NLOS Wireless Backhaul for Small Cells - TCO Comparison with Optical Fiber

NLOS Wireless Backhaul for

Small Cell Base Stations

Total Cost of Ownership Comparison

with Optical Fiber

By Frank Rayal

VP, Product Management

BLiNQ Networks Inc.

WHITEPAPER

October 22, 2010

NLOS Wireless Backhaul for Small Cell Base Stations: 2

Total Cost of Ownership Comparison with Optical Fiber

Table of Contents

Introduction .................................................................................................................................................. 3

Mobile Backhaul Options .............................................................................................................................. 3

BLiNQ Networks Solution Overview ............................................................................................................. 5

Cost of Spectrum ........................................................................................................................................... 6

Comparative Analysis to Fiber Backhaul ....................................................................................................... 8

Conclusion ................................................................................................................................................... 11



Introduction

Mobile network operators (MNOs) are increasingly focused on meeting the explosive demand for data

services. Deploying next generation systems, acquiring additional spectrum and offloading data traffic

from the mobile network are a few ways that MNOs have used to increase the offered capacity.

Deploying small, below-the-clutter cells is another well tried technique that has been used repeatedly to

solve the capacity ‘hot spot’ problem as well as to provide service in ‘coverage holes’ in mobile networks

that were designed primarily to carry voice traffic.

The mobile Internet, and corresponding data traffic, is expected to further increase the requirement for

small cell deployment as no one solution can single-handedly meet the capacity demand forecast.

However, there are technical and economic constraints that prevent network operators from deploying

small cells: backhaul is one such constraint. BLiNQ Networks recognizes that eliminating the ‘backhaul

problem’ would provide MNOs a decisive tool in their quest to scale network performance to meet the

demands of the mobile Internet.

BLiNQ’s product portfolio comprises solutions specifically targeted at backhaul applications for small

cells that are deployed below the building clutter as would be the case in urban areas where capacity

demand is highest and coverage requirements are hardest to meet. The products provide high capacity

point-to-multipoint links in a non-line-of-sight deployment configuration. Furthermore, the products

implement interference detection and mitigation techniques to reduce interference in the backhaul

network thereby gaining capacity and performance.

This paper describes BLiNQ’s value proposition for wireless operators and compares the total cost of

ownership of NLOS wireless backhaul to that of optical fiber.

Mobile Backhaul Options

Different backhaul options have been used for wireless base stations. Each option has its economic and

technical advantages and disadvantages. These options can be summarized as follows:

1- Leased-lines: Provide a dedicated channel and symmetric data rate. A leased line, in the form of

copper T1/E1 line, have data rate of 1.544/2.048 Mbps. Although leased lines have been widely

used in mobile backhaul, they are increasingly becoming unsuitable for the following reasons:

a. Multiple T1/E1’s are required per cell site to support the capacity requirements of 3G

(e.g. HSPA) and 4G (LTE) cell sites. Figure 1 shows the peak throughput for UMTS

evolution. Although these are peak rates at the physical layer and highly unlikely to be

reached in practice, the number of required leased lines will increase correspondingly.

b. T1/E1 lines are leased at rates that can easily reach $1,000 per month per line (pricing

depends on location and service provider). This makes the annual cost of backhaul for a

single 3G/4G base station extremely high.

c. Leased lines are fundamentally a TDM technology (Time Domain Multiplexing) while

recent 3G and 4G base stations are based on Ethernet/IP technology. A special interface



(e.g. pseudowire) is required in this case which further adds cost to leased line backhaul

deployments.

The above reasons make leased lines an unattractive method to backhaul 3G/4G wireless

base stations. Industry experts concur that leased lines will play a limited role in backhauling

future wireless base stations.

Figure 1 UMTS Evolution Peak Data Rates.

2- Microwave Backhaul: Microwave backhaul typically operates at frequencies above 6 GHz

(typically 11-42 GHz) and requires line-of-sight between the two backhaul nodes. It is also a

point-to-point solution. Microwave backhaul can provide high data rates starting from a few

hundreds of Mbps and functions over relatively long range. It has been used significantly for

mobile backhaul applications particularly by non-incumbent operators and those in emerging

markets as microwave backhaul is quick to deploy and offers a competitive business case.

