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Deploying LTE in Europe
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© 2013 Informa UK Ltd. All rights reserved. www.informatandm.com
About the author .............................................................................................................. 3
Introduction ...................................................................................................................... 4
Market overview ..........................................................................................................................................4
LTE in Europe ..............................................................................................................................................4
Deploying LTE in Europe .................................................................................................. 5
MS-BTS ........................................................................................................................................................6
Overlay .........................................................................................................................................................6
LTE deployment drivers in Europe .................................................................................. 7
Conclusion ........................................................................................................................ 9
Appendix ........................................................................................................................... 9
Industry survey ............................................................................................................................................9
MS-BTS deployments ................................................................................................................................................9
LTE overlay ..............................................................................................................................................................10
Network-economics modeling ..................................................................................................................10
© Informa UK Limited 2012. All rights reserved. The contents of this publication are protected by international copyright laws, database rights and other intellectual property rights. The owner of these rights is Informa UK Limited, our affiliates or other third party licensors. All product and company names and logos contained within or appearing on this publication are the trade marks, service marks or trading names of their respective owners, including Informa UK Limited. This publication may not be:-
(a) copied or reproduced; or (b) lent, resold, hired out or otherwise circulated in any way or form without the prior permission of Informa UK Limited.
Whilst reasonable efforts have been made to ensure that the information and content of this publication was correct as at the date of first publication, neither Informa UK Limited nor any person engaged or employed by Informa UK Limited accepts any liability for any errors, omissions or other inaccuracies. Readers should independently verify any facts and figures as no liability can be accepted in this regard - readers assume full responsibility and risk accordingly for their use of such information and content. Any views and/or opinions expressed in this publication by individual authors or contributors are their personal views and/or opinions and do not necessarily reflect the views and/or opinions of Informa UK Limited.
Contents
3
© 2013 Informa UK Ltd. All rights reserved. www.informatandm.com
Principal Analyst , Dimitris Mavrakis
Area of expertise: IMS, mobile access network technologies, femtocells, backhaul, network APIs.
“As LTE is being deployed throughout the world, mobile operators are finding it hard to strike balance between network investments, new pricing schemes and increasing traffic. Several initiatives are being deployed, including capacity upgrades, optimization, offload and policies to tackle all of these challenges.”
Dimitris Mavrakis is a principal analyst with Informa Telecoms & Media. He is part of the Networks team where he covers a range of topics including Next Generation Networks, IMS, LTE, WiMAX, OFDM, core networks, network APIs and identifying emerging strategies for the mobile business.
Dimitris is also actively involved in Informa’s consulting business and has led several projects on behalf of Tier-1 operators and key vendors.
Dimitris has over 12 years experience in the telecommunications market. He has a strong background in mobile and fixed networks and an in depth understanding of market dynamics in the telecoms business. In the past, Dimitris has worked as a project leader to perform challenging network measurements and has lead a team of researchers to produce pioneering research and acclaimed publications.
Dimitris has been working for Informa since 2005. In the past, Dimitris has worked as a project leader to perform mobile network field tests and has lead a team of researchers to produce pioneering research and acclaimed publications during his academic career.
Dimitris holds a PhD in Mobile Communications and a MSc in Satellite Communications from the University of Surrey.
About the author
Contributor
Phillip Marshall, Tolaga Research
Tolaga delivers actionable research for the mobile broadband industry. This research is anchored with extensive market, technology and regulatory databases that span 190 countries and its Market Explorer™ platform. The platform uses a systems based approach to technology and market modeling. Tolaga was established in 2009 and is headquartered in Massachusetts, USA.
www.tolaga.com
4
© 2013 Informa UK Ltd. All rights reserved. www.informatandm.com
Market overview
LTE has seen arguably the fastest
growth of any mobile network
technology deployed so far. With
more than 74 networks live in more
than 30 counties, covering every
populated continent, LTE is enjoying
the most successful launch of
any mobile technology in history,
with the most swiftly deployed
networks. There is a proliferation
of LTE-enabled devices in attractive
form factors and at desirable price
points, and nearly all LTE handsets
are smartphones, which provide
operators with more opportunities
for profitability. According to
Informa Telecoms & Media’s LTE
forecasts, there were 62 million LTE
subscribers at end-December, and
this number is expected to increase
to 133 million in just a year.
