Mobile Network Evolution in Austria beyond 2015

Research Paper (undergraduate), 2015

43 Pages, Grade: 1,0


Table of contents

1 Introduction

2 European Mobile Markets
2.1 Regulatory Approach
2.2 The Mobile Market in Austria

3 Mobile Core Network Evolution - LTE Evolution Roadmap
3.1 The Evolved Packet Core
3.2 From LTE to LTE-A: (Economic) motivations and constraints
3.2.1 LTE
3.2.2 LTE-Advanced

4 Looking ahead: Requirements for future mobile networks
4.1 Austria beyond 2015: Towards the future mobile network
4.2 LTE-B Key features and requirements
4.3 LTE-A to LTE-B: Potential Benefits and Applications

5 Conclusion


List of Figures

List of Acronyms

1 Introduction

The information and communications sector is experiencing a major transformation leading to a quick emerging novel industry landscape. The well-known business model of telecommunication operators is continuously being affected by the intensifying struggle between operators. These aspects do not only involve an increasing saturation within the communications market, but also contributes to a rising substitution behavior triggered by well-established Internet businesses.

In this context, the Ovum Global Telecoms Market Outlook 2013-2018 predicts for the coming five years a global increase of mobile lines of about 25% (e.g. 8.1 billion in total by 2018, the relevant growth coming primarily from emerging economies). However, the outlook for the fixed-network market does not look that promising: a 5% reduction in voice revenues for the period 2012 - 2018 is expected. Other important features that influence the economic achievement of a telecommunications provider are represented by the current regulatory provisions along with the price level the provider can realize. Obviously, this price level generally mirrors the customer behavior and the development (stage) of a particular market.

Furthermore, the present generation of mobile networks keeps on transforming the way users communicate and retrieve information as well. Particularly, upcoming technologies are deemed to enable real human-centric and connected machine-based networks, thus redefining end-user mobility and ultimately the entire telecoms industry. In fact, HSPA is nowadays a deep-rooted technology with a mature infrastructure and device environment. Despite that fact, this technology has a usual upgrade pathway in the form of HSPA+, which is being deployed since 2009.

In this sense, the mobile industry has certainly the potential to set free even superior benefits and contribute to meets the EU sustainability and innovation targets defined in the EU 2020 strategy [14]. In fact, the European mobile industry is no longer restricted to the provision of basic voice and data services, but is rather taking to an active role in offering high-speed broadband access and (data) connectivity. This involves a new third wave of connectivity (e.g. beyond tablets and laptops), comprising cars and buildings and having undoubtedly the prospect of connecting almost anything and anyone (the “Connected Life” as the GSMA denotes it).

Starting with GSM and later with HSPA, small cells were applied mainly for fill-in purposes. Nevertheless, their role will become more important for the operators’ networks since most of these (small cell) deployments support the needed capacity at the macro layer. Moreover, current cellular standards will co-exist with other (local area) technologies like Wi-Fi. Indeed, data traffic offload from cellular to Wi-Fi is increasingly being more interesting for operators due to its cost benefits as well as contribution to traffic reduction in the LTE and HSPA networks.

Having this in mind, nearly all operators will have no choice but to invest in LTE and beyond LTE technologies. Particularly, LTE’s higher speed represents a useful innovation to customers who will be disposed to compensate for the superior speeds with a high premium, at least at the beginning. Tough, the main purpose of LTE in the eyes of most operators might rather be the cost saving aspect: LTE’s primary technical framework allows operators to transport data packets much more economically than HSPA. Additionally, in defense of the own market position most operators will be motivated to move to LTE in order to protect as well as maintain the status quo.

2 European Mobile Markets

The European mobile industry is characterized by its innovative approach and entrepreneurial spirit. Consequently, price reductions derived from the fierce competition have positively influenced the affordability of mobile services for end user, inducing a considerably high penetration rate concerning unique subscribers and smartphones.

Based on a recent GSMA publication [14], market conditions have continued to deteriorate within the European mobile market. Indeed, profit margins have worsened, not only as a consequence of the market saturation but also because of ongoing regulatory activities. Another important factor shows that the continuous growth in mobile data volumes together with novel forms of content and advanced communication services are still not able to compensate the declines in long-established revenues.

illustration not visible in this excerpt

Figure 1: EU GDP development and recurring mobile revenue growth (YoY%) [14]

Furthermore, mature markets in Europe are struggling for sound revenue margins: as Fig. 1 shows, some industry players would need to implement key adjustments to their current business models so as to recover from the slightly negative development since 2011.

Needless to say, the financial pressures on European telecoms along with the delays in allocating the Digital Dividend spectrum (800MHz band) have induced investment ratios in the European mobile industry to decline. In practical terms, the earlier LTE deployments in the US (coupled with greater CAPEX levels) leads to faster data speeds on average compared to those in Europe. And this trend is expected to continue: by the end of 2012 LTE stands for less than 1% of total devices in Europe versus 11% in the US and 28% in South Korea.

As Fig. 1 further reveals, mobile networks do also directly influence the competitiveness as well as productivity of economies, causing the European economic outlook to suffer if no measures are undertaken to deal with the imminent challenges facing the industry.

Moreover, the share of 2G devices should continue to decrease, to a little over 20% by 2017. LTE devices today represent only a small proportion of devices, at just 0.3% at the end of 2012. However, as LTE network coverage slowly improves and the price of 4G devices declines further, LTE should account for 20% of total devices by 2017 [14].

The rising popularity of smartphones and tablet PCs will drive mobile data and Internet usage as well as mobile data revenues in the coming years. What is more, a slight increase in broadband lines is expected for the fixed-network market along with an incremented demand for TV, cloud services and related segments. In general, the demand for telecommunications products from small and medium-sized enterprises is likely to continue to grow, especially in mobile data transmission and automated machine-to-machine data exchange.

