Promise and Issues with LTE

While we are yet to come out of the confusing muddle of 3G, LTE is there knocking on the door. It is very important to understand what LTE is going to offer and what it is not going to offer (at least as of now) so that we dont end up with pipes ready with nothing to carry on or worse still, vice-versa. What drives this LTE evolution is the exponential data growth on the mobile networks seen in the current years and even stronger growth expected in the years to come. The SGSN- GGSN part of the network which is responsible for the data or IP side of the traffic have gained prominance in the recent time, which have seen falling Voice ARPU, data come up as the only savious in the bloodbath we see in the market. This implies the need to optimize the network for data intensive networks, eventually converging the enter network to a packet switched domain from the current combination of Circuit switched (for Voice) and Packet switch (for Data) domain. As per the research report (courtsey: Analyses research, 2007), highest data guzzling applications identified as 1. TV/Video (Average 140 mbps per sub @15 mins per month), 2. Voice (Av. 21 Mbps per sub @ 300mins per month) and 3. Audio (9Mbps per sub per month)-which clearly points out to the significance of packet data.

This has driven the global operator community to look for an upgrade from the current 3G rate of 14.4 Mbps DL and 5.72 Mbps UL to 100-173 Mbps DL and 50 Mbps UL (Upload) in the LTE scenario. With such a huge amount of data moving across the network, it makes sense to have a converged core with Voice as one of the services.

In view of the prominent driving role of IP, the architecture is defined under SAE (System Architecture evolution) under 3GPP. The specfication (3GPP rel. 8.0) defines defines enhanced efficiency with 326 Mbps peak download (20MHz spectrum) with 4x4 antenna and 173 Mbps with 2x2 Antenna and support for 200 active data users each 5 MHz cell. Cell size support in terms of spread is recommended as ranging between 5 kms and 100 kms from best to acceptable performance. What it essentially means from the network perspective is that the core of the mobile network which earlier comprised of RNC-MSC for Mobile voice and RNC - SGSN - GGSN for data traffic, collapses and merged to what is called as Evolved Packet core in LTE.

The ePC comprises of, the MME (Mobile Management Entity) is the call processing entity, S-GW (signaling Gateway) acts as Local Mobility Anchor while P-GW acts as IP Anchor responsible for allocation of IP addresses and management of IP connections. One important requisite that 3GPP has defined is the interoperability with 2G/3G networks, since it is anticipated that LTE is not likely to see uniform deployment, and will exist as island in the heavy data zones.

This could mean multiple ways of deployment as shown in the exhibits above:

wherein, as primary option, as a stepped migration, simply the GGSN is replaced with the P-GW, connectivity still being the UMTS interface (Gn) running on GTPver 1. Second option being pure LTE option, with SGSN connecting to S-GW and MME on LTE Interfaces (S-4 and S3) while P-GW connects to S-GW on S5. finally the last option would be direct tunnel option which is derived from the option presented in 3GPP rel6/7, which attempts to bypass the SGSN by connecting the RNC directly to S-GW on S12 interface. The essential requirement for the option 2 is that the Iu and Gn should be in the same network.

Key concern in LTE:

Being a pure IP system, (E-UTRAN-EPC), which means it is not designed to carry voice as circuit switch. There are three propositions to handle Voice in LTE

1. As pure VoIP(as is envisaged in LTE) this would be controlled by IMS Core, meaning VoIP in LTE and PS- CN in UMTS.

2. As a combination of CS and VoIP, where traffic in UMTS will be carried as single radio VCC that is Packet switching for signalling and Circuit switching for Voice, and in Pure LTE environment, voice will travel as VoIP. VoLGA (Voice over LTE via Generic Access) is derived out of this.

3. The last option( actually the first in precedence of appearance) is Circuit switch fall back (CS Fall Back) where in while the data traffic uses the LTE components, when it comes to Voice, it goes purely on Circuit switching. The LTE variation of MME-MSC interface (SGs) is used to register the user on UMTS network which pages the device in case of incoming call and connects the device through RNC. For outgoing call, calls are directly routed through the RNC-MSC route, bypassing the MME. One big issue is that immediately at the moment the device falls into UMTS domain with ongoing data transfer getting reduced from around 100 Mbps of LTE to 14 Mbps of UMTS. We will evaluate the issues in following posts.

International Long Distance: Opportunities and Drivers

 Government has so far given 23 ILD licences since the opening up of the sector in the year 2002 as on March 2009. The annual license fee has been reduced to 6% of the Adjusted Gross revenue (including the USOF), since 2006 and the roll out obligation for the operator is to set up on ILD gateway within a period of three years. While such policy initiatives mark high growth era in terms of usage, it further puts more emphasis on the increased competition, especially with big ticket telcos like Singtel, BT and Orange jumping into the fray. The great difficulty is that this is one business segment which can not be driven by price fall with controlled ARPU only, rather multiplicity of the carriers push for a tough tightrope walk. Earlier the difficulty was more on bilateral termination arrangement with US operators which had low rate for subscriber usage in their own and were bleeding under reciprocity on account of high rates in India.

 

Market Distribution:

As by end of 2008-09, the market still is largely held by Tata Communications, at 54.6 % market share, followed by Reliance communications at 11.5% and BSNL at 7%.

 

While the market size is quite big (pegged at INR 15000 Crores in 2008-09), with a sharp growth from flat-ish 2006-07 to 2007-08 (from INR 11506 crores to 11532 Crores), with Vodafone, BT and BSNL showing the highest growth (450%, 166.7% and 120% respectively), the pie irrespective of division is big and attractive enough to push every one on the ILD bandwagon. Eventual differentiation will be based on the capability to grow the market, with gaining the market share, and capability to sustain competition on the basis of well oiled global alliances. This is a market battle which will in great part be played outside the country. TRAI has raised the call termination charges for calls terminating on Indian operator’s network from 30 ps per minute to 40 paise per minute to bring in benefit for Indian long distance operators, while for the moment keeping the termination charges for 2G and 3G at the same level based on the inputs collected from the operators as per the notification effective from 1^st of April, 2009.

While the interconnection charges are broadly defined in the tenets of WTO agreement (GATT), 1997, policy wide tweaking is generally permitted in order to ensure that the providers in the country could make profit out of international operations (and passing off some of it towards USOF) and at the same time ensuring that the charges are conducive the overall market environment. IUC consists of Origination, termination charges, Carriage charge and transit charge. Termination charge has been fixed at 0.30 INR per minute. In case of non-availability of direct connectivity, the charge for carrying the traffic through another NLDO is termed as Transit charge which again is left to mutual workability with the ceiling of INR 0.20 per minutes. Carriage charge has been left to forebearance (mutual workability) between the ILDO and Foreign operators. It is the responsibility of TRAI to ensure while by reducing the termination charges it makes connectivity to India easier from overseas, it needs to raised to a level that connectivity to foreign shore from India does not end up as a loss making enterprise for operators (some charging as high as INR 3.00 per minute for termination). In view of this, while this is an extremely attractive market, it is driven much by global market forces and policy directives and the ability to understand and forge better alliances will spell the success.