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50) HANDBOOK OF WIRELESS NETWORKS AND MOBILE COMPUTING
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12. GSM, cdmaOne and 3G Systems
Preface
This book is concerned with the description and analysis of the global second generation
(2G) mobile radio systems: the Global System of Mobile Communications (GSM) and
cdmaOne. A subsidiary goal is to examine how these two systems will evolve into third
generation (3G) ones with their requirement *****pport multimedia mobile radio communications.
The motivation for this book originated when we were asked to compare the
capacities of GSM and, as cdmaOne was known then, IS-95. The multiple access method
used by GSM is time division multiple access (TDMA), and this represented a significant
change from the first generation (1G) analogue systems that operated with frequency division
multiple access (FDMA). IS-95 had a more complex radio interface than GSM, employing
code division multiple access (CDMA). Engineers at that time often held strong
and somewhat uncompromising views regarding multiple access methods. We preferred
CDMA from a spectral efficiency point of view, although that does not mean that CDMA
should be deployed in preference to TDMA as there are many complex performance and
economic factors to be considered when deciding on the type of system to select.
GSM was deployed before cdmaOne and is the market leader, entrenched in many parts
of the world. Its success is due to numerous factors: its advanced backbone network, the introduction
of subscriber identitymodules (SIMs) that decoupled handsets from subscribers,
its good security system, the low cost equipment due to open (i.e. public) interfaces, the
relentless programme of evolution that has yielded substantial gains in spectral efficiency
compared with the basic GSM system, and so on.
cdmaOne started as a radio interface. It was a bold step to use CDMA at a time when few
thought CDMA could work in a cellular environment. But it did so, acquiring the necessary
backbone network, and became a global standard offering tough competition to GSM. It
is also worthy of note that Europe, which had designed and promoted GSM, has opted for
wideband CDMA for its third generation (3G) networks.
Our cardinal objectives in this book are to present to the reader detailed descriptions
of the basic GSM and cdmaOne systems, mainly from the radio interface point of view;
as well as accompanying analyses. Our first chapter is designed to provide background
material on TDMA, CDMA and cellular radio networks. The reader knowledgeable in
mobile radio should omit reading this chapter and proceed directly to Chapter 2 which
describes the basic GSM system. Chapter 3 provides an analysis of the performance of
GSM networks. The same method of system description followed by a chapter dedicated
to mathematical analysis is applied for cdmaOne in Chapters 4 and 5, respectively. The
final chapter endeavours to describe how GSM is evolving to provide higher bit rate circuitswitched
channels and packet transmissions that will have an ability to provide a range of
multimedia services. The Universal Mobile Telecommunications System (UMTS) is then
described, followed by a discussion of the evolution of cdmaOne to cdma2000. BothUMTS
and cdma2000 are 3G systems.
The authors express their gratitude to those who have helped them in the gestation of this
book. In particular they thank Dr Sheyam Lal Dhomeja for proof reading Chapters 2 and
5, Denise Harvey for her typing and helping to get the book to fruition, our colleagues at
Multiple Access Communications Ltd for providing snipits of knowledge when required,
and last, but not least, our loved ones for providing the support all authors need.
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13. GSM switching, services and protocols
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14) Pricing communication networks
Preface
This book is about pricing issues in modern communications networks. Recent technology
advances, combined with the deregulation of the communication market and the
proliferation of the Internet, have created a new and highly competitive environment for
communication service providers. Both technology and economics play a major role in
this new environment. As recent events in the marketplace make clear, the success of a
communication services business is not guaranteed by new technology alone. An important
part of any business plan for selling communications services is pricing and competition
issues. These should be taken into account from the start. Tra***ionally, engineers have
devised communication services without reference to how they should be priced. This is
because communication services have been provided by large monopolies, with guaranteed
incomes. The bundling and pricing aspects of individual services have been secondary.
However, services are now sold in competitive markets and an important part of the service
definition is how it should be priced. Technology can place severe restrictions on how this
can be done. The following are some reasons why the pricing of communications services
is now exciting to study:
1. Pricing affects the way services are used, and how resources are consumed. The value
that customers obtain from services depends on congestion and on the way services
are priced.