Unfortunately, traditional microwave is not suitable where a base station is mounted below the

surrounding building clutter: in non-line-of-sight conditions obstacles between the two backhaul

nodes (e.g. buildings, trees, etc.) attenuate the power received by the remote node and distort

the signal such that communication is not possible. Traditional microwave is not an option in

backhauling small cell sites where clearance of the first Fresnel zone is not possible.

3- Fiber Backhaul: Fiber, where present, offers ample bandwidth: it meets the capacity

requirements of next-generation wireless base stations. However, fiber can be expensive to

provide in areas where it is not already available. The cost of installing fiber (trenching, right-of-

way) can be prohibitive in exactly the same areas where small base stations are required such as

in the dense urban core, as shown in Table 1. The cost of leasing fiber is also high and can range

from several hundred dollars to over $1,000 per month. Additionally, fiber deployment time can

be lengthy resulting in delays in bringing a new cell site on air.



Table 1 Typical Cost of Fiber.

Deployment Costs

(per meter; Includes right of way and

renovation construction works)

Aerial $4.5-$11.5

Trenching

Rural $10-$30

Suburban $30-$100

Urban $80-$230

Fiber Cost

(per meter; includes cable,

connector, & testing)

$5-$12

In summary, fiber is the only feasible alternative to backhaul small cell sites as it has none of the

technical issues of traditional microwave and offers higher capacity than leased lines. However, the

business case for fiber is not always competitive, particularly in areas where fiber is not available. In

addition to economics, the current lack of alternative solutions to fiber provides a significant

competitive advantage to incumbent operators: they have the incentive to expand fiber networks at the

expense of competing MNOs.

Table 2 Applicability of Backhaul Options to Compact Base Stations.

Leased Line LOS Microwave Fiber

Capacity � � �

NLOS Operation Not Applicable � Not Applicable

Fiber is the only feasible alternative to backhaul next generation wireless base stations.

BLiNQ Networks Solution Overview BLiNQ’s solution comprises a point-to-multipoint (PMP) backhaul solution that operates in non-line-of-

sight conditions (NLOS). The solution operates in time domain duplex access mode (TDD) in licensed

band frequencies below 6 GHz. Spectrum in bands such as 2.3 GHz, 2.5 GHz and 3.3-3.8 GHz is available

at relatively low prices. The solution combines the latest innovations in physical and medium access

layer techniques to provide high capacity backhaul links for compact base stations. Managed Adaptive

Resource Allocation (MARA), a key BLiNQ intellectual property which comprises interference reduction

to increase capacity, provides valuable contributions to the operator’s business case. Table 2Table 3

outlines some of the key features of BLiNQ’s solution and summarizes their impact on the operator’s

business case.

Table 3 BLiNQ Solution Features and Contribution to Operator's Business Case.

Feature Description Impact on Business Case

Interference

Detection

Maps interference between backhaul

clusters and provides RF and field

operation engineers with valuable

tools for speedy deployment and

network planning.

Reduce operational expenditure by

shortening the design cycle and providing

tools for troubleshooting the network.

Interference

Mitigation

Eliminates co-channel interference

between interfering links in different

backhaul clusters.

Reduce capital expenditure requirements

for spectrum acquisition.

OFDMA/NLOS OFDMA physical layer provides a 1- Reduce opex by allowing deployment



high-speed robust link in NLOS

conditions by using narrow-band

carriers to span a wide-bandwidth

frequency channel.

in hard to reach areas, particularly

where fiber is not available.

2- Shorten ‘time to air’ for new cell sites

and provide faster revenue generation.

Spatial

Multiplexing /

MIMO

Doubles the link capacity over single-

antenna systems and increases the

robustness of the communication

channel.

Reduce capex by doubling the spectral

efficiency: requires half the spectrum to

backhaul the same amount of data

without MIMO.

SON Allows the backhaul network to

reconfigure itself as the network of

compact base stations grows.

Reduce opex requirements related to

initial deployment, on-going maintenance

and troubleshooting.

Point-to-

Multipoint

Backhaul multiple compact base

stations to one central location.

Reduce capex and opex by reducing the

number of hub sites to backhaul data into

the core network.

Sub 6 GHz

Licensed

Spectrum

Operates in TDD mode in bands such

as 2.3 GHz, 2.5 GHz and 3.3-3.8 GHz.

Reduce capital expenditure for spectrum

acquisition.

Small Form

Factor

Low-weight (< 3.5 kg), small footprint

(20x30 cm) allows for a one-person

install within 30 minutes on light

poles and other small structures.

