Contents Telektronikk Telecommunications Forecasting Volume 100 No. 4 – 2004 1 Guest editorial; Kjell Stordahl ISSN 0085-7130 Editor: Section 1 – Long-term forecasting 3 Long-term technological forecasting; Yongil Jeon, Kwang R Hyun, Clive W J Granger Per Hjalmar Lehne (+47) 916 94 909 13 Long-term broadband technology forecasting; Kjell Stordahl [email protected] 32 Technology forecasting for telecommunications; Lawrence K Vanston, Ray L Hodges Editorial assistant: 43 Forecasting residential broadband demand with limited information – A long-term Gunhild Luke supply and demand model; Carlo Hjelkrem, Kjell Stordahl, Johannes Bøe (+47) 415 14 125 50 Mobile market dynamics; Kjell Stordahl, Irena Grgic Gjerde, Rima Venturin, [email protected] K R Renjish Kumar, Jarmo Harno, Ilari Welling, Timo Smura Editorial office: 64 Modelling and forecasting the growth of wireless messaging; Telenor R&D Mohsen Hamoudia, Towhidul Islam NO-1331 Fornebu Section 2 – Demand side models Norway 70 The demand for Voice over IP – An econometric analysis using survey data on (+47) 810 77 000 willingness-to-pay; Paul Rappoport, Lester D Taylor, Donald Kridel, James Alleman [email protected] 84 Understanding residential Internet service adoption patterns in the UK; www.telektronikk.com Alastair Robertson, Didier Soopramanien, Robert Fildes Editorial board: 95 The demand and pricing of a portfolio of broadband services; Berit Svendsen, CTO Telenor Terje Ambjørnsen, Kjetil Andersson, Bjørn Hansen Ole P. Håkonsen, Professor Section 3 – Broadband technologies and platforms Oddvar Hesjedal, Director 107 Towards the next generation broadband network platform; Leif Aarthun Ims, Bjørn Løken, Director Anjali Bhatnagar, Erik Østlyngen, Kurosh Bozorgebrahimi, André Bersvendsen Graphic design: 126 Dynamic Spectrum Management – A methodology for providing significantly higher Design Consult AS (Odd Andersen), Oslo broadband capacity to the users; John M Cioffi, Mehdi Mohseni Layout and illustrations: 138 Models for forecasting cost evolution of components and technologies; Borgar T Olsen, Kjell Stordahl Gunhild Luke and Åse Aardal, Telenor R&D Section 4 – Adaption rate forecasts and impact of forecast uncertainties Prepress and printing: 149 Rollout strategies based on adoption forecasts for ADSL2+/VDSL; Kjell Stordahl, Nils Kristian Elnegaard Rolf Ottesen Grafisk Produksjon, Oslo 157 Analysing the impact of forecast uncertainties in broadband access rollouts by the Circulation: use of risk analysis; Nils Kristian Elnegaard, Kjell Stordahl 3,500 Section 5 – Other forecasting areas 168 Internet traffic dynamics; Gary Madden, Grant Coble-Neal 180 Telecommunications demand forecasting with intermodal competition – A multi-equation modeling approach; David G Loomis, Christopher M Swann 185 Mind the gap – Linking forecasting with decisionmaking; Networks on networks Patrick van der Duin, Raymond Kok Connecting entities through networks – in 195 Broadband in Norway – Policy and status, August 2004; Kjell Ove Kalhagen technological, societal and personal terms – enables telecommunication. Networks occur on different levels, form parts of larger networks, Special and exist in numerous varieties. The artist Odd Andersen visualises the networks on networks 207 The Telenor Nordic Research Prize; Terje Ormhaug by drawing interconnected lines with different 208 Engineering software qualities in telecommunications – Three cases from industry; widths. Curved connections disturb the order Claes Wohlin and show that networks are not regular but are adapted to the communication needs. Per H. Lehne, Editor in Chief 217 Terms and acronyms Guest editorial KJELL STORDAHL Welcome to Telektronikk’s special issue on telecom- tant role for the evaluation of different technologies munications forecasting! And welcome to papers by and their possibilities. The paper “Roll out Strategies international leading experts in the field of telecom- and Adoption Rate Forecasts for ADSL2+/VDSL” munications forecasting. shows how adoption rate forecasts are used to develop optimal broadband rollout strategies. Especially welcome to last year’s Nobel Prize winner Kjell Stordahl is in Economics, Clive W.J. Granger and his colleagues Uncertainties and risks are always connected to fore- Senior Advisor in with the paper “Long-Term Technological Forecast- casts. What are the risks when making decisions Telenor Networks ing” describing long-term forecasts for the mobile based on the forecasts? In “Analysing the Impact of evolution in China. You will find five additional arti- Forecast Uncertainties in Broadband Access Rollouts cles on long-term forecasting spanning from “Tech- by the Use of Risk Analysis” an extensive risk analy- nology Forecasting for Telecommunications” to sis based