effect. As a result,
market players will be more cautious about
investing in expensive new infrastructures without
carefully investigating the market shift of services,
regulations, upcoming network technologies,
etc. For most types of investment, the return on
investment will have a shorter time scale. This
again supports the operators’ view of 4G as a
slow and incremental process.
The most pressing requirements on operators
identified by Eurescom include optimising resources
by using flexible network configuration and access
type selection, efficient and flexible QoS, singleauthentication charging and security handling ,
smooth service migration from existing systems to
B3G, and cheaper terminals and network equipment
based on global economies of scale.
•
Peer discovery: Schemes should work across
network boundaries, and service discovery
mechanisms should be put in place.
•
End-to-End Security and Privacy: Transactions
via mobile devices imply the provision of
universal, easy-to-use, secure and cheap
payment services across the system.
•
Co-operative networks and terminals: This
refers to a continuous service area ensuring
seamless use of heterogeneous networks and
terminals. An All-IP architecture could be the
common basis for cooperation.
•
Heterogeneous
ad
hoc
networking:
Additional ad hoc communication links such
as WLAN, but also ad hoc networks between
terminals themselves, are also part of the
2.2.3 Wireless Strategic Initiative and Wireless
World Research Forum12
As indicated by the labelling of 4G as a
“wireless world”, the 4G vision of both WWRF
and WSI (WWRF, 2001; Arbanowski, 2002;
Mössner, 2002) puts an emphasis on heterogeneity
of networks and new service paradigms, rather
than on increased bandwidth per se. It identifies
nine building blocks for future 4G systems:
WWRF/WSI 4G vision.
•
4G Radio Interfaces: This includes
mechanisms for spectrum sharing, new air
interfaces, and so on.
•
Smart Antennas and Base stations: This refers
to technological innovations such as high
altitude platforms and smart antennas.
•
Software Defined Radio: This refers to
reconfigurable, downloadable protocol
stacks of mobile stations, thus ensuring that
network architectures are future proof.
•
Augmented reality/Cyberworld: This refers
to new types of user interactions, such as
wearables,
deviceless
communication,
avatars and augmented reality.
•
Semantic Aware Services: 4G services should
be aware of users’ preferences, profiles,
history, context and, accordingly, be able to
anticipate in an intelligent fashion.
12
The Wireless Strategic Initiative (WSI: http://www.ist-wsi.org) was an R&D project sponsored by the European Commission under the
5th Framework Programme (IST). Its aim was to provide a focus for the conceptual work of future wireless systems and to open up
a range of advanced research prototypes and test beds from other research projects with a wireless component. WSI was originally
composed of the four major European telecom manufacturers Ericsson, Alcatel, Siemens and Nokia. They were later joined by four
European academic partners: Aachen University, the Fraunhofer Gesellschaft, the University of Oulu, and the University of Surrey.
The WSI-project ran from 2000 to 2003. It provided support to other R&D projects with a link to wireless communications in the
form of workshops, conferences, and a number of reports. Results published in these reports include a reference model for 4G
communications, system concepts for this reference model, and a timeline and roadmap for the path towards 4G.
In 2001, the WSI founded the Wireless World Research Forum (WWRF) as an open forum for discussion and research between
academics and industry researchers on 4G. Since then, the WWRF has taken on a large scale. It now has about 150 members,
mostly in Europe, but also in the US and Asia. It has also established formal links with the UMTS Forum and the Japanese mITF.
Since 2001, the WWRF has hosted four conferences annually. There were initially four working groups within the WWRF, dealing
with (1) the human perspective, (2) the service architecture, (3) new communication environments and heterogeneous networks
and (4) spectrum, new air interfaces and ad hoc networking. At the end of 2001, these working groups published the WWRF Book
of Visions, with the objective to set the agenda for 4G research in Europe and abroad. In 2002 and 2003, a number of leading
members of the WWRF, including the WSI-partners, created the Wireless World Initiative (WWI), which has initiated a series of
research proposals for the European 6th Framework programme. In the same period, the WWRF working groups have started to
produce a series of white papers, indicating a further implicit shift of the forum towards a pre-standardisation organisation.
It is striking that the operators’ vision,
as expressed in the Eurescom studies, hardly
mentions the need for higher data rates, or for
new access infrastructures. Rather, their long-term
4G (or B3G) vision is concerned with solutions
for coping with the variety of existing access
networks, and strengthening the ties between
the service provider, access network provider
and the user of mobile or wireless services by
service integration and personalisation. In terms
of timing, Eurescom sketches a migration path
adding functionality to 3G from 2005 onwards,
with a move to a B3G system after 2008/2010.
The WWRF Book of Visions (2001) outlines a
broad array of research topics connected to these
4G building blocks, including research on future
37
service and business models. As a reference for
this work, it introduces a multi-sphere model,
consisting of a number of concentric spheres
around the individual user. At the first level sits
the Personal Area Network (PAN), or even a
body area network (this is already feasible today,
but not yet well integrated within the overall
wireless and mobile systems). The second
level consists of the immediate or ambient
environment surrounding the individual, which
is expected to react to and interact with users in
an intelligent way on a much larger scale than
today. The third level consists of instant partners,
i.e. people or complex technological systems
such as cars in close proximity. It is envisaged
that easy and rich interaction, or simply the
relaying of information, will take place between
these instant partners. The fourth level consists
of radio access, referring to current as well as
new mobile communication infrastructures.
The fifth level refers to interconnectivity, i.e.
the ability to connect universally by wireless to
any other device, as in today’s mobile Internet
core networks. The sixth and final level is the
CyberWorld, the sphere most remote from our
immediate real world, i.e. self-created service
or gaming spheres with virtual presence and
semantic agents.
The most important features of this multisphere model are the integration of a multitude
of heterogeneous and until now separated
communication environments into a single system
concept, and the fact that it is centred upon the
individual (“I-centric” in the terminology of the
WWRF). This means that there is ample room
for ad hoc and peer-to-peer elements (following
the philosophy that all network nodes are equal
- there are no client or server nodes, and there is
no central element of control) within the WWRF’s
4G vision. In this view, open, distributed service
platforms need to be put into place to manage the
device and network heterogeneity.
38
This comprehensive, long-term vision,
including very innovative approaches to wireless
systems architectures contrasts with the more
short-term, network management oriented view
expressed by operator-driven organisations
such as Eurescom. Furthermore, other than
in the Eurescom reports, the predominance
of manufacturers and academics involved in
technical research within the WSI and the WWRF
has led to an emphasis on technical R&D issues,
mainly related to networks and radio interfaces,
rather than on service or business-related issues.
In terms of timing, the WWRF and WSI have
put forward a timeline and roadmap for 4G,
aiming at a first agreement on specifications
by 2004, followed by major R&D trajectories
running until approximately 2007, an integration
phase resulting in prototypes by 2009, followed
by enhancements and finally the commercial
introduction expected in 2011/2012.
2.2.4 Organisations based outside Europe
This section provides a succinct overview of
the 4G visions of a number of organisations based
outside Europe, i.e. those based in Asia or the US.
In the case of Asia, it briefly reviews the visions
and approaches of a number of national research
forums. In that of the US, it is harder to identify
potential 4G initiatives due to a lack of consensus
and cooperation between stakeholders. Instead,
vision documents or statements from selected
companies, and the IEEE, are reviewed. This
provides enough input to allow an analysis of
Europe’s position in relation to the rest of the
world.
As stated in Chapter 1, three Asian
countries are playing a proactive role vis-àvis 4G: Japan, South Korea, and China. Each of
these countries has its own 4G co-ordination
initiative, which in turn collaborates with the CJK
4G Project (Yabusaki, 2003). Another common
characteristic is the active involvement of the
national governments of these countries, which
are pushing this research forward in order to set
proprietary 4G standards early on.
In China, the FuTURE (Future Technologies
for Universal Radio Environment) project
was established in 2001 within the National
High Technology Research and Development
In South Korea, the 4G VISION Studies
Committee, founded in February, 2002, brings
together the efforts of 30 (mostly domestic)
experts with the aim of guiding the national 4G
R&D efforts. It emphasises Broadband Cellular
(100+ Mbps Access) next to ubiquitous access,
all-IP networks and reconfigurability as the
major building blocks for 4G (Han, 2002; TTA,
2003).
In Japan, the government established its ‘eJapan’ strategy in January 2001, with a view to
putting in place “the most advanced high-speed
wireless Internet-connection in which the wireless
access network will be efficiently connected with
the Internet (IPv6)”. A 2001 report on future mobile
communications systems, drafted by the ministry
in charge of telecommunications, estimated the
size of the markets to be created by 4G mobile
systems and the development of services at 42
trillion yen. The Japanese government’s “IT Policy
Guidelines 2003” have confirmed 4G mobile
communications as one of the nation’s most
important areas of strategic research. The ministry
in charge of telecommunications is co-funding the
development of key 4G technologies, scheduled
by 2005, aiming at commercial deployment in
around 2010. In a report entitled “Future Prospects
for New-Generation Mobile-Telecommunications
Systems”, it has outlined faster speed and
seamlessness as the major objectives of a new 4G
system (Fujisawa, 2002; Miyashita, 2002). The
Japanese telecommunications and IT industry,
for its part, established the Mobile IT Forum
(mITF) in June 2001, which published its own
4G vision document in 2003 (mITF, 2003). In
this document, ten application scenarios are
presented (among others, rich voice applications,
remote patient monitoring, real-time video, and
advanced mobile commerce applications), for
which user acceptance factors, business model
characteristics and technical requirements are
outlined. Finally, four major research domains
are listed: high-speed and large-capacity wireless
transmission technologies (e.g. frequency
refarming, multiplexing techniques), network
constructional technologies (e.g. radio access
networking techniques, ad hoc networks), highperformance and advanced function terminal
technologies (e.g. circuit and device technologies,
software defined radio), and mobile system
technologies (e.g. mobile multicast techniques,
security techniques).
The Asian 4G visions as reviewed here have
many points in common with the European
visions, but as a whole, they tend to be more
in line with the original ‘linear’ vision of 4G.
The 4G visions developed in China, Korea and
Japan focus more on a large increase in the data
rates of mobile systems, and on developing new
systems or system components, and less on
seamless use of existing systems, even though
this latter element tends to be included more and
more often as the visions are developed further.
Also, the government’s active role in driving the
domestic manufacturers to set early 4G standards
is a typical element in the Asian 4G ‘ideology’.
Programme. It focuses on wireless transmission
technology for B3G/4G, self-organising mobile
network technology, and technology in the
multi-antenna
wireless
telecommunication
environment. One of its aims is to establish core
patents relating to B3G/4G systems early on in
the development stage (You, 2003).
The US situation tells a completely different
story. Due to the US tradition of competing
standards, and the variety of potentially
interested companies and sectors, there is no
representative body expressing any “US vision”
on 4G. Considering statements of individual
US IT companies, US telecom operators and
standards organisations with a US emphasis,
three observations can be made:
•
Some US mobile operators, such as Nextel,
who are ‘trailing behind’ in the development
of 3G, are said to be considering 4G as a way
of ‘leapfrogging’ to next-generation mobile
networks. AT&T is also working on a socalled 4G solution, combining 2.5G EDGE
technology with advanced multiplexing
techniques (i.e. Orthogonal Frequency
Division Multiplexing or OFDM). On the
whole, however, there is no consensus view
39
on the future of 4G in the US telecoms
market, or on which standardisation
approach should be followed.
•
•
40
A number of US-based IT vendors, such as
IBM, Oracle, Sun and Microsoft, as well as a
number of start-ups, have explicitly identified
the mobile market as a strategic target
(Kewney, 2003). As middleware platforms
become increasingly important in a vision
of heterogeneous networks and devices,
converging standards mean that mainstream
IT-vendors can increasingly sell to operators,
without necessarily having to support a
multitude of telco-specific standards and
technologies. Also, operators may fear that a
further reliance upon vendor-owned device
platforms will further commoditise the role
of the network, and of the network operator.
The 4G visions of US IT companies, besides
pushing WLAN equipment sales, therefore
generally emphasise the need to overcome
problems associated with the increasing
heterogeneity of networks and devices
by implementing integrated middleware
platforms.
Some standards organisations, such as the
IEEE, have been active in the field of 4G. The
IEEE has published a number of special issues
on 4G and is involved in the 4G Mobile
Forum conferences. IEEE is working on its
own standards to accommodate ‘cellularlike’ mobility (i.e. the IEEE 802.20 standard,
which aims at providing data rates of up to
4Mbps, and mobile users supported at up
to 250 km/h). However, the IEEE’s structure
(a collection of individuals) generally
leads to slow decision making. Also, this
organisational structure makes it less suited
to actively promoting specific 4G concepts
or visions.
2.2.5 Individual players’ 4G strategies
This section reviews a number of individual
stakeholders’ current strategies in relation to 4G.
World-wide, the most concrete plans for 4G have
been announced by Asian mobile operators and
manufacturers. Japanese operator NTT DoCoMo
in particular has positioned itself as the world’s
leading operator in terms of 4G development,
in line with its successful piloting of the i-mode
service and its 3G FOMA service which has been
running since October 2001.
NTT DoCoMo has been working on 4G
since 1998. In December 2000, it started a joint
research effort with Hewlett-Packard aimed at
developing a multimedia architecture for 4G
wireless broadband networks called MOTOMedia.
In October 2002, NTT DoCoMo announced
that it had successfully conducted a 100 Mbpsdownlink and 20 Mbps-uplink transmission
experiment indoors, using a 4G mobile system.
In May 2003, NTT DoCoMo started a series of
outdoor experiments with this system, merging
orthogonal frequency division multiplexing
(OFDM), which is used by both WLAN
technologies such as 802.11b and by 3G
technologies. DoCoMo also announced that it
would open a 4G research and development
laboratory later this year in Beijing, China. It
will become DoCoMo’s second lab to focus on
such research, the first being the company’s main
research and development laboratory in Japan.
It has also been repeatedly stated that the
company is bringing forward its commercial
launch of a 4G system (delivering maximum data
speeds of 20 to 30 Mbps) to 2006 from the widely
targeted 2010 start date, with a view to setting the
de facto international standard. However, it is not
clear whether this is the official NTT DoCoMo
viewpoint.
In South Korea, there has also been talk
of introducing 4G well before 2010, as fixed
operators and mobile operators are competing
against each other for mobile and wireless
broadband users. WLAN technologies play
an important role in these strategies. Korean
manufacturer Samsung has set up 4G research
labs in Korea and the UK, as well as hosting
the Samsung 4G Forum and announcing the
In Europe, individual companies have been
far more reticent in announcing long-term 4G
plans. Mobile operators in particular have been
silent about 4G; no EU operator has publicly
announced any plans for 4G. As mentioned in
the previous chapter, most EU operators are in the
middle of rolling out 3G. A number of operators
are, in addition, building up an additional WLAN
offering and are slowly recognising the need to
integrate this with the current offering, mostly in
commercial rather than in technical terms.
European telecoms equipment vendors
have taken a more proactive approach to 4G, as
shown by their involvement in the WSI, WWRF
and WWI initiatives and subsequent research
activities. One of the aims of these activities
is to position EU vendors at the forefront of
mobile and wireless innovation. Besides these
efforts, a number of them have also announced
cooperation deals for joint 4G R&D with other
stakeholders, apparently recognising that 4G will
not be driven by the EU manufacturers and the EU
markets alone. In April 2003, Nokia and Samsung
established a cooperative tie aimed at developing
a 4G standard capable of using both the WCDMA
and CDMA2000 standards. Some observers have
interpreted this move as a sign that Nokia has
been forced to acknowledge the importance of
the CDMA standard, which is mostly used in
parts of Asia and the US. Ericsson, for its part, has
been conducting research into 4G since the late
1990’s, and has recently founded a 4G research
centre (May 2003) along with Microsoft and
Swedish operator Telia. Both short-term and longterm research related to 4G is being conducted
by EU vendors, but all have presented 4G as a
solution which will not be commercialised before
2010/2012.
2.3 Implications for Europe
Most long-term 4G visions include
heterogeneity of networks and interoperability,
or even integration, between WLAN and cellular
networks. This indicates that these ‘linear’ 4G
visions have started to converge with some of
the scenarios for the ‘immediate’ 4G vision (i.e.
Table 4: Scenarios for the ‘Linear’ 4G vision
development of powerful cell phones capable of
4G video downloads.
Long-term 4G Scenarios
EU-operators
Scenario EU (I): European mobile operators are still predominantly occupied with making 2.5G a
success, and with the planned roll-out of 3G. In the European operators’ scenario, there is no largescale integration between cellular networks and other networks before 2008/2010. 4G, or rather
Beyond 3G (or 3.5G) is mainly an architecture managing heterogeneity (i.e. fixed-mobile networks
together) and providing personalised services to the user.
EU-vendors
Scenario EU (II): European telecom vendors have set ambitious research goals regarding 4G. In their
scenario, 4G is characterised by large-scale heterogeneity of networks and devices, user centric
services, distribution of intelligence, etc. This scenario envisages pre-standardisation activities until
2005, standardisation activities from 2005 onwards, and commercialisation in 2011/2012.
Asia
The Asian 4G scenario focuses on a large increase of the data rates of mobile systems, and on developing
new systems or system components linking heterogeneous networks. The aim of companies and
governments involved is to set early proprietary 4G standards. The timeframe for commercialisation is
2010, although there have been talks of an even earlier launch, e.g. in the case of South Korea, where
the ‘linear’ and the ‘immediate’ vision overlap to a considerable extent.
US
The US scenario is one of heterogeneous networks, of competition between market-defined de facto
standards, and an emphasis on WLAN technologies. Main stakeholders are US telecom operators,
some of which consider WLAN technologies as a way of ‘leapfrogging’ to 4G, and IT companies
developing WLAN equipment and integrated middleware platforms.
41
Table 5: Four Scenarios for ‘Immediate’ 4G
Low Demand for Mobile Broadband
Services
High Demand for Mobile Broadband
Services
WLANs as substitute
for Cellular Networks
Scenario EU (A): In this scenario, there is low
demand for mobile and wireless broadband
services in general. WLAN is attractive
for private and limited public use. If 3G
is introduced at all, it is used for relieving
congestion in the 2G and 2.5G networks. In this
case, ‘immediate’ 4G remains a niche solution
for mostly private use.
Scenario EU (B): In this scenario, demand for
mobile broadband is high and 3G is a success
as a result. WLAN is either eclipsed or serves
as a niche solution in selected prime locations.
In this case, ‘immediate’ 4G is insignificant or
establishes itself as a niche market in prime
locations.
WLANs as
complementary to
Cellular Networks
Scenario EU (C): In this scenario, WLAN is
integrated into 2.5G networks. It satisfies the
demand for wireless data in selected locations.
UMTS roll-out is delayed or even put off. In this
case, ‘immediate’ 4G has severely diminished
the value of 3G.
Scenario EU (D): In this scenario, UMTS is
introduced successfully, but is unable to satisfy
all market demands in terms of bandwidth and
speed. Heterogeneous networks consisting
of UMTS combined with WLAN hotspots are
rapidly introduced. In this case, ‘immediate’ 4G
has almost instantaneously succeeded 3G in the
form of 3.5G.
the scenarios in which WLAN is regarded as
complementary to cellular networks). However,
‘linear’ long-term 4G visions of stakeholders in
different regions of the world are not the same.
They diverge as to the emphasis they place on
4G - as a new architecture connecting existing
networks, or as a completely new system, with
very high bandwidth and data speeds and so on.
This also means that there is as yet no
coherent long-term 4G vision. It may be argued
that at this point 4G consists merely of a set of
wish lists (McKay, 2002) for technologies left out
of 3G or for 3G promises that have not been met,
such as broadband-like data rates, Mobile Voice
over IP, always-best-connected capabilities,
Software Defined Radio, WLAN integration, etc.
Figure 5: Potential timelines for the ‘immediate’ 4G scenarios.
2003
2005
2008
WLAN
EU (A) 2.5G
3G
WLAN
EU (B) 2.5G
3G
WLAN
2.5G
EU (C) 3G
WLAN + 2.5G
WLAN
2.5G
EU (D) 3G
ASIA
42
US
WLAN
2.5G
3G
WLAN
2.5G
3G
WLAN + 3G
WLAN + 2.5G
WLAN + 2.5G
WLAN + 3G
WLAN + 3G
2010
2003
2005
2008
EU (I)
2.5 G
3G
EU (II)
2.5G
3G
ASIA
2.5G
US
2.5G
2010
In the summary of potential 3G and WLAN
business models, two value propositions were
outlined: firstly, where WLAN is positioned as
complementary to cellular networks, and secondly
where it is complementary to fixed networks
(substitutes to mobile operators). These value
propositions are complemented with the hypothesis
of high or low demand for mobile broadband
services leading to four potential scenarios for the
“4G now” scenario that will facilitate comparisons.
These scenarios are outlined in Table 5.
The question that inevitably arises is what the
implications of these scenarios are for Europe’s
relative position. The potential European scenarios
for both the ‘immediate’ 4G vision (i.e. scenarios
EU (A), EU (B), EU (C) and EU (D) ) and the ‘linear’
4G vision (i.e. scenarios EU (I) and EU (II) ) have
been plotted on a timeline and compared to the
long-term views and developments in Asia and
the US. This has resulted in Figures 5 and 6.
2015
3.5G
4G
3G
It is clear that the different ‘wish lists’ and the
associated timeframes are indicative of divergent
commercial interests. In general, 4 scenarios for
‘linear’ long-term 4G can be distinguished. These
are summarised in Table 4.
2012
4G
3G/3.5G?
Figure 5 shows estimated timelines for
the ‘immediate’ 4G scenarios. In line with the
arguments presented earlier, it indicates that
WLAN developments in the US, although still
quite uncertain, may lead to early integration
with mobile networks, or, alternatively, may
be dominated by strong WLAN deployment.
Similarly, the projected timeline for Asia (in this
case, for the forerunner South Korea) shows early
convergence (and competition) between WLAN
and mobile networks. The alternative timelines
for Europe all indicate that developments are
expected to take longer because of the slower
uptake of WLAN.
Figure 6 shows projected timelines for the
‘linear’ 4G scenarios. It indicates that Asia is
moving faster towards 3G, and probably this will
also mean that it will deploy new 4G systems
sooner. The EU telecom vendors’ scenario has a
similar timeline compared to the Asian one, but
with a time lag. The estimated timeline for the EU
operators’ scenario is of a more gradual conversion
to 3.5G. The potential US timeline shows a slow
launch of 3G systems, but includes the possibility
of US telecom operators ‘leapfrogging’ to 3.5G or
Figure 6: Potential timelines for the ‘linear’ 4G scenarios.
43
4G. To sum up, these projected timelines indicate
that Europe risks losing momentum vis-à-vis both
the ‘linear’ and the ‘immediate’ 4G visions and
developments.
Taking these time-paths into account, how
may the Europe’s position as regards 4G be
characterised in terms of strengths, weaknesses,
opportunities and threats (SWOT)? First of all,
it should be reiterated that 4G is not a uniform
concept. Rather it is something of a ‘technology
wish list’ and a term used (or not used) for
strategic reasons. Given this heterogeneity,
different 4G trajectories can clearly be
imagined. This chapter has attempted to show
that even within the ‘immediate’ and the ‘linear’
4G visions, a number of diverging scenarios are
possible. However, it is also clear that mobile
data, however defined, has developed its
largest user base in Asia (i.e. Japan and South
Korea). This has been achieved through the
successful introduction of 2.5G, 3G and WLAN
access and services. This seems to demonstrate
the continuing success of coordinated and
integrated approaches in stimulating uptake of
mobile communications. Also, the large Asian
user base for mobile data is likely to stimulate
further innovations in this field at a more rapid
pace than in other continents.
In the short term, the analysis of current 2.5G
and 3G (Annex 2) offerings showed that 3G services
may either be positioned as add-ons to 2.5G
services or as a completely new set of services. The
study of three potential business models leads to
the conclusion that 3G in Europe will be driven by
44
‘traditional’ telecoms players, i.e. mobile operators
and especially telecoms equipment vendors.
Finally, potential viable business models for WLAN
showed that WLAN is mainly complementary to
fixed networks, and these kinds of WLAN offerings
may only partially substitute for 3G. However,
WLAN is also increasingly integrated with cellular
networks, and is being positioned as a complement
to 2.5G mobile telecommunications networks. In
this case, WLANs can substitute for 3G access.
Though it may be said that WLAN may be a threat
to 3G under certain circumstances, it is not likely
to be a real threat to mobile operators except as a
niche solution.
Regarding the European position relating
to the ‘long-term’ 4G vision, it was stated that
it is still too early to analyse potential business
models. Instead, this chapter identified the
visions and strategies of 4G-related collective
bodies and a number of individual stakeholders,
the drivers in business terms attributed to
4G, and the different views on the time-path
towards ‘long-term’ 4G. It was concluded that
in the typical European operators’ 4G vision,
there is hardly any need for higher data rates,
or for any new access infrastructures. Rather,
their ‘long-term’ 4G scenario is concerned with
coping with different existing access networks
and strengthening the ties between the service
provider, access provider and user by service
integration and personalization. The typical
European telecom vendors’ 4G scenario has a
more ambitious scope, and envisages 4G as a
highly heterogeneous, all-embracing and usercentric wireless world. The Asian 4G scenarios,
as reviewed here, focus on a large increase
of data rates and on setting early proprietary
4G standards. They are also characterised by
active industrial policies and a high degree of
coordination. In contrast, the US ‘long-term’
4G scenario emphasises WLAN technologies
and competition between market-defined
standards. At this moment it is still unclear
whether users will favour broadband capabilities
(emphasised in the Asian 4G vision) or seamless
interoperability across heterogeneous networks
(stressed in the European vision), or WLANtype functionality, (emphasised in some of the
US visions). Each of these strategies may be
considered as an opportunity at the moment.
However, this chapter has sought to highlight
the potential benefits arising from taking an
evolutionary approach in Europe, e.g. in terms
of allowing better recouping of past investments
and opportunities for evolved 3G systems.
However, the risk of being left behind inherent
to such a cautious approach should also be
borne in mind.
SWOT analysis of Europe’s position regarding 4G
Strengths
Weaknesses
Opportunities
Threats
• 4G visions take into account installed base and past investments
• Strong position of European telecom vendors expected in 3G
• No large user community for advanced mobile data applications yet
• Diverging 4G visions between telecom vendors and operators
• Evolutionary approach may yield opportunities for evolved 3G
• Emphasis on heterogeneous networks capitalises on past investments
• Faster rate of developments in other continents
• Strong policy support in Asian countries
Table 6 summarises these points in the
form of a SWOT analysis of Europe’s position
regarding 4G.
This summary of strengths, weaknesses,
opportunities and threats to Europe’s position
indicates that the current European approach,
which emphasises 3G evolution and the
integration
of
heterogeneous
networks,
constitutes a definite opportunity and a potential
strength. However, it also indicates that the slow
speed of developments in Europe leads to a risk
of losing momentum regarding both ‘immediate’
and ‘long-term’ 4G. Also, the growing divergence
between operators and vendors, and the
resulting lack of coordination and integration,
may harm the competitiveness of the Europe
telecommunications sector vis-à-vis other
regions.
Table 6: SWOT analysis of Europe’s position regarding 4G
45
46
3.1 Introduction
3.2 The evolution of public WLAN
The main aim of this chapter is to analyse
the financial implications of emerging and future
technologies in the context of 4G. It analyses and
synthesises the financial impacts and prospects
of the two 4G visions that have been presented
in the preceding sections of the report. For the
linear vision, an analysis of the financial burden
and prospects involved in setting up an extensive
4G network will be given. The financial status of
a prospective pan-European 4G operator will be
used as an example, and it will be assumed that
such an operator will be based on 3G technology.
Simply put, what investments and revenues will
be necessary in order to make the linear 4G
vision a success financially? The other model will
address the prospects for the concurrent vision.
This analysis will also be based on a typical
operator, with certain general assumptions.
When the operators acquired 3G licenses,
they felt that the right decision had been made in
the choice of 3G technology. However, the validity
of the investments made now seems far more
uncertain (Fransman, 2003). The deployment of
the networks has been delayed, as the actors have
seen that the demand for the services is less than
they initially predicted. They now increasingly
see 3G as primarily a capacity enhancer for voice
rather than for new services.
An additional factor that has made the
investments and the business case for 3G even
more uncertain is the evolution of public WLAN
technology. The arguments for public WLAN
are based on the high data rates it offers13
and relatively low investments required. The
criticism and doubts regarding the profitability
Table 7: European operators that have launched public WLAN.
Operator and service
Country
Launch Date
Swisscom Eurospot
Europe-wide
March 2003
O2 Ireland
Ireland
February 2003
France Telecom/Orange
France (will spread across all subsidiary units)
February 2003
O2 Germany
Germany
February 2003
Westel Mobile
Hungary
December 2002
T-Mobile
Germany
November 2002
D2 Vodafone
Germany
November 2002
Connex Romania
Romania
November 2002
TDC Denmark
Denmark
July 2002
BT Openzone
UK
April 2002
Telefónica Móviles
Spain
February 2002
T-Mobile
Austria
November 2001
One / Ewave
Austria
October 2001
Telenor Mobil
Norway
February 2001
Sonera14
Finland
June 2000
Telia15 Mobile Homerun
Sweden
October 1999
Source: Pyramid Research, 2003.
13
14
15
However, 802.11b deliver 5.5 Mbps at best, and down to 100 kbps (see “Table 1: Comparison between different technologies
with respect to some features”, on page 6).
Has merged with Telia.
Has merged with Sonera.
3 Wireless
telecommunications
technologies, investments and growth
47
3. Wireless telecommunications technologies, investments and growth
of 3G have made 3G manufacturers even more
concerned. While the operators’ deployment
plans have been pushed forward and the
criticism of 3G has increased, the rise of
public WLANs has created new possibilities for
manufacturers. Branded a 3G killer by some
and a 3G saviour by others, the technology
has resulted in different beliefs among the
telecommunications players regarding its future
impact on the industry. While some operators
have embraced public WLAN, others have
taken a more conservative approach. Today
there are over 15 fixed and mobile operators
that have launched public WLAN networks
across Europe (see Table 7).
A diverse group of players (made up of
mobile operators, fixed-line operators, startups, and hardware manufacturers) is trying to
cross-sell public WLAN access on the back of
their existing (and also non-existent) operations.
