Deliverable D25 Business viability studyoban.tubit.tu-berlin.de/D25_Business_Viability_Study.pdf ·...

© Copyright by the OBAN Consortium.

Deliverable

D25 Business viability study

Author(s): Editor: Thor Gunnar Eskedal (TNR) co-authors listed on next page

Partner(s): Telenor ASA Swisscom AG France Telecom SA Birdstep Technology ASA Istituto Superiore Mario Boella Norwegian Post and Telecommunication Authority

Version: f

Delivery Month: December 2005

Date: March 14, 2006

Workpackage, Activity: WP5, WP5-A2

Deliverable Type and Number: Report, 25

Distribution – Type: Public Document

Code: OBAN-WP5-TNR-251f-D

Internet URL: http://www.ist-oban.org

© Copyright by the OBAN Consortium.

IST 6FP Contract No 001889

Deliverable (25) - D25 Business viability study

OBAN-WP5-TNR-251f-D © OBAN Consortium

Full Authors List

- From partner Telenor ASA (TNR): Thor Eskedal (ed), Ragnar Andreassen

- From partner Swisscom AG (SCOM): Eric Demierre, Jacques Robadey, Jean-Claude Bischoff, John Charles Francis

- From partner Istituto Superiore Mario Boella (ISMB): Andrea Amelio, Carlo Cambini

- From partner France Telecom SA (FT): Claire Duranton, Sami Bazaia, Lionel de Rivieres

- From partner Norwegian Post and Telecommunication Authority (NPT): Tom Opperud, Runar Langnes

- From partner Birdstep Haakon Bryhni, Otto Rustad



Document Revision History

Date Version Author/Editor/Contributor Version Description

November 15, 2005 a Thor Gunnar Eskedal (TNR) Material put into the new deliverable template

January 9, 2006 f Thor Gunnar Eskedal (TNR) Final version



Executive summary

Previous years have shown a rapid increase in the number of operative wireless local area networks (WLAN), both for residential and business usage. Public WLANs in terms of wireless hotspots have emerged and are quite widely deployed. In addition, we see that some communities offer WLAN coverage as a public utility. Another trend is the increase in functionality associated with the WLAN protocols, and the technical effort that is taking place, e.g. in the Universal Mobile Access (UMA) initiative, in order to integrate mobility handling traditionally associated with cellular networks into the WLAN domain. A third trend can already to be observed, namely the integration of WLAN capabilities into laptops, handheld devices and advanced mobile terminals. Such factors reflect a convergence in functionality and services between the telecom-driven 3G development and the more recent of WLAN.

A development with commercial WLAN coverage raises several interesting questions with respect to how and by whom mobile broadband services should be offered to the public. There are various scenarios as to which actors will become tomorrow’s broadband mobile access providers, and which technology that will be deployed where.

A key question is the cost of providing radio access coverage. In order to offer WLAN based radio coverage, a reasonably fine-grained mesh of radio basestations is required. The project OBAN proposes to utilise the existing copper access infrastructure in order to support such coverage. This infrastructure is not currently utilised to full commercially potential. Moreover, further spare capacity from residential usage can be expected to be made available in the future.

This report discusses several scenarios for commercial implementation of public WLAN-based broadband access using OBAN technology. The report presents qualitative results, based on a method that describes the various roles involved in service production, considerations as to which stakeholder can take what positions, and the commercial consequences in terms of services and value propositions for relevant stakeholders. Considerations regarding public regulation and technical implementations are also included.

The following scenarios for the fixed access operator are considered:

1. A fixed access operator that owns and operates the radio access points on a wholesale basis. In this scenario, an operator owning an extensive copper-based access infrastructure deploys a public wireless service that is tightly integrated with existing technical operations. It is considered that the access operator may be a dominant actor within a country where open commercial interfaces between access and end-user service provisioning are enforced. A WLAN-based mobile access wholesale service is thus offered to service providers on this basis. More than one service provider may potentially be present at a given access point.

2. A Fixed Access Operator that offers services to mobile-only customers. Here the focus is on an actor that is an integrated internet service provider and access provider, noting that many of today’s customers no longer utilise a fixed telephone subscription, relying entirely on mobile communication. This represents a loss for the traditional fixed operator, which may win back customers by offering WLAN-based access services. It is assumed in this scenario that an open wholesale interface for the access part of the service is not enforced.

3. A fixed access operator that owns and operates the radio access points works in collaboration with hot spot operators. In this scenario, modelled after developments in the Italian market, the fixed access operator plays a role in the emerging WLAN-based residential access industry, while the mobile access operator plays a role in the WLAN-based public hot-spot market. Thus two different types of access point operations are foreseen, targeted at residential and public hot spot sites respectively.

The following scenarios with a mobile access operator is considered:

4. A mobile access operator operates the radio access points. Here the traditional mobile industry takes a somewhat aggressive WLAN position by offering broadband mobile services over WLAN based access. Again, it is considered that the actor taking the position may be a dominant market player that



is being forced to open wholesale interfaces towards 3rd party service providers. The fixed access operator is restricted to deliver virtual channels over the access network in such a case. It may, however, offer these channels to other mobile access operators.

The following scenario with a service provider focus is considered:

5. A fixed internet service provider offers wireless roaming, so building a wireless internet service provider community and improving mobile communication services. These three facets all have in common that the service provider also acts as the radio access operator. This is a continuation of the development seen in many markets, where internet service providers offer subscriptions including WLAN routers. The scenarios imply a somewhat more active part of the internet service provider than is currently seen in the sense that active operation of the nodes are considered rather than mere pre-configuration.

In addition, an integrated scenario is addressed as a means to increase customer loyalty:

6. In this scenario, there are no open commercial interfaces anywhere in the value chain. One single actor streamlines its operation and service offering. It is the FMC case based on heterogeneous access technologies, where one subscription brings a “complete communication package” to the users.

The analysis does not conclude that any of these scenarios is a priori preferable to others. Which scenario is considered most relevant will depend on national market considerations and strategic decisions. Actors with significant market power may be expected to be more constrained by public regulation than other players. Scenarios 1 and 4 are targeted to cover such situations where open interfaces are enforced. Where actors are free to organize themselves optimally, scenarios with more integrated operations should be beneficial.



Table of Contents

1. Introduction................................................................................................................................................. 3 2. Definition of OBAN and roll out stages..................................................................................................... 4

2.1. Common definitions.............................................................................................................................. 5 2.2. OBAN roll out possibilities................................................................................................................... 6 2.3. OBAN Equipment and functionality..................................................................................................... 8

3. OBAN value proposition........................................................................................................................... 12 3.2. OBAN application examples............................................................................................................... 14

4. Business modelling method/approach ..................................................................................................... 16 4.1. Definition of the term business model ................................................................................................ 16 4.2. Business model elements .................................................................................................................... 17

5. OBAN Business roles and role modelling framework............................................................................ 21 5.1. Roles and role model........................................................................................................................... 21

6. OBAN business models ............................................................................................................................. 24 6.1. Short summery of the business models ............................................................................................... 24 6.2. Fixed access operator owns and operates the Residential gateway..................................................... 25 6.3. Integrated fixed access operator and Internet service provider conquers Mobile-only customers ...... 32 6.4. Fixed access operator as residential gateway operator with additional fragmented hot spot operators42 6.5. Mobile access operator operates the RGW ......................................................................................... 47 6.6. Fixed Internet service provider providing wireless roaming............................................................... 50 6.7. Building wireless Internet service provider community...................................................................... 52 6.8. Improving mobile communication services ........................................................................................ 54 6.9. An Integrated Operator develops customers’ loyalty .......................................................................... 56 6.10. Other business models......................................................................................................................... 64

7. Regulatory issues....................................................................................................................................... 67 7.1. Legal framework ................................................................................................................................. 67 7.2. OBAN – service or functionality?....................................................................................................... 69 7.3. Markets and regulation........................................................................................................................ 69 7.4. Regulatory Aspects applied to possible Business Models................................................................... 71

8. WiMAx and other similar technologies................................................................................................... 73 8.1. Wireless mesh networks...................................................................................................................... 73 8.2. 802.16.................................................................................................................................................. 75 8.3. WiMAX .............................................................................................................................................. 75 8.4. 808.20.................................................................................................................................................. 76

9. Concluding remarks ................................................................................................................................. 79 10. References .................................................................................................................................................. 81 11. Abbreviations ............................................................................................................................................ 82

Deliverable - D25 Business viability study


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Preface

This deliverable is part of the Work Package 5 (WP5) work within the OBAN (Open Broadband Access Network) project. The project started up spring 2004 with a total duration of 3 years. The aim of the WP is to analyse the business potential of the OBAN concept and this deliverable is part of a series of deliverables.

In Year 1, a study was conducted analysing the environmental and user impacts of the concept together with a general market survey of WLAN business. Based on this background information, business models for OBAN were studied in 2005 and are documented in this deliverable. Next year the work will continue with techno economic analyses of selected business models.

Parallel to this work plan studies are also going on looking into different charging and pricing schemes and regulatory and legal aspects concerning the business models. The regulatory issues are incorporated in the yearly deliverables to always document the latest developments with regard to national and European regulatory aspects concerning the OBAN concept.



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1. Introduction

The last years have shown a rapid increase in the number of operative wireless local area networks (WLAN), both for residential and business usage. Public WLANs in terms of wireless hotspots are still emerging and are already widely deployed. In addition, we see that some communities offer WLAN coverage as a public utility. Another trend is the increase in functionality associated with the WLAN protocols, and the technical effort that is taking place, e.g. in the Universal Mobile Access (UMA) initiative, in order to integrate mobility handling traditionally associated with cellular networks into the WLAN domain. A third trend already evident is the integration of WLAN capabilities not only in laptops, but in handheld devices and advanced mobile terminals as well. These factors seem to indicate a convergence in functionality and services between the telecom-driven 3G development and the more recent of WLAN.

A development with commercial WLAN coverage raises several interesting questions with respect to how and by whom mobile broadband services will be offered to the public. There are actually several possibilities as to which actors will become tomorrow’s broadband mobile access providers, and which technology that will be employed where. This report discusses several scenarios for how public WLAN-based broadband access can be commercially implemented by using the OBAN technology of copper based access. The report presents qualitative results, based on a method that describes the various roles involved in service production, considerations on which stakeholder can take which positions, and the commercial consequences in terms of services and value propositions for each partaking stakeholder in the various scenarios.

The business models are evaluated in terms of technical feasibility based on the technical work done in the project, and the potential value proposition for the actors involved. Regardless of what market players are involved and how they manoeuvre into strategic positions they will all be subject to regulatory requirements. The Norwegian authority on Post and Telecommunication (NPT) has, according to available European regulatory legislations, evaluated some of the business models described in this report. The market on mobile and fixed access is in a very rapid evolution thus the existing regulatory regime is subject to evolve as well.

The report starts out, in chapter 2, with a definition of OBAN services and how OBAN may be rolled out in stages according to increased functionality. The next chapter provides a general overview of critical business aspects for OBAN, and an analysis of how one may construct businesses based on WiFi technology. We then present the business-modelling framework on which the analysis in the report is based. The method is based on work by Chesbrough and Rosenbloom [5]. In order to apply the method, we need means to describe the value systems for the various business scenarios. For this we use a role model, which is described in chapter 5. Chapter 6 presents the business scenarios and the discussion and assessment of each of them. Some aspects of proposed business models are discussed on the basis of public regulation in chapter 7. Before the conclusion a short chapter is added, looking into the potential of using WiMAX and mesh networks in relation to OBAN.



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2. Definition of OBAN and roll out stages

The WLAN and mobile world is emerging rapidly and has become quite complex. Many wireless businesses based on WLAN are therefore very close to the OBAN vision. Due to this it is very important to clearly define “what OBAN is” and what “OBAN is not”.

OBAN is defined here as a connectivity service for several separate users to simultaneously use the same wireless access point and the same high bandwidth fixed access line from the same location.

This is done by segmenting the fixed access line and the wireless access part into two distinct domains i.e. a private and a public domain. Ref Figure 1. The concept enables public travelling users and private guests to access e.g. Internet, thru the residential broadband access line.

Broadband access line (xDSL)

wRG

Public Open Access capacity

Guest

Local traffic (inhouse and external)

DSLAM

Private domain

Public domain

Broadband access line (xDSL)

wRG

Public Open Access capacity

Guest

Local traffic (inhouse and external)

DSLAM

Private domain

Public domain

Figure 1: Illustration of the utilisation of the access resources by the concept of an Open Broadband Access Network.

The sharing of the access resources can be made very strict with dedicated resources for the residential user and resources allocated for each of the public users. This way of utilising the access resources is thus not resource efficient since it is the multiplexing gain on the access line that is one of the most important drivers for implementing OBAN.

This concept of sharing the access resources between residential and public users can be done quite easy. Today one can install an open wireless access point and anyone can use it. The residential owner of the access point pays for the access resources. However, to make the OBAN concept business profitable and utilise the wireless access point as a common asset in a secure way, much in the same way as cellular network, authentication of the users is demanded. With the functionality to authenticate the users one may bill their resource usage individually, serve them individually with personalised services, grant access or hinder access based on subscription etc. Authentication is thus one very important part of doing commercial business on the concept, and is thus regarded as an inherent feature of OBAN.

The OBAN concept may however be implemented with lots of added valued features as:



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QoS support. Mobility support between WLAN spots Mobility between WLAN and 2G/3G. Roaming support etc

These features may be implemented if the market player deploying the concepts thinks there will increased business potential in doing so. The ambition level is thus up to the market player that implements OBAN based on profitability considerations.

The technical studies in the project are investigating the possibilities of implementing such features. One vision of the concept is to deploy WLAN as a broadband wireless alternative technology to cellular systems as GSM and UMTS. This demands e.g. seamless mobility between WLAN access points. Such a deployment is very ambitious, and in the short run neither technically feasible nor market profitable. In the future however it may be viable. It is thus important to have all the ambition levels in mind when constructing business models.

In this report the ambition level is linked to each described business model in chapter 6. This is based on the targeted market segments and the service portfolio offered to the customer. Since the concept may include many features or only the basic sharing of the access line with separate authentication there is no strict definition of OBAN besides the concept of sharing the access resources.

The important issues is that OBAN may be realised with a quite broad range of functionality, opening up the possibility for market players to make flexible business models and streamline them to a specific target marked offering a specific service set. Due to this flexibility of adding features to the basic OBAN definition, operators may roll out the concept in stages enhancing it with added features while always keeping a close look at the up take of the service in the market.

2.1. Common definitions

This report uses some terminology that may be closely linked to the OBAN concept and is thus not directly transferable to other contexts. To give a brief introduction to some of the terminology a list of often used terms are defined below.

Note: Some of these definitions are not exhaustive. Here they are only indicative and strictly related to this document. The forthcoming chapters will give an elaborated description of the terms and their use in concrete examples.

OBAN service:

The connectivity service realised by implementating OBAN functionality at the endpoints of the connectivity, at the terminal devices and in the intermediate transport network.

Residential user = home user:

The user of OBAN services that lives in the house or private premises where an OBAN access point is installed.

Visiting user:

A user of OBAN services that use the service at another location that its own residential location. Visiting users will most often pay for the OBAN service as a public service offering from a service provider

Residential gateway (RGW):

A telecom term for the equipment at the end users premises that terminates the fixed access line. In OBAN this term is used for the wireless access point connected to the fixed access line that is augmented with OBAN specific functionality.(ref chapter 2)

Nomadic mobility:



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Mobility where a user can move between wireless access points but the session is terminated for each movement. The user is required to establish a new session. Reauthorisations may be mandatory.

Seamless handover:

Handover between access points where the user notices minimal or no disturbance in the on going session.

Seamless roaming:

Roaming between operators where the on going session is not disturbed

Seamless mobility:

In this report seamless mobility has the same meaning as seamless handover.

2.2. OBAN roll out possibilities

An OBAN service can be rolled out in stages with increasing ambition level regarding the implemented functionality. This may be beneficial in terms of targeted service offerings and in terms of location/environments as rural, suburban, urban and dens environments. A minimal OBAN solution may be defined as:

“OBAN minimal solution consists of enhancing privately WLAN services with authentication functionality to grant access for visiting/public users.

In such a configuration stand alone private WLANs with functionality for authentication can be used to grant access for visiting users. Due to authentication each user may be billed separately. Private guests are automatically treated as visiting users and pay for the usage. However, the residential user can acquires a guest authentication account and thereby let guest use this account on the residential charge. Authentication is thus one of the vital functionalities of OBAN to be able to make business on the concept and is an inherent functionality in the concept.

The use of open access point as a form for OBAN minimal solution is today widespread and many users are free riders on these open access points. There are thus problems with these open access points both in terms of billing and security for the owner in addition to an uncontrolled usage of the access resources. This situation is though being altered gradually as many open WLAN spot owners are getting more conscious about the risk they take of others using their network connection for illegal content e.g. child porn. The OBAN access points will as a minimal solution have one sort of division between the private and the public user so the public users may use access resources and be responsible themselves for the content downloaded.

Taking the situation that a user only has a fixed broadband connection without WLAN, the minimal solution will support the users with connectivity services enabling:

• Broadband wireless access at home through the use of a WLAN RGW.

• Possibly cheaper wireless access than with mobile access

• Possibility to let all visitors access Internet and corporate servers and pay for the access resourses themselves

This minimal OBAN solution may be especially attractive for areas such as coffee shops/restaurants, gas stations, public waiting rooms (dentist, public offices, hairdressers, etc) where both the site owner and the customers may use the network, and there is no need to support mobility.

A solution with mobility between the WiFi spots may also be feasible enhancing the customer’s service experience. This little enhanced OBAN solution would give a user the possibility to move between OBAN access points getting access to Internet through the home users fixed access line and be authenticated at its service provider while moving. This scenario may be useful in e.g. shopping centres where several shops may have WLAN but the customer moves between them and gets access to different WLANs as moving around in the shopping area. This OBAN solution does however require more advanced functionality than the very simple solution described above. Mobility e.g. in terms of Mobile IP between the WLAN access point would be needed and functionality in the terminal may also be required.



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Looking at the extended OBAN connectivity solution it may be defined as:

“OBAN extended solution may be defined as a shared connectivity service with public users, incorporating WLAN seamless mobility, high quality, single billing and security combined with seamless mobility functionality to cellular mobile system access”

This OBAN extended solution requires collaboration between fixed access network operators and mobile operators. This is to be able to offer quality of service across the fixed access line, mobility support between WLAN access point as well as support mobility across fixed and mobile network infrastructure. The added value for the user for the extended OBAN solution is:

• Same added value as for minimal solution

• Quality of service support

• Single billing (depending of the case)

• Very fast seamless handover

• Same or similar security/authority regime as for 3G networks

• Automatically switching between WiFi (OBAN) and cellular

• Same terminal can be used to connect to several networks

• The user receives one bill even if using several types of networks

• All network usage will be charged directly to the user of the service.

• Seamless handover support between networks

All intermediate solutions between the minimal solution and extended solutions are possible. To reduce risk and high investment costs OBAN may be built out gradually from a solution the operator/service provider regards as the minimal to be able to evaluate the technology e.g. in term of usage and willingness to pay for the added value.

The most important difference or value added incentive for operators or service providers to enter into the OBAN business would be the higher bandwidth of WLAN and the potentials this brings fourth. Traditionally travelling users and visiting users would in most places use a mobile network like GSM or UMTS. The capacity of these networks is far lower than the capacity of most of the WiFi standards. Most WiFi equipment will have a raw bit rate of 50Mb/s or higher. The fixed access line could also range from 4-25Mb/s as a shared resource, dependent of the type of access technology. Since the cell radius of WiFi is much less that e.g. 3G networks the capacity per user will be much higher than for 3G. This means that with a continuous OBAN coverage each customer will be able to acquire much higher bandwidth and thereby be able to get much faster access to Internet, render high bandwidth real time applications as video and interactive gaming etc. On line maps and other broadband demanding local information services are also well targeted to use a WiFi OBAN implementation instead of mobile networks.

Also due to the lower cell radius of WiFi, location services may be more detailed and targeted to very small areas as a part of a campus area, a specific block of flats etc. This may open up for specific services as advertisements, special offerings from stores or businesses, detailed tracking and other types of local services. On line synchronisation of presence information, and mail and calendar updates area also services that may be more widespread due to OBAN.

Since most 3G networks will be enhanced with High Speed Downlink Packed Access (HSDPA) and thereby boost the capacity per cell up to about 10-12Mb/s the 3G network will be able to support very many of the services also envisioned for OBAN. This will demand the OBAN network to be targeted to specific services that are especially suited for a short-range WiFi network. Customer that will use high bandwidth applications will however benefit from the higher capacity of WiFi networks.

This OBAN optimal solution requires collaboration with the fixed access network operator for offering QoS, and possibly mobility.



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2.3. OBAN Equipment and functionality

As described in the previous section OBAN may be built out based on different stages due to different ambition levels. One can thus build out a minimal OBAN solution requiring marginal investments or one can build out a more advanced OBAN solution. The incremental cost of each ambition level is important to analyse in terms of the estimated revenue of the more advanced service offering. It is therefore very important to get a good understanding of the equipment and functionality needed and the cost and location of these. E.g. if an OBAN operator needs to involve many other actors to implement the service this would demand a tight cooperation with other actor which could be both a slow process, costly and involve much administrative work to establish agreements.

In this section we will look closer into OBAN equipment and functionality. The functionality can be software that can be installed in existing equipment or software and hardware linked to new network nodes that need to be connected to the transport or signalling paths.

The equipment and functionality listed below may be located both at the end users site, within the transport network suppliers domain and/or at the service providers premises.

a) Network based seamless handover tool (typically Mobile IP Home Agent/Gateway Foreign Agent/Foreign Agent functionality)

b) Authentication and identification functionality (typically Radius server/client functionality)

c) Connectivity handling (e.g. Quality of service and policing of traffic flows support)

d) Site owners network equipment (basically the OBAN Residential Gateway)

e) Terminal devices (with functionality to support WLAN Handover and OBAN authentication)

These equipment and functionality issues may have major impact on the business due to where the equipment/functionality is located and the actor owning, controlling and managing it.

An OBAN operator will be an operator having total control of some or all of these tools. Figure 2 gives an overall picture of a potential network configuration with a rich set of functionality.

Figure 2: Simplified architecture reference model for OBAN.

Figure 2 shows the different parts of the service delivery chain from the service providers on the right hand side to the end users on the left hand side. Various functionality is placed in the users device to enhance the signal quality and select the right wireless access point. The device communicates with the wireless access point in the residential domain, which authenticates the user to the service provider. Within the network mobile IP functionality is implemented to support fast handover.

