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2.2.3. Evolution of mobile technologies: the migration path This section provides a brief overview of what has been already accomplished and the possible expected migration path of mobile operators.
Looking back at the 1G systems, there were three major systems: AMPS, TACS and NMT (900). Migrating from 1G to 2G (analog to digital systems) TACS and NMT (900) operators migrated to GSM (900) systems whereas AMPS operators moved to TDMA (IS-136) or CDMA (IS-95), both operating in the 800 and 1900 MHz bands (see Fig. 1). The exception here are operators in North America operating in 850 and 1900 MHz bands. Major IS-136 operators included AT&T and Cingular Wireless. AT&T Wireless and Cingular Wireless are braced for GSM system (see Fig. 1).
At the 2G phase, there were three major dominant systems in the market: (a) GSM operating in 900, 1800 and 1900 MHz band, (b) TDMA operating in 800, 1900 and 850 MHz (North America) and (c) CDMA (IS-95) operating in the 1900 and 800 MHz band. 2G systems offered enhanced voice services and improved capacity to their customers.
With the growing demand in mobile services and the need to connect corporate networks for data communications, an intermediate generation (2.5G) of technologies was developed: GPRS and EDGE (both in the GSM family) and cdma2000 1X-RTT. While migrating from 2G to 2.5G, operators made decisions based on their future planning and business interests targeting 3G networks. From 2G to 2.5G, GSM operators migrated to GPRS and EDGE systems with some of the TDMA operators also migrating to GSM/ GPRS systems (see Fig. 1). Among them, Vodafone is the largest player with a global footprint in offering GSM/GPRS services. Prominent TDMA operators in the United States include AT&T Wireless and Cingular Wireless. Other major operators include T-Mobile USA offering GSM/GPRS services. In India, Bharti Cellular (AirTel), IDEA Cellular and Hutchinson are GPRS commercial network operators who have announced their support, together with the GSM operators for GPRS network (GSM World) (see Fig. 1). On the other hand, CDMA operators migrated to cdma2000 1X-RTT (see Fig. 1). Some of the major CDMA operators include Verizon Wireless, Sprint PCS in North America and SK Telecom (South Korea). Migrating from 2G to 2.5G, no new spectrum was required: in the case of an existing spectrum, an overlay approach was used. This stage of migration did not require major capital investment; the exception being the migration from GSM/GPRS to GSM/GPRS/EDGE (see Fig. 2). According to GSM World as of May 2005, 51 networks are offering EDGE-enabled services in 36 countries and many more were in the deployment phase. In North America, Cingular Wireless launched EDGE services in the US Virgin Islands and T-Mobile USA is in the deployment phase and plans to launch in 2005 (GSM World). In India, Bharti AirTel, IDEA Cellular and Hutchison Max Telecom launched EDGE services in 2004 (GSM World). Many researchers consider EDGE as a 2.75G technology, as it offers higher data rates in comparison to 2.5G technologies. On the other hand, the upgrade to EDGE required changes in both hardware and software. The highlights of the migration from 2G to 2.5G were packet switched data and improved data rates (from 14.4 to 160 kbp (GPRS), to 473.6 kbps (EDGE)). Intermediate 2.5G systems were seen as a platform for providing data services and as an initial step towards offering enhanced wireless data services.
In the 3G wireless market, two dominant technologies have emerged: WCDMA, as the default evolution of GSM operators, and the cdma2000 evolution for CDMA operators. 3G technologies adhere to requirements of ITU to be labeled as 3G mobile technologies. Under ideal circumstances, GSM operators would migrate to WCDMA and CDMA operators would migrate to cdma2000 systems (see Fig. 1). NTT DoCoMo, Japan, and Vodafone, Japan, were the first to deploy WCDMA systems in 2001 (GSM World) (see Fig. 2). According to GSM World, 38 operators were offering UMTS/WCDMA services in a total of 23 countries in Asia, Europe and the Arab states as of April 2004. As of June 2005, 126 operators have launched 123 cdma2000 1X and 22 1xEV-DO commercial networks across Asia, Europe and the Americas (CDMA Development Group) (see Fig. 2). 20 1X and 20 1xEV-DO networks were scheduled to be deployed in 2005 (CDMA Development Group). In North America, Verizon Wireless offers Wireless Internet Broadband access based on cdma2000 1xEV-DO in more than 30 markets nationwide at a monthly rate of $79.99 for unlimited access. An operator that migrates from 2.5G to 3G faces several critical issues, e.g., new spectrum requirements, capital investment, backward compatibility of handhelds, new handhelds and applications to be offered, etc. For example, a GSM operator migrating to WCDMA would require new spectrum allocation and new cell phones that makes the migration a capital intensive project. A CDMA operator on the other hand can build on the existing spectrum i.e., ''spectrum re-farming'' (see Fig. 1).