Thus, the technology does not only concern
the mobile operators. The largest public WLAN
provider today is the fixed-line operator Korea
Telecom, which has over 8,000 hotspots and is
planning to have around 14,000 by the end of
2003,16 (see Table 8). Another fixed line operator,
British Telecom, has deployed 400 hotspots,
and has a target of 4,000 hotspots in the UK
by the summer of 2004.17 These are two fixed
line operators that see the technology as a new
means of making money, and at the same time
as part of a broader push into mobile solutions.
British Telecom predicts that its new mobility
strategy will generate US$ 261 million by 20042005 and as much as up to US$ 725 million by
2008 or earlier.18
The deployment of public WLANs may cast
some doubt on the role of 3G networks. It has
been argued that 2.5G networks in combination
with public WLANs will be able to meet users’
needs. For example, T-Mobile USA is planning
to integrate 2.5G with public WLAN networks
and does not have plans to go 3G.19 Although
many operators with 3G plans are embracing
public WLAN, there are also 3G operators that
are taking a more conservative approach toward
the technology. But, as far as 3G is concerned,
it is reasonable to ask: Where are the profits?
Although the operators have deployed public
WLAN networks for some years now, all
providers of public WLAN access have one
thing in common – no one is making any money
out of public WLAN today. Thus, it is far from a
proven business case.
Table 8: The largest public WLAN providers (world wide).
Operator
Operator type
Region
Hotspots (mar-03)
KT
Fixed-line
South Korea
8,000
T-Mobile USA
Mobile
U.S.
2,326
Boingo
Startup hotspot aggregator
U.S.
1,000
NTT Communications
Fixed-line
Japan
1,000
China Mobile
Mobile
China
900
TeliaSonera
Mobile
Nordic
700
Wayport
Startup operator
U.S.
535
Hanaro
Fixed-line
South Korea
500
Toshiba
Hotspot aggregator
U.S.
300
Metronet
Startup operator
Austria
250
Source: Planet Wireless, 2003.
48
16
17
18
19
Planet wireless hotspot operator database.
Planet Wireless, Wi-Fi hotspot operator case studies, 2003.
Planet Wireless, Wi-Fi hotspot operator case studies, 2003.
Mobile Communications International, Friend or foe? Issue 97, 2002.
180
160
140
120
100
80
60
40
20
0
2002
2003
2004
BWCS
3.2.1 Predictions of the future public WLAN
market
A number of different predictions regarding
the deployment, number of users, and market
value of public WLAN services are given below.20
Today there are about 30,000 hotspots deployed
world-wide, a number that is expected to increase
by about 400% over the next four years (see Figure
7). The technology has evolved fastest in the U.S.,
and currently the European market is far behind
both the U.S. and Asian public WLAN market
2005
Planet Wireless
2006
2007
ABI
(the number of hotspots deployed in Europe is a
few thousand, with Sweden at the forefront).
Currently, carriers are basically interested in
WLAN because of the free spectrum, which has
resulted in many profit-seeking actors deploying
public WLAN networks. In the U.S. alone there
are as many as 1,700 public WLAN providers.21
It is estimated that about 800,000 users
world-wide are using public WLAN services today
(although it is questionable that these are frequent
Figure 7: Number of hotspots world wide (thousands).
Figure 8: Number of users (millions world wide).
90
80
70
60
50
40
30
20
10
0
2002
2003
2004
UMTS Forum
2005
2006
Planet Wireless
2007
2008
Alcatel
49
20
21
It should be emphasised that these involve substantial uncertainty, are based on the opinions of others, and do not necessarily
reflect the opinion of the authors.
Ovum: Public wireless LAN, 2003.
Figure 9:
Figure 10:
Number of public WLAN users in Europe
Annual revenues from public WLAN,
world wide (US$ billion)
(million).
9
8
9
7
6
5
4
3
2
1
0
7
8
6
5
4
3
2
1
2007
Pyramid Research
2008
Yankee Group
0
2007
Forrester
Pyramid Research
users). As the number of hotspots increases and
the technology life-cycle matures, the number of
users is also expected to increase (see Figure 8).
Fewer users are expected to adopt WLAN
technology in Europe than in the U.S. and Asia.
Worldwide, the majority of adopters are expected
to be in the U.S., while the number of European
users is estimated to be around 7-8 million by
2007-2008 (see Figure 9).
The public WLAN market is currently worth
about US$ 200 million and it is anticipated that it
will be worth about US$ 3 billion by 2005.22 The
average user today is therefore spending about
US$ 21 per month. (Yankee Group23 predicts
that the European market will be worth US$ 1.8
billion by 2007).
2008
Yankee Group
Forrester
low, attracting many actors into the market for
the deployment of public WLAN networks.
However the relatively small investments do not
necessarily make it a worthwhile business for
the players. Estimates of the financial situation of
public WLAN as a stand-alone business case for
an operator without a backbone network over an
investment horizon of 10 years are given below.
Due to the ex ante dimension and the uncertainty
it involves, the authors have chosen to estimate
the number of users required, and how much
they must spend per month on public WLAN
access, for the operator to recoup its investments.
This approach makes it possible to assess the
requirements for a profitable investment.
CAPEX
3.2.2 The stand-alone public WLAN business case
The public WLAN business case differs
in many aspects from that of 3G. The spectrum
is free for the providers, while actors in the 3G
market in many cases paid billions for licenses. In
addition, the investment costs are low compared
to 3G. This implies that the entry barriers are
The CAPEX (capital expenditure) of public
WLAN relates to access points, switches,
converters, central systems, physical servers,
installation, and connection of fibres. The
calculation has been carried out with an average
cost per hotspot, which according to TeliaSonera
is €16,60024 (between €13,300 and €18,300
according to TDC25). According to TeliaSonera,
50
22
23
24
25
UMTS Forum, Impact & opportunity: Public wireless LANs and 3G business revenues, July, 2002.
The Yankee Group, Public WLAN services have role to play in Europe, but threats to 3G has been overstated, says the Yankee
Group, July 1, 2002.
Ny Teknik, TeliaSonera tvärbromsar, April 3, 2003.
Ny Teknik, TeliaSonera tvärbromsar, April 3, 2003.
In this estimate, the typical operator in
a larger country will build up a network of
8,000 hotspots, (e.g. a provider like Korea
Telecom, which has deployed 8,000 hotspots,
or British Telecom, which is on the way to mass
deployment).
Table 9: Assumptions of network deployment and cost.
Assumptions
Investment cost per site
Number of sites
€16,600
8,000
Although the investment cost for each spot
is not huge, multiplied by hundreds of sites it can
become a burden, especially for start-up hotspot
aggregators (see Figure 11).
OPEX
In order to provide a value for OPEX
(operational expenditure), it is necessary to
decide on an organisation, rental of backhaul
transport (i.e. data transport over fixed lines
from the hotspot to other points on the network),
rental of sites, maintenance of the network, and
marketing efforts. These expenditures will make
up most of the cash outflow after initial network
deployment (see Figure 12). This expenditure is
by no means insignificant. For example, backhaul
transport, if connected to fibre, is fairly expensive
- as much as €1,800 per site and month (we
have calculated €780 per site and month on
average), and the rental of sites is approximately
€3,300 per year (Thomsson, 2002). If the WLAN
operator also has a fixed fibre network, the cost
for backhaul transport is likely to be lower – our
estimate above is based upon actual outlays for
a negotiated settlement between a local fibre
owner and a WLAN operator. A work force of
one person per 50 sites can be expected. The
marketing costs make up quite a small part of
the total costs, given that the operator is an
established telecommunications provider.
To get a positive NPV (Net Present Value),
the operator has to attract at least the number of
users presented in Figure 13, in combination with
a flat ARPU (Average Revenue per User) of €46
over the whole time horizon.
Both the number of users and what they
spend on public WLAN access have to be quite
high. Even if these numbers are achieved (from
the authors’ perspective, quite an optimistic
scenario), break even will not be reached until
2009. However, since the rental of the backhaul
network makes up an essential part of the cash
outflow, operators owning a backhaul network
will require fewer customers than that stated
above to be able to make the stand alone business
case of public WLAN profitable, since the rental
the company has invested around €11 million in
its public WLAN network, which consists of 700
hotspots.
Figure 11: Cost of network investment (€ million).
35
30
25
20
15
10
51
5
0
2003 2004
2005 2006
2007
2008
2009
2010
2011
2012
2013
Figure 12: Cash outflow components.
100%
80%
60%
40%
20%
0%
2003 2004
CAPEX
2005
2006
2007
2008
Maintenance & Operational
charge for the backhaul network used here is
likely to be higher than actual costs.
Price elasticity will be an important factor in
determining the number of users adopting public
WLAN. Currently the pricing schemes of public
WLAN differ between the providers (see Table 10).
An operator such as TeliaSonera, with its current
pricing scheme, will find it difficult to achieve a
high volume of users regardless of time.
British Telecom, which predicts that it will
generate €644 million by 2008, will have to
attract 450,000 users on the basis of the prices
given in the table. Of course, the company will be
able to leverage its investment if its forecasts are
2009 2010
Rent
2011
2012
Backhaul
2013
Marketing
realised. But will British Telecom attract 450,000
users paying over €1,400 a year by 2008?
Table 10:
Pricing schemes for some public WLAN
providers.
Provider
Price per month (€)
Boingo
44
British Telecom
119
NTT DoCoMo
14
TeliaSonera
167
T-Mobile
18-35
Wayport
44
It is difficult to see how everyone can expect
to make money out of public WLAN. The key
Figure 13 Required number of users for positive NPV.
800000
700000
600000
500000
400000
300000
200000
52
100000
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
The public WLAN market is still in its
infancy. It is therefore inevitable that it will
encounter barriers (technological and userrelated) to its progress and that there will be
commercial uncertainties. That said, however, it is
already evident that the technology has inherent
restrictions on its ability to succeed in the
market place. Currently there are problems with
security, and the hand-over function. Although
these problems are expected to be solved - and
the user barriers are expected to decrease - the
usability, what the technology actually does, and
the market structure can be questioned. First, the
technology only addresses a very small market
where the demand pattern is relatively unknown.
Who will use public WLAN? The target segment
consists mainly of travelling business users.
Hotspots are located at places such as airports,
train stations and hotels, where business people
and professionals might need for the service. Is
this market enough to recoup the investments?
Is it certain that public WLAN is more attractive
than 3G in these locations? If public WLAN is not
better than other enabling technologies, the target
segment is unlikely to adopt the service. Second,
the public WLAN market is very fragmented.
Service providers, site owners, and network
owners are all competing for the profits. Certainly,
each actor will attempt to secure as much value
as possible and finding a business model that
will allow all these actors to make money out of
public WLAN may be difficult. Moreover, since
the technology is restricted to certain locations
where the value of public WLAN is considered
to be high for consumers, different operators will
compete for the same spots, meaning that at some
locations only one operator can install a hotspot,
or that several operators will place hotspots at
26
the same location. Third, the usability of the
technology is restricted. Users of public WLAN
do not know whether they will find a hotspot or
not. While 2.5G and 3G enable the users to carry
their phones ‘just in case they need it’, laptop
users may have to resort to these very same
networks in the case of absence of public WLAN
hotspots, or else chose not to carry their laptops,
unless they have a definite need to use them. In
addition, public WLAN provides, according to
the authors, portability rather than mobility. The
users must find it worthwhile to spend some time
accessing the services, they have to find a place to
sit down, start the computer, and perhaps install
software to access the network.
The stand-alone business case of public
WLAN will probably not provide a sustainable
business in the short term. The reason is simply
that the usability, functionality, demand, and
market structure is highly uncertain and even
questionable. It seems that public WLAN will
attract far fewer customers than had been
imagined and fewer than the number required to
recoup investments.
In spite of this scepticism about the
profitability of public WLAN, some important
considerations have to be raised. It might be
possible to provide voice over IP using WLAN,
though there is still great uncertainty as to how
this would be implemented (Lehr and McKnight,
2002). However, if it were possible, there would
be new opportunities for public WLAN on the
market, as the user value of the technology would
be increased. Moreover, antennas with a much
issue is a lack of sufficiently computer-literate
users. Currently, the actors are having trouble
attracting customers in volume, which is what
the telecommunications industry is all about.
This also explains why no providers are making
money today, and why several providers have
already gone bankrupt.
wider range than is currently possible - as much
as seven miles26 - may be introduced.
It seems that only a selected group of
actors will be able to turn public WLAN into a
profitable business. To survival purely as a public
WLAN operator will be difficult, although these
operators have made much of the running in the
U.S. They lack customer relationships, backhaul
networks, and existing organisations. Above all,
the lack of cash flow from other business areas
Business Week, For telecom, wireless signals hope, October 13, 2003.
53
limits them financially. Established operators, on
the other hand, can invest in WLAN even if it is
unprofitable. The only chance for public WLAN
operators may be to cooperate with established
fixed or mobile operators, and become a bit-pipe
of network capacity.
3.2.3 WLAN as a new niche
If two products offer the same functionality
the cheaper one is likely to prevail. Public WLANs
are clearly not an exact substitute for a wide area
technology such as 3G. Public WLANs differ from
wide area networks in that they currently cover
spots of only 50 meters in radius. The technology
arguably offers portability rather than mobility.
This implies that the user experiences are quite
different from that with 3G technologies. Public
WLAN users have a laptop or a PDA and have
time to sit down, log on to the network, check
e-mails and surf the Internet. As far as users
of mobile telephony are concerned, they are
typically on the move and want information
quickly. They do not necessarily wish to sit down
and look for specific information. At the same
time, public WLAN is aimed at one segment
– the business users. This segment makes up
only a small part of the total number of mobile
data users. Consequently, the authors believe
that the fear that public WLAN will ‘steal’ a lot
of revenue from wide area technologies is grossly
overstated.
3.2.4 Strategic value?
54
Although its viability as a standalone
business is unclear, public WLAN might be of
high strategic value and an important source of
competitive differentiation for 2G/3G operators,
more than a direct threat in terms of revenue loss.
In this respect, public WLAN may be viable for
the mobile operators, but only in the sense that it
might help their entire business as a value added
service.
27
Nätverk & Kommunikation, Issue 13, 2001.
Operators do not necessarily have to deploy
their own networks to get on the bandwagon.
They can seek a Mobile Virtual Network Operator
(MVNO) agreement with companies providing
public WLAN capacity, and include this in their
offering to customers.
Fixed line operators such as British Telecom
are embracing public WLAN, as they see it as a
way of breaking into the wireless market.
3.3 4G-linear
Mobile communications technology is
improving rapidly. Even though 3G services are
just about to be launched, the next generation 4G - is already receiving a lot of attention. Nortel
has proposed a fourth generation specification
with a bit-rate of 20 Mbps in the down link, a bitrate of 100 Mbps in the cells and a connection
time of 0.1 second (around 2 seconds in 3G).27
Håkan Eriksson, head of research at Ericsson, also
claims that 4G may reach transmission speeds up
to fifty times faster than 3G, i.e. 100 Mbps. Since
there are no standards or reserved frequencies
for 4G, uncertainty is high. In what follows it is
assumed that 4G is a new air interface that will
provide much higher bit rates than 3G, i.e. well
in excess of 100 Mbps.
3.3.1 Business case
In this section, the prospects for a large
European operator’s 4G investments are discussed
(the example taken being Vodafone in the UK).
As for the public WLAN business case, the focus
is on estimating the required revenues for a
profitable business case for 4G. The calculation is
a stand-alone business case for 4G regardless of
time of deployment.
For the operational expenditure, only the
costs that are in addition to the already existing
costs are included. Thus, only costs that are
associated with providing the 4G services are
Investments
As regards 4G, LM Ericsson predicts that
the operators will have to make an investment
in equipment in the range of the investment
required for 3G.28 High bit-rates entail smaller
cells, i.e. each base-station will cover a smaller
surface area, and thus more base-stations will be
required. (Here, a reservation for new solutions
for antennas, etc. has to be made). Alternatively,
the signal strength has to increase, which requires
more current and results in difficulties regarding
the terminals. To be able to cover the same surface
area, one can therefore expect that the operators
will have to invest more in 4G than they are
investing in their 3G networks, unless there is a
dramatic decrease in the cost of equipment. Each
step in technology towards higher bit-rates will
require smaller cells, leading towards de-facto
W-LAN type hotspots. Somewhere along the line,
nation-wide coverage will not be feasible. This is
more evident for those countries with relatively
low population densities (see Table 11). Instead
of calculating on the basis of nation-wide 4G
coverage, the estimates assume the same cost
of investment as in the 3G case (Björkdahl and
Bohlin, 2003). However, a future possible license
fee has not been included.
Given that a country such as Sweden has
a large surface area and is also more sparsely
populated than many other European countries,
it will always be more expensive for the network
operators to cover the whole country. For future
telecommunications systems, it is questionable
whether it will be feasible to cover large parts
of the country (for 3G networks the Swedish
operators have to cover around 99 percent of
the surface area). Regulatory authorities will
continue to plan an important role in future
telecommunications systems.
Requirement to recoup the investment
Because the network coverage of 4G is likely
to be restricted, the penetration level will not
be as high as for preceding telecommunications
networks; see Figure 15. Note though that this
penetration is highly dependent on the time of
deployment. To be able to achieve this penetration
probably means that the adoption of 3G will have
to be high before an eventual deployment of 4G,
and that 4G will have to have higher fitness than
that of 3G. A low adoption of 3G when 4G is
taken into account. This is done in order to achieve
a better understanding of what the additional
revenues have to be to recoup the investment. It
is assumed that licences are granted for a period
of 20 years and that they are distributed the year
before the initial investment.
Table 11: Network coverage per 50 percent of population.
Area (km²)
(50% pop)
% total area
50% of pop. (m)
Area (km²)/m pop.
UK
13,526
5.6
29.8
454
Netherlands
11,148
26.8
8.3
1348
Germany
90,002
25.2
42
2140
Italy
64,143
21.3
28.1
2279
Spain
60,817
12.0
20.6
2954
France
95,852
17.6
29.3
3271
Sweden
43,474
9.9
4.5
9712
Country
Source: Dresdner Kleinwort Wasserstein, 2003
28
Nätverk & Kommunikation, Issue 13, 2001.
55
Figure 14: Investment in 4G for UK reference operator (£m).
500
400
300
200
100
0
0
1
2
3
4
5
Year
introduced will probably mean that 4G will be
slow to penetrate the market.
from an additional consumer demand for these
high-bit-rate services. Other, more basic services
and their revenues are excluded.
Figure 16 shows an estimate of the
incremental revenues that are needed to achieve
break-even with an NPV estimate, with a typical
large-scale UK network provider (the Vodafone
example). Given that only the additional costs
of 4G are included in the estimate, and that the
only difference between 3G and 4G is that the
latter will enable a higher bit-rate, it is worth
emphasising that the required revenues from
4G presented in Figure 16 are revenues that are
recognised as being applicable to services that
will require this high-bit rate. Figure 16 thus
presents only the additional minimum required
average revenue per unit (ARPU) that derives
According to the bottom estimate in Figure
16, each customer has to contribute at least
£1.1 per month for the operator to recoup the
investments, provided the whole customer
base is included in the estimate. (In an earlier
estimate reported in Bohlin and Björkdahl,
2003, the required additional contribution for
3G to be profitable during the license period was
estimated to be £8.2 in the case of Vodafone in
the UK market.) In the top estimate in Figure 16,
with a gradual transition of the customer base
to 4G (compare with Figure 16), the customers
have to contribute with £6.0 per month.
Figure 15: 4G penetration.
50%
40%
30%
20%
10%
56
0%
0
1
2
3
4
5
6
7
8
9
Year
10 11 12 13 14 15 16 17
7
6
5
4
3
2
1
0
0
1
2
3
4
5
6
7
8
10
9
11
12
13
14
15
16
17
18
Year
Estimated ARPU (incremantal transition)
Estimated ARPU (total customer base)
However, there are additional considerations.
Depending on when (or if) the investment takes
place, it will affect the business case of 3G
and 4G differently. An early deployment of 4G
results in less chance of recouping investments
in 3G. If 3G has not taken off, it is not likely
that 4G will take off. Alternatively, 4G will take
customers from 3G. Acting as substitutes, the
technologies and the investments may therefore
interfere with each other. Regardless of which
generation prevails in such a situation, the total
customer base will have to increase its monthly
spending by £9.3 over a period of 20 years in
order achieve break-even in both 3G and 4G
for a typical large network provider in the UK
(Vodafone). In any case, the profitability of the
business cases of 3G and 4G will be determined
by the time of deployment and the adoption of
each technology.
Compared with the 3G investments, the
4G investments and the required customer
spending will be minor. However, this is based
on the assumption of no license fees, and that
the operator does not have to provide nation
wide coverage. There are, therefore, other
outside factors that could make this estimate an
excessively optimistic one.
29
3.4 Who will back future
telecommunications system
investments?
A central question for future investments in
the telecommunications system, and possible
license fees, is how these future investments
will be financed. What have the actors learnt
from the dark period two years ago that is
still affecting many European operators? Will
the operators be backed in the same way as
they were during the period of 3G license
acquisitions and investments? Hopefully a lesson
has been learnt by the regulatory authorities, the
capital market, vendors, and operators. There
is a high probability that the industry will not
take the same road it did over two years ago.
One argument for this may be that it will be very
difficult to finance the industry.
Figure 16: Required average revenue per user (£ per month).
3.4.1 The downturn in the telecommunications
sector
The telecommunications sector became an
under-performer due to excessive debt, equity
overhang, and major sector disappointments. The
downturn wiped out €1.8 trillion in capital-market
value.29 Although many actors are beginning
Business Week, For Telecom, Wireless Signals Hope, October 13, 200
57
Figure 17: Comparative credit ratings of major European telecommunications operators, 1999-2001.
S&P Rating
AA+
AA
AA
A+
A
09/99
12/99
03/00
FT
BT
BT
KPN
FT
KPN
BT
KPN
06/00
12/00
02/01
06/01
09/01
TEF
TEF
FT
BT
VOD
TEF
TEF
TEF
BT
VOD
BT
VOD
BT
VOD
KPN
DT
FT
DT
FT
DT
DT
KPN
KPN
FT
KPN
DT
DT
FT
DT
TEF
TEF
TEF
TEF
VOD
VOD
VOD
BT
A
09/00
FT
FT
BT
KPN
DT
VOD
DT
BBB+
BBB
KPN
Source: Standard & Poor’s.
to see some positive signs, they will certainly
attempt to avoid the same situation in the future.
The debt burden for many operators has been
enormous. As a result, major credit agencies have
downgraded the ratings for most of the operators
(see Figure 17).
The downturn in the telecommunications
sector can be traced back to the “irrational
exuberance” in the supply of capital during the
’90s (especially in 1998 and 1999).30 Optimism
ruled in the industry and operators, particularly
in Europe, strove to obtain 3G licenses at almost
any price,31 and in as many countries as possible.
Operators that had almost no debt in 1998
increased their debt burden heavily (see Figure
18).
It was not until 2001 that there were
restructuring efforts in the sector, and since then a
large part of the actors’ financial strategy has been
debt reduction. For example, Sonera acquired 3G
licenses for €3.9 billion with borrowed money,
with an annual turnover for the whole company
60
50
40
30
20
10
0
France
Telecom
AT&T
Vodafone
Net Debt, end 1998
58
Deutche
Telekom
British Telefonica WorldCom
Telecom
Net Debt, August 2001
60
50
40
30
20
10
0
%
US$bn
Figure 18: Total debts for some operators in the end of 1998 vs. August 2001, and the debt per equity value.
Debt/EV
Source: Bank of America.
30
31
Douglas Fortney, Marconi Finance, Telecoms Financing 2001, November 20, 2001
The idea of auctions is that the costs and revenues will be known. This was not the case for the 3G auctions, however (see
Fransman, 2003).
3.4.2 The capital market
Financing of the telecommunications
industry resulted in a situation in which banks
became overextended in the sector and had to
reduce their exposure due to concerns about a
possible financial crisis. As early as June 2000
and later in December 2000, the Bank of England
warned of telecom lending risks.33 It stated that
financing needs had been heavy, the risks had
increased, and returns were “some way off in the
future”. The Bank of France also issued a warning
in December 2000.34 Later, banks became
cautious and began to rethink their commitments
to the sector. As a result of the scarcity of capital,
competitive pressure built up among vendors to
finance operators. Vendors that were not well
established and did not enjoy large market shares
saw a chance to expand through vendor financing.
At the same time, vendors tried to keep up the
market adoption rate for the 3G systems. The
32
33
34
35
36
37
38
39
40
41
operators had a claim on the vendors that they did
not have on banks, and were increasingly asking
for vendor financing before agreeing to place
an order with a vendor. Vendors often financed
more than 100% of the actual sale through these
agreements, acting like surrogate banks. Vendors
like Nokia, Ericsson, Alcatel, Motorola, Nortel,
Lucent, NEC, Siemens and Qualcomm reached
vendor financing exposure as high as $25.6
billion, of which as much as 30 to 40% was in
the form of high-risk loans.35
It is hard to determine the extent of the
underlying vendor credit problem while this was
going on, since vendors are not obliged to report
the total amount of vendor financing. According
to the Financial Times,36 Nokia provided €5
billion in vendor financing in the first half of 2001,
Alcatel €3.03 billion, and Ericsson $2 billion. At
Nortel, vendor financing represented about 7%
of revenues in 2000.37 The most extreme example
of vendor financing was the rumours that Nortel
provided BT Cellnet with 300% in vendor
financing to secure the contract.38 In April 2001,
Orange secured €3.5 billion in vendor financing
for the infrastructures in France, Germany and the
UK. According to Orange, Nokia offered €2.25
billion, Ericsson €750 million and Alcatel €473
million, representing a total of 150% in vendor
financing.39 Ericsson also had vendor financing
agreements with the German operator Mobilcom
of €2.4 billion, even though the cost of equipment
was only €1.6 billion.40
at the time of about €2.2 billion and almost no
profit, resulting in a total debt that was eleven
times EBITA. The company had to abandon the
German and Norwegian markets, and tried to sell
as many assets as possible to stay afloat. Another
example is British Telecom. British Telecom
had almost no debt in 1998, but during 2000 it
acquired Telefor in the Netherlands, acquired
the control of VIAG in Germany, and purchased
3G licenses in the UK, the Netherlands and
Germany. This increased British Telecom’s debt
considerably. Because the financial markets were
drying up, asset sales were the only option to
obtain the funding needed to complete its 3G
plans.32 Many of these assets were operations in
Asia. Later, the company also had to spin off its
wireless operations.
In 2003 most European investment-grade
mobile operators have experienced strong
operating performance, bringing improvements
in credit ratings.41 However, operators continue
to focus on debt reduction, with cash flow being
used for debt repayments. Thus, even three years
Herschel Shosteck Associated, The wireless saga, February 2001.
Bank of England, Financial stability review, June 2000.
Bank of France, Banque de France bulletin digest No. 84, December 2000.
McKinsey, McKinsey Quarterly No.3, 2001
Financial Times, Industry faces important questions on subsidies, November, 2001
McKinsey, McKinsey Quarterly No. 3, 2001
Herschel Shosteck Associated, The wireless saga, February 2001
Dagens Industri, Ericsson erbjuder Orange finansiering, April 3, 2001
Dagens Industri, 3G-rädslan överdriven?, December 13, 2000
Standard & Poor’s, Industry report card released on European investment-grade telecommunications, October 21, 2003.
59
after many of the auctions, only a small part of
the envisaged 3G deployment has actually taken
place. This means that the improvements in the
credit ratings are still limited to the 3G concerns.
Cleaning up the vendor finance situation is one
of the main burdens, and it is not likely that the
situation will be repeated for 4G.
rather in achieving and learning from a successful
diffusion of 3G services in the coming years.
Two main conclusions result from this
chapter:
-
By taking advantage of a strong 3G platform,
a European evolutionary approach has
the potential to recoup past investments
and opportunities for evolved 3G systems.
However, a comparatively slow pace of
market development is a threat to this
approach, as is a growing divergence
between operators and vendors.
-
The standalone business case for public
WLAN suggests problems in the near future,
in spite of free spectrum and relatively low
investment costs in comparison to 3G.
However, WLAN may prove to be of high
strategic value and an important source of
competitive differentiation for operators.
Calculations also show that 4G investment
based on the linear vision will need to
generate increased revenues through services
requiring higher bit rate in order to be
profitable. Considering the current situation
in the industry, it is doubtful that there will be
finance available to support an introduction
of 4G in the 2010-12 timeframe.
3.5 Conclusions from the financial
analysis
“I would recommend that the newspaper
community forget about 4G”42
Keji Tachikawa, CEO, NTT DoCoMo
As plans for a fourth generation of mobile
communications systems start to materialise,
this chapter has attempted to shed light on the
financial implications of emerging and future 4G
technologies. Using a pan-European 4G operator
based in the 3G technology as a reference case,
the chapter analyses and synthesises the financial
impacts and prospects of the two 4G visions
that have been presented. Perhaps ironically, the
analysis indicates that the key to defining 4G
does not lie in long-term, far-reaching visions, but
60
42
NTT DoCoMo. DoCoMo: Forget 4G, Business Week, October 15 2003
A1.1 Introduction
In this section, a number of roadmaps for 4G
are identified. These roadmaps have been briefly
reviewed, and a shortlist of roadmaps has been
reviewed in greater detail. First, the activities of
the EU Framework Programmes are important,
in particular for a European project like this one.
Second, the World Wireless Research Forum
(WWRF) published a roadmap in 2001 and is
currently updating it. The analysis is based on
the drafts produced for the 9th WWRF meeting in
Zurich, July 1-2 2003, and on earlier documents.
Third, a short review of the Swedish KTH-study is
presented in this chapter. It has not been possible
to identify a roadmap document describing the
plans of US players. However, a number of USrelated documents were reviewed, and several
plans for improving IEEE 802 were identified,
and these are described below. Finally, the
developments in Asia (Japan, Korea, China and
India) are reviewed.
A1.2 Wireless technology development
within the EU IST programme:
Overview
Introduction
In order to create an internal market for
research and development in the European
Union by coordinating and sharing resources,
a number of Framework Programmes (FP) have
been initiated. The duration of each FP is four
years and the first (FP1) was initiated in 1982.
The research areas are quite diverse and cover
areas such as information technology, industrial
technology, life sciences, energy, transport, etc.
