WILEY Cellular Technologies User Manual
CELLULAR
TECHNOLOGIES FOR
EMERGING MARKETS
CELLULAR
n
TECHNOLOGIES FOR
EMERGING MARKETS
2G, 3G AND BEYOND
Ajay R. Mishra
Nokia Siemens Networks
A John Wiley and Sons, Ltd., Publicatio
This edition first published 2010
C
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Library of Congress Cataloging-in-Publication Data
Mishra, Ajay R.
Cellular technologies for emerging markets : 2G, 3G, and beyond / Ajay R Mishra.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-470-77947-7 (cloth)
1. Cellular telephone systems. I. Title.
TK5103.2.M567 2010
35–dc22
384.5
2010005780
A catalogue record for this book is available from the British Library.
ISBN 9780470779477 (HB)
Typeset in 10/12pt Times by Aptara Inc., New Delhi, India
Printed and Bound in Singapore by Markono
Dedicated to
The Lotus Feet of my Guru
Contents
Foreword 1: Role of Technology in Emerging Markets xv
Foreword 2: Connecting the Unconnected xvii
Preface xix
Acknowledgements xxi
1 Cellular Technology in Emerging Markets 1
1.1 Introduction 1
1.2 ICT in Emerging Markets 1
1.3 Cellular Technologies 5
1.3.1 First Generation System 5
1.3.2 Second Generation System 6
1.3.3 Third Generation System 6
1.3.4 Fourth Generation System 7
1.4 Overview of Some Key Technologies 7
1.4.1 GSM 7
1.4.2 EGPRS 8
1.4.3 UMTS 8
1.4.4 CDMA 8
1.4.5 HSPA 9
1.4.6 LTE 10
1.4.7 OFDM 10
1.4.8 All IP Networks 11
1.4.9 Broadband Wireless Access 11
1.4.10 IMS 12
1.4.11 UMA 13
1.4.12 DVB-H 13
1.5 Future Direction 14
2 GSM and EGPRS 15
2.1 Introduction 15
2.2 GSM Technology 16
2.2.1 GSM Network 16
2.2.2 Signalling and Interfaces in the GSM Network 22
viii Contents
2.2.3 Channel Structure in the GSM 23
2.3 Network Planning in the GSM Network 25
2.3.1 Network Planning Process 25
2.3.2 Radio Network Planning and Optimization 25
2.3.3 Transmission Network Planning and Optimization 35
2.3.4 Core Network Planning and Optimization 41
2.4 EGPRS Technology 44
2.4.1 EGPRS Network Elements 45
2.4.2 Interfaces in the EGPRS Network 46
2.4.3 Channels in the EGPRS Network 48
2.4.4 Coding Schemes 49
2.5 EGPRS Network Design and Optimization 50
2.5.1 Parameter Tuning 52
3 UMTS 55
3.1 The 3G Evolution – UMTS 55
3.2 UMTS Services and Applications 57
3.2.1 Teleservices 57
3.2.2 Bearer Services 58
3.2.3 Supplementary Services 58
3.2.4 Service Capabilities 58
3.3 UMTS Bearer Service QoS Parameters 59
3.4 QoS Classes 60
3.4.1 Conversational Class 60
3.4.2 Streaming Class 61
3.4.3 Interactive Class 61
3.4.4 Background Class 61
3.5 WCDMA Concepts 62
3.5.1 Spreading and De-Spreading 62
3.5.2 Code Channels 63
3.5.3 Processing Gain 64
3.5.4 Cell Breathing 64
3.5.5 Handover 65
3.5.6 Power Control 66
3.5.7 Channels in WCDMA 66
3.5.8 Rate Matching 67
3.6 ATM 68
3.6.1 ATM Cell 68
3.6.2 Virtual Channels and Virtual Paths 69
3.6.3 Protocol Reference Model 70
3.6.4 Performance of the ATM (QoS Parameters) 72
3.6.5 Planning of ATM Networks 75
3.7 Protocol Stack 76
3.8 WCDMA Network Architecture – Radio and Core 77
3.8.1 Radio Network 78
3.8.2 Core Network 80
Contents ix
3.9 Network Planning in 3G 81
3.9.1 Dimensioning 81
3.9.2 Load Factor 85
3.9.3 Dimensioning in the Transmission and Core Networks 88
3.9.4 Radio Resource Management 89
3.10 Network Optimization 89
3.10.1 Coverage and Capacity Enhancements 92
4 CDMA 95
4.1 Introduction to CDMA 95
4.2 CDMA: Code Division Multiple Access 96
4.3 Spread Spectrum Technique 98
4.3.1 Direct Sequence CDMA 98
4.3.2 Frequency Hopping CDMA 100
4.3.3 Time Hopping CDMA 100
4.4 Codes in CDMA System 100
4.4.1 Walsh Codes 100
4.4.2 PN Codes 101
4.5 Link Structure 102
4.5.1 Forward Link 102
4.5.2 Reverse Link 102
4.6 Radio Resource Management 103
4.6.1 Call Processing 103
4.6.2 Power Control 105
4.6.3 Handoff 107
4.7 Planning a CDMA Network 107
4.7.1 Capacity Planning 107
