IMT-2000 for Developing Countries

With mobile penetrations in many developed countries approaching 100% the driving
force for a new mobile generation is naturally new service capabilities including higher
bit rates. On the other hand in developing countries, where mobile usage typically greatly
exceeds fixed access, the driving force is clearly low cost access to telecommunications.

Developing countries focus on the benefits of IMT technologies to provide economic

access to basic telecommunications services, including Internet access at reasonable
speeds. Areas of particular interest are upgrading existing mobile networks to IMT,
within an operator’s existing spectrum allocation, deploying IMT networks to provide
service in areas where there is little or no present telecommunication service, and
introducing additional competition in the provision of mobile services through licensing
new operators.

Voice is the dominating traffic component, and revenue source, and is likely to remain so
for some considerable period of time, particularly in developing “growth” markets. The
business case for migration to IMT for an existing operator is likely to be strongly driven
by lowering the cost of providing basic services such as voice, usually through
increasing overall system capacity and transmission efficiency.

The Average Revenue Per User (ARPU) varies over a very wide range in today’s mobile
networks, from a low of just below $3 to a high of over $70 per month according to
Informa Telecoms and Media. The lower ARPU values do not necessarily imply that
these networks are not profitable, but it does mean that their costs must be substantially
lower than those networks with much higher ARPU values.

Profitability of Mobile Services

Source GSA
In late 2007 the number of mobile subscriptions was over 3 billion, approximately equal
to 50% of the world’s population, and existing terrestrial cellular networks covered 90%,
leaving only 10% of the population without terrestrial mobile coverage of some sort.

The challenge for operators in developing countries will be to find ways to make
mobile services affordable to those who are currently in cellular coverage areas but
are not able to benefit from these services today.

Mobile services already operate way beyond the coverage of existing fixed telecom
networks and offer, in some cases, the only communication capabilities in many areas.
Through innovative business arrangements mobile operators provide services to those
who could not come close to qualifying for traditional telecom service. In fact in many
developing countries mobile phones also provide banking services in areas, which are
often without these services, and also to those who would not generally qualify for
traditional bank accounts.

Source: Informa Telecoms and Media Global Mobile Subscriptions-November 2007

It will be important for existing mobile operators in developing countries to try to
avoid the need to purchase additional spectrum, and so initially IMT migration
options compatible with their existing spectrum allocations are likely to be preferred.

Major components of the communications cost per user are the handset and the radio
base stations, which are typically 65% of the network cost. IMT upgrade network costs
per line, within an operator’s existing spectrum and within a technology family, e.g.
GSM/GPRS to IMT-SC (EDGE) or IS-95 (cdmaOne) to IMT-MC (cdma2000 1X RTT),
could in some cases be less than US$100 per line. IMT handsets, even if their cost is
less than $100, contribute more significantly to the total user cost since network “lines”
are typically shared by many users.

Fortunately a number of organizations such as the GSMA and the CDG are aggressively
addressing ways to ensure that lower cost handsets are available. The GSMA is naturally
targeting low cost GSM handsets in the range US$20-30, though these will not
necessarily have IMT-SC (EDGE) capabilities. The GSMA has also recently started an
IMT-DS (W-CDMA) lower handset cost initiative. The CDG, in conjunction with
Qualcomm and various Korean manufacturers, has initiated a low cost IMT-MC
(cdma2000) handset manufacturing program which is also aimed at the US$20-30 range.

Initially, shared mobile terminals, e.g. similar to the concept of Internet cafes, rather
than individual handset ownership offer many advantages in remote under-served
regions. Fixed cellular terminals can also offer the potential of greatly increased range
and/or higher bit rates in these remote areas.

Power supplies can vary all the way from unreliable to non existent in some developing
areas which may necessitate a fixed, and likely shared, communication set up, probably
with solar power to recharge the batteries.

Much of the computer/communications equipment many of us take for granted such as

FAXs, PDAs, laptops, and printers are far too expensive for individual ownership in
many areas of the world so a shared community arrangement makes good sense.

Initiatives such as the Grameen Foundation/Bank micro-loans have made it possible for
relatively poor individuals to become entrepreneurs in the mobile business, e.g. to
purchase a “Village Phone Kit” (handset/charger etc.) and sell airtime to local users.

It is important to remember that profitability is essentially largely determined by the

Average Margin Per User (AMPU) which equals ARPU minus Average Cost Per User
(ACPU) so networks with low ARPU can still be profitable if they have low ACPU.

Non-real time (NRT) data services are very cost effective communication tools, since
they generally use system resources that could otherwise be idle, and would therefore be
an attractive option for developing countries. The remarkable success of SMS has shown
the potential for simple NRT data services. The success of i-mode in Japan also illustrates
that a great deal can be achieved over a 9.6 kbit/s packet data link.
Due to lack of financial services in many rural parts of developing countries cellular
handsets have taken on the role of “Debit Cards” providing many electronic banking
services through innovative uses of the Short Message Service (SMS). Some employers
in Africa even pay their employees by crediting funds to their cellular handsets and funds
can now even be transferred internationally with a just few key strokes!

