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4G LTE network access system and pricing model for IoT MVNOs: spreading smart tourism

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Abstract

The aim of this study is to facilitate market access by Internet of things (IoT) mobile virtual network operators (MVNOs) (‘M2V’ hereinafter) for the purpose of providing the IoT services required to implement more advanced smart tourism in the tourism sector, which is heavily influenced not only by the Internet but also by information and communications technology (ICT) in the era of fourth generation (4G) long term evolution (LTE) networks. The study produced the following results. It established a 4G LTE network-based technological access system, which is commercially offered all over the world, and suggested business models featuring diverse interworking between network and system through M2V access to 4G LTE, as well as the resulting wholesale price calculation model according to bandwidth. Based on the research model, both the Korean government and governments of other countries can be expected to further advance smart tourism in the future by implementing policy and institutional supports that aim to enable 4G LTE network-based M2V to realize a technological access system, and by inducing M2V to make inroads into the tourism industry based on diversified business models.

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Notes

  1. KRW 1000 is equal to United States dollar (USD) 1.100 in February 2014.

  2. The Telecommunications Business Act, previously under the jurisdiction of the Korea Communications Commission (KCC), has been administered by MSIP since February 2013, when the new Ministry was established.

  3. Wholesale price = retail price–(retail price × (avoidable cost/total retail price)). In 2001, Britain’s Vodafone set the retail-minus wholesale call charge for MVNOs to EUR 0.33 per minute, with the off-peak charge set to EUR 0.1. These rates correspond to 72.5–78 % of the retail rates applied by MNOs. The rates vary according to the number of subscribers; 78 % of the retail rates for MVNOs with 0–2500 subscribers and 72.5 % for MVNOs with more than 200,000 subscribers [37].

  4. In 2014, MSIP adopted a policy of reflecting the entire amount of the decrease in the mobile network access charge in a reduction of the land-to-mobile (LM) call charge as soon as possible after the consent of the Fee Rating Committee and the Ministry of Strategy and Finance. It also adopted the policy of returning savings on the mobile network access charge to the consumers for 4 ~ 5 months, which is a result of the decrease in the LM calling charge that is expected in April or May.

  5. Currently, in Korea, IoT services are provided by MNOs as value-added services.

  6. Japan’s NTT DoCoMo (the largest MNO in Japan) slashed its data wholesale prices for MVNOs in half. This move was made in order to comply with the amended ‘Directives on the Operation of Class 2-designated Telecommunications Facilities’ by MIAC. The price cut was explained by the drop in packet access prices brought about by the broad penetration of smartphones and resulting increase in data traffic. Concretely, the monthly rate paid by a MVNO accessing NTT DoCoMo’s circuit and switching facilities was lowered by 56.6 % to JPY 1,234,911 from JPY 2,846,478 in 2013. Meanwhile, the rate for small MVNOs using NTT Docomo’s overall facilities was reduced 51.4 % from JPY 3,691,297 to JPY 1,795,815 [55].

  7. A simple MVNO does not have telecommunications line equipment such as a voice switching system [mobile switching center (MSC) and cellular gateway system (CGS)], a data switching system [serving GRPS support node (SGSN) and gateway GPRS support node (GGSN)], or an home location register (HLR), which is the common switching system for both voice and data. A partial MVNO provides the mobile communications service with its own HLR and has its own brand strategy, although it still uses the mobile network code (MNC) and subscriber identification module (SIM) cards of the MNO. A complete MVNO provides the mobile communications service with its own telecommunications line equipment, including the voice switching system, data switching system, common switching system, transfer system, line signal system and data processing system. In this case, it uses an independent pricing policy, its own brand, in-house infrastructure and SIM.

  8. The announcement issued in May 2013 did not include 4G LTE switching systems such as S-GW, P-GW and HSS, as shown in Fig. 2.

  9. The wholesale provision announcement stipulates that the basic discount rate should be recalculated each year in accordance with the business report of the mandatory operator.

  10. The amount allocated to facility costs from the support facility cost in phase 1 was assumed to be 58 % of the 3G facility cost. The facility cost of phase 2 was split into voice cost and data cost. For the HLR and radio usage fee, it is assumed that the ratio of voice to data was 1:1. Since RNC, the transfer fee between the earth station and the switch center, and the transfer fee between the switch centers are parts of the call volume-related costs, voice and data traffic rates were used. The node-B cost was calculated using the voice and data traffic rates, reflecting the efficiency.

  11. Total traffic estimated using CAGR 5.08 % from January 2014 to December 2014 was 518,444 in 2015, 544,771 TB in 2016, 572,435 TB in 2017, and 601,503 TB in 2018.

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Authors and Affiliations

  1. Department of Science and Technology Management Policy, University of Science and Technology, Korea Institute of Science and Technology Information, 66 Hoegi-ro, Dongdaemun-gu, Seoul, 02456, South Korea

    Jeongeun Byun

  2. Department of Science and Technology Management Policy, University of Science and Technology, IT Law & Regulation Research Section, Electronics and Telecommunications Research Institute, 218 Gajeong-ro, Yuseong-gu, Daejeon, 34129, South Korea

    Byung Woon Kim

  3. Department of Accounting, Jeju National University, 102 Jejudaehak-ro, Jeju-si, Jeju Special Self-Governing Province, 63243, South Korea

    Chang Youl Ko

  4. College of Hotel and Tourism Management, Kyung Hee University, 26 Kyungheedae-ro, Dongdaemun-gu, Seoul, 02447, South Korea

    Jeoung-Woo Byun

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  1. Jeongeun Byun
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Correspondence to Byung Woon Kim.

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Byun, J., Kim, B.W., Ko, C.Y. et al. 4G LTE network access system and pricing model for IoT MVNOs: spreading smart tourism. Multimed Tools Appl 76, 19665–19688 (2017). https://doi.org/10.1007/s11042-016-3369-3

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  • DOI: https://doi.org/10.1007/s11042-016-3369-3

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