Reduce operational expenditure

associated with installation, deployment

and maintenance.

Cost of Spectrum As stated, BLiNQ solutions operate in sub-6 GHz licensed bands which have several technical advantages

which include:

1- Robust propagation channel that is not affected by environmental factors such as rain and fog,

and less affected by physical obstacles such as buildings and trees.

2- Controlled interference environment given that all transmitters belong to the same wireless

operator allowing frequency planning.

Most importantly, in the last few years, several sub 6-GHz bands have become available for use by fixed

access networks, primarily WiMAX. As such, there is an abundance of such bands available in areas

where fixed access networks did not gain traction: dense urban cores of developed markets where

today’s 3G services are most utilized.

On a worldwide basis, spectrum in the 2.3, 2.5 and 3.3-3.8 GHz bands have fetched very low valuations

in recent years, especially when compared with prime access spectrum which is characteristically FDD in

sub 2.1 GHz bands (700 MHz, 800/900 MHz, 1700 MHz, 1800/1900 MHz and 2.1 GHz). Table 4 samples

the results of recent spectrum auctions and shows that prime spectrum bands for backhaul in 2.6 and

3.x GHz are typically priced at around $0.01-$0.03 per MHz-PoP, sharply lower than prime paired

spectrum for access bands which typically fetch over $0.5 per MHz-PoP, or over 25 times the price.

Table 4 lists some specific licenses and their corresponding prices.



Table 4 Results of Recent Spectrum Auctions.

Country Year Band (MHz) Type Average Cost

(per MHz-PoP)

Comment

Germany 2010 2500 – 2700 Paired €0.023 Access band

Germany 2010 2600 Unpaired €0.021 Prime backhaul band

Germany 2010 800 Paired €0.73 Prime access band

Germany 2008 3500 Paired €0.005 Prime backhaul band

Italy 2008 3500 Paired €0.019 Prime backhaul band

USA 2008 700 Paired $0.7 Prime access band

USA 2006 1700 Paired $0.54 Prime access band

India 2010 2300 Unpaired $0.17 Access or Backhaul

India 2010 1900 Paired $0.39 Prime access band

Greece 3500 Paired €0.043 Prime backhaul band

Poland 3700 Paired €0.003 Prime backhaul band

Table 5 List of Selected Frequency Licenses.

Country Operator Frequency Band Channel Size Price

Germany Vodafone 2.6 GHz 2x5 MHz € 18,948,000

Germany Vodafone 2.6 GHz 1x5 MHz € 9,051,000

Germany Clearwire 3.5 GHz 2x21 MHz € 20,000,000

USA Verizon 700 MHz 2x11 MHz $4,741,807,000

UK UK Broadband 3.5 GHz 2x20 MHz £7,000,000

Netherlands WorldMax 3.5 GHz 20 MHz € 4,000,000

Austria WiMAX Telecom 3.5 GHz 2x28 MHz € 40,700,000

Greece Cosmotel 3.5 GHz 2x14 MHz € 20,475,000

Poland Clearwire 3.6 GHz 2x14 MHZ PLN 1,400,000

Canada Several 3.5 GHz 2x25 MHz $11,240,615

The cost of spectrum is an important factor in calculating the total cost of ownership. National or

regional licenses can be obtained, depending on national regulations. Therefore, it is possible to

purchase a license for regions with major cities (where mobile backhaul is desired) while foregoing

licenses in regions where population is less dense (where fixed access networks can be more valuable

for lack of Internet connectivity alternatives).

Based on the prices above, licenses for 10 MHz of spectrum can cost as low as a few hundred thousand

dollars or as high as twenty million dollars for a nation-wide license in a developed market. These

licenses are typically issued for twenty years.

The cost of spectrum must be included in the TCO calculations for a valid comparison with fiber

backhaul. The cost of spectrum must then be spread over all the backhaul units deployed in a market. To

simplify the calculations, we focus on determining the number of wireless backhaul nodes that lead to

breakeven in total cost of ownership with fiber backhaul.



Comparative Analysis to Fiber Backhaul

We focus our analysis on comparing two fundamental cases:

1- Deployment of compact base stations with fiber backhaul (base case).

2- Deployment of compact base stations with NLOS wireless backhaul solution.

For the purpose of this analysis, fiber is assumed to be available close to the desired site location, hence,

only a nominal setup fee will be incurred by the wireless operator. The majority of expenses are

operational expenses related to leasing the fiber cable as shown in Table 6.

