6.Evolutionary Strategies

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Evolutionary Strategies


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1. CONTINUED STANDARDISATION HIGHLIGHTS1.1 The Move to All-IP Networks 5

2. THE EVOLUTION OF THE UMTS ARCHITECTURE2.1 The Basic Release99 UMTS Core Network 9

2.2 A Common Core Transport Network 11

2.3 SIP and Multimedia in the all-IP Core Network 13

2.4 Evolution of the UTRAN 15

2.5 IP to the Node B and to the User 17

2.6 A Conceptual Multi-access UMTS / IP Network 19

3. A SUMMARY OF IP QOS3.1 MPLS 21

3.2 DiffServ 213.3 IntServ 22

3.4 RSVP 22

3.5 IPv6 22

3.6 The Introduction of UMTS Terminals 23

3.7 Evolution Issues for UMTS Terminals 25

3.8 The Evolution of New UMTS Value Chains 29

3.9 UDeciding Factors for the success of UMTS? 31


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1. CONTINUED STANDARDISATION HIGHLIGHTS

Release 99 of the 3GPP specifications for UMTS are sufficient for operators to begin

to plan and deploy UMTS networks which consist of the brand new W-CDMA, FDD-

mode air interface added to the standardised GSM Phase 2+ and GPRS core

network. However the further evolution of UMTS will be strongly dependant on futurestandardisation work, in both 3GPP and in other relevant groups.

The speed of development and the eventual implementation of future specifications

will also be immensely dependent on market demands and conditions, since these

will determine the support and resources for such development.

Amongst the key broad areas in which ongoing specification and standardisation

work is likely to impact the future of UMTS, are the following :

1. Upgrades to the core network, in particular beginning the move towards unifying

and integrating the packet and circuit-switched domains, and providing the basis for

multimedia services, on the basis of IP transport protocols.

2. Further development of service-related architectures, interfaces and procedures,

including the continued evolution of CAMEL, USIM, security and fraud protection and

the Open Services Architecture.

3. Further specification of the TDD mode of operation at the UMTS air interface.

Since TDD spectrum is currently not applicable in Japan, TDD mode is not a priority

for Japanese infrastructure and terminal vendors in the short term.

4. Investigation of possible commonalities and harmonisation of UMTS work in 3GPP

with cdma2000 development in progress by 3GPP2. This is in line with the ITU

concept of a family of 3G standards able to seamlessly interoperate easily. Other

important and ongoing harmonisation efforts also include those between the GSM

and US TDMA communities.

5. Although not strictly part of UMTS, specification of GERAN (GSM/EDGE Radio

Access Network) is a development process which now falls under the auspices of

3GPP. EDGE is by no means certain of wide market acceptance and is not a

requirement in implementing UMTS.

Although there is a body of opinion which supports the use of EDGE as a technology

to fill the coverage gaps between initial islands of UMTS, the existence of EDGE-

capable handsets and complete GERAN specifications from 3GPP will lag behind the

introduction of UMTS, and the first UMTS networks will therefore almost certainly still

use GSM alone as the fill-in radio access technology.


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TDD Mode

GSM Phase 2 + Core+

UTRAN

Service

Architectures

& Interfaces

Integrated

IP Core Network

Chinese

TD-SCDMA

IETF

IP

Standards

GSM/EDGE

Radio Access

Harmonisation with

other IMT2000

Standards

Fig. 1 Evolving a Basic UMTS Network

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6. The Chinese government and Siemens in particular are supporting development

work on TD-SCDMA. Although currently not widely discussed for use in other regions

in the world, the take-up of such a standard by such a potentially huge volume

mobile market could of course require that the rest of the UMTS community worktowards including TD-SCDMA, at the very least in terms of interoperability and

roaming with W-CDMA enabled terminals.

7. The IETF, already one of the partners with input into the 3GPP specification

process, are in charge of developing the whole range of IP-related standards and

recommendations. As the mobile world looks increasingly towards an all-IP

architecture, the work of the IETF is likely to become more relevant, particularly on

standards such as RSVP, MPLS, DiffServ, IntServ, IPv6 and SIP. These all represent

ways of introducing circuit-style carrier-grade QoS to IP-based communications.

Indeed it has already been decided to incorporate SIP as the basis for IP Multimediaservice control in UMTS.


