This document provides an overview of an ITU regional seminar on costs and tariffs for Study Group 3 Regional Group for Asia and Oceania (SG3RG-AO). The agenda includes an introduction to LRIC modeling, an overview of LRIC model development in Korea, details on BU-LRIC models for mobile and fixed networks, experiences sharing of BU-LRIC, and a discussion session. LRIC models have been used in Korea since 2002 to determine interconnection tariffs, with continuous refinements made to the models over time including considering additional network technologies.

1. ITU Regional Seminar on Costs and Tariffs for SG3RG‐AO
2012. 5. 28
Yongsun Choi (yschoi@inje.edu)
Sangwoo Lee (woody@etri.re.kr)

2. Agenda
 Introduction
 Overview of LRIC model development in Korea
 BU‐LRIC model for Mobile Network
 BU‐LRIC model for Fixed Network
 Sharing of BU‐LRIC experiences
 Discussion
ITU-T SG3RG-AO 2

3. Introduction
Principles of BU‐LRIC
 Competitive market
 Long‐run costs: include all the costs that will ever be
incurred in supporting the relevant service demand
 Incremental costs: incurred in the support of the
increment of demand; avoidable costs in case not
supporting the increment
 Efficiently incurred costs
 Costs of supply using modern technology: choice of
network technology (e.g. 2G, 3G); capacity of equipment;
purchasing price and operating cost; maintenance cost
[Source: Analysys Mason]
ITU-T SG3RG-AO 3

4. Introduction
Conceptual issues for BU‐LRIC
• Type: actual, average, hypothetical
• Footprint: national, sub‐national
• Scale: market share
• Service set supported
• traffic volume
• wholesale cost, retail cost
• network architecture issues
• adjustment of nodes: scorched‐
node or scorched‐earth
• cost increments
• depreciation method
• weighted average cost of capital
[Source: Analysys Mason]
ITU-T SG3RG-AO 4

5. Agenda
 Introduction
 Overview of LRIC model development in Korea
 BU‐LRIC model for Mobile Network
 BU‐LRIC model for Fixed Network
 Sharing of BU‐LRIC experiences
 Discussion
ITU-T SG3RG-AO 5

6. LRIC in Korea: Overview
Interconnection regulation in Korea
 1998~1999 (Revenue Sharing)
 Zero‐Payment Settlement between Mobile Operators
 2000~2001 (Representative Cost System)
 Introduction and Application of Cost‐based Pricing
 2002~2003 (Individual Rate System)
 Fully Distributed Costs (FDC)
 2004~present (Individual Rate System)
 Introduction and Application of LRIC
 Elaboration of both BU‐ and TD‐LRIC models
 Stepwise extension of models and applications
ITU-T SG3RG-AO 6

7. LRIC in Korea: Overview
Changes of termination rates in Korea
100.0
92.0
90.0
86.0
80.0
73.6
70.0 68.9
65.7
63.6
60.0 59.0 58.5
55.0 LGT
53.5 52.9
KRW 50.0
48.0
KTF
47.7 46.7 47.0
/min 45.7 45.1 SKT
40.0 41.0 40.1 39.6 KT
39.1
38.7 38.5
38.0
33.1 32.8 33.4 32.9 33.6
33.4
31.8 31.2 31.4 31.9
31.8
30.5
30.0
20.0 18.7 19.5 19.5 19.3 19.2
18.2 18.5 18.6
16.7 16.6 16.6 16.7 15.5
10.0
0.0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Note: Single MTR is to be applied from the year 2013
ITU-T SG3RG-AO 7

8. LRIC in Korea: Overview
BU‐LRIC system in Korea
Input Data Components of BU process Output
• Location and Traffic data of BTS’s • Interconnection tariff for
• Location of switching stations fixed and mobile operators
• Topography, roads, building data Depreciation
• Interconnection tariff for
Fixed
network elements
Design of Operating cost
Mobile hypothetical
Network Access Cost of
• Specifications of equipments Charges for Capital
• Unit prices of equipments Network
CAPEX for Elements
Network
Elements
• KT: D. nodes, LE, TE; LL, LE-LE,
Investment
• Asset lifetime quantity LE-TE, TE-TE
• Operating cost Conversion factor Investment • SKT/KTF/LGT: BTS, BTS Sites,
• Cost of capital Cost
BSC, MSC, CGS, HLR, BS-MSC,
MSC-MSCLL: Local loop
LE: local exchange
TE: toll exchange
ITU-T SG3RG-AO 8

9. LRIC in Korea: Overview
Extension of BU‐LRIC applications
 2004‐2005
 Sample districts: Mobile 2, Fixed 12
 Partial redesign of backbone network
 Reflect operator’s network topology
 2006‐2007
 Sample districts : Mobile 8, Fixed 12
 Full redesign of backbone network
 Allow operator’s existing point of interconnection
 Forward‐looking technology
 2008‐2009
 Samples districts : Mobile 16 (including Seoul metro), Fixed 20
 Elaboration of algorithms for optimizing mobile and fixed networks
 Re‐design of 3G network
 2009‐present
 Migration into new BU‐LRIC S/W system
 Ready to simulate all districts (Mobile 164; Fixed 259)
 Started to consider 4G network
ITU-T SG3RG-AO 9

