6.evolutionary strategies
TRANSCRIPT
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UnderstandingUMTS
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Evolutionary Strategies
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1. CONTINUED STANDARDISATION HIGHLIGHTS1.1 The Move to All-IP Networks 5
2. THE EVOLUTION OF THE UMTS ARCHITECTURE2.1 The Basic Release99 UMTS Core Network 9
2.2 A Common Core Transport Network 11
2.3 SIP and Multimedia in the all-IP Core Network 13
2.4 Evolution of the UTRAN 15
2.5 IP to the Node B and to the User 17
2.6 A Conceptual Multi-access UMTS / IP Network 19
3. A SUMMARY OF IP QOS3.1 MPLS 21
3.2 DiffServ 213.3 IntServ 22
3.4 RSVP 22
3.5 IPv6 22
3.6 The Introduction of UMTS Terminals 23
3.7 Evolution Issues for UMTS Terminals 25
3.8 The Evolution of New UMTS Value Chains 29
3.9 UDeciding Factors for the success of UMTS? 31
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1. CONTINUED STANDARDISATION HIGHLIGHTS
Release 99 of the 3GPP specifications for UMTS are sufficient for operators to begin
to plan and deploy UMTS networks which consist of the brand new W-CDMA, FDD-
mode air interface added to the standardised GSM Phase 2+ and GPRS core
network. However the further evolution of UMTS will be strongly dependant on futurestandardisation work, in both 3GPP and in other relevant groups.
The speed of development and the eventual implementation of future specifications
will also be immensely dependent on market demands and conditions, since these
will determine the support and resources for such development.
Amongst the key broad areas in which ongoing specification and standardisation
work is likely to impact the future of UMTS, are the following :
1. Upgrades to the core network, in particular beginning the move towards unifying
and integrating the packet and circuit-switched domains, and providing the basis for
multimedia services, on the basis of IP transport protocols.
2. Further development of service-related architectures, interfaces and procedures,
including the continued evolution of CAMEL, USIM, security and fraud protection and
the Open Services Architecture.
3. Further specification of the TDD mode of operation at the UMTS air interface.
Since TDD spectrum is currently not applicable in Japan, TDD mode is not a priority
for Japanese infrastructure and terminal vendors in the short term.
4. Investigation of possible commonalities and harmonisation of UMTS work in 3GPP
with cdma2000 development in progress by 3GPP2. This is in line with the ITU
concept of a family of 3G standards able to seamlessly interoperate easily. Other
important and ongoing harmonisation efforts also include those between the GSM
and US TDMA communities.
5. Although not strictly part of UMTS, specification of GERAN (GSM/EDGE Radio
Access Network) is a development process which now falls under the auspices of
3GPP. EDGE is by no means certain of wide market acceptance and is not a
requirement in implementing UMTS.
Although there is a body of opinion which supports the use of EDGE as a technology
to fill the coverage gaps between initial islands of UMTS, the existence of EDGE-
capable handsets and complete GERAN specifications from 3GPP will lag behind the
introduction of UMTS, and the first UMTS networks will therefore almost certainly still
use GSM alone as the fill-in radio access technology.
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TDD Mode
GSM Phase 2 + Core+
UTRAN
Service
Architectures
& Interfaces
Integrated
IP Core Network
Chinese
TD-SCDMA
IETF
IP
Standards
GSM/EDGE
Radio Access
Harmonisation with
other IMT2000
Standards
Fig. 1 Evolving a Basic UMTS Network
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6. The Chinese government and Siemens in particular are supporting development
work on TD-SCDMA. Although currently not widely discussed for use in other regions
in the world, the take-up of such a standard by such a potentially huge volume
mobile market could of course require that the rest of the UMTS community worktowards including TD-SCDMA, at the very least in terms of interoperability and
roaming with W-CDMA enabled terminals.
7. The IETF, already one of the partners with input into the 3GPP specification
process, are in charge of developing the whole range of IP-related standards and
recommendations. As the mobile world looks increasingly towards an all-IP
architecture, the work of the IETF is likely to become more relevant, particularly on
standards such as RSVP, MPLS, DiffServ, IntServ, IPv6 and SIP. These all represent
ways of introducing circuit-style carrier-grade QoS to IP-based communications.