The Sixth Framework Programme (FP6) was begun
in 2002, and projects are being started at the time
of writing. As part of the preceding programme,
43
FP5, a sub-programme called Information Society
Technologies (IST) was begun in 1998. IST is a
single, integrated research programme building
on the convergence of information processing,
communications and media technologies. The
strategic objective of the Information Society
Technologies (IST) Programme is to realise the
benefits of the information society for Europe both
by accelerating its emergence and by ensuring
that the needs of individuals and enterprises
are met. For the essential technologies and
infrastructures that form the building blocks of
the information society, the objective is to drive
their development, enhance their applicability
and accelerate their take up in Europe.43 With
indicative budgets of approximately 3.6 billion
Euro each for both FP5 and FP6, and with mobile
communications as a major focus area, the IST
programme has a substantial influence on the
direction of European research on wireless
technologies.
In this section, the IST vision of future
wireless systems is described, and an overview
of research activities concerning mobile IST
communications in FP6 and FP5 is presented.
As FP6 projects are being initiated at the time
of writing, the FP6 overview focuses on general
objectives and trends in the research direction.
The FP5 overview, on the other hand, includes a
more detailed overview of project problem and
technology areas, and highlights specific projects
that are of particular interest in the 4G context.
Annex 1: Regional
roadmaps for 4G
The EC vision of future wireless systems - Reconfigurable radio
Through its framework programmes, the
European commission has been actively involved
in developments of 1G-3G. What, then, is the IST
For more information on the FPs and the role of IST, see for instance http://www.cordis.lu/ist/home.html, http://www.cordis.
lu/fp5/src/t-2.htm, http://www.cordis.lu/ist/ka4/
61
Annex 1
vision of wireless beyond 3G? J. Da Silva Head of
Unit, European Commission, KA4, sees the future
wireless generation beyond 3G as not simply a
matter of higher data rates, more capacity, more
licensed spectrum and public cellular systems.44
The expression “4G” should, according to Da
Silva, not be used to imply a transition similar
to the one from GSM to UMTS. He argues that a
new cellular generation offering a factor of gain
in data rates in higher spectrum regions is not
cost-effective under known technological trends.
These gains can only be realised in hot-spot areas
where the traffic justifies investment in higher
data rates. In these areas other technologies like
WLAN can be used, while in non-urban areas
competing technologies include fixed wireless
access and satellite broadband. Moreover, the
vision guiding IST represents a shift of emphasis
from a technology-driven development process
towards a requirements- and market-driven
process. The users, or their smart agents, will in
the future select at each instant the best service/
access/network that meets the required service
and privacy performance.45 Fundamentally,
there has to be a change of perspectives from a
technology-defined development to a user-defined
development of the wireless technologies, Da
Silva argues. This suggests that the development
will not be a focused technology development
but rather a social evolution with technology
being an important enabler and facilitator.
The vision of 4G that Da Silva suggests is
centred on “re-configurable radio” (RR) (see
Figure 19). In that vision system characteristics
will change from a single network to a “network
of networks”, i.e. integration/convergence of
heterogeneous, competing but complementary,
broadband wireless networks (public and private,
operator driven or ad-hoc, broadcasting, IP).
Furthermore, there will be “networks at the
end of the network”, meaning that there will be
multiple, short distance access means for the
Figure 19: 4G as the integrator of present and emerging technologies
Source: da Silva (2002)
62
44
45
J. Da Silva, Head of Unit, European Commission, ”Moving towards 4G - Issues and challenges”, presentation held at
International 4G forum Kings College 13-14 May 2002, http://www.ctr.kcl.ac.uk/Pages/4GForum/2002/4GForum.htm
J. Da Silva, Head of Unit, European Commission, “The Wireless World – A EU Perspective”, presentation held at IST Mobile
summit 18-19 June 2003, http://www.mobilesummit2003.org
The emerging applications and network
concepts for the end-point of the network drive
the need for miniaturised, low cost, high-density
storage and adaptive power management. Userinterfaces need to handle a multitude of services
and contents, with multi-modal (speech, mimic,
gaze, gesture, emotions) dialogue capabilities as
key technologies. End user devices need to be
re-configurable to cope with dynamic changes in
the environment (access, service provider, user,
domain, context). These devices also need to be
easy to use, with “zero configuration” and plugand-play.
A range of issues related to spectrum
regulation and licensing arise with reconfigurability, as allocation of spectrum
per specific usage will increasingly become
redundant. New forms of spectrum valuation are
required and there is an imperative need for long
term spectrum planning. Examples of issues in
this matter are unlicensed spectrum usage that
may cause congestion (for instance, WLAN),
and spectrum allocation for broadcasting and
telecommunications applications.
Other issues of high interest in the near
future according to Da Silva are security and
QoS. Security, integrity and authentication are
imperative and solutions with Internet Protocol
46
47
48
6 (IPv6) will be central. With IPv6, offers of
anonymity capable service gateways will
increase. There will also be increasing difficulties
in ensuring stable QoS offerings and consumer
protection from services not compliant with
charges levied and promises made. This will
create a need for dynamic management of QoS
service agreements (bandwidth, frequency, delay,
error etc).46
In other words, the major step to the next
generation of mobile communication - as
envisioned by the IST programme - is about
development from a single standard system
(i.e. UMTS in Europe) to a system of “many
seamlessly integrated systems” (see Figure 19). RR
is in this context the technology that enables the
dynamic requirements for seamless integration
of the various present and emerging wireless
technologies. Hopes are that RR, in combination
with IPv6 and development of private unlicensed
systems, will provide an efficient use of the scarce
spectrum. This seamless system will constitute
present and emerging wireless technologies with
complementing characteristics, which together
form a cost effective solution able to provide
personalised, enhanced services over the most
efficient/preferred networks. 47
end user through self-configurable personal area,
body area, car, and ad-hoc wireless networks in
unlicensed bands. All these networks require a
flexible infrastructure centred on re-configurability
and seamlessness. Re-configurability is predicted
to cut across all domains from the terminal
to the network. Provisioning, monitoring and
managing services, assuring QoS, coping with
traffic unbalances, and optimising billing all
require re-configurability concepts. The impact of
this development on standards and regulations is
expected to be profound.
According to Da Silva, current technological
developments in different areas provide an
indication of the likely path towards future 4G
systems:48
•
Cellular systems have 1 billion users worldwide, with 3G in the process of being
deployed. IPv6 standards for cellular
systems are being constructed by different
standardisation organisations, for example
3GPP. •
Within digital broadcasting,
Digital Video Broadcasting-Satellite (DVBS) is available world-wide, Digital Video
Broadcasting-Terrestrial (DVB-T) is being
For a more comprehensive discussion on IPv6, see Bohlin, E., Lindmark, S., (2002) “Incentives to Innovate with Next Generation
Networks”, Communications and Strategies, Special Issue, No. 48, Fourth Quarter, pp. 97-117, 2002.
Jorge Pereira, European Commission, ”European approach to Fourth Generation - a personal perspective”, presentation held at
J. Da Silva, head of Unit, European Commission, ”Moving towards 4G - Issues and challenges”, presentation held at
63
Annex 1
deployed,
and
mobile-broadcasting
convergence activities are ongoing.
FP6 IST research on mobile communication:
An overview
•
Activities of integrating the different WLAN
technologies (Hiperlan/2, 802.11a 802.11B)
with Cellular technologies are ongoing.49
Furthermore, wireless connectivity has been
extended to ad-hoc networks. Body Area
Networks (BAN) and Personal Area Networks
(PAN) with intelligence on the move seem to
be the likely evolution.
•
Satellite systems have been successful in
broadcasting, as well as in niche markets for
fixed and mobile communication. Provision
of fixed interactive broadband services is the
next opportunity, and high altitude platform
stations (HAPS) are appearing as a promising
complement of terrestrial cellular and
broadcasting.
•
Spectrum Optimisation, with different
novel dynamic spectrum sharing/allocation
techniques such as Adaptive antennas and
Multiple In Multiple Out (MIMO) antennas,
is another rapidly progressing area.
The IST programme in FP6, running from 2002
to 2006 and with an indicative budget of 3.625
billion Euro, has the aim of “ensuring European
leadership in the generic and applied technologies
at the heart of the knowledge economy” and
“to increase innovation and competitiveness in
European businesses and industry”. To achieve
this, a number of strategic objectives covering
technology components, integrated systems and
applications in different technology areas have
been formulated. The objectives, which are the
basis for the calls for research proposals in FP6,
cover areas in which Europe is relatively weak,
such as generic software and computing systems,
as well as areas where it has established industrial
and technology leadership, such as mobile
communications. Apart from the two IST calls
in 2003, the programme will include one call in
2004, as well as additional calls in 2005-6 which
are yet to be defined.
As a cautionary note, the vision outlined
by Da Silva may be compelling in several
ways, and the IST programme has identified the
technological progress required to realise it, but it
is far from certain that future wireless systems will
follow this path. For one, if a more user-centred
perspective is needed, it seems precarious to
paint a vision of omnipresent mobile devices
and services before users have had their say.
Although there are signs in Asia that there will
be high demand for mobile data services in the
future, this does not imply that the far-reaching
visions on which the IST programme is based
will materialise. The systematic planning guiding
research in the IST programme is useful, but has
to be balanced by flexibility and a recognition of
the importance of shifting user preferences and
market forces.
The strategic objectives for IST in FP6
have been formulated to support the vision of
“ambient intelligence”, which is centred around
a future generation of technologies in which
computers and networks will be integrated into
the everyday environment. As described above,
the EC vision of future wireless systems based
on re-configurable radio clearly supports the
ambient intelligence scenario. The desire to give
users seamless and flexible access to mobile
communications through an integration of
heterogeneous networks is also the cornerstone
of the two strategic objectives concerned with
mobile communications in calls 1 and 2 of FP6:
“Mobile and Wireless Systems Beyond 3G”
and “Applications and Services for the Mobile
User and worker”. The first objective aims to
realise the vision of “Optimally Connected
Anywhere, Anytime”, and calls for research on a
64
49
An example of this is the recently released UMTS/WLAN phone by Mitsubishi.
Main Area Addressed
End to end service delivery
IP based networking across heterogeneous domains
Integrated Projects
DAIDALOS
WWI AN
Advanced mobile satellite systems
MAESTRO
Re-configurable radio and networks
E2R
Personal Area networks, PANs
MAGNET
Ultra-wideband (UWB) systems
PULSERS
New Radio accesses for terrestrial systems B3G
WINNER
Advanced Antennas
Networks of Excellence
SATNEX
NEWCOM
ACE
Source: Da Silva (2003)
generalised access network, with global roaming
for all access technologies and architectures
that enable reconfigurability at all layers. The
objective does not mention 4G explicitly,
but characterises mobile systems beyond
3G as a horizontal communications model
“where different terrestrial access levels and
technologies are combined to complement each
other in an optimum way for different service
requirements and radio environments”. While
the second objective is more focused on specific
applications supporting mobile work than on
enabling communications technologies, it also
stresses the need for interoperability of services
and roaming across heterogeneous networks.
The interest for research concerning wireless
technologies and applications in FP6 has been
very strong, with, for instance, the second
objective attracting 229 proposals in call 2. In FP6,
two new instruments supporting large projects
and for which app. 2/3 of the budget is expected
to be devoted have been introduced: Integrated
Projects (IPs) and Networks of Excellence (NoEs).
These instruments will be used as a priority means
to realise the FP6 objectives. While IP projects
will be driven primarily by industry and focused
on technology development, NoEs will serve to
spread knowledge and excellence by fostering
ties between the best academic teams in Europe.
Below, the IPs and NoEs that are currently being
contracted for Mobile and Wireless Systems
Beyond 3G in call 1, and the main areas that they
address, are presented (Table 12).
As the projects are being contracted at
the time of writing, an in-depth review of the
areas and technologies covered will not be
provided here; the following section contains a
more detailed discussion on research projects
concerning wireless technologies in FP5.
However, it can be noted that the general
focus of FP6 research projects is not on a new
generation of mobile communications systems
characterised by substantially higher data rates.
Instead, emphasis is on integration and seamless
access, with the IPv6 protocol in combination
with 3G emerging as a backbone infrastructure
while other applications co-exist and co-evolve.
In addition, many of the technology issues
addressed, such as quality of service, security and
location-awareness, seem to have been chosen to
allow the removal of critical barriers to adoption
for mobile communications services.
Table 12: Overview of areas addressed by IPs and NoEs in the Mobile and Wireless Systems Beyond 3G objective, call 1 of FP6 IST
FP5 IST research on mobile communication:
An overview
FP5 was conceived to help solve problems
and respond to major socio-economic challenges
that the EU is facing. It focuses on a number of
objectives and areas combining technological,
industrial, economic, social and cultural aspects.
The programme had an indicative budget of 3.6
65
Annex 1
billion Euro and was managed by the Information
Society DG of the European Commission. The IST
programme in FP5 was divided into several key
actions (KA):
•
Systems and services for the citizen, KA1
•
New methods of work and electronic
commerce, KA2
•
Multimedia content and tools, KA3
•
Essential technologies and infrastructures,
KA4
Within the IST programme, several projects
with a bearing on 4G mobile communications
have been initiated and completed. In particular,
projects within KA4 will be reviewed here.
The mobile communications research
in FP5 was structured according to several
measures. Among the units dealing with mobile
research, DG-INFSO UNIT D.1 Communications
and Network Technologies managed a part of
KA4 and divided its responsibility for mobile
communications into five clusters. In this section
an overview of the projects within the five clusters
is provided:
•
Re-configurability
•
Systems Beyond 3G
•
Adaptive Antennas
•
Advanced Satellite Mobile Systems
•
Location Based Services
An additional objective is to provide guidance
for further reading and study of the projects of
interest. Data has been gathered mainly from
reports, research papers and deliverables available
on the web pages of the current projects.50
66
The Re-configurability Cluster involves
concepts of software re-definition, i.e. upgrading/
patching any network component by altering its
software layer. The goal is to enable this feature
in all kinds of networks such as cellular, WLAN
and satellite technologies. The feature is also
50
supposed to be available on both third and fourth
generation mobile communication platforms.
Work in the Beyond 3G Cluster takes place
in the context of the evolution of access systems,
including terrestrial and satellite technologies
(both telecom and interactive broadcasting
systems). Furthermore, it takes place in the context
of an all IP network with radio access, including
mobility management and with inter-working of
existing, evolving and emerging access systems.
The context of the Adaptive Antenna Cluster
is that the adaptive antenna concept has long been
proven to bring a capacity increase for cellular
networks. Adaptive antennas were considered as a
means to steer a beam towards the user, increasing
the capacity by decreasing the interference level
at the network level. Recently, a much older
concept, that of diversity, has received renewed
attention. Space and/or polarisation diversity at the
base station receiver is widely deployed in present
cellular networks as a means to balance the link
budget between a low-power terminal and a highpower base station.
The Advanced Mobile Satellite Systems
Cluster is committed to the successful introduction
and development of advanced (including 3G and
beyond) mobile satellite communications systems
and services. Having noted the disappointing uptake
of start-up, “personal” satellite communications
systems targeted at mass markets, the cluster seeks
to build on earlier results generated under the
FP4 and on ongoing activities sponsored by ESA
and the IST programme. Key items on the agenda
are the achievement of significant growth in the
use of mobile satellite systems; the definition of
future mobile satellite system requirements; the
advantage of the unique and complementary
service characteristics offered by satellite systems,
such as wide-area coverage; the technological
and commercial implications of convergence for
broadcasting and mobile systems; and mutually
beneficial interworking with terrestrial mobile
networks.
The following cluster summaries build on the report “DG-INFSO UNIT D.1 Communications and Network Technologies,
Summary of Projects”, June 2003, ftp://ftp.cordis.lu/pub/ist/docs/ka4/projectsummaries.zip
Figure 20 provides a summary and an
overview of the respective clusters, and the
projects making up the clusters. Moreover,
Appendix 1 provides a project-by-project
summary for each cluster, detailing objectives
and project duration. Based on this information,
partly obtained from the cluster summary report
cited above and investigations of the respective
project web sites, some additional overviews are
developed in the following (see Figures 21-24
and tables 13-14).
In order to provide a more detailed project
overview and analysis, the projects within the
five clusters on mobile communications in FP5
are mapped on the basis of project focus and
technology scope in Table 14. The projects in the
table are divided into four problem categories,
namely System integration, QoS, Security, and
Application. These topics where found to be the
most commonly discussed and addressed with
the highest concern in the project reports.
The projects are categorised under system
if the project focus is broad and includes the
majority of the system architecture as well as the
issues of integrating the various technologies. An
example of this is the FUTURE project, which aims
at adopting recent advances in the Internet arena
and in UMTS by exploring applicability of native
Internet protocols over a mixed satellite/terrestrial
architecture. Another example under this category
is the WIND-FLEX project, the objective of which is
to suggest a high bit-rate flexible and configurable
modem architecture, which works in single-hop,
ad hoc networks and provides wireless access to
the Internet in an indoor environment where slow
mobility is required.
Figure 20: Clusters on Mobile Communications
The Location Based Services Cluster deals
with concepts of various positioning techniques,
such as localisation at the level of the cell. In
practise, this means positioning by triangulation
based on measurements of the uplink or downlink
channels and also satellite navigation. Today, most
effort is put into defining the most cost effective
and feasible hybrid solution delivering a reliable
location service. In practise, IP-based techniques
will be used in UMTS-networks. In a longer
perspective, the goals are to deploy a pan-European
location based service, to standardise positioning
techniques, interfaces and platforms and also to
identify context aware concepts beyond 3G.
Key Action 4 within the IST programme FP5
Communications and Network Technologies
Cluster on Mobile Communications
Systems Beyond 3G Cluster
Adaptive Antennas Cluster
Advanced Mobile Satellite
Sytems Cluster
Location Based Services
(LCS) Cluster
Goals: To implement a system for Goals:
firmware live updates of network - Establish a vision for 3G mobile
components
communication systems
- Scenario-based analysis of 3GStart Date: March 2000
systems
- Solution for integration of fixed
Projects Involved: CAST,
and mobile network
DRIVE, MOBIVAS,
- Solution for transition between
PASTORAL, SATURN,
heterogeneous networks
TRUST, WIND-FLEX
Goals:
- Solutions for adaptive antennas
- Beam steering
- Space/Polarization diversity
-MIMO (Multiple Inputs
Multiple Outputs)
Goals:
- Develop advanced satellite mobile
systems
- Solutions for integrating satellite
and terrestrial systems
- Investigate about regulatory
aspects (licesing, spectrum
availability etc.)
- Feasibility study for satellite
and terrestrial mobile systems
Goals:
- Promote deployment of panEuropean location based services
(geographic positioning)
- Standardization of LCS
techniques, interfaces and
platforms
- Identification of LCS concepts
beyond 3G
Re-Configurability cluster
Start Date: March 2000
Projects Involved: ADAMAS,
ARROWS,BRAHMS, BRAIN,
CAUTION, CREDO, DRIVE,
EMBRACE, EVOLUTE, FITNESS,
FLOWS, FUTURE, IBIS, ICEBERG,
INTERNODE, MIND, MOBILITY,
MOBY DICK, MONASIDRE,
PACWOMAN, PRODEMIS, SATIN,
SHAMAN, SOCQUET, SUITED,
TONIC, VIRTUOUS, WIND-FLEX,
WINE GLASS, WSI
Source: Compiled by Bohlin, Fredelius, Lockström
Projects Involved: ASILUM,
ESCORT, FITNESS, IMETRA, OBANET, SATURN
Projects Involved: BRAHMS,
FUTURE, SATIN, O, SUITED,
VIRTUOUS
Projects Involved: AGORA, ASAP,
CELLO, EMILY, GAUSS, LOCUS,
PEPTRAN, POS.IT, SATURN,
UCAN, WINE GLASS, WIRELESS
INFO, YOUNGSTER
67
Annex 1
Projects categorised under QoS have a
focus on transmission speed, schemes, and
software for higher QoS, i.e. shorter latency time,
greater bandwidth, more effective congestion
control, and packet prioritisation. An example
of a project under this category is CAUTION,
addressing system scalability for better network
utilisation (primary congestion control) within
cellular networks built on 2G, 2,5G and 3G
technologies.
Table 13–(a): Re-Configurability Cluster Projects
Project Name
Description
Duration
1. CAST
The prime objective of the project Configurable radio with Advanced Software Technology
is to research new technologies in software configurable radio, and to build upon
existing/emerging techniques, which contribute to laying foundations for intelligent and
adaptable configuration of the physical layer in the wireless equipment for terminals and
base stations.
Through its research, the project will contribute to: Management of re-configurable
resources; Structures for enabling intelligent decision making; Mechanisms to allow
the entire configuration system to adapt to future changes; Procedures and protocols
for downloading & handling re-configuration of distributed radio system; Concept of
configuration controller, to facilitate low-level management of re-configurable hardware
resources; Architecture and protocols for real-time configuration of high speed hardware
processing
01/04/2000
31/12/2002
2. DRIVE
Dynamic Radio for IP-Services in Vehicular Environments. The overall objective of the
DRiVE project is to enable spectrum-efficient high-quality wireless IP in a heterogeneous
multi-radio environment to deliver in-vehicle multimedia services, which ensure
universally available access to information and support for education and entertainment.
01/04/2000
31/03/2002
3. MOBIVAS
Downloadable MOBIle Value Added Services through Software Radio & Switching
Integrated Platforms. Key objective of MOBIVAS is to develop innovative and modular
network components for the seamless and efficient service provision in converging
existing network technologies.
Key issues: Software download capabilities of the terminal; Capabilities for transparent
dynamic download of transport-oriented protocols; Flexibility in Provisioning and
Accessing services; Registration of services; Authentication, Security, Accounting/Billing;
Service and user Mobility.
01/01/2000
30/06/2002
4. PASTORAL
Platform And Software for Terminals: Operationally ReconfigurAbLe)
The project aims provide a re-configurable, real-time platform for third generation (3G)
mobile terminal
baseband development.
Key issues: Terminal re-configuration; Terminal complexity, cost, power consumption;
Co-simulation & co-design methodologies; Addressing network service heterogeneity
01/01/2000
30/06/2002
5. SATURN
Smart Antenna Technology in Universal bRoadband wireless Networks. The main
objective is to promote enhanced availability of high bit rate wireless services with the use
of smart antennas for mixed tele-traffic scenarios. This means making services available
to more people, more of the time at higher speeds (mobility/location), and/or at greater
ranges. Furthermore, the aim is to consider how smart antennas can provide enhanced
location information.
01/01/2000
31/10/2002
6. TRUST
Transparent Re-configurable UbiquitouS Terminal.
The key issues are: Defining Society and the User needs from Software Radio and
translating these into technology requirements; Using these requirements to define
solutions to any technology pitfalls associated with Software Radio; Validating the
developed technology and disseminating any results via workshops, conferences and
standardisation fora.
01/01/2000
31/03/2002
7. WIND-FLEX
Wireless Indoor Flexible High Bitrate Modem Architecture. The objective of the proposed
research is to suggest a high bit-rate flexible and configurable modem architecture, which
works in single-hop, ad hoc networks and provides a wireless access to the Internet in an
indoor environment where slow mobility is required.
01/01/2000
30/06/2003
68
Project Name
Description
Duration
1. ADAMAS
ADAptive Multicarrier Access System. In ADAMAS project, the goal is to investigate the
performance of a novel adaptive OFDM P-MP outdoor broadband fixed wireless system
for a wide range of service symmetry, attempting to transmit/receive in high bit rates
while increasing the operation frequency.
01/04/2000
30/03/2003
2. ARROWS
Advanced Radio Resource Management for Wireless Services. This project aims at
providing advanced Radio Resource Management (RRM) and Quality of Service (QoS)
management solutions for the support of integrated voice and data services within the
context of Universal Terrestrial Radio Access (UTRA).
01/01/2001
31/12/2002
3. BRAHMS
Broadband Access for High Speed Multimedia via Satellite. The objective of BRAHMS is
to define a universal user access interface for Broadband Satellite Multimedia Services
that is open to different satellite system implementations, including GEO and LEO
constellations.
01/01/2000
31/12/2001
4. BRAIN
Broadband Radio Access for IP based Networks). The goals are:
• To facilitate the development of seamless access to existing and emerging IPbased broadband applications and services for mobile users in global markets.
• To propose an open architecture for wireless broadband Internet access, which
will allow an evolution from fixed Internet, emerging wireless/mobile Internet
specifications and UMTS/GSM.
• To facilitate new business opportunities for operators, service providers and
content providers to offer high-speed (up to 20 Mbps) services complementary to
existing mobile services.
• To contribute actively to global standardization bodies in the necessary timescales
to impact significantly the international standardization.
01/01/2000
30/04/2001
5. CAUTION
CApacity Utilisation in cellular networks of present and future generaTION. The main
objective of CAUTION was to design and develop a novel, flexible, highly efficient
and scaleable system able to control the cellular network resources and deal with
congestion situations. The most important conclusions from this project is that:
Wireless systems of present generation are not yet optimised and CAUTION system can
assist cellular networks to accommodate additional traffic up to 40%.
01/01/2001
26/02/2003
6. CREDO
Composite Radio and Enhanced Service Delivery for the Olympics. CREDO targets the
realisation of experiments demonstrating the delivery of services relevant to the Athens
2004 Olympics, through the joint utilisation and optimisation of diverse (alternate)
terrestrial radio access technologies.
01/01/2002
31/12/2004
7. DRIVE
Dynamic Radio for IP-Services in Vehicular Environments. The overall objective
of the DRiVE project is to enable spectrum-efficient high-quality wireless IP in a
heterogeneous multi-radio environment to deliver in-vehicle multimedia services,
which ensure universally available access to information and support for education and
entertainment.
01/04/2000
31/03/2002
8. EMBRACE
Efficient Millimetre Broadband Radio Access for Convergence and Evolution. The main
goal is to develop a low cost radio access system for the mass market. This will be
achieved through efficient utilisation of radio frequency bands and optimisation of
transmission capacities for a variety of users and usage.
01/04/2000
30/09/2002
9. EVOLUTE
Seamless multimedia serVices Over alL IP-based infra-strUcTurEs. EVOLUTE aims
to design, specify and develop an all IP-based network infrastructure that will offer
seamless multimedia services to users who access the network via a variety of different
wireless technologies.
24 months
Starts 2001
10. FITNESS
Fourth-generation Intelligent Transparent Networks Enhanced through Space-time
Systems. The project scope is to study a powerful physical layer based on reconfigurable Multiple Transmit Multiple Receive (MTMR) space-time processing that
enables a terminal to operate transparently across multiple wireless networks the
system-level implications and requirements of incorporating in a transparent manner
this emerging MTMR technology in a composite radio network according to the
FITNESS scenario.
01/09/2001
31/08/2003
Table 13–(b): Systems beyond 3G Cluster Projects
69
Annex 1
70
Project Name
Description
Duration
11. FLOWS
FLexible Convergence of Wireless Standards and Services. FLOWS will study the
benefit to the service provider of adopting a converged multi-standard approach.
FLOWS has identified multiple in multiple out antenna techniques (MIMO) as a means
of achieving this within a wireless terminal and aims to investigate and develop
the necessary antenna, radio, processing and systems and network convergence
techniques.
01/01/2002
31/12/2004
12. FUTURE
FuncTional UMTS Real Emulator. The FUTURE project aims at adopting recent
advances in the Internet arena and in UMTS by exploring applicability of native internet
protocols (in accordance with IETF multimedia data and control architecture) in over a
mixed satellite/terrestrial architecture.
01/01/2001
30/06/2003
13. IBIS
Integrated Broadcast Interaction System. The main goal is to define and specify a
Satellite Interactive System, integrated with the Broadcast Network part, for supporting
Interactive TV, Internet and Multimedia services, with an up link based on the DVB-RCS
standard and a downlink based on the DVB-S standard.
01/01/2001
31/08/2003
14. ICEBERGS
IP Conversation with Broadband Multimedia ovER Geostationary Satellites. The main
objective for the project is to define an optimised network architecture and related
performance for the provision of IP multicast conversational services.
15. INTERNODE
INTERworking of NOmadic multi-Domain sErvices. The project aims to develop the
concept of strongly secured nomadic VPN services. Main issues and difficulties are:
• Strong secure mobile access to remote LAN data services through WLAN and
GPRS.
• Strong secure access to banking services through GPRS.
• Strong authentication for nomadic services and support of it during network
handover.
• Service provisioning over multi-domain and heterogeneous networks.
Combination of several existing technologies and non-commercial solutions within a
demonstrator.
16. MIND
Mobile IP based Network Developments. The goal is to investigate how a unified
UMTS, HIPERLAN/2 and ADSL could essentially offer multimedia services across
Europe at low cost, with high flexibility and fully convergent with emerging IP services.
Furthermore, research is done about new business models, QoS and ad-hoc networks.
01/06/2001
30/11/2002
17. MOBILITY
Mobile real time TV via satellite systems. The basic goal of the MOBILITY project is to
provide live DVB-S services to people on the move for the cases in which satellite will
be the adequate solution (in particular, the maritime scenario).
01/01/2001
31/12/2002
18. MOBY DICK
MOBilitY and Differentiated ServiCes in a Future IP NetworK. Goals are:
• To facilitate the development of seamless access to existing and emerging IPbased applications.
• To propose an architecture for wireless Internet access by developing new
mechanisms for seamless hand-over, QoS support after and during hand-over,
AAA, and charging.
• To facilitate new business opportunities for operators, manufacturers, services
providers, and content providers for wireless, access, and backbone technology
and services.
• To contribute actively to standardization bodies, such as Internet Engineering Task
Force and Internet Research Task Force.
01/01/2001
31/12/2003
19. MONASIDRE
Management of Networks and Services in a Diversified Radio Environment. the
project scope (Fig. 2) is to implement a UMTS, MBS and DBS network and service
management system capable of:
• Monitoring and analysing the statistical performance and the associated QoS
levels provided by the network elements,
• Inter-working with service provider mechanisms, so as to allow service providers
to dynamically request the reservation (release, etc.) of network resources.
• Performing dynamic network planning as a result of resource management
strategies to optimise delivery of services to mobile users under a spectrum
limited constraint
• Mapping adequately the IP based network resources to the radio resources
01/01/2001
31/12/2002
01/11/2001
30/04/2003
01/09/2000
31/08/2002
Project Name
Description
Duration
20. PACWOMAN
Power Aware Communications for Wireless OptiMized personnel Area Network. Defines
a WPAN architecture ranging from the concept of Virtual Device (VD) up to the socalled Community Area Network (CAN).