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TDD Mode

GSM Phase 2 + Core+

UTRAN

Service

Architectures

& Interfaces

Integrated

IP Core Network

Chinese

TD-SCDMA

IETF

IP

Standards

GSM/EDGE

Radio Access

Harmonisation with

other IMT2000

Standards

Fig. 1 Evolving a basic UMTS Network

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1.1 The Move to All-IP Networks

The strongest evolutionary trend in UMTS is the move towards increasing the role of

IP in UMTS networks. Some observers are already looking towards 4G, used inmost cases to refer to a network which is all-IP from user terminal through to core

network.

The reasons why all-IP is a desirable end-goal include the following :

1. Cost

The use of standard, mass market IP routers rather than service and vendor-specific

switches resulting in lower costs, both in terms of initial purchase and ongoing

maintenance.

2. Efficiency

An IP network offers a multitude of possible routes for traffic, as opposed to defined

point-to-point links. This means that the network is much more flexible and efficient

at coping with temporal or spatial variations in traffic types and volumes. If a

particular route is congested, another route can be taken.

3. Scaleability

In parallel with increased efficiency, the fact that routing is inherent within an IP

network, and that alternative routes are available, means that longer term increases in

traffic or in overall network capacity can be achieved simply by increasing the

capacity of the transport network. In UMTS this will lead to an increase in the use of

Optical networks, particularly in the core network domain.

By contrast, changes in traffic volume or mix in MSC and ATM-based networks bring

much more complexity. They require constant updating of data tables within

switches, and the re-balancing of traffic between the circuit and packet-switched

domains.

4. Interworking

IP represents an increasingly ubiquitous and de facto transport mechanism. As UMTS

moves more to IP, so seamless interworking between UMTS and other IP-based

networks, such as the Internet or Intranets, will become much more straightforward.



Fig. 2 The Move to All-IP Networks

Why move towards All-IP?

- Cost

- Efficiency in Core Network

- Scaleability

- Interworking

Why not?

- Quality of Service

- Poor Efficiency over Radio


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There are some negatives in moving to an all-IP UMTS network, these include :

1. QoS

For real-time traffic, in particularly voice traffic (which is still accounting for themajority of operator revenues), IP does not currently provide sufficient reliability and

consistency to ensure carrier-grade, delay-free services.

2. Efficiency over Radio

The routing inherent in an IP packet brings with it a considerable overhead,

something which is undesirable in a radio access link, where spectrum is a scarce

and expensive resource.


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Fig. 2 The Move to All-IP Networks

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Why move towards All-IP?

- Cost

- Efficiency in Core Network

- Scaleability

- Interworking

Why not?

- Quality of Service

- Poor Efficiency over Radio


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2. THE EVOLUTION OF THE UMTS ARCHITECTURE

2.1 The Basic Release99 UMTS Core Network

The most straightforward and earliest implementations of UMTS will involve very little

change for operators who start from the basis of a GSM Phase 2+ circuit-switchednetwork, and a GPRS packet-switched network.

These two essentially separate networks define the circuit and packet switched

domains of the UMTS core network, with added support for the IuCS and IuPS

interfaces respectively, connecting these core network domains to the new UTRAN.

While the two networks can share the central databases (HLR, AuC and so on) and

some of the same service control mechanisms and servers, the transport of user data

is separated over 2 transport paths. This means that the operator has two transport

networks to manage and maintain. In particular, the switching infrastructure of the

circuit-switched network is a costly overhead.

The advantage of such a situation however, is that for voice traffic the QoS is very

well managed, since this is precisely what the GSM network was originally intended

to support.


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USER

UTRAN

MSC

SGSN

GMSC

GGSN

Database & Services

PSTN

Internet

data & signalling

signalling only

luCS

IuPS

circuit switched domain

transport network

packet-switched

domain transport network

Fig. 3 Basic UMTS Core Network

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2.2 A Common Core Transport Network

An immediately desirable evolution of the core network is to move towards a

common packet transport network, which can be used to transport user data fromboth the circuit and packet switched domains. In order to achieve this, control

(signalling) is separated from user data in the circuit-switched domain, with circuit-

switched user data now travelling as packets through the same transport medium as

the packet switched domain.

