3G Mobile Voice Termination Charge Control - Welcome to APT Online

By Ralph Sullivan,2014-07-11 15:57
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3G Mobile Voice Termination Charge Control - Welcome to APT Online ...

    Asia Pacific Telecommunity

    APT Study Groups (Study Cycle 2006 2007)

    Final Report of the Study Question 1.8



    Eunjin Cho, Jaeho Byun, Hyunmi Baek



    Approved at

    thThe 27 APT Study Groups Meeting

     18 -20 September 2007


    3G mobile services are rolled out by great many operators during 2004 and 2005 and the heaviest concentration is to be found in the Asia-Pacific region. The controversial question that arises is how-given the original governance structure- interconnection around the 3G service has developed. Current regulatory treatment of 3G across world is unclear and varies considerably from country to country. Some parties have argued that regulation of 3G mobile termination charges will reduce mobile operators' incentives to invest in 3G mobile technologies. Other parties have insisted that 3G mobile voice services would be not different from 2G/2.5G service then 3G termination charges to be suitable for symmetric charges with 2G charges based on the cost orientation. Although most of the countries have carried out their market analysis on mobile termination, little effort was dedicated to analyzing the position of the 3G player. This report provides to investigate the need of regulating the 3G mobile voice termination charges and to suggest the alternatives of the interim 3G termination charges. We will focus on the review of international case studies about regulation for 3G mobile voice termination charges and the similarities and differences between 3G mobile voice service and 2G mobile service in respect of technologies, customers, and suppliers. Finally we will induce alternatives to apply on different conditions on 3G market regarded as same 2G and different 2G.


2.1 Definition of 3G and 3G services

In the early 1990‟s, the International Telecommunication Union put forth a plan to harmonize ongoing

    developments of a next-generation wireless phone network. The initiative was called "IMT-2000." "IMT" stands for "International Mobile Telecommunications," and 2000 refers to both the target year for deployment and approximate frequency at which new wireless devices would operate, 2000 MHz. IMT-2000 supports the transmission rate of minimum 144kbps in any radio environment and 2Mbps in indoor environment and roaming between different IMT-2000 operating environments and international roaming. It also guarantees communications quality equivalent to that of the fixed network. Another 3G term is Universal Mobile Telecommunications System (UMTS) referred to and also referred to as wide band code division multiple access(WCDMA). UMTS is the successor to Global System for Mobile Communications (GSM).

    IMT-2000 supports of broad bandwidth to accommodate services from low-speed voice to high-speed graphic communications. It may provide the provision of variable-speed communications for video transmission and asymmetric communications as in video on demand, remote medical service, voice mail, video catalog shopping, electronic newspaper, so on. Symmetric point-to-point communications

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are available as video conference and telephone conference including telephone. Point-to-multipoint

    broadcast communications are as in information-distribution services.

    (Figure 1) 3G new applications and services

The IMT-2000 is a world-wide, high-capacity wireless network with the following characteristics.

    ? High transmission speeds (2 Megabits per second) : This would enable the mobile use

    of data through new handsets, including wireless multimedia, such as video and music

    ? Global roaming : The new technology should be widely embraced, such that phones

    used in one part of the world could be used in other parts. Business travelers would no longer

    need to carry three phones.

    ? Affordability. Given the promise of mobile data, the ITU sought to ensure that the

    new technology will remain affordable to a wide market.

2.2 3G rollout

3G Rollout in the world shows the current statues and development of 3G in different countries. In

    Japan, NTT DoCoMo was the first operator to launch 3G to the public, doing so during the autumn of

    2001. The newly started mobile operator 3 followed, with a launch in its respective countries during

    2003. Other operators have for various reasons delayed their launches but are now starting to work up

    the market on a broad front. Japan and Korea are still the countries where 3G development has

    advanced furthest, both as regards the infrastructure and use.