Key issues: Scalability, Low-power, Radio-integration, Wireless nomadic IP, Security.
01/03/2002
31/02/2005
21. PRODEMIS
PROmotion and Dissemination of the European Mobile Information Society. Goals:
• To facilitate co-operation, collaboration and exchange of information between the
project teams of the IST Mobile Domain projects
• To assist the project teams by providing updated information on international
research and technological development within the area of mobile communication
• To track and disseminate developments in the areas of standards and relevant
industry fora to the IST Mobile Domain and to the regulatory bodies
• To disseminate information on and promote the spreading of the mobile
Information Society in the European Union.
• To eventually give rise to new proposals to be submitted to the IST programme
and its successor, in the area of mobile and personal communications.
01/09/2001
31/08/2004
22. SATIN
Satellite-UMTS IP-based Network. Project SATIN will define and evaluate efficient
S-UMTS access schemes based on packet-based protocols whilst allowing multicast
service optimisation.
01/01/2001
31/12/2002
23. SHAMAN
Secure Heterogeneous Access for Mobile Applications and Networks. Goals:
• To develop extensions to the security architecture for future mobile
telecommunications
• To define a comprehensive set of additional security features required by the
UMTS security architecture
• To define corresponding security mechanisms, protocols and procedures required
• To define the security features and procedures involving smart cards and other
security modules.
01/12/2000
27/03/2003
24. SOCQUET
System fOr management of QUality of sErvice in 3G neTworks. The SOQUET project will
develop QoS concepts using multi-dimensional QoS inputs and generating perceived
QoS outputs for managed multi-media services over 3G networks.
01/01/2002
31/03/2004
25. SUITED
Multi-Segment System for Broadband Ubiquitous Access to Internet Services and
Demonstrator. The SUITED project aims to make a significant contribution towards
the understanding and development of IP based mobile networks consisting of both
satellite and terrestrial (UMTS, GPRS, W-LAN) components.
01/01/2000
30/06/2002
26. TONIC
TechnO-ecoNomICs of IP optimized networks and services. Main objectives:
• To assess the new business models associated with offering Internet Protocol (IP)
based mobile services in a competitive context
• To evaluate the cost and benefits of providing fixed broadband access to both
competitive and non-competitive areas, and to determine the most appropriate
network infrastructure from an economic viewpoint
• To analyze and disseminate the results of the above studies in order to provide
easy-to-understand conclusions to support strategic investment decisions.
01/01/2001
31/12/2002
27. VIRTUOUS
Virtual Home UMTS on Satellite. The goal for the VIRTUOUS project is to design,
develop and implement a satellite-based UMTS system for home usage. This includes
developing network components able to handle both terrestrial and satellite links.
01/01/2000
30/06/2002
28. WIND-FLEX
Wireless Indoor Flexible High Bitrate Modem Architecture. The objective of the
proposed research is to suggest a high bit-rate flexible and configurable modem
architecture, which works in single-hop, ad hoc networks and provides a wireless
access to the Internet in an indoor environment where slow mobility is required.
01/01/2000
30/06/2003
29. WINE GLASS
Wireless IP Network as a Generic Platform for Location Aware Service Support.
The objective of the project is to exploit enhanced and/or new IP-based techniques
to support mobility and soft-guaranteed QoS in a wireless Internet architecture
incorporating UMTS and WLANs, and to explore their potential in enabling locationand QoS-aware application services for wireless mobile users.
30. WSI
Wireless Strategic Initiative. Development of concepts for the Wireless World in
support of the WWRF.
01/01/2000
31/12/2001
71
01/05/2000
30/04/2003
Annex 1
Table 13–(c): Advanced Antennas Cluster Projects
Project Name
Description
Duration
1. ASILUM
Advanced Signal processing schemes for Link capacity increase in UMTS. The objective
of the ASILUM project is to validate new transceivers concepts, for both base station
and mobile terminal, to increase the capacity of the future generation of UMTS through
new and efficient interference mitigation schemes.
01/01/2000
31/12/2001
2. ESCORT
Enhanced diversity and Space-time Coding for metrO and Railway Transmission. The
aim of this project is to study the feasibility of using GSM-R as a cost effective way of
radio links in narrow metro tunnels. The main operational functions required by train or
metro operators are control, command, voice and video transmission.
20/01/2001
31/12/2002
3. FITNESS
Fourth-generation Intelligent Transparent Networks Enhanced through Space-time
Systems.
The project scope is to study:
• A powerful physical layer based on re-configurable Multiple Transmit Multiple
Receive (MTMR) space-time processing that enables a terminal to operate
transparently across multiple wireless networks
• The system-level implications and requirements of incorporating in a transparent
manner this emerging MTMR technology in a composite radio network according
to the FITNESS scenario.
01/09/2001
31/08/2003
4. I-METRA
Intelligent Multi-Element Transmit and Receive Antennas. The main objective of METRA
was to analyze the feasibility and evaluate the performance of introducing multi-element
adaptive antennas into mobile terminals in combination with adaptive base station
antenna arrays for UMTS. The I-METRA project aims at enhancing and complementing
the scope of the previous METRA project. The main emphasis in I-METRA project is
given to incorporating re-configurability capabilities in order to allow the radio network,
including terminal and base stations, to adjust automatically to traffic, user and channel
requirements.
5. OBANET
Optically Beam-formed Antennas for adaptive broadband fixed and mobile wireless
access NETworks. OBANET project aims at studying, proposing, implementing and
evaluating specific coverage area management strategies as well as their associated
technologies for performance optimisation in broadband adaptive broadband wireless
access networks in two scenarios.
01/12/2000
30/11/2003
6. SATURN
Smart Antenna Technology in Universal bRoadband wireless Networks. The main
objective is to promote enhanced availability of high bit rate wireless services with the
use of smart antennas for mixed tele-traffic scenarios. This means making services
available to more people, more of the time at
higher speeds (mobility/location), and/or at greater ranges. Furthermore, the aim is to
consider how smart antennas can provide enhanced location information.
01/01/2000
31/10/2002
01/11/2001
30/04/2003
Table 13–(d): Advanced Mobile Satellite Systems Cluster
Project Name
72
Description
Duration
1. BRAHMS
Broadband Access for High Speed Multimedia via Satellite. The objective of BRAHMS is
to define a universal user access interface for Broadband Satellite Multimedia Services
that is open to different satellite system implementations, including GEO and LEO
constellations.
01/01/2000
31/12/2001
2. FUTURE
FuncTional UMTS Real Emulator. The FUTURE project aims at adopting recent advances
in the Internet arena and in UMTS by exploring applicability of native internet protocols
(in accordance with IETF multimedia data and control architecture) in over a mixed
satellite/terrestrial architecture.
01/01/2001
30/06/2003
3. SATIN
Satellite-UMTS IP-based Network. Project SATIN will define and evaluate efficient
S-UMTS access schemes based on packet-based protocols whilst allowing multicast
service optimization.
01/01/2001
31/12/2002
4. SUITED
Demonstrator. The SUITED project aims to make a significant contribution towards
the understanding and development of IP based mobile networks consisting of both
satellite and terrestrial (UMTS, GPRS, W-LAN) components.
01/01/2000
30/06/2002
5. VIRTUOUS
Virtual Home UMTS on Satellite. The goal for the VIRTUOUS project is to design,
develop and implement a satellite-based UMTS system for home usage. This includes
developing network components able to handle both terrestrial and satellite links.
01/01/2000
30/06/2002
Project Name
Description
Duration
1. AGORA
A new generic method for location referencing was successfully implemented, tested
and validated in a laboratory type map database environment. The method is designed
for traffic telematics systems that use a digital map on both ends of the communication
chain.
The AGORA project key objectives are:
Adapt and implement this leading edge technology, to bring it from the laboratory
environment to real telematics applications;
Test & validate the reliability of this method on a trial site in Hanover,
Disseminate & transfer this technology for wide-spread adoption/implementation
01/10/2000
–
01/02/2002
2. ASAP
Advanced Specialization and Analysis for Pervasive Computing. The overall aim of
this project is to develop techniques which enable the development of sophisticated
and reliable software systems that are easy to maintain, and can be deployed on new
generation, pervasive computing platforms.
01/11/2002
–
31/10/2005
3. CELLO
CELlular network optimisation based on mobile LOcation.
Project Objectives:
Optimise mobile networks by introducing location-aided planning methods
Increase capacity and service level in high traffic demand conditions by adaptive
coverage areas
Facilitate wideband services by location-aided handover schemes
Enable roaming between different types of networks by location-aided mobility
management schemes
01/01/2001
–
31/08/2003
4. EMILY
The European Mobile Integrated Location sYstem project pursues a realistic system
study together with technological development in view of the implementation of very
efficient location services exploiting terrestrial and satellite location data.
The proposed concept is investigating the coupling of terrestrial and satellite
positioning data through hybridisation of a number of technologies (like cell-id, NMR,
E-OTD, OTDOA) in telecommunication networks and satellite-based positioning. In
addition to this, other hybridisation relevant to the automotive environment will also be
investigated.
1/01/2001
–
30/06/2003
5. GAUSS
GAlileo and UMTS Synergetic System.
The GAUSS project aims to:
• Design and demonstrate a realistic integration between satellite navigation
and communication, with reference to GALILEO and S-UMTS, for provision of
Location-Based Services
• Develop new technology and applications for info-mobility (consumer market) and
intermodality (professional users)
• Validate them through a trial campaign in a real environment
• Contribute to the assessment of market and business opportunities for the
GALILEO services
• Contribute to the standardisation processes
04/12/2000
–
01/12/2002
6. LOCUS
Location Of Cellular Users for Emergency Services
The key issues of LOCUS are:
• Description of the state of the art of Emergency Call Service (ECS) in Europe in
technology, market, legal, institutional aspects and identification of the mayor
players
• Proposal for user requirements and minimum standards for the relevant services
• Analysis of legal/institutional aspects
• Proposals for implementation scenarios including technology, legal and
organisational aspects costs and financing schemes
7. PEPTRAN
The aim of PEPTRAN is to provide a journey planning service which will help you to
find the best possible route between two points. Whereas traditional journey planning
services only offer one mode of transport, PEPTRAN is able to offer a journey based on
driving, walking and public transport services
Table 13–(e): Location Based Services Cluster
27/06/2000
–
27/10/2001
01/01/2000
–
31/12/2002
73
Annex 1
Table 13–(e): Location Based Services Cluster (cont.)
Project Name
Description
8. POS.IT
Terrestrial Wireless Services for Courier Management
The objective of the project will be accomplished by providing an adequate positioning solution
for locating the position of a vehicle via a mobile phone and monitoring and visualising the
vehicle in a map and obtaining information related. In addition, messages can be exchanged
to assign new tasks to be carried out within the area the vehicle is in. Delivery acceptance
will also be available for personnel to inform when a delivery or pick–up has been carried out
successfully and electronic payment to allow delivery payment via the mobile phone.
9. SATURN
Smart Antenna Technology in Universal bRoadband wireless Networks. The main objective is to
promote enhanced availability of high bit rate wireless services with the use of smart antennas
for mixed tele-traffic scenarios. This means making services available to more people, more
of the time at higher speeds (mobility/location), and/or att greater ranges. Furthermore, the
aim is to consider how smart antennas can provide enhanced location information.
10. UCAN
Ultra-wideband Concepts for Ad-hoc Networks
The overall aim is to develop and demonstrate a complete ultra-wideband (UWB) system
demonstrator paving the way to new technologies. All aspects of a functioning UWB
system will be investigated. Research will be done in theoretical and experimental
investigation of the possibilities of an ultra-wideband based physical layer (PHY) to serve
for advanced, location based, self-organising MAC and network layer (NW) scheme.
Delivery will be both the flexible UWB hardware platform and the experimental results
will provide data for regulation/standardisation bodies.
11. WINE GLASS
Wireless IP Network as a Generic Platform for Location Aware Service Support. The
objective of the project is to exploit enhanced and/or new IP-based techniques to support
mobility and soft-guaranteed QoS in a wireless Internet architecture incorporating UMTS
and WLANs, and to explore their potential in enabling location- and QoS-aware application
services for wireless mobile users.
12. WIRELESS
INFO
Wireless supporting agricultural and forestry information systems. The project aims to
implement advanced wireless communications into multimedia systems and services for
agriculture and forest administrations to improve access to information.
17/08/2000
16/04/2002
13. YOUNGSTER
Young People creating Active Service On Context-aware Terminals
The Youngster project will develop technologies to create a new open active mobile
multimedia environment that is accessible from anywhere by a wide range of devices and
networks and supports context-aware features
01/01/2001
31/12/2002
The third problem category, Security, implies
a focus on the encryption, authentication,
authorisation, and accounting issues in
transmitting data. Here the project SHAMAN,
for instance, addresses the security architecture
issues of future mobile telecommunication.
74
Duration
Finally,
the
Application
category
encompasses projects with a focus on improving
usability in terms of services and interfaces for the
end-user of the current technology/technologies.
For instance, the BRAHMS project aims to define
a universal user access interface for Broadband
Satellite Multimedia Services, which is open
to different satellite system implementations,
including GEO and LEO constellations.
The other dimension in the table is the scope
of technology focus. The technology scope is
01/11/2000
–
30/09/2001
01/01/2000
31/10/2002
01/01/2002
–
31/12/2004
01/01/2000
31/12/2001
divided into a three-grade scale ranging from
narrow technology focus to broad technology
focus. This separation has been made to get an
overview of the project technology scope and to
what extent the projects aim to integrate different
technologies. Two of the projects, WSI and
PRODEMIS, cannot be categorised in the matrix
due to the fact that they are supporting projects to
the whole Beyond 3G cluster. They are dedicated
to exchanging information and experiences
among the different projects and with external
parties. In the table, 14 out of 50 projects have
been categorised under System integration and
broad technology focus. They all aim to integrate
different technologies to achieve vertical roaming
and higher end user performance.
In order to provide a more detailed overview
of which technologies each project addresses,
Problem System
QoS
Security
Application
Technology
Focus
ASAP
(Constraint Logic Programming
CLP)
ESCORT
Narrow Technology
(GSM)
Focus
OBANET
(UMTS)
UCAN
(UWB)
Mid
Technology
Focus
IBIS
(DVB-RCS, DVB-S)
MONASIDRE
(UMTS, MBS, DBS)
PASTORAL
(GSM, 3G)
Broad
Technology
Focus
BRAIN
(Hiperlan/2, GSM, UMTS)
CAST
(Misc. Re-config. Radio
technologies)
CELLO
(2G, 3G, WLAN)
EVOLUTE
(UMTS, WLAN)
FITNESS
(UMST, UTRA, HIPERLAN/2)
FLOWS
(Sattelite & Terrestrial)
FUTURE
(satellite/UMTS/IP)
MIND
(UMTS, HIPERLAN/2)
PACWOMAN
(UWB, Bluetooth, WLAN, GPRS,
UMTS)
SUITED
(Satellite, GPRS, UMTS, WLAN)
TONIC
(Business models, UMTS,
HIPERLAN/2)
TRUST
(Misc. Re-config. Radio
technologies)
VIRTUOUS
(network components)
WIND-FLEX
(Misc. RF)
ADAMAS
(RF 5.8 & 10.5 GHz)
ARROWS
(UTRA)
ASILUM
(UMTS)
EMBRACE
(RF 43.5 GHz)
I-METRA
(UMTS)
SOCQUET
(UTRA)
AGORA
(GSM)
MOBILITY
(DVB-S)
PEPTRAN
(GSM)
WIRELESS INFO
(GSM)
CAUTION
(HSCSD, GSM,
GPRS, UMTS, EDGE)
SATURN
(WLAN, UMTS)
BRAHMS
(satellite, user
interface)
LOCUS
(cellular)
POS.IT
(GSM, GPRS)
YOUNGSTER
(GSM, GPRS)
MOBY DICK
(UMTS, WLAN)
SATIN
(UMTS/Satellite)
WINE GLASS
(UTRAN/WLAN)
CREDO
(Satellite &
Terrestrial)
DRIVE
(GSM, GPRS, UMTS,
DAB, DVB-T)
MOBIVAS
(GSM, GPRS, UMTS,
WLAN)
EMILY
(GNSS, UMTS))
GAUSS
(satellite, UMTS)
YOUNGSTER
(Misc. software)
INTERNODE
(GPRS, UMTS,
WLAN)
SHAMAN
(UMTS,
GSM, WLAN,
Bluetooth)
Other
PRODEMIS: internal and external information exchange within the IST and with outside parties
WSI: development of concepts for the Wireless World in support of the WWRF.
Table 14: An overview of FP5 Mobile cluster projects
75
Annex 1
Figure 21: An overview of project technologies
Blu
UW
B
ADAMAS
eto
Hip
oth
erla
n/2
WL
AN
GS
M
GP
RS
ED
GE
UM
TS
Sat
elli
tte
DV
B
Other
Project end
RF 5.8 & 10.5 GHZ
Currently running
During 2003
Before 2002-12-31
Before 2001-12-31
DA
B
AGORA
ARROWS
ASILUM
ASAP
software: CLP
BRAHMS
BRAIN
CAST
Misc. software for RR
CAUTION
HSCSD
CELLO
CREDO
DRIVE
RF 43.5 GHz
EMBRACE
EMILY
ESCORT
EVOLUTE
FITNESS
FLOWS
FUTURE
GAUSS
IBIS
ICEBERGS
I-METRA
INTERNODE
LOCUS
MIND
MOBILITY
MOBIVAS
MOBY DICK
MONASIDRE
RF 40 GHz
OBANET
PACWOMAN
PASTORAL
PEPTRAN
POS.IT
Misc. Tech.
PRODEMIS
SATIN
SATURN
SHAMAN
SOCQUET
SUITED
TONIC
TRUST
RR
UCAN
Misc. RF
WIND-FLEX
WINE GLASS
WIRELESSINFO
76
VIRTUOUS
WSI
YOUNGSTER
Sum
Misc. software for RR
2
3
5
12
15
14
1
31
12
3
1
35
30
25
20
15
10
5
DAB
DVB
Satellite
UMTS
EDGE
GPRS
GSM
WLAN
Hiperlan/2
Bluetooth
UWB
0
a wireless technology matrix (Figure 21) and
aggregated view of project technologies (Figure
22) have been constructed. The shades of the
squares indicate the projects’ end dates.
As would be expected, most projects deal
with UMTS followed by satellite, GSM, GPRS
and WLAN. Only one project is concerned with
the EDGE technology. A total of 30 out of the 50
projects address multiple technologies interacting
with each other. Most of these multi-technology
projects manage interaction between UMTS and
WLAN or UMTS and Hiperlan (with or without
additional technologies). Furthermore, many of
these projects include integration of UMTS and
satellite technologies or UMTS and different 2G
technologies. Nine of the projects are focused on
development within a single technology, mostly
UMTS. Some projects concern what is classified
as “other” technologies, such as UWB.
Figure 23 is a Gantt chart giving a visual
overview of the IST projects and the wireless
technologies they address over time. The first
Figure 22: Project technologies: aggregated view
Figure 23: Gantt overview of the cluster projects
2000
2001
2002
2003
2004
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
BRAIN
ASILUM
BRAHMS
WINE GLASS
ARROWS
TRUST
MOBIVAS
PASTORAL
SUITED
VIRTUOUS
SATURN
PEPTRAN
WIND-FLEX
DRIVE
EMBRACE
ADAMAS
CAST
WSI
LOCUS
WIRELESS INF
INTERNODE
AGORA
POS.IT
ASAP
GAUSS
OBANET
SHAMAN
MOBILITY
CAUTION
EVOLUTE
MONASIDRE
SATIN
TONIC
ESCORT
YOUNGSTER
GSM, GPRS, UMTS, Hiperlan/2
UMTS
Satellite
UTRAN, WLAN
UTRA
Re-conf. Radio
GSM, GPRS, UMTS
GSM, UMTS
Satellite, GPRS, UMTS, WLAN
Satellite & terrestrial UMTS
WLAN, UMTS
GSM
Misc. RF
GSM, GPRS, UMTS, DAB, DVB-T
RF 43.5 GHz
RF 5.8/10.5 GHz
Re-conf. Radio
GPRS, UMTS, Hiperlan, Bluetooth
Misc. cellular
GSM
GPRS, UMTS, WLAN
GSM
GSM, GPRS
Satellite, UMTS
Constraint Logic Programming
RF 40 GHz
UMTS, WLAN, Bluetooth
DVB-S
HSCSD, GSM, GPRS, UMTS, EDGE
UMTS, WLAN
UMTS, MBS, DBS
Satellite, UMTS
GPRS, UMTS, WLAN
GSM
GSM, GPRS
Ends on 31/10/2005
77
Annex 1
projects started in January 2000 and the last
project is planed to end in February 2005. The
projects are in chronological order, sorted after
their respective start dates.
these technologies (represented by the arrows in
Figure 24) rather than on developing technologies
independently. In addition, many of the projects
are concerned with integrating different 2G
technologies with 3G.
Figure 24 shows the traditional dimensions
in discussing the future evolution of mobile
networks, with bit rate and area coverage as
main dimensions. The figure shows that WLAN/
Hiperlan, 3G (UMTS) and satellite technologies
complement each other in the case of mobility
and transmission speed. Also, broadcasting is
in some ways complementary in terms of down
linking data. The thicker black line represents
the frontier of wireless communication as of
today. As mentioned earlier, most of the projects
studied in this section focus on integration of
From a holistic, techno-economic point of
view, the most interesting projects are BRAIN,
MIND and TONIC respectively, as these projects
are most comprehensive and because their main
focus is on the integration of a broad range of
communication technologies. BRAIN was initiated
in January 2000 and the goal was to develop a
standard for both horizontal and vertical roaming
between integrated GSM, UMTS and Hiperlan/2
infrastructures. It was an early attempt to influence
the international standardisation process in this
Figure 24: Coverage/mobility and bit-rate chart
Bit-rate
UWB
100M
Difficult area due to laws of nature
a.
WLAN/HIPERLAN2
10M
d.
b.
Broadcast
(Downlink only)
3G
1M
Bluetooth
c.
2G
100K
10K
Satellite
Fixed
Local
Wide Area
Coverage/Mobility
Legend: Arrows indicate type of integration sought in IST projects specified in the table below.
Type of
integration
78
FP5 IST projects concerned with different types of integration
a.
BRAIN, CELLO, EVOLUTE, FITNESS, FLOWS, INTERNODE, MIND, MOBIVAS, MOBY DICK, PACWOMAN,
SATURN, SHAMAN, SUITED, TONIC, WINE GLASS, WSI
b.
BRAIN, CAUTION, CELLO, DRIVE, EMILY, FLOWS, FUTURE, INTERNODE, LOCUS, MOBIVAS, PACWOMAN,
PASTORAL, SUITED, TONIC, WSI
c.
ARROWS, CREDO, EMILY, FLOWS, FUTURE, GAUSS, I-METRA, SATIN, SUITED, VIRTUOUS
d.
DRIVE
Another project of interest is EVOLUTE,
with the main goal of developing an all IP-based
infrastructure in order to offer seamless multimedia
services over a heterogeneous network. Two types
of wireless technologies, UMTS and WLANs, are
covered by this project. The project’s expected
goals are: design and develop a multiplayer
mobility management scheme, an intelligent
service provisioning environment for mobile
users, a scalable and robust authentication,
authorisation and accounting (AAA) architecture,
and resolve interoperability issues between
heterogeneous environments/networks (All-IP
platform). Sponsors of this project are, among
others, Telia, Motorola and Alcatel. There are
quite a few projects that address the QoS,
security and application issues that are of interest
in further analyses. For example, CAUTION aims
to develop a scaleable system for better network
utilisation within cellular networks. INTERNODE
and SHAMAN are interesting since their mission
was to solve a number of security flaws in
WLAN and GSM networks. Finally, MOBY DICK
concerns issues similar to those in MIND (i.e.
hand-over, charging, AAA etc.).
IST: Concluding remarks and implications for 4G
In summary, the objectives and foci of IST
projects concerned with the future of mobile
communications - including FP5 projects that
have been carried out and major FP6 projects
that are in the starting blocks - indicate a clear
tendency towards the development of a future
mobile system where a multitude of technologies,
complementing each other in terms of coverage,
bit rate and other characteristics, are working
together in a seamless system to optimise usability
for the end user. To achieve this, and move closer
to the vision of ambient intelligence based on reconfigurable radio, significant resources will have
to be devoted to integration. The advantage of
integration is the elimination of tradeoffs between
various systems, and the implicit goal of many
projects is to cover as large an area as possible
in Figure 24 above. It seems that the integration
of existing technologies is a major issue for the
future of wireless. In addition, the IST activities
point to several specific issues - such as quality
of service, security, power management and
multi-modal dialog capabilities - that must be
resolved if the end-user experience promised
by wireless visions is to be realised. At the same
time, it cannot be taken for granted that users
will embrace the vision of ubiquitous mobile
communications services and devices embodied
by the IST programme.
The review of IST research activities in this
section also indicates that 3G is emerging as
a strong base for mobile communications in
the coming years. 3G is still far from being a
commercial success and has just been launched in
Europe, but European research efforts are clearly
building on 3G as a backbone infrastructure
around which a multitude of applications will
co-exist and co-evolve. Although there is major
matter. Many influential actors within the mobile
communication industry, including Ericsson,
British Telecom, Siemens, France Telecom, Nokia,
NTT DoCoMo and others, sponsored the project.
Although BRAIN did not reach all of its original
goals, the project did lead to substantial progress,
highlighting the most important problems and
issues concerning the technologies in question.
The MIND project was a continuation of the
BRAIN project aiming at implementing the
software solutions developed earlier. It was
initiated after BRAIN concluded in May 2001
and continued until the end of 2002. Among
the objectives of MIND were seamless QoS,
accounting and billing, new business models,
and ad-hoc networks. Before the BRAIN project
ended, a project called TONIC was initiated. This
project aimed at evaluating the techno-economic
aspects of the systems developed in BRAIN and
MIND. The project performed a techno-economic
evaluation of four business cases: Seamless
mobile IP service provision economics; economic
viability of 3G Mobile Virtual Network Operators;
economics of fixed networks for broadband IP
services; and economic viability of broadband
services in non-competitive areas.
79
Annex 1
uncertainty regarding future wireless generations,
and planning for 4G has proceeded further in
other regions, the centrality of 3G in current
European research activities reflects an ambition
to consolidate efforts around this generation of
mobile communications in the coming years,
incorporating other emerging standards and
technologies to the greatest extent possible.
European research on future wireless systems
can thus be characterised as an evolutionary path
towards UMTS integration.
A1.3 WWRF Book of Visions
Background and emerging update
The Wireless World Research Forum (WWRF)
has decided to update its “Book of Visions” of
2001. Draft input for the update was distributed
at the 9th WWRF Meeting in Zurich, July 1-2
2003. A subjective overview of the key scenarios
and a discussion on missing technologies is
provided at the end of this section. In the sections
to follow, two important IST projects are in
focus: the “Wireless Strategic Initiative” (WSI),
the forerunner of the WWRF, and the Wireless
World Research Initiative, which worked on three
scenarios for the “Wireless World”. Next, the
“Book of Visions 2001”, published by the WWRF,
is described; a short description of the WWRF is
provided in this introduction.
But what is the WWRF vision about? In the
most succinct description of the vision that can
be given (quoted from the Roadmap Paper of
the WSI-Project, Mößner et al. 2002, p. 39), the
vision concerns “user centric high quality and
high-grade multi-media services in a seamlessly
integrated pervasive mobile communication
environment”. The background and reasons
behind the launch of the WWRF are:
80
“Based on the experience of the third
generation future systems will be developed
mainly from the user perspective with
respect to potential services and applications
including traffic demands. Therefore, the
Wireless World Research Forum (WWRF)
was launched in 2001 as a global and
open initiative of manufacturers, network
operators, SMEs, R&D centers and the
academic domain.”
(quoted from “Overview of WWRF”,
Zurich-CD).
The WWRF was legally established in August
2001 as a non-profit organisation under Swiss
law; members are organisations paying an annual
fee. It was founded by the project partners in the
aforementioned WSI project, namely Alcatel,
Ericsson, Motorola, Nokia, and Siemens, and as
of June 2003 the organisation has 140 members
world-wide.
A major task of the WSI project (started on May
1, 2000) was to establish an open international
discussion on future wireless technologies and
business models that may gradually become
operational after 2010. These visions are based
on the work in a Think Tank of invited experts
from network operators, manufacturers, and
academia, open calls for contributions, and
public workshops. A first edition of the ‘Book of
Vision’ was published in December 2000. Due to
the success of the Think Tank and an increasing
number of requests for participation in these
activities from groups outside of the WSI project,
it was decided at the end of 2000 to turn the WSI
Think Tank into an open forum with world wide
participation, and with a 1st call for Contributions
in December 2000 (Overview of WWRF, p. 3).
Goals and objectives are, among others:
“to develop and maintain a consistent vision
of the Wireless World, to generate, identify,
and promote research areas and technical
and society trends for mobile and wireless
systems ..., to concentrate on the definition of
research ... including pre-regulatory impact
assessments, ... to provide a platform for the
presentation of research results.” (ibid, p. 4).
The WWRF is closely related to the EU
research frameworks, as is depicted in Figure 25
(quoted from Overview of WWRF, p. 1). Of special
importance is the “Cluster on Systems beyond
3G”: “Major objectives are to develop a vision
on ‘Systems beyond 3G’, evolutionary scenarios
based on 3G-systems and revolutionary scenarios
(!) deploying leading-edge access technologies
to achieve the integration of mobile and fixed
networks and to allow the seamless transition and
service provisioning across heterogeneous access
networks.” (p. 3).
The work of the WWRF is distributed into
working groups, centred on four topics:
1)
“The User in the Driving Seat”, with tasks
being understanding the user, new generic
application elements and new interaction
techniques,
2)
“The Service Architecture of the Wireless
World”, addressing business models,
personalization of services, adaptability,
generic
service
elements,
enabling
technologies and architectures for context
awareness and ubiquitous computing;
3)
“New Communication Environment and
Heterogeneous Networks”, with tasks such
as the networking architectures, Quality of
Service, transport protocols, and
4)
“New Wireless Technologies”, with research
tasks pertaining to spectrum issues, antenna
arrays, new air interfaces and ad hoc
networks.