In practical terms this means that the MSCs must be split into two entities, with

control of the circuit-switched domain handled by MSC servers. This control plane

contains all the functions of databases & registers, mobility, security and other control

functions.

For user data, media gateways provide the interface between the common packet

core transport network and the circuit-switched domain connections at the edges of

this core network (i.e. to the PSTN and radio access network).

The way that circuit-switched domain (most commonly voice) traffic is carried over

such a common transport layer will evolve along with the transport mechanism of that

layer.

In the first instance, compressed voice can be carried using virtual circuits over a

simple ATM infrastructure. Further evolutions are likely to involve the introduction of

Voice over IP in this core transport network. IP may be carried over ATM or, ultimately,may sit directly above fiber.

The speed of such an evolution is dependent on developments in the ability to

guarantee the necessary quality of service for voice traffic, with IP protocols evolving

to support much better, more predictable QoS.


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USER

UTRAN

MSC

server

SGSN

MGW

GGSN

MGW

GMSC

server

PSTN

Internet

data & signalling

signalling only

Control

Functions

Applications

ATM &/or IP

Transport

Network

Control

Plane

Fig. 4 A Common Core Transport Network

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2.3 SIP and Multimedia in the all-IP Core Network

Ultimately, MSC servers may tend to become replaced by servers with more Internet-

like call control. In particular SIP has been chosen for controlling real-time multimediain future 3GPP releases. Voice data is then tunnelled through the IP core network

inside IP packets. The advantage of such an architecture is that all services, be they

in the circuit-switched or packet-switched domain, are handled through a common

control architecture, by means of SIP sessions.

In this case, the core network is all-IP, once again with a common transport network.

A Media Gateway is only required for interworking with an external PSTN. The serving

MSC server is replaced by a SIP proxy server, the CSCF, which can control SIP

sessions between an IP-enabled terminal and any circuit-switched domain traffic

coming via the external PSTN via a media gateway control function. This SIP-supporting architecture is termed the "IP Multimedia Subsystem" within 3GPP

specifications.

Although the simple architecture shown represents the ultimate simplification of an

all-IP transport and control scenario, the implementation of such an architecture is

extremely dependent on the evolution of sufficient IP QoS mechanisms. It is also

entirely possible for operators to deploy such an IP Multimedia subsystem in parallel

with retained MSC functionality. Indeed it seems highly unlikely that with the

considerable investment operators have made in their GSM networks, with its high

quality of service for voice, that these will be abruptly closed down.


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UTRAN

CSCF

GGSN

MGW

MGCF

PSTN

Internet

SGSN

USER

SIP Client

IP

Fig. 5 SIP and Multimedia: An all-IP Core Network

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2.4 Evolution of the UTRAN

The same advantages of an all-IP approach to the core network also apply to the

UTRAN, which itself incorporates a sizeable transport network connecting RNCs andNode Bs. Scaleability and flexibility in particular are ultimately much easier within an

UTRAN which is based on an IP transport network.

In the same way that incremental capacity increases are made more straightforward

in the core network, the introduction of IP into the UTRAN makes it easier to add

further Node Bs, or to move capacity between Node Bs and RNCs.

The most straightforward evolution within the UTRAN is likely to be the replacement

of point-to-point ATM links by an IP network.

Since the UTRAN network is potentially an expensive and complex local loop networkto manage, local market conditions may make it favourable for operators to use a

3rd party to provide this underlying transport. For example, a cable operator or

metropolitan area network provider.


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Node B

Node B

RNC CORE NETWORK

a) Current UTRAN

ATM

ATM

b) Evolved UTRAN

Node B

Node B

IP RNCCORE

NETWORK

Fig. 6 Evolution of the UTRAN

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2.5 IP to the Node B and to the User

The final steps in creating an end-to-end UMTS IP network is in taking IP all the way

to the base station by adding an IP Interface to the Node B, and by transporting IPdirectly across the air interface to an IP-enabled terminal.

This latter step in particular will require further work to increase the efficiency with

which such transport might be achieved. At the present time, the overhead of IP

header information means that IP is not necessarily an efficient way of cramming a lot

of data into a small amount of bandwidth. This is a key requirement where a scarce

resource such as radio spectrum is involved. A number of manufacturers have

proposed techniques for header compression which should alleviate this problem,

and eventually it is probable that one of these approaches will be selected for

inclusion in future specification releases.

