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This presentation discusses the scalability of telecom networks from a Indian telecom operator in terms of investments, technology - standards and Broad Industry perspective.
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Scalability challenge of Telecom networksThe India Perspective
Manas Ganguly31st January 2014
Generations of Cellular Technology
1G 2G 2.5G 2.75G 3G 3.5G 4G 5G
GPRS1xRTT
EDGEeGPRS
UMTSW-CDMA
EVDO Rev.A
HSPAHSDPAHSUPAEVDO Rev.BHSPA+
WiMAX
LTETDD LTEFDD LTE
Cognitive Radio
1983 1991 1997 1999 2003 2008 2009 2020
Voice SMSInternet on the move
High Speed data
Video ??? AI
3GPP
802.11
802.16/-2009/m
Flash - OFDM
UMTS/3GSM
CDMA 2000
GSM
HIPERMAN/ 802.20
HSPA+ 21 – 672Mbps LTE 100-300MbpsLTE Advanced
1Gbps
Rev.0 2.4Mbps
Rev.A3.1Mbps
Rev.B14.7Mbps
802.11 a6-54Mbps
802.11 b1-11Mbps
802.11 g6-54Mbps
802.11 n7.2-
150Mbps
802.11 ac87.6-
866.7Mbps
WiMax Rel. 137Mbps
WiMax Rel. 1.583Mbps
WiMax Rel 2110-365Mbps
GPRS116 Kbps
EDGE116-384Kbps
Enhanced EDGE400Kbps – 1Mbps
Flash OFDM (Mobility upto 200 mph)5.3- 15.9Mbps
UMTS/ WCDMA.384Kbps-14.4Mbps
UMTS TDD16Mbps
Telecommunication System & Standards
HIPERMAN 56.9Mbps
iBurst /802.2 (Cell Radius 3-12 kms)95Mbps
Spectrum, Technology and Standards
http://niviuk.free.fr/index.html
2100/ S- Band 1900/ PCS 1800/DCS
AWS/+(2.1 & 1.8 GHz)
850/+ / JTACS 2600 900 /TACS
1500 U/L/ L Band
700 ac/c/PS/BC 800 L/U/DD 3500 2500
2000 S Band
1600 L band 1900+
800/SMR/PAMR 700APT/de 2300 WCS 450 390
1800 PCS Korea
400 PMAR / European
PMR
LTE UTRAN P P P P P P P P P P P P P P P P P P PLTE TDD P PUMTS P P P P P P P P P PHSPA+ P P P P P PGSM P P P P P P P
CDMA P P P P P P P P P P P P P
1900 2000 PCS L/U/C 2300 2500 2600 3400 3600
LTE UTRANLTE TDD P P P P P PUMTS P P P PHSPA+ PGSM P
CDMA
Wireless Broadband: Fast Facts• Mobile broadband network deployments
– 532 commercially launched HSPA networks in 203 countries– 84% of networks support peak downlink of at least 7.2Mbps– 338 (i.e over 63%) are HSPA+ networks– 145 (27% of HSPA operators) commercially launched 42Mbps DC-HSPA+ systems in 75 countries
• LTE is mainstream– 508 operators investing in LTE in 144 countries– 456 network commitments + 52 pre-commit trials– 263 commercially launched networks/ 97 countries including 28 LTE TDD (TD-LTE)– 75% YoY– 1371 LTE user devices launched (by 132 suppliers)– 705 new products in the past year– Includes 483 LTE 1800 terminals – Includes 304 products supporting TDD mode– 533 LTE smartphones representing 39% share of all devices
• Mobile broadband subscriptions– 1.373 billion WCDMA subs including HSPA– 157.7 million LTE subs (110.1 million growth in 12 months)
LTE Devices Eco-System: 1371 user devices
• 705 new LTE devices in 12 months• Number of OEMs: +52% YoY• 533 LTE smartphones (39% share of all LTE devices)• 42 VoLTE phones• 304 LTE TDD User devices• 142 Category 4 terminals
304
LTE
TDD
Use
r Dev
ices
1068
LTE
FDD
Use
r Dev
ices
1800 MHz Band 3 is the most popular band for LTE deployments and is poised to have the largest
user devices eco-system
Data: GSMA January 24th 2014
The dichotomy of convergence & divergence: The LTE conundrum
• Harmony : Converging GSM and CDMA?• Complexity: 41 Bands• Scale: CMCC and Jio• Compromises: 2300MHz, Really now?• Trade-offs: Hazards, Investments
Indian Telecom iGDP expected to hit $100 billion by 2015
• Internet subs - 330 million by 2015• Internet’s contribution to India’s GDP to
grow from 1.6% in 2011 to 3.4% in 2015.