4.7.2 Parameters in a CDMA Network 109
4.8 CDMA2000 111
4.8.1 CDMA2000 1X 112
4.8.2 CDMA2000 1XEV-DO Technologies 112
4.8.3 Channel Structure in CDMA2000 114
4.8.4 Power Control 115
4.8.5 Soft Handoff 115
4.8.6 Transmit Diversity 115
4.8.7 Security 115
4.8.8 CDMA2000 Network Architecture 115
4.8.9 Key Network Elements (CDMA2000) 116
4.8.10 Interfaces of the CDMA2000 Network 117
4.8.11 Call Set Up Processes 118
4.9 TD-SCDMA 119
4.9.1 Services in TD-SCDMA 122
4.9.2 Network Planning and Optimization 124
5 HSPA and LTE 125
5.1 HSPA (High Speed Packet Access) 125
x Contents
5.1.1 Introduction to HSPA 125
5.1.2 Standardization of HSPA 125
5.2 HSDPA Technology 125
5.2.1 WCDMA to HSDPA 127
5.2.2 HSDPA Protocol Structure 127
5.2.3 User Equipment 128
5.3 HSDPA Channels 129
5.3.1 HS-DSCH (High Speed Downlink Shared Channel) 129
5.3.2 HS-SCCH (High Speed Shared Control Channel) 129
5.3.3 HS-DPCCH (High Speed Dedicated Physical Control Channel) 130
5.4 Dimensioning in HSDPA 130
5.5 Radio Resource Management in HSDPA 131
5.5.1 Physical Layer Operations 131
5.5.2 Adaptive Modulation and Coding Scheme 132
5.5.3 Power Control 132
5.5.4 H-ARQ (Hybrid Automatic Repeat reQuest) 132
5.5.5 Fast Packet Scheduling 133
5.5.6 Code Multiplexing 134
5.5.7 Handover 134
5.5.8 Resource Allocation 134
5.5.9 Admission Control 135
5.6 High Speed Uplink Packet Access (HSUPA) 135
5.6.1 HSUPA Technology 135
5.6.2 HSUPA Protocol Structure 135
5.6.3 HSUPA User Terminal 136
5.7 HSUPA Channels 136
5.7.1 E-DPDCH 137
5.7.2 E-DPCCH 137
5.7.3 E-AGCH 137
5.7.4 E-RGCH 137
5.7.5 E-HICH 138
5.8 HSUPA Radio Resource Management 138
5.8.1 HARQ 138
5.8.2 Scheduling 138
5.8.3 Soft Handover 138
5.9 HSPA Network Dimensioning 139
5.10 LTE (Long Term Evolution) 141
5.10.1 Introduction to LTE 141
5.11 LTE Technology 143
5.11.1 Access Technology 143
5.11.2 LTE Network Architecture 145
5.11.3 Channel Structure 146
5.11.4 LTE Protocol Structure 147
5.12 Radio Resource Management 149
5.13 Security in LTE 149
5.13.1 Network Access Security 150
Contents xi
6 OFDM and All-IP 153
6.1 Introduction to OFDM 153
6.2 OFDM Principles 155
6.2.1 Frequency Division Multiplexing 155
6.2.2 Orthogonality 155
6.2.3 Modulation in OFDM 156
6.2.4 Inter-Symbol and Inter-Carrier Interference 158
6.2.5 Cyclic Prefix 158
6.2.6 Coded OFDM (C-OFDM) 159
6.3 MIMO Technology 159
6.3.1 MIMO System 159
6.3.2 MIMO Mode of Operation 160
6.4 OFDM System 161
6.4.1 OFDM Variants 161
6.5 Design of OFDM Channel 163
6.6 Multi-User OFDM Environment 163
6.7 All-IP Networks 164
6.7.1 Core/IP Network Evolution in Cellular Networks 165
6.7.2 Advantages of All-IP Network 169
6.8 Architecture of All-IP Networks 169
7 Broadband Wireless Access: WLAN, Wi-Fi and WiMAX 173
7.1 Wireless Technology Differentiation 173
7.1.1 Broadband Wireless Access 173
7.1.2 IEEE 802.16 174
7.1.3 BWA Technologies 175
7.2 Wireless LAN 176
7.2.1 IEEE 802.11 176
7.2.2 Channel Structure 178
7.2.3 Efficient Channel Sharing 178
7.2.4 Parameters in WLAN Planning 178
7.2.5 Coverage and Capacity in WLAN 179
7.2.6 Security and Authentication 179
7.2.7 WLAN Network Architecture 179
7.2.8 WLAN Network Types 180
7.2.9 Network Planning in WLAN 180
7.3 Wi-Fi Networks 181
7.3.1 Introduction to Wi-Fi Technology 181
7.3.2 Wi-Fi Network Architecture 182
7.3.3 Wi-Fi Network Design 183
7.4 WiMAX Networks 183
7.4.1 Introduction to WiMAX 183
7.4.2 OFDMA: Modulation in WiMAX 186
7.4.3 WiMAX Network Architecture 188
7.4.4 Protocol Layers in WiMAX 194
7.4.5 Security 196
xii Contents
7.4.6 Mobility Management 198
7.4.7 Network Design in WiMAX 199
8 Convergence and IP Multimedia Sub-System 201
8.1 Introduction to Convergence 201
8.2 Key Aspects of Convergent Systems 202
8.2.1 Types of Convergence 202
8.2.2 Applications 206
8.3 Architecture in Convergent Networks 207
8.3.1 Business and Operator Support Networks 207