The SMS platform is being used in many unique ways in developing countries to meet
the special needs of those in areas which previously had no access to telecommunications
for example to check on the best market prices for their produce.

In some developing countries limited literacy/keyboard capabilities and special character

sets restrict the applicability of services such as SMS and e-mail, but it should be simple
to develop NRT voice mail services which are easy and inexpensive to use. In a shared
community communications center, a store and forward, e.g. NRT, FAX-based service
could also address some specific communications needs.

Developing countries, whose aim is to address universal service objectives such as

providing increasingly advanced services to un-served and under-served areas, should
give priority to initially making available mobile allocations at the lower frequencies
identified for IMT, e.g. 450-470 MHz and 806-960 MHz,. This is consistent with ITU-R
Resolution 224 as revised at WRC-07 and Resolution 228 as revised at WRC-03.

Higher bit rates inevitably come at a higher price, particularly where it is necessary to
transmit radio signals over a medium to long range and in high mobility applications,
since higher bit rates will generally require the use of more system resources, e.g.
power/bandwidth, than lower rate services of the same quality. This is particularly
important with real time high bit rate services such as video, which require dedicated
system resources.

For developing countries peak mobile data speeds can be progressively increased as
required, particularly in “urban” areas where relatively small cell sizes are used. The key
requirement in most developing countries is coverage for basic services at an
acceptable cost rather than exotic new multi-media services, e.g. video games and digital
photo exchange. Correspondingly most mobile handsets do not necessarily need cameras
or color screens.

The higher frequency bands identified for IMT, i.e. around 2 GHz and above, allow wider
radio channels, e.g. 5-20 MHz, and hence higher peak bit rate capabilities, than those
possible below 1 GHz. However, these higher peak bit rates will generally be in small
cells due to practical transmission power limitations in handheld mobile equipment.

Thus the higher IMT-2000 frequency bands form a natural complement to enhance
data capabilities, once mobile coverage is available to the majority of a country’s
citizens.
The cost of voice service delivery is very closely tied to an individual operator’s Quality
of Service (QoS) requirements, e.g. Mean Opinion Score (MOS) voice quality, call
blocking and drop rates. New smart speech codecs have the potential to double IMT-
2000 peak voice capacities offering further very significant radio transmission
efficiency improvements for IMT-2000. Operators now have the potential to optimize
voice service costs, e.g. through trading busy hour voice quality for service cost, to suit
their particular operating environment.

For example IMT-SC (EDGE) enhancements coupled with the Adaptive Multi-Rate
(AMR) codec can substantially increase the voice capacity of a GSM network compared
to one populated only by mobiles with the Enhanced Full Rate (EFR) or prior GSM
codecs.
Similarly IMT-MC (cdma2000 1X) can provide approximately twice the voice capacity,
using the same Enhanced Variable Rate Codec (EVRC-A), as the equivalent 2G
technology IS-95 (cdmaOne).
The new Smart Codec (EVRC-B) can provide an additional 40-60% improvement in
voice transmission efficiencies and hence proportionately lower service costs. This new
codec also allows dynamic operator control of the Average Coding Bit Rate so that traffic
peaks can be handled with “Soft Blocking” resulting in further potential reductions in
Capital Expenses (CAPEX). The wideband version (EVRC-C), offers greatly improved
voice quality, based upon a 7kHz audio input range, while still using the same maximum
coding bit rate as EVRC-A.
Second mobile licenses have recently been awarded in many developing countries to
provide a competitive environment. The existing mobile operator typically only provides
second generation mobile services and the new operator is likely to initially focus on
providing comparable mobile coverage to the incumbent, rather than immediately
launching new 3G services.
IMT radio technologies can usually provide these new operators significant strategic
and cost advantages even if they do not initially offer third generation mobile services.
This is primarily due to the improved spectrum utilization efficiency of IMT radio
technologies compared to their second generation predecessors.
Additionally equipment costs for most IMT technologies are generally not significantly
greater that 2G equivalent equipment. The latest fixed network mobile equipment, e.g.
core network and base station items, usually offers “software” upgrades for enhanced 3G
services.
Thus a key to ensuring future IMT capabilities, while realizing most of the capacity and
economic benefits prior to offering 3G services, is to make sure that mobile users on the
new operator’s network all have the latest “efficiency” enhancements, e.g. smart speech
codecs etc.
The incumbent mobile operator is likely to have a wide range of existing mobile
equipment on his network and is therefore severely limited in realizing these potential
transmission efficiency improvements, even with a fixed network upgrade to IMT.