The WSI study
The Wireless Strategic Initiative (WSI) was
an IST project with three deliverables as of
December 2002:
•
The “Reference Model”, consisting of the
conceptual base and “the grand building
blocks of the Wireless World”, which is
divided into “a set of concentric spheres
inhabited by networked Communication
The WWRF is not a standardisation body,
but at the Zurich meeting expectations asking
for an effect on standardisation were expressed
(comparable to the work that the IEEE is carrying
out). There are formal “liaison agreements” with
the UMTS Forum and the Japanese “Mobile IT
forum” (mITF).
Figure 25: Evolution of mobile communication systems and related EU research programs
81
Source: Overview of WWRF, p.1.
Annex 1
Elements” (Arbanowski et al. 2002, Executive
Summary, p. 4). The spheres pertain to the
personal, the local and the global area.
•
•
A deliverable concerning “Important
technological principles and system options
for the elements of the WSI Reference
Model”, e.g. smart antennas capable of
adaptive beamforming and beemsteering
(Pabst et al. 2002).
The “Roadmap”, describing a stepwise
evolution of technologies and thus being an
example of a so called “linear succession
model” (Mößner, K. et al. 2002).
The participating partners in this project
included researchers from Fraunhofer FOKUS,
RWTH Aachen, University of Surrey, University
of Oulu, and Nokia, Siemens and Ericsson. The
following citation from the Roadmap document
gives an overall impression of the far reaching
visions:
“The timeline and roadmap for the wireless
world is a future projection at the conflux of
technological developments as well as social and
economical way-paving events and trends. The
aims of this roadmap include mapping of socioeconomical and technological landmarks to the
technological state of the art and to expected
technological
tendencies.
Definition
and
development of the features and technologies for
the ‘Wireless World’ also has such a multi-faceted
relationship between social, economical, legal
and technological topics: the wireless world aims
towards the pervasive use of mobile technology
in all facets and circumstances of life ...” (p. 39,
also in Executive Summary).
82
This “conflux” of technological, social,
and economic (and legal) developments is
the “visionary” component, and exactly in
that respect a risky presupposition. Compared
to the more critical approach of the Swedish
Wireless Foresight study, the WSI study runs
the risk of not seeing the “disruptive situation”,
according to which new and potent market
entrants offer new technology and business
models, which will destroy the old models.
This is at the same time the central question of
this report. Nevertheless, a short description
of the Roadmap document, including the
methodology, the parts of the study and the
definition of roadmap, is provided here.
In explaining the methodology, the authors
point to other studies which supplied input:
the above mentioned “visions” of experts,
the “Ambient Intelligence” study (Ducatel
et al. 2001), the CyPhone scenario from the
University of Oulu, and UK foresight scenarios.
These give a set of possible behaviour patterns of
future mobile users, and from these the authors
of the WSI study derive technological (and
other) requirements. The focus here is on the
technological side, addressed by the technology
roadmap in Chapter 4.
The technological requirements for the
Wireless World:
“range from the future user interfaces,
mobility aware service and application
execution platforms, network technology
supporting pervasive connectivity with QoS
on demand guarantees to more flexible and
efficient use of the radio spectrum available.
To finally serve these future requirements,
new hardware and software technologies
including display, man-machine interface,
inter-machine communication mechanisms,
improved memory, processing and battery
performance as well as new software and
system design approaches are required.”
(Executive Summary)
The technological developments are
described mostly in tables and some graphics,
based on the building blocks of the reference
model: the Cyberworld (with technologies
managing the Presence, Identity, Interaction,
Application and Cyberhost, section 4.1), the
Open Service Platform (4.2), Interconnectivity
(4.3), and Access (4.4). The state of the art in these
technological areas is described, and research
needed in order to reach the goals defined.
System
1st Generation
2nd Generation
3rd Generation
4th Generation
Bandwidth
Features
9.6 kHz
analogue voice no data transmission
capabilities
AMPS
Advanced Mobile Phone System
TACS
Total Access Com.Syst.
NMT
Nordic Mobile Teleph.
GSM
Global System for Mobile
Communic.
9.6->14.4
digital voice, advance messaging,
global roaming, circuit switched data
CDMA/IS
Intermediated Standard 95
64
digital voice, data, integrated voice mail
PDC
Personal Digital Communication
-> 28 kbps
digital voice, data, i-mode
HSCSD
Switched Data
9.6->57.6
extension of 2G/GSM higher data
speeds
GPRS
General Packet Radio System
9.6->115
Extension of 2G/GSM always-on
connectivity packet switched data
EDGE
Enhanced Data Rate for GSM
Evolution
64->384
Extension of 2G/GSM always-on
connectivity faster than GPRS
IMT2000
International Mobile
Telecommunications 2000
UMTS
System
64->2.048
always-on connectivity global roaming,
IP-enabled
CDMA2000
Multicarrier CDMA
TD- SCDMA
Time Duplex - Space Code Div.
Multiple Access
WWICP
Wireless World Integrated
Communication Platform
IP-enabled
-> 1,000,000
Integration of Multiple Wireless
technologies, introduction of new high
capacity transmission scheme
Source: Mößner et al. (2002)
These central sections are introduced
with comments on the global context (World
Radio Congresses in 2003 and 2007), and on the
system evolution. Table 15 describes in detail how
the evolution of the 2nd, 3rd and 4th generations
is conceived.
WWRI-scenarios and research topics
wireless world. A third Work Package had the
task of finding “Requirements for enabling
WP1 Scenarios, Research Topics in addition to
WP2 Timelines”. The following description has
Deliverable 3 as well as a Presentation by Nigel
Jefferies (Vodafone) and Ross Pow (Analysys)
at the Workshop “Glimpses of the Future”,
12 December 2002 (Jefferies / Pow 2002), as
input.
In another IST research project called
“Wireless World Research Initiative”, with the
participating members Alcatel, IBM, Nokia,
Eurescom and Sony (Kumar et al. 2003), three
scenarios have been developed (Work Package
1). Named “blue”, “red” and “green”, the
scenarios were the basis of a requirements
analysis as to the technologies and the research
efforts needed (Work Package 2) for a future
In the context of this report, these studies
are of special interest insofar as a detailed list
of required technologies and an even more
concrete list of topics for research projects
have been produced and recommended to the
European Commission. Additional research
recommendations were a result of reflection on
alternative scenarios, e.g. that public and private
WLANs may result in a significant portion of
Table 15: System evolution according to the WSI
83
Annex 1
voice traffic moving away from cellular networks
(VoIP), a trend discussed heavily in the US.
•
The following citation from the “Concluding
Remarks” gives a first impression of how
the authors of the document see their own
endeavour:
“This document provides one of the possible
top down analysis for identifying important
technologies for enabling the three scenarios
of Wireless World Evolution proposed by
the WWRI Project WP1. Though the three
scenarios and the consequent selection of
important technologies have been presented
in a sequential manner, yet in the real
world the process of evolution may be
quite different. There is very little certitude
that only one of the three above studied
scenarios comes true in an overwhelming
manner. Moreover, several other possible
scenarios might have been overlooked
in WP1 work simply due [to] the lack of
information.” (p. 22).
In other words, the authors state that they
do not think that these three alternative scenarios
are the most likely ones (p. 19). Nevertheless,
they contain research aspects which they add to
their list and see as having “high priority for the
6th framework research programme – regardless
whether scenario A (the success of WLAN,
additional scenario B is about a comeback of
satellite networks) becomes a reality, or whether
these short range wireless technologies become
integrated in a B3G-type heterogeneous cellular
system” (p. 20).
84
The scales are:
In order to allow comparison of the blue,
red, and green scenarios to the Wireless
Foresight of KTH (which is described in a later
section), the description here is confined to a
listing of the variables they have worked with
and a set of outstanding features, as presented
by Jefferies / Pow (2002). A more detailed textual
description is contained in the aforementioned
Deliverable 3.
customer willingness to adopt new devices,
applications, and services, with three
subscales: no increase in willingness to trial
- increasingly willing to trial; no willingness
to pay more - considerable willingness to
pay more; strong dislike for complexity acceptance of complexity;
•
innovation in services propositions and
marketing: limited innovation - extensive
innovation;
•
technical success of GPRS / UMTS: many
problems - few problems;
•
interaction of wireline and wireless, with two
subscales: little convergence - considerable
convergence; little substitution - considerable
substitution;
•
convergence of telecoms and media: little considerable;
•
extent of regulatory intervention, with two
subscales: light regulation on competition
- heavy regulation; spectrum is a constraint
- is not a constraint;
•
structure of the industry: little consolidation
- extensive consolidation;
•
security, privacy and IPR: major problems not a problem.
The three scenarios have, of course, different
values on the scales; short scenic descriptions of
usage situations are given and a roadmap (“event
timeline”) for possible developments, ranging from
2002 to 2010, as well as expected market outcomes,
are specified. Important features of these three
scenarios are (as quoted from Jefferies / Pow):
The wireless world of the blue scenario:
•
Wireless is the dominant technology in
connecting people and machines.
•
Demand for accessing quality digital content
on the move grows steadily.
•
Large vendors and service providers invest
heavily in offering well-packaged products
and services.
Regulators ensure there is plenty of spectrum
to meet network requirements.
•
Customers demonstrate willingness to pay
more for devices and content that meet their
needs.
•
•
Companies begin introduction of higher
speed mobile networks.
Bigger operators, vendors and content
owners dominate though niche players do
well in selling to these.
The wireless world of the red scenario:
•
Customers highly experimental.
•
Fixed broadband very successful.
•
Customers influenced by open nature of
Internet.
•
Preference for selection of own content and
applications.
•
Home and office wireless networking
products enthusiastically embraced.
•
Wireless connectivity the default edge of
fixed network solution.
•
Vendors move to open technical platforms.
•
Strong competition leads to low prices for
products and services.
•
The industry fragments as new equipment
vendors and service providers enter the
market.
The wireless world of the green scenario:
•
Emphasis on basic personal communication
needs.
•
Customers adopt only simple low-cost
devices.
•
Deployment difficulties for 2.5/3G networks.
•
Shortages of spectrum.
•
Wireless networking limited to the business
environment.
•
Demand for video telephony and video
conferencing.
•
Focus on m2m to make life easier.
•
Significant industry consolidation amongst
major vendors and operators and few small
players.
•
Increasing emphasis on developing markets.
•
Importance of partnerships with companies
in other industries.
As in the case of the Swedish Wireless
Foresight study (below), no likelihood ratios
for the three scenarios are provided, so they
are treated as being equally likely. Kumar et al.
(2003) state: “WP3 work focussed on the analysis
of the three WP1 scenarios for the evolution of
Wireless World without any particular bias for
one or the other. There was never any attempt to
judge (and consequently include the effect of) the
likelihood of any particular scenario. Moreover,
other possible scenarios of evolution might
exist as well.” (p. 3) But it is obvious that there
is meaning in the colours: if “blue” is the colour
of hope then this scenario includes the brightest
prospects because, among other factors, users are
willing to pay for packaged content; if “red” is
the colour of danger, then one of these dangers
may be connected with a fragmented industry,
and the “green” scenario may be rather a “blue
grass” one because users are need driven and not
technology driven. But the technologies needed
in the future and the projects proposed are judged
as being valid for all three scenarios. The list of
research needed and the projects proposed are
quite comprehensive, which makes the question
of which topics are already “under research”
important.
•
Book of Visions 2001
The often cited “Book of Visions 2001”
is a 280 page volume representing the results
of one year’s work of the WWRF, founded by
Alcatel, Ericsson, Motorola, Nokia, and Siemens
in August 2001. It compiles the ambitious and
far reaching visions for the “Wireless World”,
beyond the third generation and reaching out to
2010/2015. However, the book is still in a draft
stage and “does not yet represent a harmonised
85
Annex 1
view of all WWRF members” (p. iii). The “second
version” builds on a compilation of ideas that the
so-called “Think Tank” accomplished (cf. Niebert
2000).
The book is a valuable source even today,
because not only the visions and issues are
described, but the state of the art in technological
fields is discussed, e.g. for Software Defined
Radio (which has its own forum). Furthermore,
fundamental principles are explained; for
instance, the relationship between quality and
bit rate is addressed: “The extent of good quality
radio coverage is inversely proportional to the
transmitted bit rate. The cost of ‘continuous’ and
‘all time everywhere’ radio coverage increases
very sharply with the transmitted data rate.
Spectrum will be necessary in low frequency
range which provides the required coverage in
sparsely populated areas.” (WWRF 200, p. 57)
In the context given, and since there are
newer versions of research topics suggested (see
the aforementioned WWRI list) and new drafts are
in progress (presented at the Zurich meeting, next
section), it makes no sense to provide a detailed
review of this document. Instead, it is more useful
to attempt to understand the “way of thinking”
of the people who participated in working out
the visions and to give a short overview of the
content.
The work was distributed among four
working groups:
WG 1 The Human Perspective of the Wireless
World.
WG 2 The Service Architecture for the Wireless
World.
WG 3 New Communication Environment and
Heterogeneous Networks.
WG 4 Spectrum, New Air Interfaces and Ad-hoc
Networking.
86
The content is essentially organised in the
following way: after introductory remarks and an
overview of other fora (e.g. ITU-R WG8F, and, in
2001 being in the process of being established,
the 4Gmobile Forum) (chap. 1), and a description
of the sphere model, “The Vision and the Issues”
are described (chap. 3), followed by “Expected
Results from the Research” in tables (chap. 4)
and details on the “Proposed Research Tasks”
(chap. 5). The concluding two chapters name
the “Experts having supplied text for the Book of
Visions” and list the “Contributions Received”.
To be sure, the Book of Visions is like an
encyclopædia on technical details of the mobile
technologies. But this technical view “must be put
into a much wider context,” and three features
are central:
“A user centred approach, looking at the new
ways users will interact with the wireless
systems, new services and applications that
become possible with the new technologies,
and new business models that may prevail
in the future, overcoming the by now
traditional user, service provide[r], network
provider hierarchy.” (p. 2).
The
conceptual
innovations
(and
technological as well) seem to be these new ways
of interacting and “being interacted”:
“An example for a vision of the Wireless
World is the emerging need to bridge the real
and the perceived personal virtual world and
to continuously stay in contact with both.
The Wireless World therefore has to address
communications amongst things, humans
and cymans (our synthetic counterparts in the
virtual cyber-world – a sort of autonomous
avatar). As such, a Wireless World of the
future will become our natural enhanced
living environment.” (p. 2)
Three fundamental dilemmas associated with
this “user centred approach”, and with the new
smart and personalised services as the authors
of the Book of Visions conceive them, can be
pointed out. The description of this approach
1)
2)
3)
51
In order to enable the system and the
devices to interact with the individual user
in a smart and a preferred style, the systems
need to “know” a lot about the user. To be
more precise, they need to constantly gather
information about the user (e.g. services
used, products purchased), and put this in
a “user model”, in which algorithms use
this information to generate output that the
user then interacts with. The question arises
what is driver and who is driven? Is there a
risk that the user is driven by smart devices
with “context awareness” that constantly
offer information and ask questions?
The technological and service system will,
according to the view of the Book of Visions,
become very complex, and this complexity
has to be hidden from the user. With this
tendency a fundamental distinction between
“machine” and “medium” is blurred and out
of control of the user, as Esposito (1993) has
pointed out (cf. Paschen et al. 2002). The
constituent quality of a machine lies in the
predictable output from a given input, and
the central quality of a medium lies in the
fact that the input will not be altered while
passing through the medium. With the
hidden complexity management of the new
medium of the Wireless World, the user is
never sure whether it is in fact a medium or
not.
With the “cymans” and other software based
“agents”, the user allows the system/device
to act on his/her behalf. Are machines able
to “act” in the sense that human beings act
and interact? And who is responsible for the
results, the mistakes and the damages? This
is certainly not a completely new question
(cf. Rammert / Schulz-Schaeffer 2002), but
more smart and “intelligent”.
WWRF Zurich meeting 2003
At the Zurich meeting, WWRF partners
presented research concepts for products to
be commercialised after 2010.51 With this
timeframe, it is not obvious that WWRF work is
of relevance for policy makers during the next
few years. However, there are two exceptions:
(1) The planning of future research (Framework
Programme 7) and (2) long run spectrum
planning.
The WWRF is largely dominated by
European equipment providers, with exceptions
such as Motorola and Nortel. However, there
are also some telcos. Vodafone is active (at least,
has been active in the past, see above), as is NTT
DoCoMo. A significant number of participants
at the Zurich came from China, Korea and
Japan. Asked publicly, the chair, Werner Mohr
of Siemens, offered no explanation of why more
mobile telecom companies are not active.
Many of the documents start with short
remarks concerning market trends being observed,
which would make a certain technical development
desirable. This points to a weakness of the WWRF.
It is not dominated by those who have end-users
as customers and who thus know about their
requirements, new market opportunities, and ongoing shifts on the markets.
an important one with devices getting ever
appears in the opening chapter of the book, thus
signalling high priority, and is used to set the
goals and hence the direction of development.
The authors of this report do not have the
impression that there is a close link between
technical work in the WWRF, standardisation
currently taking place, and today’s product
development. Yet, it was possible to identify a
number of papers which provide a highly useful
overview of achievements and open issues. To
name a few issues and authors:
•
Software-defined radio (Beach et al.).
A more detailed review of the WWRF Zurich meeting is available on request; please contact the authors.
87
Annex 1
•
Data throughput of at least 100 Mbps, e.g.
suitable air interface and MAC (Gosse et al.,
Falconer et al.).
•
QoS on IP-based networks (Gosse et al.,
Mangold).
•
Usability of the 60 GHz band. This issue of
shading vs. bandwidth was orally discussed
in Zurich; it is not really present in the
papers.
•
Ad-hoc networking, e.g. air interfaces,
authentication (Krco et al.).
WWRF Zurich did apparently not discuss
issues such as: batteries, openness of phones for
arbitrary code, and camera technologies.
•
"Wireless Explosion – Creative Destruction",
a fast growth, abundant services scenario,
•
"Slow Motion", due to fears of radiation
pollution and reduced usage of wireless
technology a slow growth scenario,
•
"Rediscovering Harmony", a scenario based
on society-wide lifestyle shifts toward a new
balance of human and environmental needs,
affecting all sectors of society with fewer
wireless services than expected at the turn of
century, and
•
"Big Moguls and Snoopy Governments", a
scenario with the old telcos becoming the
moguls, co-operating with Governments,
fighting against chaotic structures near the
end of 2010, and overcoming them with
strict regulations; there is no longer a free
Internet.
A1.4 The “Wireless Foresight” study
Based on earlier inspections, the Swedish
“Wireless Foresight” study (Karlson et al. 2003)
seemed to have adopted an interesting approach.
For this reason, a quite detailed analysis was
carried out, and the most important conclusions,
as well as some quotations concerning the
scenarios and the working method of the team,
are provided here.52
The “Wireless Foresight” study was conducted
as a nine month project (9/2001 - 5/2002) by a
team working half-time on the project. It was the
start of the newly founded Center for the study
of Wireless Technologies at the Royal Institute
of Technology (Wireless@KTH) in Stockholm,
Sweden. External experts participated in the
project, as well as a representative of co-founder
Ericsson in the Steering Committee.
88
Based on a number of mega-trends called
“drivers” (9 items each for technology, socioeconomic-political developments, business
and industry, and users-values-attitudes), and
14 more specific “trends”, 4 scenarios were
developed. The 14 trends were used as variables
and given a specific score on a 7-point-scale.
These scenarios are:
52
Following the four scenarios, "trends and
fundamental drivers" are described. "Technical
implications" of these scenarios, i.e. the problems
and bottlenecks which are assumed to be solved
in 2015, mostly derived from the "Wireless
Explosion" setting, which assumes the fastest
and most advanced developments, are also
described. The study is methodologically sound,
the scenarios are well composed, and the whole
procedure is transparent, probably making it one
of the best studies of this type. Other studies,
including the "Book of Visions" of the WWRF
(see earlier section) and the Swedish "Personal
Communication and Computing", gave input to
the Foresight study, but the method of scenario
writing is somewhat different.
As the carefully written scenarios seem to
have equal chances of materialising, the more
personal views of the authors concerning the
challenges for the wireless industry are cited here
(quoted from the Summary):
1)
Threat from a disruptive market change,
where the datacom industry wins the market
battle;
A detailed text-analysis of the study is available from the authors on demand.
In “Wireless Explosion – Creative Destruction” wireless services and technology develops very rapidly, transforming the
industry in which the old market leaders, the traditional telcos and their equipment vendors, lose their dominant positions. The
old world with closed and vertically integrated systems gives way to layered and open architectures based on the IP protocol.
Even though the previous market leaders don‘t vanish, it is clear that the datacom industry wins the market battle.
In “Slow Motion” the world moves into an economic recession following the burst of the great telecom bubble in the middle
of the 2000s. On top of that, research shows that electromagnetic radiation from mobile devices is harmful, forcing industry
to retreat but finally to refocus on new and more harmless technologies. The problems with guaranteeing security and
integrity in transmissions prove very difficult to solve. Users are reluctant to use wireless technology, severely affecting the
wireless industry. In 2015, the wireless industry has only just started to get back on track.
“Rediscovering Harmony” involves a significant lifestyle shift in the industrialized world. Balance in life and human and
environmental needs are in focus, affecting all sectors of society and industry. The migration flow into the large polluted
cities ended in favour of less stress and quality of life in smaller local communities. There is large diversity in lifestyle
between different groups or tribes in society. People live locally but think globally. There are fewer wireless services than
expected around the turn of the decade, but still a substantial market. Communication between people is a success but
appetite for new cool and funky applications is lower than expected. The big difficulty for the wireless industry has been to
rethink business models and services in relation to these changed market conditions.
Through consolidation and mergers, a few large companies have come to dominate the wireless world in “Big Moguls and
Snoopy Governments”. These moguls have expanded outside their original business segments. Together with the world’s
governments they exert substantial control over the information flow and the communication and media industries. The purpose
for the governments is to protect content owners from illegal copying. Most problems concerning security on the Internet have
been solved, but at the price of slow industry development. Some services are not introduced since they are illegal.
2)
spectrum must be released faster and
governments need to put this high on the
political agenda,
infrastructures and protocols. In the introductory
description of present day industry and near
future, the authors write:
3)
the telco 3G-debt burden must be dealt with
and governments need to alleviate demands
on the struggling 3G operators,
4)
exploding
complexity
with
many
heterogeneous networks and billions of users
call for decentralised systems and adherence
to IP and open APIs,
5)
cell-phone radiation must be taken seriously,
it is better to be precautious – just in case,
6)
better batteries, a bottleneck for light-weight
devices,
7)
better usability with the user in focus,
8)
cheaper infrastructure with innovative new
network architectures,
9)
a phone for the next two billion people in
the third world is a large potential market,
“With the introduction of the packet
switched 2.5G and 3G systems, a whole
new range of mobile data services will
be possible. Other types of systems,
providing advanced services in specific
locations, sometimes called hotspots, will
complement the cellular systems. This will
no doubt lead to the emergence of new
players on the wireless scene and probably
a restructuring of the whole industry as
a result.” And: “Standards and protocols
from the two worlds [telecommunication,
data communication] fight for dominance.
Alliances between companies from the
different worlds are being formed. It seems
the telecommunication industry in general
and the wireless sector in particular is at
a crossroads. The coming few years will
10) if and when the industry matures, cost
efficiency will be a critical success factor.
The study’s central assumption seems to be
that 4G is supplementing the 3G infrastructure
and that there will be heterogeneous
Four scenarios of the Wireless Foresight study
indeed be exciting!” (p. 14).
A1.5 US visions
For the US, there is a lack of roadmaps
providing plans for the whole industry. However,
89
Annex 1
improvements of the IEEE standard and other
important developments are outlined below.
Improvement of QoS in IEEE-standards
A few ongoing developments in IEEE are
particularly relevant. These developments can
be interpreted as improvements of the existing
802.11 standards. It has been recognised by
industry that for any plan to have all voice and
data communication IP-based (e.g. Sun 2002),
one would need either enough reserve capacity
at all times, or a scheme providing for enough
Quality of Service; this would make possible
voice communication with low latency, as well
as, ideally, video communication. The approaches
below aim at improving QoS in one way or
another.
IEEE 802.16
The IEEE 802 standards will be improved, as
in group 802.16. The group addresses broadband
wireless access with suitability for voice (IEEE
2002; cf. the WiMAX initiative by Intel, Nokia
et al., http://wimaxforum.org/about/index.asp).53
The standard will provide up to 70 Mbps over a
distance of up to 50 kms, on 2-11 GHz. Particularly
important is the work of the 802.16e group. It aims
at providing the quality of service needed for voice
communication, and Nokia is very active in this
group. Nokia has announced that it will produce
WiMAX phones by 2005 (according to Gabriel
2003). Mesh networking will be addressed by a
planned 802.16f standard (cf. Intel 2003c).
IEEE 802.20
This planned standard addresses mobile
wireless access on licensed spectrum for up to
250 km/h and with cell ranges of up to 15 km
and more, and high QoS for voice, gaming,
90
53
54
etc., based on IP (IEEE 2003). The IEEE 802.20
group started only recently, in December 2002.
According to Gabriel (2003), however, it may
become redundant due to 802.16e, unless Cisco
and Motorola promote it with greater effort.
IEEE 802.11e
This group is aiming at improving quality
of service in an update of 802.11e. Ratification
of a new standard is foreseen for 2004. Some of
the activity in the group is based on European
work carried out earlier for Hiperlan/2 (expert
interview). According to Gabriel (2003), 802.11e
addresses less than 802.16e, as it provides for
prioritisation only.
Wi-Fi Alliance
The Wi-Fi Alliance is discussing the use of
“spectrum etiquette”, such as listen before talk, in
new unlicensed 5.5-5.7 GHz bands (cf. Mangold,
Challapali 2003).
This overview is certainly not comprehensive.
Vendors are constantly offering new solutions,
designed to reach higher throughput and larger
distances. For instance, Airgo is offering an
improvement of reach of an order of magnitude
for 802.11 (Hirt 2003), Vivato is using beams for
the same purpose, Mesh is improving mobility,
BBSC reach, etc.54
The developments show that the threat that
Wi-Fi poses to UMTS-profits may not have been
the last one to come from the US. In particular,
WiMAX and its mobile variant 802.16e needs
to be observed. Naturally, there is great interest
among equipment providers such as Intel to
sell such equipment. This was apparent in a
presentation given by Sengupta at the World
Wireless Research Forum in July 2003. One of
the conclusions was that Intel demanded more
unlicensed spectrum.
A company called Broadstorm claims to have implemented 802.16a for a non-line-of-sight broadband connection in a rural
area (Broadstorm 2003).
“Vendors like Flarion Technologies, IPWireless and Navini Networks have emerged with compelling technologies that support
broadband data access in mobile or nomadic environments as well as supporting voice traffic using voice over IP.” (3gnewsroom
September 30, 2003)
“Think of a pond with one water lily, then
two, then four, then many overlapping, with their
stems reaching into the Internet”.55
In his vision, the lilies are the Wi-Fi
transceivers. It cannot be ruled out that such WiFi spots will grow together, although e.g. Henry
(2003) has cast doubts on the availability and
quality of such networks. Yet, provided there
were a QoS scheme, or just a substantial amount
of spare bandwidth, in 802.11-like approaches,
hotspot providers could of course aim at providing
voice or video services. Similarly, grassroots
operators could look into such new services,
using clearinghouses such as Boingo.56 However,
there is no indication that this would already be
around the corner.
Changes in regulation
Besides the debate around Wi-Fi, it is
noteworthy that some flexibilisation in the field
of spectrum regulation has started to take place.
One initiative concerns the certification of radio
transmitters. Earlier, these needed to be “type”approved. In June 2000, the FCC released a
Public Notice (DA-00-1407) proposing that a
radio “module” could be tested once and used
in any platform without having to be re-certified
(according to Intel 2003a).
Furthermore, the FCC has set itself a general
target to “advance spectrum reform by developing
and implementing market-oriented allocation
and assignment reform policies.” (2003b, p. 6).
In other words, steps towards flexibilisation of
spectrum regulation are being taken.
A1.6 Japanese initiatives and roadmaps
Introduction
In 2001, the Committee of Future Mobile
Communications Systems (in Japanese, the name
of the group is “Bunkakai”), a part of what was then
the Ministry of Posts and Telecommunications,
announced that a bandwidth of about 1.2 to 1.7
GHz will be needed for 4G, in spectrum below 6
GHz. This judgement has been repeated by Fumio
Watanabe of KDDI, in 2002, in a presentation
given on behalf of the Mobile IT Forum (MITF),
an industry group including all major operators
and equipment manufacturers, such as NTT
DoCoMo, KDDI, J-Phone, Sharp, NEC, Sanyo,
etc. It has been noticed in international discussion
of frequency allocations that “in particular Japan
is pushing for the start of the discussion of fourth
generation mobile telecommunication” (Ewers
2003, p. 20, translation AW).
Recently, the (re-named) Ministry of
Public Management, Home Affairs, Posts and
Telecommunications (MPHPT) announced that
for mobile systems (not WLAN), the following
frequencies should be made available: “Within
five years, to ensure a bandwidth of 330 - 340
MHz mainly in the 1.7-GHz band and 2.5GHz band. Within five to 10 years, to ensure
a bandwidth of up to 1.38 GHz mainly in the
5 - 6 GHz band.” It appears very likely to the
authors that the ministry is writing about “4G”,
although this is not stated explicitly (MPHPT
Communications News October 2003). MPHPT
(July 2003) even wrote of “establishing the
necessary technological elements for 4G by
2005”.
It has not been possible to investigate whether
any grassroots networks (Negroponte 2002)
could be used for low latency communication.
Negroponte is one of the earliest authors who
pointed out that such Wi-Fi networks could grow
together. He wrote:
In 2002, NTT DoCoMo announced that “the
Ministry of Public Management, Home Affairs,
Posts and Telecommunications (MPHPT) is taking
the initiative to develop key 4G technologies
by 2005 for commercial deployment scheduled
around 2010.” (NTT DoCoMo, 2002).
91
55
56
According to Negroponte, the water lily analogy is by Alessandro Ovi, technology adviser to European Commission President
Romano Prodi.
http://www.boingo.com/
Annex 1
The Mobile IT Forum also produced a
number of use cases for 4G services, discussed in
their “Flying Carpet” document (Mobile IT Forum
2003). One example is the use of wrist cameraphones while travelling. Also, use of sensors for
elderly persons is being proposed, with such
sensors communicating data to hospitals, etc.
