Research ..... by Jolito Ortizo Padilla: Viva Bahrain : The Evolution from 2G to 4G by Jolito Ortizo Padilla

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Organization Background

VIVA Bahrain, a part of the STC Group, launched commercial services in Bahrain in March 2010 with the aim of transforming the telecommunications landscape in the Kingdom.

Since launching services, VIVA has thrived to provide consumers in Bahrain a fresh approach to mobile telecommunications services. We launched operations with the latest innovative technologies and have always kept the customer as our sole focal point. VIVA’s best in class voice and data network provides subscribers with reliability and connectivity and is a direct manifestation of our customer centric approach. VIVA has built a simple and easy to understand, yet flexible and customizable product portfolio that gives high value for money to our subscribers ( Padilla, J. ,2012)

VIVA positively impacted the telecommunications market by exposing it to a number of firsts including the first HSPA+ network, the fastest broadband service in the Kingdom at 42Mbps,and the launch of high-tech devices such as the Windows Phone 7 and the iPhone 4 (Padilla, J,2012)

Our customer centric focus and innovation has led to VIVA being recognized as Bahrain’s most advanced telecom operator and achieving unprecedented market share as a 3^rd entrant. VIVA has built a strong network of customer touch points, including a comprehensive retail network and a user-friendly web portal (www.http//.viva.2013)

Besides being a provider of high quality communications services to consumers, VIVA also has a comprehensive portfolio of products to help businesses grow and succeed. With our drive and innovation we have created more choices in the marketplace and are truly empowering businesses. Our business offerings include mobility products, national & international connectivity services and internet solutions (www.http//viva.com, 2013)

Our success is because of the trust and support of the people of Bahrain and VIVA is fully aware of such responsibility that this creates. To this end, ,VIVA has launched “VIVA Jusoor” a program which will develop and run long-term projects to benefit the Bahraini community. VIVA is also the official partner of the English Premiership Champions Manchester United and under the umbrella of this partnership has launched various programs with to develop and promote football in Bahrain www:http//viva.com, 2012)

Introduction

The rapid development of new mobile and wireless technologies and integration with the internet are major challenges for mobile communications and Internet businesses. Forthcoming generations infrastructure both in access and core networks, providing both higher data rates and packet access with Quality of Service (QoS) . The ultimate goal is the development of technological infrastructure for universal communication network, which will be based on the convergence of existing networks (fixed and wireless. Such ubiquitous, but heterogeneous networking is expected to be fully operational in the Fourth Generation (4G) of mobile networking. In the new environment many business opportunities will emerge, as technological innovation is expected to enable the development of new value added services (UMTS Forum, 2000).

In this early stage, it is not useful to predict potential growth rates and size of the new market. Several attempts to do this have failed to predict the potential of highly innovative markets. For example, the popularity of the Short Message Service (SMS) had been underestimated whilst Wireless Application Protocol (WAP) services over GSM have been overestimated

In this context, two main questions arise:

1. Who will the key market players are?

2. How will business models evolve due to the introduction of new technologies?

In the following sections we attempt a systematic account of key industry players and their likely roles in future generations of wireless technologies, leading up to 4G. In doing so, we sketch likely scenarios of market dynamics based on mobile networks technological evolution. In particular the following section introduces key mobile telecommunications players (mobile operators, Internet service providers). We present technological innovation mobile networks and its impact on the key players. We mainly focus on mobile operator’s strategies and their business relationships without market players.

In the service provision value chain of both mobile communications and the internet, the key legacy players that are expected to sustain or even improve their market position in the dynamic environment of technological innovation (Padilla, J,2010) are as follows:

· Connectivity providers that own wireless network infrastructure and have large customer bases for mobile communication services. Viva have been the leaders of developmental success of mobile telecommunication market in Bahrain, by providing personal communication services and information services through wireless (GSM) network. The creation of the critical mass of mobile customers. They have been investing large amounts on upgrading, maintaining, and expanding their networks while developing competence in managing and pricing mechanisms. The mobile communications market presents intense competition, which in combination with continuous technological innovation is shrinking profit margins as communication services are becoming commodities (Laffont and Tirolle, 200). Communications services remain the primary revenue source for VIVA. However, they already faced the challenge of developing new strategies towards providing value added services, content and applications, in order to sustain their profit levels.

