Optimization SWP

8/8/2019 Optimization SWP

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S T R A T E G I C W H I T E P A P E R

Operators are looking or ways to ree up cash fow or re-investment. Operators can reduce

recurring maintenance and operations costs with measurable quick payback projects to und

uture programs or contribute to EBITA growth KPIs. As well, operators can consolidate

assets to address shiting technology, acquisitions and strategic partnerships, positioning

the network to grow or evolve to the target architectures.

Operators are looking or better ways to improve end-to-end Quality o Experience (QoE)

to reach network perormance KPIs. Specic root causes (including new application and

device behaviors) may be hidden rom the assurance layer or not well understood, or existing

service provider resources may already be too busy with existing projects. Exclusive wireless

and best-in-class xed probes and tools are available today which, when coupled with a

complete set o end-to-end network expertise, can assess and analyze fows down to

the subscriber and device, and can oer guaranteed business results.

Finally, operators are trying to leverage the existing asset base to improve utilization and

perormance to address the data trac explosion without increasing capital intensity.

This white paper introduces the opportunity or operators to optimize the existing network

to reduce costs, thereby reeing up cash fow or re-investment, to improve end-to-end

QoE to reach network perormance KPIs, and to do more with their existing asset base

in order to improve utilization and perormance to address explosive data growth.

OptimizationSecrets to network success: small changes deliver big results


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Table of contents

1 Introduction

2 Currentsituation

3 Alternatives

4 Discussion

5 Optimization delivers results

6 Conclusion

6 What to look for?

7 Authors


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Opt imizat ion | S tr ateg ic Whi te Paper 1

Introduction

Much trafc has moved o the legacy networks but most o the inrastructure is still in place. Voiceswitch utilization is beginning to drop below 50% as subscribers drop their fxed lines and moveonto mobile or IMS inrastructures. Frame relay and ATM ports are beginning to drop below 50%utilization as enterprise subscribers shit rom rame relay to Ethernet access, and more aggregationor transport trafc is moved onto newer IP/Ethernet inrastructures.

The decline in fxed subscribers, asshown in Figure 1, correlates with adecline in revenue making strongmobile revenue growth essential tooverall revenue growth. In a growingtrend, larger operators may makemore than hal o their revenuesrom mobile, while most operatorsmay make more than hal o theiroperating income rom mobile.

Broadband ARPU growth, thecurrent revenue driver, is trendingat to negative as competitive pressuresincrease (see Figure 2). Data growthcontinues to outpace revenue growth,increasing OPEX pressures and impact-ing QoE. Several regions o the worldwill transer more mobile data permonth in 2014 than they did orthe entire year o 2008 with mobilecomputing devices with embeddedcellular/4G modems representing

more than 52% o global mobile datatrafc by 2014 (ABI Research 2009).

Coupled with a maturing mobilemarket with declining subscribergrowth, operators will experiencemore challenges in achieving KPIsthat are ocused on earnings growth,subscriber QoE and capital intensityreduction.

Figure 1. Fixed subscriber forecast

Figure 2. Mobile broadband average revenue per user (ARPU) forecast


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Optimization | Strategic White Paper2

Current situation

Costs in a service provider environment are sticky. Its oten difcult or a service provider to identiythe cost drivers inside the organization and its not uncommon or internal business cases to showgreater than 2 years payback period or optimization projects. In the OPEX breakdown shown inTable 1, rom a typical Tier-1 operator, support, leases, backhaul, maintenance and OA&M arekey OPEX drivers.

Table 1. Typical mobile Operator OPEX Breakdown

New applications are consuming more resources and are behaving contrary to current trafc models,creating dynamic stress on the network. In a 2009 Tier-1 case study, high unidirectional ows roma small group o subscribers resulted in higher than planned consumption o wireless signaling andairtime resources. This behavior was hidden rom the existing assurance layer until congestionoccurred in the network.

New devices are consuming more resources and are behaving contrary to current trafc models.In a 2009 Tier-1 case study, a specifc brand o smart phone device accounted or only 6% o the total

data volume but consumed 26% o the total airtime because it consumed 52% o the signalingresources. Trafc models will need to change.

