IEEE 2- Economics of 3G Long-Term Evolution: the Business Case for the Mobile Operator


Many mobile operators are currently seeking
significant improvements to their 2G and 3G based cellular
systems. With significant improvements in the radio interface,
enabling a lower data access cost per megabyte, as well as several
potentially important new services, 3G Long-Term Evolution
(LTE) can bring substantial technological and economic benefits
to operators, and therefore provide a decisive advantage over
alternative wireless technologies.
This paper analyzes the economics of 3G LTE for a System
Architecture Evolution (SAE) network. The analysis starts by
describing the drivers for the further evolution of 3G networks
and the business case for the 3G LTE technology. This is followed
by a discussion of the general principles in techno-economic
modeling. Concluding the paper is a techno-economic analysis
for a 3G LTE operator with its own 3G network.
The analysis is carried out by the construction of a technoeconomic
simulation model, which looks at a large Southeast
Asian type country from 2010 to 2019. Two different cases are
analyzed: a fixed use case, similar to that of wireless DSL, and a
mobile use case, similar to that of 3G cellular data. The
respective addressable markets are one million and ten million
users. For these two cases, the total costs of building and
operating the SAE network are 80 million and 2 billion euros.
For the fixed case, an ARPU of 15 euros per month is sufficient
for break-even; for the mobile case, an ARPU of 10 euros.