• The Indian Telecom Industry accounts for 13% subscriptions & 2.3% share of the global telecom revenue.
Internet Subs Mobility Subs
EOY 2012 135 mln 864 mln
EOY 2013 205+ mln 904 mlnNo. of Mobile Internet Users: IAMAI
Indian Telecom Vital Stats: COAI/TRAI
Smartphone versus Mobile Phone shipments: CMRSource: McKinsey
Indian Telecom: 2G versus 3GIndia currently has amongst the lowest wireless broadband penetration in the Asia-Pacific below Malaysia, Philippines and China and nearly equal to Pakistan.Merely 16% of ARPU coming from data. Comparison: Japan (64%) , Australia (50%), Indonesia (41%), Malaysia (38%), China (35%) and even Thailand (22%).
Indian Telecom: Current Status
• Policy Enablers: 2013 – Mergers and acquisitions policy: Dominant players can now hold up-to 50% telecom
market shares. – Foreign equity participation of 100% in Telecom sector
• Low cost driving reach and affordability would be critical but a derivative of a favorable Tax regime.
– Telecom tower companies given slew of benefits (gap funding, external commercial borrowing, lower import duties, excise exemptions) with Infrastructure status is a major step forward in this direction.
• Telecom players were looking for market capitalization and consolidation. – The operators have started to focus on subscriber quality and have done away with the
lucrative dealer commissions and promotional minutes. – After 2008, for the first time, India has witnessed a surge in voice tariff
• Spectrum Re-farming, Lopsided M&A rules
Indian Telecom: Current Status
• Rs.1,48,792 – Cellular Mobile Industry• Rs.2,50,000 – Industry Debt• Regulatory costs including service tax, license fee,
graded spectrum usage charge and revised spectrum variable price equals nearly 40% of the customer tariff
• In 2012, Indian telecom sector’s EBITDA was 15%, comparing poorly with a 36.1% average for Asia’s telecom sector.
• High debt, coupled with regulatory and policy un-certainities have affected long term investments
• Average voice tariffs of roughly 35 paise/minute (arguably the world’s lowest) are responsible for this wide mismatch between 13% subscriptions and 2.3% share of the global revenue.
• Further, telecom tariffs, the industry points out, have dropped 30% in the last 4 years, even in the face of annual inflation of 7-8%.
Impact of Spectrum/Band on Network Costs
700MHz 1900MHz 2400MHz
Number of cells per unit area
1 4 10
Total Network Cost @ $150K/Cell
$1,50,000 $6,00,000 $15,00,000
Network Cost per Customer
$180 $725 $1820
No.of months for break even
9 months 36 months 91 months
Cell Radius (Ideal) 10kms 5.5kms 4.7kms
Cell Circle Coverage Area (Comparative)
1 .3 .22
Source: Aloha Partners
70% cheaper to provide MBB @ 800MHz than over 2100MHz
LTE Telco Opex
0
500
1,000
2,000
2,500
$9,000
EVDO Rev A ( 1
carrier )
2,02
5
506
26
EVDO Rev B ( 2
carrier )
2,52
6
632
32
HSPA
(10 codes )
4,35
6
1,08
9
44
HSPA
(15 codes )
5,15
9
1,29
0
52
LTE @ 2.3GHz
(20 MHz BW
)
8,64
9
2,16
2
86
Cost/ Sq Km
( $ )
10.8 6.0 8.3 7.4 3.8
Cost/Mb
(0.01 c/min )
Dense Urban Urban Rural
Key Assumptions•This is a theoretical exercise and represented as an ideal case•Utilization of BTS has been assumed to be 100%•For EVDO Rev A, # carriers on a BTS =2; EVDO Rev B = 3; costs have been
allocated proportionately• LTE throughput has been taken as 30 MbpsNot to scale
LTE Penetration
LTE expected to reach subscriber traction only by 2015 in developed countries, emerging economies to be in nascence
0
5
10
15
20%
2011 2012 2013 2014 2015
LTE Subscriber penetration (% of total mobile subsribers )
UK
Germany
France
Chile
Australia
Brazil
Spain
Indonesia
South Korea
Japan
China
USA
Dev
elo
ped
co
un
trie
s
Dev
elo
pin
gco
un
trie
s
“LTE will be deployed in developed markets first, with wide-scale deployments in emerging markets expected after costs for equipment & handsets begin to decrease. Although potential for LTE in emerging markets in the next 5 years is limited.”