Indeed it has already been decided to incorporate SIP as the basis for IP Multimediaservice control in UMTS.
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TDD Mode
GSM Phase 2 + Core+
UTRAN
Service
Architectures
& Interfaces
Integrated
IP Core Network
Chinese
TD-SCDMA
IETF
IP
Standards
GSM/EDGE
Radio Access
Harmonisation with
other IMT2000
Standards
Fig. 1 Evolving a basic UMTS Network
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1.1 The Move to All-IP Networks
The strongest evolutionary trend in UMTS is the move towards increasing the role of
IP in UMTS networks. Some observers are already looking towards 4G, used inmost cases to refer to a network which is all-IP from user terminal through to core
network.
The reasons why all-IP is a desirable end-goal include the following :
1. Cost
The use of standard, mass market IP routers rather than service and vendor-specific
switches resulting in lower costs, both in terms of initial purchase and ongoing
maintenance.
2. Efficiency
An IP network offers a multitude of possible routes for traffic, as opposed to defined
point-to-point links. This means that the network is much more flexible and efficient
at coping with temporal or spatial variations in traffic types and volumes. If a
particular route is congested, another route can be taken.
3. Scaleability
In parallel with increased efficiency, the fact that routing is inherent within an IP
network, and that alternative routes are available, means that longer term increases in
traffic or in overall network capacity can be achieved simply by increasing the
capacity of the transport network. In UMTS this will lead to an increase in the use of
Optical networks, particularly in the core network domain.
By contrast, changes in traffic volume or mix in MSC and ATM-based networks bring
much more complexity. They require constant updating of data tables within
switches, and the re-balancing of traffic between the circuit and packet-switched
domains.
4. Interworking
IP represents an increasingly ubiquitous and de facto transport mechanism. As UMTS
moves more to IP, so seamless interworking between UMTS and other IP-based
networks, such as the Internet or Intranets, will become much more straightforward.
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Fig. 2 The Move to All-IP Networks
Why move towards All-IP?
- Cost
- Efficiency in Core Network
- Scaleability
- Interworking
Why not?
- Quality of Service
- Poor Efficiency over Radio
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There are some negatives in moving to an all-IP UMTS network, these include :
1. QoS
For real-time traffic, in particularly voice traffic (which is still accounting for themajority of operator revenues), IP does not currently provide sufficient reliability and
consistency to ensure carrier-grade, delay-free services.
2. Efficiency over Radio
The routing inherent in an IP packet brings with it a considerable overhead,
something which is undesirable in a radio access link, where spectrum is a scarce
and expensive resource.
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Fig. 2 The Move to All-IP Networks
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Why move towards All-IP?
- Cost
- Efficiency in Core Network
- Scaleability
- Interworking
Why not?
- Quality of Service
- Poor Efficiency over Radio
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2. THE EVOLUTION OF THE UMTS ARCHITECTURE
2.1 The Basic Release99 UMTS Core Network
The most straightforward and earliest implementations of UMTS will involve very little
change for operators who start from the basis of a GSM Phase 2+ circuit-switchednetwork, and a GPRS packet-switched network.
These two essentially separate networks define the circuit and packet switched
domains of the UMTS core network, with added support for the IuCS and IuPS
interfaces respectively, connecting these core network domains to the new UTRAN.
While the two networks can share the central databases (HLR, AuC and so on) and
some of the same service control mechanisms and servers, the transport of user data
is separated over 2 transport paths. This means that the operator has two transport
networks to manage and maintain. In particular, the switching infrastructure of the
circuit-switched network is a costly overhead.
The advantage of such a situation however, is that for voice traffic the QoS is very
well managed, since this is precisely what the GSM network was originally intended
to support.
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USER
UTRAN
MSC
SGSN
GMSC
GGSN
Database & Services
PSTN
Internet
data & signalling
signalling only
luCS
IuPS
circuit switched domain
transport network
packet-switched
domain transport network
Fig. 3 Basic UMTS Core Network
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2.2 A Common Core Transport Network
An immediately desirable evolution of the core network is to move towards a
common packet transport network, which can be used to transport user data fromboth the circuit and packet switched domains. In order to achieve this, control
(signalling) is separated from user data in the circuit-switched domain, with circuit-
switched user data now travelling as packets through the same transport medium as
the packet switched domain.