10. LRIC in Korea: Overview
BU‐LRIC options applied in Korea
 Actual operator; Hypothetical existing operator
 National coverage for all operators
 Current market share; average of market share
 Mixed approach of scorched‐node and scorched‐earth
 scorched‐nodes: only MSC & Switching Stations
 2G, 3G, and 4G; SKT KTF LGU+
800MHz 20MHz(2G)/10MHz(4G) 10MHz(4G) 20MHz(4G)
900MHz - 20MHz(4G) -
1.8GHz 20MHz(4G) 20MHz(2G) 20MHz(2G)
2.1GHz 60MHz(3G) 40MHz(3G) 20MHz(4G)
 Voice and SMS services
 Actual voice traffic volume data of each BTS is used
 Wholesale cost
ITU-T SG3RG-AO 10

11. LRIC in Korea: Overview
Features of BU‐LRIC model in Korea
 Practical and detailed approach
 Actual traffic volumes of each BTS are collected from operators
 Utilization of detailed geodata: topography, roads, buildings,
etc.
 Phased approach
 Preprocessing of Input data (Traffic volume & Geodata)
 Network design and CAPEX calculation
 Visual display network elements on electronic map: helps
validating the efficiency of designed network
 Calculation of BU‐LRIC
 Flexible S/W systems
 Various parameters are easily handled with data tables
 Easy customization due to stepwise modularized S/W systems
ITU-T SG3RG-AO 11

12. Agenda
 Introduction
 Overview of LRIC model development in Korea
 BU‐LRIC model for Mobile Network
 BU‐LRIC model for Fixed Network
 Sharing of BU‐LRIC experiences
 Discussion
ITU-T SG3RG-AO 12

13. Mobile BU‐LRIC
Steps for mobile network
Radio Propagation Backbone Other Elements
Coverage analysis Optimized backbone
/ Distribution of traffic network topology
Calculation of
Grid segmentation for Demanding Line and
candidate BTS sites Traffic Volume
Quantity of
Final BTS sites w/ Required floorage of
Switch/(transmission
propagation analysis Central Office
equipment/Cables
Investment Cost for Investment Cost for Investment Cost for
Base Station Backbone network Central Office
Depreciation, Cost of Capital, Operating cost
Interconnection tariff
ITU-T SG3RG-AO 13

14. Mobile BU‐LRIC
Input geodata
 DEM (Digital Elevation Model)
: Global DEM is available
: Scale used: 10  10 meters (pixel)
Buildings (height & floorage
by pixel): Not used, if n/a
ITU-T SG3RG-AO 14

15. Mobile BU‐LRIC
Rooftop elevation (by pixel)
Building Height
DEM
ITU-T SG3RG-AO 15

16. Mobile BU‐LRIC
Terminology used
 District
 Target area of simulation; same with administrative districts
 Cell
 Area served by each (existing) BTS by coverage analysis
 Grid
 Square area as a candidate BTS site (highest pixel in the grid)
 Grid size varies depending on the traffic volume around
 Pixel
 Square area: scale of 10  10 meters used
 Most of analysis unit: coverage analysis, traffic volume
distribution, capacity‐based radio propagation analysis, etc
ITU-T SG3RG-AO 16

17. Mobile BU‐LRIC
Coverage analysis & distribution of
traffic (by pixel)
district
Cell polygons
ITU-T SG3RG-AO
63 Existing BTS sites 17

18. Mobile BU‐LRIC
Grid segmentation and candidates
of BTS sites
grids
ITU-T SG3RG-AO
127 Candidate BTS sites 18

19. Mobile BU‐LRIC
Finally picked efficient BTS sites with
capacity‐based propagation analysis
ITU-T SG3RG-AO
48 Efficiently designed BTS sites 19

20. Mobile BU‐LRIC
Data tables of parameters
 All parameters for the network design and cost
computation (e.g. unit cost) are managed as data tables
 Easy‐to‐use update of those parameters is supported
“Save”
ITU-T SG3RG-AO 20

21. Mobile BU‐LRIC
Simple execution of simulation runs
Folder to store
Districts Operator Year Network Types
Current Simulation
Output files
Progress bar
Simulation Plans
ITU-T SG3RG-AO 21

