Charging and Billing models for GSM and Future Mobile Internet Services

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Charging and Billing models for GSM and

Future Mobile Internet Services

John Cushnie and David Hutchison

Computing Department

Lancaster University, LA1 4YR, UK

j.cushnie@lancaster.ac.uk

d.hutchison@lancaster.ac.uk

Abstract

Mobile telephone communications and the Internet are converging and may eventually operate

on a common technical platform, using TCP/IP networks as the main backbone medium. Mobile

telephones are converging to Internet terminals, allowing the user access to email, Web browsing

and all the other Internet services currently available from a desktop computer environment.

In order to provide improved infrastructure for GSM based Internet services using 2

and 3

generation (2G and 3G) the mobile telephone network providers have the requirement to

generate revenue for the services they provide. To do this the mobile telephone network

providers first need to capture the charging and billing data from the network.

This paper describes the evolution of the Global System for Mobile (GSM) telephone networks

and future mobile Internet services, via 2G with General Purpose Radio Service (GPRS) and 3G

with Universal Mobile Telecommunication System (UMTS).

A selection of proposed Internet charging models are applied to the mobile telephone network

market and their relative suitability is examined. The use of combined charging models is

proposed and discussion of the future work that needs to be done in this field is also made.

1. Introduction

The Global System for Mobile (GSM) was first introduced in 1992 with approximately 23 million

subscribers, rising to over 200 million in 1999 on over 300 GSM networks [1]. The aim was to provide

a global mobile telephone network that could be implemented using standard building blocks not tied

to specific hardware vendors. The uptake of GSM by subscribers is far higher than any industry

predictions and typifies the 1990's and the increasing need for personal mobility.

The 1

generation GSM mobile telephone networks provide subscribers with high quality voice

communications and low bandwidth (9.6Kb/sec) data connections for FAX, Short Message Service

(SMS) and full dial-in connection to the Internet for email and web browsing, usually requiring a

mobile computer or intelligent handset. The addition of overlay communication protocols, such as

Wireless Application Protocol (WAP) [2], allow mobile handsets on 1

generation GSM networks to

be used for secure connection applications such as mobile banking and other transaction based services.

The increasing use of mobile telephones and devices for data communication drives the need from

the market for a fast, reliable and available infrastructure. GSM proposes to provide the required

infrastructure using 2

and 3

generation (2G and 3G) GSM which introduce new technology that

allows increased data bandwidths and new data services [1]. 2

generation GSM introduces the

General Packet Radio Service (GPRS) and 3

generation GSM introduces the Universal Mobile

Telecommunication System (UMTS).

Packet Switching [3] is being introduced as the switching mechanism for data calls and internet

sessions, in contrast with the current circuit switching implementations currently used in 1

generation

GSM and fixed line telephony networks. Due to the quality of service limitation of packet switching

protocols and Voice over IP (VoIP), circuit switching may still be used for voice communications on

2G and 3G GSM networks.

The 2G and 3G technologies bring the Internet to the mobile subscribers. The same services

available from the Internet today, including email, secure transactions and Web browsing become

available on mobile telephone devices, using the standard infrastructure of the Internet.

In order for the mobile telephone networks to be able to offer these additional services to the

customers there is a requirement for the recovery of the infrastructure investment cost. This is a prime

justification and motivation for charging and billing for telephone network usage together with the

need for generating commercial profits for telephone network shareholders and companies. Charging

may also be used to provide congestion control in under-provisioned and over-subscribed networks.

Page 2

This may be achieved by placing price premiums on network bandwidth, Quality of Service (QoS) or

utilisation, which may then make the network self-regulating at a first level, or by reducing usage with

additional charges that fewer subscribers may be prepared to pay for.

2G and 3G GSM networks present the network operators with many charging and billing

challenges. The experience gained with charging and billing with 2G/GPRS will prove valuable when

3G/UMTS is being rolled out in GSM networks.

2. GSM Mobile Networks and the Future Internet

generation GSM networks [1] provide high quality digital telephony with low bandwidth

(9.6Kb/sec) data communications for FAX and SMS. Implementations of GSM are typically multi-

vendor and consist of a layered architecture including the mobile telephones, the telephone network

and the subscriber invoices and bills.

With 2G GSM the General Packet Radio Service (GPRS) [1,4,5] is introduced providing an

overlay service for Internet access that shares the same air interface as 1

generation GSM. The design

goal behind GPRS is to provide high-speed Internet data communications for mobile devices and

subscribers using the existing 1

generation GSM air interface, thereby minimising the cost impact on

the existing installed network infrastructure.