In the following some of the most important equipment and functionality to support an enhanced OBAN implementation is elaborated on.



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2.3.1. Network based seamless handover tool

This consists of a tool managing the OBAN mobility service. Seamless mobility is one function that will enhance the OBAN experience for OBAN customers, enabling continuous movement across OBAN sites. It has to be noted though that seamless mobility is not demanded to offer OBAN like services.

In addition to the Mobile IP Home agent and Foreign agent, supporting mobility at the end points, the OBAN project has also described a mobility broker. This entity may be located somewhere in the fixed network to support fast handover. In cases where there is long distance between the customers service provider and the RGW a mobility broker may be needed to support real time services. This functional entity may be provided and managed by the OBAN service provider and/or the OBAN transport connectivity provider (e.g. a network operator). The mobility broker would also be a location for legal intercept due to regulatory reasons and should contain the needed functionality to do so. The mobility service means that the operator is capable of identifying OBAN clients to offer them services e.g. based on subscriber profiles.

2.3.2. Authentication and identification functionality

User authentication and identification are the most important functions of OBAN. Even the minimal solution of OBAN will demand this functionality first and foremost to be able to identify the customer and thereby be able to conduct secure charging and billing. From a business point of view the possibility to charge and police traffic from identified users is of great importance to be able to run a business. Control over these functions is from a regulatory point of view only granted to trusted entities, i.e. legal entities as enterprises, operators, and service providers. Since the RGW is located within a residential home zone this entity should not perform charging/ billing functions due to risk of illegal actions from the site owner.

The functionality of authentication is most commonly done in the residential gateway, and in a specified OBAN node called a mobility broker and at the home service provider.

Proper authentication and identification is thus required to enable connectivity, enable services and to perform secure charging.

2.3.3. Connectivity handling

Since OBAN implies public usage of the private access line, separation of the connectivity service is needed to be able to guarantee the home users’ capacity requirements. Much emphasis is put on supporting the home user with good quality, i.e. to give the home user priority over the public users when the resources are scarce. QoS/policy support is thus needed on the WLAN segment and across the fixed access line. The implementation of the QoS mechanisms and the separation of capacity between the home user and the visiting users may take many forms. In some circumstances the home user may accept to install a OBAN RGW if and only if the home user has exactly the same capacity as before and with no interference in his capacity even when he/she does not use it. This is not optimal seen from the perspective of utilising spare capacity. To make best usage of the access line it should be divided on a “on demand” basis but giving the home user priority and giving real time traffic priority over data for both the home users and the visitors. The business model would be different in the different cases e.g. in terms of sponsoring, capacity requirements to the residents’ location, QoS/policy support and charging method.

2.3.4. Equipment located at the site owner

The success of OBAN services highly depends on the connection capability of a site. An OBAN site may be small or large e.g. a small neighbourhood, a whole city or a countrywide implementation. Therefore if seamless mobility is part of the OBAN solution the density of the OBAN connection points should be high. Even if there are possibilities to handover to 3G networks the density of WLAN should be high to support applications with bandwidth requirements exceeding the capability of UMTS. The lower the required modifications by the site owners are, the easier will the penetration of OBAN access points be. If OBAN services could be provided without any modification to the site owners own in house equipment, the density of OBAN access points could quickly become high and OBAN services would have good chances of succeeding.



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Differentiation is needed for the two situations using open access points and situations using access points specially configured for OBAN services.

a) OBAN sites case: this is the situation where the access points are closed and opened only to OBAN customers. This solution considers an access controller for managing those connections and the configuration allows offering QOS and end-to-end security.

b) Open sites case: this is the situation where the access points are open and are accessible to anybody. This configuration will not allow QOS, nor separate charging but allows end-to-end security e.g. by means of VPN functionality.

If installation of hardware by the site owner is needed e.g. for specific network functionalities or for installing the access points in a specific area, e.g. closed to a window, then higher costs will be generated to install OBAN sites. If an operator also needs people to walk into each private residence to install equipment the user would also be more inclined to not allowing it, or be much more hesitant to go for an OBAN solution.

The OBAN component that will be located in the residential premises is the residential gateway. This entity is necessary for providing OBAN services, e.g. supporting access control and mobility. It may consist of software installed on the existing router or broadband modem. The software could be downloaded from the network to the Access Point if it has router functionality with Access Controller capability or to the router if it has Access Controller Capability (not all routers have it).

The Access Controller may perform the following functions:

Note. These are implementation specific so there may be many possibilities.

• for OBAN Voice over WLAN: direct the VoIP data to the “OBAN” SIP server; The VoIP parameters are located in the VoIP device

• for Internet services:

o sneefer for visiting user: the new MAC address of the device connected to the AP/residential gateway is discovered by the AP Access Controller.

o Connection to an OBAN central server with questions about username and password.

If accepted, an HTTP request is performed and the access to the Internet is done through the OBAN security and billing server.

Doing it this way, WLAN connections can only be performed for OBAN customers and through an OBAN server. The Fix Access Operator and/or the fix Internet service provider do not require to know and to participate to the OBAN service. Generally a new AP with routing functionality must be installed.

2.3.5. OBAN Devices

OBAN does not mandate special devises to run OBAN services. Only OBAN specific software needs to be installed in the terminal device. This software is comprised of:

• Access point selection software to support handover between RGW. This functionality selects the Access point with the best bandwidth and quality, support single sign on identifier (SSID) selection to acquire the best transport channel etc.

• OBAN authentication software (based on common security algorithms)

• Mobile IP client

• SIP client (to stream services)

In the first stages of OBAN the terminal devices will be a laptop running a standard WLAN card. The OBAN specific software is installed in the laptop with access point identifiers to the WLAN drivers. In later stages the software will also be adopted to fit into PDAs and small handheld devices.

The customer may have the same subscription (e.g. the 2G/3G subscription) if the customer’s home service provider offers the OBAN services. The same user security credentials are used for the authentication. In an



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OBAN context the users SIM credentials in the home location registrar will be transferred to the OBAN radius server.



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3. OBAN value proposition

As mentioned in the previous chapter OBAN is defined as a connectivity service. With well built out functionality e.g. handover and seamless roaming between 2G/3G wireless networks OBAN may also be seen as a fixed mobile convergence (FMC) enabler. With the extended authentication based on EAP-SIM and QoS and mobility support and integration with 2G/3G control and managements systems a real FMC network could be realised. With a dual mode handset the customer may use one device and be always best connected, have the possibility to receive one bill and be transport network agnostic. The network will take care of adaptation to the connected networks and device capabilities. This could be a realistic case in the future, in the same way as e.g. Seattle wireless has built out citywide WiFi networks in several cities in US with the possibility to use 3G as umbrella coverage.

OBAN may however be rolled out in different stages and with different functionality and in different areas. The business model and value proposition will differ in the different cases. In this chapter some aspects concerning the general value proposition of OBAN is discussed based on some targeted services in the market today. At the end of the chapter a list of services /applications are give that OBAN may be specifically targeted to support. These services may be e.g:

o Detailed location services due to the limited cell radius,

o High bandwidth data applications while mobile since the capacity is much higher that 3G even with the upcoming High Speed Data Access technology enhancements to UMTS.

Added value of OBAN- general value proposition

Considering the various advantages of OBAN services, it is possible to highlight specific applications or specific situation where OBAN brings a significant advantage compared to competing solutions. In the following discussion various issues connected to specific services as well as network possibilities are given. The following services/functionalities are imagined to be the driving aspects for OBAN.

• Internet Access: Internet access is today’s "killer application" driving residential broadband worldwide. In more ambitious future scenarios, the network becomes the repository for personal data storing all personal music, videos, photos and documents. The OBAN high-bitrate mobile vision provides a mechanism for uploading and downloading such material in urban/suburban areas. The mobile office service will be a typical service to reach enterprise data in a secure manner.

• Voice: the WLAN phone may assume the role of a cordless terminal in the home. The lower cost of fixed network calls may drive demand to be connected to the Wi-Fi infrastructure in urban and sub-urban environments. VoIP will however demand good QoS support and require support for fast handover and authentication if used in motion between WiFi access points during a session.

• Video surveillance: Surveillance on public transport (e.g. buses and taxis) where the OBAN network offloads video traffic to the fixed network. This is an ambitious scenario given current Wi-Fi handover speeds, as near continuous coverage is desirable for best surveillance. An umbrella architecture using WiMAX(802.16e) and interworking with 3G would help ensure continuity of service where holes in Wi-Fi coverage occur.

• Location based services: Users on the move may be located based on access line offering a potential for location-based services (e.g. map download to PDA). Since the WLAN spots are much smaller than e.g. 3G cells the location may be very accurate. Body list, shop and address look ups etc may be very precise and constitute a added value for the private and business users, blue and yellow light agencies and enterprises advertising special offers.

• Scheduler and email synchronization:



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Scheduler and emails are regularly synchronized with a specific policy favoring the WLAN access, but allowing mobile access when WLAN access is not accessible for a too long period. The policy could manage that file transfer happens only when connecting on WLAN or WiMAX when available

Among the above mentioned services two of them are more likely to raise the consumer’s interest: voice services and Internet access on the move.

3.1.1. Voice services

Due to the use of the fixed access lines OBAN service providers could build a wireless voice communication offer, which appears to be distinct from a traditional mobile operator’s one. VoIP services are already widespread and opening up for a public VoIP service residential wireless access points would support users with a low cost telephony services also when located out of their own premises. This VoIP service may be implemented as a nomadic service or a seamless mobile service in the extended OBAN definition. Since telephony is regarded as an expensive service and is one of the most used telecommunication services today, the advantages with OBAN would come from offering a public alternative to mobile voice.

In the extended OBAN definition telephone calls, which are running when the person enters a building, may be seamlessly transferred onto the OBAN in-house WLAN access. WiMAX access, if available, could be used both outdoors and indoors when available. This though demands interworking functionality between 3G /WiMAX and WiFi.

Using WLAN access as an extension to the fixed access network should drive to lower rates in general. Nevertheless, there are already some nomadic services, which can be used by visiting users. OBAN includes more functionalities than these “easy solutions” and this will increase the technology cost. The only component, which could drive to a cheaper service, is the contract made with access point owners.

Consumers would prefer a less expensive mobile communication service if it can provide carrier grade quality.

Another difference between OBAN voice and cellular voice service is that OBAN service is first and foremost restricted in mobility. This is due to OBAN and technical requirements that so far do not support vehicular speed handover with real time quality for voice services. However, we assume that this would not be a major drawback for the profitability of voice over OBAN since the mobile communication usage figures show that over 80% of voice calls are made while stationary or in nomadic situations.

3.1.2. Internet Access Services

The bandwidth will usually be higher with WiFi than for cellular access. However the availability of this bandwidth depends on what the access point owner are using it for at the given moment. With complex configurations of the OBAN RGW and configuration of the access line with the help of the fixed operator, it could be possible to improve the utilization of the bandwidth.

WiMAX may be used as an alternative backhaul technology to DSL or cable. The total capacity is high about 54 Mb/s, but this capacity must be shared between more customers.

Due to the enhanced functionality offered by OBAN, service providers could build a wireless Internet access offer on the move, which appears to be distinct from other existing wireless Internet access like 2.5G/3G, Wi-Fi hotspots or residential WLAN.

This offer could bring new added values to the customer:

• More bandwidth compared to 2.5G/ 3G data offers and probably more affordable

• Increased availability and enhanced ergonomics compared to hotspot coverage and also mobility possibilities

To avoid destructing value, the offer should exclude voice services or P2P services. For this purpose, specific technical mechanisms are implemented in the OBAN architecture to be deployed for this offer.



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3.2. OBAN application examples

OBAN is defined here as a connectivity service based on WLAN interfacing a fixed access infrastructure with possible handover and interworking with mobile networks like 2G /3G. This high bandwidth wireless connectivity service may constitute a basis to support several interesting applications that may enhance the application portfolio of the 2G/3G networks. Due to OBAN these services may be more user friendly (i.e. accessible wherever you are), cheap to use due to the network if the networks are charged differently and may be used more flexibly as today e.g. across terminal devices.

The target market for OBAN is primarily the residential market. However, the business market may also deploy OBAN technology, e.g. in term of mobile office solutions, but this has not been the main focus area of the project and the analysis of the business potential.

The applications usage by OBAN may be grouped into 3(4) groups due to different users and environments for service rendering:

• In house services enabled by OBAN for the home user

• In house services enabled by OBAN for visiting users (visitors entering into the house, friends, carpenters, plumbers, etc)

• OBAN services for outdoor by-passers

• OBAN services for the business segment

These categories are overlapping in a sense, but could have some different implications. (Not only seen from the user but also from the operators and service providers involved and possibly other market players as well)

Enable the cellular (GSM/UMTS) phone (device) to connect through the fixed (or WiMax, WLL) network. • This means always being reachable on the same devices through a

broadband access link instead of the cellular network. Possibility to use the RGW as a home platform server/controller. • The RGW may be built modular with the possibility to enhance it with open

source gateway application service bundles and universal plug and play and/or multimedia home platform functionality to support private in house networking and roaming.

Possibility to share the access line with visitors and the public and let the visitor pay for their own usage. Possibility for the residential user to use the public part of the access point for work related tasks. • e.g. home office where another party pays for the access resources Automatically synchronization of home server and network server so the in house server always has a backup copy in the network. Synchronization of calendars and other information for “family” and friends use Digital “deposit boxes” for storing of sensitive and critical information • E.g. insurance papers, health information for elderly)

In house services enabled by OBAN for residential user.

These are services that the residential user will see as value added services to himself due to OBAN. This may be due to new services, more easy to apply services, due to cheaper service rendering, better quality on existing services etc.

Sales offers/ advertisements in a public server in the private residences • E.g. directly connected to the RGW or as part of the home network (need

more security and access rights to enter the home network facilities/machines

In house applications enabled by OBAN for visiting user.

Visiting carpenters, plumbers etc could easily reach their office locations for information/and/or get help to do the work in the house by means of pictures/on line video.(manuals, telemedicine) • e.g. Mobile office applications



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Access to the resident’s content for external users. • e.g. by entering into the private network of the owner and get access to data

on personal devices, or • the owner stores data onto the RGW’s server functionality that is available

for the public. This can be compared to a private open database with public available content.

Home platform services shared with visitors • Since the visitors could be granted access to specific resources on the

residential users home network. • Access device at the home user e.g. printers, fax machines Remote access to home services • if this supported by the service provider Ensure secure access to private data at home from elsewhere. Support of location and presence information

These may be services that an in house visitor may use that are related to OBAN e.g. that a friend may enjoy when visiting you due to your acquisition of an OBAN RGW.

Since it is in house and thereby possibly very near to the RGW other communication alternatives exist as Bluetooth, IR and also Ethernet.

End user profile handling (presence, context). • The location is used to update the presence information of the users

whereabouts. Local advertisements from the site owner. • This may be that the residential user may have items that he will try to sell

to by-passers. This can be offerings of personal belongings as cars and furniture.

Advertisements from service providers due to location information: • This can be advertising things going on in the near vicinity, sending of

location maps, etc Access to content stored in house for external users. • Home platform services shared with visitors (since the visitors could be able

to log onto the residential users home network with certain access rights. VoIP on WiFi through the privately owned access network Workers on the street can get a broadband access wherever there is OBAN coverage • e.g. emergency situations, - transfer of on line video to experts Broadband Data access This is pure connectivity for public users as. • Internet browsing, mobile office applications, stocks and news information • All kind of Internet access as downloading of e-mails, banking, uploading

of photos, Surveillance of public transportation for traffic centers, • For blue and yellow light agencies Surveillance at home (from remote) Gaming, interactive entertainment to mobile users including VoD Send updated location information to buddies. Support of Location and presence information • End user profile handling (presence, context). The location is used to update

the presence information of the users whereabouts. Configuration of terminal (this can be done by accessing Internet pages, or by other means)

Outdoor services for bypassers (WiFi coverage from both business and residential locations)

Positioning/ localisation services • E.g. possibility to search for specific shops

Table 1: Examples of potential services rendered in a OBAN network



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4. Business modelling method/approach

Before going into detailed business modelling work, a common view of what a business model is needed. In this chapter we suggest a structured approach to business modelling as to be able to conduct techno economic analyses on selected business cases afterwards. Not only is it valuable to have a common view of the term business model but also to have a common view of what we understand with a business case. Different business models will be evaluated. In this context it is important to decide what parameters distinguish business models from each other. E.g. how big a change in the role/actor model will justify that it is a new business model? E.g. if we just change a pricing scheme from volume based charging to flat rate. Is this a new business case?

4.1. Definition of the term business model

Let us first draw a distinction between some concepts often confused: a ‘business idea’, a ‘business model’, and the concept of a ‘business case’ and a ‘business plan’.

• A ‘business idea’ is just what it seems, an idea for a business, or for a way of making a profit. In order to become a viable business, any business idea needs development, and it needs an organised framework or value creation logic to support it. The necessary framework for supporting a business idea is in our view what deserves the denotation ‘business model’.

• A business model is as the name suggests a model. Hence it contains many indeterminate parameters or variables, only describing the structural aspects of our business. It is a snapshot of the reality where certain aspects of business are put in focus and modelled. Several elements are built in a business model – roles and relationships model, revenue model, cost model, market model, demand model, technology model, value model, etc. Not necessarily are all models developed for each case.

• A business case is (again as the name suggests) an instance of the model, where indeterminate parameters have been given values. We cannot compute the profitability of a business model, without creating a case where all the numbers have been given values either through educated guesswork, or through empirical studies.

• A business plan is often denoted the document that describes the business of a company for a set of services or products. It contains a description of business, market segments, competitors, information about the company and its leaders/board, financial sheets (balance sheet, cost,) etc.

To be sure that all relevant information is gathered to be able to convey concrete information with the business models, several relevant question should be answered. By analysing these questions it is possible to reveal weaknesses in the proposed innovation prospects and help to guide us through the process of service innovations.

A functional definition of the business model term proposed by Chesbrough and Rosenbloom in [Chesborough 2002] has six main business elements:

1. Value proposition, describing the service we are going to sell and why it has value for our customers.

2. Customers and market segments, who our customers are and how they are distributed in various markets and market segments

3. Cost structure and profit potential, how all the costs of bringing our service to market is allocated on various elements, and how we propose to generate revenue and hence profit

4. Internal value chains, how we are proposing to produce and distribute our service, including all the necessary operational aspects

5. Position in the value network, how we propose to be positioned among the actors needed to bring our service to market, and



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6. Strategy for positioning and competition - the strategy we propose to position ourselves in the marketplace and to compete successfully.

7. Technical realisation - how different technical realisations will impact the profitability and how the best technical realisation ought to be.

Business model

Value proposition

Customer and market

Cost structure and Profit potential

Internal value chain

Position in theValue network

Strategy for Positioning, and timing

Technical realisation

Business model

Value proposition

Customer and market

Cost structure and Profit potential

Internal value chain

Position in theValue network

Strategy for Positioning, and competition

Technical realisation

Figure 3: Business elements to construct business models

Osterwalder [Osterwalder 2004] propose a similar set of elements, albeit with some naming differences. Osterwalders 9 elements are the same as Chesborough et al’s, with two differences. First, Osterwalder has exploded parts of some of Chesborough and Rosenbloom’s elements. Second, the element of strategy for positioning and competition is missing as an explicit element in Osterwalders listing.

The term service is used quite a lot, and hence we need to state what we should mean by this.

Service: The service is what is generating revenue through sales in a market. This means that a service is something a customer is willing to pay for, and this may be tangible or intangible. This being said, the end result is always assumed to be that the customer is paying for either kind of service or bundle of services.

If we accept that a ‘business model’ is a description of ‘the logic of making a profit’ then new business models only appear as a result of changes in the logic of making a profit. What constitutes such a ‘change in logic’? Intuitively and informally such a change is happening when ‘the way we are doing business’ is changed. In OBAN this may be a change in the role model, e.g. what market players are involved in OBAN service delivery, or the ownership of the RGW or the way OBAN services are charged.

In chapter 0 several business models will be analysed. Each of them comprises a basic set of information that describes the logic of making profit, e.g. taking on the role of controlling and managing the RGW. The interactions between these different market players in a business model are either direct or indirect stakeholders to OBAN service provisioning. Money flows, service agreements, physical traffic flow etc are all relevant information to show the interaction between the market players, in addition to analysing their position in the value network.

4.2. Business model elements

The following elements need to be analysed to be able to construct a viable business model comprising the different aspect as demand modelling, cost modelling, market modelling etc.



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4.2.1. Value proposition

The value proposition is the more or less concise formulation of the benefit (value) that the customer should get from our offering. The customer could be the end user or an enterprise within the value chain of the service creation and delivery platform. These two market players will look at different aspects concerning the value proposition. For both players the focus is on the fact that revenue generation is caused by the sale of goods in a market. Hence, when describing a value proposition we shall insist on being as concrete as possible with respect to services. The reason is rather obvious: if we do not have a service to sell, no revenue can be generated and any considerations on competition, markets or costs will at best be a purely academic exercise. This is a particular challenge when dealing with innovations: what can be done to investigate “future business models” for services yet to hit the market, or entirely new services based on new uses of technology or even entirely new technology? A good example of this is the way network infrastructure investments have to be decided before broadband services (e.g. OBAN services) can be sold to the market: what are the products we are going to sell that will create the revenues paying for this investment in the long run?

To analyse the potential revenue, several question need to be asked e.g.:

• Is it a tangible service or not

• What problem does the service solve for customers?

• How will the service be sold to customers?

• Does the service come in separate units or packaged with other services?

• How will the service be distributed to customers?

• Does the service substitute or cannibalise other services? Own services or competitor’s services.

Even if a service in itself will not create a revenue stream in terms of increased usage by the end user the service may lead to other types of benefits such as:

• Efficiency improvements: The service will give significant efficiency benefits in the firms’ operations (production, operations, sales, customer care, etc).

• Cost reductions (The service will give a significant cost reducing potential for the firm producing and delivering the service)

• Improved customer satisfaction

• Enhanced service portfolio (e.g. bundling benefits)

4.2.2. Customer and market segments:

The second element concerns the fact that a service needs to be sold to someone, and hence that we need customers forming a market and market segments. When describing a market we need to answer the question:

“What problem does our service solve for the customer in this particular segment?”

We believe that it is beneficial to pose this as a solution to some problem, rather than as some ‘need’ or wishes the customer might have, since it is easier to conjure up some fictitious need than a fake problem. Many failed services are just that because they simply did not bring any new solutions to real problems the customers had, and hence they did not find it worth paying for the service.