Pyramid Research, July 2011
Countries with LTE roll out begun and commercial service available in some regions
Countries with LTE spectrum auctioned but LTE deployments not yet commercial
Countries with planned LTE commercial deployments but spectrum not yet auctioned
Countries with LTE trial systems (pre-commitment)
LTE & 3G: The US Case
What to expect from LTE?
0
20
40
60
80
100%
Share of
Subscriptions
(2015 )
LTE
WCDMA/HSPA
GSM
7B
Share of
data traffic
(2015 )
LTE
WCDMA/HSPA
GSM
3.3EB/month**
Share of key technologies* (Worldwide )
LTE TO HAVE 2.4X & 44X DATA USAGE PER USER COMPARED TO WCDMA AND GSM RESP.
OPERATORS EXPECT LTE TO HAVE SIGNIFICANT SHARE OF DATA TRAFFIC
“SK Telecom predicts that around 65% of its total data traffic will be handled by its LTE network by 2014, and it expects to have 10 million LTE users by 2015.”
Unwired Insight, Nov 2011
“The average smartphone user on their (Teliasonera) network consumed 375MB/month of data. The average broadband user on their network, largely 3G data cards, consumed 5 GB/month. But the average LTE consumer (essentially all data cards) used 14 GB – 15GB/month of data.”
Gigaom, Nov 2010
*GSM, WCDMA, HSPA & LTE together expected to comprise ~90% share of all technology subscriptions by 2015; **1 EB=10^18 bytesNote: GSM share of data traffic is low because a GSM subscriber would mainly utilize a basic phone for access and thus wouldnot exceed 60 MB data traffic per subscriber per month, even in 2015Source: Ovum, Jan 2011; Gartner, Jun 2011; Bain analysis; Lit. search
LTE in India: Limited Scope in near future
City Sub density Attractiveness
Mumbai 4505 Profitable
Delhi 5689 Profitable
Bangalore 2760 Profitable
Chennai 1825 Profitable
Hyderabad 2190 Profitable
Kolkata 1678 Profitable
Pune 1968 Profitable
Ahmadabad 1103 Profitable
Surat 1292 Unprofitable
Coimbatore 1962 Profitable
11-50 1111 17 out of 40 cities profitable
51 -150* 366 7 out of 74 cities profitable
Economics suggest that a rational roll out would be limited to select cities over next 3-5 yearsProfitability is function of subscriber density and data usage characteristics
LTE in India: Building Scale
HSPA
EVDO
LTE
WDS subscribers (M )
• Staggered launch schedule across 33 cities will limit LTE share of data traffic in the next 2 years to within 5-10%
• LTE on 2300MHz will require high density of BTS to offer sufficient coverage
– LTE on 2300MHz has limited coverage with lower wall penetration
• Customers unlikely to perceive high value in LTE vs 3G
• Other LTE spectrum holders like Aircel, Infotel not likely to launch immediately
• BSNL may look to give away its spectrum slot
Economics of 2300Mhz could strain LTE business case in short-medium term
LTE in India: The Operational Challenge
• Economics of 2300Mhz could strain LTE business case in short-medium term
• LTE on 2300MHz will require high density of BTS to offer sufficient coverage– LTE on 2300MHz has limited coverage with lower wall penetration
• 2300MHz LTS solution – unlikely to benefit from a scale ecosystem as this will be among few 2300 MHz
• LTE coverage likely to be pocketed, with fallback on 3G– User Experience is limited because of nomadic coverage through mix of LTE/3G
LTE Deployments: India
• LTE deployments will in India will target heavy users and early adopters
• Pricing per MB basis for heavy users at parity to 3G or even lower
• To offset nomadic coverage, 4G solution will partly be an indoor fixed Wi-Fi type solution (via CPE equipment/ IBS)
• Focus target segments:– Enterprises– SMEs (SME dense clusters)– High-end/professional residential
areas• Will try to uptrade, switch heavy