Operators in Europe using analog NMT system in 450 MHz band did not have a defined evolutionary path. The "Digital Interest Group" (DiG) working group formed by NMT association in 1998, finalized the use of cdma2000 systems at 450 MHz as a replacement for NMT450 systems (CDMA Development Group) (see Fig. 2). An important feature of the cdma450 system is that it offers larger coverage area because it operates in a lower frequency band. It requires a small chunk of spectrum (1.25 MHz) for operation (CDMA Development Group). Furthermore, cdma450 systems require fewer cell sites as compared to systems operating at a higher frequency band, e.g., UMTS (CDMA Development Group), and a clear evolutionary path to future CDMA systems. Airvana, Ericsson, Lucent Technologies, Nortel Networks, and Qualcomm are some of the major equipment vendors offering solutions to operators worldwide. As of May 2005, according to CDMA Development Group, more than 20 commercial networks are offering cdma2000 at 450 MHz (cdma450) services across Western Europe, Asia, Latin America and Africa.
2.3. WLANs
The US FCC's decision to authorize the public use of the Industrial Scientific and Medical (ISM) bands resulted in the growth of WLANs in the mid-1980. Wi-Fi is the standard of the IEEE 802.11x family (IEEE).
The FCC decision to free the ISM bands eliminated the need for organizations and end users to obtain FCC licenses to operate the wireless devices. IEEE established the 802.11 working group to create a WLAN standard.
Today, the two most popular WLAN technologies are the IEEE 802.11x and the High-performance Radio Local Area Network Type 2 (HiperLAN2). This paper will refer to the IEEE 802.11x family as Wi-Fi. WLANs operate in the unlicensed spectrum band, 2.4 and 5 GHz. IEEE 802.11b or Wi-Fi was the first commercial product of the 802.11x family operating in the unlicensed spectrum band of 2.4 GHz, offering maximum data rates of 11 Mbp. Today, 802.11a and 802.11g standards exist, offering data rates in the range of 54 Mbp and operating in Unlicensed National Information Infrastructure (UNII) 5 GHz band. HiperLAN2 was developed by the ETSI, Broadband Radio Access Networks (BRAN). Table 2 provides a comparative overview of WLAN standards.
Typically, WLANs are deployed as ''Hot Spots'' in indoor places, e.g., hotels, private networks (home and corporate), airports, shopping malls and convention centers. Researchers have proposed integration of WLANs with their 2.5G networks and provide 3G-like services (Salkintzis, Fors, & Pazhyannu, 2002). Different integration architectures, e.g., tight and loose coupling have been proposed (Salkintzis et al., 2002). The WLAN market is one of the fastest growing markets in the short-range broadband internet access.
T-Mobile USA operates in more than 5400 locations in the United States offering wireless broadband services (T-Mobile, USA). SK Telecom (South Korea) is the world's largest service provider of WLAN services in Seoul (Interlink Networks, SK Telecom). Wi-Fi is the most popular means of providing data communications because of its commercial availability, low-cost equipment, minimum required knowledge to operate the equipment and, most importantly, it operates in the unlicensed spectrum band.
3. Factors associated with wireless technologies
This section proposes several technological, economic and behavioral factors which the authors have developed and which should be considered in the processes of deciding which migration path to follow.
3.1. Technological factors
Technology factors consist of the availability of economic systems, provision of high-speed access, user friendly devices, multimedia applications, etc. Technological factors are the driving force of the next generation mobile systems and internet services. This section compares different wireless technologies based on maturity, cost, embedded applications, business models and, most importantly the spectrum required to deploy such technologies.
3.1.1. Technology maturity vs. cost
Fig. 3 shows a classification of wireless technologies based on maturity and cost. The most matured technology is WLANs (802.11b and HyperLAN2). Wi-Fi has been in the industry for more than a decade which the organizations involved in standardization and development are making continuous progress. Compared to any other wireless product, Wi-Fi is cheap, easily available and easy to install. On the other hand, 3G systems are by far the least mature and most costly solution. 2.5G systems are somewhere in the middle: less mature in comparison with 3G systems and not as costly.