The customer would differ related to the position in the value network. One market player is a buyer of services from one market player and a seller “good” to someone else. This may be transport resources, content, service packing etc. However in this study the main focus will be the end user market since it is the end users that supply the money for services for all the involved players. How the money flows within the value chain is of interest and importance, but it is not so easy to grasp due to aspects as cooperation’s, internal service level agreements, regulatory issues etc.



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4.2.3. Internal value chains

If we have a service and a market potential, how are we going to produce the service and bring it to market? The internal value chains of a company may be complex and non-trivial to grasp fully. Further we need a good understanding of the critical production factors or essential inputs needed. We cannot produce a service if we need access to some resource on terms that may never be realised. It is also vital to ascertain that we have the possibility to scale up our production for volumes needed to make a profit. Last, but not least this part of the analysis may reveal that we lack the internal value chains needed, and hence prompt the question of whether such a capability should be built or acquired.

In short: -are we able to produce and deliver the service in mind? If no- what do we need to be able to do it?

4.2.4. Cost structure - technical considerations

The fourth issue is the one of costs. This is probably the best known issue to many, but nevertheless one where we often fail, simply because we are unrealistic with respect to what it will cost to produce, market/sell and distribute the services.

This point demands knowledge of the technical architecture to deliver the service from the service provider to the customer to be able to estimate the CAPEX and OPEX costs.

The technical architecture and functionality may also impact the way the different market players could position themselves in the value network and what function/roles they may take. E.g. the ownership of the RGW may impact the profit potential due to what functionality is implemented.

The functionality of the RGW will also influence the way different market players can use the component.

4.2.5. Position in the value network

Fifth is the issue of how our venture should place itself in the network of players necessary to bring our service to market, hence -‘the value network’. This network is a network of relations between actors in the market place, comprising the producer and all subcontractors, the customers, distributors, etc. This network has the feature that it is essential to the business, and that if it does not exist in advance it may be extremely difficult to establish because of coordination problems leading to deadlock. The value network should include all market players/roles that are important to production, delivery and control/management of the OBAN service provisioning.

The role models depict the value networks and the market players taking on one or more roles comprise the value network. Between each market players service agreements need to be in place and the money flows and physical traffic paths need to be agreed upon and supported.

4.2.6. Strategy for positioning and competition

The last issue is the one of how we will stay in business and prosper. How do we compete successfully? An OBAN operator will be positioned in a market with many other competing market players supplying similar or substituting services. How should the OBAN service providers act upon competing technologies and potential cannibalising services?

There are several ways to position in the market.

• Charging mechanisms

• Cooperation’s and alliances

• Service distinguishing mechanisms (bundling, ..)

• Service support and marketing and distribution

• Branding



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4.2.7. Modelling frameworks applicability to OBAN

The described business-modelling framework is directly applicable to the work on OBAN business modelling in this deliverable. The framework will therefore be followed as close as possible in all models. The internal value chain will however not be covered due to competition reasons and sharing of company internal matters.

To try to describe the viability of each model they are quite detailed regarding technical and commercial aspects. Some knowledge about IP and IP protocols for mobility, security and QOS is thus required to get a good understanding of each model.



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5. OBAN Business roles and role modelling framework

In this chapter we present a structured discussion of some business aspects of wireless access provisioning in the light of technology considered in the OBAN project. The aim is to shed light on the strategic implications of the technology with respect to incumbent and emerging actors in the Telecom market. The discussion is carried out with the use of a role model, with the inclusion of various actor models.

The terms roles and actor is used repeatedly in the following chapters. In this report we use the following definitions.

Business role:

A group of functions enabling an entity taking on the role to provide a set of services to its environment. Examples include end-user, customer, network operator, service provider, service integrator, content provider, content producer, clearing house, billing service provider, APS, etc.

Business actor

An organisation that plays one or more roles. Note: An organisation may imply several notions like an individual, a commercial company, a government agency, a non-governmental organisation, etc.

Some interesting actors in this context are:

• Fixed access operators, mobile access operators (new + incumbent),

• WLAN hotspot operators & aggregators,

• Service providers (ISP + Mobile).

All these actors are operating in the market today and all of them need to evolve their business to be able to compete with other actors.

5.1. Roles and role model

In order to discuss business aspects of OBAN we propose a role model featuring the following roles:

Roles Description

Residential gateway operator (RGWO): Controls the configuration and operation of the residential gateway.

Site owner (SO):

In addition to provide housing of the RGW, the site owner may be a traditional broadband fixed access subscriber.

Residential user(RU) In many cases the same entity as the Site Owner

Visiting user (VU):

A user different from the site owner that accesses services available at the residential gateway.

Mobile service provider (MSP): Offers publicly available mobile services (e.g., speech, messaging, multimedia, Internet access)

Fixed service provider (SP): Offers Internet services available over fixed or dial up access

Mobile access operator (MAO): Operator of wireless access networks that can be used for providing mobile services



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Fixed access operator (FAO):

Operator of fixed access (e.g. DSL) networks. It may sell capacity on a wholesale fashion as operator access, bit stream or other scenarios.

OBAN aggregator The aggregator acts as an intermediary between RGWOs (particularly in the context of hot-spot operations) and service providers. The aggregator handles roaming and access control such that several hot-spot domains to the service provider appear as a single unit.

Table 2: General roles definitions for the OBAN business models

Several actors may want to control the residential gateway (RGW). Therefore, RGW-operation is separated into a role that can be performed by several actors. The basic function of the RGW will be to provide local WLAN-based radio access, separation of domestic (for the site owner) versus external use, and resource management and usage metering. Depending on who actually performs the role, RGW-functionality can be further tailored.

The RGW is located at the premise of the site owner (SO). In anticipation that the RGW may be an evolution of a domestic WLAN router, the SO is given a special status as user (residential user) compared to other occasional users. Other users are named visiting end-users (VU) here. It is envisaged that, in many cases the SO is the same entity as the RGW owner. However the RGW owner may also be the RGWO.

A mobile service provider (MSP) is the unit offering traditional and emerging mobile services to end-users. It offers two-way reachability by operating a location register. The MSP also offers mobile Internet access. In order to offer its services, the MSP needs to use the network and services of a Mobile access operator (MAO). The Mobile access operator has the radio nodes providing regional (usually country-wide) mobile services. It also handles access control, usage metering and mobility handling.

Internet service provider (ISP) is the unit offering traditional end emerging Internet services, such as Internet access, mail etc. In particular, the ISP will offer VoIP services. The ISP handles the interconnect agreements towards other parts of the global Internet. In our context, the ISP offers its services through a fixed access network such as DSL or cable. This access network is operated by a fixed access operator (FAO), which conceptually offers a bitpipe with certain characteristics (service classes, etc.) between access points at the user premise and the ISP premise.

There are several parties left out in the discussion, such as application service providers, content providers, equipment vendors and backbone network operators. Even though these may deliver important premises, we consider that they will not have important strategic roles with respect to the particular aspects discussed here.

Figure 4 represents the base role configuration without there being defined any actors yet. Note the difference between a role and an actor. An actor is an economically responsible business unit that may take one or more roles. We can use the above figure to define various actor scenarios as illustrated in the following. In the figure, the dotted (red) arrows denote the physical connectivity services. The directions of the arrows denote who provides a service to whom. The non-dotted arrows indicate potential business relationships, and the directions of arrows here indicate the likely direction of money flows.

The reasoning behind the model is: The V-user has a subscription at an MSP. The MSP buys access services from mobile access operators and/or fixed access operators/RGW-operators. The RGW-operator compensates the SO for use of physical premise, electrical power etc. The site owner is customer at an ISP, which again provides access via a fixed access operator. It is possible to break the roles into still finer units. We could for example in the model have differentiated the fixed access operator on whether it provides a bare copper access service, or a version of bitstream access. We propose however to use the above as a compromise between simplicity and accuracy.



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Site- owner

V-user MobileSP

RG- operator

Fix Acc operator

Mob Accoperator

GSM/ UMTS

Internet

InternetSP

Physical connectivity services

Business relationships and money flows

Aggregator

Figure 4 Roles and their interrelations in terms of connectivity services and business relationships

There are various options with respect to integration of the RGW functionality with the functionality associated with residential usage. A minimum integration scenario is where the access resource is split at the physical level, and the RGW offering public services is realized in a separate unit. The residential user will then own and operate a WLAN router much in the same way as in the ordinary case. A maximum integration scenario is the replacement of the original WLAN router with an MAO-operated RGW. This will require a much tighter relation between MAO and the FAO with respect to service provisioning for the residential user.

The networks to the right are different network the traffic could need to enter into if not kept strictly local to the radio access network.

The GSM/UMTS network is a mobile network where the traffic and signalling streams must enter to terminate in other operators networks. Traffic from roaming users will also enter into this network to communicate with the home GSM/UMTS network.

The voice IP network is a specific IP network different from the regular Internet that has been specialised to support voice traffic (VoIP).

The Internet network is the regular Internet.

In the different business models there may appear other roles that the ones in the table above. The reason for this is that the different models may assume actors taking on some of the functionality to enable OBAN and other taking on other functionality. New actors as aggregators taking on some roles for OBAN provisioning are an example of this.



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6. OBAN business models

The following chapters describe selected business models considered in the business work in the OBAN project. The description of each model follows more or less the structure indicated in chapter 4. We have tried to use the same basic framework for describing value systems of the various scenarios, but for many of them it has been necessary to do tailoring. In the scenarios containing deviating definitions or new elements, these have been explicitly explained in the text. The process of arriving at the scenarios to be presented has been that all project partners have been asked to produce proposals they consider relevant to their companies or for their domestic national marketplace. With this “open” approach we have arrived at eight business scenarios. These scenarios are quite different in many aspects; which actors will exploit the opportunities of the OBAN technology, which services are offered to end customers, and relations to other cooperating stakeholders.

We have grouped the proposals according to the first of these aspects.

• The first three (i.e. sections 6.2 to 6.3) are focused on the fixed access operator expanding its domain.

• The fourth scenario describes how a mobile access operator expands in the OBAN/WiFi direction.

• The scenarios 6.6 through 6.8 describe how a service provider, offering mobile services, can be the party to grasp the OBAN opportunity.

• Scenario 6.9 describe a completely integrated operation with mobile and fixed access, service provisioning and OBAN-based access in one seamless operation.

• Lastly an existing business model is described briefly in reference to the previous business models for OBAN.

6.1. Short summery of the business models

Scenarios with fixed access operator focus:

1. Fixed access operator owns and operates RGs In this scenario, an operator that already owns an extensive (probably copper based) access infrastructure builds an additional wireless service that is technically and operationally tightly integrated with existing operation. It is considered that the access operator may be a dominating actor within a country, such that open commercial interfaces between access and end user service provisioning is enforced. A WLAN-based mobile access wholesale service is thus offered to service providers on this basis. More than one service provider may be present at a given access point.

2. A Fixed Access Operator conquers Mobile-only customers Here the focus is on an actor that is an integrated internet service provider and access provider. Many customers nowadays terminate their fixed telephone subscription, relying on mobile communication entirely. This is of course a loss for the traditional fixed operator, which may try to win back customers by offering WLAN-based access services towards this segment. It is assumed in this scenario that an open wholesale interface for the access part of the service is not enforced.

3. Fixed access operator as RGWO with additional fragmented hot spot operators In this scenario, modeled after the development in the Italian market, the fixed access operator plays a role in the emerging WLAN-based residential access industry, while the mobile access operator plays a role in the WLAN-based public hot-spot market. It is thus foreseen two different types of access point operations, targeted at residential and public hot spot sites respectively. In the latter case, upstart hotspot operators negotiate roaming agreements with mobile operators.

Scenarios with mobile access operator focus:

4. Mobile access operator operates the RGW Here the traditional mobile industry takes a rather aggressive WLAN position by offering broadband



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mobile services over WLAN based access. Again, it is considered that the actor taking the position may have a dominating market position, and is being forced to open wholesale interfaces towards 3rd party “virtual” service providers. The fixed access operator is restricted to deliver virtual channels over the access network in this case. It may however deliver such channels to different mobile access operators, even at the same site. This is particularly relevant at sites covering a dense population of mobile users.

Scenarios with service provider focus:

5. Fixed internet service provider providing wireless roaming, Building wireless internet service provider community, Improving mobile communication services: These three scenarios all have in common that the service provider also acts as the residential gateway operator. This is a continuation of the development seen in many markets, where internet service providers offer subscriptions including WLAN routers. The scenarios imply a somewhat more active part of the internet service provider than is currently seen in the sense that active operation of the nodes are considered rather than mere pre-configuration.

Integrated scenario:

6. An Integrated Operator develops customers’ loyalty In this final scenario there are no open commercial interfaces anywhere in the value system. One single actor may streamline its operation and service schemes in order to fully exploit the market. It is the FMC case based on heterogeneous access technologies, where one subscription brings a “complete communication package” to the users.

Other business models

7. Aggregator model (Boingo)

This is an existing business model where Boingo as a company has entered the WLAN market with software for billing and authentication of public users. Residentials may buy the software from Boingo, install it in the wireless access point and charge each user using the WLAN access. Boingo authenticates the users and has the customer provider role for the mobile users. Boingo thus acts as an aggregator for residential users that install the Boingo software. The resident gets a cut of the revenue from the access charges of each of the public users. This is a kind of reseller model which must be evaluated carefully due to operator policy.

6.2. Fixed access operator owns and operates the Residential gateway

6.2.1. Scenario Description.

In this first scenario, the fixed access operator sees a business opportunity in enhancing it’s access network functionality in order to provide wireless access as well. So, the fixed access operator takes the additional role of a residential gateway operator. In effect, the fixed access operator then walks into the traditional domain of the mobile access provider by extending the fixed line with a WiFi segment. The model envisions mobility between WiFi access points. The fixed access operator remotely manages RGws at the site owner’s premises. The WiFi access point is strategically located so as to also be able to support WiFi access outside the building. The fixed access operator can then sell this functionality to (up to several) service providers (service provider). These service providers will make business of the enhanced flexibility for their customers, who now have the possibility to move freely around while using the services of the service provider. The service providers will have to implement functionality to support the mobility and needed authentication (e.g. by means of a mobile IP home agent in the service provider domain and a foreign agent in the RGw). A storage for the foreign agent (in the RGw) functionality is being provided by the fixed access operator (in this case). The foreign agent software downloaded by the service provider to the RGw is thus part of the service providers domain. This is an important aspect of the business model. The fixed access operator offers storage space in the RGw for several service providers, so many service providers divide the RGw.



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The fixed access operator owns the RGw, and is responsible for procurement, installation, configuration, and management (possibly including remote software upgrades). The fixed access operator also supports additional functionality in the fixed access network to support separate virtual channels, QoS and possibly fast handover support with a hierarchical mobile IP solution. The RGw radio interface will be split into separate security IDs (SSIDs) corresponding to each of these virtual channels directed to the individual service providers.

The fixed access operator offers the RGw functionality on the wholesale market to service providers. The fixed access bottleneck resource is partitioned statically or dynamically between the service providers. In the first case the service provider may buy capacity on a flat rate prizing scheme. Later when more service providers join the RGw a usage based scheme will be more appropriate. The capacity partitioning is based on IP policy rules in order to control the traffic from each service provider according to a service level agreement. In a way the model reassembles the mobile network where several Mobile Virtual Network Operators (MVNOs) and service providers may buy access resources from the Mobile Access Operator.

If there are several fixed access operators offering OBAN services to a range of service providers in this way, service providers will be able to build networks regardless of the each fixed access operator’s network domain. One service provider may thus establish a network with continuous radio coverage even if single fixed access operators only cover parts of the total geographical area. Within it’s domain, the service provider may ensure seamless connectivity since full re-authentication is not needed when moving between APs of the same provider. If the service provider bases it’s coverage on roaming agreements, such seamless connectivity for real time applications would not be possible due to the need for full re-authentication at domain crossings. Figure 5 depicts the situation in which one visiting user moves in an area where there are several fixed access operators. Each fixed access operator has agreements with the same service provider. The Visiting user will always be connected to its own service provider and all communication, regardless of the access provider, is treated as being within the service provider domain.

FAO(1)

FAO(2)

FAO(3)

SPSP

SP

FAO(1)

FAO(2)

FAO(3)

SPSP

SP

FAO(1)

FAO(2)

FAO(3)

SPSP

SP

FAO(1)

FAO(2)

FAO(3)

SPSP

SP

Figure 5. Handover may be easily supported regardless of fixed access operator

If the service provider of a customer (orange line) has agreements with all the fixed access operators, the customer moves in the area only conducting intra domain handover. The authentication procedure is easier than if the service provider needed to have roaming agreements with other service providers. In a starting phase of OBAN, it would be natural and probably less expensive to establish roaming agreements with other service providers than renting resources directly from the FOAs everywhere. In a later phase, when the OBAN market is more mature, each service provider may rent access resources themselves and have a direct connection to their customers. In the following, the mature OBAN market situation is described i.e. where each service provider rents resources directly from the fixed access operator and thereby has a direct relation to their customers. The fixed access operator model differs from the models used on the fixed access today, where only one Internet service provider can rent the access line.

The upper part of Figure 6 depicts the situation today, where one internet service provider owns the Modem (e.g. an ADSL modem) and the customer is tied to this service provider as long as he has this modem. Other people may connect indirectly to other service providers through roaming. This is denoted as a “many users to one internet service provider (M-I-M)” case. Figure 6 lower part, shows the alternative model as described



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above. With this model, each service provider has the use of a “virtual RGW” in the physical RGW of the fixed access operator. This virtual RGW is part of the service provider home domain and incorporates a foreign agent and a authentication/security client e.g. a Radius client. The virtual RGW is a trusted functionality in the fixed access operator’s physical RGW. All traffic goes through the fixed access operator, but the fixed access operator has no direct customer relation. Service providers has the customer relations as usual.. This is denoted a “many users to many service providers direct” case. (M-M).

M - 1 - M

Modem SPFAO

Modem FAO

SPSP

SPSP

Roaming agreements

Direct links to each SP

M - M

SP

SP

SP

M - 1 - M

Modem SPFAO

SPSP

Direct links to each SP Figure 6: The multiprovider opportunity offered in the fixed access operator/RGWO scenario

6.2.2. The value system

In order to discuss business aspects of this scenario we propose a role model featuring the following roles:

Roles Description

Residential gateway operator (RGWO): Controls the configuration and operation of the residential gateway. The RGW contains WLAN mobility and AAA functionality. The RGWO provides many of the OBAN specific functions in the value system.

Home user (HU) In addition to provide housing of the RGW, the site owner may be a traditional broadband fixed access subscriber.

Visiting user (VU):

A user different from the site owner that accesses services available at the residential gateway.

Mobile service provider (mobile service provider):

Offers publicly available mobile services (e.g., speech, messaging, multimedia, Internet access)

Fixed service provider (service provider): Offers Internet services available over fixed or dialup access

Mobile access operator (mobile access operator):

Operator of wireless access networks that can be used for providing (2G and 3G) mobile services

Fixed access operator (fixed access operator):

Operator of fixed access (e.g. DSL) networks. It may sell capacity on a wholesale fashion as operator access, bit stream or other scenarios. The fixed access operator provides the possibility of creating several logical circuits between the RGW and service providers.

Table 3: Roles used in the description of the fixed access operator manages the OBAN residential gateway business model

The following model describes the constellation of roles in this business model. The roles within a coloured area are regarded as one legal entity.



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Home user

V-user MobileSP

RG- operator

Fix Accoperator

Mob Accoperator

GSM/UMTS

Internet

InternetSP

Figure 7 Fixed access operator manages the residential gateway

6.2.2.1 Services

This business model is targeted to offer both traditionally services supported over a fixed and/or mobile network as well as new services based on location and presence. Plain Internet access and fixed telephony may be offered as today from one internet service provider. The fixed access operator model with virtual RGWs opens the additional possibility for several service providers, operating fixed types of services. The HU may then in principle select the best service provider for different uses, e.g. one internet service provider for private Internet access and others for home office or for tenants. Each service provider must be able to authenticate users. Different SSIDs for each service provider and profile is one way of doing this i.e. having a one to one relationship between SSID and service provider identity. This approach is used in the rest of this document.

The service providers may share the access resources dynamically. In this way each of them will be able to offer their customers high bandwidth if there are not so many simultaneous users on the network. Each service provider may choose to have fixed resources (pay much) or have a dynamic resource sharing with other service provider (lower price). The fixed access operator may also implement different fixed line resource allocation schemes, i.e. fixed or dynamic resource allocation across the access line. It is important that all these aspects should be handled by agreements.

Since WiFi is a high-capacity radio interface, many broadband applications such as TV, VoD, interactive map reading, online gaming etc, may be supported in addition to traditional home office and mobile office applications. Since the service provider may keep track of the location of the users by means of mobile IP on a RGW granularity all kinds of location based services may be acquired by customers. Presence information may also be acquired.

6.2.2.2 Value propositions

The value proposition of this model may be seen from different actors. The most important are Home user, Visiting user, fixed access operator and service provider. Here, the focus is firstly on the end users, the home user in particular and the visited user secondly. It is, however, important to evaluate all parties in this model, as all involved parties must have a positive outcome for the complete system to be viable.

Home user:

1. The home user may be able to select several service providers simultaneously for different services: The set top box on the TV may be configured to access the WiFi AP on one SSID and the PC and mobile phone on another. He gets the chance of selecting the best and/or cheapest without doing anything with the modem, only contacting the service provider that has an agreement with the fixed access operator to support the customer.

2. The fixed access operator may compensate the home user for installing a RGW in the residential home (office building) so the home user pays less each months for the connectivity to the backbone.



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3. The home user is free to share the resources dynamically with other interested parties. E.g. the user could have an 8Mb/s channel shared with other users, allowing him/her to have high bandwidth alone in off-peak periods.

4. The home user gets the functionality of the OBAN RGw of seamless integration between 3G and WiFi. The same device used for mobile networks may be used on the fixed access and possibly the charge will be less using the fixed access than the mobile network in addition to possibly better quality and security.

5. The Home user may have visitors that can use the fixed access without asking for permission nor paying the home user.

6. The Home user may also use an advanced RGW for Home platform applications (MHP) if the fixed access operator offers these kinds of services. The fixed access operator may, if the RGw may be equipped with needed functionality, offer to support home platform services and remote home network management support.

