BBWF 2011 Sue Rudd - Strategy Analytics - Optimizing Wireless Backhaul

transcript

Optimizing Wireless Backhaul Makes Mobile Broadband Profitable

Survey of Vendor Approaches

Broadband World Forum Master Class

Wednesday September 28th 14.50 pm

Presented by Sue Rudd

srudd@strategyanalytics.com

Director Service Provider Analysis, Strategy Analytics

Outline

• Costs of RAN & Macrocell Backhaul Today

• Vendor Estimates of Costs

• New Vendor Approaches for Cost Savings

• Impact of Small Cell Topologies on Backhaul Costs

• Key Drivers for Mobile Broadband Backhaul

Microwave Backhaul is buried in Costs of RAN Today

RAN Costs as Percent CAPEX are Frequently Quoted ………

.....but include Cell Site Backhaul over Microwave

Source Cisco: ‘Monetizing the Mobile Internet’ 2010

RAN Percentage of Capital Expenditures in Mobile Network Topologies Today is 80% - 90%

What Percentage are Backhaul Costs for MacroCell Architecture ? Up to 20% OPEX

3G Backhaul Costs as Percent Total at 15, 30+ & 50 percent Utilization

Source Ericsson Business Review #2 2010: ‘Mobile broadband – busting the myth of the scissor effect’ & SA Estimates

OPEX (Shared w. 2G) % Total

Depreciated CAPEX % Total

Costs % Total Radio BackhaulRNC/BSC

ControllerTransport Packet TOTAL

15% Utilization 82.93% 2.73% 8.91% 2.73% 2.70% 100%

30+ % Utilization 69.35% 4.91% 16.01% 4.89% 4.85% 100%

50% Utilization 60.24% 1.20% 36.14% 1.20% 1.20% 100%

Costs % Total Radio BackhaulRNC/BSC

ControllerTransport Packet TOTAL

15% Utilization 83.16% 2.48% 9.41% 2.48% 2.48% 100%

30+ % Utilization 69.69% 4.46% 16.94% 4.46% 4.46% 100%

50% Utilization 20.00% 20.00% 20.00% 20.00% 20.00% 100%

Backhaul Evolution for Macrocells

Evolution from 2G & 3G to LTE

NSN : ‘Mobile Backhaul The Power Behind LTE’ http://www.nokiasiemensnetworks.com/sites/default/files/document/Mobile_backhaul_for_LTE_0.pdf

Mobile Backhaul OPEX Savings from Next Gen. Packet Backhaul

“Today Backhaul transport… accounts for more than 30 % of technical operation costs ..”

“Overall Savings from Packet can be 60% of Transport Costs”

“Carrier Ethernet Transport Breaks the Linear Relationship Between

Capacity and Cost.” NSN

NSN Exec Summary: ‘Mobile Backhaul Power Behind LTE’ http://www.nokiasiemensnetworks.com/sites/default/files/mobilebackhaul_executive_summary.pdf

‘Staying profitable in a booming mobile broadband environment’

http://www.nokiasiemensnetworks.com/portfolio/products/mobile-broadband/mobile-backhaul

Reduced Cell Site Costs - Single Interface - All Transport 25%

IP & Centralized Management 80%

Optimization across IP, Ethernet & Optical 30%

Overall Transport Cost Reduction from Full IP 60%

SAVINGS

Business Case Drives towards Carrier Ethernet & Private Packet

NSN Business White Paper: ‘Optimize backhaul to increase mobile data profits’ http://www.nokiasiemensnetworks.com/sites/default/files/document/Optimize_backhaul_to_increase.pdf

NSN: Typical Business case Analysis

Backhaul Savings come not only from IP Evolution, but from Wireline Offload and shift to Ethernet from TDM

Tellabs Business Case: ‘Tellabs® Mobile Backhaul Solutions Support Cost-effective, Scalable and Reliable Network Growth’ http://www.tellabs.com/solutions/mobilebackhaul/tlab_mobilebackhaulbizcase.pdf

Case 1. Tellabs 60 Base Station Business Case Analysis – IP/MPLS Savings - 60%

Case 2. Tellabs HSDPA Business Case Analysis – Wireline Offload Savings - 93%

Case 3. Tellabs Scalability Business Case Analysis – Gigabit Ethernet Savings – 47%

BTI Webinar ‘Mobile Backhaul: Exploring an All-Packet Approach’http://event.on24.com/r.htm?e=343623&s=1&k=EFE962FAA43893EECEAD39F14FD9AC4E

Carrier Ethernet Mobile Backhaul Solution- end to end Fixed Transport Evolution

Microwave Point To Point or Multipoint?

Microcells Change the Game: Topology

Microcell Ring, Tree and Branch, Star Hub and Multi-Point

Microcells Change the Game: PTP has Geometric Growth in No. Outdoor Units (ODUs)

Three Scenarios Compared: LTE Macro, 3G, LTE small Cells

Backhaul provisioning requirements (mbps) = max (peak sector

throughput ; busy-time mean traffic x number of sectors)

Three Scenarios for PMP % of CAPEXfor PTP, E-Band & Fibre: LTE Macro, 3G, LTE small Cells

• Leased fibre has the lowest CAPEX as the operator has only to pay for terminal equipment fees to set up the service

• For wireless solutions, CAPEX is lowest for PMP because it requires less equipment, which translates to savings in both equipment and installation

• Year 1 Base Case: PMP Capex is”

• 69% of PTP

• 53% of E-band

• 227% leased fibre

• Compare to 5 Year Cum. CAPEX Per RAN Site

Three Scenarios for PMP % of OPEXfor PTP, E-Band & Fibre: LTE Macro, 3G, LTE small Cells

• Opex is the Dominant Element of the Total Cost of Operations

• OPEX is 10X greater than CAPEX

• Fibre, assuming the operator is leasing from a third party is the most expensive

• Year 1 Base Case: PMP Opex is”

• 47% of PTP

• 53% of E-band

• 11% leased fibre

• Compare to 5 Year Cum. Opex Per RAN Site

Summary

• Key Drivers for Profitability Backhaul Profitability

Capacity Utilization

Scalability

IP Networking

Selective Offload to Fixed Network at ‘Edge’

Carrier Ethernet

Multipoint Options for Small Cells

• Multiple Types of Backhaul to Optimize Different Mobile Broadband Configurations

• Heterogeneous Backhaul Transport & Topologies for HetNets…

Contact Information

Sue Rudd

Director, Service Provider Analysis

Strategy Analytics

www.strategyanalytics.com

email: srudd@strategyanalytics.com