The implication of taking IP transport straight to the Node B and even to the user

terminal is that the functionality of the RNC will also be taken out into RNC and Radio

Resource Management Servers, which connect to this IP network. This is much the

same as the situation in the core network, where a control plane MSC server was

separated out compared to the existing MSC.

Since no longer dependent on setting up new dedicated transport links, but simply

on routing through the IP "cloud", an IP UTRAN architecture will also make it much

easier to enable direct communication between Node Bs. Although this would almost

certainly require definition of a new standardised interface, an advantage of this is the

ability to move some radio resource management handling functions away from the

RNC and into the Node Bs. This may prove to be more efficient in response to

specific functional speed requirements.


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CSCF

RNC &

RRM

MGW

MGCF

PSTNInternetIP Client

IP Core

NetworkIP Access

Network

Node B

Edge

NodeNode B

Border

Node

Fig. 7 IP to the User

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2.6 A Conceptual Multi-access UMTS / IP Network

With an IP transport network at its core, and services and control functions moved to

the network edge in "server farms", it will become much more straightforward foroperators to offer the same UMTS services to customers through a variety of access

methods, both fixed and wireless.

Even in early releases of UMTS, before all-IP is implemented, some vendors believe

that operators will look to deploy multi-standard base station solutions, enabling them

to offer both Node B (UMTS) and BTS (GSM or EDGE) functionality from the same

site. With governments and the public increasingly concerned over the potential

health issues in mobile, and hence the planning permission for radio masts, this

would indeed seem to be a likely market need.

With all-IP transport in the Radio Access network, it is a logical step not only to share

this resource between multiple radio access methods in future, but to also provide a

common radio resource management function. Such a function would integrate the

control of each of these radio access methods, providing much easier control of

processes such as inter-network handover.


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Applications

MGW

Intelligence Mobility

Servers

IP

IP

Signalling+

Control

RadioResource

Management

UMTS/GSM/

EDGE

Fixed

Access

Other Radio

Interfaces

Legacy

Network

Fig. 8 Multi-access UMTS/IP Network

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3. A SUMMARY OF IP QoS

IP is a connectionless technology, and so does not guarantee bandwidth. Thus IP in

itself will not differentiate network traffic based on type, and so cater for the particular

needs of an application in terms of bandwidth and priority. By contrast, ATM does

incorporate service requirements into its specifications, and so is in much wider useat present.

Although one solution is of course to just add more and more bandwidth until traffic

delays are no longer a problem, in reality it is necessary to add particular options to

IP in order to deal with the QoS limitations.

There a number of standards which are being developed within the IP community,

and which may well be important for future releases of UMTS, because of their

influence on QoS. Below are listed just a few of the most prominent ones. All

potentially enable IP QoS to be improved for traffic such as audio and video,

eliminating any annoying skips and hesitations.

3.1 MPLS

Layer 3 or the network layer refers to the communications protocol containing the

logical address of a route destination, for example the IP address which is inspected

by a router which forwards it through the network. Layer 3 also contains a type field

so that traffic can be prioritized and forwarded based on message type as well as

network destination.

MultiProtocol Label SSwitching is a specification for layer 3 switching and uses labelsthat contain forwarding information, attached to IP packets by a router that sits at the

edge of the network. Routers in the core of the network examine the label more

quickly than if they had to look up destination addresses in a routing table. The

forwarding router does not look at the entire packet header, rather only at the label

with the forwarding information. This allows packets to be forwarded more quickly,

and also allows the paths to be set up in a variety of ways. For example, the path

could represent the normal destination-based path, a policy-based explicit route, or a

reservation-based flow path.

In essence, MPLS enables more decision on the routing to be made at the peripheryof a dumb network, with the network handling this routing much more efficiently.

3.2 DiffServ

DIFFerentiated SERVices, like MPLS, operates at layer 3 only. It uses the IP type of

service (TOS) field as the Diffserv byte (DS byte), to classify packets into small

number of service types. Diffserv does not provide traffic engineering or hard quality

of service similar to ATM, in that it does not involve explicit reservation of resources

or control of admission. Instead it uses priority mechanisms to provide adequate QoS

according to the service type. Network routers have to include intelligent queuingmechanisms in order to achieve this, allowing high priority traffic to move to the front

of a queue of packets.