In practical terms this means that the MSCs must be split into two entities, with
control of the circuit-switched domain handled by MSC servers. This control plane
contains all the functions of databases & registers, mobility, security and other control
functions.
For user data, media gateways provide the interface between the common packet
core transport network and the circuit-switched domain connections at the edges of
this core network (i.e. to the PSTN and radio access network).
The way that circuit-switched domain (most commonly voice) traffic is carried over
such a common transport layer will evolve along with the transport mechanism of that
layer.
In the first instance, compressed voice can be carried using virtual circuits over a
simple ATM infrastructure. Further evolutions are likely to involve the introduction of
Voice over IP in this core transport network. IP may be carried over ATM or, ultimately,may sit directly above fiber.
The speed of such an evolution is dependent on developments in the ability to
guarantee the necessary quality of service for voice traffic, with IP protocols evolving
to support much better, more predictable QoS.
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USER
UTRAN
MSC
server
SGSN
MGW
GGSN
MGW
GMSC
server
PSTN
Internet
data & signalling
signalling only
Control
Functions
Applications
ATM &/or IP
Transport
Network
Control
Plane
Fig. 4 A Common Core Transport Network
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2.3 SIP and Multimedia in the all-IP Core Network
Ultimately, MSC servers may tend to become replaced by servers with more Internet-
like call control. In particular SIP has been chosen for controlling real-time multimediain future 3GPP releases. Voice data is then tunnelled through the IP core network
inside IP packets. The advantage of such an architecture is that all services, be they
in the circuit-switched or packet-switched domain, are handled through a common
control architecture, by means of SIP sessions.
In this case, the core network is all-IP, once again with a common transport network.
A Media Gateway is only required for interworking with an external PSTN. The serving
MSC server is replaced by a SIP proxy server, the CSCF, which can control SIP
sessions between an IP-enabled terminal and any circuit-switched domain traffic
coming via the external PSTN via a media gateway control function. This SIP-supporting architecture is termed the "IP Multimedia Subsystem" within 3GPP
specifications.
Although the simple architecture shown represents the ultimate simplification of an
all-IP transport and control scenario, the implementation of such an architecture is
extremely dependent on the evolution of sufficient IP QoS mechanisms. It is also
entirely possible for operators to deploy such an IP Multimedia subsystem in parallel
with retained MSC functionality. Indeed it seems highly unlikely that with the
considerable investment operators have made in their GSM networks, with its high
quality of service for voice, that these will be abruptly closed down.
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UTRAN
CSCF
GGSN
MGW
MGCF
PSTN
Internet
SGSN
USER
SIP Client
IP
Fig. 5 SIP and Multimedia: An all-IP Core Network
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2.4 Evolution of the UTRAN
The same advantages of an all-IP approach to the core network also apply to the
UTRAN, which itself incorporates a sizeable transport network connecting RNCs andNode Bs. Scaleability and flexibility in particular are ultimately much easier within an
UTRAN which is based on an IP transport network.
In the same way that incremental capacity increases are made more straightforward
in the core network, the introduction of IP into the UTRAN makes it easier to add
further Node Bs, or to move capacity between Node Bs and RNCs.
The most straightforward evolution within the UTRAN is likely to be the replacement
of point-to-point ATM links by an IP network.
Since the UTRAN network is potentially an expensive and complex local loop networkto manage, local market conditions may make it favourable for operators to use a
3rd party to provide this underlying transport. For example, a cable operator or
metropolitan area network provider.
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Node B
Node B
RNC CORE NETWORK
a) Current UTRAN
ATM
ATM
b) Evolved UTRAN
Node B
Node B
IP RNCCORE
NETWORK
Fig. 6 Evolution of the UTRAN
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2.5 IP to the Node B and to the User
The final steps in creating an end-to-end UMTS IP network is in taking IP all the way
to the base station by adding an IP Interface to the Node B, and by transporting IPdirectly across the air interface to an IP-enabled terminal.
This latter step in particular will require further work to increase the efficiency with
which such transport might be achieved. At the present time, the overhead of IP
header information means that IP is not necessarily an efficient way of cramming a lot
of data into a small amount of bandwidth. This is a key requirement where a scarce
resource such as radio spectrum is involved. A number of manufacturers have
proposed techniques for header compression which should alleviate this problem,
and eventually it is probable that one of these approaches will be selected for
inclusion in future specification releases.
