The one reason for Location Based Charging will happen on behalf Location based services. For this the Core Network should be aware of the Location of the user. Why PGW needs the exact UE location could be for lawful intercept.
A PGW needs to know the exact location of UE/MS so that it can do location based charging.
Any more reasons?
Like if we are in a College and our college has some 350 acre area. So we can provide services/offers/subscriptions to the users who has registered themselves as a student of that college and they will get some less call rate in that particular area. So the charging will happen accordingly.
How will it work?
The User Location Information and UE Time Zone are used for location based charging.
The UE location information will be send by MME to PGW over ULI IE (User Location Information). Whenever a UE changes a cell or routing area or tracking area, MME may inform the PGW about the same using location change reporting feature.
First if MME/PGW supports location reporting then MME will ask eNB to report UE location. So, as and when UE moves from one TAI to other or from one cell to cell eNB will send Location Update message to MME. But how to propagate this info all the way to PGW? According to release 8, there is now way to do it. MME has to wait for the next available GTP message to send this information to SGW/PGW. Which means a cell change may never be reported to PGW or you need to have a eNB with just one cell under it and that is just covering one TAI, so that when UE moves from once cell to other there can be a handover and MME can send Modify bearer request to SGW with the ULI. This is little too much. So 3GPP Release 9 brought back the support for “Change Notification Request”. If UE moves from one cell to cell, MME may now send Change Notification Request that can be propagated all the way to PGW and PGW may further send UE location to PCRF or charging server. Thus bringing back location based charging.