Where Ethernet is available or backhaul networks, service providers are ocusing on operationalissues such as service availability (QoS, latency, jitter) and synchronization to improve subscriberQoE. Where Ethernet service is not readily available, service providers are leveraging existingbackhaul investments while planning their migration to IP/Ethernet. The alternatives usuallyinclude optimization or utilizing data o-load. Key considerations include:

density o 2G or 3G deployments

level o copper or fber penetration

support or legacy 2G/3G base stations

cost or time to modiy process and systems including engineering, purchasing, OSS integrationand training


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In the start o a growing trend, service providers are re-structuring their organization models to promotemobile-fxed convergence. In two Tier-1 organizations, wireless organizations are now responsible ormarketing, base stations and MTSOs, while central fxed groups are responsible or fxed-mobiletransport and the fxed-mobile core.

In the PSTN ootprint, its not uncommon to fnd voice switches running at 50% or less capacity.Due to the organizational structure in most operators, the site power and utility budget may be separate

rom the maintenance budget. Equipment power consumption and site cooling now make up thelargest cost component o running legacy PSTN switches.

In response to the maturing markets, larger operators are evaluating acquisitions to boost subscribergrowth. As a deensive move, smaller operators are evaluating strategic partnerships to drive scale andcapital efciency. Both trends are driving a consolidation and evolution o the network ootprint.

Alternatives

The three most common alternatives include:

do nothing

optimize the existing network assets transorm the network by migrating existing legacy networks to a High Leverage Network

architecture based on IP/MPLS

The do-nothing alternative, which usually means trying to increase revenues to address the earningsgrowth difculties by adding new overlays on existing architectures, does not scale and increasescomplexity. In a Tier-1 example, the marginal cost o adding a new subscriber exceeded the marginalrevenue. Most overlays attract additional OSS and operational overhead.

Optimization means reducing costs, improving QoE, increasing utilization and improving perormance.It can payback in as little as three months and rees up cash or re-investment with a shorter salescycle. Typically, optimization can decrease total OPEX by 5% to 10% per year.

Lastly, migration rom legacy networks can reduce costs by 30%. However developing an internalbusiness case and justifcation to management to make the major capital investment tends to be slowand complex. Furthermore, the implementation cycle or migration is longer, ranging rom 1-2 years.


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Discussion

Optimization starts with a straightorward and comprehensive view or assessment o the end-to-endnetwork perormance and utilization using network probes and complex sotware tools (see Figure 3).

Figure 3. Optimization approach

The end-to-end audit includes wireless trafc monitoring down to the device and subscriber level,fxed trafc monitoring, node statistics and QoS counters. A ollow-up trafc profle analysis willcorrelate the benchmarked network against the projected trafc orecast identiy actors aectingQoE and highlight utilization opportunities in the network.

The ollow-up recommendations identiy the alternatives available to the customer, the costs and

the fnancial as well as QoE benefts. Finally, the best path is implemented.

Node Statistics& QoS Counters

Trafcmonitoring

TrafcForecast

Data

End-to-End Audit

Trafc Prole & NW Capacity Analysis

Recommendations


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Optimizationdeliversresults

The brie sampling o customer casestudies below demonstrate the impactoptimization can have on an operatorsnetwork.

Case 1

In this frst example, the challengerom the customer was to reduce thecosts and improve the utilization othe legacy fxed PSTN legacy network(see Figure 4). The scope o workincluded an assessment and analysis tobenchmark the network and identiythe best alternatives, trunk and linemigration, switch de-growth, physicalline moves, circuit pack removal andend-to-end program management.

The resulting business case analysis orecasted a NPV o $27M over 5 years with positive cash ows inyear 2. The key savings drivers included power or the PSTN equipment, power to cool the PSTNequipment locations, maintenance and administration, and fnally, spares. The budget line ownersor PSTN maintenance and power/utilities may have dierent reporting lines. A services consultantcan assist in putting together an end-to-end business case to identiy and then implement theopportunity to ree up cash ow or re-investment.

Case 2

Im paying millions o dollars per yearto my equipment vendor in mainte-nance, and I have the eeling that Im

paying or equipment that hasntbeen used or years (Anonymous). Inthis example, the scope o workincluded an audit, inventory andanalysis o 2500 data networkelements using best in class tools andprobes. The analysis identifed threemajor design areas or equipmentconsolidation including excess bladeremoval. The key savings driverincluded maintenance savings andequipment re-use in planned expan-

sions (see Figure 5).

The resulting business case orecasta frst year cash savings o $719Kwith a $2.4M cash savings per yeareach year thereater.