The implication of taking IP transport straight to the Node B and even to the user
terminal is that the functionality of the RNC will also be taken out into RNC and Radio
Resource Management Servers, which connect to this IP network. This is much the
same as the situation in the core network, where a control plane MSC server was
separated out compared to the existing MSC.
Since no longer dependent on setting up new dedicated transport links, but simply
on routing through the IP "cloud", an IP UTRAN architecture will also make it much
easier to enable direct communication between Node Bs. Although this would almost
certainly require definition of a new standardised interface, an advantage of this is the
ability to move some radio resource management handling functions away from the
RNC and into the Node Bs. This may prove to be more efficient in response to
specific functional speed requirements.
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CSCF
RNC &
RRM
MGW
MGCF
PSTNInternetIP Client
IP Core
NetworkIP Access
Network
Node B
Edge
NodeNode B
Border
Node
Fig. 7 IP to the User
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2.6 A Conceptual Multi-access UMTS / IP Network
With an IP transport network at its core, and services and control functions moved to
the network edge in "server farms", it will become much more straightforward foroperators to offer the same UMTS services to customers through a variety of access
methods, both fixed and wireless.
Even in early releases of UMTS, before all-IP is implemented, some vendors believe
that operators will look to deploy multi-standard base station solutions, enabling them
to offer both Node B (UMTS) and BTS (GSM or EDGE) functionality from the same
site. With governments and the public increasingly concerned over the potential
health issues in mobile, and hence the planning permission for radio masts, this
would indeed seem to be a likely market need.
With all-IP transport in the Radio Access network, it is a logical step not only to share
this resource between multiple radio access methods in future, but to also provide a
common radio resource management function. Such a function would integrate the
control of each of these radio access methods, providing much easier control of
processes such as inter-network handover.
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Applications
MGW
Intelligence Mobility
Servers
IP
IP
Signalling+
Control
RadioResource
Management
UMTS/GSM/
EDGE
Fixed
Access
Other Radio
Interfaces
Legacy
Network
Fig. 8 Multi-access UMTS/IP Network
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3. A SUMMARY OF IP QoS
IP is a connectionless technology, and so does not guarantee bandwidth. Thus IP in
itself will not differentiate network traffic based on type, and so cater for the particular
needs of an application in terms of bandwidth and priority. By contrast, ATM does
incorporate service requirements into its specifications, and so is in much wider useat present.
Although one solution is of course to just add more and more bandwidth until traffic
delays are no longer a problem, in reality it is necessary to add particular options to
IP in order to deal with the QoS limitations.
There a number of standards which are being developed within the IP community,
and which may well be important for future releases of UMTS, because of their
influence on QoS. Below are listed just a few of the most prominent ones. All
potentially enable IP QoS to be improved for traffic such as audio and video,
eliminating any annoying skips and hesitations.
3.1 MPLS
Layer 3 or the network layer refers to the communications protocol containing the
logical address of a route destination, for example the IP address which is inspected
by a router which forwards it through the network. Layer 3 also contains a type field
so that traffic can be prioritized and forwarded based on message type as well as
network destination.
MultiProtocol Label SSwitching is a specification for layer 3 switching and uses labelsthat contain forwarding information, attached to IP packets by a router that sits at the
edge of the network. Routers in the core of the network examine the label more
quickly than if they had to look up destination addresses in a routing table. The
forwarding router does not look at the entire packet header, rather only at the label
with the forwarding information. This allows packets to be forwarded more quickly,
and also allows the paths to be set up in a variety of ways. For example, the path
could represent the normal destination-based path, a policy-based explicit route, or a
reservation-based flow path.
In essence, MPLS enables more decision on the routing to be made at the peripheryof a dumb network, with the network handling this routing much more efficiently.
3.2 DiffServ
DIFFerentiated SERVices, like MPLS, operates at layer 3 only. It uses the IP type of
service (TOS) field as the Diffserv byte (DS byte), to classify packets into small
number of service types. Diffserv does not provide traffic engineering or hard quality
of service similar to ATM, in that it does not involve explicit reservation of resources
or control of admission. Instead it uses priority mechanisms to provide adequate QoS
according to the service type. Network routers have to include intelligent queuingmechanisms in order to achieve this, allowing high priority traffic to move to the front
of a queue of packets.