7. The home user’s pay for the resource consumption on the fixed access line in the same manner as the other customers, but may be subsidized with an amount each month. This will then be the incentive for the home user’s to have an OBAN RGW installed in their homes (or office buildings).

Visiting user:

1. As statistics from several mobile operators show about 88% of all calls in mobile networks today are originated at home or at work. The visiting users can use WiFi instead of the mobile network when visiting someone or being in the vicinity of an OBAN RGW, assuming that prices are lower than in mobile networks. They will have their own resources and they are always connected to their own service provider (if not roaming) if the service provider has an agreement with the RGW provider (the fixed access operator).

2. If the RGW is configured so that many service provider can be connected, the VU will not be a roaming user and pay roaming charges.

Fixed Access Operator (fixed access operator)

1. The fixed access operator sells the broadband fixed access resources to up to several service providers simultaneously. Thus in this model several service providers can get access to the same area (home/business) by sharing the fixed access line capacity with other service providers. The fixed access operator can get more money by selling the access resources separately in smaller chunks, or as common resources.

2. The fixed access operator goes into wireless business and can offer a home user the possibility to access several service providers on its access. (e.g. one as a broadcast provider and another as a telco- provider)

3. If entering the home platform service enabler role, the fixed access operator may enter a new role that may be economically profitable.

Mobile Access Operator (mobile access operator):

The mobile access operator is not directly involved in this business model. Since the fixed access operator goes into the business of radio communication the mobile access operator may actually see this model as a threat to its own business of operating 2G and 3G networks. WiFi networks are emerging and much traffic may move from the traditionally mobile networks to the WiFi networks.

Service Provider (service provider):

Service providers may see this model as a potential to get access to a broader scope of customers, since each service provider may (if the resources are sufficient) rent capacity to each customer’s house and business. All service providers may then have all customers as a potential customer base on the same basic conditions.

6.2.2.3 Market

The market is distinguished into service provider and customer groups. The environment is typically a densely populated area.



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Customer groups:

The initial target group is broadband users living in urban and suburban areas. In these areas it is expected the highest penetration of potential OBAN users both as outdoor bypassers and indoor frequent Internet users. The residential market is the targeted market in the first phase. In later phases the business segment may be targeted. The business case of the most profitable markets shall drive the implementation.

Service provider groups:

The fixed access operator must take the risk of investing in an RGW-based radio access network infrastructure. Access to this will then be offered to service providers. In the case of fixed partitioning of the DSL bottleneck resource, service providers can be charged on a flat rate basis. If statistical sharing of this resource is allowed, a usage-based scheme should be employed. Real time traffic must be prioritized across the service providers based on a well-defined and agreed policy.

Each service provider will be offered a virtual tunnel, which the service provider may encrypt, based on its own security mechanism. The policy mechanism in the RGW and the end GW for upstream traffic must be able to police the traffic. If excess traffic is sent either way the fixed access operator may allow it to enter the network for extra charge.

6.2.3. Technical support

The following figure depicts some of the technical aspects of the model.

SPSPSP

SSID1

SSID2

SSID3

Qos

Qos

Qos

QosGW

FAO AUcHA

SSID = SP

SLAFAO SPSSID-channel mapping

SPSPSP

SSID1

SSID2

SSID3

Qos

Qos

Qos

QosGW

FAO AUcHA

SSID = SP


SPSPSP

SSID1

SSID2

SSID3

Qos

Qos

Qos

Qos

Qos

Qos

Qos

QosGW

FAO AUcHA

SSID = SP


Figure 8: Overall mapping of SSID to virtual channels with direct customer service provider

relationships

SSID(1) SSID (2)

FAO

SPSP

SPSPSSID(3)

SSID(4)

Private

Public

SSID(1) SSID (2)

FAO

SPSP

SPSPSSID(3)

SSID(4)

Private

Public

Figure 9: SSID as a direct mapping to service provider

Mobility.

The mobility is offered by Mobile IP. The home agent is located in the service provider domain and the foreign agent in the RGW. Each service provider handles mobility for its own customers. The distance between the home agent and foreign agent specifies some upper limit of the mobility speed. If this Mobile IP solution is not sufficient a hierarchical solution with a mobility service node i.e. a mobility broker, in the fixed access operator



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may be supported by the fixed access operator. This will though demand extra functionality in the fixed access operators network. Also for lawful intercept there may be the need for a mobility anchor node in the fixed access operators networks. This is though for further study.

FARG

SSID1

SSID2

SSID3

SP

SP

SP

HA

HA

HA

Mobility handling

MIP tunnel

FAO

FARG

SSID1

SSID2

SSID3

SP

SP

SP

HA

HA

HA

Mobility handling

MIP tunnel

FAO Figure 10: Mobility handling by mobile IPv4 in the fixed access operator model

HAFA1

Move to FA2

FA2 Update FA2

Updated FA2

A

A1)A = FA12) Move to FA23) A = FA2

HAFA1

Move to FA2

FA2 Update FA2

Updated FA2

A

A1)A = FA12) Move to FA23) A = FA2

Figure 11: Mobiles station moves between RGWs within the same service provider domain

Security /authentication.

Each customer of an service provider has a security relation to its service provider. The customer entering an OBAN WiFi zone will try to authenticate to the RGW on the specified SSID it has been allocated from its service provider. The authentication server is located at the service provider, since there is a tunnel allocated to each SSID directly to the service provider owning the SSID. Users may have several profiles with different SSIDs. E.g. as a private person I will authenticate and use resources (and be billed) from one service provider and as a business user (where my company pays the bill) I will be allocated another SSID and billed by this service provider. There is a one to one relation between SSID and service provider.

If the residents own service provider has got a relation to many RGW operators he will always be directly connected to his service provider and no full re-authentication is needed when moving between RGWs. Hence this model would potentially avoid re-authentication completely IF the actual service provider has rented capacity on many RGWs that are close together. This would benefit all services that need fast handover support since most handovers would then be within one operator’s domain.

QoS.

To be able to support different traffic types each SSID needs to have the possibility to prioritize traffic based on QoS mechanisms. The WiFi needs to prioritize traffic as a total stream as to support the real time traffic on the radio interface from all users. A second phased QoS mechanism may be based on the resources on the access line. Buffers will bloc the traffic from the service provider that has rented too few resources as to transport the traffic of its customers. In this way one service provider may offer more resources and potentially support its customers with better quality than another service provider that has not invested in so much bandwidth. If the model flies the fixed access operator may be in the position to auction resources on the access line and create much revenue.



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FAOQos

SSID1

SSID2

SSID3

Qos

Qos

Qos

SP

SP

SP

Auc

Auc

AucFAOQos

SSID1

SSID2

SSID3

Qos

Qos

Qos

SP

SP

SP

Auc

Auc

Auc

Figure 12: QoS mapping to each SSID/service provider on the fixed access link

6.2.4. Interconnection with 3G

The service provider may be service providers of both an OBAN operator and a 2G/3G operator, i.e. a service provider may be a Mobile service provider. If this is the case, the customers are customers of the same service provider and don’t bother about what kind of network is used, if it is the fixed or mobile network. The service provider will then be in a good position to offer fixed mobile converged services. The service provider may choose the network for its customers based on customer’s preferences and service requirements offering them converged services across fixed and mobile networks. The service provider may choose to direct all data traffic onto the WiFi network and all voice traffic onto the UMTS/GSM network. The service provider may also use the WiFi network as an indoor radio network and 3G outdoors.

6.2.5. Competition and regulation:

The fixed access operator may offer the RGW to up to several service providers on the same terms. Full competition between the service providers is guaranteed favoring no one. The fixed access operator installs the needed software in the RGw and handles all billing and charging for the usage of access resources and the fixed line access to the RGw.

From a regulatory point of view concerning competition this model offers full competition and the fixed access operator does not go into other markets that the one today offering access to fixed installations.

6.2.6. Timing

The fixed access operator model with several virtual RGWs in the physical RGW is regarded as a business model targeted for an evolved OBAN penetration i.e. after the market for OBAN has reach a certain maturity. It is envisioned that in the beginning only one or a few service providers will rent access capacity to a RGW offered from the fixed access operator, and other service providers will have roaming agreements with this service provider. This is due to the small number of OBAN users, and rented capacity in many RGW would not be used. When the number of OBAN users increases the rented capacity would be in use nearly always so it can defend the renting costs (and possibly investments in extra equipment). Roaming charges for the customers are usually quite high (in mobile networks). If this situation can be avoided it would be beneficial for the users. The charging scheme in use is here crucial.

6.3. Integrated fixed access operator and Internet service provider conquers Mobile-only customers

6.3.1. Important Assumptions

The OBAN operator is an integrated Fixed Access Operator and a service provider, and it also controls a base of residential gateways. Some operators have merged the infrastructure and business units into one business unit. This models looks at this actor constellations, where e.g. France Telecom and Telefonica are examples today. It is however foreseen that more operators will merge the units in the future as the market tends to move



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towards FMC and lower market shares for one actor. This integrated operator offers the voice and Internet Access services to customers who don't possess any Fixed Access ("mobile-only customers"). This case stresses the offers substitution and the customers' conquest matters.

Voice and Internet Access are not offered separately:

• The OBAN market is already quite narrow due to other access technologies as UMTS: the possible customers' bases are geographically and commercially limited.

• Price-wars and the development of abundance or unlimited offers lead to a dramatic and lasting trend of voice-only services value decrease.

• In a technological context of voice and data integration, the separation between both offers may at least look artificial; at worst, considering the development of VoIP solutions like Skype, it may be risky.

• Considering the customers' new practices trends, it is commercially essential to let them very simply switch over from data to voice communication, and to give them the opportunity to simultaneously use both communications means.

The offer is restricted to the densest areas

• On the one hand, one of the most important OBAN success factors is the ability to guarantee from the start a very good quality of service in the areas where OBAN is announced to be working. Indeed, coming after the UMTS solutions and having far more limited financial and media means, OBAN must rely on an awesome image to win market shares and maintain them. The bigger the network’s coverage, the more difficult it will be to maintain a high standard of quality.

• On the other hand, the bigger the network’s coverage, the more the density of population decreases. More and more gateways are necessary to deliver the service, and the economic efficiency decreases. That is the reason why we consider the OBAN operator maximizes its success opportunities if it only targets the densest areas. Looking at the French geographic and demographic context as an example, it was concluded that covering 15% of the population would be a reasonable objective. Of course, this figure might be different in other countries.

The "OBAN network club"

Building the OBAN network presents many particular difficulties: gateways belong to customers (or at least are installed in their private home) and are not dedicated to this exclusive use; they also may be put in inadequate premises. As a consequence,

• The network coverage may constantly change, because of customers' cancellations or removals

• The network adaptation capacity may be difficult to manage (The customer's agreement or availability may be a factor of delay)

If we also consider that:

• The geographic assessment of the customers’ needs is complex and requires much flexibility and reactivity

• The site owner of the gateway must be involved in the device's maintenance (keep the gateway opened and working, report problems, welcome a maintenance team...)

• The installation costs may be high: sending a technician, installing a signal amplification system

Then, it may be interesting to more deeply involve the site owners, in order to guarantee the permanence of the OBAN sites and the minimal network coverage of the opened area. Consequently, two of the documented business models rely on the creation of a "OBAN network club", whose principle is:

According to the geographic coverage needs, the OBAN operator chooses in its gateway database a few strategic customers, to create a seamless network coverage area, and offers them a deal: if they engage themselves to pay a symbolic fee (instead of the normal fee which may be much higher), open the gateway, facilitate the service maintenance, and stay a member of the club during a year renewed by tacit agreement, they can benefit from the OBAN services the same way the future "normal" customers will. These special customers are real "network partners", as they contractually agree to



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actively contribute to the network reliability. The subsidizing may however take many forms to create an incentive for the club members.

From the operator's point of view, this deal must be considered as a network or quality investment:

• Productivity is improved: repetitive installation costs in the same area are avoided; Planning works are made easier.

• But as any investment, it must also be made profitable: the operator has to be commercially efficient to reach the coefficient of network occupation that allows covering the advantages granted to the members.

The Business Model is autonomous, but also temporal

The idea is to build a balanced business model around well known services, easy to conceive and implement such as voice and Internet Access services. This activity will finance the development of the network and commercial structures necessary to build a new business model around more innovative and potentially more profitable activities.

6.3.2. Introducing the idea behind the business model

On the one hand, we witness the ongoing development of a customers' base without any fixed access line, which we call “mobile-only customers”. For a large part of these customers, this situation is the consequence of a financial arbitration. However, in a context of strong High Speed Internet development and Multimedia explosion, these customers may find themselves marginalized, and finally look for a high speed access solution which does not compel them to subscribe to a fixed line.

On the other hand, the fixed line operators, which are also very often Internet service providers, have lost many of their telephony customers to the mobile operators. They wish they could generate, without becoming a mobile operator, an Average Return Per User (ARPU) with these "mobile-only" customers, and finally win back these customers on a fixed access.

OBAN seems to be an adequate answer to this situation: the fixed access operator can present OBAN to the mobile-only customer as a mobile offer, since a fixed access is not necessary: the operator's gateway in the neighbourhood will be used to provide the OBAN service to the customer:

• first of all, a High Speed Internet Access

• And also unlimited phones call service toward the fixed line, and low cost calls toward mobiles.

6.3.3. Service’s description from a customer's point of view

• The customer gets:

o an unlimited voice calls service toward fixed lines

o low cost calls toward mobile phones: the call termination only is charged

o a High Speed Internet Access; the minimum expected bit rate is around 128Kbit/s but the bit rate is not guaranteed

• He can at the same time use the voice and the Internet service (using for example at the same time a phone and a PC)

• On a pay per use basis, he can use optional traditional Telecom services such as SMS, MMS, video teleconferencing, personal pages, information services, ring tones.

• OBAN works on any Wi-Fi device; a dedicated device is not necessary

• Thanks to the hand-over procedure, a vocal communication or an Internet session is not interrupted when a moving customer goes from one OBAN cell to another (adjoining) one.

• There are nevertheless a few restrictions :

o No handover between the OBAN network and 2G or 3G networks



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o The OBAN services can only be used in the covered areas (mainly big cities and their suburbs), whose opening has been publicly announced.

• The "network club" case: its members benefit from the same advantages as the other customers.

This service proposal should be technically evaluated by WP2 in order to be sure it is feasible.


For the Home user and the visiting user:

In short:

"For a competitive price, and without changing my Telecom habits, I can benefit from an unlimited High Speed Internet, at home, in indoor nomadism or outdoor mobility situation. I also spare money thanks to the unlimited phone offer".

Thematically:

The value proposition has several aspects; the most important are:

• Price: the OBAN offer is a cheap alternative to UMTS and DSL offer; it is an interesting solution to reduce the mobile phone bill

• Ergonomics: the "mobile only" customer doesn't need to change his Telecom budget structure (no fixed line subscription) and his consumption habits : the communication is restrained neither by the tariff structure (using UMTS for at home Internet is expensive) nor by technical limits (DSL doesn't care with mobility)

• Abundance: calls toward fixed line, Internet Access

And to a lesser extent:

• Mobility (in the covered areas)

• Bandwidth: in some cases, it can be better than with UMTS

• Available Telecom services

For the fixed access operator-internet service provider actors :

As they are at the top of the value chain, there are not customers in any way, so there is no value proposition for them.

For the other actors:

As they are competitors, there is no value proposition for them in this business model.

6.3.5. Market segment

The commercial target: the mobile-only customers

The profile of our target is a residential customer:

• Interested by the High Speed Internet connection

o at home, indoor in a nomadism situation, outdoor in mobility situation

o with a limited budget

o ready to content himself with a not guaranteed and relatively low bandwidth

• Making potentially many phone calls, and can thus take advantage of making them on the fixed lines due to OBAN

o wishing to reduce his 2G or 3G mobile bill



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o or even ready to substitute an OBAN solution to his classic post-paid subscription (in this case, the customer would only keep a prepaid 2G or 3G offer)

• Living in the dense, urban areas covered by the OBAN network

o We consider that the mobile-only population is concentrated in the great urban centres, which happen to be also the areas covered by the OBAN network. Indeed :

Mobile-only households are often students, or young couples without children

The mobile coverage in rural areas is more uncertain : rural households generally hesitate to give up their fixed line access

The technical target: the "network club" members

• Contrary to the "mobile-only", they are already customers of the OBAN operator:

o They use a High Speed Access

o And a gateway service

• The operator recruits them among the customers with the highest bandwidth, so that they are not very sensitive to the effects of the gateway opening

6.3.6. Value Chain

In the scenario that we study, the OBAN operator can offer its service without making any essential partnership with other actors.

Site- owner

V-user Mobile SP

RG- operator

Fix Acc operator

Mob Acc operator

GSM/ UMTS

Internet

Internet SP

Figure 13: Internet service provider manages the residential gateway.

We merged the internet service provider and the Fixed Access operator for this scenario. Indeed

• Some incumbent operator (FT and TELEFONICA already, DT soon) have integrated the internet service provider activity into the Access Network Operator role.



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• The incomers, thanks to the regulation, choose most of the time the unbundling option which brings them back to the same situation as the incumbent operator. The only difference comes from the hiring of the partially unbundled local loop to the incumbent operator. However, in the OBAN business model, we do not consider this commercial relation since it has already been integrated into the internet service provider incomer’s costs and is not specific to the OBAN situation.

6.3.7. Technical considerations

6.3.7.1 Main Technical Scenario The following scenario is built up using OBAN architecture described in deliverables D5 [1] and D27 [2].

1. The OBAN user is in an OBAN covered area. He powers on its OBAN terminal (or triggers an OBAN connection).

The following technical steps are then performed.

2. Radio Association and initial Authentication phase:

• The radio association between the terminal and the RGW is performed. Preconfigured preferences on the user’s terminal determine the RGW the terminal tries to access.

• The RGW starts the authentication and authorization phase, in order to grant the access to the OBAN user

• Authentication of the OBAN user is made thanks to the AAA architecture. The authentication server is held by the OBAN service provider. After a successful authentication, the OBAN operator sends the access authorization to the RGW. Specific configuration parameters could be sent to the RGW (for instance, QoS parameters or access controls). In addition, specific authentication data are generated and transmitted to the terminal in order to prepare a future hand-over situation.

• The radio link is established and encryption is performed for security reasons

3. Initial mobile IP registration phase:

• The mobile terminal registers with the Mobile IP Home Agent located into the OBAN service provider. The registration is using foreign agent (FA) discovery functions, hierarchical mobile IP and also security architecture.

• After the mobile IP controls performed by the OBAN security server, the mobile IP tunnel is mounted between FA/GFA/HA. The terminal has access to the OBAN IP network and is granted a mobility service.

4. Internet access and Voice service:

• Internet access is available as soon as the mobile IP registration has been successfully performed

• In order to use conversational services, the terminal may initiate a SIP session as described in the overall use case of D27 [2]. Anyway, VoIP service is considered to be already provided by the OBAN integrated operator and is therefore not considered to be an OBAN specific technical consideration.

5. Hand-over case

The hand-over scenario, maintaining voice calls or Internet session, presents the following steps.

• When the terminal is connected to the OBAN network, it should prepare a future hand-over situation. Therefore, the terminal is responsible for discovering the neighbouring OBAN RGW for the next possible hand-over it could perform. New functions are added into the OBAN operator network to provide the appropriate information to the terminal.

• Using the neighbouring RGW knowledge, the terminal can foresee and decide a hand-over. The terminal is the responsible for requesting specific authentication data to be shared between it and the next RGW it is roaming to. New functions are also added into the OBAN operator network to provide the appropriate information to the terminal.



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• The terminal performs the actual hand-over to a new RGW, beginning by a new radio association. Using the authentication data it has requested, a local authentication between the mobile and the new RGW is possible. The radio link is established and encryption is performed.

• The terminal then performs its mobile IP registration. When the new RGW is connected to the same Gateway foreign agent as the old RGW, the mobile IP registration is terminated by the gateway foreign agent, and a new mobile IP tunnel between the new foreign agent and the gateway foreign agent is mounted.

Since the terminal keeps the same public IP address after the hand-over (thanks to the mobile IP service), both Internet and conversational services are available after the mobile IP registration.

In any case, it is assumed that accounting is made available in the OBAN architecture and that the OBAN operator can get relevant call data records.

6.3.7.2 Technical means The following figure shows the technical means that have to be implemented by a fixed or integrated operator that wishes to offer the OBAN service as described in the above scenario:

Figure 14: Example of a Technical Realisation Means for an OBAN Operator considering scenario RGW+fix+internet service provider

The following equipments are needed to perform the OBAN service:

• Mobile terminal is designed in order to communicate by Wi-Fi. The terminal must include new functionalities such as Neighbouring Discovery Function a Candidate Access Router Discovery (CARD), mobile IP and security client. The Neighbouring Discovery function as well as authentication functions for the hand-over case seems to be OBAN specific.

• RGW has to be provided to the residential user. The RGW is configured to support two virtual WLAN (identified by two SSIDs): a public one for the OBAN users (specific configuration to be in line with OBAN operator’s will) and a private SSID to the residential user’s disposal (free configuration allowed for the residential user). The RGW integrates classical mobile IP functions, a CARD function and a specific security and accounting function for the hand-over case.

• The Mobility Broker is described in D27 and is used to provide a hand-over delay that is under 130 ms. It integrates FA, CARD and AAA proxy functions. When applying the main technical scenario described in D27, specific AAA function is integrated into the mobility broker to manage hand-over cases. This element is serving a geographical area and the operator may deploy several mobility brokers. WP2 documents do not indicate whether this element is integrated into existing equipments or if it is new equipments to deploy into the OBAN network.



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• AAA architecture: the same architecture is used both for the network access and for the mobile IP registration phase.

• Mobile IP architecture: HA functions are needed into the OBAN network. The use of Gforeign agent functions in case of a fixed operator and internet service provider scenario may not be necessary.

• Access network elements (for instance, ADSL lines and ATM infrastructures…)

• IP collect network and Internet connectivity

• Voice infrastructure (VoIP servers, VoIP interconnection with other VoIP networks or PSTN access)

6.3.8. Strategic approach

The strategy contains two important and independent steps:

• First, building the OBAN network and reaching the profitability by targeting the mobile-only market

o Using its own resources (its gateway base), the operator conquers new customers which were initially not within its market.

Customers' base development: the operator creates new revenues with new customers, but also keeps in sight the opportunity to persuade these OBAN customers to subscribe to a fixed line access.