It is possible that service providers will use Diffserv at the edges of the network, for

classification and assignment to the right connection, and MPLS within the network.

3.3 IntServ

The Integrated Services model differs from DiffServ in that it reserves resources

explicitly using a signalling protocol. This approach uses admission control, packet

classification, and intelligent scheduling to achieve the desired QoS. It is thus a

fundamentally new approach to IP, moving away from the best effort approach.

At present IntServ might be suitable for small networks and Intranets, however as

traffic flows become larger, the signalling processing required becomes problematic

for larger networks.

3.4 RSVP

ReSerVation Protocol is a protocol that signals to a router that it should reserve

bandwidth for real-time transmission. It is designed to work with IntServ, although it

can also be applied to other service models. Information in the reservation request

could include maximum transmission rates, maximum frame jitters and maximum

end-to-end delay.

When an RSVP request is made, each router between it and the source makes a note

of it and attempts to honour it, with an error request sent back to the source if this

cant be done the circuit-switched equivalent of a busy tone. Of course, thistechnique means a lot of router upgrades where big networks are involved, and so

problems of scaleability.

3.5 IPv6

Internet ProtocolVersion 6 was started as far back as 1991, and the specification

was completed in 1997 by the IETF.

The key feature of IPv6 is that it increases the address space from 32 to 128 bits,

providing for a number of networks and systems which is unlimited in a practicalsense. However also included in IPv6 is inherent support for quality of service

parameters for real-time audio and video, and increased data security. For example,

IPv6 enables applications to request different levels of service, and will guarantee

these levels even when the request goes over a wide area network.

The draft version of IPv6 was originally called IP Next Generation (IPng), and IPv6 is

backward compatible with IPv4.


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3.6 The Introduction of UMTS Terminals

The evolution of terminals will be a crucial factor in the ultimate success or failure of

UMTS. The situation is neatly summed up by the following quote :

The problem today is that we do not have a clear indication from manufacturers of

terminals about when these kind of terminals will be available for commercial

deployment. When I say commercial, I mean sufficient in volume, full type-approved

terminals, and at a competitive price we cannot pass the technical problem to the

customer. Until such terminals become available, we believe that the success of

UMTS will be limited

Miguel Menchen Alumbreros, General Director of Wireless Internet, Telefonica

Moviles, speaking at the UMTS World Congress, October 2000

Terminal supply is something of a chicken and egg situation manufacturers will

rarely commit large resources until they are guaranteed a mass market of sales ;

operators will rarely develop and market services to the market without being certain

that terminals will be available. The slow uptake of both WAP and GPRS services

were both blamed to a large extent on the lack of available terminals as operators

went to market.

The first UMTS terminals will certainly offer multi-mode UMTS / GSM functionality,

since operators will initially only offer UMTS coverage in the busiest areas where it

can be guaranteed that demand will allow cells to be efficiently loaded. Outside suchareas services are likely to remain reliant on GSM / GPRS and perhaps EDGE.

Although both EDGE and TDD-mode UMTS have support and business cases

proposed by sectors of the industry, their introduction is likely to lag some way

behind that of the first UMTS deployments not just due to standardisation issues, but

also because of a lower priority for terminal manufacturers. Indeed for the Japanese

market, home to some of the key consumer electronics vendors, neither technology is

even applicable.


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"The problem today is that we do not have

a clear indication from manufacturers of terminals

about when these kind of terminals will be available for

commercial deployment. When I say commercial, I mean

sufficient in volume, full type-approved terminals, and at a

competitive price - we cannot pass the technical problem to the

customer. Until such terminals become available, we believe thatthe success of UMTS will be limited."

Miguel Menchen Alumbreros, General Director of

Wireless Internet, Telefonica Mobiles, speaking

at the UMTS World Congress,

October 2000.

No

Services

Lack of

Handsets

Uncertain

Terminal

Needs

Fig. 10 UMTS Terminals: Supply and Demand

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3.7 Evolution Issues for UMTS Terminals

UMTS terminals are exceedingly complex electronic and radio devices, and need to

exist in a world where small size and fashion-conscious design are increasinglyinfluential. Just a few of the key problems facing terminal manufacturers in developing

and evolving UMTS terminals are :

1. Power

UMTS terminals will be much more power-hungry both from the radio and application

perspectives. While the ability to pack enough processing power into a small device

(and avoid overheating) is one issue, a lot of work is also in progress on techniques

such as power control and power saving, in order to maximise what power is

available. Fundamental battery technologies have changed little in recent years, yet

this is another area in which developers are looking to evolve smaller and moreefficient power solutions.