From the above statements, it can be
concluded that there is a cross-industry initiative
for 4G in Japan, supported by the responsible
ministry.
New handsets
In 2003, Mitsubishi showed the prototype of
a Megapixel camera phone (see Figure 26), having
both IEEE 802.11b and UMTS communications
capabilities (Nikkei Electronics Asia 2003a). This
phone (or similar ones) might become important
in Europe, as it leaked to the media in 2003
that Deutsche Telekom considers using phones
with UMTS in the countryside, and with Wi-Fi
in the cities (the “Moteran” initiative in which
Mitsubishi is participating; cf. <www.moteran.
com> and Berke 2003).
The camera phone market has certainly not
yet come to a standstill. Fuji has produced a sensor
the size of 9.4 mms, producing 6 Megapixels
(Fujifilm 2003). This size should be well suited for
integration into camera phones, requiring a focal
length of about 10 mms. Picture quality would
come significantly closer to that of 35mm film
cameras. Remember that some Japanese cameras
(not phones) come with European lenses, e.g.:
•
The Sony DCR-IP7 camcorder with a Carl Zeiss
lens of f:1.7-2.3/2.3-23 mm and 310 grams.
•
Panasonic's DMC-LC5 still camera with a Leica
lens of f:2.8/4.6-55.2mm and 450 grams.
It was not possible to identify any Japanese
camera phone with European lenses. This is
mentioned here because Europe used to be a
leader in cameras and optics (see Weber 2003 for
details), and it is relevant to ask if Europe could
play a leading role in the future development of
camera phones.
Initiatives by operators
In the field of 4G, it was possible to detect
the following operator-led initiatives.
Figure 26:
Mitsubishi Megapixel mobile camera
phone prototype 57
NTT ME
NTT ME, a subsidiary of NTT, aims at
providing wireless IP telephone services in 2004,
initially for in-building use (Nikkei Electronics
Asia 2003b). This should be seen in the general
framework of increasing IP telephony in Japan58.
In Japan, DSL lines provide consumers with
capacities of, e. g., 12 Mbps for 25€.
IP Talk
Source: Nikkei Electronics Asia (2003a)
IP Talk is an initiative by Mitsubishi with
the potential to offer to subscribers free mobile
communications using the IP Talk handset.
92
57
58
The Mitsubishi Website states that this prototype has a “high resolution camera (Mega pixels)” (<http://global.mitsubishielectric.
com/bu/mobile/index.html>), while Nikkei Electronics Asia writes it has about “100 million pixels”. This is possibly a result of
confusion due to the Japanese style of counting large numbers in steps of 10,000s, instead of the Western style of using 1,000s.
Similar initiatives are taking place in Germany, where a company called QSC is offering free Internet telephony services for its
DSL-subscribers.
Since 1998, NTT DoCoMo has been
conducting research on 4G systems. In 2001,
Chair Oboshi said that 4G might be feasible
already in 2006. According to Electronic Times,
NTT DoCoMo plans for high-definition video
streams to phones (EE Times 2002). The 4G
handsets are expected to feature high-definition
video pictures that are double the resolution of
normal television. To cope with this amount
of data, the system will need a bandwidth of
around 100MHz (Millman, 2002). In 2002, NTT
DoCoMo announced:
“that it has succeeded with the 100Mbpsdownlink and 20Mbps-uplink transmission
experiment under an indoor environment...
4G mobile communications system offering
high-speed transmission of large-capacity data
with wide coverage requires a bandwidth
of approximately 100 MHz. When using
a channel with such a broad bandwidth,
transmission quality required can be impaired
by a large number of multipaths, that is, the
occurrence of secondary signals reflected off
buildings, mountains and other surrounding
objects. DoCoMo’s experimental 4G mobile
communications system employs Variable
Spreading Factor (VSF) and Orthogonal
Frequency Code Division Multiplexing
(OFCDM) technologies which is developed
by DoCoMo to mitigate the impact of severe
multipath interference, and to allow flexible
and fast packet transmission in compliance with
area and other communications conditions…”
(NTT DoCoMo 2002)59
Growing IP telephony in Japan.
Softbank out to link IP phones to 3 rivals. A unified network is likely by March 2005
In a move certain to speed the shift from conventional phone services to cheaper Internet-based services, Softbank Corp.,
the nation’s biggest Internet phone service, is seeking interconnection deals to link independent rivals. Company sources
said the Internet investment firm, which claims 2.8 million subscribers to its BB Phone service - the nation’s largest IP
phone subscriber base - is about to start negotiations with KDDI Corp., Japan Telecom Co. and Poweredcom Inc., which
established interconnection between their respective Net phone networks. Softbank’s plan is to connect its networks with
those of the other three. Softbank hopes to reach an accord with the three rivals by early next year.
NTT DoCoMo
Operators of IP (Internet protocol) telephone services, which relay voice data from conventional phones through data
networks and back to conventional phones at rates well below conventional landline phones, are moving toward a unified
network. With NTT Communications Corp. in negotiations with several companies on similar deals, industry sources say
it is likely all IP phone service providers will be interconnected by the end of March 2005. Six separate Internet telephone
services are available, including Fusion Communications Corp., NTT-ME Corp. and Plala Networks Inc., in addition to
Softbank, KDDI’s alliance and NTT Communications. The six services are being offered to Internet access providers that
use their networks to give customers voice phone services.
IP phone services are typically offered in combination with broadband Internet access, and those who subscribe to
the same service can talk to each other at flat rates. IP phone subscribers can also call conventional, fixed-line phones
throughout Japan at a typical rate of 8 yen for three minutes. In a possible scenario, when IP telephone networks by
separate operators are interconnected, their subscribers could call each other at no extra charge. At present, subscribers
of separate networks cannot use IP phone links to call one another.
Source: Asahi Shimbun, September 18, 2003.
59
Assuming one is thinking of VGA quality of 640x480 = 307,000 pixels, with 16 bits per pixel and 16 frames per second, this
would result in 80 Mbits. For a phone screen and with compression, would less not be enough?
93
Annex 1
The company also announced plans for a
field trial of a 4G system (3Gnewsroom 2003a):
“The field trial will employ Variable
Spreading Factor Orthogonal Frequency and
Code Division Multiplexing (VSF-OFCDM)
and Variable Spreading Factor Code Division
Multiple Access (VSF-CDMA) technologies.
VSF-OFCDM enables downlink connections
of extremely high speeds, both indoors and
outdoors, while VSF-CDMA realizes highspeed, high-efficiency packet transmissions
for the uplink. DoCoMo will evaluate
the following high-speed transmissions
technologies during the field trial:
• Effective packet transmission methods
• Adaptive modulation and channel coding
scheme
• Adaptive retransmission control
• Adaptive beam forming based
predicted direction of arrival.”
on
In 2003, NTT DoCoMo announced that
it will develop a 14.2 Mbps mobile network to
enhance the WCDMA network, the so-called
“High-Speed Downlink Packet Access (HSDPA)”,
according to Mobilemediajapan (2003). This
can be called a “3.5G” approach. The authors of
this report find it difficult to judge whether such
technologies will be needed. One reason is that,
naturally, the future demand for high-definition
video is very hard to predict. Another reason is
that the authors have not identified whether the
use of 3G networks will come close to congestion
in the foreseeable future. According to Ewers of
the German regulatory authority RegTP, Japan is
demanding to regulate 4G-frequencies for solving
Japan-specific problems with 3G implementations
(Ewers 2003).
94
DoCoMo’s Vice president Tsuda recently
presented the following elements of their plan for
4G (ZD Net 2003, Feb 7):
•
Capacity of 20Mbps.
•
Implementation between 3 and 8GHz.
•
1/10 of the costs of 3G.
The latter is perhaps the most important item.
According to Kota Kinoshita of NTT DoCoMo, the
company plans to bring its 4G-technology to the
market by 2010 (RBB Today, July 2003).
Recalling the fierce competition in Japan
mentioned earlier, and the competitiveness of
KDDI thanks to its low costs for 3G equipment,
the anticipated low costs for 4G might explain
why spectrum is not planned to be used for
FOMA, but for the next generation.
KDDI
Hideyuki Shinonaga from the KDDI
Research Institute presented his company’s
plans in July 2003 (RBBToday 2003). He stated
that a ubiquitous network will be provided by
combining CDMA2000 1xEV-Do with Intelligent
Transport Systems and ADSL. This is indeed
a pragmatic approach since it combines the
strengths of the different areas of the company. In
the future, ad hoc networks will also be integrated.
He expressed that it should be possible to earn
fees, when such networks are used, by encrypting
the data and, presumably, decrypting them in
the terminal (cf. also KDDI 2003). In the two
documents, no indication was found that cellular
transmission with 10...100 Mbps is currently in
focus for the company.
Open issues
a.
SDR is a hot issue. Concerning the planned
802.11 phones (Mitsubishi, NTT ME), it will
be seen during the coming months whether
they will have sufficient battery capabilities.
This is an issue which can be solved either
through even more clever engineering,
with new battery technologies, or with an
improvement of the protocol.
b.
It appears that DoCoMo is actively aiming
at solving the open technical issues of
transmitting 14.2 Mbps and more.
•
Korea, with its more than 10,000 WLAN
hotspots, is currently number one in the world.
Alas, market penetration forecasts turned out to
be heavily overestimated, and the target of 20
million subscribers by the end of 2003 will not be
met (KT had 261,000 subscribers in July 2003).60
The explanation for these miscalculations is the
optimistic thought of a fixed-wireless Internet
transition analogous to the earlier fixed-wireless
telephony transition.
During the conference, Samsung also
revealed its overseas sales strategy, which targets
upscale quality-conscious consumers in Europe
and North America. The goal is to launch smart
phones tailored to local user preferences. Finally,
Samsung Chairman Lee Kun-hee and Nokia CEO
Jorma Ollilla reached an agreement on software
and market development collaboration for
handsets and smart phones.
Nevertheless, Korea has all the prerequisites
for successful WLAN deployment, and the
development goes on. According to 3G
Newsroom, The Ministry of Information and
Communication will invest a total of $104 million
in the first-stage of 4G mobile communications
to develop technologies by the year 2005.61 A
description of various activities currently going
on in Korea is presented here.
Samsung 4G Forum 2003
On September 22 2003, a major 4G mobile
technology forum was held in Seoul, Korea.62 The
goal of the forum was to discuss international
standards for future mobile communications
services. The attendants were mainly global
mobile equipment manufacturers such as Nokia,
Siemens, Alcatel, Lucent and Nortel, as well as
officials from ITU and two renowned scholars
from Stanford (Prof. Vahid Tarokh and Prof.
John Cioffi).63 The following is a description of
conclusions made during the meeting:
•
The 4G system is to be fully commercialised
by 2010.
A number of strategic alliances are to be
initiated (see below).
Inter-company co-operation
Korean-Japanese venture
One press release from 200264 stated that
Korea and Japan had agreed to co-operate
in establishing a 4G mobile phone network
between the two countries. The agreement
was reached in a meeting between Information
and Communication Minister Yang Seung-taik
and visiting Japanese Home Affairs Minister
Toranosuke Katayama.
Under the agreement, the two countries
would form (in 2002) a working forum to develop
the telecommunications technology of the future
and its standardisation. The forum was designed
to promote research and development of faster,
more powerful mobile phones on which users
could watch movies, officials said. Also on the
agenda was comprehensive co-operation in highspeed Internet and e-commerce policies.
Samsung-Nokia-NTT DoCoMo co-operation
Samsung claims its position as the market
leader of 4G mobile communication. Their goal
is to take the initiative in shaping international
standards in co-operation with global industry
•
The 4G system will succeed the 3G (IMT2000) system and provide a transmission rate
of 100-1000 Mbps.
60
61
Jae-Kyung, K., How to Succeed in the WLAN, Korea Telecom report, 2003
3G Newsroom, Korea to Invest $104 Million in 4G Mobile Communication, http://www.3gnewsroom.com/3g_news/ jan_02/
news_1779.shtml
Yahoo News, Samsung Electronics 4G Forum Opens In South Korea, http://au.news.yahoo.com/030922/3/lsk5.html
Korea Today, Samsung 4G Forum 2003 Kicks Off, http://www.korea.net/kwnews/news.asp?Number=20030921011
Based on (09 January 2002, Korea Times) Science and Technology Policy News, Jan 02, topic 8, 1 p; British Embassy, Seoul:
Science, Technology and Environment Section: Kimberly Vitelli: T +82-2-3210-5500, F -738-
62
63
64
A1.7 Korea
95
Annex 1
leaders such as Nokia and NTT DoCoMo.
According to Samsung Electronics’ Telecommunications Network Division President
Lee Ki-Tae, “Samsung will share its research and
development achievements with the world’s
top telecommunications companies in order to
accelerate development of 4G technologies”.65
The remark was made on September 23 during the
Samsung 4G Forum. Furthermore, he stated that:
“Even though global information technology
downturn has delayed 3G mobile
communication deployment, it is time to
prepare for future 4G mobile services and
global standardization”.
Wireless Broadband Alliance
Another strategic alliance of importance
is known as the Wireless Broadband Alliance
(WBA).66 Although it is not solely restricted to
Korea, it will still have a major impact on the
development within the country. Behind it stand
five major telecommunication companies: Korea
Telecom (Korea), China Netcom (China), Maxis
(Malaysia), StarHub (Singapore) and Telstra
(Australia). The goals of the alliance are:
•
To further expand the concept and
incorporate other operators throughout the
world.
With this alliance, business travellers are
supposed to stay connected to the Internet easier
while on the move. Main sites for broadband
access are international airports, major business
hubs, hotels, cafés, etc. As of March 20 of this
year, more than 8,600 locations, including 17
international airports in five countries, provide
broadband services. By the end of 2003, the
number of wireless hotspots will increase to more
than 20,000.
One of the most important tasks for the
alliance is to facilitate marketing co-operation,
based on a shared mutual interest in advancing
wireless broadband service adoption. Furthermore,
three workgroups have been formed in order to
solve a number of critical issues. These are:
•
Business Development – to develop bilateral/
multilateral commercial frameworks that can
be applied throughout the world
•
Co-Marketing Group – to develop a
consistent brand and to generate awareness
of wireless broadband benefits to potential
customers
•
Service Delivery Group – to establish and
support current and upcoming technological/
interoperability issues in wireless broadband,
i.e. a uniform platform among alliance
members.
•
To drive wireless broadband adoption by
collectively encouraging increased usage
of wireless broadband services amongst
frequent business travellers
•
To establish a recognised alliance brand
with quality of service (QoS) and standards
of service to help deliver a consistent
broadband experience to users
•
To create additional services for crossnetwork usage (i.e. GPRS, fixed broadband
etc)
•
To support inter-operator roaming
65
Korea Now, Samsung to Tie with Nokia, DoCoMo on 4G Tech, http://kn.koreaherald.co.kr/SITE/data/html_dir/2003/
10/04/200310040048.asp
Wireless Broadband Alliance, World’s First & Largest Wireless Broadband Alliance (WiFi/WLAN), http://www.wirelessbroadban
dalliance.com/docs/20_March_2003_Regional_Alliance.pdf
One of the hottest topics is to work towards
technical solutions for providing seamless roaming
across networks in order to deliver a uniform
wireless broadband service for all operators'
customers. A pilot project for establishing interoperator roaming was rolled out by the end of
July this year. Fully functioning, it will support
access to more than 20,000 hotspots.
96
66
In order to increase its presence in Asia,
leading semiconductor manufacturer Intel plans
to open a research and development centre in
South Korea before the end of 2003.67 The centre
will concentrate on development of technologies
for the digital home and wireless communication.
Among the projects carried out at the centre are
UWB (Ultra Wideband) and WiMAX (Wireless
Interoperability for Microwave Access). The plans
for the research centre were disclosed as Intel
CEO Craig Barrett visited Korea at the end of a
four-nation Asian tour.
•
The policy changes since 1978 ("Open
Door Politics") have led to increased foreign
investments
•
Reversed brain-drain – Students are sent
abroad for studies and then return to start
doing business
•
The advent of domestic high-tech companies
such as Huawei, Datang, etc. gives R&D
advantages
•
Development of new technologies such
as TD-SCDMA gives opportunities for
intellectual property rights and hence
opportunities for Chinese companies to set
entry barriers and rules of competition
Intel is not the only company that is expanding
4G R&D facilities in Korea. The country’s largest
electronics companies, Samsung and LG, also
have projects dealing with connected home
applications. For example, LG recently launched
a networked refrigerator.
market actors.69
A1.8 China
Research and development in China
China is one of the largest and most fastgrowing economies in the world. The extreme
market growth (8.3% on average annually) is
perceived as a business opportunity for global
companies that cannot be underestimated. This
in turn implies a need for the companies to be
close to the market. Not surprisingly, that is
why global companies put tremendous efforts
into doing business there. Billions of dollars
are spent on R&D facilities in the country and
several strategic alliances have been formed with
foreign companies. This also holds for mobile
communications; China is the largest and fastest
growing mobile telecommunications in the world.
In August 2003, Japanese mobile operator
NTT DoCoMo announced that it will establish
a research centre in Beijing.70 The objective is to
research and promote the advancement of mobile
communication technologies for 4G. In the
beginning, ten people will work at the centre, but
this number will later on increase to at least fifty.
It will become NTT DoCoMo’s second laboratory
to focus on such research after the company’s
main R&D laboratory at the Yokusuka Research
Park near Tokyo.71 The total investment for the
whole research centre is 5.3 million USD.
Having been a market follower, China now
wants to become a market leader in industry. A
number of factors nurture this process:68
67
68
69
70
71
Finally, the Chinese market is big enough
to give adequate economies of scale in order to
minimise dependence on other countries and
Research and developmen t in Korea
Five-year plan research programmes
In March 1986, China launched the 863
Research Programme. It deals with topics such
as information technology, biology, aeronautics,
InfoWorld, Intel plans wireless, digital home R&D center in Korea, http://www.infoworld.com/article/03/08/29/ HNintelkorea_
1.html
Elixmann, D., Stappen, C., Dynamics in the ICT Market in the Greater China Region, Communications & Strategies,
forthcoming
Sigurdson, J., Kina störst på mobiltelefoni, Vinnova, 2003, ISSN 1650-3104
Cellullar News, DoCoMo opens 4G research center in China, http://www.cellular-news.com/story/9599.shtml
Computer Weekly NTT DoCoMo to open 4G research lab in China, http://www.computerweekly.com/Article124356.htm
97
Annex 1
defence, automation, energy, materials and
oceanology. It will end in year 2010 and is
budgeted at 420 million USD until year 2005.72
In the 4G wireless industry, 2002 became
a starting point when the Ministry of Science
and Technology invited public bids for the 10th
Five-year Plan Research Programme 863 (Hightech Research and Development Programme)
on research for the new generation of cellular
mobile telecommunication system technology
(4G). Wuhan Hannetwork High-Tech Co., Ltd.,
Huazhong University of Science and Technology,
and Shanghai Jiangtong University co-submitted
the bidding documents and won the bid.
You Xiaohu, the director of the department of
R&D Project of China 3G Mobile Communications
System, states that China started up its R&D of 4G
technology while its 3G mobile communications
system was in a primary stage of application.
China hopes to receive its own intellectual
property rights through development and research
in the primary stage of a new technology.73
The 973 Programme is a fairly new initiative
by the Chinese Government following its 863
high-tech development programme. It was
initiated in 1996, ten years after the start of the
863 programme. China has embarked on the
973 Programme with the aim of accelerating its
scientific, economic and social development
over the next decade and into the middle of the
21st century. The programme is divided into six
main areas: energy, information technology,
environment science, medicine and health,
material science, and agriculture. The Government
plans to spend a total of 300 million USD on
the 973 Programme over the next five years, the
largest-ever such investment in its history.74
72
98
73
74
75
There is also a third programme known as
the 985 Research Programme, which is tightly
bound to Tsinghua University, Beijing. Limited
information was found about it, but according
to an article in CompoundSemiconductor.net
(see footnote above), the programme primarily
deals with information technology development
between year 2001 and 2005.
Future Technology
Environment Project
for
Universal
Radio
The Future project is a key project for
the wireless communication branch of the
communication theme of the National High Tech
Research and Development Programme 863.75
The project carries out research on technologies
beyond 3G mobile communication systems in
order to keep up with current trends and meet
future needs. In practice, the project deals with
air interface technologies, self-organisation
of mobile networks and MIMO antennas. The
project is divided into three phases:
•
Phase 1 – Research about air interface
technologies beyond 3G, testbeds, proposals
submitted to ITU and achievement of core
patents
•
Phase 2 – Air interface technologies matures
and focus shifts towards ad-hoc networks,
nomadic wireless access networks, etc.
Proposals for Beyond (B3G) standards will
be submitted to ITU.
•
Phase 3 – Implementation of universal radio
environment, large-scale field trials and
prototype systems for commercialisation
will be launched around 2010. The network
technology will be based on IPv6.
CompundSemiconductor.net, China seeks rapid progress in electronics and photonics, http://www.compoundsemiconductor.
net/magazine/article/9/5/4/1
Global Watch: China Teams up with European Union on 4G Technology and China to Research and Develop 4G, Nov 26
2002
Hong Kong University of Science & Technology, HKUST Leads National “973” Project, http://www.ust.hk/~webopa/news/1999_
News/news0304.html
The International Forum on Future Mobile Telecommunications, Future Technology for Universal Radio Environment, http://
future.863.org.cn/future_e/future_e01_02.html
3G development
At the moment, China is attempting to create
its own standards for operating systems, audiovideo compression and 3G in order to avoid the
license fees drained away to foreign institutions.
The aim is to export standards, thus reversing the
flow of licenses.
China has increased its technological
independence significantly by developing its own
3G technology standard, namely TD-SCDMA.
This has been achieved by the Chinese company
Datang in co-operation with Siemens from
Germany. Along with WCDMA in Europe/Japan
and CDMA2000 in the US, TD-SCDMA has been
ratified by ITU. Among the benefits of TD-SCDMA
(according to its proponents) are 3-5 times
higher spectrum efficiency compared to GSM
and approximately half the deployment costs
compared to UMTS.77 However, TD-SCDMA has
proven to be quite unsuccessful in fast-moving
vehicles and cell-to-cell handover.
Assistant CFO of China Mobile, Jacky Yung,
said in a report in the Asian Wall Street Journal
that TD-SCDMA might be a complement to the
globally-adopted WCDMA standard, but would
not be able to replace it in China. Furthermore,
according to analysts at Norson Telecom
Consulting, three out of China’s four mobile
and fixed line operators will focus on building
WCDMA networks, using TD-SCDMA as a
76
77
78
79
80
81
supplementary protocol. The remaining carrier is
opting for the rival CDMA2000 technology.78
WLAN development
In October 2002, Huawei was selected as
the premier supplier of WLAN equipment for
China Mobile, the largest mobile operator in the
world.79 The WLAN network will be integrated
into the incumbent GPRS network. Huawei will
provide the authentication server and most of
the infrastructure components, such as access
controllers and access points. The capacity of
the WLAN system is about 350,000 subscribers.
According to Huawei International Marketing
Director Ms. Yu Xiangping, “Mobile WLAN
solution will help mobile operators gain more
high-end subscribers, generate new revenue
streams and enhance customer loyalty”.
The number of broadband subscribers is
growing rapidly in China and Taiwan as technology
becomes cheaper and more infrastructure
becomes available.80 According to IDC, China
is ranked second in the global WLAN race after
Korea and ahead of Singapore.81 However, with
current forecasts and the fact that the subscriber
base in Korea is about to saturate, China might
take the lead in just a few years. IDC estimates a
WLAN market growth of 180 percent this year and
an average annual growth rate of 70 percent until
2005. Today, Beijing, Wuhan and Guangzhou
already have between 30,000 and 40,000 WLAN
users each, most of them corporate users.
The project will organise international and
domestic specialists for carrying out research
about B3G systems, network infrastructure and
B3G demands. It closely co-operates with China
Wireless Telecommunication Standards Group
(CWTS).76
Xiaolingtong
Xiaolingtong, which is also known as
Personal Access System (PAS), means “little smart
China Wireless Telecommunication Standards Group, http://www.cwts.org
Paper from Siemens AG, Going 3G and Beyond, http://www.siemens.ie/mobile/TDSCDMA/TD-SCDMA.pdf
CNET sia, Can China’s homegrown 3G measure up?, http://asia.cnet.com/newstech/industry/ 0,39001143,39150203,00.htm
Huawei News Center, China Mobile Selects Huawei to Launch the World’s First Mobile Mode Wireless LAN, http://www.
huawei.com/about/News-Events/News-Center/827.shtml
Inforge, China’s Broadband Wireless Industry:A Scenario Approach, http://inforge.unil.ch/yp/TALK/slides/epfl2003.pdf
IDG, China driving broadband subscription: IDC,
http://www.cio-asia.com/pcio.nsf/0/ C7015C54EEB9702948256D1E0028AF26?OpenDocument
99
Annex 1
connection” and is the name of a local wireless
loop access network that allows mobility within
an urban area. The Xiaolingtong infrastructure is
based on the plain old fixed telephone system
with wireless end access points, similar to the
Personal Handyphone System (PHS) in Japan.
Advantages are low per-minute rates and one-way
charges. Therefore, fixed line giants such as China
Telecom and China Unicom see Xiaolingtong
as the ticket to the mobile market. However,
MII prohibited the two carriers from using 450
MHz CDMA technology to provide wireless
services. But the fact that Beijing and Guangdong
Xiaolingtongs use frequencies ranging from 19001920 Mhz makes the prohibition unlikely to halt
spreading the service.
Today, the capacity of the network is 64
Kbps, which is faster than those available on
networks of competitors. Because of its set-up, the
Xiaolingtong service is cheaper (~1.3 US cents/min
compared to 4.8 US cents/min for other providers
such as China Mobile or China Unicom), but
does not allow roaming between cities.82 China
Telecom and China Netcom are set to introduce
a roaming service that will allow subscribers to
use their phones on any Xiaolingtong network in
China. The US equipment supplier UT Starcom
is expected to launch a GSM/Xialingtong dualmode phone very soon.
During the first five months of 2003 the
number of subscribers rose with 70 percent to
22.5 million users.83 Xiaolingtong’s success in
recent months has forced the mobile operators
China Mobile and China Unicom to cut their
prices. Today, its market penetration is only
a fraction of China’s more than 210 million
mobile subscribers but is expected to increase
with more than 40 million in the next three
years.
100
82
83
84
Domestic operators’ advances84
China Mobile
China Mobile has plans for acquiring a
WLAN chip that can automatically detect WLAN
frequencies and log on when in range (i.e. optimal
connectivity). Those areas not covered by WLAN
will instead be covered by the conventional GPRS
network. The company started carrying out pilot
schemes in Chongquing and Shanghai in January
this year and they have stated that a commercial
roll-out of this service is expected by the end of
this year.
Recently, China Mobile also launched a
positioning service called Xiaoweixing (=satellite
positioning) in the Zheijang province. The
equipment is similar to a conventional SIM-based
handset.
China Unicom
In March this year, China Unicom launched
a CDMA1x service called “Color E” in the
Guangdong province. It has developed quite
well with a total of 28,000 subscribers. A
GSM1x is under trial in the Jingsau province,
with the objective of enabling China Unicom’s
GSM subscribers to utilise data services
provided by CDMA1x as well as promoting the
commercialisation of GSM/CDMA dual mode
handsets.
China Telecom
China Telecom has not yet made any official
announcements about WLAN plans. However,
according to the newspaper Nanfang Zhoumou,
the company is about to reveal major plans in the
near future.
People’s Daily, ‘Little Smart’ Expands into Beijing Suburbs, http://english.peopledaily.com.cn/200303/12/ eng20030312_
113172.shtml
China Economic Review, Surge in Xiaolingtong subscribers
http://www.chinaeconomicreview.com/htm/ n_china20030801.976613.htm
Economic & Commercial Section, Embassy of Israel, China’s Mobile Industry in 2003, http://www.israeltrade.org.cn/China_s_
mobile_industry_2003.pdf
Guangdong Telecom, on the other hand,
started testing a system called “Network
Express Train WLAN” in Guangzhou, Shenzen,
Foshan, Shuande, Dongguan, Zhuhai, Huizhou,
Zhongshan, Zhanjiang and Shantou.85 Here, the
train passengers can utilise a high-speed wireless
network while on the move. The goal is to compete
with China Mobile’s purely wireless services.
A spokesman for Guangdong Telecom says that
WLAN targets the high-end market mainly suitable
for business people since the monthly fee for
unlimited access is as much as 18 USD.
Chinese networking equipment market
The networking equipment industry in
China is still relatively immature, with quite low
production output. Therefore, the growth potential
within this field is significant. Manufacturing
is mainly carried out under OEM conditions by
companies such as Cisco, 3Com, Flextronics, etc.
At present, Cisco, with its 24% market share, is
the dominant player.
Currently, China is able to produce low- to
mid-end networking equipment. However, in
the last few years, domestic companies such as
Huawei, ZTE and Legend have increased their
market share for high-end switches and routers.
Hence, this indicates a shift from manufacturing
low-end electronics to high-end electronics.
So far, Taiwanese manufacturers have been
unsuccessful in making WLAN equipment.86 Their
competitive edge has mainly been low price and
therefore lacked the high performance required
by the high-end market.
A1.9 India
India has many advantages, such as a
loyal workforce, eagerness for hard work and
85
86
87
88
89
excellent mathematics skills. These factors give
India considerable opportunities for harnessing
future wireless communication technologies. As
a matter of fact, India has attempted to become a
pioneer in 4G wireless communication, as shown
in the next paragraph.
The first 4G test in the world
On November 6, 2000, Bangalore made
history at the IT.Com exhibition as it as the
first city in the world established a 4G pilot
project.87 The Karnataka Government, the central
government agency of Software Technology
Parks of India (STPI) and Charmed Technologies
of Beverly Hills, USA, reached an agreement
on fulfilling the project. The Department of
Information Technology and STPI provided the
network infrastructure needed and Charmed
Technologies was responsible for project
management and network design. IT secretary
Karnataka Vivek Kulkarni said that “The objective
is to elevate Bangalore to the number one
technology city in the world, to leapfrog 3G and
set world-wide standards for 4G”. It is not clear,
however, if the project in question produced any
substantial results.