Figure 4. Cash flows PSTN switch consolidation

Figure 5. Cash flow sources data network optimization


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Case 3

Revisiting a previous example rom earlier in the paper, new applications created dynamic stressesin the network. In this Tier-1 example, an assessment revealed the root cause, determined to beapproximately 1000 subscribers playing a bandwidth-hungry computer game on mobile computingdevices with attached modems, maniested as congestion in the core.

Hidden rom the assurance layer, the unidirectional ows (see Figure 6) resulted in higher consump-

tion o wireless signaling and airtime resources. In this example, the approximately 1000 subscribersaccounted or 30% o total unidirectional ows.

Figure 6. Unidirectional flows decreasing subscriber QoE

Case 4

In this fnal example, a customer was preparing or a network extension in Arica but needed toremove existing congestion issues and size the extension to the orecast trafc needs. The scope owork included an assessment on the radio (parameters, requency-plan updates) and the core network,and optimization to remove bottlenecks.

The resulting business case analysis demonstrated a savings o 200K per year, an 8% increase incall efciency, and the ability to increase subscribers by 10% without increasing capital intensity.

Conclusion

Optimization delivers results. In a market with declining fxed revenues, mobile ARPU not able tobridge the revenue gap and radically increasing bandwidth driving OPEX increases, optimization can:

reduce costs with quick payback projects, thereby reeing up cash ow or re-investment

improve end-to-end QoE to reach network perormance KPIs

do more with the existing asset base in order to improve utilization and perormance

Whattolookfor?

Look or a partner that can bring wireless and wireline probes and tools to assess the radio networkdown to the subscriber and device level as well as the fxed network.


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The partner should bring whole product expertise to each optimization project. Whole productmeans that they understand the target or uture network architectures and will ensure investmentefciency. As well, whole product means that they understand how each optimization project ftsinto the network and IT inrastructure and can build upon successive projects.

Lastly, the partner should bring a complete toolbox o network technology expertise. As anexample, potential partners that lack a complete IP/MPLS toolbox may try to steer operators

towards a VLAN architecture, although the QoS and trafc management capabilities o MPLSwould ensure investment efciency.

Authors

JohnBernard

John Bernard is a manager within the Alcatel-Lucent Service Group supporting global services strategyand solution development. John has twenty plus years experience within the telecom industry and hasheld a number o senior positions at PictureTel, 3COM, Lucent, and Alcatel-Lucent creating globaltelecom solutions. He is currently supporting Alcatel-Lucents strategy and development eorts towardeco-sustainability, cost transormation and overall business transormation solutions.

TimBroschuk

Tim Broschuk works in Alcatel-Lucent Services Business Group as Director o Sales Support within theNetwork and System Integration division in Ottawa, Canada. Tims broad background includes rolesin marketing, business operations, product line management, R&D and manuacturing operations.He is currently working with Alcatel-Lucents sales teams throughout the world to accelerate themarket introduction o business impacting integration services.

PatriciaDoane

Patricia M. Doane is a services marketing manager or Alcatel-Lucent in Naperville, IL. Pats areaso expertise include sotware and services sales and marketing, sales training and digital media. Shehas a B.S. degree in Communications & Secondary Education rom University o Illinois at Urbana-

Champaign, and M.S. degrees in Communications and Clinical Psychology rom NorthwesternUniversity in Evanston, IL and Benedictine University in Lisle, IL respectively.

MarcJadoul

Marc Jadoul is Marketing & Communications Director in Alcatel-Lucents Network & SystemIntegration division, supervising the business divisions messaging and communications activities.Marc has 20 years experience in the ICT sector. Since he joined Alcatel in 1992, he has held severalmanagement positions in research & innovation, product, solution and portolio management,marketing, communications, strategy, market and business development, and solutions consultingor fxed and mobile service providers worldwide.

MrcioNespatti

Mrcio Nespatti works in Alcatel-Lucent Corporate Strategic Marketing team as a director or the CostTransormation Marketing Program. Mrcios background includes senior roles in marketing, sales andproduct management both in the consumer as well as the inrastructure side o the telecommunicationsbusiness in Latin America, Europe, Asia and now North America. He currently oversees global programexecution to position Alcatel-Lucent as a leader in the practice o identiying customers main costdrivers and proposing solutions that help transorm hidden costs in additional ree cash ow.


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Optimization SWP