However, this kind of success does
not come without challenges: Ninety
percent of the LTE market is held by
five operators, and certain regions
are lagging due to reasons including
unclear regulation and spectrum-
license delays. Nevertheless, certain
operators are providing learning
experiences for the whole market,
the leaders being Verizon Wireless,
AT&T and those in South Korea,
where operators have already
deployed LTE to cover almost all of
the population.
LTE has arrived at an appropriate
stage of the evolution of mobile
operator business: Users are
becoming more aware of the benefits
of data services, OTT applications are
garnering success, and there is rising
demand for mobile data services and
smartphones – all influences that
promote the adoption of LTE. Initial
end-user feedback indicates that LTE
services have been well received and
that the higher-speed, lower-latency
network offers serious advantages
compared with previous networks.
LTE in Europe
Despite the success of LTE in many
Asian markets and the US, its
growth has been slower in Europe
due to regulation, license-auction
delays and the wide and dense
deployment of HSPA networks.
TeliaSonera’s LTE network in
Sweden was the world’s first to be
turned on, in December 2009, but as
of June 2011 the country had fewer
than 10,000 subscriptions. This
slow growth was due largely to the
fact that only portable LTE devices
(USB dongles and MiFi units) were
available, at higher pricing than 3G.
Nevertheless, TeliaSonera reports
that deploying LTE first was the
“most brand value accretive action
we have taken,” and other LTE
early adopters have made similar
statements.
The European market has its own
peculiarities, as do most global
regions. Densely deployed HSPA
networks, saturated markets, a
fragmented spectrum landscape
and the wide availability of fixed
networks have made the rollout of
LTE throughout the region slower, but
rises in the demand for data and the
availability of LTE smartphones are
helping the technology expand rapidly.
Europe’s mobile market has several
unique properties that make LTE
deployments in the region stand out.
•Networksharingiswidespread
in the EU, and several operators
now share parts of their network
in a passive or active mode. There
are discussions in certain markets
about regulating network sharing,
which would force operators to
share part or all of their networks.
Although network sharing reduces
costs, the strategy, governance and
integration involved often make it a
complex task.
• LTEspectrum:ThekeyLTE
bands in Europe appear to be
800 and 2600MHz and 1800MHz,
which seems to be considered a
key global LTE band. Operators
generally prefer lower bands,
which have better propagation
characteristics, meaning that
they can offer good coverage with
fewer cell sites. Some operators
have already been awarded
spectrum, some are waiting
for spectrum auctions before
they begin to deploy LTE, and
some are attempting to refarm
existing spectrum, such as the
1800MHz band, which has been
used for 2G/3G. Existing unpaired
spectrum assets might also be
used for TD-LTE networks in the
future. Unlike in regions that have
clearer conventions for spectrum
use – such as the US, where LTE
is in the 700MHz band – Europe is
fragmented, and some spectrum
auctions have yet to take place.
Introduction
5
© 2013 Informa UK Ltd. All rights reserved. www.informatandm.com
• 3G-networkdensity:Countriesin
Western Europe – and several in
Eastern Europe – are characterized
by dense HSPA deployments,
which have provided adequate
capacity for mobile subscribers.
But deploying LTE has been
considered a strategic objective,
and several operators have started
deploying it without clear visibility
of pricing models and business
opportunities. As of 2013, LTE has
become a major objective of all
mobile operators, since spectral
and network efficiency is a key
concern as the market becomes
more data-centric.
There have been several notable
LTE-network launches in Europe
(see fig. 1).
Mobile operators have been skeptical
about the value proposition of
LTE, especially due to the fact that
monetization of 3G came much later
than expected and was challenged by
license costs, low technology maturity
and overall slow development of the
ecosystem. These factors have since
been addressed, however, and the
LTE ecosystem is seeing healthy
growth across chipsets, devices and
network infrastructure, alleviating
operator concerns.
Apart from deployments that are
driven by regulation, LTE networks in
Europe have primarily been developed
in parallel with modernization efforts,
especially in cases where aging legacy
2G/3G networks were increasing
total cost of ownership (TCO) and
modernization offered an opportunity
for cost savings. Fig. 2 illustrates a
decision tree when deploying LTE and
with different options operators could
take advantage of to deploy LTE.