GPRS provides a direct interface to the Internet services for GSM mobile telephone devices. It is

implemented in an existing GSM network with the addition of two new Operational Network (ON)

elements the Signalling GPRS Service Node (SGSN) and the Gateway GPRS Service Node (GGSN) as

shown in figure 1 below:

Figure 1 GSM Network Architecture with GPRS

The Operational Network (ON), and is usually physically distributed around the area of coverage

of the GSM network. The ON elements are often sited remotely with wide area networking (WAN)

connectivity to the rest of the network to allow centralised remote administration of the network. The

Base Transmitter Stations (BTS) and the Base Station Controllers (BSC) provide the air interface for

GSM, which is then circuit switched [6] using the telecommunications industry standard SS7 by the

Mobile Switching Centers (MSCs) in the ON. Additional Gateway MSCs allow switching to other

mobile and fixed line telephone networks, allowing interconnection and roaming. Billing tickets for all

calls made in the network are produced on the MSCs, usually based on subscriber Ids in the network.

The collection of the billing data is normally via high-speed communication links using reliable

data protocols such as File Transfer and Management (FTAM) and X.25. Once billing data is collected

centrally it can be processed into subscriber invoices and bills using dedicated billing systems and the

mobile network's charging tariffs. The billing data can also be further processed by additional data-

MSC

HLR

EIR

AuC

VLR

OMS

BSC

BTS

BSC

BTS

BSC

BTS

MSC

HLR

EIR

AuC

VLR

Chipcard

Systems

Billing

Systems

Mediation

Systems

Basestation Subsystem

Network Subsystem

Operational & Support

Systems

Operational Network

GGSN

SGSN

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mining systems to detect subscriber's usage patterns, possible fraud detection and subscriber profile

surveying.

Once the billing ticket information has been collected from the network the mobile network

requires a billing and charging system to make sense of all the data and produce the invoices and bills

for the subscribers, and also to produce the cross-charge data for partner network providers. The actual

cost of providing and maintaining such a billing system can be anything up to 50% of the total

infrastructure investment and annual turnover of the mobile network. This provides a valid justification

for simplifying the billing function and investigating the use of charging models based on fixed price

subscriptions and bulk purchase of talk time and data bandwidth in the network.

With the addition of Internet access via GPRS and UMTS existing mobile network subscriptions

need to be extended to include charging for the Internet services used by the subscribers. Just how to

charge for the Internet services offered to and used by the subscribers is the major challenge to the

mobile network providers and will be influenced by many factors.

3. Charging Models

There are many charging models that have been proposed [6] for the current and future Internet as well

as those traditionally employed by the mobile and fixed line telephone networks. Most, if not all, of the

Internet charging models are equally applicable for use in the mobile telephone networks, especially

with the introduction of 2G and 3G GSM systems. Below is a discussion of some of the proposed

charging models, and how they can be adapted to the mobile network markets.

Metered Charging

This pricing model is already in use with many Internet service providers (ISPs) and European

mobile and fixed line telephone companies. The model involves charging the subscriber for the

connection to the service provider on a monthly basis and then charging for metered usage of the

service. The usage is usually measured in units of time and there is often a `free' period of usage

included with the monthly fee. Variations on this model include having scaled subscription charges that

increase with the metered usage.

The use of this model in 2G and 3G GSM networks may become commercially problematic since

subscribers may leave GPRS sessions open endlessly without the handset being powered on. Metered

charging based on time for such usage may prove prohibitive. However, if the usage is based on other

session parameters, for example number of packets transmitted/received, then the commercial impact

becomes less and the model may be usable in mobile telephone networks for data.

Fixed Price Charging

This pricing model is similar to that used by some US fixed line telephone networks for local call

charging. The network service provider sets a fixed rental charge for the telephone connection and all

local calls are then free of charge with metered charging used for long-distance calls.

The advantage of this charging model is that call data for local calls does not need to be collected

and processed, providing a commercial saving for the network operator in the billing systems and

mediation systems infrastructure.

Disadvantages of this model include no added revenue for the service providers in times of above

average usage on the network, and congestion may also become an issue if the network is under

provisioned for the number of possible subscribers at peak times. This provides a strong argument for

using charging and billing to improve congestion control by dissuading subscribers from using the

network through higher cost for the provided services.

Packet Charging

Packet Charging is specific to Packet Switching [3] networks and involves the capturing and

counting the number of packets exchanged in a session. This is a proposed method of metering Internet

traffic and being able to cross-charge between networks as well as ISP and mobile subscribers. This

model requires the implementation of packet counting systems in the network and complex billing

systems that can process the packet data on a subscriber and customer basis.

The advantage of this method of charging is that the absolute usage of the network and services

can be metered, calculated and billed for very accurately, as long as the packet information can be

captured efficiently.