Table 6 Cost of Operating a Fiber Backhaul Connection.

Setup Fee $1,500 One-time fee to setup a fiber connection.

Monthly Expense $1,000 Average cost of leasing fiber for 10 Mbps capacity in urban

area.

The assumptions for NLOS solution are outlined in Table 7.

Table 7 Capital and Operational Expenditure Assumptions for NLOS Product.

Capital Expenditure

Backhaul

Module

$1,800 Includes backhaul module, antennas, cables and other ancillary

elements.

Installation $350 Used for Hub or Remote Backhaul Module installation. Accounts

for field services to prepare and install the unit on a pole.

RF Engineering $150 Per link charge for RF engineering design services to ensure

proper deployment and configuration of NLOS wireless link.

Implementation

Services

$250 Per link charge used to cover project management and other

services related to implementing and deploying the product.

Operational Expenditure

Pole Lease $30 Monthly charge to lease space on a pole to mount the NLOS

Hub and Remote Backhaul Modules.

Support &

Software

15% Annual percentage of solution price. Covers product software

updates & support.

Field Operations $50 Annual charge per node to cover expense of field operations

personnel. This is a marginal cost as Field Operations are also

required for compact base stations.

Flat Rate Power $7 Monthly cost incurred to provide electrical power to the

backhaul node.

Backhaul Costs $1,500 Monthly cost to provide fiber backhaul service at the hub site.

Assumes hub sites are selected where fiber is already available.

For all financial calculations, we assumed a 2% inflation rate and a 12% weighted average cost of capital

(WACC).

The cost of operating fiber backhaul to a single compact base station site is shown in Table 8 based on

the assumptions presented in Table 6.



Table 8 Example of Total Cost of Ownership for Fiber Backhaul.

Year 1 Year 2 Year 3 Year 4 Year 5 Total

Net Present Value 13,500 10,929 9,953 9,064 8,255 51,700

Figure 2 shows the number of nodes (compact base stations) where the NLOS wireless backhaul solution

is deployed to achieve total cost of ownership breakeven with fiber backhaul. For instance, given 4:1

PMP ratio (four compact base stations backhauled to one NLOS hub module) and $20 million cost of

spectrum license (20 years), it requires 172 compact base stations to achieve breakeven in the total cost

of ownership.

As expected, the number of breakeven nodes increases with lower PMP ratio. So, for the same

parameters, it requires 472 nodes to achieve breakeven with fiber, while it requires only 144 nodes for

breakeven in 6:1 configuration.

Figure 2 Number of Nodes to Achieve Breakeven in the 5-year TCO with Fiber Backhaul.

Table 9 shows the 5-year total cost of ownership for the NLOS and the fiber backhaul option for

different number of nodes assuming $20m cost of a spectrum license (over 20-year period).

Table 9 Five-Year Total Cost of Ownership Comparison.

Number

of Nodes

5 Year TCO ($m) NLOS Wireless Backhaul vs. Fiber

2:1 3:1 4:1 6:1 Fiber 2:1 3:1 4:1 6:1

100 9.11 7.91 7.31 6.71 5.17 -76% -53% -41% -30%

200 13.23 10.83 9.63 8.43 10.34 -28% -5% 7% 19%

300 17.34 13.74 11.94 10.14 15.51 -12% 11% 23% 35%

400 21.45 16.65 14.25 11.85 20.68 -4% 19% 31% 43%

500 25.57 19.57 16.57 13.57 25.85 1% 24% 36% 48%

600 29.68 22.48 18.88 15.28 31.02 4% 28% 39% 51%

700 33.79 25.39 21.19 16.99 36.19 7% 30% 41% 53%



800 37.91 28.31 23.51 18.71 41.36 8% 32% 43% 55%

900 42.02 31.22 25.82 20.42 46.53 10% 33% 45% 56%

1000 46.13 34.13 28.13 22.13 51.70 11% 34% 46% 57%

1100 50.25 37.05 30.45 23.84 56.87 12% 35% 46% 58%

1200 54.36 39.96 32.76 25.56 62.04 12% 36% 47% 59%

1300 58.47 42.87 35.07 27.27 67.21 13% 36% 48% 59%

1400 62.59 45.79 37.38 28.98 72.38 14% 37% 48% 60%

1500 66.70 48.70 39.70 30.70 77.55 14% 37% 49% 60%

The cost allocation for the total cost of ownership is shown in Figure 3. The main expense related to the

NLOS solution is the cost of spectrum. The second leading expense is the cost of backhauling traffic from

the NLOS hub modules to the core network. In this comparative analysis, we conservatively assumed

that fiber would have to be leased. However, this cost can be reduced substantially if fiber is already

available at the hub site. For example, co-locating a hub site with an existing macro base station where

backhaul is already available can result in significant reduction in the total cost of ownership.