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It is possible that service providers will use Diffserv at the edges of the network, for
classification and assignment to the right connection, and MPLS within the network.
3.3 IntServ
The Integrated Services model differs from DiffServ in that it reserves resources
explicitly using a signalling protocol. This approach uses admission control, packet
classification, and intelligent scheduling to achieve the desired QoS. It is thus a
fundamentally new approach to IP, moving away from the best effort approach.
At present IntServ might be suitable for small networks and Intranets, however as
traffic flows become larger, the signalling processing required becomes problematic
for larger networks.
3.4 RSVP
ReSerVation Protocol is a protocol that signals to a router that it should reserve
bandwidth for real-time transmission. It is designed to work with IntServ, although it
can also be applied to other service models. Information in the reservation request
could include maximum transmission rates, maximum frame jitters and maximum
end-to-end delay.
When an RSVP request is made, each router between it and the source makes a note
of it and attempts to honour it, with an error request sent back to the source if this
cant be done the circuit-switched equivalent of a busy tone. Of course, thistechnique means a lot of router upgrades where big networks are involved, and so
problems of scaleability.
3.5 IPv6
Internet ProtocolVersion 6 was started as far back as 1991, and the specification
was completed in 1997 by the IETF.
The key feature of IPv6 is that it increases the address space from 32 to 128 bits,
providing for a number of networks and systems which is unlimited in a practicalsense. However also included in IPv6 is inherent support for quality of service
parameters for real-time audio and video, and increased data security. For example,
IPv6 enables applications to request different levels of service, and will guarantee
these levels even when the request goes over a wide area network.
The draft version of IPv6 was originally called IP Next Generation (IPng), and IPv6 is
backward compatible with IPv4.
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3.6 The Introduction of UMTS Terminals
The evolution of terminals will be a crucial factor in the ultimate success or failure of
UMTS. The situation is neatly summed up by the following quote :
The problem today is that we do not have a clear indication from manufacturers of
terminals about when these kind of terminals will be available for commercial
deployment. When I say commercial, I mean sufficient in volume, full type-approved
terminals, and at a competitive price we cannot pass the technical problem to the
customer. Until such terminals become available, we believe that the success of
UMTS will be limited
Miguel Menchen Alumbreros, General Director of Wireless Internet, Telefonica
Moviles, speaking at the UMTS World Congress, October 2000
Terminal supply is something of a chicken and egg situation manufacturers will
rarely commit large resources until they are guaranteed a mass market of sales ;
operators will rarely develop and market services to the market without being certain
that terminals will be available. The slow uptake of both WAP and GPRS services
were both blamed to a large extent on the lack of available terminals as operators
went to market.
The first UMTS terminals will certainly offer multi-mode UMTS / GSM functionality,
since operators will initially only offer UMTS coverage in the busiest areas where it
can be guaranteed that demand will allow cells to be efficiently loaded. Outside suchareas services are likely to remain reliant on GSM / GPRS and perhaps EDGE.
Although both EDGE and TDD-mode UMTS have support and business cases
proposed by sectors of the industry, their introduction is likely to lag some way
behind that of the first UMTS deployments not just due to standardisation issues, but
also because of a lower priority for terminal manufacturers. Indeed for the Japanese
market, home to some of the key consumer electronics vendors, neither technology is
even applicable.
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"The problem today is that we do not have
a clear indication from manufacturers of terminals
about when these kind of terminals will be available for
commercial deployment. When I say commercial, I mean
sufficient in volume, full type-approved terminals, and at a
competitive price - we cannot pass the technical problem to the
customer. Until such terminals become available, we believe thatthe success of UMTS will be limited."
Miguel Menchen Alumbreros, General Director of
Wireless Internet, Telefonica Mobiles, speaking
at the UMTS World Congress,
October 2000.
No
Services
Lack of
Handsets
Uncertain
Terminal
Needs
Fig. 10 UMTS Terminals: Supply and Demand
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3.7 Evolution Issues for UMTS Terminals
UMTS terminals are exceedingly complex electronic and radio devices, and need to
exist in a world where small size and fashion-conscious design are increasinglyinfluential. Just a few of the key problems facing terminal manufacturers in developing
and evolving UMTS terminals are :
1. Power
UMTS terminals will be much more power-hungry both from the radio and application
perspectives. While the ability to pack enough processing power into a small device
(and avoid overheating) is one issue, a lot of work is also in progress on techniques
such as power control and power saving, in order to maximise what power is
available. Fundamental battery technologies have changed little in recent years, yet
this is another area in which developers are looking to evolve smaller and moreefficient power solutions.