3.1.2. Embedded applications, data rates and range
Fig. 4 compares the evolution of wireless technologies with regard to range, applications and data rates. In short-range technologies, WLANs are the best performers. They offer data rates in the range of 1154 Mbp, suitable for deployment at home, offices, public spaces and private networks. If consideration is given to a wide range of technologies such as 2G, 2.5G and 3G, they offer theoretical data rates in the range of 9.6384 kbp and in some cases nearly 1 Mbp, respectively. 2G systems have been deployed countrywide, as their main purpose was to provide voice services. 2.5G and 3G systems are deployed in big metropolitan areas, as their main objective is to enhance voice services and add data services. In terms of embedded applications, short-range technologies offer an alternative solution to wired technologies. In terms of applications, they are good in offering video applications, web surfing and video streaming.
Fig. 3 pictures the cost vs. maturity comparison of various technologies. Less mature and more costly 3G technology cannot single handedly be used to realize the aim of being a 3G ISP. It involves high cost and high uncertainty. Fig. 4 shows that bandwidth intensive applications may not be well supported by the 3G systems because of limited bandwidth in a big geographical coverage. Hence, a combination of low cost and more mature technologies would provide 3G internet services at a reasonable cost and efficient data rates (Salkintzis et al., 2002).
3.1.3. Spectrum management
It is a common belief that 3G systems are the answer to providing high-quality voice and data services. To provide such services, 3G networks require additional spectrum to be released. For example, European operators adopted UMTS as the 3G standard. During the auction era in Europe, owning spectrum was considered prestigious among carriers. Europeans paid exorbitant amounts of money to acquire those licenses. The price varied from 20 to 650 Euros per capita (Klemperer, 2002).
In the United States, the National Telecommunications and Information Administration (NTIA) is working with FCC in 3G spectrum allocation. They focus on the 17101770 MHz band and 21102170 MHz band(FCC). The main difference between Europe and the US is that while in Europe all bids are for national licenses, in the US operators bid for specific markets (Yazbeck, 2003).
Moving to the Asia-Pacific region, the Japanese government has awarded licenses to major operators in Japan without referring to auctions (UMTS World). This was a major step taken by the Japanese government and it helped operators to utilize their resources in the deployment of 3G networks. Table 3 gives a summary of spectrum band allocation in Europe, the US and the Asia-Pacific region. It is evident that next generation wireless networks need new additional spectrum. WLANs operate in unlicensed spectrum bands whereas 3G networks operate in licensed ones.
3.3. Economics factors
The demand for wireless services has been growing tremendously over the years. This is made possible because of the technological advancements, price and the plethora of choices given to subscribers. Voice has been the major source of revenue for operators around the world. So far the operators have been surviving on revenue generated from voice services, even after the introduction of 2.5G services that promised data capabilities. Today, operators are migrating from existing systems to 3G systems. The aim of migrating to 3G is to provide enhanced mobility and improved data services. Service providers are faced with the challenges of generating additional revenue and reducing cost, while migrating from the existing technology platforms to next generation wireless technologies.
Any evolution in the mobile industry is always marked by infrastructure changes, software changes, introduction of new access devices, easily useable interfaces and meeting the users' expectations. No matter which migration path an operator chooses, these economic issues remain common for an incumbent and a Greenfield operator, operating in both developed and developing countries.
Operators should be able to avoid dramatic changes in the existing infrastructure and balance the financials of the company, while try to benefit from the technology and meet clients' expectations at the same time. In migration, they should make optimum use of their legacy systems. The authors think that economic factors, such as capital expenditure, cost reduction and additional revenue generation, are the two most important issues operators face, and these issues are related to each other (see Fig. 5).
3.3.1. Cost reduction
Reduction in cost and maximum use of available resources should be the prime objective of a service provider. Fig. 5 shows how an operator can reduce cost in the deployment of next generation wireless technology, both by internal and external factors. Internally: there are three general directions to migrate from the existing to a future technology: upgrade, overlay and forklift. Careful consideration has to be given to the selection process of infrastructure vendors, as equipment should be scalable. Also, reductions of recurring expenses on facilities, personnel and maintenance should be anticipated. Regarding head count, growing staff is not a healthy sign; staff should be hired when and where required. Externally: the operator can outsource departments such as billing, customer services and technical support.
