Mobile Network Operators and Cooperation
Total Page:16
File Type:pdf, Size:1020Kb
Mobile Network Operators and Cooperation A Tele-Economic Study of Infrastructure Sharing and Mobile Payment Services JAN MARKENDAHL PhD Thesis in Telecommunications Stockholm, Sweden 2011 Mobile Network Operators and Cooperation A Tele-Economic Study of Infrastructure Sharing and Mobile Payment Services JAN MARKENDAHL PhD Thesis in Telecommunications Stockholm, Sweden 2011 TRITA–ICT–COS–1101 KTH Communication Systems ISSN 1653–6347 SE-100 44 Stockholm ISRN KTH/COS/R--11/01--SE SWEDEN Akademisk avhandling som med tillstånd av Kungl Tekniska högskolan framlägges till offentlig granskning för avläggande av teknologie doktorsexamen i Telekommu- nikation Fredagen den 11 Februari 2011 klockan 14.00 i sal C1, Electrum1, Kungliga Tekniska Högskolan, Isafjordsgatan 26, Kista. © Jan Markendahl, February 2011 Tryck: Universitetsservice US AB i Abstract Mobile network operators are currently faced with a number of chal- lenges at the market. The revenues from voice services have decreased the last couple of years. Mobile broadband access services are being adopted and the demand is increasing. The increasing traffic volumes require investments in order to increase the network capacity. This development leads to a large interest in network solutions that can offer high capacity and low cost. Besides the use of more effi- cient radio access technology mobile network operators use strategies for network deployment and operation involving other market actors. Operators share networks with competitors or out source network de- ployment and operation to other companies, typically the supplier of network equipment. In these examples the mobile operators cooperate about the networks, the relations to end-users are the same as if the operator would operate the network on its own. However, in other areas other actors enter the market for mobile services where mobile operators traditionally have been the dominant player. Handset manufacturers and Internet companies offer value added services and applications to the end-users. They also establish relations with customers of the mobile operators. Hence, mobile operators look into new technical solutions and ser- vices in order to reduce costs and find new services and sources of rev- enues. Many of the networking solutions and services require that the operator cooperates with some other actor. In this PhD thesis cooper- ation with competitors, customers and different types of partners are considered. The partner can be a provider of a non-telecom service like public transportation, financial institutes or third parties taking intermediary roles. The main research questions in the thesis revolves around why and how mobile operators cooperate. The drivers for cooperation and the way the cooperation is organized is analyzed for a number of cases. Three types of services and markets are analyzed: - Public mobile broadband access services - Services and solutions for indoor wireless access - Mobile payment, ticketing and contactless services A number of technical solutions, business concepts and different types of cooperation and business scenarios have been investigated. Two overall research questions that are applicable for all cases of cooperation are identified for the analysis. - What are the main drivers for a specific type of cooperation? - In what ways can the actors organize the cooperation? Acknowledgements When I today in January 2011 am finalizing my doctoral studies at the Communi- cations systems department I would like to look back some years. The time frame is longer then the last 8 years when I have been researcher, project manager and teacher at KTH. 30 years ago I started as an industry PhD student at Telecommunication Theory (TTT) at KTH. At that time I had a position at Televerket (now Telia). My task was to make techno-economic analysis of the new digital PCM transmission systems that were deployed. My responsibilities were in the area of "tele-economics"! - So, it seems difficult to change track! After more than 20 years in the industry I was offered a position at KTH and "returned" to university research. At that time I did not have a clue that I would be a PhD student "again". Today I am both very happy and feel privileged that it was possible to make a re-start after the Licentiate degree many many years ago. Hence, there are a number of persons that I would like to thank. First of all I am very grateful to my two supervisors, Prof. Jens Zander, head of our department RST and Prof. Per Andersson at Stockholm School of Economics. Thanks to Jens I have got this extraordinary opportunity to re-start doctoral studies at the age of 52. I am very grateful to Jens for two other reasons. First, Jens had the courage to let me start to start studies in a research area that was new to me. Secondly, all the time at