A major factor inhibiting LTE
deployments in Europe – and other
areas, including Japan and South
Korea – is the presence of widely
deployed legacy networks. With the
aim of reducing the cost of running
legacy infrastructure, operators
have taken steps to optimize their
infrastructure before deploying LTE
networks, mainly by consolidating
existing 2G/3G infrastructure into
a single platform, often referred to
as a Multi-Standard Base Station
(MS-BTS) platform. But MS-BTS
platforms deployed for 2G/3G might
require considerable investment
to upgrade to LTE, which requires
new antennas, Remote Radio Units
(RRUs) and manual installations.
Costs are even higher when using
4G spectrum that does not overlap
with 2G/3G frequencies. For
example, 2.6GHz LTE deployments
often require new RRUs, antennas,
baseband units, manual upgrades
and, most likely, new cell sites to
satisfy coverage requirements,
boosting the deployment cost
considerably despite the existence of
an MS-BTS deployment.
This white paper discusses two
options for deploying LTE: Multi
Standard Base Stations (MS-BTS)
and LTE overlay, which refers to
adding new equipment at cell sites
Legacy 2G/3Gnetwork
MS-BTS for 2G/3G
Add LTE payloadin MS-BTS
LTE deployment
Add LTEoverlay
MS-BTS for2G/3G/LTE
Fig. 2: LTE-deployment options for legacy networks
Source: Informa Telecoms & Media
Fig. 1: Notable European LTE-network launches
Operator (country) Launch date Details Band
TeliaSonera (Sweden) Dec-09 USB dongles and MiFi only 800/1800/2600MHz
Vodafone (Germany) Dec-10 Rural deployment first 800/2600MHz
Yota (Russia) Dec-11 Wholesale network 2600MHz
EE (UK) Oct-12 Only UK LTE network 1800MHz
Source: Informa Telecoms & Media
Deploying LTE in Europe
6
© 2013 Informa UK Ltd. All rights reserved. www.informatandm.com
for LTE. An operator choosing to
deploy LTE with a legacy 2G/3G
network has several possible paths
to choose from.
Although overlay usually refers
to specific additional equipment
used to enable an air interface, the
infrastructure could be an MS-BTS
with specific functionality enabled,
which can enable modernization of
the network in later stages while
satisfying the current need for a
quick LTE rollout.
MS-BTS
MS-BTS platforms are deployed
when several networks have to
operate in similar frequencies and
at the same cell sites. For the most
part, vendors have accordingly
chosen names for their technologies
that reflect the fact that a
single base station can provide
service for different technologies
simultaneously. Assuming that an
MS-BTS is providing service for
different technologies, the following
elements are usually deployed:
• Integratedbasebandunit(BBU):
The baseband unit is responsible
for processing and converting
digital signals. It is usually in the
form of an upgradable platform,
where new cards (or “blades”)
can be introduced to cater for
increased utilization or new
protocols. Typical MS-BTS BBUs
may be made compatible with
LTE through software upgrades,
though in many cases a hardware
upgrade is necessary due to the
increased functionality required by
LTE eNodeBs.
• RemoteRadioUnit: The RRU
includes RF equipment and
converts digital signals to RF for
transmitting, and vice versa for
receiving. RRUs are band-specific,
meaning that new LTE frequencies
need new radio units. But there
are some cases where networks
share RRUs between 2G, 3G and
LTE for the same frequencies
after refarming. In most cases,
new RRUs are necessary to
enable LTE in existing MS-BTS
deployments.
• Antennas: Similar to RRUs,
antennas are band-specific and
need to be upgraded if LTE is
deployed in new frequencies.
Overlay
In overlay deployments, new
hardware is installed in existing
base stations without affecting
the existing infrastructure or
network operation. The operator
is able to procure equipment from
any vendor, not just the existing
MS-BTS provider. The following
figure illustrates a brief comparison
of MS-BTS and overlay deployments
for European networks (see fig. 3).
Both deployment strategies
offer specific advantages and
disadvantages, and the decision
of which to use is affected by
several parameters, including LTE
spectrum, legacy-network age,
whether a modernized network
has been fully depreciated, vendor
relationships and many others. But
the European market is now at a
stage where an overlay is becoming
a valid competitor to MS-BTS
platforms for LTE deployment.