Profitability : The mobile-only customers must be a profitable activity and make up for the financial advantages given to the "network club" members

Defensive marketing: mobile operators will probably be allowed to offer "DSL only" access to the households. For the fixed access operator, OBAN offer provides also means to counter this strategic move.

o The aim is to gather the conditions for a successful launch of advanced services

Investment : build a complete, robust and operational network, ready to support new services and customers

Cash management : limit the cash outflows, and cover them more quickly and more easily

• Medium-term, widen the commercial target :

o Offering the advanced services (geo-localisation, video supervision, etc...) to all the "service centric" customers. By "service centric" we mean all the customers ready to pay for technological high-tech services, but expecting on the shelve products.

o In this new business model, the OBAN operator could play a pure intermediary role: it offers facilities (the network) and allows potential relations between customers and services providers. Obviously, to be able to negotiate the best level of commissions with the service provider, the network quality and the customers' base size are essential parameters.

o The detailed study of this stage is not the object of this document

6.3.9. Incomes structure

In most cases, the OBAN subscription will not totally take over from the 2G or 3G mobile subscription; nevertheless the customer will probably choose a cheaper contract. Therefore, as he will have to deal with two different contracts, it is highly recommended that the OBAN offer be a particularly clear and simple one. It could be:

• a monthly flat rate contract offering unlimited High Speed Internet Access and unlimited voice calls toward the fixed lines

• free calls towards the OBAN customers contacted through the OBAN network (on their Wi-Fi mobile)



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• a post-paid, price per minute tariff for the calls toward the mobiles: the objective is simply to charge back the calls terminations

• an important extra revenue should come from the optional traditional Telecom services such as SMS, MMS, video teleconferencing, personal pages, etc. The growth of this kind of revenues should be progressive, and a real marketing effort is necessary to stimulate it.

• The members of the "network club" benefit from the same offer structure, but the flat rate contract price has to be particularly attractive.

The tariffing principles:

• The price of the flat rate will depend on the competing offers:

It shouldn't be far from the price of the "DSL-only" access offer

It should be more attractive than the UMTS offers (or the big 2G offers)

• The price must be reasonable for modest budget customers

The potential revenue reserves:

• Increasing the amount of the "OBAN network" subscription (without depriving the member from a real advantage). Two possible solutions:

o Globally increase the price for everyone

o Or Increase the tariff according to the seniority of the member

• Making a small profit on the calls toward the mobiles (if unlimited offers toward the mobile do not widespread)

6.3.10. Cost structure

Network costs

We consider, that the OBAN specific costs add around 15% to the normal costs generated by a High Speed Internet customer. These costs cover the following fields: Local loop aggregation, Long distance backhaul, B-RAS.

Mobility broker has to be further evaluated once it is decided if it is new equipment or software evolution of an already existed and implement equipment in the network.

IT adaptation costs

It concerns:

• gateways adaptation costs (software development)

• IT adaptation and development costs

• Servers costs

Acquisition costs

Three types of charges have been identified:

• search costs : the operator needs to identify in their customers' base and contact the potential targets for the "OBAN network club"

• device costs : an external device may be necessary to amplify the signal in 50% of the cases

• installation costs : a technician may be needed to make OBAN work (diagnose the signal quality, install the amplification device and solve electric power supply)

Commercial costs



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It concerns the various sales and marketing costs (including IT data storing). A fixed access operator can probably optimize these costs:

• local marketing effort

• cancelled customers data base exploitation

Customer care and overhead costs

• customer care and billing, after-sales services

• overhead costs : management, various indirect costs

Telephony costs

We considered we could neutralize the telephony costs in our model:

• The cost of an OBAN VoIP call toward a fixed access is supposed to be negligible

• The termination costs toward mobiles are simply re-invoiced to the final customer

• The optional Telecom services are already offered by the operator, as it is also fixed access operator and internet service provider; as a consequence, the cost to offer these services on the OBAN network should be marginal. In our model, the parameter used is directly the margin generated by these services

Devices costs

The purchase of a Wi-Fi mobile device is not subsidized by the OBAN operator.

In this model, the gateway is sold cost price, so these costs are neutralized. However, we could also choose another solution: the gateway would be rented, and high (but graded) cancellation fees would be demanded if the customer churned. In this case, the gateway would be subsidized, but it would also become a profit source with long-term customers.

6.3.11. Modelling results of the Business Model

This section aims to provide a general idea of expected results considering an OBAN offer following the above business model. Therefore, a rough modelling has been made and the corresponding results are presented in the next paragraph.

6.3.11.1 Assumptions • period: 5 years

• Actualisation rate : 10%

• "Mobile-only": between 18% and 23% of household market

• OBAN coverage (reached in 3 years): 15% of the population

• Cumulative density: 6845hab/Km²

• OBAN gateways coverage range: 30 meters (354 gateways are necessary to cover 1 Km²)

• Between 50% and 66% of the "mobile-only" are interested by High Speed Internet, and in this group, 40% would prefer an OBAN solution to a "DSL-only" subscription

• Churn rate: between 10% and 20% : thanks to the operator marketing effort, an important part of the OBAN customer base finally decides to install a fixed access

• Optional Telecom services are used by 35% of the customers (end of period) and generate a 3€ margin per month

• The flat rate tariff decreases from 25€ to 20€

• Network costs: 7€ / opened gateway (mobility broker ignored)



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• - Acquisition costs: 100€ / customer (amplification: 80€; installation: 110€; customers gateway recruitment: 5€)

• - Commercial costs: 18% of the flat rate revenues (members+ customers)

• - Overhead and customer care costs: 3€/month

6.3.11.2 Results • The economic equilibrium seems possible to reach.

o The Net Present Value obtained is about 25.000 K€

o Profit perspectives are nevertheless fragile and limited

• The profitability is very sensitive to the following parameters:

o Geography of mobile-only housing

o Filling rate of the gateways

o Acquisition costs (need for a technician's help)

o Adaptation costs (IT and gateways)

This business, as a whole, seems to be risky. The profitability is low and uncertain. But, if we consider this activity as an intermediary business model, it is an interesting way to finance and master the necessary investments to commercialize advanced services: the operation allows, with a limited investment, to create a strong commercial link with an important customer base.

6.4. Fixed access operator as residential gateway operator with additional fragmented hot spot operators

6.4.1. Scenario Description

In this model the Mobile Access Operators are also Mobile Service Providers and Fixed Access Operators are also Internet Service Providers (mobile access operator=mobile service provider and internet service provider=fixed access operator).

There is no MVNOs in this model.

We distinguish between public sites (hotels, airports, restaurants....) and residential sites (household) for hot spot operators; it brings to two different types of hot spot operators: public hot spot operators (PHSO) and residential hot spot operators (RHSO).

Indeed, pure Wi-Fi operators (in Italy Megabeam or Freestation) have placed their hot spots in public sites like airports, restaurants etc....but not in the houses of residential ADSL customers. They act like public hot spot operator (PHSO), indeed. On the other hand, Fixed Access Operators have clearly an advantage offering residential hot spots and they can act like Residential Hot Spot Operator (RHSO) offering to their ADSL customers the opportunity to place a hot spot in their homes. Indeed, in Italy Fastweb and Telecom Italia have already done that. It appears that the players are very different depending on the location of the hot spots; therefore it seems correct to identify two distinct roles: PHSO and RHSO.

Consider a situation in which the Fixed Access Operator is not integrated with the Mobile Access Operator and the PHSOs are pure Wi-Fi operators. In Italy, this situation is represented by a Fixed Operator like Fastweb, a Mobile Operator like Vodafone and pure PHSOs like Megabeam and Freestation.

• Fixed access operator and mobile access operator, in order to offer Wi-Fi integrated services, perceive PHSO and RHSO as key players.



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• Considering that most of the Wi-Fi connections are made from hotels and conference halls (60%) fixed access operator and mobile access operator are interested on PHSO.

• Mobile Operators are more likely to build their Wi-Fi network mostly through roaming agreements (acting mainly as aggregators), or relying on aggregators.

• Mobile Operators are well positioned to offer WLAN services since they have a longstanding relationship with the mobile customer, a great experience in signing roaming agreements and managing mobility, customer care systems and marketing influence.

• PHSO are willing to stipulate agreements with fixed access operator and mobile access operator given that they can benefit from fixed access operator and mobile access operator’s users. Megabeam has already adopted this strategy. It has signed roaming agreements with Vodafone and Telecom Italia for the use of its hot spots).

• The number of users pledged by the operators affects the bargaining power of PHSOs. This justifies the current attempt of operators to stipulate business agreements in order to benefit in the negotiation from a bigger base of users (i.e. Vodafone and Fastweb).

RSO

V-user MSP=MAO

RHSO FAO

Aggregator

Intern

ISP

Physical connectivity servic

Business relationships and

PHSO PSO

Figure 15. Non-integrated operators manages OBAN residential gateways

• Fixed access operator (OBAN operator) acts as:

1. internet service provider (since we’ve assumed no virtual operators)

2. RHSO offering Wi-Fi infrastructure through incentives to share the bandwidth

• Mobile access operator acts as:

1. mobile service provider guaranteeing 3G coverage when Wi-Fi coverage is not available

2. Aggregator (through roaming agreements with PHSO operators) to increase the number of hot spots their customers can access.

6.4.2. Roles

In order to discuss business aspects of OBAN we propose a role model featuring the following roles:

• Residential Hot Spot Operator (RHSO). It controls the configuration and operation of the residential gateway (in homes or offices).



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• Residential Site owner (RSO). In addition to provide housing of the RGWO, is an Internet customer.

• Public Hot Spot Operator (PHSO). It controls the configuration and operation of the gateway placed in public places (bars, airports, hotels).

• Public Site Owner (PSO) Provide housing of the PHSO.

• Visiting user (VU). A user different from the site owner that accesses services available at the residential gateway.

• Mobile service provider (mobile service provider). It offers publicly available mobile services (e.g., speech, messaging, multimedia, Internet access).

• Internet service provider (internet service provider). It offers Internet services available over fixed or dial up access.

• Mobile access operator (mobile access operator). It operator of wireless access networks that can be used for providing mobile services.

• Fixed access operator (fixed access operator). Operator of fixed access (e.g. DSL) networks.

6.4.3. Services

We focus on the needs of businessmen.

• “Mobile Office” service, which entails communication services (voice and video telephone and conference, SMS, personal location) and specific services (narrowcast business TV, device synchronization).

• Traditional internet services as.

o Financial services

o Information

To perform these services it is required:

• Wi-Fi “public” coverage (in public site like hotels, cafe’, airports)

• Wi-Fi “residential” coverage. The coverage is guaranteed by households

• Mobile network (3G/GPRS) when Wi-Fi coverage is not available

Indeed, operators have a particular attention to communication and data services to private companies. British Telecom offers a Mobile Office offer to Nortel Networks vendors and this gives the vendors the chance to connect Internet, read mails, and take advantage of all business application (in the office or at home through broadband fixed network, in nomadic through hot spot owned by British Telecom, in mobility through GPRS). This service raises vendors’ productivity and British Telecom cares about implementation and maintenance of the solution, offering a unified billing.

6.4.4. The value proposition

Visited user:

• Switching from a mobile conversation to an OBAN residential gateway to perform wireless voice communication or video communication with file sharing

• Give priority to his OBAN operator when starting the communication avoiding roaming charges

Home user:

• He gets the same benefits of the visited user

• Possible compensations from the fixed access operator

Fixed Access Operators (OBAN operator):



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• The fixed access operator has clearly an advantage to capture all the residential Internet users, to offer Wi-Fi (may be through subsidization) to be one of the relevant Residential Hot Spot Operator and to act as a service provider.

• The fixed access operator is also able to pay back on the base of the “external” usage of the bandwidth. This opens a possibility for future agreement. Therefore, Fixed Access Operators can act like Residential Hot Spot Operator.

Indeed, today Telecom Italia has already extended its offer, proposing their residential ADSL users to install a Wi-Fi hot spot for having Wireless Internet at home. Fastweb is going to do the same

Public hot spot operators and aggregators:

• Benefit from the agreements stipulated with mobile access operator and fixed access operator enjoying a bigger user base.

6.4.5. Market

We assume a national market in urban areas. Therefore the offer will be targeted to the businessmen who travel in the national territory mainly in urban areas.

The target group of the fixed access operator (OBAN operator) is broadband users living in residential urban areas. The residential service operators market is pre-empted by fixed access operator that can easily assume control on the residential hot sport operators market. They have to take the risk of investing providing the hardware and by offering incentives to the residential service operators.

The fixed access operator will face the competition of the mobile access operator that instead of trying to make Wi-Fi a substitute product of the mobile phone, will try to exploit all the complementarities between these two communication devices.

The Mobile operators:

• Well positioned to exploit all the complementarities between Wireless technology and 3G. This is done by offering “Mobile Office” services, which relies on technologies for mobile data transmission (GPRS/UMTS) and offering nomadic data transmission (Wi-Fi) to guarantee business applications “in mobility”. The OBAN provider could imply a growth of Wi-Fi technology supported by roaming functionalities that could lead to cannibalization with 3G technology.

• Adding Wi-Fi service to the product mix would be a natural extension, since WLAN services could be easily bundled with voice and data services (and the consumer will benefit from integrated charging and billing system and mobile company expertise on security)

• Mobile Operators can rely on their networks when there are Wi-Fi coverage holes

• Mobile Operators are well positioned to offer WLAN services since they have a longstanding relationship with the mobile customer, a great experience in signing roaming agreements and managing mobility, customer care systems and marketing influence

Indeed, today we already have examples of integrated 3G (or GPRS)/Wi-Fi offer that support our assertion (Vodafone, T-Mobile).

6.4.5.1 Competition and regulation

The Wi-Fi market is full of start ups because hot spot operators enjoy a low barrier to entry. In Wi-Fi, no spectrum protection exists, and as in the internet service provider space, anyone with a bit of capital and entrepreneurial initiative can compete in the service provider value chain. As already said, Wi-Fi has a very limited range. Wi-Fi users today are forced to either maintain accounts with each of the hot spot operators they encounter in their travels or type in their credit card number each time they want to connect. Characteristic of the hot spot industry is fragmentation and very low barriers to enter.

The competition is driven by the ability to acquire customers guaranteeing coverage. Therefore, the player with high coverage and big installed base are the dominant player i.e. fixed and mobile operators.

Summing up:



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• Low regulation

• Low barriers to enter due to cheap hardware and technology easy to acquire.

• Fixed and mobile operators are the dominant players

6.4.6. The income/cost structure

• Income. fixed access operator (OBAN operator) offering an integrated product like Mobile Office plus additional services relies on a flat rate in order to exploit the simplicity of the offer being aggressive. In order to stimulate, the growth of the network coverage, fixed access operator puts in place a scheme of incentives for the RHSOs in order to capture more residential users willing to share the network. This can be done by offering the technology or through compensation on the usage. In order to put emphasis on the substitution effect between 3G and Wi-Fi, fixed access operator puts in place incentives to connect through the Wi-Fi. Guaranteeing higher level of quality can do this. Another alternative could be the subsidization of Wi-Fi devices (mobile 3G/Wi-Fi).

• Costs. Network cost, acquisition, maintenance and customer care are the fundamental cost items. However, especially at the beginning, fixed access operator bears the cost of subsidizing the use of the Wi-Fi through devices offers and reduction of fee for the users willing to share access.

6.4.7. Assessments on the model

In a competitive equilibrium given the previous assumptions, two platforms compete on the relevant market (national urban areas-businessmen)

• fixed access operator (OBAN operator) offer the voice over Wi-Fi and the Internet access trying to cannibalize the 3G and uses the agreements with the PHSO to enlarge the coverage of the offer

• mobile access operator tries to exploit the complementarities between 3G and Wi-Fi by agreements with the PHSOs

The price competition for the market is fierce and both the platforms can create a Wi-Fi coverage either through agreements (mobile access operator) or through the RHSO (fixed access operator). In different ways, the Wi-Fi is a change for both to enlarge the coverage, enrich the mix and therefore compete on the relevant market.

The platform will either exploit the complementarities either the substitution effect created by the OBAN service.

The competition for the market is expected to drive price down. Fixed access operator (OBAN operator) to offer a competitive product must create sufficient network coverage and guarantee quality of the product. In this way, businessmen perceive the alternative solution as an opportunity and the switching (or substitution effect) is accelerated.

However, the creation of a sufficient network coverage and quality level could be a difficult task given the difficulties to stimulate adoption to enlarge the network (acquisition cost and marketing costs), to sustain adaptation costs and maintenance costs. The landscape with many operators and low barrier to enter can in some way facilitate the expansion of the coverage.

Overall, the cost of the OBAN investment seems big and the risk high given the fierce competition of mobile access operator faced. mobile access operator by upgrading the mobile offer with the Wi-Fi can easily and with low additional cost exploit the complementarities. Fixed access operator (OBAN operator) to stimulate a substitution effect resulting in higher cost making the investment riskier. The complementarities effect seems to play a significant role at the beginning making the investment fragile and highly conditioned on the ability of expanding the network coverage.



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6.5. Mobile access operator operates the RGW

6.5.1. Scenario Description.

The incumbent mobile access operator is a natural candidate for operating an residential gateway. In this scenario we therefore consider such an actor that seeks to seize the opportunity OBAN technology offers in order to offer WLAN-based wireless mobile services. We further consider that there is a commercial and open interface between the mobile access operator and the mobile service provider. This is then a continuation of the regime that is largely enforced in Europe towards the incumbent operators. The technology is assumed to offer integration between WLAN and 3G e.g. based on UMA-specifications.

Mobile service providers connect to access points in the mobile access provider’s domain, and are offered full mobility handling, including a distributed directory system and the possibility for fast hand-over. The mobile access operator buys fixed access services from the fixed access operator in order to produce it’s own services. As in the previous case, the fixed access operator can offer several logical channels over a single physical interface, each with separate quality and security guarantees. These are terminated in suitable circuit-terminating equipment outside the residential gateway. Whether the mobile access operator uses one such channel for each mobile service provider connected to its network, or prefer to tunnel the connections inside one channel, is a technical question that should be resolved, but which is not included in this discussion. As long as the quality and security can be handled similarly, we consider both alternatives here to be equivalent. In both cases, there may be more than one mobile access operator present with an residential gateway at the same termination-location, since several mobile access operators can rent separate virtual channels within the same fixed access line to the residents premises.

6.5.2. The value system

In order to describe the business scenario, we use the same set of roles as in the previous section. The business relations are different, however.

Home-user

Visitinguser

MobileSP

RG- operator

Fix Acc operator

Mob Accoperator

GSM/ UMTS

Internet

InternetSP

Figure 16: Mobile access operator manages the residential gateway

6.5.2.1 Services

We summarise the services that are delivered between the actors in the value system in the table below.



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To

From Home user

Visiting user

mobile service provider

internet service provider

mobile access operator fixed access operator

Home user

Site rental

Visiting user

mobile service provider

Mobile services

internet service provider

Internet services

mobile access operator

Mobile access services, including mobility handling

fixed access operator

Fixed access services, including service differentiation and QoS guarantees

Fixed access services, including service differentiation and QoS guarantees

Table 4: Services between actors in the mobile access operator/RGW case

The main difference between the Internet services offered by an internet service provider and the mobile services offered by an mobile service provider is that mobile services supports terminal mobility aspects such as roaming and session mobility. In other aspects they may be very similar. An internet service provider might for example offer a voice service that is available to the home user over WLAN. As long as this service is available only on a given access point, it is considered as a fixed service. Also, fixed services will typically have higher capacities available, such that the service spectrum will be different (e.g. covering HD-television and video rental).

6.5.2.2 Value propositions

The value propositions of this model are very similar to the ones of the fixed access operator case (6.2.2.2). In particular, the services seen by the end-users are the same. The main differences are with respect to the fixed access operator and the mobile access operator, so we will focus on these in the following.

Fixed Access Operator

The fixed access operator sells the fixed access resources to up to several service providers. Thus, in this model several service providers can get access to the same area (home/business) by sharing the broadband capacity with other service providers. The fixed access operator can get more money by selling the access resources separately in smaller chunks.

Mobile Access Operator (mobile access operator):

The value for the mobile access operator is twofold. Firstly, it may be cheaper to offer mobile data and multimedia services by using OBAN technology than UMTS technology, at least in certain demographic areas. Secondly, OBAN technology may offer the possibility for higher capacities than 3G. This will increase the value of the access network, leading to increased revenues for the mobile access operators.



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6.5.2.3 Market

As for the previous case (fixed access operator case) the market is distinguished into service provider and customer groups.

Customer groups:

The initial target group is broadband users living in urban and suburban areas. In these areas it is expected the highest penetration of potential OBAN users both as outdoor by passers and indoor frequent Internet users. The residential market is the targeted market in the first phase.

Service provider groups:

The fixed access operator must take the risk of investing in an RGW-based radio access network infrastructure. Access to this will then be offered to service providers. In the case of fixed partitioning of the DSL bottleneck resource, service providers can be charged on a flat rate basis. If statistical sharing of this resource is allowed, a usage-based scheme should be employed. Real time traffic must be prioritized across the service providers based on a well-defined and agreed policy.

Each service provider will be offered a virtual tunnel, which the service provider may encrypt, based on its own security mechanism. The policy mechanism in the RGW and the end GW for upstream traffic must be able to police the traffic. If excess traffic is sent either way the fixed access operator may allow it to enter the network for extra charge.

6.5.3. Technical support

The technical solution for this model is also very similar to the fixed access operator case in section 6.2. If the mobile access operator (as the fixed access operator in the fixed access operator case) has the possibility to split the physical RGW up into virtual RGWs several service provider may have direct access to the customers. No full re-authentication is needed when moving between AP within the same domain. The customer is always within its own service provider domain. If the customer moves into an area where its own service provider is not present, roaming agreements is needed for the customer to get access to the AP.

The technical solution for mobility, QoS and security is the same as for the fixed access operator case. To be able to route the traffic to the correct service provider directly from the fixed access operator, the fixed access operator needs to have a BRAS that can split the traffic steams to the correct service provider of the users. The fixed access operator that owns the infrastructure will be able to sell capacity on the same fixed access line to several service providers and thereby create more revenue than with a single service provider renting the total capacity.

In this model the mobile access operator will be the entity that configures and controls the RGW, hence selling storage to all service providers that will be linked to it by downloading their foreign agent and security client SW to the virtual RGW storage.

6.5.4. Competition and regulation:

This model will be fair to service provider and different mobile access operator and letting all service providers enter the same market (even the same location) by offering them a storages space on the RGW for customer acquisition. The mobile operators own service provider will be treated in the same manner as all other service providers interested in acquiring access to the specific location. There is of course a technical upper bound on the number of service providers allowed in the each RGW so a fair strategy must be the sought to let service provider access the RGw.

