Pico GSM cells, what's the fuss all about?

New entrants could enter into roaming agreements with the current operators, but unless Ofcom mandates this (which is unlikely) there's likely to be strong opposition. Since some of the license winners already have GSM networks, they can offer localised services knowing there's no interference problems with existing infrastructure.

One way ahead is for a licensee to make an agreement with a foreign operator and the localised network just becomes an extension of their network, but then when users roam on to the network they'll be subect to roaming charges which, as both Ofcom and the EU Government know too well, can mean very high charges for the end-user. If roaming charges do decline, this may well be a way forward.

There's also a big potential opportunity for the Channel Islands GSM networks here, as they abide by UK numbering plans, so though they are considered "foreign" their numbers look like UK numbers, including mobile ranges. They could offer roaming agreements and even offer SIMs which would still look like UK numbers, unfortunately as they are foreign operators, high roaming charges still apply.

The clear opportunity ahead is for O2, Opal and Cable and Wireless (C&W). O2 has an existing GSM network, C&W owns Guernsey Telecom (and it has a mobile network) and Opal is owned by Carphone Warehouse which has an MVNO (mobile virtual network operator) agreement with O2 (O2, of course, has to let it utilise its back-end network).

Building a GSM network isn't cheap

Just because the licensees have got a license, that doesn't give them the facilities to run a GSM network, it just allows them too. There's much more that's actually required to put a GSM network in place.

A cell site is actually known as a BTS (basestation), BTS' are controlled by a BSC (basestation controller). A BSC can control around 100 BTS's.

BSCs connect to an MSC (mobile switch centre) which is like a telephone exchange.

The network has to have an HLR (home location register) which stores the state of mobile phone (i.e. which cell they're in, are they on or offline), really just a big database. If the network needs to support roaming customers, a VLR (virtual location register) is needed too, though that can be part of the HLR.

If SMS' (or texts) are going to be supported, then an SMSC (short message service centre) is also required.

The mobile operators spend millions of pounds on this kit, and a GSM guard band operator needs to have at least that as a minimum. Though the big operators have to contend with millions of users, even a small network is looking at at least £500,000 to get started.

Once all the network is in place connections are required to other networks so calls can be made and received. This requires telco interconnects (which also don't come cheap) and everything uses a telco protocol known as SS7.

There are companies which make pico cells (used on ocean liners and such like) but these cost around £2,000 each.

O2 ahead of the game

If a big mobile operator was to offer a pico cell solution, they generally have a major problem as they don't want the pico cell to interfere with their existing network.

Operators use what's known as a seven cell repeat patern. Each cell has six sectors (the six aerials that can be seen on a cell site). Cells and sectors can't use adjacent frequencies or they'll interfere. The seven cell repeat pattern ensures that frequencies can be re-used without interfering, but in the next seven cell pattern.

O2 now has a very efficient way of dropping new cells into places, using new frequencies which are guaranteed not to interfere with O2's existing network - or any other major operator's. It does have to mind other GSM guard band operators, but as the power output is small, even this can be easily mitigated.

It has a choice of 15 frequencies, so even if another guard band operator is nearby, they can both choose different (non-adjacent) ones.

Where O2 really gains is in the in-building/home use. One of the major costs of providing a GSM network is getting the calls back from the cell. By utilising a pico cell and a broadband connection, O2 has reduced this to practically zero, so it can offer cheaper calls just on that reduction.

O2 does need to convert the calls to VoIP (voice over IP) and that increases the bandwidth required (GSM encoding uses 13Kb/s, by the time that is packetised and put in an IP packet it may well be 26Kb/s, but that easily fits into a broadband connection).

O2 happened to have bought a broadband provider (Bethere), so it's not just a marriage of convenience, it actually gives it a very strong proposition in the marketplace.

The big question is how cheaply it can make a BTS. O2 is saying it can produce a combined cell/ADSL router for under $100 (around £60) which is around what a normal Wi-Fi ADSL router costs.

If it can pull it off, it has the broadband service and can offer local GSM connectivity using normal handsets without the problems that other services like BT Fusion suffer (specialised handsets with poor features, battery life etc).

It, of course, could also offer data services like GPRS (general packet radio service) or even EDGE (Enhanced Data Rates for GSM Evolution - which came first the acronym or discription?) and use them for localised data hotspots much like there are for Wi-Fi, but using nothing more than a GSM phone connected to a laptop.

Though O2 has a headstart, it will be interesting to see what innovative services the other guard band operators will bring to the game and who will survive in the long term. If the licenses aren't used for real services, they're just expensive bits of paper. ®