Fig. 3: Comparison of LTE-deployment strategies
LTE overlay Single RAN
Bevnefits Speed of deployment Lower site rental cost
No network disruption Lower power comsumption
Lower capex Cell-site simplification
Challenges Potentially higher opex Requires existing network renewal (downtime and potential disruptions, additional optimization and training)
Multiple platforms to manage Vendor lock-in
Source: Informa Telecoms & Media
7
© 2013 Informa UK Ltd. All rights reserved. www.informatandm.com
Several operators have already
modernized their existing networks,
with a focus on reducing opex for
2G and 3G deployments. Many of
these modernizations have taken
place over the last five years, in the
900MHz, 1800MHz and 2.1GHz bands.
As such, these modernized networks
might not be fully depreciated and
cannot be removed without suffering
a decommissioning fee, which can be
substantial – especially if considering
stand-alone (non-MS-BTS)
platforms. In many cases, mobile
operators continue to operate stand-
alone platforms until they are fully
depreciated, after which they might
be considered for replacement.
Simplification of the network and
reductions in capex and opex are the
advantages most frequently cited by
European operators for deploying
LTE through an MS-BTS platform
(see fig. 4).
An overlay decouples modernization
efforts from network deployment,
which results in a faster and less
disruptive network rollout and might
also delay modernization. Operators
with aggressive LTE deployments
have reported that traffic over their
3G networks is declining in favor
of LTE, which in turn reduces the
pressure to modernize. A simpler
network deployment is also a
major advantage in markets where
regulations and permissions for
work at cell sites are strict.
Although opex savings can be
achieved by consolidating 2G/3G
and LTE base stations, the majority
of TCO will come from upgrades,
which applies to both MS-BTS and
overlay cases. Moreover, adding
functionality to a platform that is
already operating and providing
connectivity to subscribers might
lead to unplanned downtime,
which might be considered a risk.
According to Informa’s financial
modeling, the cost of an overlay is
in many cases lower than that of an
MS-BTS (see fig. 5).
Another major operator concern
is vendor lock-in, which is a
considerable commitment with most
MS-BTS platforms. An operator
becomes tied to the vendor’s strategy,
including infrastructure upgrades,
which usually keep pace with market
LTE deployment drivers in Europe
0
5
10
15
20
25
30
35
Resp
onse
(%)
5
101212
3031
Othe
r (p
leas
e sp
ecify
)
Hard
war
e re
use
for d
iffer
ent a
ir in
terfa
ces
Abili
ty to
sup
port
futu
re s
pect
rum
refa
rmin
g
Low
er s
ite c
osts
(inc
ludi
ng p
ower
)
Net
wor
k si
mpl
ifica
tion
– o
ne p
latfo
rm to
man
age
Low
er C
APEX
and
/or O
PEX
Fig. 4: What is the most important benefit of deploying an MS-BTS platform?
Note: Responses from survey of 112 European operators.Source: Informa Telecoms & Media
0
100
200
300
400
500
600
700
800
NPV
gai
n (U
S$ m
i.)
726660544842363024181260
Simulation month
Dominated by the negative impact of
multi-standard RAN upgrade
Dominated by the positive impact of reduced power consumption, OA&M and ground lease costs for multi-standard RAN
Fig. 5: Forecast cumulative gain in net present value of an LTE overlay relative to MS-BTS
Source: Informa Telecoms & Media, Tolaga Research 2013
8
© 2013 Informa UK Ltd. All rights reserved. www.informatandm.com
Our research, modeling and survey
illustrate that LTE overlay is
considered a viable alternative to
MS-BTS. Several operators across
the world, especially in the US,
Japan and Korea, have deployed
LTE by overlaying on existing
infrastructure and, in many
cases, have enjoyed a competitive
advantage by being first to market.
Many operators in Western
Europe are expected to follow
similar steps and include overlay
as an element of LTE-network
deployments.
Many of their counterparts in
Eastern Europe are expected to
follow, given that LTE adoption
in that region is slower than in
the more developed markets of
Western Europe.
Other benefits of an overlay include
not being locked in to a single
vendor, a lack of network disruption,
greater reliability and, in many cases,
a financial advantage over MS-BTS.