    The table below shows when the first operator opened its network for commercial operation, which

    operators have licenses, what license requirements apply, what changes have occurred.

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    < Table 1 > 3G rollout

    Country Launch of 3G License holders License Changes

    conditions in licenses Australia March 2003 Hutchison3 None No changes




    Denmark October 2003 Hi3G 30% 2004 Orange has surrendered one

    TDC 80% 2008 license.

    Telia (20 years)

    Finland October 2004 TeliaSonera Larger cities Tele2s license has been

    Elisa (20 years) withdrawn. Suomen 3G has

    surrendered one license. France November Orange 35% 2004 No changes

    2004 SFR 58% 2005

    Bouygues (20 years)

    Greece January 2004 Cosmote 25% 2003 No changes

    Panafon 50% 2005

    STET Hellas (20years)

    Hong Kong January 2004 Hutchison 3 None No changes




    Holland June 2004 KPN Mobile 80% 2007 No changes

    Vodafone (15 years)

    Ireland November Hutchison 3 53% 2005 No changes

    2004 O2 80% 2007

    Vodafone (15 years)

    Israel November CellCom None No changes

    2004 Orange

    Italy March 2003 H3G, 3 17% 2004 New license to Ipse2000.

    TIM 30% 2007 Telefonica is negotiating for

    Vodafone (15 years revocation

    Wind opportunity

    (Telefonica) for


    Japan October 2001 DoCoMo No No changes

    Vodafone conditions


    Korea December KTF SK Telecom Soul 2003 LGT has been withdrawn.

    2003 All cities


    Norway December Telenor 30% 2005 Tele2 and Broadband Mobile

    2004 NetCom (12 years) have surrendered their licenses.

    Hi3G, 3

    Singapore February 2005 Mobileone No details No known change


    Spain May 2004 Amena 50% 2006 New license allocated Xfera

    Telefonica 90% 2009


    UK March 2003 Hutchison 3 80% 2008 No changes, but more licenses

    O2 (20 years) are planned

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    Sweden May 2003 Hi3G, 3 99% 2004 Orange has surrendered

    Telia/Tele2 (15 years)


    Germany May 2004 E-plus 25% 2003 Group 3G&MobileCom has

    O2 50% 2005 surrendered.

    Vodafone (20 years) Telefonica is negotiating for

    T-mobile revocation


    USA June 2004 Cingular None No changes


This section has focused on wireless network structures and functions. A WCDMA network consist of

    three interacting domains; Core Network (CN), Radio Access Network (RAN), and User


    The User Equipment includes a handheld device, such as a phone or handheld computer, and its

    associated hardware/software identity module, such as a SIM card.

    (Figure 2) WCDMA network architecture

3.1 Core network components

The Core network is divided in circuit switched and packet switched domains. Some of the circuit

    switched elements are Mobile services Switching Center (MSC), Visitor location register(VLR), and

    Gateway MSC. Packet switched elements are Serving GPRS Support Node(SGSN) and Gateway

    GPRS Support Node(GGSN). Some network elements, like EIR, HLR, VLR and AUC are shared by

    both domains.

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    (Figure 3) Core Network structure

The Asynchronous Transfer Mode(ATM) is defined for WCDMA core transmission. ATM

    Adaptation Layer type2 (AAL2) handles circuit switched connection and packet connection protocol

    AAL5 is designed for data delivery.

3.2 Radio Access Network

RAN is consists of Node B and Radio Access Controller. RNC is similar to the Base Station

    controller that is present in the GSM and GPRS architectures. Node B is the role of BTS in the GSM

    and the functions of Node B are air interface transmission/ reception, modulation/demodulation,

    CDMA physical channel coding, error handing, so on. A RNC functions radio resource control,

    admission control, channel allocation, power control setting, handoff control, ciphering,

    segmentation/reassembly, broadcast signaling, so on.

    (Figure 4) Radio Access Network structure WCDMA defines four new open interfaces; Uu, Iu, Iub, and Iur.