Page 4

The major disadvantage of Packet Charging is that the cost of measuring the packets may be

greater than their actual value, both from an infrastructure investment and additional network traffic

viewpoint. This may lead to packet charging being used as a policing tool to ensure that network

bandwidth is used efficiently and not over consumed by the network subscribers, rather than as a direct

charging model.

Expected Capacity Charging

This charging model [6] allows the service provider to identify the amount of network capacity

that any subscriber receives under congested conditions, agreed on a usage profile basis, and charge the

subscriber an agreed price for that level of service. The subscribers are charged for their expected

capacity and not the peak capacity rate of the network.

This model has the advantage that the price to the subscriber is fixed and predictable which in

turn permits the network provider to budget correctly for network usage. The expected capacity model

also gives the network provider a more stable model of the long-term capacity planning for the

network. This model fits is well with mobile telephone networks and the administration of the agreed

expected capacity would be done as part of the normal subscriber administration tasks.

One disadvantage is that the network operator has to police the actual capacity of the network

used by subscribers and act accordingly by limiting the subscribers service to what has been purchased,

or by invoicing the subscriber for the extra capacity used, on a metered tariff for example.

Edge Pricing

Proposed in [7] this model charges for the usage at the `edge' of the network scope for the

subscriber, rather than along the expected path of the source and destination of the calling session. The

networks in turn then cross-charge each other for the usage at the network `edges'. Edge pricing refers

to the capture of the local charging information. Once captured the information can be used for any

kind of charging including metered, fixed or expected capacity, for example. Past research [10] has

shown that much of the observed congestion on the Internet is at the edges of the individual networks

that make up the Internet. The use of edge pricing may be effective as a policing method to monitor

and alert the network operators to such congestion.

This approach has the advantage that all session data can be captured locally and does not involve

exchanging billing data with other networks and partners for subscriber billing, as for current roaming

arrangements between mobile telephone networks.

A disadvantage with this model is the lack of visibility of the routing via external networks and

the costs of that traffic to both networks. The cost of collection of the data may again also be an

influencing factor in the selection of this method, as for Packet Charging above. The cost of collecting

the edge usage information may be in excess of the value of the collected information.

Paris-Metro Charging

This charging model, proposed in [8], introduces the concept of travel class, as used on public

transport systems, to network traffic and relies on providing differentiated levels of service based on

customer usage pricing only. The scheme assumes that subscribers will assign a preferred travel class

with an associated cost for their different network traffic. The class assigned may be simplified to first

and second class, as used on the Paris Metro system that inspired this charging model. The choice of

class may be made dynamic and the subscriber may also use the throughput of the network to

determine which class to use for their required traffic. The network may become self-regulating at

periods of high usage. When the network becomes congested and all the capacity in first class is filled

subscribers may downgrade to second class to improve their own network performance.

This charging model may work well in GPRS and UMTS networks and allow subscribers to

prioritise network traffic, for example business emails may be considered more important that personal

email so the cost penalty for first class may be considered appropriate for business email.

An advantage of this charging model is the flexibility given to the network subscribers and also

the control they have over the cost of their network traffic.

This model has the disadvantage of introducing mathematical complexity to the network's

behaviour and a tariff class decision overhead to the network subscriber. For this scheme to work the

class decision may need to be made automatic, and may involve extensions to network communication

protocols and the application software handling the network traffic. This charging model also requires

the network bandwidth to be segmented and therefore does not allow multiplexing.

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Market Based Reservation Charging

This charging model discussed by [9] and usually attributed to Mackie-Mason, introduces the

concept of a public auction of bandwidth or network resources. The network subscribers place

monetary bids that will influence the quality of service they receive from their network-based

applications. This model may be used in the mobile telephone networks by having subscribers to the

network maintaining a preferences profile that details the subscriber's bids for the various services

used, for example email, voice, http, ftp and SMS. The network provider may then use the subscriber's

preference profile when routing the network traffic. In the case of GPRS networks the subscriber

preference profiles may be administered via a WWW page and browser or possibly by SMS.

Subscribers have the advantage that they can influence their quality of service from the mobile

network by the value they attach to the services they require.

As a disadvantage this charging model introduces some uncertainty to the subscribers with regard

to the quality of service in the network. It may also allow some of the subscribers to gain unfair

advantage when they have bid for certain services at the expense of other subscribers and network

users.

4. Conclusions and further work

From the above discussion of the various charging models it is clear there is much scope for the

methods which can be employed to charge subscribers for the services provided in future GSM mobile

telephone networks. The technical challenges to capture the GSM based billing ticket data in order to

charge subscribers are well known and documented.

Not all GSM mobile telephone networks may choose to charge their subscribers in the same way

or in the same proportion for the new Internet services available with GPRS and UMTS technology.