3.3.2. Additional revenue generation
The next major challenge that service providers are faced with is how to generate additional revenue, i.e., the other side of the equation. Service providers must develop new innovative products for both general and corporate users. From Fig. 5, it can be seen that operators could achieve this goal in two ways: internally and externally.
Internally: Phone subsidization can act as an incentive for existing customers to adopt new systems and can attract new customers to adopt new technology at affordable prices. Customer experience in usage of previous technologies should be emphasized. New applications and solutions will attract new customers. Minimization of the churn rate can be achieved by service quality improvement, offering of better coverage capacity, voice quality and new services. Numerous internet equipment companies provide software and technical know-how to wireless companies in managing their bandwidth efficiently and offer new services to customers. Companies such as IPWireless, Bridgewater Systems and Convergys Corporation provide software, tools, billing and customer care management services to help companies to connect with their customers. Woosh in New Zealand in collaboration with IPWireless is offering a broadband solution. It has been observed that 40% of all the new broadband subscribers in coverage areas choose Woosh's over Telecom New Zealand's DSL offer (IP Wireless, Woosh). Lastly, marketing or sales should be coordinated with technical services conveying the right information to customers.
Externally: The operator could tie up content management providers and third-party providers who specialize in specific services such as sports, stock market quotes and weather reports. The recent collaboration between Cingular Wireless and the mobile content and media provider Motricity helped Cingular to increase its mobile games services by 25% (Motricity). Operators can increase revenue and their subscriber base linking with mobile content hosts and service providers (9squared-Wireless Content Providers, http://www.9squared.com ; (M) FORMA, http://www.mforma.com ; UPOC Networks). Secondly, they can also lease spectrum to Mobile Virtual Network Operators (MVNOs), in areas where it is not heavily used and earn addition revenue. For example, Virgin Mobile USA leases spectrum and infrastructure from Sprint PCS USA. Thus, the service providers can diversify into new areas and offer attractive services to their customers.
Finally, operators should be able to use the legacy systems to gain in investment cost, scalability, faster time to market, availability of terminals, flexibility in future migration, service offering and meeting the users' expectations.
This section provides a brief overview of what has been already accomplished and the possible expected migration path of mobile operators.
Looking back at the 1G systems, there were three major systems: AMPS, TACS and NMT (900). Migrating from 1G to 2G (analog to digital systems) TACS and NMT (900) operators migrated to GSM (900) systems whereas AMPS operators moved to TDMA (IS-136) or CDMA (IS-95), both operating in the 800 and 1900 MHz bands (see Fig. 1). The exception here are operators in North America operating in 850 and 1900 MHz bands. Major IS-136 operators included AT&T and Cingular Wireless. AT&T Wireless and Cingular Wireless are braced for GSM system (see Fig. 1).
At the 2G phase, there were three major dominant systems in the market: (a) GSM operating in 900, 1800 and 1900 MHz band, (b) TDMA operating in 800, 1900 and 850 MHz (North America) and (c) CDMA (IS-95) operating in the 1900 and 800 MHz band. 2G systems offered enhanced voice services and improved capacity to their customers.
With the growing demand in mobile services and the need to connect corporate networks for data communications, an intermediate generation (2.5G) of technologies was developed: GPRS and EDGE (both in the GSM family) and cdma2000 1X-RTT. While migrating from 2G to 2.5G, operators made decisions based on their future planning and business interests targeting 3G networks. From 2G to 2.5G, GSM operators migrated to GPRS and EDGE systems with some of the TDMA operators also migrating to GSM/ GPRS systems (see Fig. 1). Among them, Vodafone is the largest player with a global footprint in offering GSM/GPRS services. Prominent TDMA operators in the United States include AT&T Wireless and Cingular Wireless. Other major operators include T-Mobile USA offering GSM/GPRS services. In India, Bharti Cellular (AirTel), IDEA Cellular and Hutchinson are GPRS commercial network operators who have announced their support, together with the GSM operators for GPRS network (GSM World) (see Fig. 1). On the other hand, CDMA operators migrated to cdma2000 1X-RTT (see Fig. 1). Some of the major CDMA operators include Verizon Wireless, Sprint PCS in North America and SK Telecom (South Korea). Migrating from 2G to 2.5G, no new spectrum was required: in the case of an existing spectrum, an overlay approach was used. This stage of migration did not require major capital investment; the exception being the migration from GSM/GPRS to GSM/GPRS/EDGE (see Fig. 2). According to GSM World as of May 2005, 51 networks are offering EDGE-enabled services in 36 countries and many more were in the deployment phase. In North America, Cingular Wireless launched EDGE services in the US Virgin Islands and T-Mobile USA is in the deployment phase and plans to launch in 2005 (GSM World). In India, Bharti AirTel, IDEA Cellular and Hutchison Max Telecom launched EDGE services in 2004 (GSM World). Many researchers consider EDGE as a 2.75G technology, as it offers higher data rates in comparison to 2.5G technologies. On the other hand, the upgrade to EDGE required changes in both hardware and software. The highlights of the migration from 2G to 2.5G were packet switched data and improved data rates (from 14.4 to 160 kbp (GPRS), to 473.6 kbps (EDGE)). Intermediate 2.5G systems were seen as a platform for providing data services and as an initial step towards offering enhanced wireless data services.