· Internet Service Providers (ISPs) connectivity and, sometimes information providers that have IP network infrastructure, Internet know how, and how high speed backbones, which maybe integrated as the core network of 3G and 4G technologies. They have a large customer base of fixed internet subscribers. They are currently managing their own networks locally (traditional ISPs) or internationally (backbone providers). They will provide connectivity services (local and global) Internet access, through packet switched networks. Many ISPs also provide information services to both individuals and corporate customers. They have been developing, in collaboration with technology integrators, various types of value added services covering security,QoS and wide range a wide range of commercial needs. National markets have numerous ISPs that either provides competitive network services covering security or focus on niche markets. However, intense competition is driving the market to consolidate.

· Content providers providers that are currently active mostly in the fixed internet. They provide services at the applications level, typically on top of a TCP/IP communication infrastructure. Their role will be empowered in the new market, as 3G and 4G network technologies will provide the necessary infrastructure for wider use of multimedia content and applications as well as for provision of high value added personalized services. Their services are usually bundles of information content, customized information needs. Some content providers have developed mediating roles that facilitate customer exploitation of the internet by providing suitable online facilities for communication and/or business transactions.

There are two players having a significant impact on technology deployment and hence, market evolution, namely:

· The mobile device and infrastructure vendors (Nokia, Samsung, IPhone , Sony Ericsson)

· The software vendors and communities (Microsoft, Symbian, Linux)

As mobile and wireless IP network technologies are not fully deployed and no specific standard are widely adopted yet, the role of the market player will be critical , though the selection and timing of the technology that will be implemented on end user devices.

The market position of Viva is determined by their respective market power or, in other words, their ability to command superior revenues and profits. The main revenue source is the customer base. In many cases the key player who owns the customer base has the market power to decide on new business relationship with other players. Mobile operators have large customers bases already created from the provision of mobile telephony. ISPs and information providers also manage large customer bases on the Internet. Customers currently subscribe to mobile operator, for mobile communication services, to ISPs for Internet access services and to information providers for content or application services over the Internet (Padilla,J, 2012)

The convergence of the mobile and Internet markets will facilitate provisioning of the above mentioned services through a common network infrastructure. Thus customers will need to subscribe to more than one operator for access and network services. Instead, they will buy network access and probably end to end services with QoS via a single contract. In this context, the strategic challenges are as follows: Who is going to provide network access and services to the customer, and what are the other key players going to do? Will they adapt their strategy by developing different value added services?

Business Relationship Models in 2G and 2.5G Technologies

Communication services in 2G are based on circuit switched radio channels (and in Europe and GSM standard), Kano (2000) identifies the driving force of GSM success as standardization vis-a vis the proliferation of platforms that defined First Generation analogue systems (inter alia, NMT, TACS, and AMPS) , 2 G standardization in Europe occurred for three substantive reasons. First, over the European continent, individuals” mobility makes the case for regional “roaming” compelling. National boundaries in terms of mobile communications is less meaningful than in the US where for example, international or the technological developers and vendors into global businesses able to compete with the United States and Japan. Third, Europe has a predilection towards central standards setting and adoption in contrast to the United States where market is a significant determinant of outcomes.

In the GSM, the drivers were two fold. First, there was a clear push- this was arguably feasible because of the modest market expectations for the technology. Second, there was no prediction for the generation of a mass market; moreover, the existence of the mass market in Europe cannot be explained by consumer demands nor is the explanation rooted in technology. The answer lies somewhere in between. For example, SMS, the GSM short messaging service, was not demanded by consumers, but once available became a cultural phenomenon, especially in the youth market. Mobile operators have generated high profits vis SMS , which is considered to be a “ killer” application in 2G.