users and early adopters cream the 3G/EVDO data market
References• Data business: The India perspective - http://www.slideshare.net/Manas.Ganguly/data-business-the-indian-context• India data traffic: The broadband story
http://www.slideshare.net/Manas.Ganguly/india-data-traffic-the-broadband-story• LTE: The Operational & the deployment challenges
http://www.slideshare.net/Manas.Ganguly/lteoperational-challenges-deployment-conundrum• Data in Indian context: Networks & Traffic
http://www.slideshare.net/Manas.Ganguly/data-in-indian-context-networks-traffic• Digital Dividend
http://www.slideshare.net/Manas.Ganguly/digital-dividend-2451233• GSMA: The Mobile Economy India 2013
http://www.slideshare.net/Manas.Ganguly/gsma-mobile-economy-india-report-2013• Spectrum, Technology & Standards http://niviuk.free.fr/index.html• iGDP expected to hit $100 billion by 2015
http://ronnie05.wordpress.com/2013/12/31/indian-telecom-2013-the-year-that-was-and-the-way-forward/• No. of Mobile Internet Users
http://ronnie05.wordpress.com/2013/12/29/driven-by-a-narrowing-price-gap-smartphones-begin-to-penetrate-deep-into-indian-markets/
• Smartphone versus Mobile Phone shipments http://ronnie05.wordpress.com/2013/12/29/driven-by-a-narrowing-price-gap-smartphones-begin-to-penetrate-deep-into-indian-markets/
• LTE device Ecosystem http://www.gsacom.com/news/gsa_398.php
Glossary of Terms• GPRS: General Packet Radio Service• EDGE: Enhanced Data rates for GSM Evolution• 1xRTT: Single Radio Transmission technology• eGPRS: Enhanced GPRS• GSM: Global systems for mobile communication• CDMA: Code division multiple access• UMTS: Universal mobile telecommunication systems• WCDMA: WideBand CDMA• SCDMA: Synchronous CDMA• TD-SCDMA: Time division synchronous CDMA• HSPA: High speed packet access• HSDPA: High speed downlink packet access• HSUPA: High speed uplink packet access• HSPA+: Enhanced HSPA• WiMAX: Worldwide Interoperability for Microwave Access• TD LTE: Time Division LTE• FD LTE: Frequency Division LTE• Cognitive Radio: The cognitive engine is capable of configuring radio-system parameters. These parameters include "waveform,
protocol, operating frequency, and networking"
Glossary of Terms
• 3GPP: 3rd Generation Partnership Project• OFDM: Orthogonal frequency Division Multiplexing• WCDMA: Wideband CDMA• 802.11: Multi stream modulation techniques• AWS: Advanced Wireless Services• UTRAN: Universal Terrestrial Radio Access Network• S-Band: used by weather radar, surface ship radar, and some communications satellites, especially those used by NASA to communicate
with the Space Shuttle and the International Space Station.• Specialized Mobile Radio (SMR): Analog or digital trunked two-way radio system, operated by a service in the VHF, 220, UHF, 700, 800 or
900 MHz bands• L-Band: refers to four long different bands of the electromagnetic spectrum: 40 to 60 GHz (NATO), 1 to 2 GHz (IEEE), 1565 nm to 1625 nm
(optical), and around 3.5 micrometres (infrared astronomy).• APT: Segmentation of the 698–806 MHz band (usually referred to as the 700 MHz band) formalized by the Asia Pacific Telephony• de: Band or technology with origins in Germany• WCS: Wireless Communication Services usually in the 2300MHz Band• PCS: Personal Communication Services usually in the 1900MHz Band first launched in US, Mexico,Canada• DCS: Digital Cellular Service in US• TACS/ETACS: Total Access Communication System (TACS) and ETACS are mostly-obsolete variants of Advanced Mobile Phone System(AMPS)
which were initially developed by two companies separately, i.e. Vodafone and Cellnet. • PAMR: Public Access Mobile Radio mostly used in the former TV broadcasting spectrums