on forecast uncertainties is carried out. The “Long-Term Broadband Technology Forecasting”, analysis quantifies the risk and shows the impact on “Forecasting Residential Broadband Demand with the broadband rollout strategies. Limited Information – A Long-Term Supply and Demand Model” and long-term mobile forecasts The issue also contains forecasting articles on time through the papers “Mobile Market Dynamics” and series analysis of Internet traffic: “Internet Traffic “Modelling and Forecasting the Growth of Wireless Dynamics” and two more specific forecasting arti- Messaging”. cles, “Telecommunications Demand Forecasting with Intermodal Competition” based on complex system This special issue contains three papers on demand relationships, and “Reverse Modelling: How to side models analysing willingness to pay and price answer a Question from your Manager about the elasticities. The articles “Estimating the Demand for Future”. Finally, the issue ends with an article VoIP Services”, “Understanding Residential Internet describing the broadband situation in Norway right Service Adoption Patterns” and “The Demand and now, “Broadband in Norway”. Pricing of a Portfoilo of Broadband Services” have been written by well known international experts. A natural approach for making forecasts is to go through the history and collect relevant data – extract Many of the articles in this issue analyse new services observations and develop forecasting models. Let us like VoIP, broadband with the new technologies such take the same approach when describing the future as ADSL2+, VDSL, WLAN, WiFi, WiMax, and perspectives of telecommunications forecasting! mobile systems with the new technologies GPRS, EDGE and WCDMA/UMTS. Two technical articles Telegraph networks were established more than 150 aim at understanding the new technologies and their years ago. Alexander Graham Bell developed the possibilities and potentials. “Towards the Next Gen- telephone 130 years ago and telephone networks eration Broadband Platform” describes how a target worldwide were slowly deployed after Bell’s innova- network will be developed to offer new advanced tion. In 1946 Telenor introduced the telex service. A telecommunication services, while “Dynamic Spec- manual mobile telephone service was introduced in trum Management – a methodology for providing 1966. The Nordic circuit switched data communica- significantly higher broadband capacity to the users” tion network was established in 1980–81, at the same describes how new copper based technology can time as the Nordic Mobile Telephone System (NMT). increase the capacity to 100 Mb/s symmetric access In Norway Teletex and Videotex were introduced in on short distances. 1984 and 1986, while ISDN was offered from 1994. The European Mobile System GSM was introduced In the article “Models for Forecasting Cost Evolution in 1993. In the 1980s the network operators started to of Components and Technologies” a specific fore- deploy optical fibre in their core networks, while the casting model for cost predictions has been devel- European networks were digitalised in the 1990s. oped. As described in several articles, knowledge of The use of Internet gained speed after the release of the new technology and the cost of implementing World Wide Web at the end of 1990 and introduction new technology is important for making forecasts. of the first graphical Internet browser and WWW Especially, techno-economic analysis plays an impor- client, Mosaic, in 1993. The Internet development Telektronikk 4.2004 ISSN 0085-7130 © Telenor ASA 2004 1 was followed by broadband utilisation of the twisted Established, enhanced and new services, Services pairs and coax cables through DSL- and HFC-tech- offered by different technologies, Market segment nology. The broadband technology opens up a great forecasts for incumbent (wholesale, retail) and other variety of possibilities like TVoDSL, VoIP, triple operators, Market segment forecasts based on demo- play, very high up- and downstream capacities, etc. graphic and geographic classification, Subscribers, Subscriptions, Terminals and handsets, Traffic vol- 30 years ago a telephone access had no additional ume, Busy hour traffic, Revenue forecasting models, attributes. Now, a service may be characterized by Composite forecasting models and many more. capacity, service level agreement (SLA), multiple PC connections, firewalls, Internet addresses, etc. The forecasts are crucial input for decisions regard- We see a variety of new services every year both in ing: the mobile and the fixed network area. New complex relations between services are generated. Knowledge • Introduction of new services of substitutions and migration effects are important • Business case analysis for