Wireless Application Protocol

Recently, Viva invested in Wireless Application Protocol (WAP) technologies that permit in embryonic (i.e. limited) interconnections with the internet. They expected to generate high profits by providing information services that are enabled through WAP. WAP is an open, global specification that empowers mobile users with wireless devices to access and interact with information services. WAP can be used on of various communication systems.WAP was designed for the current generation of wireless devices. It adds to a relatively small additional small additional memory requirements to non-WAP mass market products. Content providers saw an opportunity to extend their business model to include an untapped market of mobile customers. As mobile operators own the access network, ISPs and content providers often enter into agreements with them to effectively exploit their investments in WAP (Padilla,J, 2011)

Regarding security, WAP includes a specification called WTLS, which implements option for authentication and encrypt that, are optimized for use in the mobile environment. WAP is using existing Internet standards such as XML, User Datagram Protocol (UDP) and IP. The WAP architecture was designed to enable standard off-the shelf Internet servers to provide services to wireless devices. WAP is based on Internet such as HTTP and TLS, but has been optimized for the unique constraints of the wireless environment. The Wireless Markup Language (WML) used for WAP content makes optimum use of small screens by and allows easy navigation. However, available bandwidths is very limited, circuits switching is not efficient for data transfers, and mobile devices have limited capabilities and are unable to support a wide range of more complex and demanding WAP applications.

With the introduction of 2.5G technologies, GPRS (General Packet Radio Service) and EDGE (Enhanced Data Rates for Global Evolution), the technical limitations of 2G will partially removed. 2G and 2.5G technologies are empowering mobile operators by enabling them to expand their business scope towards information services, notably information portals. GPRS deployment will enable customers to have efficient (because of packet switching) and effective (because of higher data rates) Internet access. According to Bettsletter et al, 1999, GPRS is an important step in the evolution toward the Third Generation mobile networks. “ The challenge in the development and implementation of GPRS has been in integrating the circuit switching mode technology of GSM and the packet switching mode technology of GSM and the packet switching mode of GPRS. Bringing GPRS online involves operators overlaying a packet based infrastructure over the GSM circuit switched network infrastructure. This is both a major upgrade and a step towards UMTS rollout.

GPRS does a not require that mobile devices dial up to access the Internet because users are always connected. The service enhancement is illustrated by GPRS’s ability to allow users to capitalize on services currently available on the fixed Internet, namely file transfer, Web browsing , chat, email, telnet, corporate LAN access; location dependent information services; and WAP. Another key issue is the expectation of operator’s equipment vendors, particularly device manufacturers, with respect to the provision of mobile devices that can exploit the full range of services they expect to offer. The recent experience of GPRS phones suggests that operators are vulnerable to the withdrawal of vendors’ support for new services should they choose not to market the application supporting devices.

It is also worth mentioning that 2G operators without 3G licenses will attempt to compete with 3G operators on a range of non- voice services (e.g. information services). GPRS could be the top of the see the need to migrate to 3G.

We present the 2G business relationship model, where players retain their traditional business activities. Mobile operators provide network and information services to the customer. Any player wishing to offer services to mobile customer will need to interconnect to the customer’s mobile operator. On the other hand, if a more powerful user device is used, and standard TCP/ IP protocols and applications are used, the business model could change drastically and start resembling what we expect for the early 3G phase.

Business Relationship Models in 3^rd Generation Technologies

Third Generation wireless technology will enable high speed mobile convergence to the Internet while offering customers full access to rich content , applications and value added services. An important issue to consider is Fransman’s observation that mobile telecommunication technologies have in the past developed well in advance of consumer demand (Fransman, 2003, forthcoming). There is little evidence that there exists a demand for 3G and its supporting hardware. Operators, however, need to maximize revenue through services and applications in order to recoup the often huge investments ploughed into network development and licenses.

Recent stock market declines have been fuelled by telecom stocks, in turn informed by the liabilities that some operators have taken on as a result of license auction. The shocks in the financial markets are rooted in uncertainty about business and consumer interest in the technology and its capabilities especially in the context of modest but adequate competition from innovations that significantly enhance GSM platform, notably GPRS, which fully captures the essence of incremental innovation in its building on existing technology whilst increasing capacity.

3G is not about voice (to the extent that it may be provided free of charge in future tariff packages), it is about data communications and multimedia based packet switched, volume charged models. To deliver on this plurality of technical and content skills have to be deployed in some collaborative effort. It is not yet clear what the terms of such collaborative efforts will be. What is clear is that operators are in danger of entering parts of the value chain in which they have no competence to control the arena and avoid having to relinquish control over their customer information-probably the most valuable asset in the whole scheme.