8.3.2 Technology 208
8.4 IMS 209
8.4.1 Introduction to IMS 209
8.4.2 IMS Development 210
8.4.3 Applications of IMS 211
8.5 IMS Architecture 211
8.5.1 Service or Application Layer 211
8.5.2 Control Layer 212
8.5.3 Connectivity or Transport Layer 212
8.5.4 IMS Core Site 213
8.5.5 Functions and Interface in IMS 215
8.5.6 Reference Points 217
8.5.7 Protocol Structure in IMS 217
8.6 IMS Security System 222
8.7 IMS Charging 223
8.7.1 Offline Charging 223
8.7.2 Online Charging 223
8.8 Service Provisioning in IMS 224
8.8.1 Registration in IMS 224
8.8.2 De-Registration in IMS 226
9 Unlicensed Mobile Access 229
9.1 Introduction to UMA 229
9.1.1 History and Evolution of UMA 230
9.1.2 Benefits of UMA 230
9.2 Working on UMA Network 230
9.3 Architecture of UMA 231
9.4 U
Interface in UMA 233
p
9.5 Protocols in UMA 234
9.5.1 Standard IP-Based Protocol 234
9.5.2 UMA Specific Protocols 234
9.6 Security Mechanism of UMA 235
9.7 Identifiers and Cell Identifiers in UMA 235
9.8 Mode and PLMN Selection 236
9.8.1 Mode Selection 236
9.8.2 PLMN Selection 237
Contents xiii
9.9 UMAN Discovery and Registration Procedures 237
9.9.1 Registration 237
9.9.2 De-Registration 239
9.9.3 Registration Update 241
9.9.4 ‘Keep Alive’ 242
9.10 UNC Blocks 242
9.11 Comparison between Femtocells and UMA 243
9.12 Conclusion 243
10 DVB-H 245
10.1 Mobile Television 245
10.1.1 Bearer Technologies for Handheld TV 245
10.1.2 Service Technology for Handheld TV 247
10.2 Introduction to DVB 247
10.2.1 Digital Video Broadcasting – Terrestrial 248
10.2.2 Digital Video Broadcasting – Handheld 249
10.2.3 History of DVB-H 249
10.3 DVB-H Ecosystem 249
10.4 DVB-H System Technology 250
10.4.1 Time Slicing 251
10.4.2 IPDC (Internet Protocol Datacasting) 252
10.4.3 MPE/FEC (Multiple Protocol Encapsulation/Forward Error
Correction) 252
10.4.4 Protocol Stack for DVB-H 253
10.4.5 4k Mode and In-Depth Interleavers 254
10.4.6 Multiplexing and Modulation 254
10.4.7 DVB-H Signalling 255
10.4.8 SFN 255
10.4.9 Power Consumption 255
10.4.10 Signal Quality in DVB-H Networks 255
10.5 DVB-H Network Architecture 256
10.5.1 Content Provider 256
10.5.2 Datacast Operator 256
10.5.3 Service Operator 256
10.5.4 Broadcast Network Operators 257
10.6 DVB-H Network Topologies 257
10.6.1 Multiplexing – DVB-T and DVB-H Networks 257
10.6.2 Dedicated DVB-H Networks 257
10.6.3 Hierarchal DVB-T and DVB-H Networks 258
10.7 Network Design in the DVB-H Network 258
10.7.1 Site Planning 261
10.7.2 Coverage Planning 261
Appendix A VAS Applications 265
A.1 Multimedia Messaging Service 265
A.2 Push-to-Talk over Cellular 267
xiv Contents
A.3 Streaming Service 270
A.4 Short Message Service 271
A.5 Wireless Application Protocol 272
Appendix B Energy in Telecommunications 275
B.1 The Solution Exists – But It’s Not Very Good 275
B.2 Renewable Energy – a Better Solution 276
B.2.1 Solar 277
B.2.2 Wind 277
B.2.3 Biofuels 278
B.2.4 Fuel Cells 278
B.2.5 Hydro and Geothermal 279
B.3 The Optimal Design for a Base Station Site 279
B.4 Business Case for Renewable Energy in Mobile Base Station Sites 279
B.5 Effects of Climate Change on Mobile Networks 281
Bibliography 283
Index 291
Foreword 1:
Role of Technology in Emerging Markets
Telecom wireless technology has been progressing rapidly over the last two decades. Initial
introduction of the GSM platform created global standards in the 1980s and provided opportunities to innovate new business models to reduce costs and increase affordability, leading to
substantial growth and expansion in the emerging countries. In the process, GSM technology
was enhanced through several new features and functionalities to add data capabilities. In
the 1990s, third generation wireless technology was introduced in advanced countries of the
western world and Japan. At the same time China and India witnessed an unpredicted growth