Both deployment strategies
offer specific advantages and
disadvantages, and the decision of
which to use is affected by several
parameters.
developments but could fall short due
to changes in vendor strategy.
Reliability of the network and vendor
lock-in are among the top concerns
related to MS-BTS deployments
cited by European operator
respondents to our industry survey
(see fig. 6). Another major concern
linked to vendor lock-in is financial
stability, in cases where several
vendors are subject to hostile
market environments and their
future is not clear.
The biggest advantage of a network
overlay is speed of deployment. It is
usually much faster than deploying
an MS-BTS and replacing legacy
networks. By deploying LTE through
an overlay, the operator can offer
LTE services the soonest, which
in many cases gives it a major
competitive advantage. A quick
deployment also gives operators
extra time to consider the strategic
impact of an LTE network, which is
especially useful when considering
the value proposition of LTE
in Europe’s volatile economic
environment.
Network sharing is a major force
behind network deployments,
and its importance is expected
to increase. Active sharing
arrangements provide the most
economic benefits but require
operators to be in similar market
positions, e.g., using similar
bandwidth and frequencies. Passive
sharing is expected to be more
popular, because the integration,
governance and cultural and
strategic issues linked to active
sharing pose a considerable
challenge for operators. In cases
where operators are already
participating in active-sharing
arrangements, they need to jointly
decide to upgrade the platform to
new technologies, including LTE.
In many cases, an overlay strategy
is considered a more effective
option, enabling each operator to
meet its strategic objectives without
having to wait for its active-sharing
partners to move in parallel.
Othe
r (p
leas
e sp
ecify
)
May
requ
ire s
igni
fican
t upg
rade
s fo
r add
ition
al a
ir in
terfa
ce (e
.g. n
ew s
pect
rum
)
Relia
bilit
y is
sues
Dow
ntim
e re
quire
d fo
r rep
laci
ng e
xist
ing
netw
ork
infra
stru
ctur
e
Com
plet
e v
endo
r lo
ck-in
Resp
onse
(%)
0
5
10
15
20
25
30
35
912
19
27
33
Fig. 6: What is the most important challenge when deploying an MS-BTS platform?
Note: Responses from survey of 112 European operators.Source: Informa Telecoms & Media
Conclusion
9
© 2013 Informa UK Ltd. All rights reserved. www.informatandm.com
Industry survey
To gauge market perception of LTE
launch strategies and understand the
state of European networks, Informa
has launched an industry survey that
includes broader questions regarding
LTE. Those that are relevant to this
study are presented here.
The survey had 442 respondents,
of which 112 were operators
based in Europe. Of these operator
respondents, 68 were mobile
operators and 43 hybrid operators,
with both fixed and mobile assets.
Asked if they had an LTE network
live or pending launch, a staggering
96.3% of European operators
answered in the affirmative, with
only 3.7% stating that they are not
planning to launch LTE. Method of
deployment was evenly split among
the three options (see fig. 7).
Western European operators were
biased toward overlay and those in
Eastern Europe toward MS-BTS.
This is somewhat expected, since
operators in Western Europe expect
faster take-up of LTE services due
to higher demand for mobile data,
and they rely on a faster deployment
strategy. The results illustrate that
developed markets are more likely to
rely on overlay deployments for LTE.
MS-BTS deploymentsQuestions about MS-BTS platforms
revealed that cost savings and
network simplification are the major
incentives for operators to take such
an approach. The ability to reuse
hardware for future technologies
was cited by surprisingly few
respondents, as was support for
future refarming efforts.
Regarding the challenges of
deploying LTE through a MS-BTS
platform, the most operators
cited vendor lock-in and network
downtime. Future upgrades scored
only 12%. The responses about
MS-BTS deployments imply that even
though the technology is usually
positioned by vendors as future-
proof, meaning it offers cost savings
on future hardware, operators do
not take that into account. And
they do not appear to consider the
additional costs of introducing new
air interfaces a major challenge for
MS-BTS, indicating that they are
deploying these base stations only to
consolidate legacy networks rather
than to cater for future technologies.
LTE overlayRespondents cited service interruption
and network reliability as the main
benefits of an LTE overlay (see fig. 8).