Circumventing the power of the operators may also feature in the future scenarios. If operators try to control the content access by users- for example, by directing customers through particular portals rather than simple access to the Internet-Handset manufacturers may well exploit this constraint and differentiate their products by making it easy for users to reconfigure their devices to suit their own needs rather than those of the operators. The trade offs, however, is whether users have the inclination and motivation to do this.

Business Relationship Models in 4^thG Generation Technologies

The system enabled 4G technologies will combine mobility with broadband services on converging figure networks. A broad range of access systems will be offered to the subscriber in order to cover a variety of requirements. Hence different access systems will have to be integrated with the backbone network. Convergence and ubiquitous networking are going to be key concepts. Technological revolution will lead to a seamless network where the customer will be able to access application, from any access infrastructure, terminal or user interface. Wireless networks will evolve towards higher data rates, flexible bandwidth allocation in any part of the assigned spectrum and the ability to efficiently handle asymmetric services.

End to end IP connectivity over wire-line and wireless networks will support multimedia applications. Consistent, QoS and security are of strategic importance for any player involved and must be offered at the link, transport and application levels in coordinated manner. The same services are expected to be available in all environments using intelligent application layer adaptation technology to cope with widely variable bit rates (Wireless Strategic Initiative-IST Project, 2000). Customers will be able to use any service of any third party without being limited by exclusive arrangements or other exclusionary tactics of the access provider. From business perspective, the objective is to provide cost effective bandwidth to mobile customers while focusing on increasingly individualized, content and commercial applications.

Fourth Generation Impact on Access Networks

The introduction of 4G technologies will have critical implications on access networks. Aiming at the development of a globally integrated access network and the provision of “seamless service”, a layered structure of the access technologies is expected to appear. This can be compared to hierarchical structures in mobile radio systems. This concept facilitates an optimum system design for different applications areas, cell ranges and radio environments, since a variety of access technologies complement each other on a common platform. In this structure the degree of support for mobility and the cell sizes increases from the lower layer to the top layer.

The Broadcasting layer contains emerging digital broadcasting (or distribution) systems such as Digital Broadcasting (DAB), Digital Video Broadcasting (DVB), High Altitude Platforms (HAP) and satellite systems that have a global coverage and support large cells, full mobility, as well as global access. Individual links are not necessarily needed for broadcasting services. This technology can be used as broadband downlink channel to provide fast transfer of Internet content. Other access systems may be used as return channels for data requests and acknowledgement signaling in highly asymmetric services.

The 2G and 3G layer enables a high system capacity in terms of customers and data rates per unit area. It will consist of 2G and 3G mobile radio systems for data rates up to 2Mbps. The systems on this layer provide full coverage, full mobility and global roaming. The 2G and 3G layer is well suited for small to medium bit rate multimedia applications and supports individual links.

The LAN layer is intended for very high data applications, it should be employed in “hot spots” such as company campus areas, conference centers and airports. This layer contains WLAN (Wireless Local Area Network) type systems. These systems are flexible with respect to the supported data rates, adaptive modulation schemes and support asymmetric services. In contrast to 2G and 3G systems, this layer contains systems that are characterized by a shorter range and provide mainly local coverage with local mobility. Where global roaming will be required, however, full coverage is not expected.

The Personal Area Network (PAN) layers will mainly be used in office and home environments. Various information appliances (laptops. Printers, personal digital assistants) and traditional appliances (video cameras, TVs, refrigerators, toasters, washing machines, smart sensors) can be connected to each other to provide short range communication via systems such as Bluetooth,. These systems can also be used to connect the equipment directly to medium access system or to multi mode terminals that can also communicate on one of the other network layers and are of course also equipped with a short range connectivity system. This facilitates an efficient interconnection between the devices as well as a connection from these devices to the public network. PANs may not support mobility (Wireless Strategic Initiative –IST Project, 2000)

The Fixed network layer contains fixed access systems such as optical fiber twisted pair systems (xDSL) and coaxial systems (CATV).Furthermore, fixed wireless access or wireless local loops can be included in this category. However, portability with global roaming is feasible and might be supported. These systems of the fixed network layer are characterized by high capacity and relatively low cost.

Interconnection issues on 4G Networks

Interconnection will be the key to the formation of 4G networks. Both mobile communications and the internet market have established various types of interconnection agreements to ensure connectivity between networks. An interconnection agreement ensures bilateral exchange of traffic between two networks according to specific conditions.