Guangdong Telecom
Development in India
With 3G services in India delayed indefinitely
due to the lack of government directives,
service providers are being asked to focus on
2.5G (i.e. GPRS) services instead. The Director
General of The Cellular Operators’ Association,
T.V.Ramachandran, said that “India should go
through the 2.5G step before commencing to
consider 3G”.88 Furthermore, he stated that 2.5G
will meet the market’s expectations and be far
more cost-effective while providing adequate
“breathing space” before leapfrogging to 4G.89
Gartner Group researchers say that the lack of 3G
China Big, WLAN in China, http://www.chinabig.com/en/report/it15-4.htm
China Big, WLAN in China, http://www.chinabig.com/en/report/it15-4.htm
EE Times, Site selected for pilot 4G cellular network, http://www.eetimes.com/sys/news/OEG20001106S0063
3G Newsroom, India focus on 2.5G instead, http://www.3gnewsroom.com/3g_news/aug_01/news_0956.shtml
Microwave Engineering Online, Service providers urged to hold back on 3G in India,
http://www.mwee.com/ printableArticle?doc_id=OEG20010803S0007
101
Annex 1
directives from the Indian government has forced
companies into a holding state.
India, like Europe, is an overwhelmingly
GSM-based
country. While
the
Indian
government is technology neutral, all mobile
operators stick to GSM. Unlike China, India
does not have a consistent telecom policy.
While China has been clear about expanding its
telecommunications infrastructure from 1994,
Indian telecommunications is put on hold by
bureaucracy. With about a thirty percent larger
population, China invests more than five times
more in telecommunications ($5-8bn annually).
Ramachandran has cautioned that India is
being left behind in mobile services. “Despite
the great potential here, the gap between us and
other countries is widening day by day”, he said.
This example shows how important government
policies are to the national industry. Some
analysts say that India should skip 3G altogether
and instead wait for 4G technology to mature.
Ashok Jhunjhunwala of the Indian Institute of
Technology in Madras said that “India is not
the place to experiment with expensive new
technologies” and further stated that “the 3G
hype has made the technology unviable in most
developed countries”.
The Implementation Mission Group90
102
The wireless future of India is not pitchblack though. In July 2002, it was announced
that a new wireless technology group called The
Implementation Mission Group was formed by
India’s India’s Ministry of Information Technology.
It was assigned to target fourth-generation
wireless standards development and deployment,
sources here said. It was formed based on the
recommendations of a study funded by the
ministry and overseen by a prominent Indian
computer engineer and professor. The move
marks one of the first times India has attempted
to set technology standards for an emerging
90
technology rather than waiting for international
standards to emerge.
India has traditionally taken a follow-theleader approach to commercial technology
development, but like China, sources said that
the 4G effort is designed to change that approach.
According to Krishnadas (2002), building a
leadership position in 4G would involve the
combined efforts of the Indian government’s
ministries of communications and information
technology, leading government and educational
institutes and laboratories, component and
equipment manufacturers, and service providers.
The plan is also based on India’s track record
for providing software services. Though not the
same as developing technical standards, software
development skills are seen here as an indicator
of Indian technical prowess.
Drawing lessons from Europe’s successful
development of GSM technology, the proposed
road map calls for grabbing a leading role in
almost all facets of 4G technology, from standards
to user terminals. The study recommended that the
government make grants over three years, totalling
about $USD 80 million, to achieve the goals. The
study also recommended that the government
should only monitor and mentor the research
activities rather than control them. The plan is
based on a study carried out by Vinay Deshpande,
former president of the Manufacturers’ Association
for Information Technology and chairman of
Encore Software Ltd. The other author was H. S.
Jamadagni, a professor at the Indian Institute of
Science. Deshpande was part of the private sector
team that designed India’s first computers as well
as the cheap handheld Simputer. Jamadagni is
regarded as one India’s foremost authorities on
digital signal processing. He is chairman of the
Center for Electronic Design and Technology at
the science institute.
Sources said the new wireless standards
group has already met several times to consider
the 4G plan and give it shape. A previous meeting
Comms Design, Indian group to set 4G wireless technology specs,
http://www.commsdesign.com/news/tech_beat/ OEG20020712S0044
“It does look like the funding is being
organised,” an industry source said. “Another
round or two of discussions are needed to figure
out the precise steps to be taken, including
whether there must be co-operation in this with
other countries.”
Research and development in India
India has the world’s largest pool of
technical skills after the US, and the country has
a world-wide reputation for its excellent software
engineers. In order to take advantage of highly
educated, low-wage employees, quite a few
global telcos have therefore outsourced parts of
their software divisions to India. Among these are
Computer Sciences Corp., General Dynamics
and IBM.
Siemens is giving its research development
centre in Bangalore global responsibility for
developing applications such as location-based
services and multimedia messaging to run over
3G mobile networks.91 In total, more than 500
software engineers are currently working on 3G
application development based on WCDMA
technology. The hardware research centre moved
from Germany to Shanghai. At the time being, no
information on whether 4G research is conducted
at the research facilities is available.
looked at whether mobile service providers
would be interested in deploying the technology
when it is developed. The meetings are a sign of
progress, observers said, but the government has
yet to decide whether it will fund the effort.
103
91
Computer Weekly, Siemens hands 3G Apps Development to India, http://www.computerweekly.com/Article121976.htm
104
A2.1 2.5G and 3G
Based on the successful, Europe-led,
standardisation cycle of GSM, the telecom world
has taken to planning an interval of approximately
ten years between each new generation of mobile
systems. Following this timeframe, UMTS systems
and services were supposed to come on the
market by 2002/2003. They were supposed to
mark the transition from the voice-centric 2G to
the data-centric 3G world. Meanwhile, GPRS, as
an upgrade from GSM, and subsequently labelled
2.5G, offered the first real market experience
with mobile data services. However, its ‘mobile
internet’ concept, based on the WAP protocol,
failed. In contrast, the messaging service SMS
proved to be a success.
Doubts over the market potential of mobile
data and mobile multimedia have depressed the
expectations for 3G. Major problems associated
with 3G are (see e.g. Wallage, 2003):
•
Deployment is stalling because of the
changed investment climate vis-à-vis high
license costs and high infrastructure costs;
•
2.5G seems to be adequate for mobile
services at the moment. There are still
doubts if there is a mass market for mobile
multimedia;
•
Latency is too high for Voice over IP; data
speeds were initially less than predicted,
but recent developments in Japan show
otherwise;
•
Vendors still struggle with basic problems
such
as
interoperability,
availability
of devices, network performance and
reliability;
92
http://www.3g.co.uk/
•
Battery life of terminals was expected to be
a major bottleneck, although the FOMA
system seems to be breaking ground.
As a result of these problems, a number of
major European mobile operators have already
written off the cost of their 3G licenses. The
massive roll-out of 3G has been delayed, and
the linear, phased approach to new mobile
generations seems to be under pressure. However,
for the time being, 3G deployment is still
announced to go forward, even though launch
dates have been pushed back considerably.
The following paragraphs assess the influence
of current developments on potential business
models for 3G in Europe.
Actors and markets
In Europe, 2.5G systems and services
are widely in operation. Table 16 provides an
overview of European operators offering GPRS
services. World-wide, GPRS is available on 147
networks in 58 countries, totalling 6.4 million
subscribers92.
Meanwhile, Japan has taken the lead
world-wide in the introduction of 3G. NTT
DoCoMo introduced commercial 3G services
in Japan in October 2001 and had over 1
million subscribers by October 2003. The
second operator to employ 3G services based
on the WCDMA standard (i.e. part of the GSMfamily) in Japan (December 2002) was J-Phone
(owned by the Vodafone Group), which claimed
65,800 subscribers by July 2003. Meanwhile,
South Korean SK Telekom and Japanese KDDI
had started offering 2.5G/3G services based on
Annex 2: Current and
emerging business
models for mobile
services
105
Annex 2
standards belonging to the competing CDMAfamily.
Table 17 provides an overview of 3G
launches and major trials in Europe.
The first introduction of 3G in Europe was
in Italy. Hong Kong-based company Hutchison
Whampoa first introduced 3G services through
its subsidiary ‘3’ in Italy and the UK. By March
2003, the company reported 50,000 subscribers
in Italy and 10,000 subscribers in the UK. By June
2003, the company had approximately 520,000
3G subscribers world-wide93 (i.e. in Italy, Austria,
Sweden, UK and Australia). At the end of August
2003, the number of subscribers had risen to
155,000 in the UK, and 300,000 in Italy.
A number of other European mobile
operators have announced the launch of 3G
before the end of 2004. These include most
operators that are part of the Vodafone Group,
T-Mobile UK and T-Mobile Germany, TIM,
TeliaSonera Finland and TeliaSonera Sweden, O2
Germany and O2 UK, E-Plus, Orange France,
Telefonica and KPN Mobile. However, it is
uncertain what date these companies are aiming
for, and to which extent services and networks
will be available.
Table 16: GPRS operators in Europe
Country
Operator
Austria
Belgium
Denmark
Finland
France
Germany
Greece
Ireland
106
Date
Country
Operator
Connect Austria
March 2001
Italy
Blu
December 2000
Mobilkom
August 2000
TIM
March 2001
T-Mobile Austria
April 2001
Vodafone Omnitel
July 2001
Tele.ring
January 2001
Wind
April 2001
Base
October 2002
P&T Luxembourg
May 2001
Belgacom Mobile
July 2001
Tele2
March 2001
Mobistar
May 2001
KPN Mobile
December 2000
Orange Denmark
May 2001
Orange
December 2002
Sonofon
January 2001
Telfort
November 2001
Luxembourg
Netherlands
TDC Mobil
January 2001
T-Mobile Netherlands
December 2001
Telia Denmark
May 2002
Vodafone
April 2001
Netcom
January 2001
Telenor Mobil
February 2001
Alands Mobiltelefon AB May 2001
Norway
Finnish 2G
January 2001
Radiolinja
October 2001
Sonera
December 2000
TeliaSonera
October 2001
Bouygues Telecom
June 2002
Orange France
May 2002
Telefonica Moviles
January 2001
SFR
June 2002
Vodafone Espana
May 2001
E-Plus
March 2001
O2
January 2001
T-Mobile
June 2000
Vodafone D2
March 2001
Cosmote
March 2001
Vodafone
March 2001
STET Hellas
July 2000
Portugal
Spain
Sweden
Switzerland
UK
Optimus
June 2001
TMN
March 2001
Vodafone Telecel
April 2001
Amena
June 2001
Tele2
October 2001
Telia Mobitel
February 2001
Vodafone Sweden
September 2001
Orange
September 2001
Swisscom Mobile
February 2002
TDC Switzerland
September 2000
O2
June 2000
O2
January 2002
Orange
August 2002
Vodafone Ireland
February 2002
T-Mobile
June 2002
Vodafone
April 2001
Source: GSM Association, http://www.gsmworld.com
93
Date
http://www.hutchison-whampoa.com/eng/stock/investor.htm
Country
3G Operator
Date
Status (October 2003)
Austria
3
May 2003
Service Launched
mobilkom austria
April 2003
Service Launched
Croatia
VIPnet
May 2003
Trial
Czech Republic
Eurotel
February 2003
Trial
Estonia
EMT
September 2003
Trial
Greece
Telestet
July 2003
Trial
Ireland
3
October 2003
Trial
Vodafone
May 2003
Trial
Isle of Man
Manx Telecom
December 2001
Trial
Italy
3
March 2003
Service Launched
Luxembourg
P&T Luxembourg
June 2003
Trial
Tango
May 2003
Trial
Monaco
Monaco Telecom
June 2001
Trial
Sweden
3
May 2003
Service Launched
UK
3
May 2003
Service Launched
Source: http://www.umts-forum.org
Services
In Japan, multimedia services offered with 3G
technology were already accessible under 2G on
handsets equipped with large colour screens and
built-in digital cameras that can take photos or
videos (notably with the sha-mail and movie-mail
services). Mobile subscribers there can download
screensavers and polyphonic ringtones. DoCoMo’s
FOMA services do not presently provide
additional generic innovations besides bitrates and
videophony. It appears that the dissemination and
adoption of these services has been gradual, and
not marked a break with existing services.
In the EU, the situation has been somewhat
different (see also Manero, 2003). In the UK, mobile
operator 3 was offering three bundled solutions at
launch in March 2003, all containing a wide range
of accessible services, with considerable emphasis
on video. Because of the mitigated results and
a disappointing sign-up rate, the operator cut its
rates considerably, particularly for voice calls, and
was then accused by its rivals of having instigated
an aggressive price war. 3 UK plans to begin
marketing prepaid offers by the end of the year. 3
Italy launched its services a few days after those in
the UK, and included two high tariff packages, with
an emphasis on messaging and multimedia content
downloads. Two lower rate plans were introduced
in June, and in addition, the operator offered
summer deals on handsets. At launch, 3 Austria
offered packages, including video downloads,
e-mails, MMS and video messages, and voice
calls. Like in Italy, the operator in Austria offered
special summer deals including free handsets and
introduced two new rate packages.
Table 17: 3G introduction in Europe
3 Sweden, which was launched in May
2003, adopted a different approach right from
the start, i.e. offering 3G as a complement to
existing 2G services. It offers three sets of tariffs.
Customers can choose between two plans, geared
to standard (2G-type) use, and a third plan which
also includes video services. Mobilkom Austria,
the only European competitor to the Hutchison
branches offering 3G, adopted a similar approach.
It offers 3G services which are identical to 2.5G
services, including two data-centric packages.
The services themselves are free until October
2003 (note that the handsets are being marketed
at €800).
Considering the 3G applications currently
on the EU market, a number of ‘unique selling
points’ for 3G can be identified:
107
Annex 2
•
Video clips: short video content services
created jointly and/or exclusively with
certain content owners / content providers;
•
Messaging: in addition to email, text, picture
and voice messages, 3G enables real-time
video calls;
•
Cheap phone calls: through better network
management and because it relieves
congestion, 3G makes innovative pricing
strategies possible such as flat fee or simply
bulk pricing for voice calls.
The latter selling point, surprising as it may
seem, is in line with the argument (see e.g.
Odlyzko, 2001) that the investments being made
in 3G may not be necessary, as 2.5G would have
been sufficient to relieve network congestion,
but that, once made, they will provide much
greater voice capacity and thus an incentive to
charge substantially lower rates for voice calls.
As the intensity of usage of mobile phones is still
way below the intensity of fixed phone usage,
there seems to be ample room for stimulating a
quantum change in customer behaviour.
Other features that have been emphasised as
part of the 3G service portfolio are:
108
•
Information
services:
general
financials) or location based;
•
Gaming;
•
Advanced
voice
teleconferencing;
•
Simultaneous use of voice and data: while
talking on the phone, data can be accessed.
services:
(news,
e.g.
In addition, a number of applications
for the business market are envisaged, such
as high speed access to (company) networks
(e.g. intranet, sales and service information).
However, such applications are emphasised
less, because of the higher requirements posed
by the corporate market, and the identification,
since a few years, of the youth market as driver
of innovation in the mobile market.
Of course, the above observations are only
based on a limited amount of evidence as they
currently reflect only one operator’s strategy.
However, they already provide a number of
indications as to the nature of 3G business models
and service offerings that may be expected. Next
to video applications as an attractive novelty,
3G will likely be just as much about relieving
congestion, so as to be able to better support and/
or combine existing applications and services,
and offer cheap mobile voice calls.
In terms of the value proposition, a
divergence is apparent between positioning 3G
as a complement (e.g. the strategy of 3 Sweden,
Mobikom Austria, and to some extent also of
NTT DoCoMo), or rather as a substitute of 2.5G
(e.g. the initial strategy of 3 UK and 3 Italy). The
demand for mobile broadband services seems
to be one of the main factors influencing the
eventual outcome of these divergent strategies. If a
strong uptake of mobile broadband services (such
as video services) is expected or experienced,
3G will be more likely to be positioned as a
substitute of 2.5G. If this uptake is not expected
or perceived to be strong, 3G will be more likely
to be positioned as in line with 2.5G, e.g. offering
cheaper voice calls.
Roles
As the success of Japanese i-mode services
has been attributed largely to i-mode’s supposedly
superior business model, the particularities of
this model and the roles constituting the i-mode
value network have been well documented (see
e.g. Bohlin et al, 2003). However, as far as the
whole field of mobile services is concerned, a
systematic taxonomy and comparison of mobile
business models on the value network level
are still lacking. This constitutes an important
challenge for any research into current and future
wireless business models.
Nevertheless, there have been several
attempts to ‘deconstruct’ the emerging 2.5G and
3G mobile value network (see e.g. Li & Whalley,
2002; UMTS Forum 2002; The Yankee Group,
2000). The UMTS Forum (2002) has specified a
number of generic roles for 3G service provision:
Network Operator: The key function of the
network operator is to provide access and
transport services. A network operator is
typically a 3G licence holder;
•
Content Aggregator: A content aggregator
performs the function recognised today as
mobile portal. The key function of the content
aggregator is to package and offer services
from one or several content providers;
•
Content Provider: The role of the content
provider is to provide services (“content” or
applications) that add value to access and
transport services. Value-added services can
be produced by the content provider itself or
purchased from others;
•
Billing and Collections Provider: A billing
and collections provider issues bills (or the
equivalent) and arranges for collection of
payments from customers. In most cases this
provider will also handle authentication,
authorisation and credit reservation;
•
Financial Institution: These handle financial
transactions such as payments on behalf of
other organisations. In most countries these
institutions must hold a banking license;
•
Clearing House: A clearing house
communicates the roaming records and/
or settlements between visited and home
domain “parties”;
•
Authentication, Authorisation and Credit
Reservation role: This role is usually included
in the billing and collections provider
role, but it may be a separate role in some
particular roaming scenarios;
•
Resellers: These perform the function of an
agent between the network operator and end
customers;
•
Advertisers: These offer advertisements or
sponsored services;
•
Content Owners: These are not directly
involved in providing services, but they will
interact with content providers and may have
bilateral agreements with them.
According to the UMTS Forum, these are the
core roles to be found in any typical 3G service
offering. The way these roles are combined by
specific actors will determine the way the value
network and subsequent business model are
structured. This means a greater flexibility for
the 2.5G/3G value network. The most striking
difference between the 2.5G/3G value network
and the traditional mobile value chain is that
the latter is characterised by linear sequential
dependencies, while the former is organised in
the form of parallel, but interlinked, tracks of
different chains and systems. The Yankee Group
describes a mobile value network existing of five
major value chains. They refer to:
•
Network Transport. Network operators
have traditionally integrated the whole
network operating value chain, consisting
of spectrum brokerage, mobile network
transport, and mobile service provisioning.
They are often labelled as gatekeepers, both
in terms of customer ownership and in terms
of ownership of limited resources such as
spectrum and operating licenses. With the
subdivision of telecom groups into fixed
and wireless operators, and the advent of
so-called mobile virtual network operators
(MVNOs), some fragmentation of this value
chain can be expected.
•
Applications Operation. The application
environment includes application developers,
systems integrators, and applications operators.
Companies that bundle these activities are
also labelled wireless application service
providers (WASPs). WASPs may develop
and host applications for end-users, but they
may also concentrate on providing solutions
for mobile network operators. This means
that there are strong links with middleware/
platform providers (see below).
•
Content Provisioning. This value chain consists
of content providers, content aggregators and
portals. Portals also serve as wireless Internet
service providers (WISPs), as they become the
gateway to Internet content.
•
109
Annex 2
•
•
Payment Processing. Traditionally, network
operators have had the only billing
relationship with the client. With the possible
advent of mobile commerce, requiring a
number of mobile financial services, other
parties, such as banks, specialised billing
companies, and mobile commerce platform
vendors, have opportunities to get involved
in this activity.
Providing Device Solutions. Handset vendors
are a well-established part of the mobile
value system. As they provide hardware as
well as software solutions, they not only
have access to the user because of the direct
buying relationship, but they can also preset
the operating and browser systems running
on the handsets to their own advantage.
In addition, there are two ‘enabling’ value
chains involved:
•
•
110
Network Equipment Provisioning. Companies
providing network equipment are e.g.
Ericsson, Nokia, Motorola, Alcatel, Nortel.
Traditionally, infrastructure vendors provided
a relatively standardised product. However,
this is changing as new applications and
middleware (see next bullet) are being
developed by these companies.
Middleware/Platform Provisioning. This is
becoming an ever more important part of
the wireless value system. Examples are
WAP gateways, SMS gateways, mobile portal
platforms, mobile commerce platforms, and
other applications platforms.
A lot of speculations have been put
forward about the precise configuration of
these interdependent chains in the 3G wireless
value network. In general, it can be argued
that business models for mobile services have
traditionally been characterised by an important
dependency on the underlying technological
infrastructure, resulting in a rather closed model
with a central ‘gatekeeping’ role for the mobile
network operator. Recent research (Ballon et al,
2002; Fransman, 2002; Wehn de Montalvo et al,
2003) shows that this constellation is, in general
terms, still valid with the advent of new services
over 2.5G/3G systems, although there are a
number of profound underlying changes which
are becoming visible:
•
The increased centrality of handset and
network vendors in the core value network,
even more so as they are providing more
and more of the platform and middleware
functionality;
•
The billing relationship with the customer
is still largely held by the mobile operator,
although it is no longer restricted to this
role;
•
There is no well-defined content provisioning
model yet, with the i-mode model and the
messaging model being the most successful
ones at this stage;
•
There is a large and growing gap between
the high R&D expenditure of handset and
network manufacturers and the continuously
decreasing R&D expenditures of network
operators;
•
There is increased attention to the active role
of users in the process of value creation.
Business models
The UMTS Forum (2002) has put forward 3
potential generic business models for 3G. These
business models are differentiated according
to which role acts as the main service provider
(i.e. the point of enquiry for service requests and
problems, typically also incorporating the billing
and collections provider role) to the customer.
These business models are labelled as follows:
•
Network Operator Centric Service Provider.
In this model, the customer has a direct
relationship with the network operator.
The network operator sets the prices of the
services and handles the payments. Content
is normally acquired wholesale from content
providers or is ‘home-made’ by the operator
itself. The network operator effectively
bundles the content aggregator role. Services
•
•
Content Aggregator / m-portal Centric
Service Provider. This model is not limited to
providing physical access to services through
a mobile portal, but rather includes a range of
value added services. Added value that might
be offered on top of access and transport
services could include authentication,
security, simplicity and payment aggregation.
In this model, the customer has an agreement
with the content aggregator, but may still
also have a relationship with the network
operator. Content charges and access charges
might thus be separated;
Content Provider Centric Service Provider.
This model is similar to the content aggregator
model. The difference is that the content
provider has a considerable portfolio of its
own and wants to align itself with a network
operator and thus take up the content
aggregator role. The customer may have a
relationship with many content providers in
this model. The diversity of service offerings
is likely to be very high, while the number of
transactions per buyer-seller combination is
probably rather low.
The business model typology described by
the UMTS Forum effectively points at the dilemma
of so-called walled garden versus open models,
which has occupied a central role in the debate
over mobile internet business models since its
very beginning. However, this chapter argues that
this typology is biased towards third party content
services with the neglect of peer-to-peer services,
and that it focuses too much on the operator –
content provider dichotomy, thereby neglecting
the increasingly decisive role of both handset
vendors and platform providers, two ‘enabling’
roles that, as was described above, have moved
into the core of the mobile value network.
Therefore another typology of potential 3G
business models is adopted, which does take into
account these decisive shifts. It distinguishes three
typical ‘approaches’ or models to new mobile
services, service architectures, and network
concepts, depending on the prominence of
specific roles within the value network, functional
characteristics, and dominant application types
(apart from voice telephony). Adapting from Tee
(2003), these may be labelled service-centric
models, protocol-centric models and platformcentric models:
(1) Service-centric models. These models are
driven by mobile operators, following the example
of the Japanese i-mode service. The dominant, or
at least most characteristic application type is
third party content, provided by subsidiaries or
partners of the mobile operator, or by independent
content providers adapting their content to
the operator’s platform. In these models, the
operator acts as a co-ordinator in terms of the
standardisation of service design, protocols and
billing models. The operator also plays a defining
role in the branding of the service package. This
goes contrary to the European tradition of vendors
being able to innovate around a number of voice
and open standard protocols, and to the tradition
of branding of handsets, rather than of services,
which has prevailed in the EU.
are in many cases offered as bundled
packages as part of subscriptions. Network
operators will use this model to increase
ARPU and to retain their customers;
Recently, the most notable examples of
service-based models in the EU have been imode (Telefonica, E-plus, KPN), Vodafone’s Live
services and T-zones (T-Mobile). Vendors have
been clearly reticent to support these services,
as can be shown from the initial refusal of Nokia
to build handsets supporting i-mode. Vodafone,
having a larger scale on the EU market, has found
it easier to convince handset makers to support
Vodafone Live specifications. This has in turn led
T-Mobile, TIM and Telefonica to bundle a number
of their handset activities as a way to increase
their bargaining power vis-à-vis the vendors.
(2) Protocol-centric models. These models
are driven by mobile phone manufacturers.
They are based on more or less open protocols
such as WAP, SMS and MMS, which are in
principle agnostic of operators, but may differ
slightly between handset vendors. The dominant
111
Annex 2
application type in these models is messaging
(SMS, MMS).
Since Vodafone live and increasingly also
i-mode supports MMS, it may seem as if these
models have converged. Still, MMS is partly
complementary, but also partly in competition
with the service based models, as it may form
in itself an alternative to many i-mode and Live
functionality. It is publicised as a peer-to-peer
medium rather than a content driven medium
such as the service-based models. But of course
it can be used for multimedia versions of today’s
SMS third party content services. It has no portal
structure, so users must know the address of
these third party content providers, as is the case
with SMS third party content services. Finally, it
is branded as a feature of phones, rather than of
operator’s networks. The Open Mobile Alliance
(OMA), to which the crucial player Nokia has
pledged its allegiance, is currently attempting to
push forward MMS and to enlarge the scope of
open standards such as MMS.
(3) Platform-centric models. These models
are driven by platform providers such as Microsoft
and the Symbian group. They are based on a
new generation of mobile handsets that run on
powerful operating systems which have the ability
to provide strong links with the fixed internet,
intranet and extranet. The most characteristic
application types in these models are mobile
office applications. The O2 XDA and the Orange
SPV Smartphone, both running on Microsoft
operating systems, have initiated this approach.
112
As it risks reducing device manufacturers to
the role of white branded hardware producers,
selling an increasingly commoditised product,
an alliance of mobile handset manufacturers has
teamed up under the name of Symbian to counter
this strategy. With the goal of creating a joint,
open mobile platform, the Symbian alliance
was set up and headed up by Nokia as early as
1998, when it became clear that Microsoft was
increasingly targeting mobile devices with its
94
OS Pocket PC. In 2002, the first open Symbian
platform was released, which is the Series 60
developed by Nokia. This has been licensed
to most major handset makers. Its link with the
manufacturers also ensures that the Symbian
software is compatible with telecom operators’
back-end equipment. Also, the Symbian Series
allows customisation so that each vendor’s
cell phone is unique. The use of wireless Java
(J2ME) on top of the operating system creates
the possibility to change the upper layers of the
platform substantially.
Still, Symbian is not undisputed because of
its strong Nokia ties. For instance, Motorola has
recently announced that by 2004, it will equip
80% of its handsets with the license-free Linux
operating system. This is, among other factors,
motivated by the expectation that, as prices of
colour screens go down, the operating system will
account for a major portion of the cost of a phone.
As of late, the Symbian coalition seems to be
crumbling further, as both Samsung and Motorola
have announced the release of a Microsoftpowered phone by the end of 2003. Moreover,
mobile operator Vodafone has announced that
it will work closely with Microsoft in the area of
its Office applications and mobile web services
standards, but that it has no plans at present to
use the MS wireless operating system.
While protocol-centric models dominate for
the time being, the competition between these
models is still open and is not expected to be
settled within a short timeframe. Research and
market forecasts show that in the short term, the
protocol-centric, and to a lesser extent the servicecentric models, will remain the most important
models for 3G on the European market94. These
are driven by ‘traditional’ mobile (cellular)
players. The transition from 2G to 2.5G and to
3G will be marked by evolutionary change in
business models, but also by potentially disruptive
developments caused by technological, strategic
and demand factors. The uptake of WLAN might
be one of those disruptive phenomena.
For instance, Ovum’s recent market forecast on smartphones shows that platform-centric models are not expected to gain a
dominant market share in the short-to-medium term.
WLAN has emerged as a family of standards
from the IT- and Internet-community. Based on
IEEE standards (i.e. IEEE 802.11b), it operates
in unlicensed spectrum. As Lehr & McKnight
(2002) point out, while 3G offers a verticallyintegrated, top-down, service-provider approach
to delivering wireless Internet access, WLAN
offers, at least potentially, an end-user centric,
decentralised approach to service provisioning.
WLAN offers wireless access characterised
by high data rates at low cost. This is possible
because the infrastructure cost of WLAN is only a
small percentage of the cost of 3G infrastructure.
Also, it does not require a massive, centralised
roll out. As it is possible for anyone to set up
a single WLAN ‘hotspot’, WLAN can be rolled
out much more gradually and/or by many more
actors. All of these characteristics have led
WLAN to become hyped as the ‘immediate 4G’
option.
solution in a single unit are not yet effectively
realised;
•
Coverage: Traditionally, to receive coverage
from an 802.11b access point a user must
be within fifty metres and often within
line-of-sight. This means that users have
to ‘schedule’ their visit to a hotspot, which
significantly lowers the utility of the WLAN
service. Roaming across hotspots is also an
issue;
•
Batteries and devices: IP Talk (Mitsubishi)
has announced a WLAN phone designed for
hotspots which also offers web browsing and
e-mail. Other producers such as Cisco, NEC
and Samsung are also working on WLAN
phones. However, as a recent Forrester study
has pointed out, it is unlikely that mainstream
mobile phones will be WLAN-enabled in the
short to mid-term future. The huge demands
of WLANs on battery power even render
it practically unworkable to incorporate
WLAN-capabilities into anything else but
laptops, which constitute only a small part
of all mobile devices. On top of this, there
is uncertainty over the market demand for
public WLAN access via laptops outside of
a limited number of prime locations such as
airports;
•
Different owners: Besides the positive
points of spreading risks and costs, this also
creates problems of non-ubiquity, large
administrative and transaction costs, and
technological heterogeneity;
•
Potential congestion: WLAN access points
compete with each other for space within
the 2.4Ghz range. On top of this, even a
single WLAN access point may congest the
connecting T-1 line if it is used intensively.