2. Memory

As the PC, mobile and other computing industries expand, all of the new devices and

new applications tend to need increasing memory. The successful introduction of

UMTS terminals will depend not just on the continued decrease in the size of storage

technologies, but also on the ability of manufacturers to supply memory at a rate fast

enough to support the growth of computing in general.

3. Operating SystemIn an ideal world, all terminals would use a common operating system to ensure the

interoperability of applications, and an easier task for application developers who will

be vital in building the UMTS market. Success in balancing high functionality with low

power and memory requirements are the evolutionary goal of any mobile O/S, and the

O/S will be a major determinant of the power and design requirements of UMTS

terminals.

However, as in the PC world, the O/S is proving to be a competitive battleground,

with no clear winner likely to emerge. The most prominent competitors include

Microsoft, who of course are keen to see mobile devices inter-operate with the

Windows PC environment ; Symbian, a joint venture including Psion, the organiser

manufacturer, and mobile phone leaders Nokia & Ericsson ; and Palm, whose Palm

Pilot PDA became a market leader particularly in the US.



Fig. 11 Issues for UMTS Terminals

Issues for UMTS Terminals

Power

- processing power

- power control

- power saving

Memory

Operating System

Form Factor

- Bluetooth

Standardisation


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4. Form factor

With little real knowledge of what the "killer applications" for UMTS may be, it is of

course difficult to propose the most effective design for UMTS terminals. Different

mixes of voice, video and data are best supported by different types of design, and a

whole range of concept phones have been proposed.

Most in the mobile industry originally believed that increasingly functional

smartphones were the evolution path for terminals, combining voice, perhaps video,

and a whole range of data services into a single phone-like device. However recent

handset trends have seen the increasing success of small-size and fashion value as

factors in consumer purchasing, while such terminals have remained essentially

voice-centric in terms of design.

The entrance of the computing industry into the competition for market share inhandheld devices has led to a much more data-centric approach, including larger

screens, pens and touch-screens rather than keypads, and with voice as an

accessory add-on.

Improvements in voice recognition may also change the way in which users can

interact with terminals, and hence the way the terminal is designed, and indeed a

whole plethora of concept phone designs are proposed by handset vendors.

Ultimately, suitability for whatever services emerge and consumer reaction will decide

5. Bluetooth could potentially have a big effect on form factor. Bluetooth is designed

to provide wirefree communication between computing devices over a short range. It

raises the possibility that rather than try to cram more and more features into a single

device, terminals could instead become disaggregated. A radio module could provide

the interface between the UMTS network, and Bluetooth could provide the onward

link to the most appropriate user interface device for the service in question. For

example this might be a PDA for organiser functions, a laptop for viewing streaming

video or large documents, a microphone and ear-piece for voice.

5. Standardisation

Since standards are constantly evolving, particularly at the early stages indevelopment, it is usually impossible for terminal manufacturers to begin testing and

type approving terminals until these standards have stabilised. No manufacturer is

willing to release terminals to market only to have to ask customers to return for an

upgrade just a few months later. In many cases, it is impossible to get around

standardisation changes through software upgrades, since efficient operation of the

terminals requires that as many functions as possible be achieved trough hardware.


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Fig. 11 Issues for UMTS Terminals

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Issues for UMTS Terminals

Power

- processing power

- power control

- power saving

Memory

Operating System

Form Factor

- Bluetooth

Standardisation


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3.8 The Evolution of New UMTS Value Chains

When operators offered 2G Voice, the value chain was quite straightforward, as

simplistically illustrated opposite.

In a market where users have access to a range of multimedia services, potentially

provided by a number of different sources, the value chain becomes much more

complex. UMTS has been designed to easily offer such service flexibility, and so there

is no reason to believe that such complex value-chains will not evolve.

What is less clear is how revenue will be split along such value chains, and whether

some players will occupy more than one position (for example a content provider

could aim to become a virtual network operator, or a virtual network operator could

also be the consumer retailer). Ultimately the consumer will pay for UMTS services by

means of a bill. However there are a number of places from where this bill could be

generated.