2. Memory
As the PC, mobile and other computing industries expand, all of the new devices and
new applications tend to need increasing memory. The successful introduction of
UMTS terminals will depend not just on the continued decrease in the size of storage
technologies, but also on the ability of manufacturers to supply memory at a rate fast
enough to support the growth of computing in general.
3. Operating SystemIn an ideal world, all terminals would use a common operating system to ensure the
interoperability of applications, and an easier task for application developers who will
be vital in building the UMTS market. Success in balancing high functionality with low
power and memory requirements are the evolutionary goal of any mobile O/S, and the
O/S will be a major determinant of the power and design requirements of UMTS
terminals.
However, as in the PC world, the O/S is proving to be a competitive battleground,
with no clear winner likely to emerge. The most prominent competitors include
Microsoft, who of course are keen to see mobile devices inter-operate with the
Windows PC environment ; Symbian, a joint venture including Psion, the organiser
manufacturer, and mobile phone leaders Nokia & Ericsson ; and Palm, whose Palm
Pilot PDA became a market leader particularly in the US.
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Fig. 11 Issues for UMTS Terminals
Issues for UMTS Terminals
Power
- processing power
- power control
- power saving
Memory
Operating System
Form Factor
- Bluetooth
Standardisation
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4. Form factor
With little real knowledge of what the "killer applications" for UMTS may be, it is of
course difficult to propose the most effective design for UMTS terminals. Different
mixes of voice, video and data are best supported by different types of design, and a
whole range of concept phones have been proposed.
Most in the mobile industry originally believed that increasingly functional
smartphones were the evolution path for terminals, combining voice, perhaps video,
and a whole range of data services into a single phone-like device. However recent
handset trends have seen the increasing success of small-size and fashion value as
factors in consumer purchasing, while such terminals have remained essentially
voice-centric in terms of design.
The entrance of the computing industry into the competition for market share inhandheld devices has led to a much more data-centric approach, including larger
screens, pens and touch-screens rather than keypads, and with voice as an
accessory add-on.
Improvements in voice recognition may also change the way in which users can
interact with terminals, and hence the way the terminal is designed, and indeed a
whole plethora of concept phone designs are proposed by handset vendors.
Ultimately, suitability for whatever services emerge and consumer reaction will decide
5. Bluetooth could potentially have a big effect on form factor. Bluetooth is designed
to provide wirefree communication between computing devices over a short range. It
raises the possibility that rather than try to cram more and more features into a single
device, terminals could instead become disaggregated. A radio module could provide
the interface between the UMTS network, and Bluetooth could provide the onward
link to the most appropriate user interface device for the service in question. For
example this might be a PDA for organiser functions, a laptop for viewing streaming
video or large documents, a microphone and ear-piece for voice.
5. Standardisation
Since standards are constantly evolving, particularly at the early stages indevelopment, it is usually impossible for terminal manufacturers to begin testing and
type approving terminals until these standards have stabilised. No manufacturer is
willing to release terminals to market only to have to ask customers to return for an
upgrade just a few months later. In many cases, it is impossible to get around
standardisation changes through software upgrades, since efficient operation of the
terminals requires that as many functions as possible be achieved trough hardware.
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Fig. 11 Issues for UMTS Terminals
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Issues for UMTS Terminals
Power
- processing power
- power control
- power saving
Memory
Operating System
Form Factor
- Bluetooth
Standardisation
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3.8 The Evolution of New UMTS Value Chains
When operators offered 2G Voice, the value chain was quite straightforward, as
simplistically illustrated opposite.
In a market where users have access to a range of multimedia services, potentially
provided by a number of different sources, the value chain becomes much more
complex. UMTS has been designed to easily offer such service flexibility, and so there
is no reason to believe that such complex value-chains will not evolve.