with over 700 million subscribers in China and over 500 million subscribers in India. Similar
growth in many other emerging markets of Latin America, Africa and Asiapushed the number
of global mobile phone users to over 4 billion worldwide.
The expansion of mobile phones in the emerging markets has been critical in the overall
development of the rural areasand the people at thebottomof the pyramid. This has provided a
unique accesstobasic telephone servicesand avariety ofnew SMSbased applicationsrelated to
entertainment, news, agriculture,payments, etc. It hasbeen shown by theOECD andother studies that a10 % increase inthe mobile phonecoverage increases theGDP of thecountry by 0.6 %.
This offers hope for new features and functionalities with more data capabilities and applications related to education, health, governance, etc. to benefit the poor in the emerging markets.
All of this was possible because we were able to make a business case for affordable
technology and bring down the total cost of ownership for the people. This is where Ajay
Mishra’s book steps in. It provides a comprehensive coverage of many technologies that
will give the readers a quick understanding of the upcoming new opportunities. A basic
understanding of the evolution of technologies will help make the right choices for future
network capabilities.
Once we are able to bring down the total costs of ownership by placing the right technology,
we can provide an opportunity for real economic development and growth to the community.
The key is to continue to focus on lowering the cost of mobile services where basic voice
services will become a commodity and the future revenue for the operators will come from
novel and useful applications and transaction services. Only then the real potential of the
mobile revolution will be realized.
Sam Pitroda
Advisor to the Prime Minister of India
Former/First Chairman Telecom Commission of India
Foreword 2:
Connecting the Unconnected
The world now has more than 4B telephone lines – thanks to wireless connectivity as more
than 65 % are mobile connections. The increase has been tremendous in emerging markets
such as India where mobile connections are now happening in double digit millions every
month. It has been a phenomenal journey of perhaps one technology (i.e. wireless/mobile)
that has not only outgrown the vision of the founding fathers but has been quite successful
in touching the lives of people living in the remotest of locations. We have many studies that
have very strongly pointed to the fact that an increase mobile penetration would impact the
lives of people and this is absolutely amazing.
As we talk about ‘connecting the un-connected’ and reducing the digital divide, it is absolutely necessary that the benefits of technology reach to people living in the remotest places
on this planet. Many of the emerging markets, although immensely successful for highest
connectivity growths, have not achieved similar success in making its people reap the benefits
of being connected to the world.
Technology will play an important rolein bringing down the total costs ofownership. With a
host of technologies at the disposal of emerging markets, it would be even easier for operators
and industry in general to bring connectivity to the door steps of people in the farthest of
locations. I think that by giving the right overview of the technologies that will play a role in
emerging markets, under one cover, this book will prove to be extremely useful to decisionmakers in the cellular industry. The book brings technology and design aspects that one would
need for day-to-day decision making in a simple and lucid way. Only when both connectivity
and its benefits will reach every one single person would we say that we are living in a truly
connected world.