Alternatively, using LOS microwave backhaul may result in cost reduction over fiber in many instances.

Figure 3 Cost Allocation for BLiNQ Backhaul Solution at Breakeven with Fiber Backhaul.

NLOS wireless backhaul solutions offer a competitive business case in comparison to fiber backhaul due

to several considerations:

1- Use of low-priced spectrum assets for use in backhaul application results in a low breakeven

number of nodes versus fiber backhaul.

2- High-capacity links allow backhaul of multiple base stations to a single hub. This provides two

advantages:

a. Lower capital expenditure and simpler network design, implementation and

deployment effort.



b. High flexibility in placing hub modules in locations where fiber or LOS microwave

backhaul is readily available to backhaul the aggregate traffic of multiple base stations

to the core.

3- Quick and simple deployment and activation of compact base stations to address coverage holes

and capacity hotspots leads to higher revenue generation and greater customer satisfaction.

This upside measure was not factored into the business case.

4- Implementation of frequency detection mitigation techniques allow high spectrum utilization

which leads to lower upfront capital expenditure to secure what is relatively low priced

spectrum.

Conclusion

Compact base stations are a key element in the design of mobile data networks. Due to the high

capacity of these base stations and since they are deployed below clutter, traditional wireless (LOS

microwave) and wireline (e.g. leased line) backhaul techniques are no longer an option, leaving fiber as

the only feasible method of backhaul. BLiNQ’s intelligent non-line-of-sight wireless systems provide an

economically competitive solution to fiber backhaul: a relatively low number of wireless backhaul nodes

are required to achieve cost breakeven with fiber backhaul (in the low hundreds). The savings in total

cost of ownership can be significant, exceeding 30% for typical deployment scenarios. The financial

model demonstrates that some of the main costs associated with backhaul include spectrum cost and

the cost of backhaul to the core network. For this reason, BLiNQ solutions implement interference

detection and mitigation techniques that minimize the amount of spectrum required for the backhaul

network and make use of low-cost spectrum in sub-6 GHz band which has been deemed less desirable

for access applications. Furthermore, BLiNQ products provide high-capacity point-to-multipoint links to

maximize the aggregated data at the backhaul hub site and reduce the cost of transport to the core

network.



Acronyms

CBTS Compact Base Transceiver Station

FDD Frequency Domain Duplex

HSPA High Speed Packet Access

LOS Line of Sight

LTE Long Term Evolution

MARA Managed Adaptive Resource Allocation

MIMO Multiple Input Multiple Output

MNO Mobile network operators

NLOS Non Line of Sight

OFDMA Orthogonal Frequency Division Multiple Access

PMP Point to Multipoint

PoP Population

TCO Total Cost of Ownership

TDD Time Domain Duplex

TDM Time Domain Multiplex

UMTS Universal Mobile Telecommunication Systems

WACC Weight Average Cost of Capital

BLiNQ Networks Inc.

400 March Road, Suite 240

Ottawa, ON K2K 3H4 Canada

Main: 613-599-3388

[email protected]

www.blinqnetworks.com

BLiNQ Networks was founded in June 2010 after the acquisition of intellectual property and wireless assets from

Nortel Networks. BLiNQ is a pioneer of wireless backhaul solutions that fundamentally change the way mobile

operators deliver mobile broadband services in urban areas. BLiNQ uses cost-effective sub-6 GHz spectrum and

unique and patent-pending Managed Adaptive Resource Allocation (MARA) technology to provide network-level

intelligence, self-organizing network capabilities, and eliminate interference challenges to maximize spectral

efficiency. BLiNQ is headquartered in Plano, TX with research and development facilities in Ottawa, Canada. For

more information, please visit www.blinqnetworks.com.

The information presented herein is to the best of our knowledge true and accurate and is subject to change without notice. No

warranty or guarantee expressed or implied is made regarding the performance or suitability of any product. All product or

service names are the property of their respective owners. © BLiNQ Networks Inc. 2010. All Rights Reserved.

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