Techno-economics of radio access networks: case of Finland

This dissertation explores how mobile network operators can develop their radio access networks to provide wider coverage and higher capacity at a lower cost and energy consumption. The research focuses on three objectives: (1) to develop a revenue model for forecasting mobile broadband revenues, (2) to develop a cost model with a focus on energy consumption in radio access networks, and (3) to apply these developed models to optimally reduce the cost and energy consumption of radio access networks in the Finnish mobile broadband market for the period between 2015 and 2020. This dissertation deals with the uncertainty in radio access network evolution, taking into account traffic growth and government intervention, specifically coverage obligations, broadband and energy policies. The dissertation builds on a techno-economic framework which combines the disciplines of telecommunications engineering and economics. It consists of multiple quantitative methods, mainly including empirical estimation of demand, network dimensioning, mathematical modeling, and marginal cost analysis. The dissertation contributes to techno-economic modeling by extending the development of revenue and cost models, and applying them to new technical and industry architectures. According to the main findings from the models, the evolution in macro network causes a drop in cost, and consequently in the price per gigabyte. Additionally, it was found that mobile broadband revenues increase, but not as fast as the traffic increases. Furthermore, the energy consumption of radio access networks is largely independent of traffic and decreases with macro network enhancements. However, a larger reduction of energy consumption can be achieved by small cell network deployments. Finally, the energy cost constitutes a small, but remarkable, share of the macro network operating cost. It is concluded that the macro network evolution (based on standards and products of the 3rd Generation Partnership Project, as defined in Releases 8-12) is sufficient to meet the required wider coverage, higher capacity, lower cost and lower energy consumption in Finland. Wider coverage and higher capacity are required by market forces and government intervention. The speed of investments is driven by the traffic growth in urban regions, while conversely, the speed of investments is driven by the regulator's intervention in the suburban and rural regions. Also, lower cost and lower energy consumption are required so that mobile network operators can respond to mobile data traffic growth. Finally, it is concluded that mobile network operators do not have business need for excessive indoor small cell deployments at least until 2020.