Adel Hattab
Vice-President
Nokia Oy
Preface
Emerging markets have seen an unprecedented growth inthe last few years. The operator focus
has been on giving complete coverage to all regions (urban to rural) and to subscription to all –
people from the highest to the lowest income groups. When the idea is taking coverage for
the remotest of the regions and getting the ‘unconnected–connected’, technology and business
modelling are two important focus areas. This book covers one of them – technology. Many of
the mobile technologies find importance in one network. No more do we see networks that are
working on just one or two technologies but we are seeing networks that are an amalgamation
of technologies. Engineers and executives working in the field sometimes find itchallenging to
get hold of a single manual that gives them an overview of technologies that are existing in the
mobile field. This book tries to address that challenge – providing an overview of technology,
designing and applications of the few important technologies under one cover.
There are many books that are available dealing with individual technologies and so this
book is not for in-depth reading of one technology but rather a quick overview of some key
technologies. Experts of one technology can quickly understand what they can expect in other
technologies. So, this book will be beneficial to beginners, experts, managers and technocrats
at the same time.
Chapter 1discusses the scenario in emerging markets and technologies that are making their
mark. Chapter 2 focuses on GSM and EGPRS and includes a technology overview, details on
network architecture and network planning/ optimization.
Chapters 3 and 4 are concerned with UMTS and CDMA, covering technology, network
architectures and designing issues.
In Chapter 5 we go beyondthe third-generation technology. Technologies that are sometimes
called 3.5G (HSPA) and 3.9G (LTE) are discussed. These are of immense interest in current
scenarios – both in the developed and emerging markets.
Going further, we look into OFDM and All-IP technologies in Chapter 6. Both ofthese have
started to make an impact and are being studied with much greater interest by the technocrats
of emerging markets.
We look into the world of Wi-Fi, WLAN and WiMAX in Chapter 7. Although Wi-Fi and
WLAN have established places in the technology world, they are finding more importance as
we move towards fourth-generation networks.
WiMAX and LTE are still being debated but leaving that for cellular operators to decide,
we focus on looking into the technical aspects of WiMAX in this chapter.
Convergence is again a fascinating world and is covered along with the underlying technology of IMS in Chapter 8.
xx Preface
Although UMA has been more common in North America, it is briefly covered in Chapter 9
to give the reader an overview of the concept that is implemented in one of the biggest cellular
markets in the world.
Chapter 10 deals with DVB-H, the underlying technology for mobileTV. Thistechnology is
now making inroads into emerging markets and has an impact on the life of ‘common man’ –
taking TV to his/her handheld devices.
There are two appendices as well – one which covers VAS applications while the other
one concentrates on highly important areas for anyone and everyone in the telecom industry –
‘energy’.
Finally, at the end of this text, there is a Bibliography with a carefully chosen list of books
and papers forfurther readingwhich I hope the interested reader will find useful. In conclusion,
I would appreciate it if readers can give me feedback with respect to comments concerning
this text and suggestions for improvement, via fcnp@hotmail.com.
Ajay R. Mishra
Acknowledgements
Writing this book has been nothing short of an exciting journey – and no words are sufficient
to thank those people who have helped in various ways during the course of this project.
My big thanks go to Mark Hammond and Sarah Tilley from John Wiley & Sons, Ltd,
Chichester, UK, who believed that this project would finallybe completed in spite ofnumerous
delays.
Special thanks are due to my following colleagues and friends for taking out the time to
read the manuscript and give their valuable comments: Johanna Kahkonen, Mika Sarkioja,
Sushant Bhargava, Shweta Jain, Pauli Aikio, Munir Sayyad (Reliance Communications) and
Cameron Gillis.
Many thanks go to Sam Pitroda, Advisor to The Prime Minister of India and First Chairman
of the Telecom Commission of India, and Adel Hataab Vice President, Nokia Oy for donating
their precious time in writing the Forewords and sharing their vision with us.
Many thanks are due to Rauno Granath and Amit Sehgal for their contributions to Chapter 1
and to Sameer Mathur and Anne Larilahti for their contributions in writing the Appendices.
Thanks also to KanakShree Vats, Kanchan Agarwal, Shankar Shivram, C. Ravindranath
Bharathy, Das Bhumesh Kailash, Dandavate Pushpak Ravindra, Abhishek Kumar and Kriti
Vats for helping me during the last phases of the writing of this book.