In the 3G wireless market, two dominant technologies have emerged: WCDMA, as the default evolution of GSM operators, and the cdma2000 evolution for CDMA operators. 3G technologies adhere to requirements of ITU to be labeled as 3G mobile technologies. Under ideal circumstances, GSM operators would migrate to WCDMA and CDMA operators would migrate to cdma2000 systems (see Fig. 1). NTT DoCoMo, Japan, and Vodafone, Japan, were the first to deploy WCDMA systems in 2001 (GSM World) (see Fig. 2). According to GSM World, 38 operators were offering UMTS/WCDMA services in a total of 23 countries in Asia, Europe and the Arab states as of April 2004. As of June 2005, 126 operators have launched 123 cdma2000 1X and 22 1xEV-DO commercial networks across Asia, Europe and the Americas (CDMA Development Group) (see Fig. 2). 20 1X and 20 1xEV-DO networks were scheduled to be deployed in 2005 (CDMA Development Group). In North America, Verizon Wireless offers Wireless Internet Broadband access based on cdma2000 1xEV-DO in more than 30 markets nationwide at a monthly rate of $79.99 for unlimited access. An operator that migrates from 2.5G to 3G faces several critical issues, e.g., new spectrum requirements, capital investment, backward compatibility of handhelds, new handhelds and applications to be offered, etc. For example, a GSM operator migrating to WCDMA would require new spectrum allocation and new cell phones that makes the migration a capital intensive project. A CDMA operator on the other hand can build on the existing spectrum i.e., ''spectrum re-farming'' (see Fig. 1).
Operators in Europe using analog NMT system in 450 MHz band did not have a defined evolutionary path. The "Digital Interest Group" (DiG) working group formed by NMT association in 1998, finalized the use of cdma2000 systems at 450 MHz as a replacement for NMT450 systems (CDMA Development Group) (see Fig. 2). An important feature of the cdma450 system is that it offers larger coverage area because it operates in a lower frequency band. It requires a small chunk of spectrum (1.25 MHz) for operation (CDMA Development Group). Furthermore, cdma450 systems require fewer cell sites as compared to systems operating at a higher frequency band, e.g., UMTS (CDMA Development Group), and a clear evolutionary path to future CDMA systems. Airvana, Ericsson, Lucent Technologies, Nortel Networks, and Qualcomm are some of the major equipment vendors offering solutions to operators worldwide. As of May 2005, according to CDMA Development Group, more than 20 commercial networks are offering cdma2000 at 450 MHz (cdma450) services across Western Europe, Asia, Latin America and Africa.
2.3. WLANs
The US FCC's decision to authorize the public use of the Industrial Scientific and Medical (ISM) bands resulted in the growth of WLANs in the mid-1980. Wi-Fi is the standard of the IEEE 802.11x family (IEEE).
The FCC decision to free the ISM bands eliminated the need for organizations and end users to obtain FCC licenses to operate the wireless devices. IEEE established the 802.11 working group to create a WLAN standard.