Other (please specify)4%Only using small cells
1%
Overlaying LTE in an existing network deployment
32%
Adding LTE in an existing MS-BTS deployment32%
Replacing a legacy 2G/3G network with a MS-BTS platform supporting LTE as well31%
Fig. 7: What is the primary deployment mode for your LTE network?
Note: Responses from survey of 112 European operators.Source: Informa Telecoms & Media
Appendix
Resp
onse
(%)
0
5
10
15
20
25
30
35
Oth
er (p
leas
e sp
ecify
)
Lega
cy n
etw
ork
is tr
ied
and
test
ed
Low
er C
AP
EX
com
pare
d to
Sin
gle
RA
N
Hig
her
net
wor
k re
liabi
lity
No
2G/3
G s
ervi
ce in
terr
uptio
n
10
15
19
23
32
Fig. 8: What is the biggest benefit of deploying LTE through an overlay?
Note: Responses from survey of 112 European operators.Source: Informa Telecoms & Media
10
© 2013 Informa UK Ltd. All rights reserved. www.informatandm.com
Other answers included the ability to
deploy LTE at any time rather than in
parallel with a modernization effort
coupled with MS-BTS.
The need to manage multiple
platforms and interoperability
problems with the existing core
network were the most frequently
cited challenges when deploying
an overlay (see fig. 9), with a rise
in opex and the need for multiple
vendor relationships cited by fewer
respondents.
When asked for the most important
technical aspect of an LTE network,
an overwhelming 60% chose cell
throughput, and when asked which
future capability of the technology is
the most important, 36.8% answered
LTE-Advanced, followed by VoLTE,
with 30.3%.
The survey results chime with the
analysis findings presented above
and reflect the market state in
Europe. Although each deployment
must be considered independently,
due to specific market and operator
conditions, overlay appears to be
a viable deployment method for
LTE despite the trend for network
modernization and platform
consolidation.
Network-economics modeling
A simulation model was developed
to compare the economics
of MS-BTS and overlaid LTE
architectures, based on a real
operator in a leading European
market and using the following
general assumptions:
• AtthetimeoftheLTE
implementation, the 2G/3G
radio equipment had already
been modernized and operated
multicarrier RF equipment.
• ThesimulationstartedinJanuary
2013 and assumed that an LTE
overlay had commenced six
months earlier. The simulation
covers a six-year period.
• Thenetworkconsistsof2G
GSM/EDGE, 3G UMTS/HSPA
and 4G/LTE. The 2G GSM/EDGE
network uses 24.8MHz of 900MHz
and 10MHz of 1800MHz radio
spectrum. UMTS/HSPA operates
in the 2.1GHz 3G band with 20MHz
bandwidth. LTE operates in the
800MHz band with 20MHz, the
1800MHz band with 30MHz and
the 2600MHz band with 40MHz.
The LTE network is deployed
initially to maximize coverage and
expanded into higher frequency
bands according to capacity
demands.
•Mobiletrafficisestimatedon
a per-device basis for non-
smartphones and smartphones,
and connected tablet, laptop
and e-reader devices. A general
category is used to estimate
0
5
10
15
20
25
30
Othe
r (p
leas
e sp
ecify
)
Lega
cy n
etw
ork
is tr
ied
and
test
ed
Low
er C
APEX
com
pare
d to
Sin
gle
RAN
High
er n
etw
ork
relia
bilit
y
No
2G/3
G se
rvic
e in
terr
uptio
n
12
15
19
24
30
Resp
onse
(%)
Fig. 9: What is the biggest challenge when deploying LTE through an overlay?
Note: Responses from survey of 112 European operators.Source: Informa Telecoms & Media
Resp
onse
(%)
0
5
10
15
20
25
30
35
Oth
er (p
leas
e sp
ecify
)
Lega
cy n
etw
ork
is tr
ied
and
test
ed
Low
er C
AP
EX
com
pare
d to
Sin
gle
RA
N
Hig
her
net
wor
k re
liabi
lity
No
2G/3
G s
ervi
ce in
terr
uptio
n
10
15
19
23
32
Fig. 8: What is the biggest benefit of deploying LTE through an overlay?