2. Communication service contracts provide for substantial flexibility. Pricing plays
an important role as an incentive mechanism to control performance and increase
stability.
3. Modern networking technology provides new possibilities for producers and the
consumers to exchange economic signals on fast time scales. This allows for the
creation of new flexible services that customers can control and by which they can
better express their needs for quality. This was not possible until a few years ago,
since previously services were statically defined and the network operator was in
total in control.
4. There is no unique way to price. Issues such as ?~flat?T versus ?~usage-based?T charging
have important effects on the short and long term network operation and its
competitive position. These must be understood by people designing pricing policies.
5. Competition can be greatly influenced by the architecture of a networks and the ability
of few players to control bottleneck resources in parts of the network, such as the
access. New networks should be designed so that they provide an open competition
environment in all parts of the supply chain for services. Competition and regulation
issues are important in today?Ts communication market.
6. Communication services are economic goods and must be priced accordingly. There
are generic service models that capture aspects such as quality and performance and
can be used to derive optimal prices in a services market. They can be used to propose
tariffs with the desired incentive properties by pricing the appropriate service contract
parameters.
We began this book after five years of research focused in pricing the rich family of
ATM services and the newly emerging Internet. We believe there is a need for a book that
can explain the provision of new services, the relation of pricing and resource allocation
in networks, and the proliferation of the Internet and the debate on how to price it. We
have had in mind as readers graduate students and faculty in departments of Electrical
Engineering, Computer Science, Economics and Operation Research, telecoms engineers,
researchers and engineers who work in research and industrial laboratories, and marketing
staff in telecoms companies who need to understand better the technology issues and their
relation to pricing. Our experience is that most of these people have only part of the
background needed to follow such important subjects. Readers with engineering and OR
background usually lack the economics background. Economists usually know little about
communications technology and usually underestimate its importance. We have sought to
write in a way that all readers will find stimulating. The book should interest anyone with
some technology and mathematics background who wishes to understand the close relation
of communication networks and economics. Of course, economists may skip the chapters
on basic economics.
When we started this book, ATM technology was already declining in importance as an
alternative to the Internet. However, there continues to be a practical demand for services
such as ATM and Frame Relay. These can be put into the same generic model as the
provision of WAN connectivity services. Similar concepts will apply in future extensions
of Internet services that provide quality guarantees, such as differentiated services and
integrated services. Consequently, we not only deal with the Internet, but also with effective
bandwidths and statistical multiplexing.
The scope of this book is broad. It covers most of the concepts that are needed
to understand the relation of economics and communications. We do not claim to
provide a complete unifying framework, but explain many concepts that are generic to
the problem of pricing. This is not a ?~how to pricê?T recipe book. Rather, it explores
relevant subjects. It provides the basic models and terminology needed for a non-specialist
reader to understand subtle topics where technology, information and economics meet. It
explains the architecture of the communications market and provides a simple and intuitive
introduction to network services at all levels, from the infrastructure to transport. We have
tried to make the book technology independent, emphasizing generic service aspects and
concepts.
The reader does not have to be an expert in communications or read several books on
networking technology numbering hundreds of pages in order to understand these basic
concepts. This may be of great benefit to a reader with an economics or operation research
background. The same holds for readers with no economics background.We explain relevant
microeconomic concepts in enough detail that the reader can follow many issues in network
economics, without having to study advanced economic textbooks. However, we are not
economists and do not claim to cover all topics in network economics. We hope that we
do provide the reader with a useful summary of many key issues and definitions in basic
economics. Those who wish to study these ideas in more depth can turn to economics
textbooks. For instance, our section on game theory should remind those readers who have
previously studied it of those concepts from the subject that we use in other parts of the
book. Readers who have not studied game theory before should find that the section provides
a readable and concise overview of key concepts, but they will need to look elsewhere for
details, proofs and further examples.