My all-time thanks must go to my Professors/Mentors, G. P. Srivastava,K. K. Sood and J. M.
Benedict, and to my colleagues, Antti Rahikainen, Reema Malhotra and Prashant Sharma, for
their moral support during the course of my career.
Finally I would like to thank my parents, Mrs Sarojini Devi Mishra and Mr Bhumitra
Mishra, who gave me the inspiration to undertake this project and deliver it to the best of my
capability.
1
Cellular Technology in Emerging Markets
Rauno Granath
Nokia Siemens Networks
Amit Sehgal
Nokia Siemens Networks
Ajay R. Mishra
Nokia Siemens Networks
1.1 Introduction
From the remotest areas of the developing world to the most advanced areas of the developed
world, connectivity has become a key issue. How to connect the ‘unconnected’ is an issue
that is facing the governments of most of the developing countries, while mobile operators
in advanced countries are looking towards connecting their consumers to enhanced services.
While the developing world is trying various advanced technologies, it is not necessarily
following the path taken by the developed world. They are trying out various permutations and
combinations of technologies to reach their goal to connectivity and profits. In this context,
it becomes important to understand the various technologies that would help technologists in
the developing world realize their ultimate goal – getting the ‘unconnected’ connected in the
shortest duration of time.
1.2 ICT in Emerging Markets
During year 2009the global cellular industry was able to celebrate its 4th billionthsubscription
to its services. By any means this is a staggering figure. It is even more staggering to realize
how short a time it has taken to achieve this. It is hard to come up with any other example
Cellular Technologies for Emerging Markets: 2G, 3G and Beyond Ajay R. Mishra
C
2010 John Wiley & Sons, Ltd
2 Cellular Technologies for Emerging Markets
where a new technology has proliferated and diffused throughout the world, to all continents,
countries and markets and among all consumer groups, cultures and socio-economic strata.
How did this happen?Was it planned anddesigned into the specifications andimplementations
of early cellular technologies? It is quite safe to say that the huge success of the most common
and used cellular technologies has taken the industry itself by a little bit of surprise. However
the global ecosystems around the cellular technologies havenot been ‘stunned’ by the success,
rather the growth momentum and positive response have been used as strong levers to develop
the next steps in the evolution towards even richer and more penetrated services.
Looking back 20 years, the first cellular or mobile services were clearly created for and
targeted to the business segment. The clear value addition was the mobility itself. People who
carry out businesses which are not tied to a fixed office desk and location obtained a great
productivity boost by being connected all the time. One can think of some other examples
where ‘freeing people from a fixed place’ will bring obvious economic benefits – at the macro
level as well as at the individual level. One of these could be by comparing people having
watches instead of a ‘grandfather’s clock’ inside a house. Having a ‘time with you’ greatly
enhanced the way one can plan and synchronize interactions with other people.
‘Mobility’ was the first phase of cellular penetration and while the actual number of users
in the first phase was relatively low, it was as important because it demonstrated business
viability as well as showing some of the main requirements. As the users were mainly from
the business segment their requirements became very apparent in 2nd generation technology
specifications and functionalitof thesystems. Some ofthe seeds for futureglobal successcan be
traced here: international roaming, globally harmonized frequencies allowing use of the same
device – or a simpler device, certified interoperability between network and user devices, etc.
All of this started to push the industry towards a truly global scale, enabling the immense cost
benefits later.
The next phase of rapid penetration took place when individual consumers started to see a
similar value in being connected. For the first time the concept of ‘affordability’ really kicked
in. When the overall cost of getting and being connected became low enough compared to
the perceived value there was a true mass market adoption – in any given market, throughout
the world. One can only conclude that the basic demand – everybody’s basic human need to
communicate – is very universal.
In many mature markets that phase was reached during the early-2000s. Perhaps it’s a better
topic for a book about social behaviour but it became increasingly difficult – even impossible
to participate the society without being individually connected – all the time. At this phase
an additional boost for the mass market came through ‘fixed-to-mobile substitution’ – people
actually gave up, or never subscribed to fixed services any more. It also meant that most
households practically had a mobile device for every family member and market penetrations
reached close to or above the 100 % mark.
Around the mid-2000s a similar development was already clearly seen in many developing
markets as well. Here, the concept of ‘affordability’ comes out in the clearest way. There are
three basic pillars for this which can be illustrated as shown in Figure 1.1.
