A Techno-Economic Analysis of 3G Long-Term Evolution for Broadband Access

Abstract

3G long-term evolution (LTE) can bring substantial technological and economical benefits to operators deploying mobile networks beyond 3G. With significant improvements in the radio interface, enabling a lower data access cost per megabyte as well as several potentially important new services, 3G LTE could have a decisive advantage over alternative wireless technologies that currently compete with 3GPP technologies. 3G LTE provides a cost-efficient way to deliver the most popular services to large numbers of people, with a technology that is directly based on existing 2G and 3G systems. This paper analyzes the economics of 3G LTE for a system architecture evolution (SAE) network. This starts with examining the drivers for broadcasting and mobility convergence, which is followed by a description of the business case for the 3G LTE technology and its SAE network structure. 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 techno-economic simulation model, which looks at a large Western European type country from 2010 to 2019. Two different cases are taken into account: a fixed use case, which is similar to that of wireless DSL, and a mobile use case, which is similar to that of 3G cellular data. The respective addressable markets arc assumed to be one million and ten million users. For these two cases, the total costs of building and operating the SAE network arc approximately 120 million and 1.9 billion euros. For the lived case, an ARPU of 15 euros per month is sufficient for breakeven; for the mobile case, an ARPU of 10 euros.