What is less clear is how revenue will be split along such value chains, and whether
some players will occupy more than one position (for example a content provider
could aim to become a virtual network operator, or a virtual network operator could
also be the consumer retailer). Ultimately the consumer will pay for UMTS services by
means of a bill. However there are a number of places from where this bill could be
generated.
The lower diagram opposite gives an illustrative evolution of a UMTS value chain, to
show the greater complexity which may arise, and hence the more points along the
chain where billing & revenue generation may occur. A key challenge for operators is
to pay for their investments in UMTS by keeping a controlling position in such a
chain. Ultimately this may depend on the success of persuading consumers to spend
more then previously on mobile services, compensating for a smaller slice of the
overall revenue pie, by growing a much bigger overall pie.
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UserHandset
Vendor
a) 2G Voice
b) 3G Multimedia
RetailerService
ProviderOperator
UserHandset
VendorRetailer
Billing
Content aggregator/distributor
Virtual
Operator
Service
Provider
Operator
Billing?
Content
Owner
Content
Owner
Content
Owner
Fig. 12 Value Chains
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3.9 Deciding Factors for the success of UMTS?
UMTS is the result of a complex and hugely detailed work effort, which has included
a wide range of opinions and interests from within the mobile community. The resultis a set of specifications which potentially provide a huge leap forward in terms of the
efficiency, quality and flexibility with which services can be provided to mobile users.
However, ultimately the success of UMTS may depend not just on quality of this
work, but on a number of external market factors which can be very difficult to
predict, and which may not reflect any all-industry consensus. Just a few of these are
highlighted below.
1. Operator Interests.
The competitive playing field is changing, most analysts predict the emergence of adecreasing number of large global operators, as a result of acquisitions and
consolidation. The bargaining power of these operators with infrastructure suppliers,
and their need to harmonise operations worldwide, potentially from very different
starting networks, is likely to have major influence.
2. Infrastructure Vendors.
Much of the cost of developing UMTS has been borne by vendors, who must
therefore expect a return on this investment in terms of contracts and equipment
sales. Although UMTS has been designed to be much more a multi-vendor
environment, the vendor market has already evolved into various alliances,particularly between traditional mobile suppliers and Internet suppliers, in order to
provide operators with a "one-stop shop" option.
3. Governments and Regulators
The licensing timetables and public policies of regulators and governments can affect
anything from the broad timetables for UMTS introduction to the detailed processes
of cell site planning and selection, or the emission and power constraints of terminals.
In particular health concerns are coming more into the public agenda, at just the time
when the roll-out of new base stations and more powerful terminals is required.
Regulators may also ultimately decide how value chains look from country to country,
for example by enforcing particular rules and conditions concerning the access of
virtual network operators and value added service providers to UMTS networks.
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Consumer
Electronics
UMTS
Operators
Vendors
Regulators
Content
Providers
THE CONSUMER
Marketing
Fig. 13 UMTS: The Unknowns
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4. Terminals & Consumer Electronics Markets
As traditionally "fixed" computing and consumer electronics vendors such as
Compaq, Hewlett-Packard, Sony and Panasonic increase their influence on the
terminals market, innovation and design are likely to evolve quickly. Since terminals
represent the consumers interface with UMTS, design and useability are likely to
strongly impact the success or failure of UMTS terminals.
5. The Content Industry
Most analysts agree that without sufficiently attractive content and applications, new
mobile services will not appeal to users. The content industry, be it music, film, banks
or information, is well aware of this, and certain to have an increasingly strong voice
in UMTS service development, for example in much the same way that the Hollywood
ultimately determined the multi-region development of DVD.
6. Marketing
It has been pointed out many times that Betamax was superior to VHS, but VHS was
marketed much better. UMTS faces a similar challenge. Marketing covers a vast array
of issues for the mobile industry to face, from branding to market education to
attractive pricing. The latter in particular will also be influenced strongly by the
development of appropriate Billing solutions.
And finally..
7. The Consumer
It is the reaction of consumers which will ultimately decide the service mix and traffic
types whose support needs to be optimised in UMTS. It will be consumers
disposable income which will decide if pricing strategies have been formulated
correctly. It will be consumers fashion quirks that will decide which terminals sell the
best and it will be consumers convenience and confidence in matters of health, which
will see them favour mobile over fixed access.
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Consumer
Electronics
UMTS
Operators
Vendors
Regulators
Content
Providers
THE CONSUMER
Marketing