Liberalization of the whole telecommunications sector – and the resulted regulatory environment – is at least as important an element in overall affordability as any of the technologyderived innovations and business models. This was actually one key element in, for example
Western European mobile success. In most countries the telecom infrastructure was regarded
as a natural monopoly, among other utilities, due to the costs of building and operating the
Cellular Technology in Emerging Markets 3
Growth
Affordable
connectivity
Total cost of
ownership
Figure 1.1 The three pillars of telecom development in emerging markets.
Cash barrier
for entry
Regulatory
environment
fixed telephony networks. In many cases it was a government-owned monopoly, and in some
cases partly due to privately and partly government-owned set-ups. With the advent of the first
cellular technologies and mobile telephony services the sector was ready for a drastic change.
The cost dynamics and advantages of cellular technologies made it feasible to open the sector
for competition, overseen by national regulatory bodies. Free competition in a transparent
regulation environment is the best mechanism to really push all technological innovations and
cost break-throughs to the end consumer.
Nothing highlights this better than an example from Nigeria. During the early part of the
2000s Nigeria licensed itsfirst fourmobile operators, three privately ownedand oneincumbent.
In just 18 months the country’s telephony penetration doubled (Trends in Telecommunications
Reform, ITU, 2003). In other words, the mobile operators were able to provide, in 18 months,
as many connections as the government-owned fixed telephony provider from the beginning
of the country’s independence!
Whereas regulatory environment is more of the industry topic in each country the other two
elements of affordability are very much user- or consumer-centric. Cost, or rather the Total
Cost of Ownership (TCO), is the obvious one. The TCO includes all the costs that it takes to
get and stay connected: the cost of the handset, the cost of the subscription and the ongoing
cost of the service itself. All of these typically also include government taxes. Technology
innovations and a massive global scale have greatly reduced the TCO over the last few years.
Another important element is ‘Cash’, that is how do people finance the consumption of the
service. One of the great business model innovations stemming from developing markets is
the pre-paid model where services can be consumed in very small increments – matching the
daily cash situation of particularly low-income segments.
Playing with the two aforementioned aspects – the universal human need to communicate
and the concept of affordability being the main drivers for penetration – it is easy to model
and understand the huge global success of mobile telephony services. Modelling with the
well known ‘income pyramid’ one can readily see that each step downwards in ‘affordability’
brings in a larger potential customer segment (Figure 1.2).
4 Cellular Technologies for Emerging Markets
4 billion mobile phone users
3 billion mobile phone users 2008
2 billion mobile phone users 2005
0.8b
>40$/day
1.5b 4-40$/day
1.3b 4$/day
1.4b 2$/day
1.3b 1$/day
Figure 1.2 World population split according to income segment (USD/ capita/day).
The rapiddevelopment ofconnectivity through mobile technologies indeveloping countries
throughout the 2000s was early on identified as one true opportunity to bridge the ‘digital
divide’. In fact, advancing the benefits of ICT technologies was adopted as one of the UN
Millennium Development Goals.
Several international studies have come up with clear evidence between the mobile phone
penetration and macroeconomic development. In a typical emerging market, an increase of
10 mobile phones per 100 people boosts the GDP growth by 0.6 percentage points (Vodafone
policy paper, 2005). A 2006 study byMcKinsey and Company (incooperation withthe GSMA)
found that the indirect impact of mobile phone penetration is at least three times as great. In
addition, the latest study by the World Bank (Quian, 2009) comes up with the figure of a 0.81
percentage GDP boost for low- and middle-income economies.
Lately, the focus of research has been in broadband, instead of pure voice services. The
same World Bank study shows clearly that the 0.81 %-unit boost will increase to 1.12 with
usage of the Internet and all the way up to 1.38 %-units in the case of broadband connectivity
for the services and the Internet.
While the basic mobile connectivity continue to increase beyond the 4B mark it is now
important to have a similar advance in broadband connections. Interestingly, very similar
mechanisms and market behaviour seem to have now taken place in mature markets that led
to the massive increase of mobile voice services 10 years ago. Mobile broadband services
have become affordable – in terms of cost, cash and regulatory environment – so that there
is a ‘fixed-to-mobile’ substitution going on in many markets. The industry has come up with
the necessary technology (speed, latency and end-user devices) and business models (flat rate
pricing) enabling rapid consumer acceptance. Several new services – like social networking –
are once again extending the social dimension to the picture. People want to get into their
services independent of the place and time.
While the technology can’t provide all the answers to unlock the potential of broadband
in developing markets, it surely has a key role as well. The industry knows what it takes to
Cellular Technology in Emerging Markets 5
give broadband connectivity a similar success in all parts of the world – and for all people.