Today, the two most popular WLAN technologies are the IEEE 802.11x and the High-performance Radio Local Area Network Type 2 (HiperLAN2). This paper will refer to the IEEE 802.11x family as Wi-Fi. WLANs operate in the unlicensed spectrum band, 2.4 and 5 GHz. IEEE 802.11b or Wi-Fi was the first commercial product of the 802.11x family operating in the unlicensed spectrum band of 2.4 GHz, offering maximum data rates of 11 Mbp. Today, 802.11a and 802.11g standards exist, offering data rates in the range of 54 Mbp and operating in Unlicensed National Information Infrastructure (UNII) 5 GHz band. HiperLAN2 was developed by the ETSI, Broadband Radio Access Networks (BRAN). Table 2 provides a comparative overview of WLAN standards.
Typically, WLANs are deployed as ''Hot Spots'' in indoor places, e.g., hotels, private networks (home and corporate), airports, shopping malls and convention centers. Researchers have proposed integration of WLANs with their 2.5G networks and provide 3G-like services (Salkintzis, Fors, & Pazhyannu, 2002). Different integration architectures, e.g., tight and loose coupling have been proposed (Salkintzis et al., 2002). The WLAN market is one of the fastest growing markets in the short-range broadband internet access.
T-Mobile USA operates in more than 5400 locations in the United States offering wireless broadband services (T-Mobile, USA). SK Telecom (South Korea) is the world's largest service provider of WLAN services in Seoul (Interlink Networks, SK Telecom). Wi-Fi is the most popular means of providing data communications because of its commercial availability, low-cost equipment, minimum required knowledge to operate the equipment and, most importantly, it operates in the unlicensed spectrum band.
3. Factors associated with wireless technologies
This section proposes several technological, economic and behavioral factors which the authors have developed and which should be considered in the processes of deciding which migration path to follow.
3.1. Technological factors
Technology factors consist of the availability of economic systems, provision of high-speed access, user friendly devices, multimedia applications, etc. Technological factors are the driving force of the next generation mobile systems and internet services. This section compares different wireless technologies based on maturity, cost, embedded applications, business models and, most importantly the spectrum required to deploy such technologies.
3.1.1. Technology maturity vs. cost
Fig. 3 shows a classification of wireless technologies based on maturity and cost. The most matured technology is WLANs (802.11b and HyperLAN2). Wi-Fi has been in the industry for more than a decade which the organizations involved in standardization and development are making continuous progress. Compared to any other wireless product, Wi-Fi is cheap, easily available and easy to install. On the other hand, 3G systems are by far the least mature and most costly solution. 2.5G systems are somewhere in the middle: less mature in comparison with 3G systems and not as costly.
3.1.2. Embedded applications, data rates and range
Fig. 4 compares the evolution of wireless technologies with regard to range, applications and data rates. In short-range technologies, WLANs are the best performers. They offer data rates in the range of 1154 Mbp, suitable for deployment at home, offices, public spaces and private networks. If consideration is given to a wide range of technologies such as 2G, 2.5G and 3G, they offer theoretical data rates in the range of 9.6384 kbp and in some cases nearly 1 Mbp, respectively. 2G systems have been deployed countrywide, as their main purpose was to provide voice services. 2.5G and 3G systems are deployed in big metropolitan areas, as their main objective is to enhance voice services and add data services. In terms of embedded applications, short-range technologies offer an alternative solution to wired technologies. In terms of applications, they are good in offering video applications, web surfing and video streaming.
Fig. 3 pictures the cost vs. maturity comparison of various technologies. Less mature and more costly 3G technology cannot single handedly be used to realize the aim of being a 3G ISP. It involves high cost and high uncertainty. Fig. 4 shows that bandwidth intensive applications may not be well supported by the 3G systems because of limited bandwidth in a big geographical coverage. Hence, a combination of low cost and more mature technologies would provide 3G internet services at a reasonable cost and efficient data rates (Salkintzis et al., 2002).
3.1.3. Spectrum management
It is a common belief that 3G systems are the answer to providing high-quality voice and data services. To provide such services, 3G networks require additional spectrum to be released. For example, European operators adopted UMTS as the 3G standard. During the auction era in Europe, owning spectrum was considered prestigious among carriers. Europeans paid exorbitant amounts of money to acquire those licenses. The price varied from 20 to 650 Euros per capita (Klemperer, 2002).
In the United States, the National Telecommunications and Information Administration (NTIA) is working with FCC in 3G spectrum allocation. They focus on the 17101770 MHz band and 21102170 MHz band(FCC). The main difference between Europe and the US is that while in Europe all bids are for national licenses, in the US operators bid for specific markets (Yazbeck, 2003).