Note: Responses from survey of 112 European operators.Source: Informa Telecoms & Media
11
© 2013 Informa UK Ltd. All rights reserved. www.informatandm.com
the average traffic generated
by M2M devices. Data and voice
traffic is skewed using a modified
lognormal distribution to reflect
the differing population densities
across the network-coverage
area. Bandwidth usage caps are
assumed across the forecast
period and form the basis for
determining the upper limits
of per-device traffic. Network
dimensioning is based on peak
traffic demands.
• AnOkumura-Hataradio-
propagation model is used to
predict network coverage and
combined with a radio-capacity
model to predict the number of
base stations needed and their
associated output powers. Four
categories of base stations are
used, including high-power,
medium-power and low-power
macrocells and microcells. Each
base-station category is defined
in terms of antenna height, output
power, receiver sensitivity and
average number of sectors. Small-
cell and Wi-Fi offload is used to
moderate large-cell demand.
Fig. 10 shows forecast subscriber
usage and downlink data traffic on
the network. Data traffic per user is
forecast to increase from an average
of 258MB a month to 1.5GB per
month over the six years, covering
both mobile devices and connected
computing. Average voice-service
use per user is assumed to remain
constant at 130 minutes a month.
The forecast traffic was applied
to a network model to predict
radio-base-station requirements
(see fig. 11). Two scenarios where
analyzed, one in which GSM/EDGE
base stations were decommissioned
after three years and on in which
the GSM/EDGE cell sites remain in
place. Data traffic is assumed to be
aggressively migrated to LTE over
the first 8-12 months of the forecast.
As a result, no additional UMTS/
HSPA(+) base stations are assumed
to be required after six months.
The demand for LTE base stations
increases throughout the forecast,
reaching 30,300 after six years.
The network-deployment scenario
studied in this report reflects
that of many mobile operators, by
incorporating three radio-technology
generations – GSM/EDGE, UMTS/
HSPA and LTE – spanning five
frequency bands. Because the
majority of network costs are due
to radio-base-station operations,
mobile operators are eager to
optimize their radio-infrastructure
costs. Many operators have replaced
obsolete infrastructure and are
carefully evaluating LTE-deployment
strategies.
Tota
l bas
e st
atio
ns (0
00S)
0
5
10
15
20
25
30
35
LTEUMTS/HSPAGSM/EDGE
726660544842363024181260
Simulation month
Fig. 11: Forecast base-station requirements over six years
Source: Informa Telecoms & Media, Tolaga Research 2013
0
100
200
300
400
500
600
Downlink network bandwidth LTE
Downlink network bandwidth HSPA(+)
Downlink network bandwidth UMTS
Downlink network bandwidth GSM/EDGE
7266605648423630241812600
300
600
900
1200
1500
1800
Average data traffic per user (M
bps/mo.)
Dow
nlin
k ne
twor
k ba
ndw
idth
(Gbi
ts/s
econ
d)
Simulation month
Fig. 10: Forecast subscriber and network traffic over six years
Source: Informa Telecoms & Media, Tolaga Research 2013
12
© 2013 Informa UK Ltd. All rights reserved. www.informatandm.com
The financial impact of an LTE
overlay is compared with an
equivalent MS-BTS implementation
using a marginal discounted-
cash-flow analysis, to forecast the
cumulative benefit in net present
value (NPV) of an LTE overlay
relative to a MS-BTS deployment.
The results demonstrate the
following:
• Forthefirst19monthsof
the simulation, the MS-BTS
architecture is more costly
because it requires 2G and 3G
upgrades in addition to LTE
implementation. At its peak,
the cumulative NPV benefit for
LTE overlay is forecast to reach
US$601 million.
• AstheMS-BTSisimplemented,
it offers cost savings through
reductions in power consumption;
lower operations, administration
and maintenance costs; and
slightly reduced site-lease
costs. The MS-BTS base stations
are assumed to use up to 50%
less power, incur 60% lower
operations and maintenance
costs and bring down the cost of
ground leases by 7%. The gains
begin to be reflected after 19
months.
The results indicate that for a
modernized 2G/3G network, an
MS-BTS implementation does not
achieve a positive return relative to
an LTE overlay architecture even
after seven years, and they illustrate
that mobile operators must carefully
evaluate the total cost of ownership
for alternative network architectures
before pursuing LTE-network
upgrades.
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