crucial backhaul economics - the latest total cost of ownership comparison of backhaul solutions
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www.cbnl.com
Crucial backhaul economics The latest Total Cost of Ownership comparison of backhaul solutions
Next generation thinking
7 December 2011
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Crucial backhaul economics – today’s agenda
Crucial backhaul economics webinar
• Overview of the Total Cost of Ownership project - Lance Hiley
• The latest financial comparison of backhaul solutions - Monica Paolini
• Meeting the challenges of mobile backhaul - Monica Paolini
• How VectaStar achieves cost savings in a live backhaul environment - Lance Hiley
• Your questions - Q&A will be open for 10 minutes
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Crucial backhaul economics – the challenge
Lance HileyVP Marketing Cambridge Broadband Networks Limited
Objectives and overview of the Total Cost of Ownership project
Crucial backhaul economics webinar
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Crucial backhaul economics
Crucial backhaul economics webinar
Why is understanding Total Cost of Ownership crucial for backhaul market?
• Operator financial focus is higher than ever
• Operators demands
• Capex and opex are at the forefront of the CEO’s thoughts
• Potentially millions of small cells on the horizon
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Crucial backhaul economics – the challenge
Objective
Create a financial model tool to analyse the Total Cost of Ownership (TCO) for popular backhaul technologies to help network operator decision making.
Based on:
•An independent and fair analysis
•Accurate cost estimates
•Research from customers and vendors across continents
•Industry published data by Next Generation Mobile Networks (NGMN)
Crucial backhaul economics webinar
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Basis: backhaul solutions and scenarios
Solutions
• Point-to-point (PTP) microwave
• Point-to-multipoint (PMP) multipoint microwave
• E-Band microwave
• Leased fibre
• Built fibre
Scenarios
• LTE
• 3G
• LTE small cells
Crucial backhaul economics webinar
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Basis: cost parameters
Model was populated with median values across all markets
Capex
• Outdoor equipment costs
• Indoor equipment costs
• Network planning, site acquisition and installation
Opex
• Site rental fees, leased line fees
• Spectrum licensing fees
• Recurring operating costs (e.g. power, maintenance)
Crucial backhaul economics webinar
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Basis: backhaul topologies
8
RAN
RAN
HUB
RAN
RAN
RANRANRANRAN
RANRANRANRAN
RAN
RAN
RAN
RAN
Point-to-multipoint (PMP) topology Point-to-point (PTP) and E-band star topology
Point-to-point (PTP) and E-band tree-and-branch topology Point-to-point (PTP) and E-band ring topology
RAN
RAN
RAN
RAN
RAN
RAN
HUB
RAN
RAN
RAN
Max 16 RAN sites supported
RAN
RAN
RAN
RAN
RAN
RAN
RAN
RAN
RAN
RAN
RAN
RAN
RAN
RAN
RAN
RAN
RAN
HUB
Max 10 RAN sites supported
RAN
RAN
RAN
RAN
RAN
RAN
RAN
RAN
RAN
HUB
RAN
RAN
RAN
RAN
RAN
RAN
LEVEL 3LEVEL 2LEVEL 1Max 15 RAN sites supported
Up to 240 RAN sites supported, depending on RAN site capacity
Crucial backhaul economics webinar
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Crucial backhaul economics – the results
Monica Paolini, PhDFounder and President Senza Fili
Analysis and conclusions from the Total Cost of Ownership (TCO) project
Crucial backhaul economics webinar
| 10 | Confidential - Do not distribute without permission © Senza Fili Consulting LLC
TCO analysis of backhaul costs: why a long-term view matters
Analysis approach• Small network that scales in size, same size assumptions across solutions• Cost assumptions are for median prices across developed and emerging
markets, and are consistent across solutions• No specific allowance was made for discounts made on the basis of contract
size or operator competitive position• Analysis of multiple geographic and competition environments: presentation
focuses on single one, model allows to change assumptions
Crucial to look at both capex and opex• Real cost of backhaul is opex - for both wireless and fiber solutions• Looking primarily at capex can be easier, but misleading
– Impact of equipment costs is often overestimated
But money is not everything• Non-financial considerations in many cases prevail (and rightly so)• But understanding tradeoffs makes it possible to take right decision
April 10, 2023
Our analysis focuses on drivers dynamics:Costs change across regions and types of operators, drivers stay the same
| 11 | Confidential - Do not distribute without permission © Senza Fili Consulting LLC