From a regulatory point of view the mobile operator acquires a new wireless network into its portfolio which should not be regulated due to the fairness towards service providers and other mobile access operators. The mobile access operator can rent the fixed access line in the same manner as it rents a leased line to the BTS in GSM and offers the wireless access to several service providers. The open interfaces between the fixed access operator and mobile access operator is upheld.



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6.5.5. Timing

Due to the rapid growth of WiFi solutions and the terminal development it is expected that the usage of WiFi for different types of services will increase rapidly in the coming years. The fight for WiFi spots has already started. It is important for the mobile operator to also take shares of the potential traffic and service delivery in strategic spots from the beginning. The mobile service provider has already entered this market several places, going into the residential and potential business market will only broaden the target field.

6.6. Fixed Internet service provider providing wireless roaming


We consider here that an internet service provider did already introduce some OBAN infrastructure, for example with the “wireless internet service provider community business model”. Therefore he already has an OBAN infrastructure which is available for other businesses.

This business model considers leveraging this wireless infrastructure by making it available for third party operators, like a mobile operator.

6.6.2. Roles

In order to discuss business aspects of this business model we propose a role model featuring the following roles:

• Residential Hot Spot Operator (RHSO). It controls the configuration and operation of the residential gateway (in homes or offices). In our case this is the internet service provider.

• OBAN Site Owner (OSO). They all are internet service provider customers having installed an OBAN infrastructure. They typically are residential, but could be SMEs or shops (semi-public) as well.

• Visiting user (VU). A user, member of the community, but using an access point of another member of the community.

• Mobile Visiting user (MVU). A mobile customer of the 3rd party operator can use this OBAN wireless infrastructure without any additional subscription..

• Internet service provider (internet service provider). It offers Internet services available over fixed access.

• Fixed access operator (fixed access operator). Operator of fixed access (e.g. DSL) networks. It could be paid by the internet service provider for improving QOS by its customers.



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Internet

OBANAggregator

Site owner

BroadbandModem owner

Fix AccessOperator

DSLAM

MobileISP

Mobile AccessOperator

Access Pointowner

Physical connectivity servicesBusiness relationships and money flows

Visitingusers

Fix ISP

InternetInternet

OBANAggregator

Site owner



Fix AccessOperator

DSLAM

Fix AccessOperator

DSLAM

MobileISP


Access Pointowner

Access Pointowner

Physical connectivity servicesBusiness relationships and money flowsBusiness relationships and money flows

Visitingusers

Visitingusers

Fix ISPFix ISP

Figure 17: Internet Service provider as residential gateway operator I

6.6.3. Services

We focus on the needs of a third party operator:

• Communications using mobile network are more expensive

• In-house cellular coverage is not as good as outdoor coverage, especially at higher frequencies

• Fixed wireless accesses have broader bandwidth

This service can be offered for example to mobile operators or fixed wireless operators outside home country.

To perform these services it is required to provide:

- Wi-Fi “residential” coverage. The coverage is guarantee by households, resp. shops or semi-public locations.


The Mobile Operator:

• saves a lot of money compared to having to build the fixed wireless infrastructure on its own.

• improves its offer, and more particularly the network coverage and bandwidth at some conditions

• reuses its investments in the mobile network by transferring part of the traffic to the fixed network.

The (Mobile) Visiting user gets

• wireless voice communications, he can access Internet through their profile from any access point of the community, etc with no additional charge

• complementary coverage to its subscription

The OBAN internet service provider (providing a roaming agreement):



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• leverages its OBAN investment The internet service provider can negotiate a higher roaming price because of the complementarities, the network coverage and the savings of the 3rd party operator (thanks to this agreement) it can provide.

• gets additional revenue

6.6.5. Market

• Fixed wireless communications provided by OBAN are very complementary to mobile communications, mainly when considering in-house access and larger bandwidth.

• Market of “service over IP” is developing against “older technologies”. Then fixed communications (wireless mainly) will compete against mobile communications.

6.6.5.1 Competition and regulation Network providers will be in competition between each-other for providing roaming services. Regulation seems not to be an issue if we except regulation considering the type of voice service that is provided.


Roaming agreement charging could be made on a similar way as roaming for mobile communications. Nevertheless a flat rate could be negotiated as well with the 3rd party operator.

The level of rate should still be evaluated considering that this extends network coverage (then the service), this reduces the load on the mobile network and this allows using other services requiring larger bandwidth.


The situation here is very similar to the mobile communication situation.

6.7. Building wireless Internet service provider community


OBAN requires some installation at home. The best-positioned actor for pushing this installation is the Internet service provider because he knows its customer and can easily offer him some compensation. In this case the compensation is the possibility for its customer, member of this wireless Internet service provider community, to go to any of the community member, or even to move seamlessly from one to the other. Through the given access the user may then possibly be offered a service that keeps its profile with email services, preferences, etc.

6.7.2. Roles



• Residential Gateway Owner (RGWO).

• Residential Site Owner (RSO). In addition to provide housing of the RGWO, is an Internet service provider customer. He’s an active (=> VU as well) member of the community.



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• Semi-Public Site Owner. In addition to provide housing of the RGWO, is an Internet service provider customer. He can be an active (=> VU as well), or passive (for leveraging its core business and allowing its clients to use its wireless infrastructure) member of the community.

• Visiting user . A user, member of the community, but using an access point of another member of the community.


• Fixed access operator . Operator of fixed access (e.g. DSL) networks. It could be additionally paid by the internet service provider for improving quality to its customers.

OBAN Aggregator


Mobile ISP

InternetInternet

Site ownerSite owner

Fix AccessOperator

DSLAM

Fix AccessOperator

DSLAM

Fix ISPFix ISP



Business relationships and money flowsBusiness relationships and money flows

Visitingusers

Visitingusers

Access Pointowner

Access Pointowner

Figure 18: Internet Service provider as residential gateway operator II

6.7.3. Services

We focus on the needs of internet service provider customers, mainly techno-freaks first, but extending to “mobile communicators”.

• These people are very mobile

• They possibly belong to a specific community (e.g. with same hobby, or collaborating work)

• The “passive community members” are mainly coffee shops or service business (hair cutter, doctor, …), typically considered as “semi-public areas”.


• Wi-Fi “residential” coverage. The coverage is provided by households, resp. shops or semi-public locations


For the visiting user:

• wireless voice communications, access Internet trough their profile from any access point of the community, etc without additional charge



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For the home user:

• easy to provide access to the visiting user (Note: This is not a value for the home user)

• possible incentives from the internet service provider

• he can be a visiting user as well

For the internet service provider operator (OBAN operator):

• The internet service provider operator offers more to its customers and reinforces the network effect. Therefore it improves its position in the market

6.7.5. Market

The market is mainly formed by travelling/mobile people, techno freaks and SMEs, all clients of the Internet service provider and using WLAN devices. Such a service will reinforce customer retention. In addition, some new community could be interested to get the service with all its members becoming customers of this Internet service provider. All that will reinforce the position of the Internet service provider in its market and prepare a new wireless infrastructure for future businesses.

6.7.5.1 Competition and regulation There is no regulation problem for such a business model, except if some specific voice services are provided (but this is independent of the business model).

Other Internet service providers could apply similar strategies, and become competitors, or partners if collaboration agreement is set up to improve network effect.


The additional income for that service can not be very high. It will more be a measure to maintain subscription prices at a certain level. This service will help to have more customers, continuing to pay more for Internet access, and a lower churn rate.

Costs are related to installation of RGWO as well as login process and possibly upgrading network with QOS capability. These costs will be shared with other (future) business models.

6.8. Improving mobile communication services


OBAN requires some installation at home and this will be very difficult for a mobile operator to provide. The reason is that a mobile operator does not know the fixed customers who must update their in-house installation.

Nevertheless, fixed wireless technology is very attractive for mobile operators for: extending their network coverage in-house, transferring mobile traffic to fixed infrastructure.

In such a situation, the best for a mobile operator would be to make a deal (e.g. a roaming agreement) with an internet service provider having built an OBAN network.

6.8.2. Roles





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• Residential Gateway Owner (RGWO).

• Residential Site Owner (RSO). In addition to provide housing of the Residential Gateway operator, is an internet service provider customer. He’s an active (=> VU as well) member of the community.

• Semi-Public Site Owner (SPSO). In addition to provide housing of the Residential Gateway operator, is an internet service provider customer. He can be an active (=> VU as well), or passive (for leveraging its core business) member of the community.

• Visiting user (VU). A user, member of the community, but using an access point of another member of the community.

• Mobile Visiting user (MVU). A mobile customer of the 3rd party operator can use this OBAN wireless infrastructure without any additional subscription.


• Fixed access operator: Operator of fixed access (e.g. DSL) networks. The Internet service provider for improving quality of service by its customers could pay it.

Fehler!

Figure 19: Service provider as RGWO III

6.8.3. Services

We focus on the needs of mobile customers:

• These people are very mobile but often loose connection in-house because the mobile network does not cover in-house areas.

• They have always more sophisticated devices always allowing more powerful applications but requiring more bandwidth which overcharge the mobile network. Then, using fixed wireless access would make some applications more efficient and less expensive.


• Wi-Fi “residential” coverage. The coverage is guaranteed by households, resp. shops or semi-public locations

• Dual mode devices (mobile + WLAN)



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The Mobile Operator:

• saves a lot of money compared to having to build the fix wireless infrastructure on its own.

• improves its offer, and more particularly the network coverage and bandwidth at some conditions

• reduces its investments in the mobile network by transferring part of the traffic to the fix network.

The (Mobile) Visiting user gets

• wireless voice communications, he can access Internet trough their profile from any access point of the community member, etc with no additional charge

• complementary coverage to its subscription

The OBAN Internet service provider:

• leverages its OBAN investment The internet service provider can negotiate a higher roaming price because of the complementarities, the network coverage and the savings of the 3rd party operator (thanks to this agreement) it can provide.

• gets additional revenue

6.8.5. Market

Fixed and mobile access are always more competing against each other. It is expected that, in the future, offers will combine both in a complementary way.

6.8.5.1 Competition and regulation There is no regulation problem for such a business model, excepted if some specific voice services are provided (but this is independent of the business model).

This business model will improve the competitiveness of the mobile operator by being involved in that segment and by avoiding (or reducing) competition of fix wireless competitors.


Cost savings as well as price reductions could be offered to mobile customer thanks to discharging the load of the mobile network. This is an optimization process.


The network coverage is a key issue for mobile communication. Therefore the network coverage extension with fixed wireless infrastructure is the ideal way to improve mobile network services.

6.9. An Integrated Operator develops customers’ loyalty

6.9.1. Important Assumptions

The OBAN operator is an "Integrated Operator", which means it is at the same time a Fixed Access operator, an internet service provider and also a mobile Access and Service operator. The OBAN Voice and Internet Access offer is used as a mean to build its UMTS and DSL customers' loyalty and a way to complete the control of their Telecom budget. Therefore, this case deals mainly with customers' loyalty and offer’s complementarities.

• Voice and Internet Access are not offered separately :



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o The OBAN market is already quite narrow: the possible customers' bases are geographically and commercially limited (OBAN has such strong competitors as UMTS).

o Price-wars and the development of abundance or unlimited offers lead to a dramatic and lasting trend of voice-only services value decrease

o In a technological context of voice and data integration, the separation between both offers may at least look artificial; at worst, considering the development of VoIP solutions like Skype, it may be risky.

o Considering the customers' new practices trends, it is commercially essential to let them very simply switch over from data to voice communication, and to give them the opportunity to simultaneously use both communications means.

• The offer is restricted to the densest areas

o On the one hand, one of the most important OBAN success factors is the ability to guarantee from the start a very good quality of service in the areas where OBAN is announced to be working. Indeed, coming after the UMTS solutions and having far more limited financial and media means, OBAN must rely on an awesome image to win market shares and maintain them. The bigger the network’s coverage is, the more difficult it will be to maintain a high standard of quality.

o On the other hand, the bigger the network’s coverage is, the more the density of population decreases. More and more gateways are necessary to deliver the service, and the economic efficiency decreases. That is the reason why we consider the OBAN operator maximizes its success opportunities if it only targets the densest areas. Looking at the French geographic and demographic context as an example, we concluded that covering 15% of the population would be a reasonable objective. Of course, this figure might be different in other countries.

• The "OBAN network club"

Building the OBAN network presents many particular difficulties: gateways belong to customers (or at least are installed in their private home) and are not dedicated to this exclusive use; they also may be put in inadequate premises. As a consequence,

o The network coverage may constantly change, because of customers' cancellations or removals

o The network adaptation capacity may be difficult to manage (The customer's agreement or availability may be a factor of delay)

If we also consider that:

o The geographic assessment of the customers needs is complex and demands much flexibility and reactivity

o The site owner of the gateway must be involved in the device's maintenance (keep the gateway opened and working, report problems, welcome a maintenance team...)

o The installation costs may be high : displacement of a technician, installation of a signal amplification system

Then, it may be interesting to more deeply involve the site owners, in order to guarantee the permanence of the OBAN sites and the minimal network coverage of the opened area. Consequently, both business models rely on the creation of a "OBAN network club", whose principle is: according to the geographic coverage needs, the OBAN operator chooses in its gateway database a few customers and offers them a deal: if they engage themselves to pay a symbolic fee, open the gateway, facilitate the service maintenance, and stay a member of the club during a year renewed by tacit agreement, they can benefit from the OBAN services the same way the future "normal" customers will. These special customers are real "network partners", as they contractually agree to actively contribute to the network reliability.

From the operator's point of view, this deal must be considered as a network or quality investment:

o Productivity is improved: repetitive installation costs in the same area are avoided; Planning works are made easier.



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o But as any investment, it must also be made profitable: the operator has to be commercially efficient to reach the coefficient of network occupation which allows covering the advantages granted to the members.

• The Business Model are autonomous, but also temporal

The idea is to build a balanced business model around well known services, easy to conceive and implement: voice and Internet Access services. This activity will finance the development of the network and commercial structures necessary to build a new business model around more innovative and potentially more profitable activities.

6.9.2. Introducing the idea behind the business model

Contrary to the model in 6.3, the OBAN operator holds a mobile business and manages convergent services, which can be used with any kind of device. This operator is also able to build a unique service device policy. On the other hand, as it has got a mobile customers' base and a 3G licence, it wants to make the best use of them. As we consider that the "Bill and Keep" system (which neutralized the mobile-mobile call terminations) no longer exists, the integrated operator has not got anymore any advantage to proceed the traffic toward the mobile customers.

Technically speaking, nothing prevents the integrated operator from choosing the fixed access operator strategy (target the competitors' mobile-only customers), but it might not be the best solution, commercially speaking:

• it might better try to develop customer loyalty :

o enrich the services offered to the gateway owners

o try to be the customer's unique Telecom service provider

• it will prevent the UMTS customers' base cannibalization :

o practicing a "top of the line" policy, and not offer the OBAN unlimited voice and Internet Access offers to customers using only a cheap UMTS flat rate offer

o presenting OBAN as UMTS complementary service

o Not targeting aggressively the competitors "mobile-only" customers : it would destroy the mobile market value, as those competitors would counterattack the same way

• It will promote the OBAN value by underlining the importance of convergent services

This second business model has also indirect aspects which are difficult to quantify without precise context, but which can be decisive:

• its UMTS offer will be more attractive : OBAN may be a sales point to convince the customer

• its DSL and gateway offers will be more attractive

• its customer's loyalty will increase

6.9.3. Service’s description from a customer's point of view

• The customer has:

o An unlimited voice calls service toward fixed lines

o Low price calls toward mobile phones: the call termination only is charged

o High Speed Internet Access.

• He can at the same time use the voice and the Internet service (using for example at the same time a phone and a PC)

• On a pay per use basis, he can use traditional Telecom services such as SMS, MMS, video teleconferencing, personal pages, information services, ring tones.



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• OBAN works on any Wi-Fi device; a Wi-Fi/3G device is better for this service; a dedicated device is not necessary

• Thanks to the hand-over procedure, a vocal communication or an Internet session is not interrupted when a moving customer goes from one OBAN cell to another (adjoining) one

• The handover between the OBAN network and 2G or 3G networks:

o when the customer leaves an OBAN area, his communication (or Internet session) can be routed on the 3G network (if this is a 3G area, and the customer agrees to pay the 3G tariff)

o when the customer enters an OBAN area, his communication is automatically routed on the OBAN network

• The OBAN services can only be used in the covered areas (mainly big cities and their suburbs), whose opening has been publicly announced.

• The "network club" case: its members benefit from the same advantages as the other customers.

This service proposal should be technically evaluated by WP2 in order to be sure it is feasible.


• For the Home user and the visiting user :

In short:

"My privileged operator rewards my loyalty by freeing my telecom consumption: for a marginal cost in my budget, I benefit from high-tech services, with unlimited voice calls (toward fixed phone) and Internet High Speed access, at home and in mobility situation"

Thematically:

The value proposition has several aspects; the most important are:

- Abundance :

o Calls toward the fixed lines are unlimited

o Internet access is unlimited, even when the customer is mobile

- Service :

o Integrated services :

Automatic traffic shifting between the different network solutions: the operator always selects the best technical (and financial) solution for you

All the operator services are available on all its devices

Unified tariff

o Advanced services available in mobility context

The other ones are:

- Mobility

- Bandwidth

- Ergonomics: The subscriber can use the OBAN network with different devices at the same time

• For the integrated fixed access operator-internet service provider-Mobile actors :

As they are at the top of the chain value, there are not customers in any way, so there is no value proposition for them.

• For the other actors:

As they are competitors, there is no value proposition for them in this business model.



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6.9.5. Market segment

The customer's profile

• At the beginning, he already belongs to the customers' base of the integrated operator : he is either a High Speed Internet customer, or a mobile customer, or both

• He is interested in having a cheap High Speed connexion in mobility context

• He has an important Telecom budget, and he is ready to trust this budget entirely to his operator

• His state of mind gives more value to the improvement and simplification of his communication system than to the optimization of his budget

The commercial target

• The integrated operator sells its 3G offer to its High Speed Internet customers

o The customer takes at least a 3G middle range offer ;

o he takes an OBAN flat rate offer linked to his 3G offer ;

o he opens his gateway to the OBAN traffic

o The Wi-Fi device is not subsidized by OBAN

• The integrated operator sells its High Speed offer to its 3G customers

o The customer takes a fixed High Speed access and a gateway, and a VoIP offer

o he takes an OBAN flat rate offer linked to his 3G offer ;

o he opens his gateway to the OBAN traffic

o He can't cancel his UMTS offer without cancelling his OBAN offer.

• The integrated operator upgrades its "double" (High Speed & mobile) customers:

o High Speed Internet Customers moving from 2G to 3G offers

o 3G Customers choosing a DSL offer with a higher bandwidth

o 3G Customers taking a gateway

The technical target: the "network club" members

The operator recruits them among the customers with the highest bandwidth (and also equipped with a gateway), so that they are not very sensitive to the effects of the gateway opening.

6.9.6. Value Chain

In this scenario, an integrated operator has built strong positions in the different Telco’s business: fixed access, mobile, internet service provider. Thanks to this, it manages to offer integrated services, i.e. services which are independent from a specific network and available on different kinds of devices. It also controls the residential gateways. That kind of operator has all the necessary skills to offer a complete OBAN service.



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Figure 20: Integrated operator operates the residential gateway

The integrated operator may be in competition with other integrated operators, or with actors specialized in one role.

6.9.7. Technical considerations

6.9.7.1 Main Technical Scenario The technical scenario is the same as for the fixed access operator case, apart from the 3G hand-over case. The scenario was built up using OBAN architecture described in D5 [1] and D27 [2], and from the requirements concerning the 3G integration expressed in deliverable D7 [3].

The initial technical steps to use the OBAN Wi-Fi network are identical to the ones described in paragraph 6.3.7. A fifth step has to be considered for the Wi-Fi/3G integration.

5. Wi-Fi/3G Hand-over case

When OBAN Wi-Fi coverage is not available, umbrella cells, based in particular on UMTS cells can provide continuity of service. Implementation of this hand-over case is not described yet in WP2 since the technical studies will begin by the end of 2005.

6.9.7.2 Technical means The following figure shows a possible integration of OBAN Wi-Fi architecture and a 3G network for an integrated operator, as foreseen by the Unlicensed mobile access consortium:



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Figure 21: Coupling of WLAN and cellular system (a foreseen architecture by UMA) for an integrated

operator (source: D7)

This kind of architecture could match the need for an OBAN integrated operator. However, more detailed technical results from WP2 are expected for the end of 2005.

Equipments are needed to perform the Wi-Fi OBAN service are identical to the ones described in paragraph 6.3.7. In the case of an integrated operator, extra equipments have to be considered:

• Existing cellular infrastructure is used to offer 3G coverage when the Wi-Fi coverage is not available.

• Specific elements may be needed in order to enable a Wi-Fi/3G hand-over: the 3G integration studies may provide some inputs about these elements.

6.9.8. Strategic approach

The strategy, again, has two important and autonomous stages:

• The building stages: building the OBAN network and deepening the commercial relationship with the present customers' base

• Widening the commercial target to all the "service-centric" customers, thanks to service advanced offers. It is a typical intermediation business model, which won't be studied in this document.

The strategy

OBAN will be offered to the customers in very specific cases:

• when the customer decides to give his whole telecom budget to the operator :

o a Fixed access High Speed Internet customer becomes also an UMTS customer

o a UMTS customer becomes also a High Speed access and gateway customer

• when an already completely controlled customer rises in range :

o getting Higher Bandwidth

o Moving from a 2G to a 3G subscription

The objectives

• have a complete control of the telecom customer

• increase the customer loyalty

• Increase or at least maintain the ARPU by developing the customer's service portfolio



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• Defend or promote the UMTS

• Develop the integrated services use and value

6.9.9. Incomes structure

An income structure based on a clear and simple offer:

• a monthly flat rate contract offering unlimited High Speed Internet Access and unlimited voice calls toward the fixed lines

• free calls towards the OBAN customers contacted through the OBAN network (on their Wi-Fi mobile)

• a post-paid, price per minute tariff for the calls toward the mobiles: the objective is simply to charge back the calls terminations

• an important extra revenue should come from the traditional Telecom services such as SMS, MMS, video teleconferencing, personal pages, etc… The growth of this kind of revenues should be progressive, and a real marketing effort is necessary to stimulate it.

• The members of the "network club" benefit from the same offer structure, but the flat rate contract price has to be particularly attractive.

