Asia Pacific Telecommunity
APT Study Groups (Study Cycle 2006 – 2007)
Final Report of the Study Question 1.8
“3G MOBILE VOICE TERMINATION CHARGE CONTROL”
Eunjin Cho, Jaeho Byun, Hyunmi Baek
ELECTRONINCS AND TELECOMMUNICATION RESEARCH INSITUTE (ETRI)
REP. OF KOREA
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. 3G MARKET DEVELOPMENTS
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 Tele2‟s 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
Italy March 2003 H3G, 3 17% 2004 New license to Ipse2000.
TIM 30% 2007 Telefonica is negotiating for
Vodafone (15 years revocation
Japan October 2001 DoCoMo No No changes
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.
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
USA June 2004 Cingular None No changes
3. 3G MOBILE NETWORK ARCHITECTURE
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
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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
4. INTERNATINAL EXPERIONCE ON REGULATORY TREATMENT
Current regulatory treatment of 3G is unclear and varies from country to country.
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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?
Austria yes Access no 3.49%
Denmaryes Access no 3.18% k Transparency
and just pricing)
Ireland yes yes 0.74% Italy Yes(decision no yet nondiscrimination n/a 7.82%
Sweden yes Access no 3.34%
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).
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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)
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
5. RECOMMENDATION AND REMARKS
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-
user‟s 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 couldn‟t 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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