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    ? Uu: UE to Node B(WCDMA air interface)

    ? Iu: RNC to Core Network interface(MSC/VLR, or SGSN)

    ? Iu-CS for circuit-switched data

    ? Iu-PS for packet-switched data

    ? Iub: RNC to Node B interface

    ? Iur: RNC to RNC interface, not comparable to any interface in GSM

    The Iu, Iub, and Iur interfaces are based on ARM transmission principles.

3.3 Evolution of Mobile Technologies

Mobile technologies have emerged quickly. Technically generations are defined 1G to 4G. 1G

    networks include NMT, C-Nets, AMPS, TACS and are considered to be the first analogs cellular

    systems, which started early 1980s, There were radio telephone systems eve before that. 2G

    networks(GSM, cdmaOne, DAMPS) are the first digital cellular systems launched early 1990s. 2.5G network(GPRS, cdma 2000 1x) are the enhanced versions of 2G networks with data rates up to about 144kbit/s. 3G networks(UMTS FDD and TDD, Cdma2000 1x EVDO, cdma2000 1x, TD-SCDMA,

    WCDMA, EDGE, IMT-2000 DECT) are the latest cellular networks that have data rates 384kbit/s

    and more. 4G is mainly a marketing buzzword at the moment. Some basic 4G research is being done, but no frequencies have been allocated. 4G could be ready for implementation around 2012.

    (Figure 5) Evolution of mobile services


    Current regulatory treatment of 3G is unclear and varies from country to country.

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4.1 Europe

Most of the European member states have carried out their market analysis on mobile termination.

    They found 3G operator as being an SMP (Significant Market Power) operator, basing their decision

    on it having 100% market share in the market for wholesale voice call termination. Even though

    regulators imposed the SMP status over 3G operator, they chose different remedies to correct the

    market. The following table summarized regulatory measures imposed upon on 3G operator across six


< Table 2 > 3G regulatory treatment

    Country Was 3G operator Which obligations Was the 3 market share(%

    imposed with SMP in were imposed? decision connections)

    the market analysis on appealed?

    mobile termination?

    Austria yes Access no 3.49%


    nondiscrimination, rate


    Denmaryes Access no 3.18% k Transparency


    Rate regulation(fair

    and just pricing)

    Ireland yes yes 0.74% Italy Yes(decision no yet nondiscrimination n/a 7.82%


    Sweden yes Access no 3.34%



    Rate regulation



    UK yes none yes 5.23%

Remedies adopted range from a light touch in the UK that chose not to impose any regulation upon

    3G operators UK, and at the other extreme were Sweden and Austria. In Swede, the NRA chose to

    impose all remedies upon 3, including a price ceiling over its termination. In Austria, charges must be

    set according to the LRAIC method. UK considered the possibility to introduce a regulated/blended

    rate, applying to both 2G and 3G termination starting from the next market review, in order to avoid

    any asymmetric regulatory treatment that could in turn introduce distorting behavior in the market.

    UK is the first regulator to tackle the problem of consistent regulatory treatment for different

    technologies (2G and 3G to provide similar service).

4.2 Australia

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Australia determined symmetric mobile termination charge with 2G and 3G. The national regulator

    agency, ACCC considered that mobile termination services are the scope of the regulation as the

    bottleneck services. ACCC, believes that many of market power are likely to exist with regard to the

    provision of voice termination services on more advanced 2.5G and 3G networks. ACCC expanded

    termination service description to include voice services terminating on 3G mobile network in 2004.

    ACCC explained the background of mobile termination regulation to expand to 3G. First, 2.5G/3G are

    able to provide a range of existing mobile services with 2G network, specifically, voice and SMS.