The tariffing principles:

The flat rate fee will depend on if:

o it is a marginal a product, which is added to an already expensive offer. Moreover, it is launched as a "customer loyalty" offer: consequently, the tariff can't be very high

o It is really a value-added product, thanks to the integrated services

o The price must be, for some customers or some market segments, more attracting than the UMTS one. But it must not induce a general cannibalization

The potential revenue reserves:

• Increase the amount of the "OBAN network" subscription (without depriving the member from a real advantage). Two possible solutions :

o Globally increase the price for everyone

o Or Increase the tariff according to the seniority of the member

• Make a small profit on the calls toward the mobiles (if unlimited offers toward the mobile do not widespread)

6.9.10. Cost structure

Important remark:

Contrary to the previous model, all customers open their gateway. However, the network filling rate (observed in our simulation) makes it clear that it is not immediately necessary for the OBAN operator to install signals amplification systems for each of those customers' gateways which would require one. That kind of investment is reserved to the "network club" gateways.

The cost elements are the same described in section 6.3.10

6.9.11. Modelling results of the Business Model

This section aims to provide a general idea of expected results considering an OBAN offer following the above business model. Therefore, a rough modelling has been made and the corresponding results are presented in the next paragraph.



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6.9.11.1 Assumptions • period: 5 years

• Actualisation rate : 10%

• OBAN coverage (reached in 3 years): 15% of the population

• Cumulative density : 6845hab/Km²

• OBAN gateways coverage range : 30 meters (354 gateways are necessary to cover 1 Km²)

• Churn rate : between 10% and 15%

• Optional Telecom services are used by 35% of the customers (end of period) and generate a 3€ margin per month

• The flat rate tariff decreases from 25€ to 20€

• Network costs: 7€ / opened gateway (mobility broker ignored)

• - Acquisition costs: 100€ / customer (amplification: 80€; installation: 110€; customers gateway recruitment: 5€). No acquisition cost is taken into account for the "normal" customers' gateways

• - Commercial costs: 18% of the flat rate revenues (members+ customers)

• - Overhead and customer care costs: 3€/month

6.9.11.2 Results • The Business Model seems profitable, but forecasting the customers' migration or conquest movements is

very difficult.

o The Net Present Value is around 30.000 K€, obtained with 400.000 customers

o Around 230.000 customers are needed to reach the equilibrium

• Obviously, the model depends on the integrated operator market share level; our assumption was based on a very optimistic case : 50%

• The profitability is very sensitive to the following parameters:

o Migration and conquest dynamism

o UMTS tariff structure

o Gateways filling rate

o Acquisition costs

o Adaptation costs

As a whole, the Business Model seems financially and commercially attractive for a big integrated operator. Moreover, considered as an intermediary model, it seems an interesting way to finance the necessary investments for advanced services.

6.10. Other business models

The Wi Fi market is different from the cellular wireless market first and foremost due to the low entry barrier. This is due to low cost equipment and no spectrum protection as for mobile networks as GSM and UMTS. In the Internet service provider space, anyone with a bit of capital and entrepreneurial ingenuity can compete in the service provider value chain. However, Wi-Fi has a very limited range. Wi-Fi users today are forced to either maintain accounts with each of the hot spot operators they encounter in their travels or type in their credit card number each time they want to connect.



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Characteristic of the hot spot industry is fragmentation. As hot spots proliferate, fragmentation will also proliferate, slowing down the market. Due to that the Wi-fi market could expect the raise of an aggregator player. The aggregator handles roaming and access control such that several hot-spot domains to the service provider appear as a single unit.

This section describes some existing business models that are very similar to OBAN. The business cases are based on Wifi and sharing of the capacity of the fixed access line.

6.10.1. Role model

Site-owner

V-user MobileSP

RG-operator

Fix Accoperator

Mob Accoperator

GSM/UMTS

Internet

InternetSP



Aggregator

Site-owner

V-user MobileSP

RG-operator

Fix Accoperator

Mob Accoperator

GSM/UMTS

Internet

InternetSP



Aggregator

Figure 22: Aggregator model, where MSP manages the residential gateways

6.10.2. An example of aggregator: Boingo

As the first and largest hot spot roaming aggregator, Boingo’s mission is to unite Wi-Fi hot spots into a seamless network. Boingo then enables major brands to rapidly offer a powerful hot spot service to their millions of customers. To accomplish this, Boingo created Boingo Platform Services, which includes the leading roaming network of Wi-Fi hot spots and an advanced Wi-Fi client software, all customized and delivered under the carrier’s or internet service provider’s brand.

Boingo’s Hot Spot in a Box allows any Wi-Fi access point to power a commercial hot spot. In the future, every DSL line, cable line, T1, etc., is likely to have a Wi-Fi hub on the end of it. With Hot Spot in a Box, every one of these broadband endpoints would have the ability to be a commercial hot spot. One doesn’t need to operate a café, retail store or hotel to consider the potential of this. One who live in an apartment over a busy street corner and already has a DSL or cable broadband connection could opt to become a wireless Internet provider just by flipping a switch on his Hot Spot in a Box-enabled home Wi-Fi access point. He would get a check at the end of the month for all the users who connected to your network

Boingo has agreements with dozens of Hot Sport Operators (HSOs) across the globe, more than any other roaming provider. The company has built the technology and systems necessary to turn these disparate networks into a single unified experience that can be offered to end users.

Boingo’s client software makes finding and connecting to both private Wi-Fi networks (in the home and office) and commercial public hot spots easy, all under one brand.

In addition to Wi-Fi, Boingo supports wireless wide area network (WWAN) technologies such as GPRS, CDMA technologies, so end users will be able to move seamlessly between Wi-Fi hot spots and wide area networks through a single service.



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Boingo’s client software allows users to access Wi-Fi networks, both private and public, and to connect to WWAN networks when Wi-Fi isn’t available, all through one simple user interface.

In the home or office, Boingo’s profile manager makes connecting to private secure networks much easier.

On the road, the Boingo software becomes a universal pass to Wi-Fi hot spots and WWAN networks. Each hot spot that is part of the Boingo aggregated network is presented to the user uniformly under a single brand (the brand of the carrier that owns the end user relationship). The software knows how to log in to each hot spot it encounters, so all the user sees is a familiar username and password box. Boingo takes care of authentication and verifying that the user is fully connected.

Boingo pays its partner hot spot operators a wholesale fee for each connection generated through Boingo’s dozens of distribution channels, which include laptop and Wi-Fi card OEMs, internet service providers and major carriers. This wholesale fee typically ranges between $1 and $2 per connect day (up to 24 hours for one user in one location). In addition, Boingo provides a marketing bounty of $20-$50 for new customers who use the Boingo software to sign up in one of the HSO’s locations. Revenue from connectivity and sign-up bounties can make a hot spot profitable, but hot spots also deliver significant indirect benefits. High-speed wireless Internet access is an amenity that makes a customer’s visit more productive and enjoyable. It fosters loyalty, increases the amount of time customers spend in the venue and creates the opportunity to sell more goods and services. It also becomes a platform for future value-added services. Boingo has roaming agreements with dozens of hot spot operators, representing over 5,000 public hot spots. Boingo provides its carrier and internet service provider partners a single, turnkey aggregated roaming network that is uniformly branded. Wi-Fi signals in each aggregated hot spot are displayed in the client software using the carrier’s or internet service provider’s brand. For example, when the user opens their laptop or PDA in a Boingo hot spot operator partners, the user will be presented with a live signal branded, “ (Carrier Brand) Wi-Fi”. When the user selects the signal, the software prompts them to authenticate through a username and password or a SIM card, which is passed through Boingo’s back-end systems to the carrier’s authentication systems, and then the user is connected to the network. At no time is the user aware of who the underlying hot spot operator is or what other carriers might also have roaming relationships with that location.

Carriers and internet service provider partners have the option of building their own hot spots or cutting direct deals with larger hot spot operators, while still using Boingo’s aggregation, network monitoring and clearing house functionality to tie their networks together with dozens of other hot spot operators.

There are commercial and regulatory issues to be worked out in sharing or reselling a residential broadband connection. However, it surely represents a step toward OBAN project.

Another existing example: NoCable

The idea for NoCable is to reduce the cost of ADSL repaying entirely the fee to those users that are available to share their connection with three neighbors through Wi-Fi technology. The sharing is obtained through a Wi-Fi access point placed by NoCable; anyway the three neighbors must be included in a radius of 300 meters.

The offer consists of a fee of 18 euro at month for the three users that connect to the hot spot of the neighbor (at whom the fee of ADSL is entirely repaid). This offer represents an important innovation since it lets the residential user become an hot spot operator.

So it could be an important step toward the convergence of public and private hot spots. For the customers it would be a way to reduce the cost of ADSL especially for those who don’t exploit fully the bandwidth of ADSL.

The Telecomunication Guaranteer had nothing to object to that (even if much thought it wouldn’t have been so) motivating that the residential user can be seen like a bar owner or a restaurant owner.



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7. Regulatory issues

In all new development of network concepts with new ways to do business crossing the fixed /mobile borders and altering the use of the private access line one needs to be aware that regulation may apply. Especially for large incumbent operators with dominant market share the regulatory authorities may restrict the way the incumbent can offer services and/or demand openness for other actors to enter the same market on the same conditions. This is due to competition effects and fairness so the big actors do not use their market dominance to sequence small actors off the market or limit the choice of service providers to the customers. This chapter looks into different aspects of deployment of OBAN and points out aspect that may be regulated. This may be the need for legal intercept, clear role definitions and competition aspects. Some concrete remarks to some of the described business models have been given as examples. A special chapter on the French market is given where France Telecom has merged the business units into one legal entity.

7.1. Legal framework

The telecommunication sector in European countries has been through a transition from monopoly to competition. It is a main objective within EU to make this competition effective. It is recognised that in order to achieve this objective, sector specific regulations are needed in a transition period. A packet of directives was passed from the EU commission in 2002 that constitutes the basis for relevant laws in the Member States and in the countries affiliated to the European Economic Area (EEA). The directives most relevant within the scope of this document are:

• Directive (2002/21/EC) on a common regulatory framework (Framework Directive) is setting out the main principles, objectives and procedures for an EU regulatory policy regarding the provision of electronic communications services and networks

• Directive (2002/19/EC) on access and interconnection (Access and Interconnection Directive) is stipulating procedures and principles for imposing pro-competitive obligations regarding access to and interconnection of networks on operators with significant market power

• Directive (2002/20/EC) on the authorisation of electronic communications networks and services (Authorisation Directive) introduces a system of general authorisation, instead of individual or class licences, to facilitate entry in the market and reduce administrative burdens on operators

• Directive (2002/22/EC) on universal service and users' rights relating to electronic communications networks and services (Universal Service Directive) requires a minimum level of availability and affordability of basic electronic communications services and guaranteeing a set of basic rights for users and consumers of electronic communications services

• Directive (2002/77/EC) on competition in the markets for electronic communications services (Competition Directive) is consolidating the legal measures based on Article 86 of the Treaty that have liberalised the telecommunications sector over the years

Generally, market competition is regulated in two ways named ex post and ex ante respectively. In the first case the market is supervised and possible corrective actions are taken in retrospect when illegal situations are discovered. In the latter case the regulations contain a set of rules regarding how actors are allowed to behave in the market and obligations on providers with significant market power (SMP). While the first regime is used in mature markets, ex ante regulations apply to e-com markets in the transition period until the level of competition is regarded satisfactory. 18 product and service markets where ex ante regulation is applicable are identified. These relevant markets are identified in an EC recommendation:

• Recommendation 2003/311/EC on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC of the



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European Parliament and of the Council on a common regulatory framework for electronic communication networks and services

A further explanation of the background for the market definitions is given in an accompanying memorandum.

General comments

A general concern behind the regulatory framework is to promote competition. In this context it means that the OBAN business opportunity should not be limited to actors with significant market power or well-deployed infrastructure. There are no general regulations preventing an operator in one market to enter into another market. On the contrary, as long as it contributes to increased competition, it is regarded advantageous. The important point is that an operator with significant market power in one market should not be allowed to exploit this power to get a competitive advantage in another market. This can be regulated by imposing accounting separation and/or requirements for unbundling of regulated services. This kind of regulation applies only to the operator with significant market power. It is in general not a requirement that the operator is organized into separate business units before doing business in separate markets1.

What kind of regulations OBAN possibly would be subject to, is depending on whether it is considered inside one of the already defined relevant markets. In that case which market, or considered representing a new market.

It is stated in the Framework Directive that “Member States shall ensure that in carrying out the regulatory tasks specified in this Directive and the Specific Directives, in particular those designed to ensure effective competition, national regulatory authorities take the utmost account of the desirability of making regulations technologically neutral.” Since it might differ from regulator to regulator how this ideal aim of technological neutrality is interpreted, one might find different regulations as the result. This question involves an element of subjective judgement.

It is a common understanding among European regulators not to regulate up and coming technologies2 very strongly. One could argue that OBAN should be categorized as an up and coming technology.

The EU directive 2002/22/EC (Universal Service Directive) has regulations that in theory could apply to operators with significant marked power. This is a directive that establishes the rights of end-users and the corresponding obligations on the SMP provider regarding access to (at least)3 publicly available telephony services. Although not very likely, it should be examined whether this obligation possibly could apply in an OBAN network. One could imagine a Home User require a service comprised by the USO definitions through an OBAN network operated by a competitor of the SMP provider. At first glance it seems unreasonable. However, whether this is a potential problem at all, depends among other factors on how what we might call an “OBAN minimal solution” for the Home User is defined. If one can assume that the services in question are comprised by this solution, then it might be no problem. If the OBAN minimal solution regarding the HU is more limited (e.g. speech service is not included), then the situation would need a more thorough consideration. In Norway there is an agreement between the authorities and the operator with significant market power regulating this universal service obligation. The situation may be similar in other European countries. It will periodically be evaluated which services that are comprised by the directive, so it is not evident what could be the consequences for actors with significant marked power in a few years time.

According to chapter 2 the definition reads: "Wireless services for visiting and home users, considering at least WLAN with seamless handover and connection security. Optionally the following access features could be integrated: Public WLAN, mobile (2G+ and 3G), high QOS, authentication and single billing"

1 This applies to both vertical and horizontal leveraging of market power 2 Ref. the concept of ”emerging markets” 3 At retail level 7 markets are defined altogether, 6 related to public telephony service and one to leased lines.



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7.2. OBAN – service or functionality?

A fundamental question could be: Is there such a thing as an OBAN service (primarily from the visiting user’s point of view)? We have a definition in4. However, depending upon how OBAN is realised and the business model chosen, it might also be reasonable to regard the functionality enabled by OBAN as just improved network functionality that the internet service provider/mobile service providers can offer their customers. The answer to the question of service or functionality might have impact on how OBAN should be regulated. To illustrate the point a simple analogy could be drawn to the introduction of cellular systems. Communication via radio transmission systems had been a reality for many years, but the improved mobility in cellular systems was a new feature. It was regarded a totally new service. One could argue on OBAN along the same lines. Will OBAN be perceived as a new service to users or will it be perceived as just enriched functionality to existing services? We are not able to conclude on this, but it is useful to keep in mind because this question is related to the question of business model choice.

7.3. Markets and regulation

The markets subject to sector specific regulations are divided into two levels: Retail and Wholesale level. The short description of the markets is according to recommendation 2003/311/EC:

Retail level

1. Access to the public telephone network at a fixed location for residential customers.

2. Access to the public telephone network at a fixed location for non-residential customers.

3. Publicly available local and/or national telephone services provided at a fixed location for residential customers.

4. Publicly available international telephone services provided at a fixed location for residential customers.

5. Publicly available local and/or national telephone services provided at a fixed location for non-residential customers.

6. Publicly available international telephone services provided at a fixed location for non-residential customers.

7. The minimum set of leased lines (which comprises the specified types of leased lines up to and including 2Mb/sec as referenced in Article 18 and Annex VII of the Universal Service Directive).

Wholesale level

8. Call origination on the public telephone network provided at a fixed location. For the purposes of this Recommendation, call origination is taken to include local call conveyance and delineated in such a way as to be consistent with the delineated boundaries for the markets for call transit and for call termination on the public telephone network provided at a fixed location.

9. Call termination on individual public telephone networks provided at a fixed location.

10. Transit services in the fixed public telephone network.

11. Wholesale unbundled access (including shared access) to metallic loops and sub-loops for the purpose of providing broadband and voice services.

12. Wholesale broadband access.

13. Wholesale terminating segments of leased lines.

14. Wholesale trunk segments of leased lines.

4 According to chapter 2 the definition reads: “Wireless services for visiting and home users, considering at least WLAN with seamless handover and connection security. Optionally the following access features could be integrated: Public WLAN, mobile (2G+ and 3G), high QOS, authentication and single billing”



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15. Access and call origination on public mobile telephone networks, referred to (separately) in Annex I(2) of the Framework Directive in respect of Directives 97/33/EC and 98/10/EC.

16. Voice call termination on individual mobile networks.

17. The wholesale national market for international roaming on public mobile networks.

18. Broadcasting transmission services, to deliver broadcast content to end users.

The market regulation work goes like this: The regulators carry out an analysis for each of the 18 markets in their countries. For each market, if a provider (possibly also more than one) having significant market power is identified, resolutions are worked out that puts restrictions and obligations on this provider in the relevant market.

Business models, roles and competitive conditions

From a regulator’s point of view it is a main concern that the business models we consider do not weaken or undermine the obligation access operators have regarding local loop unbundling. This obligation is founded on the Access Directive (2002/19/EC) and supposedly implemented in Member States’ laws. This implies that the RGWO role and OBAN aggregator role should not be restricted to actors who are fixed access operators. But on the other hand, a Site owner (SO) and an actor offering OBAN functionality (usually an OBAN service provider) should not be allowed to make an OBAN delivery contract without the involvement of the fixed access operator. The actor offering OBAN functionality will have to enter into some contractual agreement with the fixed access operator that allows him to use the bandwidth required.

The actor taking the RGWO role will most likely be subject to electronic communication legislation. The RGWO role constitutes an important part of the total provision of OBAN and might be considered a provider of electronic communications service. Therefore it is not likely that small actors having just the SO/HU roles will find it attractive to take the RGWO role.

7.3.1. Comments to some of the models

The business models presented in this report represent a variety of combinations of roles. It is important to underline that regardless of model, models should not be implemented in a way that introduces practical obstruction for other actors than incumbents or actors that have a strong market position in advance. The regulatory regime OBAN would meet in the future is of course not possible to foresee exactly. In this document we point out problems that we at this point of time can identify as regulatory issues.

It follows from the discussion above that the model in 6.2 has attractive properties from a regulator’s point of view with respect to competition because of the further unbundling of the access line so that more internet service providers can offer services over one RGW. We think that the suggested model could be implemented without violating the local loop unbundling regulations. It is important to stress that the fixed access operator role is understood as an operator role and not necessarily an owner of fixed access infrastructure. It is furthermore important that the model is not implemented in a way that introduces practical obstruction for other actors than those being fixed access operators.

In the proposals of 6.3 and 6.9 the actor providing OBAN to the user is taking more roles than in the case presented in 6.2. Generally, from a regulator point of view it could be stated that the more roles one actor takes, the more important it is to have clear role descriptions. Otherwise it could in practice be very difficult for new actors to be able to participate in OBAN provision. Three general remarks to these models are:

One should make sure that the binding of the “OBAN network club” members is not too long. At least in Norway, that kind of binding (if understood correct) is not allowed to last for more than one year.

More fundamental even, is the question whether the club members will be to regard as providers and hence be subject to regulation. One should consider this carefully in order to exclude that possibility.

In the case of service bundling (e.g. unlimited voice calls) it would be a prerequisite that there are other actors in the marked that have the possibility to match such offers. Otherwise it could be regarded as unfair competition.



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7.4. Regulatory Aspects applied to possible Business Models

This paragraph aims to show some regulatory aspects when applied to possible cases presented in paragraph 6.3 and 6.7. The cases present two fundamental aspects that are interesting when studying regulation issues:

One fundamental assumption in the case taken as an example is that there is no purely virtual OBAN actor, but every OBAN supplier is also Internet access provider on the ADSL line.

Another aspect is that the OBAN customer subscribes to OBAN and gets an unlimited voice calls service toward fixed lines, low cost calls toward mobile phones and an Internet Access on the move.

The following paragraphs bring some clarification and examples on these two aspects. Conclusions are then made regarding the OBAN business models possibility.

7.4.1. Actor merging several roles

In the case taken as an example the OBAN actor plays two roles: the Fixed Access Operator and the Internet Service Provider. The OBAN provider is at the same time a Fixed Access Operator and an internet service provider.

This case has been taken as an example since it is a pragmatic example considering the European Internet Access market. In France, the incumbent fixed operator France Telecom reinstated its internet service provider subsidiary company (Wanadoo) in year 2004 after having removed the corresponding legal structure. In this way, the incumbent operator plays two roles: Fixed Access operator and internet service provider. This situation is also a trend in other European countries: Telefonica and Terra, BT and T-on line.

In France, this situation has been accepted by the regulator under specific conditions. In particular, since June 2005, the French regulator:

• Imposes an accounting separation on the wholesale market of broadband access, namely unbundling offers and collect that is delivered at the regional level

• Requests for the establishment of a protocol between the network division and the residential marketing division on the subject of high-speed access.

Another important aspect of the French Market is the high development of unbundling offers. The regulator imposed on France Telecom to open its local loop in the form of unbundling:

• In the case of a total unbundling, a fixed incoming operator can substitute itself for FT. Thus, the customer has no more commercial relation with FT.

• In the case of a partial unbundling, a third operator is allowed to recover the high frequency band for providing high speed access while the base band remained at FT for providing phone access.

New incomers on the market of the ADSL choose as soon as they can an option of unbundling. Thus, French incomers often play the two roles: Fixed Access Operator and internet service provider, which brings them back to France Telecom situation for the high speed access. In almost all the cases, the incomers choose partial unbundling offers.

7.4.2. Service Bundling including Unlimited Voice Offers A first statement concerning unlimited voice offers is that the VoIP is not regarded as a “ex ante” regulated market. In France, many actors (Free, Wengo) already offer unlimited voice offers toward the French fixed access and propose aggressive tariffs towards the mobile phones. These services are often included into a single subscription that combines Internet access and telephony offers. Finally, the OBAN voice offers proposed in the business case do not recover from the dumping:

a. The OBAN subscription covers the different costs: as it is currently done on the PSTN market, the traffic is bought in bulk and the tariff level takes into account the real consumption profiles.