However, there also a number of problems
associated with WLAN. Major bottlenecks for
WLAN business models are (see, among others,
Liddel, 2003; Briere & Bacco, 2003; Pau, 2003):
•
•
Security: WEP encryption is generally used,
but has been reported to be flawed. A lot of
public attention has been dedicated to this
aspect of WLANs. User authentication is a
similar problem;
Backhaul: One of the major flaws in the
‘independent’ hotspot business model is that
the hotspot operator must lease a terrestrial
circuit from an incumbent network operator
to provide connectivity between the hotspot
and their network operations centre. The cost
of these backhaul circuits (T-1 or even simply
DSL connections) represents a fixed cost
that significantly outweighs current hotspot
revenues. In addition, as usage increases,
hotspot operators are entirely reliant on the
incumbent network operator to dimension
these circuits in a timely and cost-effective
manner. Solutions that combine the WLAN
access point and a wireless backhaul
From this short overview it may already
be concluded that WLAN presents both major
advantages as well as disadvantages compared
to 3G. The following paragraphs assess to which
extent these technologies and the associated
business models will overlap and influence
each other.
A2.2 WLAN
113
Annex 2
Actors and markets
WLAN has entered the EU market in the form
of private home solutions and public hotspots.
Hotspots are locations such as hotels, airports and
restaurants where users may wirelessly connect
to the internet, their e-mail account or their
corporate network. This access can be offered
either as a paid or as a free service.
Due to the lack of transparency in this
market, it is impossible to assess the precise
development of WLAN hotspots world-wide (see
also Stone, 2003). According to some sources,
there were over 50.000 hotspots world-wide by
July 2003. Other estimates are as low as 10.000
or 20.000. In any case, it can be said that the
amount of hotspots is small, but growing quite
rapidly. According to most analysts, there were
little over 1.000 hotspots in Europe at the end
of 2002. As of September 2003, this number
has grown to an estimated number of just over
2.750 public hotspots in the EU, most of which
are operated by Telia Homerun and Swisscom
Europort. Another major player is BTOpenZone,
which has announced the opening of about 1.700
hotspots within a short time frame. Estimations for
the future vary considerably as well. IDC predicts
that Europe will have 32.500 hotspot locations by
2007. Other estimations claim that there will be
up to 100.000 hotspots in Europe alone by 2005.
114
World-wide, a conservative estimate
shows that in September 2003, the US counted
over 4.500 hotspots, about half of which were
provided by T-Mobile. In total, Asia counted over
11.000 hotspots, of which more than 50% were
located in South Korea. The major driver behind
the WLAN ‘success story’ in South Korea is
fixed incumbent Korea Telecom, offering public
WLAN access bundled with the popular ADSL
subscription, requiring users to pay a relatively
small amount (about 8€) on top of the monthly
subscription fee. Currently, it is reported that there
are over 150.000 WLAN users in South Korea.
95
96
97
As far as other countries are concerned,
however, the number of users and the profitability
of WLAN is low (see, among others, Gneitig,
2003; Rafer, 2003b). It has been estimated that
between one and two percent of hotel clients
use WLAN access when it is offered. The typical
usage of a current commercial WLAN hotspot is
between 0 and 1 users per day. Even at standard
commercial rates for WLAN access of between 4€
and 8€ per hour, this does not cover the estimated
daily operating expense (mainly associated with
billing and support functions) of over 25€ for a
single commercial WLAN access point. Even free
WLAN offerings attract only limited amounts of
users. As an example, a recent experiment with
free WLAN access in the Paris underground
resulted in only 1.700 users in 3 months.
While all of this means that income from
WLAN use for WLAN operators remains very low,
WLAN equipment producers are faring better.
World-wide sales of WLAN equipment amounted
to 1,68 billion dollars in 2002. According
to Synergy Research Group, the top WLAN
equipment companies are Cisco and Linksys, with
approximately 14,8 and 14,3 percent of the total
market. Enterprise WLAN revenues accounted for
approximately 37 percent of the total95. Market
research group In-Stat forecasts the number of
WLAN chipsets to be sold in 2003 to grow to 33
million. In 2007 this will be over 94 million units.
The company also suggests that by the end of
2004 70 percent of new laptops purchased will
have integrated WLAN capabilities96. Strategy
Analytics expects that 90 percent of all notebooks
sold will have WLAN capabilities by 2008 (24
percent in 2003). Forrester estimates this to be
80 percent by 200897. However, an explosion in
WLAN equipment sales is not expected by most
analysts, mainly because of the reticence of the
corporate market towards WLAN.
Table 18 presents a (necessarily incomplete)
overview of the number of public hotspots, as
well as their main operators world-wide.
http://wi-fiplanet.com/news/article.php/3064741
http://www.eetuk.com/bus/news/mr/OEG20030409S0004
http://www.webwereld.nl/nieuws/15846.phtml, http://www.europemedia.net/shownews.asp?ArticleID=17077
the German and UK markets, by acquiring,
respectively, British Megabeam and German
WLAN AG in March 2003.
Public free WLAN has a very limited scope
in the EU. A small number of cities are said to
have plans to offer public free WLAN access.
The Freenet movement, consisting of individuals
offering free WLAN access, is also limited in
Europe. There are as yet very few so-called
hospitality providers (i.e. hotels, cafés or camping
sites) offering free WLAN access as part of their
ordinary service offering.
Private WLAN solutions consist of an inhouse or in-company solution, which is generally
restricted to teleworkers or smaller companies.
The typical service offering is wireless internet/
intranet access. Hardware manufacturers and
fixed operators and other DSL providers are
driving this offering.
The WLAN options mentioned above are
aimed at providing wireless services, but not
mobile services. The type of access can be
characterised as ‘nomadic’ or ‘serially stationary’
rather than mobile. The remaining option is to
Table 18: Overview of WLAN hotspots in selected EU, North American and Asian countries (August 2003)98
Country
# of commercial hotspots (est.)
Main operators and est. # of hotspots
Public commercial hotspots in Europe are in
general not very user friendly according to recent
research. They are characterised by high tariffs,
difficult registration and charging procedures,
an unclear overview of operators, exclusivity
deals between operators and locations, a lack
of roaming agreements and so on. A study by
BroadGroup revealed that prices for WLAN access
in Europe are considerably higher than those in
the US or Asia. The companies initially driving
the WLAN public hotspots offer in Europe were
specialised WLAN operators and the associated
wireless internet service providers (WISPs). There
are already some consolidation tendencies in
the market of specialised WLAN providers. One
of the reasons for this seems to be the entry of
fixed and mobile telecommunications operators
in this market. For instance, in the Netherlands,
the commercial WLAN access market is more or
less split between national telecom incumbent
KPN and Swiss telecom operator Swisscom,
after the acquisitions, in 2003, of the formerly
independent WLAN providers HubHop (by
KPN), and Aervik and Megabeam (by Swisscom).
Swisscom followed the same strategy to enter
Europe: 2750+ hotspots
Austria
295+
Metronet (295)
Finland
214+
Telia Homerun (214)
France
159
Kast Telecom (23)
Germany
386
Swisscom Eurospot (134), TacTeam (81)
Netherlands
80+
HubHop (48), Swisscom Eurospot (32)
Sweden
415+
Telia Homerun (415)
UK
667
BT Openzone (205), Surf and Sip (121), Swisscom Eurospot (42)
North America: 4750+ hotspots
United States
Canada
4500+
T-Mobile, Boingo, Surf and Sip
230
FatPort
China
500+
China Mobile, China Telecom, China Netcom
Singapore
288
Singnet (SingTel)
Hong Kong
247
PCCW
Asia: 11000+ hotspots
Japan
1000+
NTT, Hotspot
South Korea
8500+
Nespot (Korea Telecom), Hanaro Telecom, SK Telecom
98
Indicative numbers, based among others on wifinder.com
115
Annex 2
integrate WLAN into a 2.5G/3G network, or even
to construct an entire “mobile” network using
WLAN technology.
In order to use WLAN for broadband
services that are really mobile, it appears that
WLAN hotspots need to be integrated into a
cellular network. As an example, in order to
obtain a WLAN-like data rate of 1Mbps while
moving through a cellular network, it would be
enough for mobile users to be in a 100 Mbps
hotspot during 1% of the time. However, such
an integrated WLAN/cellular network is only
a feasible option if a number of major caching
and synchronisation problems can be solved.
Currently, no real integration (for instance in terms
of roaming, or even billing) between WLAN and
cellular networks has been realised (see also the
next section on services).
There are only very rare examples of cellular
networks based solely on WLAN. In New
Zealand, the company RoamAD has deployed a
WLAN-only demonstration network, consisting
of 47 access points and covering three square
kilometres. It has announced a commercial 100
square kilometre roll-out soon. The University
of Twente in the Netherlands operates a large
hotspot network on its campus consisting of
650 access points. However, most observers
agree that a complete WLAN “cellular” network
offering mobile services is not commercially
feasible. To connect WLAN hotspots owned
by a single operator to form a cellular network
is hardly feasible because of, among others,
the huge number of access points required,
synchronisation and interference problems, and
high operating expenses. In addition, to connect
WLAN hotspots owned by different owners
creates high transaction and co-ordination costs,
which would probably outweigh the cost of
transmission-based solutions.
116
Some future visions point to so-called mesh
networks (i.e. networks consisting of WLANaccess points or WLAN-enabled terminals working
together in an ad hoc fashion) as an alternative
means of creating entirely WLAN-based networks.
In this vision, network components would be fully
distributed and individually owned, interactions
between the nodes being ‘regulated’ by tacit or
explicit conventions between all participants.
However, the long-term commercial feasibility of
such solutions is quite problematic, among other
factors because of the well-known ‘Tragedy of
the Commons’ problem affecting shared public
resources. A potentially more viable version of
this vision, involving the possibility for each user
to become a commercial service and/or network
provider, is still very futuristic.
Services
The previous paragraph already outlined
the main forms in which WLAN access is offered
and how it may be used. Currently, WLANs are
used by laptop or PC owners for either internet
access in public spaces or as a substitute to fixed
LANs. As was outlined in the previous paragraph,
WLAN might, in addition, operate as (part of) a
mobile broadband network in the future.
At this moment, predominant WLAN services
are:
•
Internet access;
•
Intra-/extranet access;
•
To connect to other in-house devices.
In addition, services (to be) offered are:
•
Shared internet access;
•
Multiplayer gaming;
•
Voice telephony (VoIP);
•
Replacing fixed with wireless (in-company)
network connections;
•
SMS and MMS-WLAN-services.
The growing interest of telecom operators in
the provision of public WLAN access seems to
indicate that some sort of convergence between
public WLAN and telecom networks is on the
agenda. More futuristic cases will be dealt with
in the next chapter. On a short-to-mediumterm timescale, two types of WLAN offerings
by telecom operators are in place or already
emerging:
•
Telecom operators, including mobile
operators, that have taken over public WLANs
from specialised WLAN operators, have in
general ‘inherited’ a strategy in which WLAN
access is positioned as a specific service,
separate from and parallel to 2.5G services,
and in which the WLAN market is treated as
a separate market from other wireless data
markets. However, there are clear signs that
this strategy is being modified. First of all,
the previous situation in Europe, in which
there were no roaming agreements amongst
WLAN providers, is being turned around.
A number of operators have already signed
roaming agreements so that WLAN users
may use each other's networks. EU market
leaders Telia Homerun and Swisscom have
been among them, announcing a Europeanwide roaming agreement in October 2003.
Secondly, joint GPRS and WLAN mobile
data service are being announced and/
or launched by, for instance, T-Mobile,
Vodafone and KPN. These services typically
do not include roaming between the cellular
network and the WLAN hotspot or integrated
billing yet, but such a convergence is clearly
intended (Boogert, 2003; Kewney, 2003).
While remaining open to subscribers of
other mobile networks, T-Mobile USA is
now offering its WLAN service for a reduced
tariff to its own mobile phone subscribers
as a bundled option on their monthly
wireless voice and data bill. South Korean
KT is working on a single-password service
that enables advanced mobile phones and
PDAs to seamlessly access either its cellular
infrastructure or its WLAN hotspots.
In addition, fixed operators might be
further driving public WLANs in Europe,
as may be witnessed from the plans by a
number of fixed incumbents to equip public
payphones, where the fixed infrastructure is
in place already, with WLAN access points.
For instance, BT has announced that it will
offer wholesale access to its public wireless
broadband network. BT Openzone will
market the wholesale service to mobile
operators, ISPs, fixed line operators and even
“virtual mobile operators.” The company
plans to put BT Openzone Wi-Fi access
points in many of the thousands of payphones
across Britain.
In sum, WLAN is at this point still positioned
as a specific service, separated from other wireless
data services, or as a complement to fixed
networks (whose business case is not threatened
by, but rather strengthened by WLAN). The
question of whether these public WLANs might
operate as substitutes to 3G access is still unclear.
Private WLANs act mainly as a complement
to fixed (often DSL) lines, and may be substitutes
to short range wireless technologies such as
Bluetooth.
In the case of public WLAN being integrated
into cellular networks, WLAN is used as a
complement to mobile cellular networks (2.5G or
3G), and might be a substitute to 3G access in the
case of being combined with 2.5G.
Roles
In terms of the value network, five business
roles can be distinguished in the provision of
WLAN access:
•
Location owners: these are owners of
attractive locations;
•
Operators: they manage a number of
hotspots;
•
Aggregators: they link ‘networks’ of
hotspots together and provide access for the
customer;
•
Service providers: they formulate a
proposition for the client, of which WLAN
access may be only a part;
•
Vendors: WLAN equipment producers and
vendors constitute an enabling role, but
are nevertheless very important in driving
the market. In the case of private WLAN
solutions, they constitute, together with the
retailers and the users themselves, the core
of the WLAN value network.
•
117
Annex 2
118
In the case of public WLAN, actors within
each of the four primary business roles, i.e.
location owners, operators, aggregators and
service providers, are experimenting and moving
downstream or upstream to integrate other
roles. Actors originating from any of these roles
have integrated the service provisioning role
and thus the customer relationship. However,
telecom operators, having the resources, the
experience and the customer base to sustain the
customer relationship, are becoming increasingly
predominant in this area. Notwithstanding the
fact that some telecom operators may become
WLAN operators without retailing the service
themselves (see the example of BT in the previous
paragraph), telecom operators are, as a rule,
entering this market as service providers and/or
aggregators of WLAN services.
In the specific case of mobile operators,
various strategies can be observed in the market
as to which other roles they are integrating.
Some mobile operators only act as service
providers, relying on specialised WLAN operators
and aggregators; others have integrated these
roles, typically by acquiring WLAN operators
as subsidiaries. Operators such as Telia and TMobile are even becoming location owners, by
installing WLAN access points in their stores.
Integration of roles seems to be positively related
to ambitious WLAN expansion strategies. Taking
the German market as an example (Gneitig,
2003), the different strategies can be illustrated
for the mobile operators T-Mobile, Vodafone,
O2 and E-Plus. T-Mobile is clearly pursuing a
strategy of integration. It has also expanded its
operations the most, concluding agreements with
not just prime locations such as airports, but also
with hotels (e.g. the Sheraton chain), and even
with a range of cafes (e.g. Starbucks) and beer
halls. Vodafone also directly contracts locations,
but it operates more selectively and only targets
prime locations. Its WLAN roll out plans and
co-operation agreements have clearly been
more modest than those of T-Mobile. Vodafone
has recently introduced an international WLAN
offering at Lufthansa lounges in airports, opening
the connection service to anyone with GPRS (not
necessarily a Vodafone subscription) or a WLAN
card. Finally, O2 and E-Plus have at the time of
writing concluded no agreements at all, but have
partnered with specialised WLAN operators, who
contract locations themselves. The WLAN offerings
of these operators are so far quite limited.
As a rule, mobile operators try to close
exclusivity deals with location owners. However,
prime locations such as airports usually adopt
a multi-service provider model. Other location
owners are even offering WLAN access
themselves, independent of any specific operator.
The German rail company Deutsche Bahn, for
instance, is planning to offer “rail&mail” WLAN
access in most train station lounges and in its first
class carriages.
According to a study by the BroadGroup,
new roaming and billing platform structure
players may be expected in Europe by 2004, and
will start to displace the role of aggregators. In
Germany, the clearinghouse Eco-Forum already
offers a roaming platform between different
public WLAN operators and takes care of the
charging between them.
Business models
In general, three potentially viable WLAN
business models can be distinguished in the
short-to-medium-term:
(1) Private WLAN model. In this case, WLAN
is positioned as complementary to ADSL, and as
a substitute to short-range wireless technologies
such as Bluetooth. Hardware manufacturers and
ADSL providers (including fixed operators) drive
this offering. The use of WLANs as a strictly
private home or in-company solution is generally
restricted to teleworkers or smaller companies.
The typical service offering is wireless internet/
intranet access. Next to the fixed internet
subscription, there is only a hardware sale, of
which the costs are relatively small.
(2) WLAN hotspot model. In this case, WLAN
is positioned as complementary to fixed networks,
limits the number of attractive locations) or as
a ‘last resort’ option. Generally public WLAN
access is positioned as a separate offering, even
though there are signs of bundling the service
with other services such as ADSL (i.e. in the KT
case) or with GPRS.
(3) Integrated WLAN-cellular model. This
model may be seen as a potential evolution of
the WLAN hotspot model. In this case, WLAN
is positioned as a complement to 2.5G/3G, and
potentially a substitute to 3G access points, as
it might make it unnecessary to upgrade from
2.5G to 3G, at least in some locations. Mobile
operators will drive this model. The first signs
of integrating WLAN into cellular networks can
already be witnessed today, but full integration is
still a futuristic option.
and perhaps as a substitute to mobile networks.
It has been argued earlier in this paper that free
hotspots, which are operated by (networks of)
individuals, have a limited long-term potential,
in spite of the large amount of publicity that
the free access phenomenon has received. Free
hotspots operated by public authorities, or by
hospitality providers, are still very limited in
numbers. Commercial hotspots are operated by
fixed operators, mobile operators, specialised
WLAN operators or service providers, or even
by location owners themselves. In general, high
rates are charged for access to these hotspots, in
order to cover operating expenses or, as might be
the case for mobile operators, not to cannibalise
other services. These high rates limit the use of
hotspots to the business market (which in turn
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Feb. 7, 2003. http://www.zdnet.co.jp/
mobile/0302/07/n_foma.html
-
Zhang, Ping: General Technical Consideration
on Beyond 3G and China’s FUTURE Project.
Presentation given at WWRF Zurich 2003
-
Zwamborn, A. et al.: Effects of Global
Communication system radio-frequency fields
on Well Being and Cognitive Functions of
human subjects with and without subjective
complaints. The Hague 2003. http://www.tno.
nl/en/news/article_6265.html
AAA
Authentication Authorisation and Accounting
ADAMAS
ADAptive Multicarrier Access System
ADSL
Asymmetric Digital Subscriber Line
AMPS
Advanced Mobile Phone System
AP
Access Point
ARPU
Average Revenue Per User
ARROW
Advanced Radio Resource management fOr Wireless services
ASAP
Advanced Specialization and Analysis for Pervasive Computing
ASILUM
Advanced SIgnal processing schemes for Link capacity increase in UMTS
BAN
Body Area Networks
B3G
Beyond 3G
BRAHMS
Broadband Access for High Speed Multimedia
BRAIN
Broadband Radio Access for IP based Networks
BT
British Telecom
CAPEX
CApital EXPenditure
CAST
Configurable radio with Advanced Software Technology
CAUTION
CApacity Utilisation in cellular networks of present and future generaTION
CDG
CDMA Development Group
CDMA
Code Division Multiple Access
CELLO
CELlular network optimisation based on mobile LOcation
CEO
Chief Executive Officer
CREDO
Composite Radio and Enhanced Service Delivery for the Olympics
CWTS
China Wireless Telecommunication Standards Group
DAB
Digital Audio Broadcasting
List of Acronyms
Direct digital Audio Broadcasting
DBS
Direct Broadcast Satellite
DECT
Digital European Cordless Telecommunications
DG
Directorate-General
DRIVE
Dynamic Radio for IP-Services in Vehicular Environments
DSL
Digital Subscriber Line
DVB
Digital Video Broadcasting
131
List of acronyms
132
DVB-S
Digital Video Broadcasting-Satellite
DVT-T
Digital Video Broadcasting-Terrestrial
EBITA
Earning Before Interest Taxes and Amortization
EC
European Commission
ECS
Emergency Call Service
EDGE
Enhanced Data Rate for GSM Evolution
EMBRACE
Efficient Millimetre Broadband Radio Access for Convergence and Evolution
EMILY
European Mobile Integrated Location sYstem
E-OTD
Enhanced Observed Time Difference
ESA
European Space Agency
ESCORT
Enhanced diversity and Space-time Coding for metrO and Railway Transmission
ESTO
European Science and Technology Observatory
ETSI
European Telecommunications Standards Institute
EU
European Union
EV
Equity Value
EVOLUTE
Seamless multimedia serVices Over alL IP-based infra-strUcTurEs
FCC
Federal Communications Commission
FISTE
Foresight on IST in Europe
FITNESS
Fourth-generation Intelligent Transparent Networks Enhanced through Space-time Systems
FLOWS
FLexible Convergence of Wireless Standards and Services
FOMA
Freedom Of Mobile multimedia Access
FP
Framework Programme
FuTURE
Future Technologies for Universal Radio Environment
FuncTional
UMTS Real Emulator
G
Generation
GAUSS
GAlileo and UMTS Synergetic System
GEO
Geostationary Earth Orbit
GPRS
General Packet Radio System
GSM
Global System Mobile
HAPS
High Altitude Platform Stations
HIPERLAN
HIgh PERformance Radio Local Area Networks
HSCSD
High Speed Circuit Switched Data
HSDPA
High-Speed Downlink Packet Access
IBIS
Integrated Broadcast Interaction System
IP Conversation with Broadband Multimedia ovER Geostationary Satellites
IEEE
Institute of Electrical and Electronic Engineers
IETF
Internet Engineering Task Force
IMETRA
Intelligent Multi-Element Transmit and Receive Antennas
IMT
International Mobile Telecommunications
INFSO
INFormation Society
INTERNODE
INTERworking of NOmadic multi-Domain sErvices
IP
Integrated Projects
Internet Protocol
IPR
Intellectual Property Rights
IPTS
Institute for Prospective Technological Studies
IS
Intermediated Standard
ISP
Internet Service Provider
IST
Information Society Technologies
IT
Information Technology
ITU
International Telecommunications Union
ITU-R
International Telecomunication Union - Radiocommunication
J2ME
Java 2 platform Micro Edition
JRC
Joint Research Centre
KA
Key Actions
kbps
kilo bits per second
LAN
Local Area Network
LEO
Low Earth Orbit
LOCUS
Location Of Cellular Users for Emergency Services
MAC
Medium Access Control
MBS
Mobile Broadband Systems
Mbps
Mega bits per second
MIMO
Multiple In Multiple Out
MIND
Mobile IP based Network Developments
mITF
Mobile IT Forum
MMS
Multimedia Message Service
MOBY DICK
MOBilitY and Differentiated ServiCes in a Future IP NetworK
MOBILITY
MOBILe real tIme TV via satellite sYstems
MONASIDRE Management Of Networks And Services In a Diversified Radio Environment
ICEBERGS
133
List of acronyms
MOVIVAS
MOBIle Value Added Services
MPHPT
Ministry of Public Management, Home Affairs, Posts and Telecommunications
MTMR
Multiple Transmit Multiple Receive
MVNO
Mobile Virtual Network Operators
NMR
Network Measurement Results
NMT
Nordic Mobile Telephone
NoE
Networks of Excellence
NPV
Net Present Value
NTT
Nippon Telegraph and Telephone
NW
NetWork layer
OBANET
Optically Beam-formed Antennas for adaptive broadband fixed and mobile wireless access
NETworks
OFCDM
Orthogonal Frequency Code Division Multiplexing
OFDM
Orthogonal Frequency Division Multiplexing
OMA
Open Mobile Alliance
OPEX
OPerational EXpenditure
OS
Operating System
Open Service
OTDOA
Observed Time Difference Of Arrival
PACWOMAN Power Aware Communications for Wireless OptiMized personnel Area Network
PAN
Personal Area Networks
PAS
Personal Access System
PASTORAL
Platform And Software for Terminals: Operationally ReconfigurAbLe
PC
Personal Computer
PDA
Personal Digital Agenda
Personal Digital Assistant
134
PDC
Personal Digital Communication
PHS
Personal Handyphone System
PHY
PHYsical layer
PRODEMIS
PROmotion and Dissemination of the European Mobile Information Societ
QoS
Quality of Service
R&D
Research and Development
RF
Radio Frequency
RR
Re-configurable Radio
Radio Resource Management
SATIN
Satellite-UMTS IP-based Network
SATURN
Smart Antenna Technology in Universal bRoadband wireless Networks
SCDMA
Space Code Division Multiple Access
SDR
Software Defined Radio
SHAMAN
Secure Heterogeneous Access for Mobile Applications and Networks
SIM
Subscriber Identity Module
SK
South Korean
SME
Small and Medium (-size) Enterprise
SMS
Short Message Service
SOCQUET
System fOr management of QUality of sErvice in 3G neTworks
SSL
Secure Socket Layer
STPI
Software Technology Parks of India
SUITED
Demonstrator
SWOT
Strengths Weaknesses Opportunities Threats
TACS
Total Access Communications System
TD
Time Duplex
TD-SCDMA
Time Duplex - Space Code Division Multiple Access
TETRA
Trans European Trunked RAdio
TONIC
TechnO-ecoNomICs of IP optimized networks and services
TV
TeleVision
UCAN
Ultra-wideband Concepts for Ad-hoc Networks
UK
United Kingdom
UMTS
Universal Mobile Telecommunications System
UTRA
Universal Terrestrial Radio Access
US
United States
USA
United States of America
UWB
UltraWideBand
VD
Virtual Device
VIRTUOUS
Virtual Home UMTS on Satellite
VPN
Virtual Private Network
VSF
Variable Spreading Factor
WAP
Wireless Application Protocol
RRM
135
List of acronyms
WASP
Wireless Application Service Providers
WBA
Wireless Broadband Alliance
W3C
World Wide Web Consortium
WCDMA
Wideband Code Division Multiple Access
WEP
Wired Equivalent Privacy
WG
Working Group
Wi-Fi
Wireless Fidelity
WiMAX
Wireless Interoperability for Microwave Access
WIND-FLEX
Wireless Indoor Flexible
WINE GLASS Wireless IP Network as a Generic Platform for Location Aware Service Support
WISP
Wireless Internet Service Provider
WLAN
Wireless Local Area Networks
WLL
Wireless Local Loop
WPA
Wireless Protected Access
Wi-Fi Protected Access
WPAN
Wireless PAN
WSI
Wireless Strategic Initiative
WW
Wireless World Integrated Communication Platform
WWI
Wireless World Initiative
WWRF
World Wireless Research Forum
YOUNGSTER Young People creating Active Service On Context-aware Terminals
136
About ESTO
The European Science and Technology Observatory (ESTO) is a network of organisations
operating as a virtual institute under the European Commission's – Joint Research Centre's
(JRC's) Institute for Prospective Technological Studies (IPTS) - leadership and funding. The
European Commission JRC-IPTS formally constituted, following a brief pilot period, the
European Science and Technology Observatory (ESTO) in 1997. After a call for tender, the
second formal contract for ESTO started on May 1st 2001 for a period of 5 years.
Today, ESTO is presently composed of a core of twenty European institutions, all with
experience in the field of scientific and technological foresight, forecasting or assessment at the
national level. These nineteen organisations have a formal obligation towards the IPTS and are
the nucleus of a far larger network. Membership is being continuously reviewed and expanded
with a view to match the evolving needs of the IPTS and to incorporate new competent
organisations from both inside and outside of the EU. This includes the objective to broaden the
operation of the ESTO network to include relevant partners from EU Candidate Countries.
In line with the objective of supporting the JRC-IPTS work, ESTO aims at detecting, at an early
stage, scientific or technological breakthroughs, trends and events of potential socio-economic
importance, which may require action at a European decision-making level.
The ESTO core-competence therefore resides in prospective analysis and advice on S&T
changes relevant to EU society, economy and policy.
The main customers for these activities is the JRC-IPTS, and through it, the European policymakers, in particular within the European Commission and Parliament. ESTO also recognises
and addresses the role of a much wider community, such as policy-making circles in the
Member States and decision-makers in both non-governmental organisations and industry.
ESTO members, therefore, share the responsibility of supplying IPTS with up-to-date and high
quality scientific and technological information drawn from all over the world, facilitated by the
network’s broad presence and linkages, including access to relevant knowledge within the JRC’
Institutes.
Currently, ESTO is engaged in the following main activities:
A series of Specific Studies, These studies, usually consist in comparing the situation,
practices and/or experiences in various member states, and can be of a different nature a)
Anticipation/Prospective analysis, intended to act as a trigger for in-depth studies of
European foresight nature, aiming at the identification and description of trends rather than
static situations; b) Direct support of policies in preparation (ex-ante analysis); and c)
Direct support of policies in action (ex-post analysis, anticipating future developments).
Implementation of Fast-Track actions to provide quick responses to specific S&T
assessment queries. On the other hand, they can precede or complement the above
mentioned Specific Studies.
To produce input to Monitoring Prospective S&T Activities that serves as a basis of
experience and information for all other tasks.
ESTO develops a “Alert/Early Warning” function by means of Technology
Watch/Thematic Platforms activities. These actions are putting ESTO and JRC-IPTS in the
position to be able to provide rapid responses to specific requests from European decisionmakers.
Support the production of "The IPTS Report", a monthly journal targeted at European
policy-makers and containing articles on science and technology developments, either not
yet on the policy-makers’ agenda, but likely to emerge there sooner or later.
For more information: http//esto.jrc.es Contacts: [email protected]
EN
INSTITUTE FOR PROSPECTIVE TECHNOLOGICAL STUDIES SEVILLE
EUR 21192 EN
LF-NA-21192-EN-C
tech
technical
report
re
sseries
ISBN 92-894-7872-1
Oficina de Publicaciones
9 789289 478724

EUR 21192 (OK 2T 3Color).indd

Transcription

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