Capex drivers: PMP reduces the footprint, and the costs
April 10, 2023
Source: Senza Fili Consulting
• PMP topology: fewer equipment terminals, as single hub supports multiple RAN sites― 15 RAN sites: 18 (15 +3) radios with PMP, 30 radios with PTP
• Fewer terminals: less equipment, less sites to be installed, lower capex
| 12 | Confidential - Do not distribute without permission © Senza Fili Consulting LLC
Opex also scales with number of installed radios
April 10, 2023
Source: Senza Fili Consulting
• Opex cost items are constant across wireless solutions• Overall opex depends on topology:
― Number of terminals― Aggregation gains
| 13 | Confidential - Do not distribute without permission © Senza Fili Consulting LLC
A closer look at cost drivers
PTP compared to: PMP E-band Leased fibre
Capex
Equipment costs, outdoor
Equipment costs, indoor
Network planning, site acquisition, installation
Opex
Site rental fees, leased line fees
Spectrum licensing fees N/A
Other recurring operating costs
= higher cost than PTP; = lower cost than PTP; = comparable cost as PTP
| 14 | Confidential - Do not distribute without permission © Senza Fili Consulting LLC
Summary of results
• PMP is the most cost effective backhaul– Overall cost savings of 49% over PTP microwave for LTE networks– 31% cheaper capex than PTP microwave – 53% cheaper opex
• TCO of backhaul networks is dominated by opex– For PMP, opex accounts for
83% of TCO– For PTP and E-band,
opex accounts for 76% of TCO
• PMP cost effectiveness is driven by– Less equipment to be deployed,
installed and maintained– Leveraging traffic aggregation gains
October 4, 2011
Source: Senza Fili Consulting
| 15 | Confidential - Do not distribute without permission © Senza Fili Consulting LLC
Meeting the challenges of mobile backhaul:high traffic volumes and small cells
• High data traffic loads changes the nature of mobile backhaul– Capacity density rather than coverage
becomes a major issue
• Small cells quickly add to backhaul costs– Need to keep equipment footprint down
to contain capex and, primarily, opex
• Solutions like PMP that lower amount of installed equipment are more cost effective:– Lower installation costs– Lower opex– Added benefits: faster installation,
smaller footprint
October 4, 2011
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How VectaStar achieves these cost savings in a live backhaul environment
Lance HileyVP Marketing Cambridge Broadband Networks Limited
How VectaStar achieves these cost savings in a live backhaul environment
Crucial backhaul economics webinar
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• VectaStar Radio Controller (Hub)• Aggregates and switches 8 Access points • 1U Rack mount, 10Gb/s backplane capacity• Supports 240 Remote Terminals per hub• 300Mb/s/sector capacity
VectaStar Gigabit Backhaul Solution
• VectaStar is a carrier-grade multipoint microwave solution with the capacity to handle the aggregated traffic from multiple HSPA and LTE sites
• Each connection requires one radio, one visit, meaning less time and money to deploy
• VectaStar Remote Terminal
• All-outdoor design• 150Mb/s throughput
• VectaStar Access Point• All-outdoor design• Supports 8 remote
terminals per sector• 150Mb/s throughput• 10.5, 26 & 28GHz ETSI
spectrum support
Commercial in confidence
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Case study: European LTE network
•Brief: LTE backhaul for dense urban network – emphasis on performance and speed of deployment
•VectaStar hubs situated on existing macro sites in dense urban setting each covering 2sq. Km
•150 Mb/s peak performance – 90 Mb/s delivered to customers
•Stable sub-600 μs latency
•In the words of the customer:
“The only other feasible alternative to (VectaStar) is leased fiber. Speed to deploy and flexibility in deployment are the key VectaStar advantages (it takes months to set-up leased fibre connections but VectaStar takes hours. It also has 25% lower TCO over 2 years!”
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Multipoint microwave is a fast and cost effective way to build backhaul networks• Low capital requirements
• Low operating costs
• Fast build-out
• Long deployment life
Mature VectaStar solution• Deployed across Europe,
Middle East and Africa
• Compatible with what operators run now and anything they’re planning for the future
Summary
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Watch the webinarWatch our webinar where Lance Hiley, VP Marketing at CBNL, and Monica Paolini, owner of Senza Fili, discuss the presentation, the TCO findings and take industry questions.
Watch now at www.cbnl.com/resources/webinars
Download the white paper: www.cbnl.com/resources/white-papers
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