2.1 Regulatory Approach

Competitive pressures in Europe remain intense and have caused significant price declines in voice and data services (the current voice and mobile broadband pricing in Europe being currently low-priced than in the US). These factors have, in turn, affected industry profitability, with EBITDA margins down by 7% in the last four years [14]

The EU can speed up the progress of a connected Europe and maximize the economic and social contribution of the mobile industry through a policy and regulatory approach that Encourages investment in mobile connectivity Enables innovation in new content and services Builds consumer confidence in mobile services and applications In fact, there are some critical areas of regulatory and public policy worth of being addressed in order to create the proper environment to promote investment in mobile connectivity: this is lastly dependent on the appropriate allocation of sufficient spectrum to enable operators to fulfill (in the short and medium run) the expected growth in data traffic. For this purpose, the EU has pointed out that a total of 1200MHz of spectrum should be spotted to meet this upcoming demand (around 600MHz is released at present in Europe).

Europe further necessitates redeploying its policies so as to encourage investment and innovation rather than the merely management of customer prices. In addition, the European policy should help the mobile industry in accomplishing the economies of scale intrinsic to a single telecoms market. Other important points for an agenda could comprise the improvement of the approval process for innovative BS or the elimination of sector-specific taxes which hamper investment within the mobile industry.

The European Commission adopted on September 2013 a Recommendation to the national regulatory authorities regarding the non-discriminative practices on costing methodologies in order to encourage competition and improve the broadband investment landscape. Still, the European Commission proposed in 2013 an EU Regulation targeted at the further development of the single market for electronic communications.

Besides, customer protection measures have to be harmonized to avoid unnecessary burdens for telecommunications services providers.

The frequencies in the 880-915/925-960 MHz and 1710-1785/1805-1880 MHz bands were allocated for the purpose of the GSM technology deployment in Europe. The aim was to make mobile communications one of Europe's greatest technological successes in the last century. Though, more efficient technologies have appeared (UMTS, LTE) making it reasonably to open up the GSM bands for the deployment of more innovative technologies.

2.2 The Mobile Market in Austria

Austria’s mobile market is intensively disputed by three network operators and an increasing number of MVNOs and resellers. Particularly, the competition has led to a moderate ARPU for operators and some of Europe’s lowest rates for end-users. Besides, subscriber growth for 3G networks has been quite positive (even at the expense of GSM products). The key player, A1, has expanded to Eastern Europe to incorporate lucrative neighboring markets.

Mobile broadband (usage) has shown an unusual increase in the past few years. Furthermore, competition has promoted market consolidation, with T-Mobile buying tele.ring in 2006 and Orange Austria merging into Hutchison Drei Austria in 2013.

Some of the recent key developments involve:

LTE to be available to a quarter of all Austrians by the end of 2013 [28]

Mobile TV streaming success with more than 50 channels available

Multi-spectrum auction delivers 2 billion euros for the state

Telekom Austria adds M2M platforms

UPC signs up as an MVNO on Hutchison Drei Austria’s network

Some of the key findings of the Mobile Communications Report 2013 [23] endorse various consumer (usage) patterns described above. In particular, the vast LTE coverage in Vienna and surrounds (around 88% as A1 advertises) supports a steady mobile data traffic growth as Fig. 2 and Fig. 3 depict

illustration not visible in this excerpt

n=1002 (persons younger than 60 years)

Figure 2: Share of tablet usage (one or more) in Austrian federal states 2013 [23]

illustration not visible in this excerpt

Figure 3: Data volume included in tablet post-paid contracts in Austria (by the end Q3 2013). Breakdown according to gender and age class. [23]

The local regulatory authority (RTR) conducted a consultation about refarming the GSM frequencies in March 2011. As a result, RTR decided not to postpone the refarming (till the completion of the frequency assignment procedure) in case an operator files a corresponding request pursuant to Art. 57 Par. 4 of the Austrian Telecommunications Act (TKG) 2003.

Within this context, the deferment of the multiband auction based on the merger procedures between Hutchison Drei and Orange would additionally suspend the liberalization of frequency usage rights in the 900 MHz and 1800 MHz bands by almost one year. Hence, the deployment of relevant frequency resources has been blocked for this period (with rural regions being particularly affected).

The delay in the assignment of the digital dividend would boost the economic benefits of refarming the 900 MHz and 1800 MHz bands more rapidly. In this sense and considering the growing availability of LTE in the 1800 MHz band and the availability of UMTS in the 900 MHz band, the regulatory authority considered additional postponements to be improper. Based on the Radio Spectrum Policy Program (multiannual radio spectrum policy program, 2012), it is indispensable from a legal point of view to make the frequency bands (900 MHz, 1800 MHz) available for mobile broadband services according to the market demand.

Fig. 4 shows the outcome of the multiband auction for the frequencies 800/900/1800 MHz for the current Austrian operators.

Figure 4: Results of the Austrian multiband auction in 2013 [31]

illustration not visible in this excerpt


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Excerpt out of 43 pages


Mobile Network Evolution in Austria beyond 2015
University of Applied Sciences Technikum Vienna  (Telekommunikation und Internettechnologien)
Advanced Technologies
Catalog Number
ISBN (eBook)
ISBN (Book)
File size
892 KB
Mobile Network Evolution, LTE, LTE-A, LTE-B, LTE Evolution Roadmap
Quote paper
Omar Amoretti (Author), 2015, Mobile Network Evolution in Austria beyond 2015, Munich, GRIN Verlag,


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