    Second, consumer‟s point of view, 2.5G and 3G services are likely to appear as „add-on‟ services to

    existing mobile services rather than as new communications services, Third, 3G termination services

    is an essential service with bottleneck characteristics. Fourth, termination of voice services on mobile

    network is a sufficiently mature services such that it should be regulated irrespective of network type

    (2G, 2.5G, 3G sufficiently to be substitutable as part of the same service market)

4.3 Korea

MIC announced the plan to review 3G voice termination charge on this year mobile termination

    determination for 2006/07. Related operators asserted termination charges for their own advantage

    and did not agreed. SKT insists the 3G termination charge on 62.25 won which it comes out the 65

    percent of the price of land to mobile. This method was applied when the PCS termination charges

    were determined in 1998. SKT also argues the symmetric rates with entrants because 3G services

    commence in same time and there is no difference between them. Mobile Competitor, SKT and LGT,

    argue asymmetric rates with the incumbents due to the competitors weakness to be protected. Fixed

    operator, KT, argues the 3G termination charge for SKT is 31.81 won it is the same level with 2G

    termination charge because 3G voice service is not different with current 2G service.

    MIC addressed the 2006-2007 mobile termination charges. The mobile interconnection charge

    included 3G investment cost a part in order to offer the diffusion and the additional net investment

    incentive concerning early with 3G service. It compared for the sudden connection charge

    imprint according to the change over of 3G in 2G in the future.

4.4 Regulatory comparison on 3G mobile termination charge control

As shown in the lead, the form of 3G termination charge is classified into the symmetry tariff with 2G

    termination charge and the asymmetry tariff. In the United Kingdom, Korea, and Australia, the

    asymmetry tariff is applied in the extrinsic country while applying 2G and 3G terminating connection

    tariff with the symmetry tariff standard path. The United Kingdom and Korea, and Australia apply the

    identical symmetry tariff mode. However, it shows a difference in the termination charge method of

    calculation. Whereas mobile termination charge is calculated on the blended 2G and 3G costs in the

    United Kingdom and Korea, it computes in Australia based on 2G connection charge.

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    < Table 3 > Comparison of 3G regulatory treatment

    Symmetric charge Asymmetric charge blended 2G termination charges

    Austria, Denmark, UK, Korea Australia Sweden, Italy, etc


In determining whether the 3G service is regulated, the national regulator agency will examine the

    following aspects: the differences between current services and 3G services, the national coverage,

    and the spectrum resources.

    This paper focus on mobile voice services and the differences between 2G and 3G aspect of end-

    users point and mobile service providers. End-users do not distinguish the both of them on voice

    services. Mobile service providers, however, argue 3G services as new services. Therefore if 3G were

    imposed with same regulations on 2G, the incentive to investment on 3G would be decreasing.

    National regulator agency should consider the market situations and balance the effective

    competitions. 3G service market is just started and will be developed though the deployments toward

    national wide. 3G does not cover the nation and should roam with the exist network to provide the 3G

    service in not covering 3G network. To regulate 3G service on cost-based termination charge, 3G

    should cover the national coverage like as 2G.

    3G services are in introduction stage and costs of 3G network are not stable and couldnt find the

    meaningful costs to set the termination charges. When the proper time to regulate 3G service is the

    time for frequency resources dry up.

    Alternatives to regulate 3G termination charges are simply symmetric with 2G or asymmetric with 2G

    termination charges. First symmetric termination rates are selected in case of National regulation

    agencies believing 2G and 3G services not different. As noted in above section, consumer‟s point of

    view, 3G network should need roaming with 2G network, consumers do not distinguish 3G or 2G

    roamed. In this case 3G termination charges do not have evidence to be different with 2G. Also when

    3G service providers set the retail price on similar with 2G services, 3G termination charges are

    proper to be set the level of 2G.

    Asymmetric approach with 2G is not cost based regulation but reasonable price principle. It promotes

    the incentives to invest 3G services of mobile operators and this is referred as “Light touch” approach.

    Regulator should monitor the market competition and following the results, which remedies is

    imposed to 3G.

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