Moving to the Asia-Pacific region, the Japanese government has awarded licenses to major operators in Japan without referring to auctions (UMTS World). This was a major step taken by the Japanese government and it helped operators to utilize their resources in the deployment of 3G networks. Table 3 gives a summary of spectrum band allocation in Europe, the US and the Asia-Pacific region. It is evident that next generation wireless networks need new additional spectrum. WLANs operate in unlicensed spectrum bands whereas 3G networks operate in licensed ones.
3.3. Economics factors
The demand for wireless services has been growing tremendously over the years. This is made possible because of the technological advancements, price and the plethora of choices given to subscribers. Voice has been the major source of revenue for operators around the world. So far the operators have been surviving on revenue generated from voice services, even after the introduction of 2.5G services that promised data capabilities. Today, operators are migrating from existing systems to 3G systems. The aim of migrating to 3G is to provide enhanced mobility and improved data services. Service providers are faced with the challenges of generating additional revenue and reducing cost, while migrating from the existing technology platforms to next generation wireless technologies.
Any evolution in the mobile industry is always marked by infrastructure changes, software changes, introduction of new access devices, easily useable interfaces and meeting the users' expectations. No matter which migration path an operator chooses, these economic issues remain common for an incumbent and a Greenfield operator, operating in both developed and developing countries.
Operators should be able to avoid dramatic changes in the existing infrastructure and balance the financials of the company, while try to benefit from the technology and meet clients' expectations at the same time. In migration, they should make optimum use of their legacy systems. The authors think that economic factors, such as capital expenditure, cost reduction and additional revenue generation, are the two most important issues operators face, and these issues are related to each other (see Fig. 5).
3.3.1. Cost reduction
Reduction in cost and maximum use of available resources should be the prime objective of a service provider. Fig. 5 shows how an operator can reduce cost in the deployment of next generation wireless technology, both by internal and external factors. Internally: there are three general directions to migrate from the existing to a future technology: upgrade, overlay and forklift. Careful consideration has to be given to the selection process of infrastructure vendors, as equipment should be scalable. Also, reductions of recurring expenses on facilities, personnel and maintenance should be anticipated. Regarding head count, growing staff is not a healthy sign; staff should be hired when and where required. Externally: the operator can outsource departments such as billing, customer services and technical support.
3.3.2. Additional revenue generation
The next major challenge that service providers are faced with is how to generate additional revenue, i.e., the other side of the equation. Service providers must develop new innovative products for both general and corporate users. From Fig. 5, it can be seen that operators could achieve this goal in two ways: internally and externally.
Internally: Phone subsidization can act as an incentive for existing customers to adopt new systems and can attract new customers to adopt new technology at affordable prices. Customer experience in usage of previous technologies should be emphasized. New applications and solutions will attract new customers. Minimization of the churn rate can be achieved by service quality improvement, offering of better coverage capacity, voice quality and new services. Numerous internet equipment companies provide software and technical know-how to wireless companies in managing their bandwidth efficiently and offer new services to customers. Companies such as IPWireless, Bridgewater Systems and Convergys Corporation provide software, tools, billing and customer care management services to help companies to connect with their customers. Woosh in New Zealand in collaboration with IPWireless is offering a broadband solution. It has been observed that 40% of all the new broadband subscribers in coverage areas choose Woosh's over Telecom New Zealand's DSL offer (IP Wireless, Woosh). Lastly, marketing or sales should be coordinated with technical services conveying the right information to customers.
Externally: The operator could tie up content management providers and third-party providers who specialize in specific services such as sports, stock market quotes and weather reports. The recent collaboration between Cingular Wireless and the mobile content and media provider Motricity helped Cingular to increase its mobile games services by 25% (Motricity). Operators can increase revenue and their subscriber base linking with mobile content hosts and service providers (9squared-Wireless Content Providers, http://www.9squared.com ; (M) FORMA, http://www.mforma.com ; UPOC Networks). Secondly, they can also lease spectrum to Mobile Virtual Network Operators (MVNOs), in areas where it is not heavily used and earn addition revenue. For example, Virgin Mobile USA leases spectrum and infrastructure from Sprint PCS USA. Thus, the service providers can diversify into new areas and offer attractive services to their customers.
Finally, operators should be able to use the legacy systems to gain in investment cost, scalability, faster time to market, availability of terminals, flexibility in future migration, service offering and meeting the users' expectations.
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