When considering interconnection in mobile communications, where services used to be provided through circuit switched networking, agreements were more straightforward and related to the total amount of traffic and the peak amounts of exchange between networks. However, the future seamless network will be based on packet technologies. The Internet market provides a suitable metaphor for analysis. Internet connection agreements are broadly classified into two categories: peering that involves exchange of traffic free of charge, and transit that involves usage based pricing. The new seamless network will have an IP based core network managed by internet legacy key players such as backbone providers. Therefore interconnection agreements, at least at the initial phase of future network development, will be internet driven. However, issues related mobility and roaming may be better handled by Viva that have already developed such as core competencies in circuit switched networks (Laffont& Tirole, 2000)

Communications and network services between various networks become a commodity, as technological innovation will lead to low coast provision. However, the various autonomous systems will need to collaborate closely in order to increase efficiency of the future network and provide services to the customers. Interconnection between various networks will be necessary. In order to minimize inefficiencies observed in the internet (free riding, asymmetrical information), a common framework for interconnection agreement is needed.

1V. Recommendations

In 4G, Wireless LANs (WLANs) and other unlicensed spectrum local connectivity solutions will compete as substitutes to mobile networks (which are attempting to provide ubiquitous service). WLANs will provide an alternative access network in the framework of a 4G seamless (inter-)network. WLAN access can be envisioned as an involving no usage cost since the use of spectrum will be free; the main cost would be the cost of the deployment (and secondarily maintenance)

The initial deployment of WLAN is expected to focus on access from customers within specific areas that it covers, the “hotspot” e.g as a corporate network. The relatively low cost of implementing WLAN technologies in specific “hotspots” may increase competition in the market for network access , thus putting more pressure in prices. Furthermore, in order to exploit network externalities, WLAN operators may cooperate to create a wider coverage access network based on WLAN islands.

Conclusion

The evolution of business relationship models in mobile networking indicates the leading role of Viva Telecommunications. However, the ability of manufacturers to supply infrastructure and handset according to the launch timeframes of new technologies is critical. In addition technological innovation enables the provision of new value added services that create new business opportunities for Internet players. Ultimately, the proliferation of wireless data and multimedia is likely to be driven by the extent which applications simplify or add value to people lives and by usability of the devices they run out.

The increasing importance of information services for mobile customers, along with the decreasing margins from communication services provision, suggests that Viva should reconsider their strategy, in order to maintain the leading position in the future seamless network.

References:

Bettsteeter, C, Vogel , H.G (199(, GSM Phase 2 +General Packet Radio Service GPRS,: Architecture, protocols and air interface IEEE Communication Survey pp 23.24

Fransman, M (2001) Evolution of the Telecommunication Industry into the Internet Age, International Hanbook on Telecommunication Economics, Edward Elgar Publishing, ppp236, 237

Laffont, JJ (2000) Competition in Telecommunication , MIT Press, 2001, p96, 97

Padilla, J , (2010) Strategic Management. 2^nd edition , p14,17,187,123

Padilla,J (2012) Study of Smart Telecommunications Evolution, American Journal of Information Technology , October, p19, Vol 123

UMTS Forum (2008) Shaping the Mobile Multimedia Future-An extended Vision from the UMTS Forum , Report No. 10 , September

Wireless Strategic Initiatives –IST Project (2000) –The Book Visions of 2006 : Visions of the Wireless Worls, http://www.1st –wsi.org

www.http//viva.com-conf

Index:

The ultimate goal is the development of technological infrastructure for universal communication network, which will be based on the convergence of existing networks (fixed and wireless. Such ubiquitous, but heterogeneous networking is expected to be fully operational in the Fourth Generation (4G) of mobile networking. In the new environment many business opportunities will emerge, as technological innovation is expected to enable the development of new value added services (UMTS Forum, 2000).

In 4G , Wireless LANs (WLANs) and other unlicensed spectrum local connectivity solutions will compete as substitutes to mobile networks (which are attempting to provide ubiquitous service) . WLANs will provide an alternative access network in the framework of a 4G seamless (inter-)network. WLAN access can be envisioned as an involving no usage cost since the use of spectrum will be free; the main cost would be the cost of the deployment and secondarily maintenance (Padilla, J, 2012)

Figure1: Current Business Relationships Model in 2G and 2.5G