This is also true with 1

generation GSM mobile networks due to a variety of technical, commercial,

geographical and political issues and concerns. In the mobile telephone network market it may make

technical and commercial sense to adapt and combine some, or perhaps all, of the above charging

models and additional ones into `unified' flexible models which will cover the more diversified

requirements of mobile charging. Figure 2 below shows an example of how the discussed charging

models may be combined for charging for GSM voice and Internet services.

Figure 2 Combining Charging Models

A basic customer subscription may comprise a fixed price tariff that includes free mobile calls up

to an agreed limit, plus Metered Charging for extra mobile calls. Packet Charging may be included for

Web browsing and email using GPRS for the subscriber's account. Expected Capacity may also be

included for GPRS data traffic as well as Edge Pricing and Paris Metro Charging for email and data

traffic. Subscriber's requirements vary greatly from students to business users, from light domestic

users to heavy personal users. By modifying and combining charging models tariffs can be developed

to cover the major demographic groups, which make up the network subscribers.

Fixed Price

Expected

Capacity

Metered

Charging

Packet

Charging

Edge Pricing and Paris Metro Charging

Page 6

The above combination of the charging models is a simple example and shows how a mobile

network operator may choose to charge and invoice their subscribers. The illustration also shows the

overlap between the various pricing models and how the boundaries can be made flexible depending on

the subscriber usage profiles. For example, the mobile network operator may use Packet Charging in

both Fixed Price and Metered Charging tariffs for some subscribers but only use Packet Charging with

a Fixed Price charging model for other subscriber groups or tariffs. Some subscribers may only want to

use limited Internet services, for example only text email and no Web browsing. The mobile networks

may choose to implement charging models to take care of these limited service requirements

The tariffs for the subscriber may become complicated but may ultimately give the subscribers

more control over the way they are charged for using the mobile voice and Internet services and the

Quality of Service they receive from the network operator. The network operators will also have the

advantage of being able to charge the subscribers for different level of Quality of Service for the

different services and network provision.

Once experience of realistic network traffic in the next generation GSM networks has been gained

and large quantities of network usage statistics have been collected and analysed, then more

comprehensive or simplified charging models may be investigated, developed and prototyped from the

ones discussed above. There will always be a trade-off between the complexity of the billing system to

be implemented and supported and the advantage the network provider will receive for having the

systems in place. Fixed price charging schemes reduce the overhead of the charging and billing

systems infrastructure, as they tend to provide the simplest charging scenarios. Usage based charging

models provide incremental and harder to predict income for the network providers as well as requiring

high investment in the charging and billing infrastructure required. This includes increased cost in

network traffic involved in the collection of the billing data required.

When the GPRS networks are up and running and the charging models are in place the economics

of the market may take over and under- and/or over-provisioning of network resources may become

apparent, especially with the Internet gateway provision. Charging and billing may then be used for

congestion control as already proposed for the Internet and not just for recovery of costs for the

network operators.

Further work in this area should include the mathematical modelling of the various charging

models on simulated mobile network data covering both voice and Internet data services. This should

include examining the combining of charging models and the resultant effect on the income for the

GSM telephone network provider and also the cost impact on the different types of subscribers using

the mobile telephone networks.

Acknowledgement:

John Cushnie is grateful to HP Labs for the support of his work through an

Industrial CASE Award in cooperation with the EPSRC.

References

[1]

GSM Association -

http://www.gsmworld.com/

[2]

Wireless Application Protocol -

http://www.wapforum.org/

[3]

S. Keshav.:

An Engineering Approach to Computer Networking

, Addison-Wesley, 1997.

[4]

G. Brasche, B. Walke.: "Concepts, Services, and Protocols of the New GSM Phase 2+

General Packet Radio Service",

IEEE Communications Magazine

, August 1997 pp 94-104

[5]

J. Cai and D.J. Goodman.: "General Packet Radio Service in GSM",

IEEE Communications

Magazine

, October 1997 pp 122-130

[6]

D. Clark.: "A Model for Cost Allocation and Pricing in the Internet", MIT Workshop on

Internet Economics, March 1995

[7]

S. Shenker, D. Clark, D. Estrin, S. Herzog.: "Pricing in Computer Networks: Reshaping the

Research Agenda",

ACM Computer Communication Review

, Vol. 26, 1996, pp 19-43

[8]

A. Odlyzko.: "Paris Metro Pricing: The Minimalist Differentiated Services Solution", AT&T

Laboratories Research, April 1999

[9]

Z. Fan and E.S. Lee.: "Pricing for Differentiated Internet Services",

Proc. IDMS'99

Toulouse, France, Oct 1999, Springer-Verlag LNCS 1718 (ISBN 3-540-66595-1), pp365-370

[10]

A. Odlyzko.: "The Internet and other networks: Utilization rates and their implications",

Proc. 26

Telecommunications Policy Research Conference

, October 1998