The lower diagram opposite gives an illustrative evolution of a UMTS value chain, to

show the greater complexity which may arise, and hence the more points along the

chain where billing & revenue generation may occur. A key challenge for operators is

to pay for their investments in UMTS by keeping a controlling position in such a

chain. Ultimately this may depend on the success of persuading consumers to spend

more then previously on mobile services, compensating for a smaller slice of the

overall revenue pie, by growing a much bigger overall pie.


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UserHandset

Vendor

a) 2G Voice

b) 3G Multimedia

RetailerService

ProviderOperator

UserHandset

VendorRetailer

Billing

Content aggregator/distributor

Virtual

Operator

Service

Provider

Operator

Billing?

Content

Owner

Content

Owner

Content

Owner

Fig. 12 Value Chains

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3.9 Deciding Factors for the success of UMTS?

UMTS is the result of a complex and hugely detailed work effort, which has included

a wide range of opinions and interests from within the mobile community. The resultis a set of specifications which potentially provide a huge leap forward in terms of the

efficiency, quality and flexibility with which services can be provided to mobile users.

However, ultimately the success of UMTS may depend not just on quality of this

work, but on a number of external market factors which can be very difficult to

predict, and which may not reflect any all-industry consensus. Just a few of these are

highlighted below.

1. Operator Interests.

The competitive playing field is changing, most analysts predict the emergence of adecreasing number of large global operators, as a result of acquisitions and

consolidation. The bargaining power of these operators with infrastructure suppliers,

and their need to harmonise operations worldwide, potentially from very different

starting networks, is likely to have major influence.

2. Infrastructure Vendors.

Much of the cost of developing UMTS has been borne by vendors, who must

therefore expect a return on this investment in terms of contracts and equipment

sales. Although UMTS has been designed to be much more a multi-vendor

environment, the vendor market has already evolved into various alliances,particularly between traditional mobile suppliers and Internet suppliers, in order to

provide operators with a "one-stop shop" option.

3. Governments and Regulators

The licensing timetables and public policies of regulators and governments can affect

anything from the broad timetables for UMTS introduction to the detailed processes

of cell site planning and selection, or the emission and power constraints of terminals.

In particular health concerns are coming more into the public agenda, at just the time

when the roll-out of new base stations and more powerful terminals is required.

Regulators may also ultimately decide how value chains look from country to country,

for example by enforcing particular rules and conditions concerning the access of

virtual network operators and value added service providers to UMTS networks.


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Electronics

UMTS

Operators

Vendors

Regulators

Content

Providers

THE CONSUMER

Marketing

Fig. 13 UMTS: The Unknowns

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4. Terminals & Consumer Electronics Markets

As traditionally "fixed" computing and consumer electronics vendors such as

Compaq, Hewlett-Packard, Sony and Panasonic increase their influence on the

terminals market, innovation and design are likely to evolve quickly. Since terminals

represent the consumers interface with UMTS, design and useability are likely to

strongly impact the success or failure of UMTS terminals.

5. The Content Industry

Most analysts agree that without sufficiently attractive content and applications, new

mobile services will not appeal to users. The content industry, be it music, film, banks

or information, is well aware of this, and certain to have an increasingly strong voice

in UMTS service development, for example in much the same way that the Hollywood

ultimately determined the multi-region development of DVD.

6. Marketing

It has been pointed out many times that Betamax was superior to VHS, but VHS was

marketed much better. UMTS faces a similar challenge. Marketing covers a vast array

of issues for the mobile industry to face, from branding to market education to

attractive pricing. The latter in particular will also be influenced strongly by the

development of appropriate Billing solutions.

And finally..

7. The Consumer

It is the reaction of consumers which will ultimately decide the service mix and traffic

types whose support needs to be optimised in UMTS. It will be consumers

disposable income which will decide if pricing strategies have been formulated

correctly. It will be consumers fashion quirks that will decide which terminals sell the

best and it will be consumers convenience and confidence in matters of health, which

will see them favour mobile over fixed access.


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Consumer

Electronics

UMTS

Operators

Vendors

Regulators

Content

Providers

THE CONSUMER

Marketing

6.Evolutionary Strategies

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