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b. The termination costs towards the mobile phones are charged back to the end customers.

7.4.3. Conclusion

The presented business cases rely on the fact that the OBAN service provider is not a purely virtual actor and plays several roles, e.g. Fixed Access Operator and Internet Service Provider. The cases are also based on a service bundle that includes interesting voice offers. Such scenarios are quite realistic in regard to the current European situation, and particularly in France where the incumbent operator and many incomers already act as Fixed Access Operator and internet service provider at the same time and where VoIP offers are often proposed with the Internet access.

To avoid regulatory issues, the incumbent and the incomers should have similar market conditions. A simple and pragmatic approach is to focus the market to the zones, mainly urban, where at least partial unbundling is effective.



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8. WiMAx and other similar technologies

OBAN as described in this report has only looked into how WiFi networks may be deployed as an access network to the fixed access line. The OBAN concept is however not restricted to this connectivity scenario. Wireless backhaul may be deployed e.g. in areas where it is very costly to deploy fixed access or other wireless technologies may alternatively be used instead of WiFi as the last segment to the laptop, handheld device etc. Bluetooth has not been considered as a relevant technology nor other short-range technologies as Rfid, Zigbee, IR etc. This is due to their technical characteristics. Bluetooth may be used but does not have the same momentum in the market and do not have the desired characteristics as to fulfil the OBAN vision. Other upcoming technologies as Wireless mesh networks, WiMAX (IEEE 802.16) and IEEE 802.20 may potentially be applicable to use in an OBAN network. In the following a brief discussion of these technologies is given in relation to their applicability to the fulfilment of the OBAN vision.

8.1. Wireless mesh networks

A mesh network is a network that employs full mesh topology or partial mesh topology as connection arrangement. In the full mesh topology, each node is connected directly to each of the others. In the partial mesh topology, nodes are connected to only some, not all, of the other nodes. By connecting a number of wireless LANs together over the air, larger areas can be covered. The simplest configuration uses standard single radio APs to form meshed networks. Single radio MESH systems typically uses 2.4-GHz 802.11b/g radios. These are the least expensive system to deploy, but offers limited performance and capacity. That's because the single radio in each mesh node must time-slice between client access, ingress and egress. To overcome these limitations, one must design the network to minimize hop counts. It is therefore recommended that about one-third to one-half of all mesh nodes are connected to the wired network. This recommendation is, however, well adapted to the OBAN approach because this is the level of broadband penetration one can expect.

Wireless mesh networks can thus be used as:

1. an extension to the wired connected RGw or

2. as a wireless access link to OBAN RGW’s

By utilizing mesh technology one may therefore provide a more flexible access point arrangement, which may lead to better outdoor coverage and a reduction in the number of wired households with direct OBAN Residential gateway access.

Figure 23a) shows an example of some APs forming a meshed network connected to the legacy network over 2 fixed access lines. The figure visualises one important and also limiting aspect of such networks, namely interference. Interference between APs is a major problem for meshed network consisting of ‘single radio APs’. In order to enable communication between APs, all APs must operate on the same frequency, and complicated MAC-layer protocols must be used to enable communication. The total throughput from a network like the one shown in Figure 23a) will be low due to this interference problem. The advantage of a single radio MESH network is that the equipment and installation cost is low compared to other more complicated systems as mentioned below.

Access line

Access line

Access line

Access line

Access line

Access line

Access line

Access line

Access line

Access line

Access line

Access line

Access line

Access line

Access line

Access line



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a) Single radio MESH b) Multiple radio MESH

Figure 23 MESHed wireless LANs used to increase broadband coverage

By using ‘multiple radio APs’ one can dedicate some frequencies for inter-AP communication while other frequency bands are used for local communication. Normally one uses 802.11a for inter-AP and 802.11b/g for local communication. Figure 24 shows a multiple-radio AP utilising 5 different frequencies. Different frequencies are used both to distinguish between up- and downlink transmission and to distinguish between other interconnected nodes. To optimally form real meshed networks the APs can be equipped with even more frequency channels.

AP/Router

Local802.11g

Ethernet WiMAX

Inter-AP link802.11a

Inter-AP links802.11a

AP/Router

Local802.11g

Ethernet WiMAX

Inter-AP link802.11a

Inter-AP links802.11a

Figure 24 Multiple radio MESH AP

If multiple radio APs are used, most of the interference problems can be solved. IEEE802.11a is normally used for communication between APs and since it offers 12 non-overlapping channels the network configuration is not limited by interference – see Figure 23b). However, IEEE802.11a operates at 5 GHz, which requires near line-of-sight installations of APs. Line-of-sight distances lead to heavily overlapping Aps. However, since different frequencies can be used it is possible to partly reduce the interference between AP operating on the same frequencies.

If large areas shall be covered by WLAN technologies while still offering broadband connectivity to many users, it is assumed that directive antennas also have to be deployed. In addition the network has to be carefully planned in respect of capacity, frequency utilisation and through-put for a number of users in an actual area. It is also worth to mention that multiple radio WLANs are much more expensive that the single frequency ones used by the general public. The higher price is thus a limiting factor for the deployment of such systems.

Multi-hop mesh networks also suffer from problems of guaranteeing quality of service and may thus basically support an OBAN network without quality assurance. In the following, some of the key aspects of mesh networks are highlighted.

1. In mesh networks the radio access network used in the wireless mesh is a shared medium and forces everyone to stay silent while one station transmits.

2. In a single radio ad hoc mesh network, throughput degrades as the number of hops increase. A simple model of performance can be given as (1/2)^^n at each hop. So in a multi hop mesh network, the Max available bandwidth available to you degrades at the rate of 1/2, 1/4, 1/8. By the time you are 4 hops away the max you can get is 1/16 of the total available bandwidth.

3. For many simultaneous users of the wireless mesh network, we have a problem of contention. To avoid collisions, data transmissions in radio follow a CSMA protocol that while very effective, is not particularly efficient. With contention, the bandwidth available is reduced even further.



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Note that these staements mention no dependency on any time parameter -- nothing is necessarily dynamic in a mesh. In an OBAN-setting, the mesh network is considered to be stationary, while users of the network may be mobile.

A wireless mesh network can handle many-to-many connections and is capable of dynamically updating and optimizing these connections. This may be (but does not have to be) a "mobile network" in which it is assumed that each (or at least some) of the nodes of the network are mobile units that change position over time. The dynamic management of complex routing information, very likely to include information about external networks (e.g. the whole wide Internet and the gateways to it), is arguably the biggest challenge for (dynamic) mesh protocols.

In spite of the challenges of mesh networks the technology may be used in OBAN in a cost optimal way, enhancing coverage in certain area types and reduces the needed number of wired access lines.

However due to the limited shared capacity over a couple of hops and the lack of standardized protocols and managements systems for controlling meshed networks meshed network are not considered further as very applicable in OBAN.

8.2. 802.16

The IEEE 802.16 Working Group has developed point-to-multipoint broadband wireless access standard for systems in the frequency ranges 10-66 GHz and sub 11 GHz. The standard covers both the Media Access Control (MAC) and the physical (PHY) layers [7]. The 802.16a standard can deliver fixed broadband using licensed MMDS frequencies (2.5-2.6 GHz), 3.5 GHz or the unlicensed 5.8 GHz band.

For OBAN, 802.16 networks are most relevant for backhaul infrastructure, connecting residential gateways to the central network. With the high capacity planned and industry standardization happening, we believe 802.16 networks can be a very relevant alternative for ADSL lines in OBAN. However, the standard is very wide and a number of PHY considerations were taken into account for the target environment. At higher frequencies, line of sight is a must. This requirement eases the effect of multipath, allowing for wide channels, typically greater than 10 MHz in bandwidth. This gives IEEE 802.16a the ability to provide very high capacity links on both the uplink and the downlink. This may be beneficial for OBAN scenarios where high bandwidth is needed both in the uplink and downlink channel. This may remover ADSL up-stream capacity as a bottleneck.

For all wireless technologies with a frequency below 11 GHz line of sight shall not be demanded to support users capacity demands. The original IEEE 802.16 MAC was enhanced to accommodate different PHYs and services, which address the needs of different environments. The standard is designed to accommodate either Time Division Duplexing (TDD) or Frequency Division Duplexing (FDD) deployments, allowing for both full and half-duplex terminals in the FDD case.

The MAC was designed specifically for the point-to-multipoint wireless access environment. It supports higher layer or transport protocols such as ATM, Ethernet or Internet Protocol (IP), and is designed to easily accommodate future protocols that have not yet been developed. The MAC is designed for very high bit rates (up to 268 mbps each way) of the truly broadband physical layer, while delivering ATM compatible Quality classes. This is of high interest to OBAN, but it is yet not clear which standard will succeed, and it is clear that the fixed wireless mode with ATM-style quality of service is the most likely alternative relevant for OBAN.

The 802.16 network can also be used for access network to OBAN RGW’s, but this is believed to be relevant at a later stage of the standard development. The relevant standard for mobile access is often called “Mobile WiMAX”, or IEEE 802.16e, but is often regarded as an extension to a fixed wireless standard rather than a fully mobile standard in its own right.

8.3. WiMAX

In order to make more concrete choices for the 802.16 standard, an industry consortium led by Intel has initiated a project to develop and promote conformance standards and test specifications. In order to ensure



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interoperability between vendors equipment, the WiMAX technical working groups have completed the work for 10 to 66 GHz and has started work for the sub 11 GHz part of the standard. The working groups develop a set of system profiles for 10 to 66 GHz and sub 11 GHz, all according to the ITU-T x.290 series of conformance testing standards [7];

Many as the upcoming Wireless Metropolitan Area Network (WMAN) standard [7] regard WiMAX. It is not yet available, but equipment will be coming onto the market in the next several years, and pre-commercial implementations exist, using orthogonal frequency division multiplexing modulation technologies. WiMAX was designed to be a WMAN technology from the start, offering a predominately fixed connection over long distances to cover the "last mile" rather than reaching directly to user equipment. WiMAX networks are generally a service provider or an enterprise solution. Intel is providing chipsets that include both 802.11 and 802.16 to enable interoperability between the two, and claim that 802.16 also will be used for last mile access to terminals. As such, the standard has relevance for OBAN both as access network to the OBAN RGW and as terminal access in the future.

Over the next several years, WiMAX is likely to have a significant impact. WiMAX supports up to 70Mbps at a range of up to 30 miles, making it suitable for larger corporate campuses and rural installations where cable and DSL are not widely available. As such, it can help in extending the OBAN coverage to areas where DSL cannot be used. In corporate campuses, it is likely to serve as a wireless connectivity option between 802.11 sub-network hotspots.

Devices will also increasingly be capable of communicating through a number of standards with seamless handoff. This can be done using Mobile IP as used inside OBAN. This will also include WiMAX, WLAN, and even cellular WWAN connections. With corporations extending internal networks through use of VLANs (virtual LANs), this will mean access in any area, with the key differentiators being cost of connection and bandwidth. One key issue will be ensuring that billing information for the locale in use is properly transmitted, and concepts from OBAN can be of relevance here.

8.4. 808.20

IEEE 802.20 is a new high speed standard, as part of the IEEE Mobile Broadband Wireless Access (MBWA) initiative, it goes beyond 802.16 and WiMAXin that it also provides solutions for mobility. The 802.20 standard only works with licensed frequencies below 3.5 GHz and provides hand-off at vehicular speeds. Table 5 compares 802.20 to 802.16e and 3G.

Mobile Data Architectures

802.16e 802.20 3G

IP 802.16a mobility (more than 1Mbps)

IP roaming & handoff (more than 1Mbps)

Circuit-switched cell data (less than 1Mbps)

Extentions to MAC and PHY from 802.16a

New MAC and PHY with IP and adaptive antennas

W-CDMA & CDMA-2000

Backward compatible with 802.16a

Optimized for full mobility

Evolving GSM or IS-41

Between 2-6 GHz Licensed Bands below 3.5 GHz

Licensed Bands below 2.7 GHz

Packet Architecture Packet Architecture Circuit Architecture



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Low latency Low latency High latency

Table 5: Comparison of access technologies [2]

The different standards can be compared according to speed of mobile operation. According to ITU-R Recommendation M.1034-1, wireless access can be divided into the following mobility classes:

• Stationary (0 km/h)

• Pedestrian (up to 10 km/h)

• Typical vehicular (up to 100 km/h)

• High-speed vehicular (up to 500 km/h)

By MBWA (“mobile wireless”), we refer to any systems that can address the latter two mobility classes, and as such share many of the properties in OBAN. As described in chapter 2 OBAN may incorporate functionality for seamless mobility. This is thus not demanded but related to specific business models. In contrast, the definitions of fixed and nomadic wireless access (“fixed wireless”) require the user terminal to be stationary while in use. We define portability to cover only the first and second mobility classes. In addition to distinct mobility classes, fixed wireless and mobile wireless have traditionally involved distinct sets of carriers, vendors, spectral allocations, data rates, applications, user services and devices. In particular, mobile wireless typically uses licensed spectrum below 3.5 GHz allocated for mobility, with block assignments as small as a single or paired 5 MHz blocks and channel bandwidths as small as 1.25 MHz. Meanwhile, fixed wireless systems typically use unlicensed bands or licensed spectrum allocated for fixed services, with different block allocations and channel bandwidths than mobile wireless.

802.20 can be regarded as a new access network, but goes beyond the access and also specifies mobility. As such, it is a competing alternative to OBAN more than 802.16a, e and WiMAX specifications.

There are numerous system design issues for mobile wireless that may impact the PHY and MAC design. To support vehicular speeds, the system needs to be robust against rapid channel variations. Since licensed spectrum for mobility is limited, great emphasis is placed on spectral efficiency. To achieve these ends, mobile wireless systems may make use of real-time control channels, spatial processing, non-contention-based transmissions and messaging and efficient, low latency access schemes that scale with the number of users. In addition, synchronization, access, power control, timing control, and multiple antenna spatial processing may also be optimized for vehicular mobility, which are key issues within 802.20. There are also significant implications of mobility on the IP layer due to the need to maintain routability of the host IP address and preserve in-flight packets during IP hand-off. Mobile IP has been suggested as one of the proposed standards, but inter-technology solutions (not giving mobility beyond 802.20-type access networks) are also discussed. This may require specialized low-latency MAC signaling resources for IP hand-off management, e.g., for movement detection, re-authentication, and hand-offs for uplink and downlink IP packets and MAC frames.

Many of the same challenges with supporting seamless mobility in high velocity in WiMAx are also studied in the OBAN project.

The standard can also be compared to fixed wireless access. Table 6 provides a highlight of the distinctions in for MBWA and fixed wireless.



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Table 6: Comparison between 802.20 and Fixed wireless [3]

As such, 802.20 should be studied more in detail for a full comparison with the OBAN approach. In many ways, OBAN can be an alternative to MBWA as soon as alternative access technologies like 802.16a and WiMAX is used for backhaul and mobile access like 802.16e and mobile WiMAX is used in the access network.



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9. Concluding remarks

Many good ideas for new technologies never reach the commercial scene due to the lack of accompanying viable business models. A requisite is, of course, that services to end-users are seen as attractive in comparison to alternatives. This requirement is however not a sufficient commercial condition. A commercialisation of the technologies developed in the OBAN project will possibly require several stakeholders in the industry to cooperate in order to produce services to end users. In this cooperation, a balance must be found such that each cooperating partner gets a revenue share based on a common understanding of the value of contributions to end user services.

This report was devoted to describe various business scenarios that each gives an answer to how cooperation between different actors possibly can take place in order to produce services based on OBAN technology. For each such scenario, the interfaces in terms of services and money flows between actors were described, together with value propositions from the viewpoints of each participant.

The business models took as outset the stakeholders that currently can be observed in the industry, where several of them can possibly be the one that exploits the OBAN technological potential. In order to arrive at scenarios, we let each participating project partner propose the ones they considered interesting from their point of view. The eight resulting scenarios can be grouped into certain categories according to which existing actor that take the responsibility of operating residential gateways. In summary, we presented:

Scenarios with fixed access operator focus:

1. Fixed access operator owns and operates RGs In this scenario, an operator that already owns an extensive (probably copper based) access infrastructure builds an additional wireless service that is technically and operationally tightly integrated with existing operation. It is considered that the access operator may be a dominating actor within a country, such that open commercial interfaces between access and end user service provisioning is enforced. A WLAN-based mobile access wholesale service is thus offered to service providers on this basis. More than one service provider may be present at a given access point.

2. A Fixed Access Operator conquers Mobile-only customers Here the focus is on an actor that is an integrated internet service provider and access provider. Many customers nowadays terminate their fixed telephone subscription, relying on mobile communication entirely. This is of course a loss for the traditional fixed operator, which may try to win back customers by offering WLAN-based access services towards this segment. It is assumed in this scenario that an open wholesale interface for the access part of the service is not enforced.

3. Fixed access operator as RGWO with additional fragmented hot spot operators In this scenario, modeled after the development in the Italian market, the fixed access operator plays a role in the emerging WLAN-based residential access industry, while the mobile access operator plays a role in the WLAN-based public hot-spot market. It is thus foreseen two different types of access point operations, targeted at residential and public hot spot sites respectively. In the latter case, upstart hotspot operators negotiate roaming agreements with mobile operators.

Scenarios with mobile access operator focus:

4. Mobile access operator operates the RGW Here the traditional mobile industry takes a rather aggressive WLAN position by offering broadband mobile services over WLAN based access. Again, it is considered that the actor taking the position may have a dominating market position, and is being forced to open wholesale interfaces towards 3rd party “virtual” service providers. The fixed access operator is restricted to deliver virtual channels over the access network in this case. It may however deliver such channels to different mobile access operators, even at the same site. This is particularly relevant at sites covering a dense populations of mobile users.



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Scenarios with service provider focus:

5. Fixed internet service provider providing wireless roaming, Building wireless internet service provider community, Improving mobile communication services: These three scenarios all have in common that the service provider also acts as the residential gateway operator. This is a continuation of the development seen in many markets, where internet service providers offer subscriptions including WLAN routers. The scenarios imply a somewhat more active part of the internet service provider than is currently seen in the sense that active operation of the nodes are considered rather than mere preconfigurement.

Integrated scenario:

6. An Integrated Operator develops customers’ loyalty In this final scenario there are no open commercial interfaces anywhere in the value system. One single actor may streamline its operation and service schemes in order to fully exploit the market. It is the FMC case based on heterogeneo access technologies, where one subscription brings a “complete communication package” to the users.

Other business models 7. Aggregator models

Here we discussed some aspects of the existing business model of Boingo and No Cable.

These scenarios form a rich set of development possibilities. Regulators must be expected to follow such developments closely. From the discussion presented on regulatory issues, we cannot see that any of the presented scenarios can be immediately ruled out as conflicting with the current regulations. On the other hand, future regulation will depend on how these markets evolve. The strategy of incumbents will be an important factor here.

We cannot at this stage say anything regarding whether one or some models presented are more relevant and important than others. Future work will focus on techno-economic analyses of the models in order to assess cost structures. Such analyses will provide important information on relative merits pf proposals. Based on the current regional diversity of broadband markets that can be observed, it is probable that we also will see more co-existing business models for OBAN based services as well.



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10. References

[1] Deliverable D5, “Open Access Environment Architecture”

OBAN-WP2-LUC-123o-D

[2] Draft version of Deliverable D27, “OBAN Architecture”

OBAN-WP2-LUC-141e-D

[3] Deliverable D7, “ Scenarios and Requirement”

OBAN-WP1-SCOM-021d-D

[4] Discussion Paper, “D25 Business viability study”

OBAN-WP5-FT-104c-DIS

[5] Chesbrough and Rosenbloom in [Chesborough 2002]

[6] A Osterwalder [Osterwalder 2004].

[7] WiMAXForum – www.wimaxforum.oRGw

[8] Enterprise Wireless Network—A View to the Future. Info-Tech White Papers 2004 by Info-Tech Research Group.

[9] Mobile Broadband Wireless Access (MBWA) http://grouper.ieee.oRGw/groups/802/20/

[10] Boingos home page: http://www.boingo.com/

[11] LinSpots homepage: http://www.linspot.com/

[12] Deliverable D6 “ Environmental and market Impacts of OBAN”



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11. Abbreviations

AAA Authentication, Authorization, Accounting

ADSL Asynchronous Digital Subscriber Line

AP Access Point

API Access Point Identifier

ARPU Average Return Per Users

ATM Asynchronous transfer Mode

B-RAS Broadband Remote Access Server

CARD Candidate Access Router Discovery

CAPEX Capital Expenditure

CDMA Code Division Multiple Access

CN Correspondent Node

CSMA Carrier Sense Multiple Access

EAP Extensible Authentication Protocol

FA Foreign Agent

FDD frequency Division Duplex

FAO Fixed Access operator

FMC Fixed Mobile Convergence

GFA Gateway Foreign Agent

HA Home Agent

HLR Home Location Register

HSDPA High Speed Downlink Packed Access

HSPA High Speed Packed Access

HSUPA High Speed Uplink Packed Access

HSO Hot Spot Operator

IEEE Institute of Electrical and Electronics Engineers

IETF Internet Engineering Task Force

IP Internet Protocol

ISP Internet Service Provider

MAC Medium Access Control

MAO Mobile Access Provider

MB Mobility Broker

MBWA Mobile Broadband Wireless Access

MIPv4 Mobile IP version 4

MMDS Multichannel Multipoint Distribution Service



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MHP Multimedia Home Platform

MSP Mobile Service Provider

MVNO Mobile Virtual Network Operator

NPT Norwegian authority on Post and Telecommunication

OBAN Open Broadband Access Network

OPEX Operation Expenditures

OSP OBAN Service Provider

PDA Personal Data Assistant

PWLAN Public WLAN

QoS Quality of Service

RADIUS Remote Authentication Dial In User Service

RGWO Residential Gateway Operator

RGW Residential Gateway

RU Residential User

SIM Subscriber Identity Module (2G)

SIP session Initiation Protocol

SME Small to Medium Entreprises

SLA Service Level Agreement

SO Site Owner

SP Service Provider

SSID Service Set Identifier

TDD Time Division Duplex

UMA Unlicensed Mobile Access

UpnP Universal Plug and Play

VLAN Virtual Local Area Network

VoiP Voice over IP

VPN Virtual Private Network

VU Visited user

WEP Wireless Equivalent Privacy

Wi-Fi Wireless Fidelity (IEEE 802.11b wireless networking)

WiMAX Worldwide Interoperability for Microwave Access

WWAN wireless wide Area Network

WLL Wireless Local Loop

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