BBWF 2011 Sue Rudd - Strategy Analytics - Optimizing Wireless Backhaul

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

[email protected]

Director Service Provider Analysis, Strategy Analytics

September 28th. 2011 email: [email protected] Copyright© Strategy Analytics 2011

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

September 28th. 2011 email: [email protected] Copyright© Strategy Analytics 2011 2

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

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

http://www.nokiasiemensnetworks.com/sites/default/files/document/Mobile_backhaul_for_LTE_0.pdf

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

http://www.nokiasiemensnetworks.com/sites/default/files/mobilebackhaul_executive_summary.pdf

http://www.nokiasiemensnetworks.com/sites/default/files/mobilebackhaul_executive_summary.pdf










Business Case Drives towards Carrier Ethernet & Private Packet

H


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

€

http://www.nokiasiemensnetworks.com/sites/default/files/document/Optimize_backhaul_to_increase.pdf


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%

http://www.tellabs.com/solutions/mobilebackhaul/tlab_mobilebackhaulbizcase.pdf


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


http://event.on24.com/r.htm?e=343623&s=1&k=EFE962FAA43893EECEAD39F14FD9AC4E

http://event.on24.com/r.htm?e=343623&s=1&k=EFE962FAA43893EECEAD39F14FD9AC4E

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: [email protected]

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