There is no one unifying model for network services. We provide models for several
services and leave others of them out. These models allow network services to be priced
similarly to tra***ional economic goods. These models can be used by network engineers
as a framework to derive prices for complex transport services such as ATM, Frame Relay,
IP VPNs, etc. We model the Internet and its transport services and discuss certain issues
of fairness and resource allocation based on pricing for congestion. This provides a deeper
understanding of the feedback aspects of the Internet technology, and of the recent proposals
to provide for a richer set of bandwidth sharing mechanisms. We also provide the theoretical
framework to price contracts in which parameters can be dynamically renegotiated by the
users and the network. Finally, we give the reader a simple but thorough introduction to
some current active research topics, such as pricing multicasting services, incentive issues
in interconnection agreements between providers, and the theory of price regulation. For
completeness, we also provide a simple introduction to auction mechanisms which are
currently used to allocate scarce resources such as spectrum.
We hope to introduce non-specialists to concepts and problems that have only been
accessible to specialists. These can provide both a practical guideline for pricing
communication services and a stimulation for theoretical research. We do not review in
extreme detail the existing literature, although we provide basic pointers.Aguide to references
appears at the end of each chapter. We seek to unify and simplify the existing state-of-theart
by focusing on the key concepts. We use mathematics to make the ideas rigorous, but
we hope without being unnecessary detailed. About 80% of the results in the book have
been published elsewhere and 20% are new. The level of the mathematics is at that of first
year university student?Ts knowledge of calculus and probability, and should be accessible
to students and engineers in the field. Appendix A covers some important ideas of solving
constrained optimization problems using Lagrange multipliers. The book has parts which are
more technology specific and other parts that are more theoretical. Readers can take their
pick.
We have found it convenient to divide the book in four parts. An overview of their
contents can be found at the end of Chapter 1. Possible course that could be taught using
this book are as follows:
1. An introductory course on pricing: Sections 1.4, 2.1, 3.2?"3.3, 4.1?"4.5, 4.10, 5.2?"5.4.3,
5.4.7, 6.1?"6.3, 7.3, 7.5, 8.1?"8.4, 9.1?"9.4, and Chapter 10.
2. An advanced course on mathematical modelling and pricing: Section 1.4, Chapter 2,
Sections 3.1?"3.3 and 3.5, Chapter 4, Sections 5.1?"5.4, 5.6, 6.1?"6.3, Chapters 8, 9
and 10.
3. A course on telecoms policy issues and regulation: Chapter 1, Sections 2.1, 3.2?"3.6,
Chapters 5 and 6, Sections 7.1?"7.1.2, 7.3?"7.5, Chapters 12 and 13, Sections 14.1?"
14.1.3, 14.2 and 14.3.
4. A course on game-theoretic aspects of pricing: Sections 5.1?"5.4, 6.1, 6.4, 7.1?"7.2,
Chapters 9, 10, 11, Sections 12.4?"12.5, 13.1, and Chapter 14.
5. An introductory network services and technology course: Sections 1.1?"1.2, 2.1 and
Chapter 3.
Acknowledgment
There are many people with whom we have enjoyed stimulating discussions while working
on this book. These include especially Frank Kelly and Pravin Varaiya, who have done so
much to inspire research work on pricing communications. They include also our partners
in the Ca$hman and M3i projects, and Panos Antoniadis, Gareth Birdsall, Bob Briscoe,
John Crowcroft, Manos Dramitinos, Ioanna Constantiou, Richard Gibbens, Sandra Koen,
Robin Mason, Georges Polyzos, Stelios Sartzetakis, Vassilis Siris, Georges Stamoulis and
Jean Walrand.
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SIGNAL PROCESSING:1,2,3,4,9,10,15,16,17,26,46,47,62,67,73,75,85,86,95,96
IMAGE PROCESSING :18,31,58,63,97,108
WIRELESS TELECOMMUNICATIONS:,8 ,12,13,14,19,20,22,23,24,25,
27,28,29,30,35,38,40,41,52,53,71,103
COMMUNICATIONS SYSTEMS:11,37,39,51,54,55,56,65,68,70,98,101,111
COMPUTER & TELECOMMUNICATION NETWORKS:21, 33,34,42,43,44
45,49,50,57,59,60,61,89,99,100,,104,105,106,115
ELECTROMAGNETICS:72,74,88,92
RF COMPONENTS & ANTENNAS:32,36,48,87,94,107,109,110
OPTICS:6,79,80,83,91,102,114
E-COMMERCE: 64, 112,113
COMMUNCATION & CODING:5, 7 ,69
CONTROL:77,78,
ELECTRONICS: 76,81,82,84,90,93

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