the department and at Wireless@KTH RST I have had a very strong feeling of being trusted by Jens. In the projects, conferences and authoring together with Per I have had the privilege to see and learn many new things. Per has introduced me in his field of research in a very supporting way. It has been extremely rewarding to get ac- quainted to a completely new research field with a different research tradition. I would like to thank Prof. Heikki Hämmäinen for accepting the role as oppo- nent at my defense. I am also grateful to the members of the grading committee, Prof Anders Henten, Dr Fredrik Gessler and Carl-Gustaf Jansson. A special thank to Fredrik Gessler for his review of the PhD proposal and the useful comments and suggestions on how to re-structure the work leading to this dissertation. iii iv ACKNOWLEDGEMENTS A very warm "thank you" to my colleges and co-authors that has reviewed differ- ent draft versions of the dissertation: Bengt G. Mölleryd, Lars-Gunnar Mattsson, Mats Nilsson, Östen Mäkitalo, Jan Werding and Niklas Arvidsson. All the dark December and January hours that you have spent providing comments and sugges- tions has helped me to substantially improve the different chapters in the thesis. I would like to thank all colleges at KTH for the collaboration in the different research projects: Klas Johansson, Johan Hultell, Mats Blomgren, Miguel Berg, Olav Queseth, Pietro Lungaro, Bogdan Timus, Aurelian Bria, Juan Espino, Ömer Oleri, Mark Smith and Cleas Beckman. Many thanks to Bertil Thorngren, Pablo Valiente and Niklas Kviselius for good collaboration in the joint research projects with Stockholm School of Economics and KTH as partners. In the Ambient Networks project I have spent many interesting hours and days at interesting locations together with interesting people. I am glad to have worked together with you and also for the papers that we manage to produce. Thanks to all of you: Petteri Pöyhönen, Ove Strandberg, Nadeem Akhtar, Martin Johns- son, Oscar Rietkerk, George Huitema, Henk Ensing, Mikael Prytz, Peter Carlsson, Lester Ho. I am also grateful to Lise-Lotte Wahlberg, Irina Radulescu, Ulla Eriksson, Anna Barkered och Lissi Perséus for excellent administrative support and guidance in the world of university administration. For support on computer issues I am grateful to Niklas Olsson, Robin Gehrke and Ali Özyagci. I really appreciate the support from Luca Stabellini and Anders Markendahl that helped me to reveal the secrets of LaTex. I also want to thank my wife Marika for all help with literature support, ref- erences and the excellent compilation of the bibliography. I am also extremely grateful to Marika for all caring support during the finalization of this dissertation. Jan Markendahl Uppsala, Sweden, 2011 Contents Acknowledgements iii Contents v List of Tables vii List of Figures ix 1 Introduction 1 1.1 Background . 3 1.2 Research questions, scope and delimitations . 8 1.3 Thesis outline . 10 1.4 Contributions . 12 2 Research approach 19 2.1 Scope of the techno-economic feasibility analysis . 19 2.2 Related work . 22 2.3 The overall analysis approach . 25 3 Network sharing and dynamic roaming 31 3.1 Chapter introduction . 31 3.2 Related work . 33 3.3 Methodology . 38 3.4 Existing types of operator cooperation . 41 3.5 Dynamic roaming . 47 3.6 Cost and capacity . 54 3.7 Opinions about cooperation . 60 3.8 Analysis . 66 3.9 Conclusions . 77 4 Indoor wireless systems and femtocells 81 4.1 Chapter introduction . 81 4.2 Related work and activities . 86 v vi CONTENTS 4.3 Methodology . 89 4.4 The Femtocell concept . 93 4.5 Existing indoor solutions and business models . 97 4.6 Cost and capacity analysis . 101 4.7 Co-existence of macrocells and femtocells . 112 4.8 Analysis . 118 4.9 Conclusions . 130 5 Mobile payment and contactless services 133 5.1 Chapter introduction . 133 5.2 Related work . 137 5.3 Methodology . 141 5.4 The Pay Buy Mobile approach . 147 5.5 SMS based ticketing and payments services . 151 5.6 Emerging contact-less services in Sweden . 164 5.7 Other types of payment and ticketing solutions . 178 5.8 NFC services in Japan . 183 5.9 Comparison of solutions . 189 5.10 Conclusions . 196 6 Conclusions and future work 197 Bibliography 203 Publications . 203 References . 208 List of Tables 3.1 Network investments in different areas (Million €) for different deploy- ment strategies in the example country case . 57 3.2 Investments in mobile networks (Million SEK) in Sweden year 2000 - 2009, data compiled by Bengt G. Mölleryd based on annual reports . 57 3.3 Production costs per GB for operators in the country case . 58 3.4 Mobile Broadband subscriptions, from Telenor web page 2010-12-27 . 67 3.5 Mobile Broadband subscriptions, from Hi3G web page 2010-12-27 . 67 3.6 Mobile Broadband subscriptions, from Tele2 web page 2010-12-27 . 67 3.7 Mobile Broadband subscriptions, from Telia web page 2010-12-27 .