Affordability and access, relevant services for people to enhance their business, social or
personal interests will truly make the whole ICT as ‘the biggest democratizer of opportunities
ever seen’.
1.3 Cellular Technologies
Mobile operators usethe radiospectrum to providetheir services. Spectrum is ascarce resource
and has been allocated as such. It has traditionally been shared by a number of industries,
including broadcasting, mobile communications and the military. Before the advent of cellular
technology, the capacity was enhanced through a division of frequencies and the resulting
addition of available channels. However, this reduced the total bandwidth available to each
user, affecting the quality of service. Introduced in the 1970s, cellular technology allowed
for the division of geographical areas (into cells), rather than frequencies, leading to a more
efficient use of the radio spectrum. Figure 1.3 details the evolution of cellular technologies
and the dominant ones at the present time and for the coming years.
Based on usability, cost and quality and quantity of services etc, the evolution of cellular
technology has been divided into generations.
1.3.1 First Generation System
Also referred to as 1G, this period was characterized by analogue telecommunication standards
and supported basic voice services. The development started in the late 1970s with Japan
taking a lead in deployment of the first cellular network in Tokyo, followed by the deployment
1G 2G 3G 4G
GSM
(TDMA)
PDC
(TDMA)
iDEN
(TDMA)
IS-136
AMPS
NMT
1970 1990 2000 2005
(TDMA)
DAMPS
IS-95A
(CDMA)
PDC
GPRS
IS-95B
(CDMA)
EDGE
CDMA
2000
Figure 1.3 Evolution of cellular technology.
UMTS
(WCDMA)
HSDPA
CDMA 2000
(EV-DO)
CDMA 2000
(EV-DV)
LT
E
6 Cellular Technologies for Emerging Markets
of NMTs (Nordic Mobile Telephones) in Europe, while the ‘Americas’ deployed AMPS
(Advanced Mobile Phone Service) technology.
Each of these networks implemented their own standards – with features such as roaming
between continents non-existent. This technology also had an inherent limitation in terms of
channels, etc. The handsets in this technology were quite expensive (more than $1000).
1.3.2 Second Generation System
As we have seen above, the various systems were incompatible with each other. Due to this,
work towards development of the next technology was implemented that would lead to a more
harmonized environment. Such work was commissioned by the European Commission and
resulted, in the early-1990s, in the next generation technology known as the ‘Second Generation Mobile Systems’, which were also digital systems as compared to the first generation’s
analogue technology. Key 2G systems in these generations included GSMs (Global Systems
for Mobile Communications), TDMA IS-136, CDMA IS-95, PDC (Personal Digital Cellular)
and PHSs (Personal Handy Phone Systems).
IS 54 and IS 136 (where IS stands for Interim Standard) are the second generation mobile
systems that constitute D-AMPS. IS-136 added a number of features to the original IS54 specification, including text messaging, circuit-switched data (CSD) and an improved
compression protocol. CDMA has many variants in the cellular market. CDMAone (IS-95)
is a second-generation system that offered advantages such as increase in coverage, capacity
(almost 10 times that of AMPS), quality, an improved security system, etc.
GSM was first developed in the 1980s. It was decided to build a digital system based on a
narrowband TDMA solution andhaving a modulation scheme known as GMSK. The technical
fundamentals were ready by 1987 and the first specifications by 1990. By 1991, GSM was the
first commercially operated digital cellular system with Radiolinja in Finland. With features
such as pre-paid calling, international roaming, etc., GSM is by far the most popular and widely
implemented cellular system with more than a billion people using the system (by 2005).
1.3.3 Third Generation System
This improvement in data speed continued and as faster and higher quality networks started
supporting better services like video calling, video streaming, mobile gaming and fast Internet
browsing, it resulted in the introduction of the 3rd generation mobile telecommunication
standard (UMTS). These third generation cellular networks were developed to offer high
speed data and multimedia connectivity to subscribers. Under the initiative IMT-2000, ITU
has defined 3G systems as being capable of supporting high-speed data ranges of 144 kbps to
greater than 2Mbps.
The Universal Mobile Telecommunications System (UMTS) is one of the third-generation
(3G) mobile phone technologies. It uses W-CDMA as the underlying standard. This was
developed by NTT DoCoMo as the air interface for their 3G network FOMA. Later, ITU
accepted W-CDMA as the air-interface technology for UMTS and made it a part of the
IMT-2000 family of 3G standards.
CDMA2000 has variantssuch as 1X,1XEV-DO, 1XEV-DV and 3X.The 1XEV specification
was developedby theThird GenerationPartnership Project2 (3GPP2),a partnershipconsisting
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