22. Mobile BU‐LRIC
Spreadsheet output: volume
and CAPEX of network elements
 Summary of simulation (for each simulation plan)
 District, Operator, Traffic volume, Network type, Target Year
 Total costs
 Categorized details (each subcategorized by network types)
 BTS: FA, Threshold; # of BTS, unit cost (by # of sectors); sum of BTS costs
 BTS site (default option: rent): # of site; Deposit, Rental fee (monthly)
 BSC: Unit cost (min, max); # of BSC, # of BTS, CH; sum of BSC costs
 BTS‐BSC network (default option: rent): type of cable; distance; sum of
BTS‐BSC network costs
 Ancillary equipment: Air‐conditioning, fire extinguisher, QDF
 Powersource equipment: Rectifier, Storage battery, Cabinet panel
 Radio mast (6M or 40M): # of masts; unit cost; sum of mast costs
ITU-T SG3RG-AO 22

23. Mobile BU‐LRIC
Display of network elements on e‐map
Basemap: vector, satellite,
vector & satellite, none
Display options
ITU-T SG3RG-AO 23

24. Mobile BU‐LRIC
User‐driven display for validation
ITU-T SG3RG-AO 24

25. Agenda
 Introduction
 Overview of LRIC models in Korea
 BU‐LRIC model for Mobile Network
 BU‐LRIC model for Fixed Network
 Sharing of BU‐LRIC experiences
 Discussion
ITU-T SG3RG-AO 25

26. Fixed BU‐LRIC
Steps for fixed network
Local loop Backbone Other Elements
Subscriber clustering Optimized backbone
network topology
Optimized locations of Calculation of
LL nodes Demanding Line and
Traffic Volume
Optimized routing of Quantity of
Required floorage of
LL along roads Switch/(transmission
Central Office
equipment/Cables
Volume and Cost for Investment Cost for Investment Cost for
LL elements Backbone network Central Office
Depreciation, Cost of Capital, Operating cost
Interconnection tariff
ITU-T SG3RG-AO 26

27. Fixed BU‐LRIC
Cost elements of fixed networks
RSS Network Feeder Network Distribution Network
RSS
10km
Distribution nodes
12km 12km
Stn. A
F. Node a
10km 10km 10km 20km 20km
100회선
i) ii) iii)
15km
F. Node b
20km
50km 200회선
Switching
Network id From / To Type Total distance Non‐overlapped Overlapped
1 Stn. A / Stn. B S. Net 10+50+10 = 70 50+10 = 60 i) 10km 1, 2, 4
2 Stn. A / RSS RSS Net 10+10+12+10 = 42 12+10 = 22 ii) 10km 2, 4
Stn. B 3 RSS / Node a F. Net 12+20+20 = 52 12+20 = 32 iii) 20km 3, 4
4 Stn. A / Node b F. Net 10+10+10+20+15+20 = 85 10+15+20 = 45
10km
ITU-T SG3RG-AO 27

28. Fixed BU‐LRIC
Spreadsheet output: Volume and
CAPEX of network elements
 Summary of simulation (for each simulation plan)
 District, Operator, Target Year, Total costs
 Categorized details (e.g., local loop case)
 RSS network: # of RSS, length of duct, # of manholes, length of
Fiber cable, # of equipments (Switching / Transmission); Costs
 Feeder Network: # of Feeder nodes, length of Duct, # of Manhole,
length of cable (each Cooper or Fiber); # of equipment (Switching /
Transmission); Costs
 Distribution Network: # of distribution nodes, length of Duct, # of
Manhole, length of cable, # of poles; Costs
 Additionally, details of overlapped sections are provided
ITU-T SG3RG-AO 28

29. Fixed BU‐LRIC
Display of network elements on e‐map
Fiber nodes & network
Selection of network
elements to display
Copper nodes & network
ITU-T SG3RG-AO 29

30. Fixed BU‐LRIC
Zoomed‐in view with vector & satellite
basemap
ITU-T SG3RG-AO 30

31. Agenda
 Introduction
 Overview of LRIC models in Korea
 BU‐LRIC model for Mobile Network
 BU‐LRIC model for Fixed Network
 Sharing of BU‐LRIC experiences
 Discussion
ITU-T SG3RG-AO 31

32. Sharing of experiences
Proposal to share experiences
 Sharing of experiences in ITU‐T SG3RG‐AO will help
better understanding and improvement of BU‐LRIC
models
 Survey of various options applied (or planned) in each
member state could be proposed
ITU-T SG3RG-AO 32

33. Sharing of experiences
Availability of GIS data
 There are some sources of GIS data, in case n/a
 An example view of GIS data obtained from Google (Vietnam case)
ITU-T SG3RG-AO 33

34. Sharing of experiences
Examples of overlay display on Google map
ITU-T SG3RG-AO 34

35. Sharing of experiences
Willing to provide our experiences
 We are willing to provide our experiences and
developed S/W systems non‐commercially
 Customization will be required due to diversity of
options and differences of requirements granularity
 Modularized systems will not ask much effort for
customization
 Member states can develop their own modules of
BU‐LRIC systems
ITU-T SG3RG-AO 35

36. Discussions…
ITU-T SG3RG-AO